AI in airfreight: It’s already in the name

AI is the current technology buzzword — and for good reason. The air cargo industry is beginning to look to AI for digital booking and pricing optimization , flight information based on real-time data, operating efficiencies and more. “There are a lot of IT trends, and I think artificial intelligence is definitely one of the ones that is here to stay,” Martin Schulze , chief executive of Bonn, Germany-based BlueBox Systems , an airfreight tracking solutions provider, told Air Cargo Next . “The logistics industry will apply that.” AI adoption across the logistics industry is set to play a critical role, according to a survey released this month by Freightos , operator of digital booking and payment platform WebCargo. Of the 55 respondents: 50% were from beneficial cargo owners; 25% were forwarders; and 25% were from carriers and were other logistics professionals. About half of respondents were from companies with more than 250 employees, deemed large companies, while the other half were from companies with fewer than 250 employees, deemed small and medium-sized businesses (SMBs). Industry increasingly eyes AI Fifty-two percent of survey respondents said AI will have a major impact on logistics and 43% said it will have a real, but more limited impact on logistics. A 5% minority believe AI is “just hype.” The 5% minority was composed entirely of SMBs, none of whom agreed to be interviewed by Air Cargo Next . “I was interested by that result,” Freightos Chief Marketing Officer Eytan Buchman told Air Cargo Next . He believes SMBs may feel threatened by AI, as it could allow larger companies to update information and offer services more quickly — an “edge” held by SMBs. “My recommendation there is: Don’t give up the core advantages that you have on customer service and relationships,” Buchman said. “But don’t throw out the baby with the bathwater, and make sure you are assessing the different use cases and trying to figure out where does this play to your strengths — not just where is this a threat.” However not all SMBs are down on AI. Robert Khachatryan , chief executive of La Crescenta-Montrose, Calif.-based Freight Right Global Logistics , said AI must be more widely implemented across the air cargo industry. Freight Right, a respondent to the survey, has more than 40 employees, according to its website. “There is an endless trove of optimization to be gained,” Khachatryan said. Freight Right’s “limited use of AI to analyze shipment data is already yielding a competitive advantage, not to mention the overall optimization of supply chains. We’ve been able to identify hidden bottlenecks and help negotiations with carriers because of a better understanding of densities, and much more.” Meanwhile, 78% of the survey respondents already use, have plans to use or are considering using AI. Specifically: 7% are actively using AI; 7% are in the pilot phase with AI; 29% have plans for AI; and 35% are considering using AI. However, 22% are not considering using AI. SMBs appear more decisive in their plans for AI, while larger companies are still mulling it over, according to the survey data. In fact, 37% of SMB respondents have concrete plans to use AI compared with only 21% of large business respondents. Of the businesses still considering their AI options, 43% are large businesses while only 26% are SMBs. AI streamlines communication The most common use cases projected for AI by survey respondents are pricing and customer service, while R&D and sales ranked at the bottom: 64% of respondents expect to use AI for pricing automation; 56% for customer service automation; 51% for operations; 35% for sales functions; and 24% for software engineering. Anticipated AI use varied by the size of the respondents’ companies. AI has proved valuable for natural language processing . In this use, for instance, an AI program can “read” an email and pull out pertinent data to populate a booking form. “The natural language processing … is, I think, one of the biggest advantages that has emerged from large language models over the past couple of months and years,” Buchman said. A slightly more sophisticated use, according to Buchman, is pricing, for which AI programming analyzes data to automatically determine optimal pricing. The industry is increasingly using AI to improve “the day-to-day tasks that are taking place within the entire organization, whether it is customer success, marketing, sales, development,” Buchman said. In another use case, BlueBox is working on a predictive ETA model that relies on AI technology, Schulze said. This model is expected to remove some frustration when ETAs are inaccurate and allow freight forwarders and shippers to prepare better for delays. This system will offer “prediction of the estimated time of arrival of a shipment independent from what the airline is saying [and] based on data,” Schulze said. Investing in AI Logistics and digital solutions companies are increasingly making large investments in their AI capabilities, both for implementation and research. For example, London-based Raft , an intelligent logistics platform, raised $30 million in a series B funding round in July and intends to use the money to drive further development of its AI offerings. “Over the short-term, Raft aims to automate the execution of an entire shipment lifecycle from start to finish with AI,” Raft co-founder and Chief Executive James Coombes previously told Air Cargo Next . “More medium term, our standardization in execution would also open up clear opportunities to help plan supply chains more effectively, and we see plenty of opportunities down the line in predictive analytics, for instance.” Meanwhile, Bengaluru, India-based Wipro Ltd. , a technology services and consulting provider, in July launched Wipro ai360, an AI-first ecosystem with the goal of integrating AI into every Wipro platform, tool and solution. The company also committed to investing $1 billion to advance AI capabilities over the next three years through company initiatives and by investing in startups. “Our goal is to weave AI into everything we do,” a Wipro spokesperson told Air Cargo Next . “Responsible and secure deployment of AI will be foundational to everything we do.” Wipro plans to train all its 250,000 employees on AI fundamentals and responsible use during the next year, offering more advanced training to those in AI-specialized roles, according to the Wipro spokesperson. Wipro’s innovation lab, Lab45 , released a report in May that details AI’s importance to future operations and advises businesses to explore AI use cases. “AI has the potential to revolutionize industries and functions,” the report states. “While the C-suite within an enterprise will always have a competing list of innovation priorities, AI should be on the top of the list. Failure to adopt a strategic approach to AI will result in missed opportunities, reduced market share and the risk of falling behind in innovation.” Fear of layoffs When it comes to staffing, 84% of survey respondents said they expect AI to lower headcounts. According to the results, 53% of respondents said AI will lead to a limited reduction in headcount, while 31% expect significant redundancies. Large businesses expect AI to have a more significant impact on headcount than SMBs: 38% of large businesses expect major reductions and 55% expect minor reductions; and 26% of SMBs expect major reductions and 48% expect minor reductions. SMBs were more likely to expect AI to create jobs than larger companies, with 7% of SMB respondents saying so versus 3% of large companies. Freightos’ Buchman does not believe AI will replace humans in the supply chain. “It’s there to surface the right information for those people, and lets humans manage the relationships,” Buchman said. “One of the examples I recently used is: Mick Jagger is not going to want his guitar to be shipped by a computer without anybody ever talking about it.” Buchman expects AI to both create and change jobs. For instance, individuals doing menial, repetitive tasks will “find better uses for their time in the company” once AI is implemented, he said. “It gives the people that are using it more powers and lets them do things more efficiently,” he said. “What we found is that the amount of work you can do expands, and so we’re doing more.” Implementation issues Though some SMBs may be hesitant to implement AI, according to the Freightos survey, it will actually be easier for smaller companies to fold the technology into their operations, Buchman said. “If you’re a very small startup, it’s very easy to take any new technology that’s out there and implement it,” Buchman said. “Because you’re buying all new products, you don’t need to change anything. In some cases, it’s easier to build a new house than it is to renovate an existing house. “The really large freight companies that move the vast majority of goods,” he continued, “they have really, really deep stack tech systems that have been built up over decades in many cases. It takes time to implement changes.” Additionally, the air cargo industry’s recent push to digitalize will help AI implementation. “If you look at third-party bookings, or global capacity available on third-party platforms, like WebCargo, it was zero in 2016 — and now we’re at 60% of the industry,” Buchman said. “What that means … is that the industry has a much younger and a much more agile tech stack behind it. “We might not be using [AI] because we’re still kind of getting started with digitalization, but once we get started, it’s going to be a whole lot easier to lean in and double down,” he said. Integrating an AI process with an existing tech stack is only part of the battle. “Of course, you need data to utilize this technology,” BlueBox’s Schulze said. “And I think that is one of the key challenges the industry is still facing. So, the underlying groundwork is, I think, maybe not totally prepared, but there are very obvious examples, like optimization … customer services and invoicing, where AI will play a huge role to work to automate processes. “But there is a long way to go,” he said. “And we are definitely in the pilot phase with all that in the industry.” Freight Right’s Khachatryan believes the biggest roadblock to AI implementation “is expertise, in particular around the erroneous output and false results. This, of course, can be overcome as best practices and standards become more mature.” Some AI programs, like ChatGPT, will sometimes fabricate information to fill holes, according to NewsGuard , a firm that monitors and studies online misinformation. NewsGuard analysts conducted a test in January showing that, when the AI program was “tempted” with 100 false narratives, the chatbot delivered “eloquent, false and misleading claims about significant topics in the news, including COVID-19, Ukraine and school shootings,” 80% of the time. This tendency of generative AI to make up facts is called confabulation or hallucination. Like in humans, confabulation occurs when there is a knowledge gap, and something is made up to fill that void. Due to AI confabulation, those using AI need to be trained to factcheck information and look for falsehoods. New tech brings new concerns As the industry implements AI, it is important to institute safeguards. “Personal information, private information needs to be protected very, very carefully,” Buchman said. “Certainly in the beginning, and probably for a very long time, [it is important to make] sure that there’s a human with the finger on the button for making the more important decisions. You don’t necessarily want cargo getting automatically booked and delivered to a plane without one person looking at it and being like, ‘Yeah, that checks out. That makes sense.’” Since humans are “the weakest link” in cybersecurity , according to Buchman, he believes AI technology does not pose a cybersecurity risk, but stressed the importance of training employees on cybersecurity, as well as AI, to prevent human error that could expose a company to cyberattack. Khachatryan thinks AI’s benefits will far outnumber any detriments. “The companies that concentrate on data analytics and shipment optimization will create so much new value that it would outweigh any concerns,” he said. Join Air Cargo Next for its second annual Air Cargo Tech Summit on Sept. 18-19 in Brussels, sponsored by Unisys and Brussels Airport and featuring a fireside chat with Brian Hodges, managing director, American Airlines Cargo. For more details and to register, click here .

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