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Is digitisation an opportunity – or a threat?

The air cargo industry has unfinished business when it comes to digitisation and the modernisation of its processes. That at least was the message from the International Air Transport Association’s (IATA) Director General and CEO, Alexandre de Juniac when he spoke at the IATA 73rd Annual General Meeting.

Time to move on

“Air cargo processes are stuck in another century. To ensure that air cargo is ready to benefit from the we need a major overhaul of industry processes,” he said. “The time is right for change. After several years of virtually no growth, air cargo demand is starting to pick up. We are also seeing new business opportunities with internet commerce and the global distribution of time and temperature sensitive cargo, especially pharmaceutical products.”

Customer first

The message then is clear – digitisation is essential in order to keep up with the rapidly transforming demands of customers, who expect a supply chain that is efficient, flexible and effective. A more customer-centric approach will see the development of an air cargo industry that will also be more responsive, with intelligent systems that are able to self-monitor, alert people in real time and respond to any changes in the delivery process.

The end for forwarders?

De Juniac’s vision is an exciting one then – and although it lays down a serious challenge to the industry to change, it seems to paint a picture of an air cargo industry that will thrive if it makes the investment in the necessary technology. But what are the implications of increased digitisation for freight forwarders? A recent article by McKinsey suggested that by 2025, 15 to 20% of air freight shipments will be booked directly by the shipper with the airline. Meanwhile one of those freight forwarders who may be looking at a potential drop off in work due to digitisation – Flexport – suggested in another article that “airlines are poised to bring freight consolidation in-house”. So does digitisation mean the end of the need for specialist freight forwarders?

An unlikely scenario

Not so fast, suggests Niall van de Wouw in the Loadstar. “Neither airlines nor shippers have the global capabilities to perform, for example, the customs activities that are required to move freight from one part of the globe to the next,” he says. “And I don’t see either building up these capabilities – and why would they? From the airlines’ perspective, it makes no sense to start competing with a client base that provides 80-85% of their revenue.”

Embrace technology

Ignazio Coraci comments: “The advantages of digitising and modernising our industry far outweigh any potential threats to individual operators within the industry. Any failure to move with the times – and to offer the kind of service customers now expect – is a far greater threat to everyone’s revenue streams than the latest technology.”

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