Tag Archives: Air Fright

Cargo News, Ignazio Coraci

What can the industry learn from KLM’s new air cargo e-commerce strategy?

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The pace at which we all respond to the demands of our customers is critical – and recent investments made by some of the world’s leading air cargo operators suggest that the industry is finally getting the message about e-commerce.

Prime position

The sector is booming within the air cargo industry and KLM Cargo have now invested in a combination-carrier-operated sorting system at its Amsterdam Schiphol airport site that is able to handle package-level air freight. It’s been designed specifically to handle post, express and pharmaceutical cargo.

That means that KLM Cargo should now have the systems in place to fully take advantage of the growth in e-commerce traffic. Marcel de Nooijer, executive vice president of KLM Cargo explains: “E-commerce is a fast-growing branch in the cargo industry. This innovative system allows us to keep pace with the rapid increase in post and express consignments. The system is faster and smarter, allowing us to offer better service to our customers.”

Same-day revolution

KLM Cargo have described the new facility as a world first, and it’s clear that it should now allow the business to make more use of its air freight capacity. KLM Cargo have teamed up with Netherlands-based Parcel International to run 12Send, a new same-day delivery service for Europe. They’ve already piloted the service on routes between Amsterdam and Barcelona, and have held successful trials in London, Madrid and Stockholm.

A lesson for the sector

Ignazio Coraci comments: “This is a sign of things to come. No industry can afford to ignore their customers. The investment made at Amsterdam Schiphol is an indication that businesses are slowly beginning to listen to changing customer needs, and I feel that we are starting to move in the right direction. This kind of investment is essential if carriers want to survive as new markets develop.”

Cargo News, Ignazio Coraci

Is blockchain technology the answer for air freight?

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We’ve talked in this blog before about the need for the air cargo industry to begin to move away from the paper-based systems that so often clog up many of our processes. As our customers become accustomed to services that deliver more responsive, flexible solutions and with the higher service expectations that have grown out of the increasing use of mobile technology, we need to respond quickly.

First steps

The International Air Transport Association (IATA) have already made a number of steps towards doing this, not least through their support of the e-freight digital process transformation programme.

“Our customers are telling us that they expect more,” said Alexandre de Juniac, IATA’s Director General and CEO. “Complicated and convoluted paper-based processes that are basically unchanged from the 16th century are still being used in air cargo today. Our customers pay a premium to ship by air and they rightly expect modern processes and high quality services.

“Shippers today want responsive services based on intelligent systems able to self-monitor, send real-time alerts and respond to deviation. Technologically speaking, this is totally possible. The key to this and other innovations is using data efficiently and effectively. Finding solutions to unfulfilled (or even unrealized) expectations creates value for customers. And that propels a business forward.”

Is blockchain the answer?

Blockchain is often talked about as being just the kind of innovative technology that supports these aims. But what is it, and how can it be assimilated successfully into the processes and systems of a 21st century air cargo industry?

Well, simply put blockchain technology uses a shared digital ledger to record transactions across a number of computers. The advantages for users are that everyone can see any changes made to public blockchains, creating a more transparent process. Every single transaction made on a blockchain is also immutable – so it cannot be altered or deleted by anyone. A blockchain also creates a single ledger, seen by everyone, that any new transactions are added to – cutting down on any complications and removing the need for lots of different ledgers.

Air freight applications

So what would this potentially look like in an air freight operation? Using blockchain technology within this context creates a cloud-based system that is essentially more secure way of recording shipments. And because of the way that blockchain technology works, it’s also secure from hacking – as well as being a permanent record of transitions that is shareable between multiple users.

While blockchain has yet to really be tested thoroughly within an air cargo setting, it’s already made an impact with marine shippers. Here’s what Jody Cleworth, CEO of British freight forwarder Marine Transport International Limited (MTI) has to say: “Blockchain has the ability to empower our industry into a true digital age,” he said. “The sheer volume of containers processed per year means that safely decentralizing the management of these containers will radically reduce the complexities of shipping.”

Time to invest

Ignazio Coraci comments: “Blockchain technology is precisely the sort of innovative solution to age-old problems that we should be applying within our own industry. It’s important that other sectors aren’t allowed to steal a march on the air freight industry by adopting innovations that will serve customers in a way that we can’t offer yet – the time to act is now.”

Cargo News, Ignazio Coraci

Business continuity

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Cyber attacks by hackers are becoming a huge problem in our increasingly connected and technology-driven world.

A growing threat

Recent examples include the global ransomware attack back in May that disrupted many critical systems – not least in the UK’s National Health Service, which was badly affected for a number of weeks, severely impacting patient care. Closer to home in – terms of the air freight industry at least – was the attack on marine container shippers AP Moller Maersk, that saw a large number of their critical IT systems hit by the so-called ‘Petya’ operation.

One of the key phrases that is usually heard in the aftermath of such attacks is the need for a more robust procedure around ‘business continuity.’ But what does this really mean, and what steps has the industry already taken to lessen the impact of similar attacks – or even global IT system failures such as the one that recently hit British Airways – in the future?

Plan B

A new system that has been implemented in the UK might give some clues as to the future shape of our industry’s response to this issue. The ‘CCS-UK Fallback’ system is intended to allow the UK air cargo industry to continue running in the event of any prolonged problems with the HMRC’s vital CHIEF (Customs Handling of Import and Export Freight) system. The new system means that traders will be able to continue processing Customs export declarations even with CHIEF down, and it has been designed to run for 30 days. The system’s development is a great example of collaboration between the private sector and government to safeguard an industry that’s worth billions.

“We have recently seen the horrendous impact of major IT system failures in aviation, and this cannot be allowed to happen to the UK air cargo industry which provides essential support to UK trade and industry, helps maintain our competitiveness on the world stage and supplies urgent commodities that are sometimes a matter of life and death,” says Steve Parker, DHL’s Head of Customs for Europe and Chairman of the CCS-UK User Group.

Safeguarding our customers

Ignazio Coraci comments: “The CCS-UK Fallback system is a real step forward, and I think it could be used as a model right across the sector. The service that we provide as an industry must have effective protection and we should all have business continuity plans in place – it’s the least we owe to the millions of customers who rely on us.”

Cargo News, Ignazio Coraci

Poor weather and volcanic ash are affecting flights

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Bogoslof Island might be small, but the impact it’s having on transpacific air freight operations has been significant in recent months.

A major impact

The volcano is located in Alaska and is a part of the Aleutian island chain that arcs between the Asian and American landmasses. It first erupted back in May, and has remained active ever since – with serious implications for the many transpacific routes whose flight paths cross the region. Eruptions in late June sent a huge amount of ash and steam into the atmosphere to a height of around 36,000ft – right into the path of many crucial air freight routes.

Experts say that the disruption could continue for a while yet.

“The volcano remains at a heightened state of unrest and in an unpredictable condition,” says the Alaska Volcano Observatory “Additional explosions producing high-altitude volcanic clouds could occur at any time.”

Major disruption

The volcanic activity at Bogoslof has led many air freight operators in the region to adjust their schedules, with a number of flights being cancelled as a result of the ash cloud. It’s a situation that puts increased pressure on a region already suffering as a result of poor weather in Shanghai and Hong Kong. It means that space is tight and that capacity is down for some companies.

Bad weather in China has also affected flights to the EU, once again seriously impacting the amount of space available. “Airlines are increasing rates to the EU, and bad weather meant about 20 flights in and out of Hong Kong have been cancelled,” one forwarder told The Loadstar, “So space to the EU is really affected.”

Hard to predict

Ignazio Coraci comments: “Natural events are hard – if not impossible – to see coming. However I believe that we can all try to build the capacity into our business models to ensure that the impact of these events is lessened in the future. Unfortunately the pressure that these situations put on our industry mean that it’s likely to have an impact not just on capacity, but prices as well.”

Cargo News, Ignazio Coraci

Global Air Cargo Demand Climbs in February 2017

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New data has recently come to light, which illustrated that global demand for air cargo climbed at a phenomenal pace during the second month of 2017. Ignazio Coraci gives his take on these figures.

Changing fortunes

2016 was a challenging year for businesses. An uncertain geo-political climate, with events such as Brexit damaging investor sentiment, coupled with a slowing Chinese economy to ensure that 2016 only saw moderate trade growth. This inevitably had an impact on the fortunes of the global air cargo sector, which depend upon trade to thrive, ensuring it too only recorded moderate growth last year.

But the fortunes of the worldwide air cargo sector are changing this year. Despite the fact that January is a traditionally bad time for the sector, air cargo volumes expanded on some key routes during the opening month of the year. On the Hong Kong/US and Hong Kong/Europe routes, for example, air freight rates were 9.1% and 6.5% higher respectively in January 2017, than they were in January 2016.

Strong demand

Figures released by the International Air Transport Association (IATA) indicates that the global air cargo industry kept growing in February 2017, according to Airport Technology, an aviation sector news hub. The IATA notes that worldwide, demand for air freight climbed by 12% – way higher than the five year monthly average of 3%, in terms of freight tonne kilometres (FTKs) in this month.

Commenting, IATA Director General Alexandre de Juniac noted: “February further added to the cautious optimism building in air cargo markets. Demand grew by 12% in February—about four times the five-year average rate. With demand growing faster than capacity, yields got a boost. While there are signs of stronger world trade, concerns over the current protectionist rhetoric are still very real.”

Further progress

The organisation also found that when compared to February 2016, demand for global air freight ticked up by 8.4%. The IATA further noted that when measured in available freight tonne kilometres (AFTKs), the capacity of the worldwide air freight industry dropped by 0.4% in February 2017, while there was also a slight uptick in global trade volumes, which correlated with the air cargo demand rise.

Turning his attention to the air cargo market’s future prospects, Alexandre said: “Any optimistic look at the future sees growing demand for specialised value added services. Shippers are telling us that the key to turning the current uptick in the cargo industry’s fortunes into longer-term growth is modernising our antiquated processes. We must use the current momentum to push ahead with the elements of the e-cargo vision—including the e-air waybill which is nearing 50% market penetration.”

Brighter future

Giving his commentary on the IATA’s latest data, Ignazio Coraci noted: “The global economy is starting to recover from a rocky 2016, benefiting the worldwide air cargo industry and boosting demand during February 2017. With cross-border e-commerce, an increasing lucrative market for air cargo, set to grow rapidly over the next five years, the future is looking brighter and brighter for the industry.”