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Issue 1 2015 - Freight Business Journal Bringing technology to the table


IT developments have been vital to greater global connectivity, but have brought challenges to logistics services providers while greatly expanding the ability to meet their changing customer needs, senior FedEx executives told a virtual round table discussion held towards the end of last year. At the table were Rajesh


Subramaniam, executive vice president marketing and communications at FedEx Services, and Michael Foster, vice president information & technology, Europe, Middle East and Africa, as well as Ralf Dreischmeier, global leader - technology advance practice - at The Boston Consulting Group


(BCG). An online forum was the


ideal place to discuss the recent revolutionary developments in digital technology that are now widely available to businesses around the world – and how that has impacted the logistics industry. Subramaniam considered improvements in connectivity to represent the biggest change in business conditions in recent times; he argued that we should see IT connectivity in the same way that we see physical infrastructure and shipping connectivity – as absolutely fundamental to commercial success. Dreischmeier pointed to the


potential for increased trade that greater IT connectivity offers.


Supplementing the physical movement of goods, he sees it as a “key driver of growth” that can link buyers and sellers in ways that are much faster, and more efficient, than physical connections. Moreover, Foster adds, IT


improvements have “levelled out” the marketplace. Not only does digital technology bring everyone together in ways that could never be done physically, but it allows businesses to think truly globally in terms of their potential market. It is also an “equalizer”, Subramaniam says, breaking down barriers to entry for new starter businesses and putting readily connectable customers very much at the focus of everything companies should do.


The implications for logistics


More specifically, what does it mean for logistics and logistics service providers? Well, companies can readily manage their supply chains. Just- in-time models can be maintained that much more easily, as IT allows for the very quick and continuous processing of stock and delivery data. International trade has also been boosted. The


rapid growth of e-commerce has facilitated this – the e-commerce segment already accounts for about 13-14% of the retail sector and that ratio is growing; the international e-commerce share of the pie is rising particularly quickly. For forwarders and express services providers such as FedEx, IT developments have


also


radically changed the way they operate. Not only can their own package deliveries and locations be tracked, but the conditions of those packages can also now be carefully monitored – a parcel’s temperature or barometric pressure, for example, can be constantly monitored and any change in conditions proactively disseminated to interested parties, vital in a sector such as healthcare or pharma shipping. Forwarders can also now keep in much closer


contact with not only customers, but their customers’ customers, Foster explains, allowing it to package its delivery proposition closely to that required by the end user in the supply chain.


///IT


Hermes keeps pace with a changing industry


Much has changed at cargo handling IT solutions provider Hermes over the last two and a half years as the company grows its portfolio offering and its customer base. CEO Yuval Baruch took over


at the helm of the Bracknell, UK-based cargo management systems developer in the summer of 2012, and since then he has helped the company not only to grow but to grow “in the right way” he insists. Staff numbers are now about than


25% higher a couple


of years ago, he points out, Hermes having taken on three new cargo specialists and two new system developers over just the past 12 months. It has also expanded its service


offering. The new Hermes cargo management solution, introduced at Shanghai Pudong Air Cargo Terminals Limited (PACTL) last year, for example, represented a major new development, Baruch says. Yet the transition at the huge facility at Shanghai Pudong went “very, very smoothly; indeed, phenomenally well.” Hermes’s latest 4.6.2


model offers a number of improvements over its predecessors. These include a Work Orders System, a new generic tool that allows customers to define and add their own, specific, internal processes using a set of pre- defined building blocks, giving them the independence and


Automated quality control


Hermes has introduced an automated quality control function within its systems. “A very positive move,” Baruch says, one that will be appreciated by the company’s growing customer list. Recently added new clients have included the Perishable Center at Frankfurt-Main International Airport (PCF, described as Europe’s largest perishables centre), which became a Hermes customer in March 2013, and Middle East airline Etihad, which signed up towards the end of last year. As of the end of 2014, other projects currently running involved CACC (Cairo


Airport Cargo Company) and HCS (Hahn Cargo Services). The addition of Etihad and the terms of the


agreement with the UAE flag-carrier represented a particularly important change in focus for Hermes. The Abu Dhabi-based airline was interested in the freight hub handling capability of Hermes, and Hermes has of late focused much of its efforts on strengthening and developing this aspect of the product’s functionality. Developed initially as purely cargo handling software, hub functions have become increasingly important.


Change comes to a conservative industry


FedEx’s Raj Subramaniam – IT connections are as important as physical ones these days


With 2.4 billion people now believed to be using


the Internet around the world, it appears that there is no going back on the revolutionary changes that are taking places in IT and the logistics industry that benefits – and is being radically changed – by it.


The air cargo industry is conservative one, that does not see rapid change, Baruch believes. But it certainly does evolve, and that has affected Hermes. For example, the drive towards paper- free cargo handling, which he describes as probably the most important development in the air freight business of recent times, is driving demand for IT systems such as Hermes. Perhaps paradoxically, given the downturn


in the industry and the smaller margins being made by just about all those involved in it, the search for greater efficiency in cargo handling has also driven demand for the product and the operational improvements it allows. Handlers on tight margins may have little money available to invest, but they can’t afford not to invest in these sorts of technologies if they are to remain competitive, Baruch believes. Finally, he points to growing demands for


what he describes as a “true mobile (phone) application” for cargo management systems – not just an app that can be used for accessing cargo management software such as Hermes, but one that has been created specifically for – and is dedicated to – mobile phone use. Equally applicable for terminal handling staff, operations controllers or managers wanting to monitor KPIs


the flexibility to personalise their systems without having to contact the Hermes team directly. Plus, the Hermes cargo


management system benefits from the Customs clearance expertise that the company has built up. “We have met different customs clearance challenges around the world, which in turn has led to the development of fully automatic accredited customs interfaces and to semi-manual and


manual controlled


customs processes,” Baruch explains. Wherever possible, the customs clearance process has been integrated into the Hermes system, as opposed to being a separate procedure.


Yuval Baruch, CEO of Hermes Logistics Technologies


(key performance indicators), such an application may well be something that the market would greatly benefit from, Baruch considers. Indeed, he informs: “We have demonstrated


it to our key users and currently have a few customers who are considering what kind of functionality they would like to expose and who the target users that will use this technology will be. We are working closely with them and hope to see results soon.”


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