SPECIAL REPORT


You can’t turn back the clock but you can and must learn from past experiences,


especially those you got wrong. In years gone by the air cargo industry has stood by and watched as opportunities presented by changing customer demands have not so much come and gone, but instead been grabbed by more agile and more forward-thinking solutions providers. Now the world is experiencing a new business phenomenon, the dramatic and seemingly unlimited growth of e-commerce. Once again, the world of air cargo has the chance to embrace this opportunity and, in doing so, take a giant step towards safeguarding its future. But what needs to change and have the lessons of the past really been learned?


Stan Wraight, President of Strategic Aircargo Solutions (SASI), a provider of consulting and management services for international trade organisations and global logistics companies, looks at what’s at stake and what needs to change for air cargo to step up to the plate


Are airlines going wrong about their cargo business? Will Amazon and Alibaba be the shock value, or will the air cargo industry be able to reinvent itself?


Unlike regular air cargo, global e-commerce is booming. Said Steven Li, Cainiao’s Director of Strategic Partnerships at the Cargo Facts Asia conference in Hong Kong: “One-third of the $3 trillion global e-commerce is cross- border trade, which is growing faster than domestic sales.” Shops are closing as consumers just browse but order online. This is a shift that requires some rule changing in logistics as well.


Steven Li added: “Sure, it will drive demand for airfreight, as long as the industry recognises the need to change.” What drives e-commerce boils down to Fast, Transparent, Easy, and Dependable. There is no getting around these basics. Take airline sites to buy tickets, book hotels and cars, choose insurance, etc., it’s all online. It is an easy and transparent way of doing business. But why are air cargo businesses dragging their feet in opening up in that way?


E-commerce powerhouses, “E-Retailers” if you will, do put enough pressure on. They


have opened up global shopping to anyone with a computer or smartphone, changed distribution channels and unlocked new markets. Understandably, they will not have those levels of availability and comfort frustrated by below par logistics. Consumers trawl the web and once they buy a product they expect their purchase to hit their doorstep preferably next day. However, the “open-loop” airline-forwarder system has never been designed for to-door performance. It is better suited to


‘One-third of the $3 trillion global e-commerce is cross-border trade, which is growing faster than domestic sales. Sure, it will drive demand for airfreight, as long as the industry recognises the need to change.’


airport-to-airport movements of volumes at compatible costs. Hence, the bundling in consolidations, which seeks out lower unit costs, which means freighters, which in turn calls for concentration on fewer gateways. That’s away from doorsteps, not towards.


But even integrators’ “closed-loop”- systems, with capacity to reach individual addresses, are sometimes having a hard time to cope as e-commerce has introduced an entirely different rhythm to the flow of logistics. Little wonder E-Retailers raise storm flags over their logistics partners’ performances. With airlines they see investments in the speed of aircraft creamed off rather than leveraged, ground logistics vectored out instead of in. They find that airlines and forwarders are collectively missing


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