People may be sending fewer letters, but they’re definitely not sending – or receiving – fewer packages. In the United States alone, according to FedEx Ground President and CEO Henry Maier, the e-commerce market is expected to top $300 billion in sales. And a report by eMarketer showed that the global B2C e-commerce sector is expected to hit $2.3 trillion by 2017.
The air cargo industry gets around $2 billion of that pie every year, based on figures from around 250 IATA-member airlines in more than 100 countries. But the new trend toward convenience coupled with the explosion in online stores – 1,354 percent between 2012 and 2014, compared with 100 percent growth for brick-and-mortar stores – means the air cargo industry is finding itself stuck between a rock and a hard place.
On one side, integrators and ocean and land freight options are standing in as stiff competitors for cargo and combination carriers. As consumers demand more goods more quickly, it can be difficult to adapt – especially for an industry that has seen largely flat growth until recently, and few innovations.
Smarter, Not Faster
IATA has encouraged carriers to shave 48 hours off the six-day transport timeline that has been the average since the 1980s. But current global head of cargo Glyn Hughes says it’s not just about being quicker – it’s about being smarter. Faster shipping times should be a natural byproduct of more large-scale fixes required for what Hughes calls a “fragmented supply chain.” But those changes need to come from within the industry, not from above.
The Push for e-Freight
E-freight is another important component of the air cargo industry’s evolution. “Customers look at this paper-based way of doing business and consider it to be outdated, inefficient, and adding significant cost,” said Bill Gottlieb of the Global Air Cargo Advisory Group back in 2011, and it still holds true today. IATA’s head of cargo e-business, Guillaume Drucy, says that 22 percent of air waybills are electronic, leaving a long way to go. But it’s not enough to simply reduce paper. Information must be able to flow seamlessly throughout the supply chain, and not just one way. Challenges here include matching paper documents with e-air waybills, sending incomplete information, and inefficient redundancies in data entry.
The Carrier’s Role
As the future of airmail falls upon us, there are a number of things that cargo and combination carriers can do to prepare for the new era. One of those is the adoption of a robust, integrated IT solution that can streamline cargo operations and improve the experience for forwarders and consignees alike.
When considering a cargo solution, look for one that improves customer service. Real-time progress and status reports help all supply chain members track and record key events in the shipment lifecycle, along with spotting and resolving discrepancies as soon as they arise. A system that supports automation and paperless processes is also important for supporting industry-wide efforts in those areas. In addition, you’ll need a solution that’s compliant with IATA, AVI, and DG standards and regulations. Finally, features that help you manage terminal operations can help you get shipments off the ground more quickly, and help manage capacity, as well.
It’s unlikely that e-commerce is going anywhere anytime soon. What was once a fun novelty has now become an entire way of life for many people, with consumers ordering not just electronics and other luxury goods, but groceries and everyday essentials, as well. The sector is simply too large to be ignored – but it’s important to remember that consumers want their items as soon as possible, and at the cheapest price, as well. Complex, outdated systems and operations add bulk to both cost and delivery timeframes, making air cargo particularly prone to being edged out by competitors. With a partner in hand to help streamline your own cargo operations, you’ll be much better poised to join the remainder of the industry in what now looks to be the brave new world of shipping.