Air cargo carriers are operating in an industry that transports $6.8 trillion worth of goods annually. Competition is fierce, margins are slim, and there’s no time to wait for change. The industry needs to make that change happen now.
That’s why carriers have been innovating at a rapid pace. For instance, Virgin Atlantic’s fleet of fully connected 787 planes enables flights to be much more efficient. Lufthansa Cargo has teamed with startup RocketSpace in an effort to advance the air cargo and logistics sector technologically. And an intelligent air cargo ecosystem has been launched to make cargo carriers more efficient at managing the whole operation. But there’s still more work to do.
For direction on innovating in today’s air cargo world, look to the experts. Here are 4 things air cargo leaders are saying about innovation:
1. Handle Data Well
Janne Tarvainen, the Managing Director of Finnair Cargo, sums up nicely why data is a big part of innovation for air cargo carriers. As he says, excellent data management is “a prerequisite for increasing the quality and speed of our services,” and is also important in “introducing efficient and value added cloud-based online interfaces” for customers and even authorities.
Every cargo carrier has mountains of data. What they do with it is how they can differentiate themselves. Quality analytics and insight-based decision making are the keys to success in air cargo. The problem is that air cargo carriers aren’t exactly using data as well as they should be. In fact, some companies spend at least 80 percent of analysis projects dealing with data issues.
To wipe out inefficiencies in data management and optimize the operation, cargo carriers need to focus on using data to create a visible, connected supply chain, like e-commerce giant Amazon is doing. Once finished, Amazon’s global delivery system will employ real-time to control the flow of goods from the seller to the customer’s doorsteps. The platform relies on connecting to outside systems, as products are going on trucks, planes, through customs, and more. Also, its efficiency depends on constant data analysis to extract insights.
2. Align With Growth Industries
Emirates SkyCargo, a carrier which recorded a 6% increase in airfreight tonnage during the 2015-2016 fiscal year, accounting for 14% of the airline’s total revenue, has a good model for staying ahead of the game: Align with thriving industries that rely on air cargo. Specifically, the idea is to find innovative solutions that allow partners to thrive.
Nabil Sultan, who is Emirates SkyCargo’s Divisional Senior Vice President, has a unique way of describing why the company has chosen this growth strategy. He explains that, since “we are never innovating enough,” questions about how to innovate should center around the priorities and areas “that are really emerging.” This is what would truly “make a huge difference to us as a business and try to address those.”
Sultan states this is why they’re working on solutions in industries like e-commerce and pharmaceuticals (a sector which has enjoyed consistent double-digit growth). One innovation Emirates SkyCargo has made for its pharma customers is the white container, which is designed to enhance protection and security of temperature-sensitive pharmaceutical shipments. This is in addition to state-of-the-art cool chain facilities. Such innovations have helped Emirates SkyCargo become a reliable cargo carrier for pharmaceutical companies.
3. Invest in New Ideas
One thing the world’s most innovative companies all do, like Google, Apple, and Facebook, is invest billions upon billions into innovation. Their innovation hubs are sights to behold. Air cargo carriers need to be doing the same.
David Kerr, who is Etihad Cargo’s Senior Vice President, stresses the need to invest in innovation. At Etihad Cargo, he states, “we continually invest in innovation to ensure that we are able to offer the best possible products and services to serve our customers—now and into the future.”
Innovation for air cargo carriers requires a financial commitment from the company. Adequate resources must be given to the nurturing and development of groundbreaking ideas. At Etihad Cargo, Kerr and other leadership are doing precisely that with initiatives like the Etihad Innovation Centre in Abu Dhabi, a hub that enables the airline and its cargo division to consistently reinvent itself.
4. Build an Ecosystem
As mentioned in the first point, data can help with bringing visibility and real-time updates across the operation. The key for this to be effective is for airlines to create a platform that tracks everything about a shipment. This can provide transparency and peace of mind to customers. A connected ecosystem can also give carriers the ability to see and solve problems quickly, find and eliminate pain points, and discover better solutions.
Korean Air Cargo, one of the best in the air cargo industry at delivering shipments on time, is a great example to follow. The carrier came up with a mobile application that gives live info on shipment schedules, flight status, booking list, location of products, clearance status, storage charges, and more.
Back in 2012, in an interview with IATA, Korean Air CEO Yang Ho Cho said that the company’s success should center around continual innovation. As he said, “The trick is to keep innovating and looking afresh at our operations and processes.” With the arrival of the mobile application, it’s clear that Korean Air Cargo has lived by those words—and that a unified ecosystem is the way to optimize its operations and processes.
Keep Pushing Forward
What it comes down to is never being satisfied. Innovation stops when people stop trying to innovate. For innovation to happen successfully, airlines must first commit to it. Then, they must embrace new technologies, especially advanced analytics, and invest sufficient resources. Finding solutions for growth industries and markets, and also aligning with them, can also ensure sustained success.
As cargo carriers innovate, there should be a conscious movement towards simplification and visibility (i.e. a unified platform). This is what will ultimately allow for continual innovation.