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Impact on Commercial Airlines

The global commercial airline industry has reported more than a 90% decrease in revenue and bookings. By the end of 2020, IATA expects global revenue losses for the passenger business of$250 Billion. That is a 44% decline on 2019 revenue figures. ).

As a result of the disruption of global supply chains, commercial airlines and air freight carriers are seeking alternate sources to bridge the gap in consumer spending and loss of passenger ticket revenue, by expanding air cargo service offerings and navigating through this major economic disruption. Air freight carriers have expanded to offer humanitarian and relief shipments, private and group charters, and time-sensitive freight services.

Challenges with government local, national, and global COVID-19 restrictions and guidelines have sparked an expansion of transportation and logistics network and services that includes methods to bolster the supply chain delivery and respond to the increase in demand in the air cargo industry.

Customers across the global consumer market, now seeking to limit their exposure to the Coronavirus, have decreased their in-store visits and hands-on shopping experiences, and have moved to online and eCommerce shopping and delivery services to supply their essential needs - of pharmacy, food, and other basic or urgent supplies. Online retail categories experienced as much as a 74% year over year increase in sales during March 2020, . Other industries such as agriculture, food, manufacturing, and healthcare will also look to leverage alternate modes of transportation, as trucking and railways will become overwhelmed with the increased volume to meet customer demand.

Air charter and airline cargo service providers are looking to maximize their customer base by leveraging and optimizing their current domestic, international or transatlantic routes, and are marketing expanded services that allow other logistics organizations the options to maintain their contractual obligations and service level commitments to their customers. Organizations looking to procure cargo freight services will have more choice for 24/7 logistics solutions to increase their reach and number of delivery destinations.

COVID-19 has driven air-freight traffic to historic levels, resulting in a more enterprising industry and IT technology to propel this industry into a solid and secure future. All these initiative-taking and reactive steps will solidify and result in improved revenue and profit over the long-term future for the air cargo freight industry.

Current Industry Trends in Air Cargo

Current trends indicate growth in air cargo prices and a switch to all-cargo chartered flights. Some freight forwarders may pay 3 times the cost to transport their freight by an airline. Several airline carriers are reviewing the addition or conversion of A330, A350, 777, 787 and 737 freighters to their fleet and facilitating the process to request the emergency exemption from the Department of Transportation or International Transportation governing authorities, and reducing or ceasing passenger operations. Carriers with grounded planes are trying to salvage the situation by taking up cargo operations. Especially now when the fuel prices have plunged, cargo operations can bring in much needed cash. In fact, the International Air Transport Association, IATA, has urged governments to take urgent measures to ensure that air cargo can support the global fight against COVID-19.

Additional steps across the industry in this direction include, removing passenger seating from the upper deck cabin to accommodate additional cargo freight space and loading loose cargo on the seats. Future expansions may involve the use of the overhead bin space to assist with the shipment of small packages to maximize revenue by leveraging all available space within the aircraft.

The industry will rely on technology innovations in cloud-based freight software solutions, eFreight solutions, Enterprise resource planning software (ERP) and 3PL (Third-party logistics) software that integrate real-time, up-to-date cargo data, brokerage, and freight forwarder software. The expansion of air cargo charters and airline freight carrier services will also require additional package and cargo shipment tracking and enhancements via GPS, RFID and Bluetooth technology to assist customers and shippers with transporting and tracking cargo freight. Air cargo carriers will look to host technology advancements such as Open Cargo Platform (OCP) products to provide a workflow-based and virtual portal experience that allows cargo customers to transact electronically. Future trending also points to Bluetooth technology to track and monitor Unit Load Devices (ULD) - with the addition of Bluetooth sensors installed in cargo warehouses. Cargo warehouses will also begin exploring adding self-service cargo kiosks to enable truck-drivers to self-service and skip cargo counter customer service clerks, thus reducing the manual paperwork processing. This, along with Electronic Data Interchange innovations, will transmit much of the paperwork documentation electronically.

How can technology help

The impact of COVID-19 on cargo operations will result in Digital transformation initiatives that include enhanced web interfaces to allow more self-service quotes and transactions for cargo shipments and charter services via cargo.com websites. Converting to chartered, cargo-only flights will require the implementation of revenue management to optimize the cargo rates and maximize yields across available inventory in terms of belly space, payload, and containers B2B air freight services.

The air freight supply chain and cargo freight operations, that are experiencing increased volume, will require streamlined processes to improve the management of air freight and carrier paperwork. This may involve bill of lading, air waybill, inventory counts, safety documentation for dangerous/hazardous goods, EDI data transmissions to expedite and resolve international customs check points, certificates of origin etc. Requirements for increased documentation presents a great opportunity to provide EDI or (Electronic Data Interchange) and data exchanges support services between shippers and airline carriers.

IT Infrastructure will also present opportunities to expand Relational Database Management Systems (RDBMS), support more data and historical archiving for future business and strategic operational decisions. Air cargo companies will employ more resources to implement Big Data Thinking Analysis and Artificial Intelligence to align their future planning on more data-driven analysis and predictive modeling. To meet the global increase in demand, the labor force must address the lack of a skilled workforce and bridge any employee gaps that may cause hindrances in operations or delays in service.

The below will be essential to understand the trends and performance across operations:

  • Building technical skills in the areas of airfreight and customs requirements, FAA/ICAO/IATA criteria and regulations, device platforms, digital services
  • Knowledge of scripting (VBScript, JavaScript, CMD, etc.) and programming (C#, VB, etc.) and cloud implementations
  • Data architect skills such as building MPP data warehouse enterprise data warehousing (EDW), analyzing data warehouses such as Teradata, Netezza, Oracle, etc.
  • Reporting KPI measurement, and tracking and dash-boarding data visualizations software

Strengthening knowledge in project management methods such as Agile, Extreme Programming, Lean Software Development and DevOps will also benefit the technology gaps and needs of the air cargo and freight industry in the near future.

These are my thoughts around the transformation underway in the air cargo industry which will turn its ways of working into futuristic business models. Write to us at info@mindtree.com to learn more about how we can help your transportation & logistics business scale with the power of Digital transformation.

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About the Author

Kimberly Murray
Senior Consultant

Kimberly is an IT professional with more than 15 years of experience in business analysis, process improvement and project management in the Airline, Healthcare, Mortgage Insurance, Retail, Consumer Packaging and Manufacturing industries. She brings a diverse set of skills with a strong understanding of business operations, IT infrastructure, software development and implementation projects.

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