Outside help needed to develop digital strategy

MUNICH – Taking on such seemingly straightforward technology upgrades as eliminating paper-based air waybills is apparently a challenge the airfreight industry cannot tackle alone. After 15 years of effort to spread the acceptance of e-freight, we have only managed a 25 percent buy-in from the supply chain. Clearly it’s time to start emulating companies outside airfreight help to get our act together.

These and other conclusions were raised this week during the “eCommerce in Airfreight: Possibilities and Priorities” panel discussion at the Air Cargo Europe conference.

Citing the advances in e-commerce technology on the passenger side, panelist Tim Scharwath, executive vice-president of air logistics for forwarding giant Kuehne + Nagel, showcased his firm’s online booking portal, known as “FreightNet.” Launched last year, FreightNet allows K+N customers to request airfreight quotes quickly. The reported price includes all applicable surcharges for fuel prices and other variables. They can also track the position and status of their shipments along the way.

“The original idea was to achieve something that gives smaller customers an easier way to interact with a large forwarder,” Scharwath said. “Customers with an urgent shipment need to work quickly – this portal can give you a quote within a few seconds.” He added that FreightNet is having some success with mid-size companies that may not have large logistics department.

Speaker Marcus Fromm, managing director of Accenture Freight, said that airfreight companies need to think ahead and develop a “digital business model,” not just for growth but “as a matter of survival.” He recommended honing a strategy before trying to creating a solution. “The next step is creating connectivity with that data, and there’s never been a better time than now to collaborate.”

While listening to the needs of the customer is important, Fromm reminded the audience that true disrupters, like Steve Jobs at Apple, didn’t just “dress up the cash cow,” they created true innovations. “Did Apple’s customers ever think they needed an iPad? No, Apple told its customers that’s what they needed,” he said. “I would like to see that in this industry, too.”

Guillaume Drucy, head of cargo e-business management at IATA , acknowledged the frustrations of the slowness of the e-AWB adoption rate, but noted how hindered the industry was by the patchwork of conflicting customs policies and regulations around the world that, in effect, prevented digitization of airfreight from happening.

“Air cargo has not had its data revolution yet,” Drucy said. “We are digitizing, but we are still copying the old system. We need to harness the power of data and connectivity.” As an example, he talked about the ability of postal operators to share data among themselves and other post offices around the globe so that they instantly “know how much it costs to ship packages all over the world,” a service that “puts us to shame” in comparison. “Postal companies know more about our industry than we do.”

Frank Naeve, e-cargo program manager for Lufthansa Cargo, told the panel we no longer have any choice but to listen to other industries’ suggestions. “We don’t have the historical level of know-how,” he said. “We need to work with partners, whoever they may be. There are a number of people offering services – I get a new letter each week.”

One of the biggest challenges, however, will be translating the high-level benchmarks seen in other industries and making them relevant to air cargo partners. “As a legacy industry, it’s hard to have a greenfield approach,” Naeve said. “But we can’t wait another 15 years and still talk about how to digitize. We will have a different and growing family, and we want to be part of that family.”

Finding the financial investment to pull of this digital information challenge will be one of the many “bottlenecks” the industry will have to overcome, Naeve added. “But finance is actually the least of those challenges. The ability to integrate with the rest of the industry and the number of personnel required to complete this will be a massive change we need to address.”

Drucy remained optimistic about the recent progress with e-AWB, saying he had “never seen such commitment before” to e-freight initiatives. But he also agreed with Naeve, saying the industry really has about a two- to three-year window to make rapid digital changes before its credibility comes into question.

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