The ritual of buying a sturdy pair of new dress shoes recently reminded me of those trips to the shoe store during my childhood. Such excursions had the distinct purpose of making an investment that could last into the next year or shoe size, whichever came first. Those visits were serious business, involving multiple stacks of new shoe boxes in varying shades of color, an omnipresent, newly made leather smell, and a man seemingly schooled in the science of fitting footwear, whose skills online shopping sites could not possibly capture today.
So after an offer of outrageously expensive shoe trees to go with my new purchase, I politely refused and lied to the salesperson, explaining that I already had a pair at home when, in fact, I did not. My next stop was to a computer, ready for an online excursion that resulted in cheaper shoe trees and enough money saved for a pair of rubber over covers to protect the new shoes. But the real surprise came the following morning, as the items unexpectedly arrived at the door before 10 a.m. My unanticipated Sunday delivery experience demonstrates how the domestic distribution business is changing, making me wonder if global air cargo and its border clearance complexities can keep up with the pace.
At the Cargo Facts Asia 2016 conference, panelists participating in a session addressing e-commerce and its relationship to airfreight agreed that individual players risk being squeezed out of this market unless they are prepared to make significant changes. According to an executive on the panel from Alibaba’s logistics subsidiary, Cainiao, the airfreight industry is not sufficiently ready to meet the demands of the cross-border market. He further challenged the airlines to integrate their IT systems with other logistics providers and with e-commerce marketplaces. He also called for new solutions to the “headache” caused by having to send dangerous goods – including lithium batteries – by sea when the market was demanding the speed of airfreight.
From the actual transportation perspective, the airlines are changing, with new, larger aircraft and generous bellyholds continuing to flood the market with excess capacity, ready to accommodate more shipments caused by increased demand. Planes have traveled at roughly the same speeds for more than 50 years and flight times show no signs of significantly changing soon, leaving speed enhancements at the mercy of insufficient technological integration and government bureaucratic delays that slow international shipments.
Various technology platforms, including one from IATA – an organization better known for setting standards and not technical solutions – have entered the market, allowing faster processing of shipping information and forwarders are, to a lesser or greater extent, beginning to see the wisdom of adoption. These platforms allow independent forwarders to gain the same level of efficiencies already enjoyed by multinational forwarders and tap into the growing trend of airport fast-lanes for cargo tendered in advance with electronic data.
Still, there is no one-size-fits-all solution, and forwarders each remain in control in determining how much investment to make in offering services to online providers, while allowing the market to determine sufficiency. On the other hand, airlines, handling contractors and government customs officials must provide more timely transmission of appropriate milestone data, which can then be augmented with in-house forwarder data. How this information gets displayed or transmitted to the customer is up to the individual forwarder, creating operating efficiencies, innovation and competitive advantage in the process.
Governments, on the other hand, can assist in closing this perceived operational gap by developing manufacturing standards, offering faster border-clearance tools, and pursuing vigorous regulatory enforcement. As the U.S. approaches its December 2016 single-window import clearing electronic processing deadline, the replacement of paper with digital data should allow multiple government agencies access to the same consignment information. The sharing of this information must result in clearing shipments at the border faster.
The current embargo on bulk shipping of lithium batteries on passenger flights may seem like a solution to a complex problem, but it will only cripple many industries in the long run. Governments worldwide need to give a boost to e-commerce and air cargo by assisting manufacturers in developing better packaging standards and enforcing mutually agreeable safe battery transportation regulations.
The e-commerce ordering boon is serving as a call to action from all players in the air cargo supply chain. While forwarders may respond in varying degrees, airlines, contractors and government officials need to provide the necessary informational tools and regulatory enforcement needed for quicker border clearances – and perhaps more Sunday deliveries. Which reminds me that I need to go back to the shoe store; I forgot the shoelaces.Like This Post