We are only seeing the opening act of the e-commerce effect, according to logistics IT company Unisys.
A report released by the company this week claims that the global air cargo industry will transform by 2020 through “even smarter” warehouses, as companies across the supply chain rush to capitalize on the e-commerce boom.
One novel outcome of this trend: Airfreight companies will have to team up with their terrestrial partners if they hope to handle the predicted surge in smaller package shipments.
Subject to infrastructure capabilities, market demand for passenger air travel is set to double by 2035 according to IATA, which translates into millions more available tonne kilometers (ATKs) in belly space each year. E-commerce parcels are expected to fill that capacity gap, and now Unisys says that, “these market pressures will bring innovation in three areas in the cargo supply chain: Smart warehouses will become even smarter, drones will finally take off in the cargo supply chain – but inside the warehouse – and new alliances between airlines and global distributors will enable longer-term capacity management.”
Venkatesh Pazhyanur, senior industry director of freight solutions at Unisys, points out that, “much of the underlying technologies are already in use in other sectors. But now, more than ever, cargo operators will be forced to embrace such innovation to be more efficient, agile and proactive in an increasingly competitive and price conscious environment.”
Unisys is calling on the cargo industry to embrace disruptive technologies from the consumer world, including the internet of things (IoT), digital assistants and drones. The IT company argues that these tools are necessary to meet market demand for greater transparency throughout the supply chain.
Unisys identifies three areas of impending change, and makes the following predictions:
- Smart warehouses will become a reality. Warehouses will become dynamic facilities using IoT and “voice artificial Intelligence” (voice A.I.) enabling faster processing of more shipments to generate a higher return on the investment. Recent innovations – such as smart glasses used to display information triggered by a barcode or QR code on a container – will be taken to a new level by incorporating scanners to automatically capture and input information into the warehouse system, and integrating voice A.I. to initiate actions. Unisys expects cargo operators to invest in converting machine commands to voice within the next three years.
- Drones will be used inside the warehouse. Unisys predicts the immediate application of drones in the cargo supply chain will be within the confined space of warehouses to conduct inventory checks more often and more accurately, replacing the largely manual process. Beyond locating lost or misplaced items, the drones will use sensors to monitor environmental information such as light or temperature for perishable food, pharmaceuticals or livestock, and raise alerts to unusual noise or movement that may indicate animals are in distress. Unisys predicts this within the next 12 months.
- New alliances between airlines and global distributors will pave the way for long-term revenue optimization. With cargo capacity potentially increasing faster than cargo demand due to extra passenger flights and larger aircraft, cargo capacity management has become the number-one challenge for airlines. In this environment of unconstrained capacity, the traditional approach to yield management will not work, as airlines may dump cargo space onto the market, creating a price war. Unisys predicts a fundamental move to longer-term revenue optimization based on strategic alliances between airlines and organizations with large ongoing delivery requirements, such as postal authorities, major online retailers, global distributors and supply chain management companies. This will require airlines to provide their alliance partners with transparent, real-time access to available capacity and predictive analytics to determine best routes based on speed, reliability and cost. This expectation for visibility will also extend to the “last mile” of the business-to-consumer cargo supply chain, leading to the development of mobile apps to allow the final recipient to be able to track the approach of their delivery.