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Digitalization in Air Cargo: Finding Synergy in Systems Integration

leo_hanon_nametag_250px_2

A lot has been said about the contribution of digitization in its quest to streamline processes in air cargo.

In this fast-paced industry, it would be naive to expect airlines, ground handlers, freight forwarders, and customs brokers not to dabble in digitization. After all, can any industry survive the onslaught of digitized disruption by rigidly sticking around with paper-based processes?

Digitization is sweeping across the logistics landscape; it is unquestionable and an unstoppable juggernaut that is speeding through the air cargo industry.

Despite the importance of digitization, a 2017 IATA report found that more than 50% of global air trade relied on paper-based processes. It is inconceivable that a modern shipment still generates a dreadful 30 paper documents with many of the processes still requiring human intervention.

We know that digitization is the future for air cargo, but how can we integrate technology into a company that is part of a complex industry with so many processes and number of players involved?

IATA, the most successful trade association in the airline industry, is still looking for solutions worldwide and has been involved in several cargo initiatives based on standards such as e-AWB, e-Freight, and very soon, One Record.

Let’s take e-Freight as an example. It was launched by IATA in 2006 as an industry-wide solution that aims to build end-to-end paperless transportation processes for air cargo involving stakeholders such as carriers, freight forwarders, shippers, customs brokers, ground handlers, and customs authorities.

It has been 12 years since IATA took that initiative, and we are still looking at 50% or more paper-based transportation processes.

Yet, the industry has made way for a lot of digitized disruption to uproot old and slow paper-based processes. Several new digital trends are sprouting up – including e-commerce – to reshape the industry and create business opportunities that address ‘localized’ pain points in the area of logistics.

If anything, digital trends have only exposed more complexities to traditional cargo companies, including having to deal with several systems at the same time— given that any one of them can focus on just a single variable of the supply chain equation. A lot of the data generated is not readily available or reliable either.

 

A Few Cases in the Quest to Cope With Digital Trends

The Do-It-Yourself approach by airlines, ground handlers, and freight forwarders has worked to a certain extent, but this was not without substantial maintenance costs and slow exchange of data between customers and suppliers.

Creating a Do-it-All solution to cover the whole supply chain is impossible at this point, regardless of whether companies try to insource or outsource digitalization with solution providers. There are so many digitalization options for airlines and ground handlers that spotting any significant pros and cons is like finding a needle in a haystack. Even the best project management team will find this to be a profoundly confusing riddle that they simply do not have the time or resources to solve.

Technology providers can be more successful in the long run if they look for synergies with other solution providers that specialize in complementary areas of their niche. This will give customers a more complete answer according to their market requirements.

Synergy in this context is the collaboration of two or more processes that achieve a positive outcome — one they couldn’t have on their own.

Logistics service providers should be looking for synergy in the air cargo industry for promising solutions.

 

Factors for Successful Integration

Forming business partnerships between technology service providers is key to strengthening their value proposition in the air cargo industry.

A successful partnership of this kind should be made up of the following critical factors:

  1. Customer specific portfolios
  2. Customer-centric benefits
  3. Fast, cheap, and easy technological adaptation
  4. ROI – WIIFM for both providers

1) Importance of Customer Specific Portfolios

System integration between two logistics providers becomes evident when customer portfolios receive a similar and more complete service. Think of airline networks where cargo handling systems integrate with digital payment solutions. This arrangement also helps different types of customers that serve as counterparts in their current business relationships. An example would be a freight forwarders network connected with airlines by integrating through the system.

The biggest benefit of synergies between two service providers is access to a large and wide network of the customers— an advantageous feature for both incumbents involved.

2) Benefits to Customer

Identifying common objectives to benefit the customer has proven to be a success story for solution providers when integrating their systems. These benefits include speed, transparency, secured and guaranteed payments, no refunds and no disputes along with automated reconciliation control, just to name a few.

3) Easy API – Application Program Integration

A good API makes all the difference to your new partner when it comes to integrating systems. This is because it not only provides all the building blocks but also puts them together. Logistics providers can avoid unnecessary expenses in the way of IT resources needed to handle customers, making the process quicker and cheaper.

4) WIIFM - What Is In For Me?

A good partnership between solution providers should be centered on increasing value to the customer. At the same time, it should also enhance their respective value propositions. This will give both companies more business opportunities in the future.


The bottom line is that systems integration is the way of the future. It helps companies to remain operationally focused on their strengths, minimize their weaknesses, and tailor their strategy for customer-centric solutions. This helps businesses form effective partnerships that help airlines, freight forwarders, and ground handlers stay ahead of the curve thanks to synchronized digitalization in the air cargo industry.

Looking for synergies?

Leonardo Hanon - Executive Vice President at PayCargo, LLC

Digitalization in Air Cargo: Finding Synergy in Systems Integration

leo_hanon_nametag_250px_2

A lot has been said about the contribution of digitization in its quest to streamline processes in air cargo.

In this fast-paced industry, it would be naive to expect airlines, ground handlers, freight forwarders, and customs brokers not to dabble in digitization. After all, can any industry survive the onslaught of digitized disruption by rigidly sticking around with paper-based processes?

Digitization is sweeping across the logistics landscape; it is unquestionable and an unstoppable juggernaut that is speeding through the air cargo industry.

Despite the importance of digitization, a 2017 IATA report found that more than 50% of global air trade relied on paper-based processes. It is inconceivable that a modern shipment still generates a dreadful 30 paper documents with many of the processes still requiring human intervention.

We know that digitization is the future for air cargo, but how can we integrate technology into a company that is part of a complex industry with so many processes and number of players involved?

IATA, the most successful trade association in the airline industry, is still looking for solutions worldwide and has been involved in several cargo initiatives based on standards such as e-AWB, e-Freight, and very soon, One Record.

Let’s take e-Freight as an example. It was launched by IATA in 2006 as an industry-wide solution that aims to build end-to-end paperless transportation processes for air cargo involving stakeholders such as carriers, freight forwarders, shippers, customs brokers, ground handlers, and customs authorities.

It has been 12 years since IATA took that initiative, and we are still looking at 50% or more paper-based transportation processes.

Yet, the industry has made way for a lot of digitized disruption to uproot old and slow paper-based processes. Several new digital trends are sprouting up – including e-commerce – to reshape the industry and create business opportunities that address ‘localized’ pain points in the area of logistics.

If anything, digital trends have only exposed more complexities to traditional cargo companies, including having to deal with several systems at the same time— given that any one of them can focus on just a single variable of the supply chain equation. A lot of the data generated is not readily available or reliable either.

 

A Few Cases in the Quest to Cope With Digital Trends

The Do-It-Yourself approach by airlines, ground handlers, and freight forwarders has worked to a certain extent, but this was not without substantial maintenance costs and slow exchange of data between customers and suppliers.

Creating a Do-it-All solution to cover the whole supply chain is impossible at this point, regardless of whether companies try to insource or outsource digitalization with solution providers. There are so many digitalization options for airlines and ground handlers that spotting any significant pros and cons is like finding a needle in a haystack. Even the best project management team will find this to be a profoundly confusing riddle that they simply do not have the time or resources to solve.

Technology providers can be more successful in the long run if they look for synergies with other solution providers that specialize in complementary areas of their niche. This will give customers a more complete answer according to their market requirements.

Synergy in this context is the collaboration of two or more processes that achieve a positive outcome — one they couldn’t have on their own.

Logistics service providers should be looking for synergy in the air cargo industry for promising solutions.

 

Factors for Successful Integration

Forming business partnerships between technology service providers is key to strengthening their value proposition in the air cargo industry.

A successful partnership of this kind should be made up of the following critical factors:

  1. Customer specific portfolios
  2. Customer-centric benefits
  3. Fast, cheap, and easy technological adaptation
  4. ROI – WIIFM for both providers

1) Importance of Customer Specific Portfolios

System integration between two logistics providers becomes evident when customer portfolios receive a similar and more complete service. Think of airline networks where cargo handling systems integrate with digital payment solutions. This arrangement also helps different types of customers that serve as counterparts in their current business relationships. An example would be a freight forwarders network connected with airlines by integrating through the system.

The biggest benefit of synergies between two service providers is access to a large and wide network of the customers— an advantageous feature for both incumbents involved.

2) Benefits to Customer

Identifying common objectives to benefit the customer has proven to be a success story for solution providers when integrating their systems. These benefits include speed, transparency, secured and guaranteed payments, no refunds and no disputes along with automated reconciliation control, just to name a few.

3) Easy API – Application Program Integration

A good API makes all the difference to your new partner when it comes to integrating systems. This is because it not only provides all the building blocks but also puts them together. Logistics providers can avoid unnecessary expenses in the way of IT resources needed to handle customers, making the process quicker and cheaper.

4) WIIFM - What Is In For Me?

A good partnership between solution providers should be centered on increasing value to the customer. At the same time, it should also enhance their respective value propositions. This will give both companies more business opportunities in the future.


The bottom line is that systems integration is the way of the future. It helps companies to remain operationally focused on their strengths, minimize their weaknesses, and tailor their strategy for customer-centric solutions. This helps businesses form effective partnerships that help airlines, freight forwarders, and ground handlers stay ahead of the curve thanks to synchronized digitalization in the air cargo industry.

Looking for synergies?

Leonardo Hanon - Executive Vice President at PayCargo, LLC
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