Air freight has an important part to play in a healthy supply chain ecosystem. Although air cargo is one of the more expensive ways to ship goods, it has one huge advantage — speed. The need to transport goods quickly is driven by customer expectations and the urgency of shipments that need to arrive ASAP. Air cargo carriers can greatly benefit from digitizing their supply chain, and gaining greater visibility for both themselves and their customers. This also helps to build agility into the supply chain mix, providing more options for supply chain managers.
The Amazon Prime Effect
Arguably, one of the main factors pushing for greater use of air freight is Amazon Prime’s next-day shipping promise. The popularity of Amazon’s membership program, and the convenience of receiving goods within 24 hours is forcing the rest of the industry to play catchup. If air cargo carriers want to remain competitive, digitization is essential.
The Challenges Facing Air Cargo Carriers
Let’s explore the unique difficulties that air freight logistics providers face:
- Weakening demand: Air freight had a difficult time towards the end of the 2010s, with 2019 alone seeing a four percent fall in freight transport kilometers. It’s difficult to predict future demand, but optimization is necessary to retain profits.
- Geopolitical and economic tensions: Major political events like the US-China trade war, Britain’s exit from the European Union and fears of a pandemic can hurt manufacturing and production, with a downstream impact on air cargo carriers. Understanding and modeling these risks is essential for forward planning.
- Airport slots for carriers: European airports are experiencing a severe shortage of slots at airports to accommodate cargo planes. Congestion is already common at the more popular destinations, with the problems expected to get worse. This requires very accurate supply and demand management.
- Efficiency: Air cargo carriers operate on thin profit margins, pressured even more by falling demand and the rise of Amazon Air. This demands greater visibility and efficiency to remain competitive.
How Digitizing the Air Cargo Supply Chain Can Help
More than three-quarters of logistics businesses can benefit from growth opportunities in the supply chain, with 60% of supply chain businesses saying digitization is having a significant impact. The average business involved with supply chains has only digitized just over 40% of its operations. There’s a gap that air cargo carriers can benefit from. Here’s how:
Air Cargo Carriers Benefit from Data Sharing and Visibility
A modern air freight logistics supplier needs to manage data across multiple areas. From customers and contracts to aircraft and assets, air cargo carriers can access and share information to keep everyone in the loop. A centralized platform can bring together air cargo data across multiple sources and protocols, providing one view of the truth for insights and reporting. This makes it much easier to resolve issues, identify demands and remain flexible.
Analysis of Data Identifies Efficiency and Cost Savings for Air Cargo
Operating an air freight business is expensive. High fixed costs for assets and aircraft combine with variable expenses like fuel to create a significant expense base. This means maximizing efficiency is key. Gathering data from multiple sources allows for deep analysis that can identify opportunities for cost reduction, problem-solving, agility and service improvement. For example, air freight carriers would understand all of the costs involved with a particular shipment, allowing for more accurate quoting and realistically priced services.
Agility is especially critical. Real-time visibility of air freight assets combined with logistics updates and other essential information lets carriers maximize service availability to customers.
Real-Time Location Tracking and Monitoring Identifies Where Cargo is Located
Tracking the location of shipments to and from the airport and while they’re in the air helps to keep cargo secure and ensure it’s delivered and handed over correctly. From GPS positioning to aircraft tracking, real-time visibility makes it easier to manage end-to-end shipments, wherever they are.
Access to a Global Network of Logistics Service Providers Provides Flexibility
The modern supply chain means that air freight carriers are deeply interconnected with other logistics service providers. A centralized digital platform provides easy access to LSPs, together with information on capacity, constraints and services. This makes it much easier to manage supply chain handoffs, increasing efficiency and speed and driving up customer satisfaction. It’s a key part of maintaining supply chain agility.
Accurate Forecasting Allows for Better Management of Air Freight Capacity
The high fixed costs of managing a fleet of aircraft mean that carriers need to ensure planes are full to maximize revenue. A digital supply chain platform can use sophisticated AI and machine learning to predict when flights are under or over-utilized. Combined with the flexibility offered by connections with other LSPs, this makes it much easier to manage demand and maintain profits while maintaining customer service. For example, insight into an airport’s slot availability means better control over arrivals, departures and other airport-based logistics operations.
Air carriers can also build risks into business models. As political events impact the global economy and transportation, logistics services can plan for potential opportunities or issues.
Digitization Helps Avoid Manual Rework and Reduces Errors
Digital automation reduces mistakes and delays in the air cargo supply chain. A digital platform can automate common processes like logistics handoffs and real-time tracking, meaning that employees don’t need to waste time and introduce errors by copying information from one place to another. Areas like automated invoicing and billing mean that air freight carriers get paid faster, too.
The Blume Global digital platform is designed for airfreight optimization. Our data-driven, open digital platform increase asset utilization and helps you optimize your transportation fleet. From deep data insight to logistics network access, Blume can help you reduce costs, build agility and stay on top of customer requirements. Our solutions will position you to become your customer’s air carrier of choice by providing real-time status updates, information sharing and optimized operations so you can adapt as demand changes.
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