The air cargo industry still has a long way to go towards digitalization and the standardization of its business processes, particularly by upping the use of electronic air waybills (e-AWB). This statement made by Lodige Industrie’s Head of Sales Air Cargo, Jan Kristof Nol, during a meeting of Germany’s Air Cargo Club (ACD) in Berlin last week brought the ongoing deficits in air freight to the point again.
But where are the solutions and who pushes them forward to press ahead with digitalization? There were more questions than answers to the topic tabled by the participants.
In his introductory remarks at PanAm’s former Berlin Lounge, ACD President Christopher Stoller presented an ambitious wish-list to the media people: “Paper documentation must be replaced much
faster by electronic data exchange,” he claimed. “This will only work if all of the different industrial players pull together and put the digitalization topic on their agenda – the quicker, the
better.” Or else, he added, many actors will be pushed aside by big boys like Amazon, Alibaba, integrators or disrupters, offering holistic services from A to Z.
“Roll up your sleeves and get to work”
Christopher’s message can be understood as a matter of do or die and as an urgent wake-up call to forwarders, carriers and handling agents. He added to this: "The pressure is clearly coming from Asia and our companies must not wait until the digital processes in air freight are handled only on platforms outside Europe. Particularly nations that highly depend on the seamless export of their industrial goods, such as Germany, “need a digital jolt in air freight,” the ACD Chief exclaimed.
10 percent vs 80 percent
During the discussion speakers pointed out that Alibaba, Amazon and similar online traders will take over the market step by step based on their digital power. How far behind the (digital) times some European enterprises still are was openly admitted by Cargolux executive Chris Nielen: “our average e-AWB ratio has reached no more than ten percent.”
Not really impressive. His explanation to this: “Obviously, we haven’t invested sufficient money in the past to achieve better results.” However, improvements are around the corner: "Our focus is on digital shipping documents and we aim to significantly increase the share of e-AWBs over the next two to three years."
In contrast, Cathay Cargo’s e-AWB rate has reached an impressive level of nearly 80 percent, and Lufthansa Cargo just surpassed the 50 percent hurdle.
Not long ago LHC started charging a single euro or one US dollar respectively for each paper AWB. As of next October, the fees will go up to 12 euros / USD per paper documented shipment. An educational measure aimed at changing the traditional habits of their customers as well as upping the carrier’s e-AWB penetration rapidly.
Model case Helsinki
Lodige’s Jan Noll beamed another ray of hope into the Berlin meet: “At the Helsinki-based Cool Nordic Cargo Hub we have realized Finnair’s digital ambitions by planning and installing an air cargo logistics system that not only digitalizes cargo data upon goods entry but integrates these data into the carrier’s wider cargo management system.” He went on to say: “Meanwhile, the Helsinki hub reveals initial benefits of the accomplished data integration in terms of efficiency gains in both resource planning and throughput terms.”
How inconsistent and fragmented the international cargo landscape still is when it comes to cyber issues was illustrated by IATA Chief Central Europe, Mathias Jakobi: “Due to fear of data theft, some shipping companies have only a very limited interest in transferring data. This applies particularly to those firms that ship high-priced goods by air, such as jewelry or valuables,” he said.
Blockchain ante portas
This is sharply contrasted by the pharmaceutical industry that demands a stringent chain of precise information in order to be able to seamlessly monitor each of their transports. “That's why they already tend to rely on blockchain technology,” illustrated Herr Jakobi.
Not in ten years
And there is another rift, this time between small and medium-sized companies engaged in air freight and big boys like Kuehne & Nagel, DB Schenker or Panalpina, to name just three. These mighty players are increasingly developing their own digital standards, sidelining other market participants, cutting them off from accessing their electronic systems. A pessimistic perspective, exclaimed Dietmar Korell, Managing Director of the Cargo Operation Center GmbH located near Frankfurt: "As long as the 60,000 German forwarding agents, no matter if big ones or small ones, airlines and ground handling firms do not pull together, there will not be a unified and standardizes electronic air waybill in ten years.”
Other stumbling blocks that impede the transformation of the industry from the paper to the digital age are differing national rules or disparate data protection laws. It will cost the industry great efforts to set the hurdles and harmonize the e-AWB criteria, speakers stated.
Viewed from this perspective, e-freight and the cyber world remain being the Achilles heel of air freight.
Redefinition of security needed
And what about security? This issue was only mentioned on the sidelines during the ACD meeting. But it needs to be urgently tabled. This, because the upcoming cyber world offers a wide range of new opportunities but conversely it poses new threats and dangers, also to the air freight industry. Hand search, X-raying of shipment or screening won’t suffice any longer to prevent misuse and protect the integrity of business processes.
The flow of goods can be interrupted or shipments deviated if electronic systems of forwarders or airlines are hacked by unknown intruders. Rather unlikely? The WannaCry virus caused a chaos in the UK’s medical service last year. Stuxnet sabotaged the centrifuges used by Iran to produce highly enriched Uranium. And presumably Russian troll brigades have polarized the American society in the electoral campaign 2016 by producing false news through so-called social media, launching the biggest attack on the U.S. democracy since 9/11.
Air traffic might not be a prime target of any cyber warriors, but system intrusions and interferences cannot be excluded. Therefore, it’s time for IATA, FIATA or TIACA to stick their heads together to find solutions for protecting the data integrity of the industry.