Unlike Harry Potter muggles and mere mortals will have to live with the fact that they are barred from walking the cobblestones of Diagon Alley and thus will not lay their hands on a magic wand resolving all their troubles, writes Markus Flacke in his consideration on mental and other needful transformations to open up the avenue for a data sharing and collaborative industry.
These were my thoughts when I came across an analysis recently published on airport-technology.com by Ross Davies with the title “Will blockchain boost air cargo efficiency after Covid-19?” Don’t understand me wrong I agree with Ross Davies that blockchain technology holds great potential and that it is necessary to run as many Proof-of-Concepts as possible in order to identify where along the air cargo supply chain this technology will indeed boost efficiency in the future. In fact, there are plenty of use cases one could think of ranging from a payment network that could replace IATA’S CASS system all the way to a neutral ULD network where the load devices are shared among all users. What all use cases should have in common is the quest to eradicate the costly middlemen structure that is still employed in order to control, verify or - in short - “to create the trust” that is needed to do business.
Uncertain fate of digitalization
However, there is from my point of view no such thing like a “saviour solution” that will boost the industry’s efficiency in the immediate aftermath of the Covid-19 pandemic. In fact, I fear that quite a few of the planned investments into digitalization will fall victim to the necessary cost saving measure of airlines, airport operators, ground handlers and others in their quest for survival. At best, the industry will remain in a technological status-quo for months to come, at worst we will witness a setback where digitalization is once more seen as a nice to have only affordable by the dominating players in the market. This paired with the wait for the advent of a so-called saviour technology (another example is the adoption of IATA XML) may lead again to a period of digital stagnation within the air cargo industry.
New thinking required
So, what can one do in the meantime? First the industry requires a dramatic shift in mind set both from a) technology perspective and b) with regards to industry practices.
From a technology perspective the mind set needs to shift from protectionism to collaboration. What do I mean by that? The user experience along the traditional supply chain is one of a fragmented service delivered by a multitude of stakeholders often without clearly defined responsibilities leading to finger-pointing when things go wrong. Integrators managed to offer an alternative to this type of service although at a premium and never really breaking into the traditional air freight market. The arrival of Amazon’s Prime Air and Cainao is now the next evolutionary step challenging the traditional air cargo market – here everything is about end-to-end transparency, real-time information and creating the best possible customer experience. Whereas the integrators operate in a clearly defined product segment (express shipments, documents) the e-commerce giants operate within blurred borders: an e-commerce shipment can be almost anything from a book to machinery. Thus, legacy players of the air cargo supply chain need to secure that they are capable to facilitate date exchange along the supply chain. By data exchange I mean everything from API access to booking systems, flight operations, to shipment and tracking information. This will allow legacy players to provide an affordable service equal to the one offered by integrators and the e-commerce giants and will also increase their attractiveness as possible system partners to e-commerce vendors.
Old habits must be thrown overboard
My second argument was that the industry needs to do away with some of the old-fashioned industry practices. One of them is certainly the way air cargo is booked in an industry that has tremendous fix costs. It is almost incomprehensible why the industry as a whole seems to accept that bookings are mere expressions of intent rather than a done deal. Today, the carrier will only know whether the booked revenue will turn into a payment when a shipment has been delivered for transport. At the same time forwarders complain when their shipments are not flown due to overbooked flights (more often due to capacity steering methodology than actual sudden increase in demand). How anyone can give a shipper a reliable service promise based on such a system remains a mystery to me. These practices – along with many others – will have to change in order to take the industry into the future.
Collaboration and data sharing should become the “new normal”
The good news is that the past few months have hopefully accelerated this mental transformation which is needed in order to adopt any technology in the future. Whether this will be blockchain or something else will be almost irrelevant once we have accepted that the key in a multi-stakeholder service delivery is collaboration and the capability to share data with each other. And please today’s technology can already resolve many of the industry challenges – do not wait for the gate to Diagon Alley to open: There is no magic wand for the industry’s challenges!
Markus FLACKE joined the air cargo industry in 2001. He has been working in various functions at Lufthansa Cargo AG, was Managing Director for CHAMP Cargosystems’ Cargo Community Platform TRAXON cargohub and has - as Head of Product Management at Unilode Aviation Solutions - won the IATA Air Cargo Innovation Award 2019 for the company’s digital transformation program.
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