Chris Notter’s panel at the ACHL on the morning of 22SEP23, had a paragraph of a title: “The airline industry struggles to compete against the eCommerce giants, where mega companies such as Amazon and Cainiao control their own lift and market. How can the industry support the thousands of companies looking for an alternative?” which he then condensed into the Struggle to Compete against eCommerce Giants. A lively discussion brought a number of points.
Emirates Cargo’s Dennis Lister, dnata’s Guillaume Crozier, and IndiGo’s Mark Sutch delivered industry input as to the challenges and opportunities posed by the rise of e-commerce in the air cargo industry.
It’s not about the competition!
All three were very clear on the point that when it comes to air cargo versus eCommerce giants, “it’s not about the competition!”. Mark Sutch’s take was that “[air cargo and eCommerce] are two very separate models. Capacity is airline agnostic. What is important is what happens on the ground.”
Dennis Lister pointed out that: “[eCommerce] is here to stay and will continue to grow. I don’t like calling it ecommerce anymore as it is a mix of express and general. […] End-to-end is super important.” He underlined that each component in the supply chain needs to adapt to ensure smooth and safe processes, continuing: “As an airline… safety, security, technology and above all – transparency – is crucial.”
Guillaume Crozier agreed and outlined dnata’s proactive approach: “It’s about getting ready to take the lead and identifying the volumes themselves: general cargo, courier, mail, etc. – all this already touches on ecommerce business. Customers are starting to think about end-to-end, and we need to deliver on their promises. We cannot build up on something shaky,” so dnata’s focus is on data and the piece level challenge. It participates in a case study and has launched dnata logistics to deliver ecommerce promises: first/last mile, pick and pack, etc. Crozier sees that airlines will begin to push for these ground solutions, therefore he recommends to adapt “step by step, be serious, invest, and work with vendors. eTailers are partners almost, not competitors.”
eCommerce is evolving
The panel acknowledged that e-commerce is evolving beyond its traditional definition. It encompasses both express and general cargo, and poses dangerous goods challenges with the increasing amount of Lithium Batteries coming into the system. The air cargo industry needs to keep up with the requirements and risks of the many thousands of eTailers out there, since – according to SASI’s Stan Wraight in the audience: “Why does Amazon fly their own airlines? It’s because traditional industry failed them!” His recommendation: “Track and trace needs to be the industry standard. Redundancy also required – if there is an AOG, there has to be reciprocity with another airline to move goods on another airline.” The industry has to talk to each other and above all to the actual shipper(s) to get the information on what is expected and can be done. It needs to adapt to the eCommerce evolution by focusing on end-to-end solutions, involving all stakeholders in the supply chain.
Learning from eTailers
The panel advocated learning from e-commerce giants such as Amazon in terms of operational efficiency and customer-centric approaches. Dennis Lister said: “Look at how Amazon is set up across NA, with algorithms to compute the fastest route – we can learn about efficiency from them. We need to listen to customers, understand their requirements, and see how we can make things more efficient. Cainiao has hubs and worked out at doing things efficiently, themselves. We need to learn from them. There are things that we can do better. This includes understanding customer requirements and finding ways to enhance efficiency in the supply chain.” That efficiency is supported by data and technology – particularly real-time tracking and tracing is important. The industry should invest in forward-looking technology such as computer vision and AI for better efficiency.
Standardization and Regulation
There was a common call for industry-wide standards in track and trace as well as ensuring that concerns related to Dangerous Goods Regulations (DGR) and Lithium Battery shipments in e-commerce were addressed and solved. And a good segment of the panel discussed the merits of Cargo iQ and achieving consistency in data reporting and standards. Cargo iQ was seen as a crucial step forward, though the challenge still lies in aligning a very diverse range of stakeholders and partners which all operate varying systems and are at different levels of maturity in their eCommerce readiness.
“What needs to be done in next 2 years?” was Notter’s final question. Crozier urged the industry to focus on data management, governance, and computer vision. He also emphasized that stakeholders should use Cargo iQ MOP defined data so that capabilities can be adapted, and data communicated as required.
Sutch underlined the quality perspective: “I get disillusioned that everyone is looking for more and more quality at less and less cost. We need to educate [all involved] that quality requires investment.”
Lister added the technology aspect: “Let’s not get caught up on legacy stuff. Let’s move forward. Tech is very important – AI, machine learning is reality and is coming fast. Cargo is often late to the party – still using paper AWBs in some cases!”
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