| 16 Nov 2020
The air cargo industry has suffered from decades without technological evolution, primarily due to two reasons –
But, the last few years have turned out to be a roller coaster for the air cargo industry, due to the sudden boom in cargo-tech. startups, that are threatening to democratize both pricing and real time availability of information – the two levers around which this entire industry has been able to survive.
In addition, Amazon Prime’s promise of next day delivery has left the entire cargo industry playing a game of catch up. With disruption at their doors, it is a wake-up call for the dinosaurs of the air cargo industry to adapt or die.
Air cargo value chain and the need for digital technologies
The air cargo ecosystem is both fragmented and complex, with many stakeholders involved along the value chain: shippers, carriers, customs, freight forwarders, integrators, airlines, and end customers to name a few. Digitalization serves as the perfect opportunity to improve communication and cooperation within this complex value chain – driving both cost efficiency and service excellence.
Challenges faced by the air cargo industry
The fundamental challenges that the air cargo industry has been facing are the usage of outdated technology, poor data and limited information sharing. These challenges have had a cascading effect on the entire ecosystem leading to poor financial performance of carriers, creating unnecessary complexity across the supply chain and driving up costs for customers. Given below are some of the specific problems that have been plaguing the industry for decades.
Interestingly, most of the problems above originate in the monolithic, legacy IT systems being used by individual carriers. These systems tend to operate in silos, slowing down reaction times and putting their users at a competitive disadvantage.
Digitalization playbook for CIO’s of the air cargo industry
It is time for CIO’s from the air cargo industry to rewrite the rules of doing business – putting the customer at the center of everything they do and democratizing data across the entire value chain. The key to a successful digital transformation strategy is to start out small and then add complexity to it. A big bang approach to reinvent a trillion dollar industry is neither feasible nor recommended. As a CIO driving the digitalization in this industry, here are a few key technology initiatives to undertake
As CIOs go about executing the transformation program above, their focus should be on implementing measured change: engaging widely with all stakeholders, piloting at every step, and rolling out initiatives in phases. This is to ensure that a digitally starved industry like air cargo responds well to the changes above.
Air cargo 2.0 – Creating the future of air cargo today
Adopting digital technologies would not be enough. Players in the air cargo industry need to continually innovate, and raise the bar for customer experience and operational excellence. Given below are a few of the innovations which are changing the way the air cargo industry works
Role of the partner ecosystem in embracing digital transformation
According to Gartner, 4 out of 5 digital transformation initiatives fail to attain their desired goals. For a successful digital transformation project in any industry, one needs a strong and experienced partner ecosystem in place. A partner ecosystem consists of mainly three pillars:
Development platform – A development platform is the foundation on which you build your application. It determines whether you can scale your application as your business grows or remain stuck with limited capabilities
Technology providers – Technology providers include hardware vendors, independent software vendors (ISVs), OEM vendors, SaaS vendors, etc. The role of technology providers in the ecosystem is to provide technological capabilities along each step of building the solution. If chosen well, it has the potential to enable a feature rich application
Implementation partners – The platform and technology alone cannot function without the presence of the last pillar – implementation partners. Implementation partners are system integrators (SIs) who have expertise in building solutions. Out of these three pillars, implementation partners constitute the most important pillar, which will determine the outcome of your digital transformation. They are the ones who combine technology expertise with domain understanding to drive solutions for your business problems
It is clear that if traditional players in the air cargo industry continue to persist with a business as usual approach, they will continue to lose competitiveness and value in the ecosystem. To stay ahead in the game, it is just not enough for them to embrace digital transformation, but they need to reinvent their business model as well – a 360 degree shift in their value proposition from being just providers of air cargo services, to being providers of convenience to their customers.
The digital transformation roadmap for players in the air cargo industry will differ widely depending on their positioning in the value chain, and their future strategies. However, irrespective of what their specific ambitions are, all stakeholders in the air cargo industry should adopt a common goal – leveraging technology to reaffirm the competitiveness of air cargo over other modes of freight transportation, all of which are more advanced in their digital transformation.
We at ValueLabs can help air cargo operators modernize and transform their legacy business into next-gen, digitally relevant customer offerings. With over two decades of expertise in technology and an understanding of the cargo domain, we are appropriately positioned to help our clients reimagine their future.
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