By Nadia Khan on Jan 12, 2014, Arabiansupplychain.com
With air cargo operators battling between rising costs and rising customer demands, the need to ensure a streamlined and efficient air cargo process is vital to long-term success. Automating certain aspects ensures that operations run optimally, resulting in increased revenue, lower costs and better customer service. Whether capacity planning, allotment management or hurdle pricing guidelines, an automated system is there to make the life of the air cargo community much easier.
But to fulfil this promise, there are several criteria that need consideration when selecting such a system. Technology has to be flexible and easy to operate, and needs to include tools for booking, handling and accounting as well as for the central management of master and customer data. Often a stumbling block when it comes to air cargo management systems, the need for system compatibility amongst all the partners in the air cargo supply chain is also crucial.
“Air cargo management systems need to support a wide range of requirements from the shipper’s on-going demands for detailed shipment information to meeting the ever increasing need to provide information to regulatory bodies globally,” says Doug Brittin, secretary general, TIACA (The International Air Cargo Association). For this reason, he maintains that operators need to take extra care to select a system that meets both their operational needs and one which is compatible with accounting and customer relationship/sales management needs. “A system which can link to proprietary internal [existing] systems may be perfectly suitable for some companies, while others may wish to see an ideal solution,” says Brittin.
“Operators need to consider other costs apart from those incurred in the initial set-up, such as those involved in ensuring system reliability and user training time.”
For some, the issue of cost can prove to be a mental barrier when it comes to adopting an air cargo management system – particularly one that slots in neatly with other existing, often older, technology. “Finding a solution that fits the operator’s cost model and is able to link up easily with proprietary, and perhaps somewhat out-dated, systems will always present a challenge since technology advances change so quickly,” says Brittin. “For this reason, the industry may be well-served to look at third party companies who can provide a neutral platform that is flexible and upgradeable and wherein the cost of change is then borne by a wider range of clients, thus reducing individual operator costs.”
But as the air cargo industry knows so well, passing on any extra expenses to the customer can be a dangerous business, particularly due to competition from lower-cost freight alternatives such as sea freight. “But it is difficult to sustain a high-cost market without fully supporting market demands for high levels of real-time information,” says Brittin. “And incompatible systems can absolutely be problematic in the long run.”
Brittin maintains that common shared platforms, which allow for customisation and proprietary needs, may go some way towards easing the challenge of costly IT programming. With the number of players involved in each air cargo supply chain, some level of compatibility between systems is vital. “Everyone wants to provide the highest level of information sharing to satisfy shipper demands,” he says. “But one of the challenges for operators is that their partners in the forwarding community come to the chain with a wide range of their own proprietary systems.”
At the heart of good air cargo management is the need to channel information technology in a way that ensures the seamless flow of air freight through the supply chain. But without an effective system to make the process smoother and more cost-efficient, operators face losing business in the long run. “Across the supply chain we still suffer from insufficient data quality, thus impairing effective service execution and creating unnecessary cost for manual updates at several points on the transport process,” says Henrik Ambak, VP, Ground Service & Commercial IT at Cargolux Airlines. “Air cargo systems play a vital role in facilitating the air freight process but it does not come without investment and we believe this will be sufficiently rewarded long-term.”
The need for automated connectivity between air cargo carriers, GSAs, GHAs, and forwarders has long been recognised by Europe’s largest all-cargo airline. Back in 2004, Cargolux joined hands with SITA to develop CHAMP Cargosystems or eChamp (Cargo Handling And Management Planning) – a suite of integrated IT solutions and distribution services to the global air cargo community, which it relies on for its cargo management needs. Since its inception, others have also been seduced by the systems, with the likes of Saudi Arabian Airlines, CHAMP’s third-largest hosted customer, recently extending its contract for five years.
So what are the winning factors when it comes to finding that perfect cargo management system? Ambak points to certain key parameters that should be used as a selection guide. Firstly, users need to consider the ease of use of the system, as well as the richness and integration of functionality. “This means having one system that is flexible to cover growing needs rather than a multitude of disparate systems which subsequently need to be interfaced and synchronised,” he says. Having the ability to influence the road-map for the development of the system in line with the client’s requirements is also important, as is having the communication capabilities to enable effective interfaces with other air cargo business partners and authorities.
On an industry level, Younus Habib, IT director at Saudia Cargo, agrees. “As an integrated industry, air cargo systems should provide the most comprehensive range of integrated IT solutions and distribution services for all players in the air cargo transport chain,” he says. “Having a versatile and secured system with the capability to interlink and exchange accurate data with other systems through standardised EDI communication is key.”
Saudia Cargo has been one of the more successful air cargo operators reporting growth in the first six months of this year. The growth has been attributed to many factors: a boost in charter activity, the optimisation of the freighter network, adjustments to freighter schedules and an increase in the number of freighters to key destinations. When juggling so many variables, a multi-functional air cargo system can be invaluable. “An effective system must provide complete and transparent workflow management from the initial cargo acceptance and waybill generation to final delivery to consignee,” says Habib. “Furthermore, it has to possess the capability to improve accuracy in cargo forecasting, including the ability to identify up-selling and cross-selling opportunities while maximising cargo profits and improving allotment of cargo space and profitability.”
With an ambitious growth strategy on the cards, Saudia Cargo’s priority is to ensure that its IT objectives are closely aligned to meet the future demands. “Depending on the strategic direction of a company, information technology can deliver solutions that significantly improve the capabilities by linking and resolving gaps within its operations,” says Habib. “It can significantly boost cargo operation capabilities and employee productivity by having accurate and reliable data leading to the enabling of better decision-making.”
As well as providing this much-needed boost to services overall, air cargo management systems have also been touted as being integral to delivering on the industry’s standards when it comes to e-Freight. At the World Congress of the International Federation of Freight Forwarders Associations (FIATA) last month, Tony Tyler, director general and CEO of IATA (the International Air Transport Association) reiterated the commitment to improve competitiveness by modernising air cargo processes through the e-freight programme. Replacing the paper process with electronic documentation, he stressed, will drive both efficiency and quality improvements as well as improving customer service by enabling shippers to have the same level of data about their shipments that they get from the integrated delivery companies. But so far, too few airlines and forwarders have signed up to the initiative. “E-freight will improve the competitiveness of air cargo, and delivering it is a mammoth task involving a complex chain of stakeholders which includes governments and customs,” says Tyler. “But more airlines and forwarders need to sign up as we cannot build a better, more competitive future for air cargo without individual contributions and leadership.”
When it comes to implementing such e-cargo targets, fellow association TIACA’s Brittin agrees that air cargo management systems have an essential role to play. “Whether it is e-airbill or other ‘e’ elements, simplification and standardisation of information globally is critical to the sustainability of air cargo,” he says. “These systems must also be recognised as an absolute ‘must have’ in order to comply with various regulators’ increasing need for shipment level and information, such as advance data systems.”
One regional air cargo operator that has taken e-Freight one step further has been Emirates Skycargo. “Emirates is an enthusiastic advocate of the IATA initiative and one of the world’s leading carriers promoting and implementing e-freight,” says Pradeep Kumar, Emirates’ senior vice-president, Cargo Revenue Optimisation and System. As part of its on-going initiative to take the lead on e-Freight, Mercator, a company within the Emirates Group, has developed its own cargo management system ‒ SkyChain. “Emirates SkyCargo constantly looks at ways to conform to industry standards that comply with the communications protocol,” says Kumar. “SkyChain is a system designed to automate every aspect of an airline’s cargo business in a single integrated system in order to maximise performance, raise service quality and optimise resources.” The list of capabilities enabled with the air cargo management system appears endless. With SkyChain, Emirates Skycargo’s customers are able to check flight/truck schedules and space availability; make bookings online in real time; communicate instantly; track and trace shipments; receive automatic shipment status notifications; submit and print full air waybill details; file and track claims online; and print barcodes.
“Most air cargo systems take care of basic reservations and operations. What is important to us is information availability and timing to make the right strategic decisions which we provide through implementing e-freight,” says Kumar. “The paper-free system enables customers to access information on the status of their queries and claims at any time, and to communicate with Emirates SkyCargo to follow-up on related issues.” Forwarders who send traffic using e-freight can also benefit from a faster service through reduced cycle times, greater reliability and accuracy with its one-time electronic data entry at point of origin, and better visibility as electronic documentation allows for online tracking and tracing functionality. “Customs offices benefit too, as the number of fines is reduced and deposits are no longer required.”