E-commerce is having a major impact on air cargo, but the sector must continue to adapt to realize the full potential from this revenue stream

E-commerce represents a structural shift in shopping. Consumers are moving to a 24/7 online experience.

Take Singles Day in China, an event much like Black Friday in other parts of the world. In 2018, it generated more than one billion packages in a 24-hour period. In fact, global e-commerce growth rates in the region of 15%–20% year-on-year are the norm, creating millions more shippers and billions more parcels with revenues measured in the trillions.

The air cargo sector must continue to modernize to support the scale of this transformation. Packages need to be processed in a manner that allows them to be moved safely, speedily, and efficiently. In short, the ease of purchasing must be matched by the ease of shipping.

“In the e-commerce world, shippers and consumers want transparency on their package, they want predictability of delivery times, and they want speed,” Brendan Sullivan, IATA’s Head, E-Commerce and Cargo Operations.

Virtual record

Taking advantage of e-commerce opportunities requires both a virtual and physical infrastructure.

On the virtual side, ONE Record is about creating a digital “plug and play” environment to make data easily accessible, furthering air cargo’s paperless processes vision.

To overcome the multitude of reports that can exist for a single shipment, the ONE Record standard evolves e-freight messaging into such next generation technologies as cloud hosting and distributed databases to provide a single view of a virtual shipment record.

“Ultimately, ONE Record will allow everybody involved in the logistics and transport supply chain to exchange data easily and transparently,” says Sullivan.

A pilot project is being established to generate appropriate feedback. IATA will also work with the industry to develop the ONE Record data model to include other areas of air cargo.

The cargo facility of the future will be safe and secure, green, automated, connected and smart

Future facility

In terms of physical infrastructure, the move away from dark and dusty warehouses on the outer reaches of the airport will be vital.

The cargo facility of the future imagines fully automated high-rack warehouses, green vehicles navigating autonomously through the facility, and employees using artificial intelligence (AI) and augmented reality (AR) to be more efficient.

“The cargo facility of the future will be safe and secure, green, automated, connected and smart,” says Sullivan. “This will ensure the cargo facility of the future is fit for purpose in size, location and for the people who use it.”

IATA’s white paper on the subject lists six technologies set to revolutionize air cargo facilities (see sidebar).

“In the last quarter of 2018, we launched a proof of concept study on augmented reality in air cargo,” Sullivan informs. “The goal of this study is to determine whether augmented reality was suitable for air cargo and what kind of high-level findings we should expect to see.”

The study focuses on acceptance of cargo given that there are estimated to be over 3,000 rules and checks to be performed before a carrier can determine whether they can carry the goods, ranging from compliance checks to physical suitability for a given aircraft.

The study uses a wearable solution (glasses) with speed of processing, error reduction and user satisfaction all being measured.

13% - In 2019, air cargo is expected to be worth $116 billion, about 13% of airline revenues

3000 - It is estimated that carriers have to undertake 3000 rules and checks such as compliance checks to ensure they can transport cargo

Support projects

To further enhance the levels of service, a number of important cargo work streams are supporting the air cargo industry’s efforts to capitalize on e-commerce growth while still maintaining the excellent safety record of the industry and improving operational efficiency.

Border control projects illustrate the point. The global standards in Advance Cargo Information (ACI) and the Air Cargo Tariff and Rules (TACT), for example, facilitate not only a speedier handling process but also a more secure and accurate one. There is also a working group exploring a number of other customs and security issues to ensure the industry is properly consulted on customs requirements. A focus on advanced electronic cargo reporting requirements is one the group’s primary objectives.

The World Trade Organization (WTO) Trade Facilitation Agreement will also be vital. Some 140 countries have signed this agreement, which is intended to speed up shipments while also reducing cost. The WTO reports that the full implementation of the TFA could reduce trade costs an average of 14.3% and boost global trade by up to $1 trillion per year, with the biggest gains in the poorest countries.

“The growth of e-commerce benefits both major corporations and small and medium-sized enterprises,” concludes Sullivan. “By improving e-commerce services and making them globally available, developing countries can grow their economies, reducing poverty and inequality.”

Sending information

Putting together a framework is only the beginning. E-commerce is creating millions more shippers, many of them small and medium-sized enterprises (SME) that, almost by definition, are different from traditional bricks-and-mortar companies.

“We need to disseminate the right information to these shippers and ensure they have access to the right tools,” Sullivan says. “They have different requirements from traditional companies, and we must respond.”

It is a tough challenge. On the safety side, for example, all shippers must understand the need to pack lithium batteries to comply with global regulations.

IATA has begun working with the Universal Postal Union to get all related information out into the marketplace, and is seeking further collaboration from other relevant air cargo organizations.

IATA’s white paper six technologies

IATA’s white paper on the subject lists the technologies set to change air freight for the future.

  • Green, sustainable, buildings
  • Big Data leading to predictive AI systems
  • Drones and autonomous vehicles
  • Internet of Things for connected cargo and devices
  • Robotics and automated systems
  • Augmented reality and wearables