This is where we find air freight logistics today.
Commonly used for high-value or highly perishable products, air freight is increasingly used as more individuals and businesses purchase products online and expect delivery within a very short time frame. short. Modal mix is becoming more common as supply chain and logistics managers juggle the choices to meet the expectations of Beneficial Goods Owners (BCOs). Sea-to-air services are growing, combining the cost value of sea transport with the higher speeds of air services and a smaller environmental footprint when the weather permits.
As leisure passenger traffic recovers, higher-margin business travel is only slowly returning to the skies. The slow recovery is having many effects on the commercial aviation industry. The most striking impact is a loss of capacity, especially on international routes. With many wide-bodied passenger aircraft shelved due to declining passenger numbers, cargo shipping capacity has declined.
Quite simply, the global air cargo logistics industry continually faces challenges, which can be turned into opportunities by capable and flexible organizations. The dynamism, vitality, resilience and sustainability of the industry are essential to the socio-economic well-being of everyone in the world.
This blog series will focus on key areas that are changing the air cargo industry as you read this. They include the value of air cargo transportation, different roles of air cargo, disruptions in the global air cargo logistics industry, and new developments contributing to the vitality of the industry.
Keep in mind that:
• Change is constant – a delayed reactive response is death.
•The global air cargo logistics industry has experienced a series of disruptions dating back to the early 1970s with the emergence of integrated air carriers.
•There is a cumulative impact of: the COVID pandemic; increasing reliance on e-commerce and high-speed delivery expectations; scanning; expansion of ocean carriers into air cargo services and operations; consideration of climate issues; and an unstable geopolitical environment. All challenge traditional structures, services and relationships.
• The realization by governments and businesses that a global supply chain is essential for socio-economic and commercial viability in the future.
•There is a misunderstanding about air travel and its role in global welfare.
So we’re all on the same page, here are some key terms to keep in mind:
• The global air cargo logistics industry is broader than the traditional focus on airlines, freight forwarders, ground handlers and trucking companies. In reality
encompasses all parties involved in the handling and movement of air cargo shipments, including truckers, freight forwarders, ground handlers, clearing agents/customs brokers, border agencies, platform providers and digital services, airports, airlines, 3PL companies, crating and packaging companies as well as safety and security inspectors.
•The term Beneficial Owner of Cargo (BCO) encompasses all parties who “own” the cargo. They may be the physical sender, the ultimate recipient or, increasingly, the party that takes ownership of the shipment and may never manage it but derives tangible benefit from each shipment. Increasingly, the BCO is the party that orders the product. Each person who selects a product on an e-commerce platform is a BCO. We dictate what is ordered, where and when it should be delivered. We defer to the platform operator as to the mode of transport. But through track and trace applications, we monitor the shipping process across the supply network.
• Supply chains/networks: the complexity of supply processes leads to the replacement of sequential chains by complex networks. Webs are made up of individual chains, but they facilitate modal shift, sourcing of similar goods from different locations, and a plethora of lanes to get goods to the point of delivery.
Several disruptions have affected the global air cargo logistics industry over time. These disruptions reinforce the idea that it is not appropriate to rely on past traffic patterns to predict future air cargo volumes.
The main disturbances here include:
•Years ago, the emergence of integrated freight companies—Burlington Air Express, CF Air Freight, DHL, Emery Air Freight, FedEx, TNT, UPS and others—challenged traditional airlines. They had to rethink their business models and provide an innovative new option for real freight owners, individuals and businesses, to use air freight services to transport their goods. As in all cases of industrial change, the list of companies was broken down into DHL, FedEx and UPS.
•Online / e-commerce platforms have disrupted the apple basket in recent years. These companies, which use sophisticated data collection processes and complex algorithms, are customer-centric. They capitalized on the expectation of high-speed delivery which, in turn, led to the expansion of their networks of facilities and increased control of transportation. These include road and air and use their growing purchasing power to acquire free market space in all modes of freight transport.
• The freight forwarder-controlled mega airlift is expanding. There is potential for crowding out small freight forwarders who cannot compete in terms of financial resources and controlled traffic.
•The entry of shipping carriers into all-cargo operations and services is another disruptive element. These players in international transport are transferring their assets in the field of air freight. These removals offer a multimodal offer to their BCO customers.
•Digitalization is becoming more and more the norm in the freight transport industry and more particularly in the field of air freight. Dependence on traditional communication systems and protocols is decreasing as BCOs demand full and comprehensive information about their shipments. Open access digital encrypted platforms are spreading from the Indian subcontinent and Europe as their benefits to all cohorts of the global air cargo logistics industry are understood. In addition to operational and business benefits, these systems also address environmental concerns – an increasingly important objective of BCOs.
That should be enough to set the tone for this blog.
So put your seatbacks and trays in the upright and locked position. Store all hand luggage in the locker above you or under the seat in front of you. And make sure your seat belt is tight and fastened around your waist. Join me now for an overview of the global air cargo logistics industry as we descend below the wing and onto the main deck.