Don't underestimate the air freight forwarder: carrier digitisation is not market disruption
Digitisation of the air cargo industry will eat into the market share of traditional freight forwarders, ...
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By Alex Lennane
The future of logistics is in jeopardy unless the mindset of shippers, forwarders and carriers change to reflect new technologies, a senior executive has warned.
Pointing to carmaker Henry Ford’s quote: “If I had asked people what they wanted, they would have said faster horses,” Ram Menen, who built Emirates’ SkyCargo division over 30 years, claimed that there was very little that could be done to improve efficiencies in the supply chain – the model itself has to change, he believes.
“Changing ...
Comment on this article
David Ambridge
February 25, 2014 at 2:54 amEver wise words from a man sorely missed in our Industry. Why is it I buy a ticket and I pay upfront but I buy cargo space and get a minimum 30 days credit? Why isn’t cargo space and rates available for online purchase the same as tickets? Why haven’t LCC’s at least adopted the same approach to Cargo selling as they have with passenger tickets?
I now wait for all the diehards to tell me ” ah but the models are completely different” and ” it is so much harder to in the Cargo Industry”. That’s one reason why we have barely seen any change in over 40 years!!
Jens Rueckert
February 25, 2014 at 12:57 pmDavid,
at least in Germany the Pax business model has been challenged in court by consumer protection organiztions. It is actually questionable whether it is permissible to charge a credit card and provide the services (or not, in case of bankruptcy of the carrier, flight cancellation or overbooking) considerable time ahead.
My personal thinking is that there should be some upfront payment (since the carrier provides a booking) but that the complete charges should not be due earlier than a few days prior to the flight.
Other than that, I’m in agreement…
Ricardo Pilon
February 25, 2014 at 4:02 pmVery well said and well positioned by the well-respected Ram Menen.
Although I also believe that one of the structural challenges in the air cargo business is that we still focus predominantly on tactical drivers of demand and not sufficiently on strategic drivers of demand.
An industry transformation is more fundamental than how cash flow is triggered and managed.
The value creation has to happen across the supply chain, not between individual links in a logistics supply chain, and arguably it should work in tandem with other modes of transportation. Only a constrained framework of reference will position air cargo to still be competing with other modes on traditional terms.
Ram Menen
March 02, 2014 at 1:58 pmSome valid comments. Sometimes, we tend to complicate things because of the complexities we have created in the past! With all the technological evolutions taking place, we need to try and get our industry to the same kind of mindset as we are in when we go shopping online for buying a book on amazon.com…. The integrators have already done this… We need to take a leaf out of their book. I agree that they own most of the elements in their process, however, it is not going to be very difficult to get the diversified group that comes together in a supply chain operation if we all put our minds to it … I might be over simplifying things…. But I feel that if we don’t let the paranoia of fear of the risk exposures that can come with change, we can truly transition this industry to a more efficient and profitable business. We should stop looking at efficiencies at individual element level but go for collective efficiency that will benefit our end customers’ business whilst allowing every body in the chain to invest more in the developing this industry.