Digital disruption & Future of Air Cargo

Transcription

1 Digital disruption & Future of Air Cargo Forum ACFA - Air Cargo Digital April 4 th, 2018

2 Digital Cargo The OxCam competition of world logistics : Sea vs Air Sea trade has grown faster than the air trade because the respective value propositions have evolved in favor of Maritime cargo Relative evolution on Key success factors World trade evolution per mode of transports Tons, World, , base Air Sea 200 Sea cargo 10 billions tons in 2015 Costs & Freight rates 150 Air cargo 52 million tons in 2015 Sea CAGR % Quality / Reliability 100 Air 2.2 % Delay 50 Flexibility 0 Source: Unctad,, IATA, Arthur D. Little

3 Technologies Digital Services Digital Cargo Digital Transformation in the Maritime Cargo Maritime cargo leveraged a wide set of digital technologies across its entire value chain to improve its value proposition Sales and Marketing Operations Admin Business development & Sales Booking/ Pricing Pre/post intermodal transport Capacity Management Ground Handling Transport Customs & Security Customer Support Reporting & Invoicing Demand forecast Digital lead management Online booking Dynamic pricing Multimodal information sharing Empty container repositioning Smart capacity management Automated warehouses / robotics Automated port operations (loading /unloading) Predictive maintenance Data protection (cyber attack ) Real time E-invoicing tracking Payment On-board automation cargo monitoring Chabot & automated troubleshooting Block chain Internet of Things E-Platforms Cyber Security Artificial Intelligence Robotics Data analytics Source: Marine insight, freight hub, Arthur D. Little 3

4 Digital Cargo The opportunity for Air Cargo The impact of Digital on the retail ecosystem (e-commerce) is actually the main impact of Digital on air cargo ecosystem Digital is disrupting Retail E-commerce is booming Cross-border e-commerce 1 (US$ Bn) Air Cargo is competitive for e-commerce +25% International e-commerce has shown over 30% CAGR for the last 3 years in a row, Commercial Director, IAG Cargo Sources: 4

5 Digital Cargo The opportunity for Air Cargo The digitalization of the airfreight value chain brings 3 promises : better customer experience and efficiency gains, enabling higher volumes, Better customer experience Zencargo (Kuehne+Nagel) KN FreightNet (Kuehne+Nagel) Efficiency gains Warehouse robotics (Amazon, DHL) Ability to manage B2C markets + + Instantaneous quotations and booking Real-time track & trace Sources: Faster and more reliable ground operations Faster custom and security processes Optimized capacity and yield management 5

6 Digital Cargo The long road towards digitalization of Air Cargo / Airlines Air Cargo industry, driven by airlines, is trying to roll-out the foundations for digitalization through the industry-wide e-awb program e-air Waybill Adoption rate and targets The e-air Waybill is the 1 st step towards e-freight (electronic contract of carriage between the shipper and the carrier) Removes the requirement for paper Air Waybill Original transportation contract is electronic No longer need to print, handle or achieve the paper AWB simplifying the air cargo process Paper AWB e-awb Front Electronic message (XML) + + Reverse Signed e-awb agreement 65% Trend 60% Actual 55% IATA 2016 targets 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: IATA, Arthur D. Little 6

7 Digital Cargo The long road towards digitalization of Air Cargo / Airlines but multiple obstacles, on a country-by-country basis, are slowing down this initiative Obstacles faced by airlines We are trying to develop the e-air Waybill but some government entities are not ready VP Cargo sales, Asiatic airline We would like to exclude paper, but our government is not ready for this, it slows us down Head of cargo, European airline We have the e-air Waybill but regulation is slowing it down. EU-US import and transit director, European airline e-air Waybill is not going to change everything already, we still use paper because customs need a stamp Head of cargo, Asiatic airline Air freight market is underdeveloped when it comes to digitalization VP Sales & Marketing, European airline Air freight market is far from the passenger business, this has to be understood. We start now to work on e-solutions VP Commercial, Middle-Eastern airline We have the e-air Waybill for the e-booking we are not ready. Chinese airlines are not leaders in terms of digital but more often followers. Cargo Manager, Chinese airline Air cargo is a very traditional business, you can move to quickly with the eawb because customs do not follow VP ACS, Global express airline Source: IATA, interviews, Arthur D. Little 7

8 Digital Cargo The long road towards digitalization of Air Cargo / Airports Leading airports are embracing digitalization to increase efficiency for the different stakeholders in the airfreight value chain Digitalization of cargo at Frankfurt airport Case study Better Shipping Planning Electronic data exchange Greater efficiency and transparency of each transportation step (incoming shipments alert, flight manifest ) Enhancement of data sharing Information about safety, security, customs status and dangerous goods regulations Intelligent business management Analytics for sales, handling and revenue management in base of data available Business digitalization E-Cargo service Airlines Transporter Operations digitalization FAIR@link Digital Platform Handler Digital transformation Customs Processes simplification Registration process unification for truck drivers at the airport to reduce coordination effort between parties Automation of processes (handover certificates printing, change of depositary, edgd 1 Source: Fraport,, Lufthansa, Arthur D. Little Note: 1) Digital dangerous good declaration 8

9 Decision-making quality Digital Cargo Impact on client relationship & front-office New digital players are entering the market and competing with traditional Logistics Service Providers: we identify 6 archetypes Spot pricing & brokerage platforms Generic marketplaces DFEs 2.0 & e-forwarders DFEs 1.0 & Specialized marketplaces & crowdshipping platforms 5 6 Carrier Integrators Vision: Digital LSPs Traditional LSPs Traditional LSPs Smart decision making (analytics) Automated decision making (real-time input) Automated decision making (static input) Manual decision making / intuition Tender platforms Information brokering Spot Niche Spot Full Spot & Contract Niche Spot & Contract Full Market focus 9

10 Admin Operations Digital Cargo Impact on operating costs We have recently assessed the potential efficiency gains enabled by digital in airfreight sales, operations and admin processes Digitalization of Sales, Operations and Admin processes Task Description Complexity Booking data entry Answering phone request for customer Effort Today 100 full digitization 50 Rationale E-booking standardizes quotations requests, limiting the need for human intervention to complex requests Facilitation with customs Interline operations Track & Trace Interface between airlines, customs, GHA and freight forwarders E-booking and e-awb can simplify these activities by reducing the data to be filled manually and the risk of errors CASS invoicing Fill invoice for CASS accounting 100 ~0 Thanks to e-awb the data entry for invoices can be fully automated Internal invoicing Fill invoice for internal accounting 100 ~0 Thanks to e-awb the data entry for invoices can be fully automated Source: Arthur D. Little High complexity Low complexity 10

11 Digital Cargo Key Success Factors to embrace digital transformation We see 5 Key Success Factors to grow in a digitalized airfreight industry Robust Digital Foundations Develop and deploy a robust common data infrastructure across the airfreight value chain: simplification, standardization and quality of data are three targets to be pursued Governance & Organization Avoid building digital silos inside the company and adopt a holistic approach in defining and steering your portfolio of digital activities Focused Project Portfolio Make sure that your digital initiatives are fully aligned to your strategic priorities Understand the digital technologies to fully exploit their potential Lean & Agile approach Leverage rapid prototyping and minimum viable products to test, and if necessary adjust, the new digital solutions, with the end users before committing to full scale deployments Ecosystem Play Smooth interaction across the entire value chain is a key requisite for delivering high quality services: an ecosystem-play is needed for airfreight digitalization to succeed 11

12 Arthur D. Little has been at the forefront of innovation since We are an acknowledged thought leader in linking strategy, innovation and transformation in technology-intensive and converging industries. We navigate our clients through changing business ecosystems to uncover new growth opportunities. We enable our clients to build innovation capabilities and transform their organizations. Our consultants have strong practical industry experience combined with excellent knowledge of key trends and dynamics. Arthur D. Little is present in the most important business centers around the world. We are proud to serve most of the Fortune 1000 companies, in addition to other leading firms and public sector organizations. For further information please visit Copyright Arthur D. Little All rights reserved. Contact: Mathieu Blondel Partner, Travel & Transportation E: M: ACFA Forum Air Cargo Digital