Every type of freight shipping faces common challenges and unique challenges. Sea freight may face issues with seasonal capacity availability or weather issues, while road freight may face the uncertainty of road construction delays or traffic jams.
Shipping your goods by air offers the quickest way of getting your freight from A to B, but what challenges does the air cargo industry face and how do they meet those challenges?
Air cargo faced these four logistics challenges in 2019
- e-AWB. The electronic air waybill became the default contract for carriage of all air cargo freight on the 1st January, 2o19. This is part of the ongoing process to make the entire air supply chain digital. While this new format can help reduce – and ideally eliminate eventually – the numerous errors that can occur as a result of manual or paper processes, it also brings its own challenges that the industry needs to tackle. Access to relevant data, and the quality of that data, needs to be a primary focus, as well as better technology to support all needs.
- Security. It is fully understandable that we are seeing more stringent security measures brought in for all aspects of global trade. The problem can be that there still remains a level of disparity globally with such measures and no accepted global standard. In the U.S., we have initiatives such as ACAS (Air Cargo Advance Screening) and PLACI (Pre-Loading Advance Commercial Information) but many countries remain without such initiatives and this continues to present a challenge to the air freight logistics industry. And there is the added challenge of getting up to date information for the countries we fly to and this is something that the industry needs to address.
- Postal requirements. While mail shipments usually had a level of exemption, 2019 saw the start of radical new changes with the introduction of the SAFE Framework of Standards and of ICS-2. For now, the new rules means that all air express carriers must provide information to customs on any mail shipments being carried. And these new rules also extend to all postal shipments as of 2023. This means that the logistics industry must look at ways to collate the information required and use it to complete the relevant security filings.
- E-Commerce. The growth in the e-commerce sector has led to a massive growth in those goods being sent by air. With a rise in these goods traveling by air, the challenge has been for everyone involved in the air freight sector to rise to the challenge and ensure these goods are dealt with in the fastest possible way. These changes may need new processes to be developed as well as adapting or developing new technology.
Challenges in Air Cargo that Digital Tools Can’t Solve
While many of the challenges the industry faces can be solved with either new technology or adapting existing digital tools, improved efficiency will not and cannot be achieved purely by these means. There are several challenges, some old, some new, that the industry must cope with in order to sustain business and growth.
- Oil prices. The cost of fuel has always been one of the major worries for the aviation industry. Situations such as the current conflict between the U.S. and Iran cause rises in the price of crude oil and ultimately these rises are passed down the line to industry and consumers. This is, sadly, a challenge that cannot be solved in the near future though progress is being made.
- Protectionism. While the technology we use can help us keep up to date with any changes in tariffs or even laws, the whole issue of trade protectionism is one that concerns the entire industry. Continued protectionism will inevitably lead to a decrease in the overall volume of trade which means less business for the industry as a whole. The International Air Transport Association (IATA) recorded year on year reductions in air freight throughout 2019.
- Security. While there are many necessary increases to security regulations across the aviation industry, many of them can be dealt with by means of technology and digital tools. However, challenges remain as far as transporting dangerous cargo is concerned, the ongoing threat of terrorism, and even the risk of cyber attacks affecting plane or air traffic control systems.
- Capacity. In 2019, we saw a year on year slowing in demand for air freight services. This is down to a number of diverse factors, from growth of passenger travel to the industry seeing disruption by mega-corporations such as Amazon. Technology may help us in optimizing loads for more efficient operations, but it can’t produce demand from thin air.
The Future of Air Freight Shipping
There is no doubt that technology has to play a major role in the future development of air shipping. Air carriers have to learn from the examples in other sectors. Maersk’s partnership with BMW to improve the supply chain for sea freight is just one example of technology leading the way.
By embracing innovation and technology, the industry as a whole can grow and expand. While there are many challenges, including geopolitical issues, that threaten the well-being of the industry, looking for solutions to any solvable problems is the only way forward.
As a whole, every part of the air freight industry, including carriers, freight forwarders, and brokers are facing many challenges in 2020. Some of those are due to the introduction of new systems, technology, regulations, and processes.
For most of these challenges, it will be a learning curve as the industry adapts and learns how to work within the confines of these innovations. These should, in reality, only present a short to medium term challenge, and by the end of this year we would hope to see the benefits outweigh any issues.
Other challenges, such as fuel prices and trade protectionism, are the ones we can do little about. Although there is ongoing research into alternative fuels, the reality is that it will likely be decades before oil-based fuels are completely replaced. And trade protectionism remains something that the industry has no influence on.
With so many changes, and so many challenges, it makes sense to work with one of the world’s leading logistics companies. Asiana USA has been providing global logistics solutions for over 30 years and have offices in several countries. If you have any freight forwarding or logistics needs, give us a call today on 855-500-1808.