A view from an outsider by Crises Control CEO Rickie Sehgal
I was honoured to be a guest speaker at the recent Air Cargo Handling (ACH) Conference 2018, held in Brussels. As a result of that experience I have been asked to share my reflections on some current issues within the air freight sector, as an outsider, albeit one who has been involved with the industry in some form or other for the last 20 years through our pioneering logistics document management service, SHIELDIntelefile.
The air cargo sector is a vital cog in the wheel of the global cargo industry. Air freight accounts for less than one per cent of world trade tonnage, but it is very high value, with a staggering 35 per cent of world trade value is carried by air. The sector is critical for markets that demand fast and reliable transport of high value goods, dangerous goods, live animals and even military hardware.
IATA forecasts a significant growth in global GDP and goods trade over the next 20 years and is predicting the air freight market to double as a result. According to the Boeing – World Air Cargo Forecast 2016/17, the number of freighters is expected to grow by 70 per cent to more than 3,000 worldwide.
So, there is lots of reason for optimism in the sector, but there are also a number of issues that need to be resolved to ensure that the potential for growth is maximised.
The first of these is the continuing trend towards supply chain digitisation. Industry chiefs at IATA and elsewhere are talking a good game on digitization and pushing out lots of operational guidelines that are very expensive to implement. Many operators further down the supply chain are not buying this because of a lack of clarity and the costs involved. Air freight is a low margin industry and suppliers are reluctant to make investments when they can’t see an immediate return.
As the CEO of a technology company, of course I can absolutely see the benefits of digitization and I understand that the momentum towards even greater use of technology in the sector is unstoppable. But industry leaders must recognise the challenges for some and seek to both minimise the costs of compliance and the benefits for operators and suppliers.
The second issue is closely tied into the first and is the threat of data security breach, magnified by supply chains, which become longer and more interconnected every day, extending the corporate security perimeter with them as they grow.
High profile data breaches, allied with the new EU GDPR rules, have moved information security and the threat of cyber-attack right to the top of CEO and CIO inboxes. Every survey confirms that it is the number one issue for the C-suite. Up until now it has been the passenger side of the airline sector that has suffered most, with data breaches at British Airways and Cathay Pacific the most recent high-profile examples.
But the cyber-threat is coming to the freight side of the business as well. Cargo manifests are highly confidential documents, containing much personally and commercially sensitive information. If this information were to fall into the wrong hands then there is the potential for all sorts of commercial, reputational and even political fallout.
There is much that can be done to mitigate the threat, from anti-virus and penetration testing software to network monitoring solutions and critical event notification platforms should the worst occur. But the key here is to act proactively before a breach takes place, rather than as son many companies do reactively once it is too late.
The third issue I want to touch on in the air freight sector is one that will be very familiar to you and is that of incident handling and business disruption. As you already know too well, the air cargo industry is subject to a wide range of predictable events that have the potential to disrupt your smooth operations, including severe weather, industrial action, security threats and ground handling accidents that impact the skin of the plane. When such incidents do occur then they can cost thousands of pounds per minute, with significant knock on effects elsewhere in your operations.
At this point all affected operators, including air freight companies, ground handling agents and airport authorities, need to be able to respond quickly to alert and activate their response teams and provide them with instructions on how to resolve the problem. They also need to keep their supply chain, customers and teams in the airport informed.
There are now critical incident notification solutions available on the market that fulfil all of these criteria and my experience the air freight operators have been slow to take advantage of this new technology to speed their business recovery operations.
That is certainly the view of a good friend of mine, Chris Notter, Chief Ground Handling Officer at Saudia Cargo. Under his leadership Saudia Cargo has selected Crises Control to be their critical event notification platform and partner for the Saudia Cargo Handling Programme, an industry leading quality assurance programme for the air freight sector.
Saudia are using Crises Control to support the CHP, through the delivery and tracking of documented operating instructions and automated performance reporting by department, team and even individual. They are using the platform to embed a whole range of operating processes, including critical event response.
As I saw in Brussels at ACH, the air freight sector is a vibrant and growing one, with a number of threats that need to be faced, but alongside these a greater number of opportunities to deliver efficiencies and resilience to improve operating performance and ultimately profit.