In a post-pandemic world, quickly moving from paper-based processes to the digitalisation of the entire industry will be the key issue – and the past year has provided a glimpse of what is possible, highlights international freight forwarding federation FIATA
The world will never be the same after 2020. The COVID-19 pandemic has shaken all industries and only time will tell how long the impact will last. The aviation industry has experienced by far the sharpest traffic decline in its history. Today, the overall capacity available for air freight remains well below the demand. This has led to higher air freight rates, as well as making the freight forwarder need to charter aircraft to meet the demand from the shipper. With aircraft belly capacities depleting almost overnight, and only freight capacities available, the greatest challenge was and remains to find space available at affordable rates.
Customers have been running amok in search of affordable space, and airlines are struggling to offer what customers demand due to various challenges. Whether it be limited freighter capacities, even-more-limited passenger-to-cargo (P2C) capacities, and trade imbalances in place due to ever-changing country regulations caused by the pandemic, the situation is not easy.
Despite the challenges, freight forwarders have shown great resilience at adapting to the new situation and developing new capacities in freight. Air freight businesses and airlines will further need to collaborate to overcome these challenges, so finding a balance equitably is going to be critical in the coming months.
A glimpse of what is possible
Looking into the future in a post-pandemic world, the main issue will be to quickly move from manual, paper-based processes to the digitalisation of the entire industry. Last year gave us a glimpse of what is possible. Digitalisation in logistics had perhaps never been as fast as it was in 2020. It was not a choice, but a matter of survival. The ‘work from home’ culture became a reality for many, and without efficient systems, this could not have been achieved. But digitalisation is always an ongoing process, as things change rapidly in this sphere.
In this sense, the supply chain industry remains fragmented on many counts. Freight forwarders still need to communicate with different airlines and ground handlers in most parts of the world using their different systems, rather than using mutually accepted platforms which would enable the seamless flow of cargo information. Hence, the need in logistics to have integrated digital ecosystems which allow stakeholders to leverage new and legacy technologies – and build automated processes around them. At FIATA, we recognize the lack of interoperability between systems and are working tirelessly on delivering our digital strategy, which will enable this seamless data exchange across the industry.
E-commerce effects
The demand for air freight services is expected to remain high, due to increased online shopping from consumers triggered by lockdowns. Consumer technology (smartphones, laptops, tablets and related devices) will continue to be in high demand. Even during these difficult times, e-commerce remained largely unaffected and, in fact, grew in strength. Air freight transports 80% of cross-border business-to-consumer (B2C) shipments and consumers demand fast deliveries – and speed is air freight’s distinct advantage. Demand for pharmaceutical and healthcare products is also expected to increase, not only for vaccines but overall. The aviation industry must therefore gear up to handle such time-sensitive and temperature-controlled commodities, as they are here to stay for a while.
General cargo, on the other hand, has severely dropped and it could take a very long time to recover. As shipping lines have caused many disturbances through schedule changes and very high rates, general cargo normally shipped by sea might be changing to air freight. The pandemic will have long-lasting effects and recovery could take a while.
As for the enormous task of vaccine distribution, air freight has certainly come to the forefront, with airlines and freight forwarders alike treating this operation with the sensitivity and urgency it deserves. The challenges are different in and for every continent, region and country, but it is possible to solve the problems. According to the December 2020 Sunrays Project report, an initiative supported by FIATA, nearly 46% of the air freight industry stakeholders (including airlines, forwarders, ground handlers, airport operators, and IT solution providers) felt better prepared for transportation of COVID-19 vaccines, compared to 28% two months earlier.
Vaccine distribution challenge
Today, at this early stage of vaccine distribution, the challenge lies not so much on the supply chain – which possesses the capabilities to ensure delivery – but on the production side, which is experiencing delays. Nevertheless, combined with the resilience and flexibility of logistics stakeholders at all levels, we are confident that all challenges will be met with care and determination to efficiently organise and distribute the vaccines on a large scale. FIATA, in collaboration with IATA, are working to provide the necessary guidelines to all players in the sector.
FIATA plays a pivotal role in the development of air freight globally. Our Airfreight Institute interacts extensively with airlines, through IATA, to promote the air freight industry. FIATA also liaises regularly with the International Civil Aviation Organization on training and security matters. During these unprecedented COVID-19 times, where air freight space has been drastically reduced and aviation is severely affected, FIATA continues to represent its members by advocating air freight assistance initiatives to address disruptions in global supply chains.
FIATA would like to thank Keshav Tanna, Airfreight Institute (AFI) Chair, and Lothar Moehle, AFI delegate, for their contributions to this article.
