Understanding Ericsson’s ‘Airfreight Data Backbone’

posted on 3rd April 2018

Frustrated shipper turned air cargo solutions provider, Robert Mellin, explains his company’s project to provide end-to-end visibility from shipper to consignee

After spending many years as a frustrated air cargo shipper, telecommunications network specialist Ericsson and its outspoken senior executive Robert Mellin have been working on developing a solution to help enable air freight to become more efficient and transparent. And over the last year or so, Mellin – who was previously head of distribution logistics but is now a global strategy development manager for the group’s ‘Industry & Society’ business line – has been discussing and gathering support at events and conferences for the creation of the so-called ‘Airfreight data backbone’ or ‘Logistic data backbone’.

The initiative seems to have garnered considerable interest from various people within air freight, including apparently some tentative support from IATA, but has left some, perhaps less-tech-savvy, observers rather confused about the project – for example, exactly what is the main problem it is trying to solve, and how it is going to do that?

Some industry executives have got the impression that it involves trying to create software that will link the fragmented air cargo players in a way that would allow them to communicate in an integrated fashion, like the so-called ‘integrators’ are able to currently. Others are under the impression that the aim is to create a neutral platform or mechanism within ‘the cloud’ to enable all the players within the air cargo chain to communicate in real time about shipments, without exposing to their potential competitors the identity of their customer, or other commercially sensitive information.

Others still have been intrigued by the mention of the future potential of 30 billion ‘connected’ devices worldwide and the fact that cargo will at some point become ‘connected’. These observers have been left wondering whether the main aim of the project is, ultimately, to gather so-called ‘big data’ that the industry can use to identify patterns within the logistics chain, with the aim that this can be used for multiple purposes – some, presumably, as yet unidentified – that would improve the efficiency of the logistics chain. And some wonder whether it may be a combination of all these things.

And so, in a bid to provide some clarification and clarity, CAAS put some questions to Robert Mellin about the project…

What is the main problem that you are trying to solve?

End-to-end visibility from shipper to consignee.

What is it about that problem that has proven so difficult for others to solve in the past?

Collaboration across the supply chain and transparency.

How do you intend to solve this problem, in simple terms?

Create an open and neutral ecosystem for the players in the supply chain to collaborate.

What do you expect the main benefits to be for members of the air cargo sector and their customers?

Reduce cost and improve customer satisfaction by providing simplified connectivity to collaborate and reduce the amount of the costly EDI links among the players;

Improve competitiveness and sustainability and open up the ecosystem for SME players to be part of the ecosystem;

Provide value-add to the end customer of the sector (shipper and consignee).

How does your project compare with and contrast with Cargo iQ and its aims?

Cargo iQ has been addressing the airport-to-airport, carrier-to-carrier, carrier-to-freight forwarder, carrier-to-GHA, but shippers have been indirectly engaged. Ericsson (and other shippers) and carriers have approached IATA and Cargo 2000/Cargo iQ in a workshop in Geneva early this year to take the initiative, but we did not get a definitive confirmation from IATA and from Cargo iQ to champion the initiative. Hence, we are pushing forward with establishment of a new association to represent the interest of the shippers and consignees as the end customer of this sector.

The long-term vision of the logistic backbone as an ecosystem is not limited to the air freight, but includes all the surface cargo transport modes (truck, rail, ocean and river transport).

How would your project interface with or build upon the achievements or processes of Cargo iQ?

We have been involving Cargo iQ right from the beginning and we are looking into the standards that IATA has been working on to take [these] into account.

You have spoken about the ‘value’ of the information or data that will be generated. Can you say a bit more about what it is that will be valuable, why, and to whom?

Better transparency of the data and, in combination with the information of the data (‘meta data’), bring the following value to the players in the supply chain:

Reduction of cost via ‘create-once, reuse-many’ principle for data;

Better planning on the subsequent supply chain once the shipment arrives at the destination. (For example, Ericsson still has a long supply chain even after the shipment arrives in our warehouse. This is only applicable for those shippers with unfinished goods);

The ‘meta data’ (information about the data) will be as valuable as the data itself in the future – like routing selection analysis based on the track and trace performance; LSP selection; carrier selection using empirical performance; etc. It can be as simple as consulting firms buying the data for their industry analyses and reports.

To what extent is the project about gathering ‘big data’ about air cargo operations (in a neutral or anonymised form) that can be analysed and used to improve efficiency or quality?

This is a medium-term use case to use the breadth and the depth of the information in near real time to make decisions on the strategy and operation of the player in the supply chain.

How long do you think it might take to create something that has tangible benefits to members of the air cargo sector or their customers? What benefits do you think those will initially be?

It will take 1-2 years to get the basic building blocks in place and most of it due to the soft aspects of the collaboration and a proper governance to reach a consensus on how the best to transform the sector. The technology is already available in other industries and in the adjacent sectors.

How big might those benefits eventually be?

The analysis that was done by IATA has quantified the benefit in cost savings alone at a magnitude of around US$2 billion. This does not include reduced tied capital and other savings derived from improved planning at the shippers’ end and improved customer satisfaction.

[The cost savings cited by IATA are: messaging costs; data-correction costs; data-entry costs; process costs; and customs overcharges – with process costs and customs overcharges accounting for the vast majority of the savings].

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Online cargo marketplace consolidates as Freightos acquires WebCargoNet
The creation of the world’s largest database of air, ocean, and land freight rates is aimed at accelerating the uptake of digital freight bookings, reports Will Waters

Ambitious online freight marketplace Freightos and its plans to accelerate the uptake of digital freight bookings have taken a further step forward after the company agreed to buy the world’s largest air cargo rate management provider, WebCargoNet, creating what it claims is “the world’s largest database of air, ocean, and land freight rates”.

Freightos said the combination created a database with hundreds of millions of international and domestic rates and routes, making it “simpler and faster for carriers and forwarders to sell their services and for importers and exporters to buy”. WebCargoNet will retain its independent brand, bringing air cargo rates online worldwide, complementing the Freightos ‘AcceleRate’ freight rate management solution and the Freightos Marketplace.

There would be no immediate changes to current offerings, but “over time, strategic synergies will be leveraged to provide more comprehensive and innovative online solutions to carriers, forwarders, and shippers”. Sources said the acquisition was “in the seven-figure Euro range”.

Freightos operates an online marketplace for shipping, as well as also providing its Freightos AcceleRate software-as-a-service (SaaS) to automate pricing and routing for leading carriers, freight forwarders and shippers. Founded by serial entrepreneur Zvi Schreiber, Freightos is incorporated in Hong Kong, with a global presence, and has raised $23.3 million from leading venture funds.

Freightos’ SaaS technology powers instant freight quotes internally for international freight forwarders including CEVA Logistics, Nippon Express, Hellmann World Logistics, and offers freight rate management and pricing and routing optimization for supply chain companies like Sysco Foods, Panasonic USA, and Marks & Spencer.

Zvi Schreiber, founder and CEO of Freightos, commented: “Combining these two technologies takes us a step closer to bringing freight shipping online and into the 21st century for companies big and small.”

Manuel Galindo, CEO of WebCargoNet said: “Joining Freightos brings WebCargoNet instant scale and the capacity to rapidly advance the technologies we are bringing to market.”

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Cargonaut builds links with seaport community systems providers
The Amsterdam-based information services provider becomes the first specialist air freight member of international network IPCSA, to help drive cooperation, innovation and change in air logistics, writes Will Waters

Cargonaut has become the first dedicated air cargo ‘Port Community System’ member to join The International Port Community Systems Association (IPCSA), in a bid to encourage co-operation in driving change and innovation in the air cargo sector – including by combining the experiences from different modes of freight transport.

The Amsterdam Schiphol Airport-based air freight information services provider, which celebrated its 30th anniversary in May, aims to bring its experience in the field of ‘Air-PCS’ services to help improve the standardisation of information and air cargo processes and ultimately to optimise and create value for customers according to Cargonaut’s senior strategic advisor Lex Werkhoven.

“Joining IPCSA will enable us to work with other Port Community Systems and join forces nationally and internationally,” says Werkhoven. “IPCSA also provides the benefit of promoting a joined-up approach of business and government agencies.”

A number of IPCSA’s members already operate in the air environment as well as the ports environment, but as a dedicated ‘Air-PCS’ operator, the association believes Cargonaut will bring to IPCSA conferences, working groups and discussions its own in-depth knowledge and expertise in the air cargo business, including market intelligence, processes, information and use of data, as well as technical knowledge in the field of data, messaging, connectivity and system architecture, Werkhoven says. Cargonaut is a market leader in information services for the air cargo industry, providing specialist software and consulting services to airlines, freight forwarders, handling agents, carriers, consignors, Customs and other public administrations.

Werkhoven told Cargo Airports & Airline Services (CAAS): “Cargonaut already has connections to several other Air Cargo Community Systems and has close contacts with Air Cargo Community System providers. We seek more co-operation for driving change and innovation in the air cargo industry.”

He added: “Port Community Systems, whether they are working in the air or sea cargo sectors, operate in a fast-moving, dynamic environment. For Cargonaut, a key issue is the creation of ‘Green Fast Lanes’, requiring cooperative working between business, Customs and other government agencies.

“Other challenges include modernising the use of data and re-design processes to make the maximum use of reliable data – changing from digitised documents to pre-information based processes,” Werkhoven continued. “A further challenge is the creation of a ‘network of networks’, connecting Port Community Systems, to benefit customers both nationally and internationally.”

In terms of the benefit this would bring to customers, and whether there any initiatives to create such a ‘network of networks’, he told CAAS: “For our customers, it means a further standardization of processes driven by reliable information. For example we would like to create Green Fast Lanes: more predictable, faster and non-interrupted cargo flows and processes, thus saving costs and create value for our customers.

“For example, at Schiphol Airport we already introduced eLink for a smoother, faster and more predictable export process (delivery of export goods to ground handlers with checks on goods, driver, truck, customs and security regulations). With our membership of IPCSA and collaboration with other Air Community System providers we would like to create this network of networks: one virtual big data pipeline for data sharing to the benefit of our customers.”

Richard Morton, secretary general of IPCSA, commented: “This represents not only a further expansion of our membership but also adds a new dimension, as Cargonaut brings its very specific experience in the air cargo sector to the Association. IPCSA was founded as a European association five years ago; since then, it has continued to expand rapidly and we now have more than 30 members around the world, providing representation in each of the five UN Regional Commission regions.”

He said IPCSA’s geographical reach enables it to address the needs of members on a regional as well as international basis. The Association also has consultative status at the International Maritime Organization, providing an important platform for representing the needs of its members at the highest level.

IPCSA was originally founded in 2011 as the European Port Community Systems Association by six Europe-based PCS operators. It was re-launched in 2014 as an international association, reflecting its growing membership outside Europe.

Today, IPCSA’s membership operates in ports handling more than 100 million containers and 2.5 billion tonnes of cargo a year – statistics that show the growing importance and influence of Port Community Systems in supporting effective trade facilitation. Membership of the International Port Community Systems Association is open to Port Community System operators and port authorities.