SAS Cargo is focusing much of its strategy on digitising its processes and looking at collaborating with partners as it looks to further improve the efficiency of its air freight operations.
CAAS spoke to president and chief executive officer, Leif Rasmussen about what the carrier is doing and if its efforts have been a success, and to get his thoughts on whether the industry is still dragging its heels on investing digitally.
What is SAS Cargo doing to digitise its processes and operations?
We have had quite a success with our online booking portal since we launched it in 2015. We put a lot of efforts into constantly improve the online experience for our customers in order to meet our customers’ expectations, as we believe this is the way forward to success. Today we receive 90% of our bookings online in our home market (Scandinavia) and 75% worldwide. We believe this is a good acknowledgement of the fact that it’s working well.
It’s vital to have the majority of our customers online to simplify the whole process of booking air freight. You can today via our booking portal create and get a confirmed booking, price and capacity included, in just 84 seconds. In addition, you are able to create most documents needed for a shipment as this is now part of the booking portal offer. It allows all stakeholders in the supply chain to both access the necessary documents and collaborate trough a very easy sharing process.
We now have to continue our journey towards further digitalization. This means looking at how we work internally, our tools and systems and of course most importantly – keeping up with tomorrow’s customer expectations where flawless transactions, mobility, personalisation and easy access across all platforms are amongst the key factors.
Looking at other industries, we see that the digital developments followed by business disruptions are changing the way many traditional businesses or industries used to work. We are well aware of this, as our industry has worked the same way for decades. This could impact the way we present and develop our products, plan our executions and how we look at the entire value chain.
We have to apply our value chain as the basic for collaborating and meeting our customers and other stakeholders expectations. There is nothing indicating that air freight should be exempted from the same digital transformation that most other industries have gone through. At the same time, we have to ensure we have the right competencies on board and the framework that supports this development.
Is digitalization too slow in the air cargo industry or is progress being made?
In times of change, one key to success remains constant: understand what your customer wants. We must ask ourselves: How can air freight remain relevant in customer centric times characterised by the e-commerce boom and digitization?
Air freight is vital for international trade. Air freight represents less than 1% of world trade by volume, but over 35% by value. The global upswing that e-commerce is undergoing is positively affecting the transport industry and air freight, providing a lot of potential. However, it also puts light on our industry and the fact that there is a lot of room for improvements opens the door to disruptive innovations – also from outside our industry.
I think we have to prepare for our present business model being challenged by actors from outside our industry. Putting full focus on the customer requires us to look at elements such as liquid expectations (B2B decision makers bring their B2C behaviour into the purchasing journey) and aggregators (generating transparency and price comparisons). We are looking at how all this will impact our future business, organization and processes, stakeholder relations, collaboration and our business model.
An implementation of innovative and competitive digital solutions in the industry requires that all stakeholders put the customer at the center, secures “just in time” / on demand delivery, offers customer transparency and integrates a digital strategy that offers a coherent experience through all channels.
Transparency is becoming best practice within all industries and the end customer’s demand for supply chain transparency will continue to push technology forward. If we don’t look at logistics inefficiencies ourselves and start implementing new business models and ways of working that will provide the end customer with what they expect – someone else will.
The use of blockchain for example, will enhance messaging and trust between the supply chain partners and give the end customer full transparency and a better service experience. We cannot look away from the fact that, like in most other industries, the end customer will expect to have full visibility of the entire supply chain in real time.
Is there resistance to change in the industry from old processes (paper etc) or is it due to a lack of investment/finances?
I think it’s a combination of both. The transport industry, is far behind the general digital development level and it has been so for many years. There seem to have been a general notion of seeing disruption as a threat or something that won’t affect us – rather than seeing new opportunities and potentials to expand our business. Let’s not go the Kodak way.
The trend seems to be shifting slowly now and more and more companies within our industry are embracing the digitalization – but we still have quite some stretch to go.
It is in this process also required that authorities are adapting their processes and regulations, not act as obstacles.
The air freight industry must do a so called digital reshape with the help of tech companies and start-ups. And it’s time to assess what role data and transparency can play in supporting new, successful business models that now need to replace the old ones. We should ask ourselves: If we were to start from scratch, would we build the same business model?
Shippers expect accurate, prompt and complete information on a shipment’s status as well as guarantees that the shipment is delivered intact, undamaged and complete.
Is SAS Cargo meeting demands of e-commerce and benefitting from the boom? If so, how and where?
The e-commerce boom has meant an increased demand for air freight. We try to maximise utilization of our capacity and adjust our products and services to meet the present needs of our customers. As already mentioned e-commerce is positively affecting the transport industry and there is a general demand for speed. This is where air freight delivers.
What potential disruptive elements are emerging?
We live in a world where change is our only constant and we are daily faced with new, innovative solutions to yesterday’s tasks. The transport industry is no exception and we can expect a lot of changes to how our business is run as disruption and digitalization is rolling into the market. We need to maintain the customer focus and understand what tomorrow’s customer expects.
At the same time, we need to look at technology trends and what other industries are doing to use digitization as an opportunity rather than a threat. I think the crucial task is to develop strategies that are agile, flexible and has a long-term perspective. It’s impossible to foresee what the future holds in detail, especially with the exponential rate of changes in mind that we are facing within several areas. So, an open and flexible mind, an eye towards the distant future and a constant finger on the pulse of the customer is what I believe will help us stay on the right track.
Today’s customer is used to know where their products are in real-time and with what mode of transport these are being sent. They will not accept not having insight in complex and burdensome processes.
For example, when someone buys a car, they compare prices, using supply and demand to make a well-founded decision based on value and cost. When a customer is booking a hotel room, they have an array of choices they can make to reach the final product. Customized to their very own needs and likes. We must look at how we as an industry can offer the end customer the same possibility when they want to book air freight.
What is SAS Cargo doing in the supply chain in relation to the above questions?
We are looking at potential partnerships/collaborations as well as constantly trying to develop services and products that will simplify the value chain and make air freight easier for our customers. Most of all we are looking at how to meet customer expectations in general and the need of the end customer to have full insight into our product and services in particular.
We cannot expect our industry to follow a different path than all the others. Therefore, I believe it’s time to open the door to all stakeholders and through technology and innovation ensure we are collaborating on joint platforms. We need to look at solutions that are open market places and that can offer customers the chance of comparing and making decisions based on all factors they consider important. Be it price, speed, availability, quality in transportation.
What are the biggest challenges and opportunities for SAS Cargo?
All of the above. A volatile and rapidly changing industry means opportunities to differentiate. Either we seize these opportunities – or someone else will. Based on our in-depth knowledge of the industry, we should take up the challenge and pursue the necessary digital transformation. We have a competitive advantage compared to outsiders.