Air Cargo Management

Change is in the air: Logistics companies face era of change

The cargo-partner facility in Ljubljana

Logistics companies are facing an era of unprecedented change as digitisation, operating models and customer expectations evolve.

A report by PwC has indicated that the transportation and logistics industry is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models are just some of the issues to contend with.

Clearly, the e-commerce boom is driving up freight movements globally, and this is evidenced by the key players and how they are engaging.

In September, SEKO Logistics announced it had acquired a majority stake in its strategic partner Omni-Channel Logistics to solidify and grow its e-commerce and technology solutions.

At the time of the announcement, Mark White, SEKO Logistics’ chief commercial officer said it was a significant investment for SEKO Logistics. “As we continue to invest in market expansion focusing on cross-border e-commerce and returns, the big winners will be our clients as we continue to push shipping and technology boundaries to a new level for retailers.”

In 2014 SEKO Logistics had also acquired an equity stake in full service e-commerce agency, Red Hot Penny, in the company’s move to provide a complete solution for growing retailers.

In Austria, cargo-partner is a privately owned full-range info-logistics provider offering a comprehensive portfolio of air, sea, land transport and warehousing solutions.

Christina Kalløkken, director corporate communications and marketing recalls when the company started out as an airfreight specialist with only five people based at Vienna Airport in 1983.

“Back then, we were called air-cargo partner,” states Kalløkken. “However, we soon began to expand our expertise to sea freight, road transport and logistics. Today, cargo-partner offers integrate supply chain and info-logistics solutions for our clients all around the world.”

Worldwide info-logistics solutions

Kalløkken says, “customers can choose between economy, priority and emergency service levels to find the optimal solution for their cost and speed requirements.”

In 2018, cargo-partner Group celebrated its 35th anniversary. Looking back, Kalløkken feels content with what has been achieved in these three and a half decades.

“We grew from a small air freight specialist in Vienna to an international all-round logistics provider by gradually and organically expanding our expertise and global representation. First, we branched out to Central and Eastern Europe, then Western Europe and the US, then the Asia- Pacific region and India. Today, we have more than 130 offices in 29 countries.”

Looking ahead, cargo-partner are currently focusing on two main areas: “On the one hand, we want to build up our contract logistics competence as a third pillar of our business, in addition to our core business of air and sea cargo.

“On the other hand, we are working on achieving a deeper integration with our customers by means of sophisticated IT services and tailor-made transport and logistics solutions.”

Kalløkken says one example of this is the new timber-based iLogistics centre at the headquarters near Vienna Airport, which was designed to meet the requirements of customer Engel, a manufacturer of injection moulding machines. “Both the layout of the warehouse and its processes are fine-tuned to our customer’s needs.”

Kalløkken affirms that this successful integration with the customer, along with the sustainable timber construction of the warehouse, makes the new facility an ideal example of how the company wants to develop further in the future.

The cargo-partner iLogistics Centre is made completely of wood, from the wall and roof construction to the façade. In total, 4,200 m3 of timber were used.

On a total area of 12,250 m2, the facility contains 24,500 pallet slots in the high-bay racking system as well as 32,000 small parts bins, 2,000 m2 of operative handling area and several variable areas.

The cargo-partner iLogistics Centre
The cargo-partner iLogistics centre near Vienna Airport

The warehouse provides dedicated equipment for the storage and handling of various types of goods – from sensitive small parts to standard pallets to long and heavy goods.

With its new facility, cargo-partner has created 35 additional jobs, bringing the staff up to a total of over 300 employees in Fischamend, Austria, and just under 500 in the whole of Austria.

Stefan Krauter, CEO of cargo-partner, explained his motivations behind this investment: “The transport and logistics industry never stands still. In times of globalisation and digitalisation, we constantly must keep transforming and adapting to stay ahead of the curve. The Vienna Airport region has always been an important hub for us and with our iLogistics Centre, we have successfully created a showcase project of ecologically and economically sustainable architecture.”

Earlier this year, cargo-partner announced the construction of another logistics centre in Ljubljana, Slovenia. So far, Kalløkken reports that the construction is well on schedule, with the opening of the centre in Ljubljana slated for August 2019.

“Due to its proximity to Ljubljana Airport as well as the excellent connections to Trieste [Italy] and Koper [Slovenia], this location is an important strategic hub to Asia and the Balkans,” she adds.

The vision is to make cargo-partner an environmental leader in the air cargo industry, as Kalløkken indicates. “We attribute a high priority to this topic in both air freight and ground handling.”

To meet the highest standards in this regard, cargo-partner follows a strict carrier selection process based on an evaluation of environmental protection aspects.

“We measure technical progress, operational issues, infrastructure and economic schemes, and preferentially work with carriers who can fulfil aspects such as a young fleet of aircraft, modern engine technologies, efficient load factors, optimised flight routes, e-freight promotion and development, long-term emission reduction targets and so on,” she points out.

Driving technology

SEKO Logistics is pushing its technology suite to the next level to support customers’ global demand chains. “Technology has always been a differentiator for SEKO in the eyes of its clients,” said Mike Powell during his appointed as SEKO Logistics’ chief technology officer earlier this year.

“SEKO has been providing technology solutions for many years that some newcomers to the market are only just starting to shout about. While they are doing that, we will continue to push the digital boundaries of the global supply chain process.

“I’m excited to build on the existing technology solutions that are adding value in global trade management, delivering proven Software as a Service (SaaS) solutions with extensibility and exploring how blockchain and other disruptive technologies can be a catalyst to add value to the bundled, customisable suite of products we have ready to ‘plug and play’ today,” he said.

Evidently, client expectations of their transportation and logistics providers have gone up; as they should. This is setting a new standard for technology in the industry and will define who shippers do business with.

A report by McKinsey & Co earlier this year highlighted that traditional air freight forwarders faced increasing pressure to digitise from three sources:

  1. digital forwarding specialists offering solutions for one or two elements of the value chain;
  2. digital forwarders providing a range of transport services almost as wide as traditional forwarders do, and a better customer experience at relatively low cost; and
  3. carriers building and improving their digital channels to serve customers, especially smaller ones, directly.

The air cargo sector is currently in a digitisation revamp of current systems to transform internal operations as well as the way to interact with customers.

The LATAM Cargo and American Airlines Cargo projects are recent examples that come to mind. LATAM Cargo announced a new partnership with global information technology firm Wipro for a multi-year cargo management engagement. Wipro is deploying its end-to-end cargo management system – CROAMIS as part of this engagement.

The end-to-end cargo management system

American Airlines Cargo selected IBS Software to implement a next generation cargo management system. With the implementation of iCargo, American migrates to a web-based, fully integrated technology platform connecting all its critical business functions.

The World Economic Forum reports that digitisation is expected to disrupt the wider logistics industry, of which air freight is a part.

This digitisation of air freight comes at an opportune time to the industry to help it reduce costs and improve revenue potential against a backdrop of challenging business conditions.

cargo-partner is continuously improving the data quality and performance efficiency says Kalløkken. In the past year, the company has managed to raise the groupwide data quality from 90 per cent to 97 per cent and performance by 20 per cent.

“Data quality is measured by accuracy in regard to time and content, while performance efficiency is measured by the number of completed orders per employee.”

Kalløkken explains that the continuous improvement process is based on the KPIs measured by means of what is called the SPOT Visibility and Collaboration Platform.

“We have been using SPOT since 2000 as a tracking and tracing tool for our clients. Since then, SPOT has evolved into a comprehensive supply chain management platform. Today, we use it to provide transparency and simplify communication with our clients as well as to help make our internal processes more efficient.”

Further, every cargo-partner employee has a personalised dashboard on the SPOT platform which helps them set priorities in their daily work and makes it easy to detect and resolve discrepancies.

The worldwide performance is measured centrally and published monthly so that all employees can have a clear understanding of the current status and the next objectives.

Kalløkken adds that customers also have an individual dashboard which always gives them a simple overview of their transports.

Clearly, to provide a digital experience to users and businesses with limited complexity and less capital expenditure, this is the way forward.

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