Air Cargo Management

How is technology impacting the freight forwarding logistics sector?

The domain of freight forwarding logistics is under significant technological development. IT, coupled with artificial intelligence (AI), is favouring industry integration and real-time visibility.
photo_camera Credit: Lufthansa Cargo/ Oliver Roesler

The domain of freight forwarding logistics is under significant technological development. IT, coupled with artificial intelligence (AI), is favouring industry integration and real-time visibility. Mario Pierobon reaches out to industry experts for an overview of major industry trends, and thoughts on how technology is developing in the sector.

According to Manel Galindo, chief revenue officer of WebCargo by Freightos, there are several areas of development in air freight forwarding logistics from a technological standpoint, including digital rate management for air cargo, real-time airline booking and airline connectivity, and the capacity to typical destinations.

He says: “It is critical to bring together both the dynamic spot market with contract rates, as well as block space agreements, to make sure that forwarders can make the best possible decision in real time.

“Freight forwarders need one place where they can see all the rates and give a quote and make the right decisions.

“Furthermore, leveraging real-time industry connectivity, freight forwarders can directly access airlines’ real-time rates and capacity so forwarders can give the best offer to their clients.”

As for the capacity to typical destinations, WebCargo is working to offer interline services to airlines.

“With interlining, forwarders can find rates to any destination in the world,” explains Galindo. “Sometimes, to make that happen, one needs to create interlines between two different carriers.

“Market intelligence remains critical for informed decision making. With more industry activity digitised, there is more of a direct feedback loop that can direct player decision making.”

Artificial intelligence (AI)

The last few years have certainly been eventful, affirms Philippe Uhlmann, head of air freight for Europe at Bolloré Logistics.

He says: “Essentially, freight forwarders are selling long-term while buying short-term, as a result, most large freight forwarders are now experimenting with rate predicting using artificial intelligence (AI) technology and predictive tools offered by specialist technology partners.

“By studying past variations over the last few years, seasonal patterns, consumer trends (e-commerce, electric cars, etc.) and geopolitical events, it is now possible to calculate fairly accurate rate predictions on trade lanes and freight modes.

“As a demonstration of how fast that technology is moving, it should be noted that three years ago no one could have thought of AI technology being useful within the logistics sector.”

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Freight forwarding logistics
(L) Philippe Uhlmann from Bolloré Logistics and (R) Stefan Pargfrieder from DB Schenker

AI-supported operational tasks such as REL models, video analytics, and sophisticated algorithms are making in-roads into enhancing operational tasks in the air logistics space, according to Stefan Pargfrieder, vice president for global air freight strategy and development at DB Schenker.

He says: “Classic operations research problems, for example continuous warehouse allocation optimisation, have become a lot more widespread due to a surge in technology providers.

“At DB Schenker, for example, we are using predictive analytics to optimise our hub operations or smart algorithms to optimise pallet utilisation.”

By leveraging the latest technology in data science, AI, and GenAI and Automation companies can become faster and improve service to customers, says Marcel Fujike, global head of air logistics it and technology at Kuehne + Nagel.

“We invest in a highly automated shipment execution to minimise the number of repetitive tasks and manual data entry so that our experts can focus on our customers,” Fujike says.

“Furthermore, AI is more and more used in the industry, and it can be used to predict future demand, pricing, and risk on specific trade lanes or for specific, sensitive shipments, such as temperature sensitive healthcare.”

Real-time visibility

One of the main areas of interest in logistics is real-time visibility, says Pargfrieder. “This has moved from a bespoke solution three-to-four years ago to a standard customer requirement by now.

“With B2C having led the way, B2B is now asked to deliver similar levels of transparency and insights into real-time shipment visibility.

“Overall, this is still at very early stages. However, rapidly declining technology costs will make this financially viable to scale, presenting supply chains with an unprecedented level of insights and data points for predictions and simulations.”

According to Galindo, freight forwarders embraced digitalisation because the airlines were able to provide robust application programming interfaces (API) and competitive service via digital platforms.

He says: “Once freight forwarders embraced the technology in service of their customers, the flywheel that kept more carriers returning benefited as well.

“This is a key point: markets embrace technology and digitalisation when they see value.

“And, of course, to make this all work, it is so important to listen closely to clients, partner with forward-thinking vendors and customers, and drive value with the combination of connectivity and tech, like dynamic quoting in our rate management and quoting tools.”

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Freight forwarding logistics
Freight being loaded onto an aircraft. Credit: DB Schenker/Mario Arnold
Systems connectivity

“The interconnectivity of systems has become a key factor for enabling structured data and information interchange between multiple parties, in many cases automating previously manual processes across the industry,” explains Pargfrieder.

“Whereas this facilitates data exchange in a one-to-one relationship, in a more long-time view, cloud services will surely play a dominant role in the air freight industry, enabling a many-to-many relationship and thus enhanced visibility and data exchange for all stakeholders of the transport chain.”

According to Fujike, the growing importance of connectivity throughout the value chain is crucial, and various initiatives such as cargo community platforms typically linking parties in one location are being witnessed.

He says: “These platforms link the forwarder with carriers and distributes then provides carrier responses to the forwarders quote requests.

“API usage is easing the efforts of connecting to other parties involved in the supply chain. But on the other hand, the growing requirements and demand from customers for accurate, near-real time information pressures supply-chain partners to automate their information exchange as well.”

Cyber security is another important topic in transport and the number of attacks has been steadily increasing over the last few years according to the European Union Agency for Cybersecurity (ENISA) figures with aviation being the most targeted sector, highlights Fujike.

He says: “As we are entrusted to handle our customers precious cargo every day, we need to ensure that the integrity of that cargo remains intact and that its journey is protected against potential threats.

“Cyber-attacks are steadily increasing, and so are our efforts to secure our own in-house TMS system; we developed a Cyber Disruption Protection liability extension that protects our customers’ cargo against costs and delays stemming from potential cyber-attacks to our subcontractors,” concludes Fujike.

 

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