Digitization in Air Freight: An Analysis
The Pandemic as a Catalyst
Although digitization has been in process for years in the air cargo industry, the current global trade situation is further accelerating the move. The COVID-19 pandemic has had an astonishing and persevering effect on global trade, and air freight is certainly a included. The grounding of passenger flights due to social and travel restrictions, combined with the increase in online shopping from people stuck at home, resulted in a surge in air cargo prices.
Previously, air cargo operated in the background of the airline industry while air travel remained the industries main source for profits. Now, passenger revenue has dropped by about 70% while cargo revenue has surged 27%. This swing in the balance of passenger and air freight revenues has been helping airlines make it through the pandemic while encouraging beneficial changes in air cargo operations.
One factor resulting in a push for digitization is the increased use of spot rates and a decrease in long-term contracts. While the passenger side of the airline industry generally has online channels and marketplaces, air freight has lagged in implementing such tools.
Prior to the pandemic, shippers and freight forwarders would use rate sheets or login to the airlines websites to get their contract rates. This was sufficient for pre-covid shipping levels, but it quickly became clear that the industry needed digital booking capabilities to smooth the process for unprecedented floods of requests in the spot market.
Many carriers have already begun accelerating a shift to online sales channels and marketplaces, which provides carriers access to more customers as compared to using their own websites alone. Although the shift had begun even before the pandemic, the rate of growth then was not nearly as high as today.
For example, the online quoting and booking platform WebCargo by Freightos has reported extraordinary growth in the number of transactions of about 2000% in the last 12 months. Additionally, Vice President Camilo Garcia has said that the last two years constitute “more progress than during the last 15 years” when it comes to digital pricing.
Despite these great strides, there still remains much work to be done. An industry-wide overhaul will likely take years, requiring a top-to-bottom shift in corporate culture. But full implementation will give companies greater access to the market, increase transparency, and improve the efficiency and speed of pricing and quoting.
ClearFreight has highly trained air freight specialists waiting at the ready to assist you in finding the best options for your cargo. Let us show you how we put our customers forward by putting their needs and concerns at the front of the line. Contact us today to tell us about your logistics needs and learn how our supply chain solutions can take your business to new heights.