USD10/EUR 9 FALL 2016 NETWORKING | KNOWLEDGE | ADVOCACY | WWW.TIACA.ORG ARTIFICIAL INTELLIGENCE – decoding market complexities INSIDE Technology: Cargo monitoring is being hampered by a lack of standards ACF program: A complete listing of the workshop and panel discussions Guest Column: Denis Choumert calls for an air cargo market open source platform One to one: Chris Welsh of the FTA on modernizing air freight Zoo Studio pour Aéroports de Paris SA.
Transcript
USD10/EUR 9 FALL 2016
NETWORKING | KNOWLEDGE | ADVOCACY | WWW.TIACA.ORG
ARTIFICIAL INTELLIGENCE
– decoding marketcomplexities
INSIDE
Technology:Cargo monitoring is beinghampered by a lack of standards
ACF program:A complete listing of the workshopand panel discussions
Guest Column:Denis Choumert calls for an aircargo market open source platform
One to one:Chris Welsh of the FTA onmodernizing air freight
Published by TIACATIACA Times is the quarterlymagazine of the AssociationP.O. Box 661510, 5600 N.W. 36th Street, Suite 620 Miami, Florida 33266-1510.
04 TechnologyIan Putzger looks at how technology isbeing used to track shipments, but issuffering from a lack of standards.
07 View from the Board Kwang-Soo Lee of Incheon Airport isamong airport executives giving theirview on the future of the supply chain.
08 MultimodalMultimodal hubs may be the template forthe future, although there is some reluctanceto face up to this, writes Robert Platt.
14 Artificial intelligenceAI will be a game changer for theindustry. Alex Lennane reports on someof the directions it is leading.
16 TIACA News TIACA’s new Board member StevenPolmans pledges to focus on collaboration.
18 New membersSpotlight on TIACA’s new corporate,forwarder and affiliate members.
19 ACFA welcome to Paris from TIACAChairman Sanjiv Edward.
22 ACF brochureA full listing of the workshop and paneldiscussions being held at the ACF inParis.
28 Guest columnDenis Choumert calls for an opensource platform for the air cargo market.
30 One to OneChris Welsh of the FTA and GSF talksabout his career and passion formodernizing the industry.
CONTENTS A people business
Networking | Knowledge | Advocacy
My tenure as Secretary General of TIACA since 2013 has been set against thebackdrop of some of the most eventful times in the 36 years that I have beeninvolved in our dynamic air freight industry. The regulatory and businesslandscapes are dramatically changing, and we have had to learn to adapt andinnovate as never before. But the need to keep pace with these changes has acost, and how we address this twofold challenge must, in the end, benefit us all.
I have attended countless meetings and summits with regulators all over theglobe as they plan a host of new security rules, advocating the needs of our wide range of membersand the air cargo community as a whole. While some of these are short-term changes, others maytake years to complete and finalize. Throughout this process, I continue to be encouraged by theirwillingness to hear the voice of our industry, and to better understand through our efforts how theiractions have an impact on every segment of the supply chain. Developing and maintaining theseclose relationships is essential as they take decisions that will affect all of us. I do believe that togetherwe will find global solutions that ensure we have a secure supply chain, which also works smoothly.
Disruptive technologies, meanwhile, are shaking up our manufacturing world and forcing some, letus face it, much needed change. The Internet of Things, smart warehouses, and 3D printing are justsome of the breakthroughs that, only a decade ago, felt like futuristic dreams but are now here tostay and are developing at eye-watering speed.
Our industry is learning to embrace the disruption and I have no doubt we will see slicker, moreefficient supply chains as a result. But in order to accomplish this, we must all, from consignor toconsignee, and every segment of our industry in between, continue to collaborate and identifysolutions together. The e-commerce revolution continues to force change and innovation and hascompletely altered the way we need to think about our customer service, delivery and security.Through this process I am convinced that we will emerge stronger as an industry, and move solidlyinto the digital world. In my view that is not a hope, it is a must.
At our last Air Cargo Forum (ACF) in Seoul, Korea, we called for closer collaboration. Industrylistened and we are indeed working better together. I am very proud of TIACA’s part in continuing toprovide a platform for that to happen. We are now looking forward to three days of lively andinformative discussion at our next ACF in Paris, with a multitude of networking and businessdevelopment opportunities. TIACA is unique in representing all sectors of the air cargo supply chain,and for this event we have put the shipper voice firmly center stage.
In these challenging times, it is vital that we have input and representation from all stakeholders toensure we have a successful and vibrant future. TIACA enables, encourages and championsprecisely that. Ours is a people business and I have been privileged to work with many innovativeand interesting colleagues. I am convinced that our industry has a bright future and I wish you all thevery best as part of that success.
Doug BrittinTIACA Secretary General
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To track cargo at the piece level, Air CanadaCargo is busy rolling out radio-frequencyidentification (RFID) across its network, with fullinstallations in key stations. RFID tags areembedded in barcode labels, which are usedin smaller stations.
Cargo is captured at six read points throughoutthe shipment process while it is in the custody ofthe carrier – from goods acceptance over build-up to export for outgoing shipments and import(entry into the warehouse from airside dock),breakdown and delivery at the receiving end.
At some points, RFID readers areplaced in pairs as portals to registerthe passage of cargo from one area toanother. At others, multiple units aremounted in clusters, which enables thesystem to pinpoint a shipment’slocation. One area where this comesinto play is container build-up, allowingthe system to register whether a piece isplaced in or taken out of a container.
High expectations
The real-time feed of data allows not only fastershipment tracking and monitoring, it also helpseliminate mistakes. Barb Johnston, Manager ofOperational Programmes, Air Canada, said it istoo early to quantify improvements, but thecarrier has high expectations.
After the roll-out, which should be completedhalfway through 2017, management intends tobroaden the use of RFID. Already trials are inprogress using it for mail bags, which arecurrently scanned manually in the industry.
One possible target on Johnston’s radar ispharmaceutical cargo. Air Canada’s RFID
readers can pick up thesignals from tags placedin many of theseshipments to monitor
ambient temperature.
Requirements for close monitoring continue torise. By 2018, seven of the top ten best-sellingpharmaceutical products will require strict 2°Cto 8°C conditions, noted Chris Fore,Compliance Manager of Envirotainer.
The regulatory bar is moving up. More than 40markets, including the EU, US, South Korea,China, and Brazil, are introducing new rulesthat require tracing by serial number tocombat counterfeit drugs. According toindustry tracking provider TraceLink, over 75%of prescription medications worldwide will becovered by the new rules by the end of 2018.
Leandro Moreira, Director, Life Sciences atBrinks, noted that other sectors areexperiencing similar developments.
He pointed to new rules in the US that mandatebest practices for sanitary transportation offood products. Better monitoring also helpsprevent theft and counterfeiting in the IT andapparel sectors, he added.
There is also a strong case for air cargo serviceproviders. “The industry needs to embracetechnology and continuous improvement not tolose more cargo to ocean transportation,”Moreira warned.
He emphasized the need to use monitoringdata in a more proactive manner, noting thatcurrently it serves mostly for post-incidentinvestigations. “This information can and
Fall 2016
Cargo monitoring’s MISSING HARMONYIan Putzger reports on hownew technology is beingused to track shipments, andon how the lack of standardsis creating problems for thesmaller operators.
Bow
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Air Canada’s RFIDreaders can pick up thesignals from tags placed
in many of theseshipments to monitorambient temperature.
www.tiaca.org | TIACA Times | 5
TECHNOLOGY
should be aligned with proactive processes toturn the information into action steps to preventsuch losses,” he commented.
“As supply chains become increasinglycomplex, companies seek solutions thatprovide greater visibility in order to manageand reduce risk. The trend is towardscomprehensive management of the supplychain,” commented Fore.
Increasingly this produces multiple layers ofmonitoring technology, such as Air Canada’splans vis-a-vis pharmaceuticals and RFID.Envirotainer is tracking its own containers –chiefly to monitor its equipment and improveavailability of units, but there are other benefits.
“We are able to aggregate data across variousshippers and look at various trade lanes. Wecan tell someone: ‘Here’s what you shouldexpect in this trade lane’,” said Fore.
Measuring parameters
Envirotainer can also measure otherparameters, like light, motion, humidity, shock,and so on. Fore stressed that this is not toreplace shipper’s own tracking devices. By thesame token, the container provider can trackindividual shipments but does so only for asmall fraction of its traffic.
The overlap of technology and shipmentinformation moving between differentproviders’ systems raises questions about dataownership and control. Five years ago mostpharmaceuticals shippers were adamant thatthe data was theirs alone, but they have since
changed their stance for the sake of bettervisibility, observed Fore.
“This topic has been the big elephant in the roomfor several years. As the industry evolves towardsefficiency, transparency, and compliance,information sharing will hopefully help supportcollaborative efforts,” remarked Moreira.
“You have to make sure you sanitize data. Youhave to come to some agreement with themanufacturer and the shipper. I think it shouldbe part of a service-level agreement what datais used and how it is managed,” Fore reflected.
When it comes to selecting trackingtechnology, much hinges on the needs andpriorities of the players involved, as each hasits particular strengths and weaknesses.
Data loggers, the type of technology favoredby pharmaceuticals shippers, are small andeasy to use and perform well. On the downside, the devices have to be programmed,software is needed to download the data, andthe technology becomes labour-intensive ifmultiple shipments are being received, notedFore.
He added that many pharmaceuticalcompanies will not allow reusable devices dueto worries that data from a prior trip might notbe properly erased.
Moreira noted that the time it can take for asignal from a device to reach the person whomonitors it from far away and makes a call to acontact to take corrective action can be quitelong. According to IATA statistics, 57% of lossesof temperature-controlled pharma shipments atairports happen on the tarmac, he added.
Global System for Mobile communications(GSM) automates the entire process andprovides real-time decision-making. It improvesproductivity and enhances visibility, Fore noted.However, GSM is not used in Japan and Korea,and it does not work in mountainous areas,deserts, or at sea. To be used on aircraft, thetechnology has to be approved by the airline.
Unlike GSM, satellite tracking offers globalcoverage. However, it does not have the samefrequency of pings as GSM, and is moreexpensive.
The sum of different technology solutions andofferings used by logistics players makes for afragmented landscape, which is all the morefrustrating for the absence of standards. Foredescribed this as both a challenge and a bigheadache for the airlines.
Disadvantage
It also puts smaller firms at a disadvantage.“Companies that have a global presence are ina better position to bridge the gaps from lackof harmonization. They can implement theirown standards,” remarked Moreira.
He gives kudos to IATA for championing theCEIV standard for handling pharmaceuticals.
The airline body had a Cargo WirelessTechnology Advisory Group to providerecommendations for common industrystandards and best practices related towireless monitoring devices but this peteredout, Fore noted ruefully.
“At this point your best bet is to talk tomanufacturers about standardization,” he said.
“I think the industry needs someone to take thelead in this,” he reflected. “We would like to beinvolved in this. If TIACA was to do it,Envirotainer would commit time and resourcesto participate.”
Fall 2016
Requirementsfor closemonitoringcontinue torise.
– Chris Fore,Envirotainer
Companies thathave a globalpresence are ina betterposition tobridge the gapsfrom lack ofharmonization.– Leandro Moreira,
Brinks
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What impact will e-commerce have on aircargo?KSL The growth of the e-commerce market willlead to an increase in demand for last-miledeliveries and same-day deliveries, bringingdisruption to the conventional transport modes.It will lead to an increase in intermodal transportsolutions. To meet the future challenges, weneed to focus on expediting Customs clearanceprocesses, developing new services to suit
customer needs, reducing delivery times andreasonable delivery fees, and increasing thesupply of infrastructure to respond to risingdemands for fulfilment centers.
AvdB E-commerce may not completely takeover, but we think the shift will be significantand we feel it will have implications for thewhole supply chain. It could mean a densenetwork of fulfillment centers which are constantly
supplied, but it could also mean more direct-to-consumer delivery – so more pieces of airfreight.
In both cases it means more local/last-milelogistics delivery. And then there is returnlogistics: how are products that are sent backto be dealt with? For this the same applies.
FG E-commerce implies changes in theprocesses and the compelling use of
Fall 2016
VOICE OF THE AIRPORT on the future of the supply chain
Kwang-Soo Lee, Chief Airport Operations Officer at Incheon Airport, is one of four TIACABoard members representing the airport. On the eve of our Air Cargo Forum (ACF) in Paris,France, which focuses on a collaborative vision for the industry, we asked for his perspectiveon market trends. Incheon has a Leading Airport Alliance with Groupe ADP, one of the ACFhosts, and Amsterdam Airport Schiphol, and we also spoke to Franck Goldnadel, ChiefAirport Operations Officer of Groupe ADP and Paris-Charles de Gaulle Airport ExecutiveDirector, and André van den Berg, Chief Commercial Officer, Schiphol Group, for their input.
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digitalization. We have to rely on each otherand implement real-time data sharing.
While e-commerce is boosting the world freightmarket, major actors like airports have toreorganize their cargo business/infrastructuresin order to gain time and develop their expressfreight activities. In this matter warehousesdirectly airside connected are a strong asset.
What is the role of the airport in the air cargosupply chain?KSL The airport brings together all supply chainmanagement (SCM) stakeholders and theyshould function as a gateway for global SCM.
Airports must play the role of a coordinator,initiating harmonious collaboration amongst aircarriers, freight forwarders, couriers, andrelated government agencies. As a coordinator,airports must secure leadership in SCM.
As a business partner to all stakeholders,airports should create a reliablecommunication system and we muststrengthen our competitiveness by leadinginnovative industrial convergence andproviding creative services leveraginginnovative technologies.
AvdB The air cargo industry has a role invaluable and speedy products such as spare
parts, gold and paper money, animals,medicine, flowers and other luxury goods. Inthis airports do not touch airfreight itself, we‘just’ facilitate others like airlines, handlers,forwarders, hauliers and Customs in theirshipment and in their storing of products.
However, in airfreight hardly any stakeholder isin a position to dominate the whole supplychain and that is why airports do have a role toplay: getting everybody on the same page todrive efficiencies, to lower costs and toenhance services.
FG I am certain it is not possible to have a largeinternational airport without major cargo activity.The function of the airport is to boost cargobusiness by gathering the cargo communityaround challenging and innovative projects, aswell as by promoting platforms cargo assets.
The airport’s role is to bring together allpartners in order to make the communitystrong and efficient. To achieve that, the airportmust facilitate and lead unifying projects thatcannot be carried out by each member of thecommunity individually.
What will the hub of the future look like?KSL Airports are leading development in the21st century providing a growth momentum ona national level.
Successful realization of hub strategies willhave positive ripple effects, not only for theaviation industry and the airport’s surroundingregions, but also for the entire nation.
Strengthening competitiveness on all levels willcreate economic added-value on an integratedlevel.
Airports will need to create cost-effectiveconnectivity among passenger airplanes andcargo freighters, as well as investing inexpanding airport infrastructure and adoptingnew technologies.
AvdB A good but broad question! To answer, Iwould like to define ‘future’ as five to ten yearsfrom now. The airplanes, runways, trucks andother structures will look pretty similar,however – although we think moststakeholders will be pretty much the same –we do think the supply chain will becompletely changed.
We believe the following trends will apply:tracking of all airfreight from-start-to-end, sometypes of airfreight temperature-controlled fromstart-to-end, security controlled airfreight,speedy and non-speedy airfreight. This willlead to a rise in product diversity for airfreight,which will lead to more airfreight.
Public bodies of countries will coordinate theirdata and checks. So, airfreight will beintegrated, and tuned in, with all other forms oflogistics, and so we, as airports, will workclosely with all relevant parties in logistics.
FG Improving the operational and economicefficiency of the cargo business and simplifyingprocedures associated with freight handlingare key factors.
Technological disruption affectingmanufacturing as well as changing behaviors,consumption modes, locations of productionand logistics organization/sites.The hub of the future, along with the cargocommunity, needs to adapt its processes to fitto these new parameters.
Combined action by everyone involved willprovide better monitoring of goods and shallmobilize the whole cargo community via thedevelopment of new technologies.
Dematerialization is essential to gain transparencybetween the buyer and the customer at theorigin of the order. Training and the integrationof new technologies will be top priority.
We have to adapt processes, adapt people,and adapt organizations!
Clarion Events, owners of both the Multimodal UK Exhibition, and the Supply Chain and Logistics Summits, will launch an Americas show in 2018, co-located with TIACA’s 29th International Air Cargo Forum & Exhibition in Toronto, Canada.
TIACA is the only organization representing all sectors of the air cargo supply chain, and our showcase Air Cargo Forum is a unique opportunity to explore new business opportunities, connect with suppliers, and learn from the experts.
The three-day conference and exhibition will provide a networking opportunity for shippers, partners, suppliers, and regulators from across the globe, as well as a chance to find new supply chain solutions, explore the latest trends and source new ideas.
www.tiaca.org | TIACA Times | 9Fall 2016
The logistics industry should collaborate toinnovate and embrace multimodal solutionsplaying to each mode’s strengths.
This is becoming a greater necessity as factorssuch as environmental pressures, rising costs,and an increasingly complex legislativelandscape are demanding industry to think uptransport systems that are more reliable,quicker, and more cost-effective.
Some are recognizing opportunity in suchchange, and efforts such as the Express RailEuro Carex high-speed rail cargo transportproject in Europe have culminated.
Once fully realized, it will be one of the firstinitiatives to move high-value, fast-moving aircargo from the current mixture of air and truckto rail, to have taken off.
A flexible FUTURE?
In a rapidly changing logistics environment, multimodal hubsserving all transport modes may be the template for thefuture. But there is a reluctance among traditional operatorsto face up to the challenges, writes Robert Platt.
Multimodal transportsystems, as at the Port ofFelixstowe here, might beboth more sustainable andalso help to alleviate costs
and create new efficiencies.
MULTIMODAL
Courtesy of Port of Felixstowe
10 | TIACA Times | www.tiaca.org Fall 2016
But the traditional players, and those in aircargo in particular, have been slow to embracenew ideas, often held back by a fear of losingmarket share.
Enno Osinga, former Vice Chairman of TIACAand former Senior Vice President at SchipholAirport, believes the logistics industry as a wholeis playing catch-up with a quickly evolvingmarket, with many not recognizing or capitalizingon the new opportunities and, as a result, beingdetermined to defend the status quo.
“There are some exceptions but, in general,traditional players – airlines, airports, logisticsservice providers, truckers, and rail operators –are too focused on the past and maintainingthe market in its current state, which has beenbased on competition between themselves,rather than embracing innovation,” he said.
“They are continuing to offer existing products,maybe cheaper, but often not changing whatthey offer.
Rapid change
“The reality is that we are experiencing a rapidlychanging business environment in Europe andglobally, both in the logistics business and onthe regulatory front. Some of these changesinclude an increase in night bans at airports,more road congestion and road tolls, thepossibility of increased security checks atborders, as well as a driver shortage that willimpact the capacity of trucking in Europe.
“We are also witnessing change as a result ofthe rapid growth in online retailing, which hashad an impact on the behaviors andexpectations of consumers who want faster andfaster delivery service. All companies involved inthose deliveries need to re-evaluate the differentopportunities available to them in Europe.”
Shippers have been the quickest to pick up onthe changing infrastructure of the business buttheir demands have mostly fallen on deaf ears,Osinga added.“Shippers are attempting to communicate thatthere has been a huge change in terms of theirbusiness model, which requires totally different
solutions. Yet industry does not want to comeup with new solutions – it has been so cost-driven and so competitive that they havealmost lost their ability to communicate.Instead of innovating, they are waiting forshippers to tell them what to do.”
Industry professionals need to eithercollectively or individually invest in innovation,as those that do are far more successful,Osinga added.
“But to do that they need to look outside theirown industry, and perhaps benchmark againsttotally different industries – that would be trueinnovation. The solutions to these problemsmay actually be outside the industry.”
One of these solutions may be improvingmultimodal transport systems, which might notonly be more sustainable, but could also helpalleviate costs and create new efficiencies.Osinga believes concepts such as the ExpressRail Euro Carex could set precedent, settingthe stage for a trans-continental distributionnetwork enabling next-day delivery with a lowercarbon footprint lower than current air and roadtransport solutions.
But Rogier Spoel, Policy Advisor at theEuropean Shippers’ Council, said a lack ofinfrastructure is hampering multimodaldevelopment on the continent. As airports andrailways are built and developed independently,the idea of designing and constructing mixedrail-to-air hubs has simply not yet taken placeon the continent on any meaningful scale.
“Some cargo, such as bulk and steel, eithercannot or would be very difficult to transport byair, but some cargo such as high-techproducts, which are increasingly beingtransported by rail, could make the modalswitch during a journey on the supply chain,”Spoel stated.
However, air transport would requireinterchangeable containers between Air andHigh Speed Rail to ensure a smooth transitionand to reduce costly loading and re-loading. Asolution would require a new technological
development that would allow easy transferbetween the different modalities, whilst keepingtransit times as short as possible.
“But multimodal transport solutions would begreat as each mode could play on the other’sstrengths – for example air is quicker, but mostcities have industrial centers easily accessibleto other transport modes,” Spoel said.
“Each mode also has its weaknesses –airfreight is typically more inward looking andmore competitive than other transport modes.Rail is competitive as well and suffers morethan the other modes from bureaucracy, but ingeneral it collaborates a whole lot better.Maybe the correct approach is learning fromeach other’s strengths and weaknesses andsharing best practice.”
New regulations
Spoel added that with new regulations, such asrestrictions on transporting lithium batteries byair, a shift has begun in the ways goods aretransported. Despite the hurdles, industry isincreasingly considering multimodal solutions.Some have even speculated about turningsmaller airports into multimodal cargo hubs, assuch facilities could be adapted more quicklyand at a much cheaper cost than larger airports,which are also much more passenger-focused.
“Multimodal hubs that service all transportmodes are the future, but we still need manymore improvements as the connectionsbetween different transport modes remain veryweak. Smaller airports could be the answer.Regardless, instead of viewing these changesas a threat, all industry should be workingtogether and looking at how we can all benefitfrom each other,” Spoel observed.
Dr Libor Lochman, Executive Director,Community of European Railway andInfrastructure Companies (CER), stated thatimproved rail-air collaboration will become anecessity as a result of globalization, which isdriving increased trade and changingconsumer demands.“Such solutions wouldalso help with sustainability, and therefore arein the public interest,” he said.
Multimodalsolutions wouldbe great aseach modecould play onthe other’sstrengths
Shippers areattempting tocommunicatethat there hasbeen a hugechange interms of theirbusinessmodel...
– Enno Osinga,Schiphol Airport
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www.tiaca.org | TIACA Times | 13Fall 2016
MULTIMODAL
“Intermodal terminals are needed desperatelyand it is apparent that, whilst our infrastructureis advancing, the market is changing faster.Industry needs a big push for this to reallyhappen and for it to happen on time. I believethat must come from an international level, notjust from a commission or a union.”
The pace of change is particularly apparent inrail transport, which some believe is goingthrough a kind of renaissance. Alice Defranoux,Head of Rail Freight, GEFCO Group, gave theexample of the Chongqing, China, to Duisburg,Germany, high speed rail line. It stretches6,946 m (11,179 km) and stretches across sixcountries, and was established with the aim ofcapturing some of the freight that currentlymoves from China to Europe by sea and air.
Defranoux said that the rail option is attractivesince it can handle heavier items than airfreight and is faster than seaborne cargo, andbelieves the success of the China – Europe railline could be replicated in Europe.
Lower cost solution
“Customers who used to transport goods viaair are increasingly looking for other lower costsolutions,” she said. “Train transit times areonly 15 days from China to Europe, and costfive times less than freight.
“We currently have about ten trains per weekon this service, which we expect to grow in thefuture. The speed has also improveddrastically, with trains covering approximately621 m (1,000 km) a day.
“Add to this, border crossing arrangementshave also improved; when we cross intoRussian territory, for example, we are no longerwaiting a few days as we have in the past.”Defranoux believes the air cargo industryshould see the rise in rail transport as anopportunity rather than a challenge.
“At GEFCO, we transport a lot of cargo via seaplus rail, which is great because most portshave good rail connections. In this respect, rail has improved the competitiveness of each port, so the two modes have benefitedeach other.
“Now, we have the opportunity to do the samewith rail and air. In much the same respect, ifthe rail infrastructure existed at airports, wecould see rail-air solutions cutting down China-Europe transport even further to just five days.”
But there are still many hurdles to overcome ifmultimodal solutions, and in particular air-railsystems, are to be established in Europe.These include limitations in cargo capacity onshort-haul flights within Europe, as well as weakconnections between rail and airport hubs.
“We do put cargo on short-haul flights but it isnot a priority at the moment,” Spoel said.
“Meanwhile rail, with all the regulations oftransporting across vast distances in Europe,including crossing the borders of severalcountries, still presents its own unique set ofchallenges.
“This adds a lot of time to delivery, which alsohurts costs. More transparency is also neededas the industry currently is too fragmented.”
ACF Paris speakersEnno Osinga, Rogier Spoel, and AliceDefranoux will be taking part in a sessionlooking at multimodal opportunities andchallenges in Europe at the Air CargoForum. More on the ACF on pages 22 to 26.For more details or to register to attend, visitwww.aircargoforum.org
Customers whoused totransport goodsvia air areincreasinglylooking forother lower costsolutions,– Alice Defranoux,
GEFCO Group
Courtesy of Port of Hamburg
Rail can handleheavier items than airfreight and is fasterthan the seaborneoption. Seen here israil transport outsidethe Port of Hamburg.
14 | TIACA Times | www.tiaca.org
Disruption has become a rather over-usedword recently. It is used frequently in thecontext of 3D printing, e-commerce, drones,robotics, and automation. But more change iscoming – triggering several questions: whatchanges are they, when are they coming – andwhat will you do about it?
In the short term, the most significant shifts toaffect logistics are in e-commerce. Much of thetechnology is already there – but the sector isstill in its infancy, and the total impact andsignificance of the shift is yet to be felt.
“The future is not just about new technology –it is also about what trends companies shouldnot be missing,” pointed out Niall van deWouw, Managing Director of CLIVE.
“There is a marketplace consolidation takingplace, consumers are buying more and moregoods from fewer and fewer companies.
“If we buy most of our things from a handful ofwebsites, that retailer will have tremendouspower over how those goods will be deliveredto the final customer. The manufacturers andtheir traditional logistic providers will have lessgrip on the flow of these goods.”
Interpretations
He noted that instead of pallets reflecting whata large manufacturer has produced, they willshow instead what a large group of consumershas actually bought.
“In that case the B2B element of the totallogistics chain will become smaller and theB2C part bigger,” he said.
However, this growing sector can also offergreater opportunities to smaller companies,according to Andrew Schmahl, Principal, PwCTransportation & Logistics practice.
“Part of the differentiation between logisticscompanies was relations with customers, butthe e-marketplace is very commodity based,and is democratizing those relationships,” heexplained.
“Smaller companies, and owner/operators cannow participate. Technology enablescompanies to synthesize global networks usingmultiple suppliers.”
He added that any disruption felt by transportcompanies could partly be of their ownmaking.
“Transport companies are not known for theirinnovation and wait for customers to demandit, which is why retailers have started buildingtheir own capacity as the industry has notdelivered. If you are no longer a customer, youare a competitor.”
One further impact of e-commerce has beencustomer expectations in terms of visibility anddelivery times – we expect our e-tailer or itsdelivery company to give us preciseinformation on the status of a shipment. Yet all
Alex Lennane looks at why artificial intelligence will be anindustry game change and at some of the directions it isalready starting to lead those exploring its potential.
www.tiaca.org | TIACA Times | 15
ARTIFICIAL INTELLIGENCE
too often in the B2B world of logistics,customers have not had this service.
“One thing that needs to happen is true visibilityof where a shipment is, and the quality andstatus of goods,” said Adriana Diener, GlobalLead for Accenture Freight and Logistics. “Butthanks to the internet of things it will get solved.
“The transportation side can benefit fromknowing how many days it will take and why ashipment may be stuck. There is a significantnumber of inaccuracies in documents andmanual intervention. The ability to have visibilityis better from the express sector but you do notsee it to the same extent with other players.
“You cannot rely on Electronic Data Interchange(EDI) messages – there are a lot of failures.”
Chemical manufacturer TOSOH would like farbetter visibility from its logistics suppliers. LarsDroog, Supply Chain & General AffairsManager, believes forwarders should sell datato shippers.
“The biggest focus for us is on supply chainvisibility, track and trace, and deliveringperformance. And how we have visibility on alldata in the organization.
“The biggest challenge is to get theinformation,” he says. “For us it will improveplanning. We could also optimize locations andlower cost. But we need partners who willcollaborate and share data, and who havevisibility. In the long term – why not sell dataabout things like unstable areas, strikes,congestion? If we had that information in
advance we could re-route a shipment, butmostly we do not receive it.
“Forwarders do not have the IT infrastructure togather the information and send it on. Theysend newsletters. We are interested in quitespecific places, but there is not a singleforwarder who offers a solution for that.”
Logistics companies should also be aware ofchanges in the manufacturing process whichwill affect supply chains.
Automation, robotics, and 3D printing will allhave the effect of shortening the distancebetween production and consumption;manufacturers will no longer need low-costlabour countries. “Modes such as air freight arehighly ‘disruptable’ because of the speed-to-market selling point,” warned Schmahl.
Parcel industry
He added that robotics will also become usefulin the parcel industry – but at the momentrobots are less efficient than humans forsortation.
“Manually, people do about 1,000 pieces anhour. But robots have not had ocularsensitivity to view packages, so they areslower. It is a bit like the game Jenga –humans have an innate sense of what will fit.Robots do not have the sensitivity of humantouch – they crush. But we are going to needthis technology – it is hard to find enoughpeople in peak times working for USD10 toUSD15 an hour.”
Fall 2016
Diageo’s Johnnie Walker label hasproduced a smart bottle togetherwith tech company Thinfilm that candetect the sealed and opened states.
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www.tiaca.org | TIACA Times | 17
ARTIFICIAL INTELLIGENCE
Another major change is that we buy less assoftware becomes a larger component inmost goods.
“From a tech point of view, the internet ofthings involves less and less hardware andmore software – which is not good for airfreight,” explained Van de Wouw. “The value ofsoftware – relative to the hardware it is ‘on’ – ofeverything from phones to cars is going up. Wesimply need less physical stuff – we no longerbuy movies and music, we simply subscribe toNetflix and Spotify, for example.”
This is also the case in the pharma industry,where Mobile Health – apps – are increasinglyused. The total market for Mobile Health isexpected to reach USD26 billion next year –and is likely to lead to a reduction in thetransport of medical equipment and medicines.
Other industries are using more software inproducts, which could alter the logistics cycle.Telematics is changing the automotive andaerospace industries, for example showingwhen key parts are likely to fail. It will alsoboost safety and tracking.
“Machine learning and data analytics will helpmachines predict things, and help withclosures, accidents,” explained Schmahl.
Smart bottles
Diageo’s Johnnie Walker label has produced asmart bottle together with tech companyThinfilm that can detect the sealed and openedstates. Diageo can send personalizedcommunications to consumers who read thetags with their smartphones.
Companies using sensor tags can track theirproducts across the supply chain, frommanufacturer to retailer and consumer. Theycan help identify issues such as counterfeitsand temperature excursions, and providemanufacturers with better data.
Further down the line is blockchain, newtechnology cited by both Schmahl and Diener.A distributed database originally conceived forbitcoin, it maintains a growing list of records
and transactions which cannot be tamperedwith. Every user is able to connect to thenetwork, make new transactions, verify themand create new blocks.
“No trust is needed, everything is verifiable bya network of people,” explained Schmahl. “It isimpossible to hack transactions, and intransport it would link one participant withanother. It is an integrated global networkwhich will tell you who has it, who broke it, whyit is late. It has the potential to democratizeaccess to different participants. A freightmanagement system is OK, but blockchain isopen source. It will require some industrycommitment though.”
Impact
Diener agreed that it will have a “significantimpact”. “With increased demands onshipment security coupled with financialsecurity, blockchain opens the door to smartersharing and accessibility of shipment data torelevant parties such as Customs, shippers,and carriers when and where needed. Thistranslates into closer integration and ultimatelyinto better decision making. It is not only aboutvisibility of the shipment but also, for example,about the manufacturing cycle, therepositioning of containers, etc, that drives thedecisions each involved party makes.”
“It will not happen next year, but blockchain isbeing tested and the first transaction happenedrecently in another industry.”
Even further away is the physical internet, atthe moment an academic concept.
“The digital internet sends an anonymouspackage of data via the skies, which becomesnon-anonymous when it arrives,” explainedSchmahl. “So the question is whether there is away to create physical standards, so that ananonymous box can move through any systemor channel, participating with blockchaintransactions, which will make the infrastructurea bit more accessible. You could have maybe
ten different box sizes that fit together in aTetris kind of way.”
But while other industries embrace newtechnologies, logistics is still slow to use newapplications in its own business. Part of thereason, said Schmahl, is that the freight lies ina hidden world.
“Scientists do not think about trucking, butthere is an opportunity for transport companiesto make the industry known to graduates andattract younger people. At the moment, thepeople who would use new tech are driversand handlers – not people who have previouslybeen exposed to this technology. But now withsmartphones, you overcome that obstacle –there is an understanding. The question is: canI find the talent to create solutions, and can Ifind people who can operate it?”
He added that there is not always an easyanswer to investment.
“Lots of our clients are working on cost versusbenefits. Cost is always real and now, whilebenefits are potential and later, so it is difficultto know how to respond.”
Diener said the logistics industry’s slowadoption of technology is a “real concern”. Butshe has advice.
“If I were at a transport company, I wouldupgrade the IT infrastructure to eliminate muchof the manual intervention that is needed todaywhile setting the foundation to create and trackdocuments, monitor shipments, engagedigitally with partners and third-party suppliers,forwarders, and shippers to establish a bettercollaborative connectivity. And I would look forpartners and disruptors that can help meredefine the way I run the business to driveefficiency and lower costs.
“Once you have all this in place, look at bigdata analytics, which will tell you what youcannot see today. Business intelligence is notenough. Big data will tell you what actions youneed to take.”
Fall 2016
Blockchainopens the doorto smartersharing andaccessibility ofshipment data.
– Adriana Diener,Accenture Freight
and Logistics
The internet ofthings involvesless and lesshardware andmore software – which is notgood for airfreight.
– Niall van deWouw, CLIVE
18 | TIACA Times | www.tiaca.org Fall 2016
Secretary General Doug Brittin retiresDoug Brittin,Secretary Generalsince 2013, hasadvised the Boardof Directors that hewill retire at the endof this year.A selectioncommittee, underthe direction ofSebastiaan Scholteof Jan de RijkLogistics has beenestablished and hascommenced the process to review and recruitcandidates.Brittin will stay with TIACA in an advisorycapacity once the new Secretary General hasbeen appointed to ensure a smooth transitionand to continue to support the TIACA Board.
Strong turn-out for first WCOe-commerce working groupTIACA took part in the first World CustomsOrganization (WCO) e-commerce workinggroup (WGEC). The group, which was set upto look into Customs issues surrounding e-commerce, was also attended by tradeassociations, UN organizations and big e-commerce players including Alibaba, eBayand Amazon.
Security talks in Brusselsand Washington
TIACA attended the European UnionStakeholder Advisory Group of AviationSecurity (SAGAS) meeting to discuss latestPre-Loading Advance Cargo Information(PLACI) developments. SAGAS is exploringthe option of setting up a cargo-specificworking group and TIACA will report back to
members on the progress of this. TIACA alsoattended security meetings in Washington,including a meeting of the Aviation SecurityAdvisory Committee (ASAC) attended by TSAleadership which discussed, amongst othertopics, the potential expanded use of caninesfor screening and enforcement issues.
US freight forwarder programcomments submitted
TIACA has submitted comments andrecommendations for the proposed Change 6to the Indirect Air Carrier Standard SecurityProgram (IACSSP), which the TransportationSecurity Administration (TSA) released forindustry comment in August.Many of TIACA’s comments were centered onseeking improved clarification and definition,to eliminate burdensome cross-referencinginherent to the programs in the past, and costto operations and training.
TIACA NEWS ROUND UP
Steven Polmans, Head of Cargo at BrusselsAirport Company (BAC), pictured right, haspledged to focus on improved industrycollaboration in his new role on the TIACA Board.
Polmans has been voted onto the Board andsaid he would continue to encourage greatercollaboration across the supply chain to copewith a rapidly changing industry, starting withour Air Cargo Forum in October.
“I strongly believe that more cooperationbetween all stakeholders is to the benefit of our industry,” said Polmans.
“We are facing challenging but interestingtimes. Our industry is in need of change, anddigitization and innovation must become partof our behavior and culture.
“For the past six years at Brussels Airport, I have been committed to bringing the aircargo community together and I am pleased and honored to join the Board ofTIACA to continue this work together with other industry leaders, the TIACA team, and the whole cargo community on a global level.”
Polmans, who has over 15 years’ experience inthe aviation industry, is also Chairman of thenewly established Air Cargo BelgiumAssociation based at Brussels Airport.
Prior to joining BAC, he worked for groundhandler Aviapartner Cargo, before moving onto logistics marketing specialist GLU4 BV,
where he managed the company’s Beneluxoperation.
Polmans joined BAC in 2010 and wasappointed Head of Cargo in 2012. He oversees the development andimplementation of the airport’s overall cargo strategy.
New TIACA board memberpledges to focus on collaboration
r
www.tiaca.org | TIACA Times | 19
NEWS
Fall 2016
SPOTLIGHT ON NEW MEMBERSNew Forwarder Members
AC World Connect PVT LTD – The Cyprus-based company works in the field of privatecharters and aviation logistics.www.worldconnectpvt.com
Carloking Services Ltd – A 100% locallyowned Ghana freight forwarding companyoffering complete solutions to its domesticand international clients. www.carloking.com
Damco – A Dutch-based freight forwarderspecializing in SCM, air and ocean.www.damco.com
FPS Logistics – An international courier andcargo company set up in 2004 in New Delhi,India. http://www.fpslogistics.in
LUG International – A Qatar based companyspecializing in air and sea cargo freightmovement, Customs brokerage service,warehousing and distribution, project cargomovements, cross-border haulage, domestichaulage, and groupage service.www.lugintl.com
Wax Logistics Ltd – The company won theInternational Association of Movers award forthe most professional logistics company inNigeria in 2013. http://waxlogistics.com.ng
Affiliate Members
Asociacion de Agentes Aduanles delAeropuerto de Mexico AC – A civil associationwhose main objective is to represent itsCustoms brokers associated with the variousentities and authorities related to foreigntrade. http://aaadam.com.mx
Atlanta Logistics Connection – A Hapeville,Georgia, US based non-profit organizationproviding education on all aspects ofinternational trade. www.atlanta-lc.org
Find out more about membership by contactingKenneth Gibson at [email protected] or visitwww.tiaca.org
TIACA will co-locate its Toronto ACF in 2018with a new Multimodal Americas show to belaunched by Clarion Events, owner of both theMultimodal UK Exhibition and the SupplyChain and Logistics Summits.
The Multimodal Americas exhibition willshowcase leading logistics and transportcompanies over a three-day event, which willalso include a series of seminars and practicalworkshops held alongside TIACA’s Toronto ACFin 2018.
“TIACA’s 28-year heritage and the association’sair cargo expertise is the perfect fit for us, andwe are looking forward to working with itsmembers to produce an exciting new show inToronto,” said Robert Jervis, Logistics PortfolioDirector, Clarion Events.
“We will provide an important platform for thelogistics community in North America todiscover innovative ways to improve theirsupply chains, meet new suppliers, and growbusiness.”
The Toronto event takes place from 17 to 19October 2018.
“We are excited to be announcing plans tocollaborate with a leading exhibitionorganizer,” said Doug Brittin, SecretaryGeneral, TIACA.
“Both of our organizations are leaders in theirfield, and working together we look forward toproducing a memorable event that will helpour community to innovate and growbusiness.”
TIACA believes that any regulations on airtransportation of lithium batteries should beglobal in nature so that members can comply with a common standard and avoidconfusion and inefficiencies to the detriment of safety.
The Association has published a positionpaper stating its belief that the InternationalCivil Aviation Organization (ICAO) providesthe appropriate forum for bringingstakeholders together to discuss the manycomplexities relating to lithium batteries.“We are encouraging ICAO to further clarify
Standards and Recommended Practices(SARPs) and policy relating to the air transportof lithium batteries, with the goal of reducingcomplexity, enhancing understanding ofexisting requirements by state regulators aswell as industry, and compliance,” said DougBrittin.
“ICAO should continue to encourage affectedregulators to partner with industry to clarifyand simplify the requirements, whereappropriate, in order to facilitate a betterunderstanding of all parties in lithium batterysupply chains.”
TIACA in new Multimodal Americas collaboration
Position paper outlines need forglobal lithium battery regulations
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www.tiaca.org | TIACA Times | 21
ACF
It is with great pleasure that we welcome youto TIACA’s 28th Air Cargo Forum (ACF) inFrance’s beautiful City of Light, Paris.
TIACA represents all sectors of the air cargocommunity, and the ACF is a uniqueopportunity for us to network, grow business,and learn from expert speakers, as well asregulators.
Our industry is facing challenging times, andTIACA has a vital role to play in providing abackdrop for us to get together to exchangeideas and share best practice, as well as tomeet with colleagues and suppliers to find newways of delivering more efficient, secure supplychains.
The dramatic changes brought about by e-commerce, as well as disruptivetechnologies such as the Internet of Things,and 3D printing, make it imperative that weevolve and innovate.
Opportunities
With challenges come opportunities, of course,and there has never been a better time for usto explore new ways to collaborate to ensurethat our industry does just that.
Our Forum theme focuses on a vision for ourindustry, with sessions covering issues fromnew security and Customs legislation todisruptive innovation and embracing theCloud.
By inviting so many thought leaders to sharetheir insight and analysis, we are ensuring thatour members and the industry at large staysahead of the curve. As part of the discussion, Iwill be leading a panel on the cargo hubs of thefuture, looking into how the airport communitycan gear up to deliver an efficient cargoplatform in these changing e-commerce times.
E-commerce will doubtless continue to be amajor driver, with supply chains gettingshorter – and airport strategic planning shouldtake this into consideration.
Some activities will move closer to, or takeplace on-airport and this has to be factored infrom the start – airport masterplanners need toprovide more on-airport space for cargoprocessing for second and third tier activities.
E-commerce
Regulators will also need to align to meet thechanging environment created by internationale-commerce. Security remains a majorchallenge and airports should be proactivelyplanning infrastructure and futuristictechnology to cater to this.
Cargo is often a neglected area for airports butthere are proven models to demonstrate thatcargo investment drives cargo volumes.Modern air cargo hubs will require investmentin automation and new technology andalthough cost and space are issues, there aresmart ways to address these.
Collaboration will be critical going forward, notonly for our hubs, but for the industry at large.TIACA plays a major role by facilitating thatcollaboration and enabling us to share bestpractices.
Driving efficiency
TIACA also takes the voice of the industry to the regulators so that changes can be made that drive efficiency in the air freightsupply chain.
We have an opportunity to learn from eachother and plan for the future, and I am lookingforward to meeting with you to discuss yourchallenges so that together we can make themost of these exciting times.
On behalf of the Board of TIACA, we would liketo extend a thank-you to our kind hosts andsupporters, Groupe ADP and Air France KLMCargo, and wish you all a fruitful andinteresting ACF.
Fall 2016
COLLABORATIONdrives our industry forward
Sanjiv EdwardChairman, TIACA
E-commerce will doubtless continue to be a major driver, withsupply chains getting shorter – and airport strategic planningshould take this into consideration.
ACF 2016Wednesday 26th October
09.00-10.00 Plenary Session: Air cargo vision 2020
Speakers: Doug Brittin, Secretary General, TIACA (Chair)Dr Fang Liu, Secretary General, International Civil Aviation Organization (ICAO)Sergio Mujica, Deputy Secretary General, World Customs Organization (WCO)
11.00-12.00 Air Cargo: What lies ahead?
Speakers: Sebastiaan Scholte, CEO, Jan de Rijk Logistics, Vice Chairman, TIACA (Chair)Randy Tinseth, Vice President – Marketing, Boeing Commercial AirplanesOliver Von Tronchin, Head of Freighter Marketing, Airbus S.A.S.Marco Bloemen, Senior Vice President, Seabury Group
11.00-12.00 Global Shippers Forum Briefing – Connecting the links to a high-performance supply chain!
Speakers include: Ariaen Zimmerman, Executive Director, Cargo iQKester Meijer, Director operational Integrity, Division Safety and Compliance Monitoring Manager, KLM Cargo, and Board Member Cargo iQ Lucas Kuehner, Global Head of Air Freight, Panalpina, and Board Member TIACAJohn Batten, interim Europe CEO, WFS, and Board Member Cargo iQ Chris Welsh MBE, Secretary General, GSF, and Director of Global and European Policy, FTA
12.30-13.30 Disruptive Innovation – an inspirational roadmap for tomorrow’s leaders
Speakers: Christopher Shawdon, VP Logistics Solutions, Unisys (Chair)Jim Friedel, President, Strategy Validation, LLCLise-Marie Turpin, Vice President, Cargo, Air Cargo CanadaOlivier Rochet, CEO and Founder, ScallogSimon Clark, Vice President of Business Development in EMEA, WiseTechGlobal
ACF 2016Wednesday 26th October
14.00-15.00 The new EU Customs code explained
Speakers: Vladimir D. Zubkov, Member of TIACA Board of Directors, Vice President, Relations with International Organizations, Volga-Dnepr Airlines, Dr Susanne Aigner, Head of Unit Customs Legislation, DG TAXUD A2Hélène Crocquevieille, General Director, DGDDIKester Meijer, Director Operational Integrity and Division Safety & Quality Manager, KLM CargoBrigitte Iconomoff, Manager Customs Regulatory Affairs, FedExJean François Auzéau, Customs Commission Chairman, TLF Overseas, Vice-Chair CITI, Customs and Indirect Tax Institute, Clecat
14.00-15.00 Global Shippers Forum Briefing – Quicker, slicker air cargo
Speakers include: Robert Mellin, Strategy Development Manager, Industry and Society, EricssonChris Welsh MBE, Secretary General, GSF, and Director of Global and European Policy, FTABoubacar Djibo, Director, Air Transport Bureau International Civil Aviation Organization (ICAO)
15.30-16.30 Multimodal opportunities and challenges in Europe
Speakers: Enno Osinga, former Vice Chairman, TIACA (Chair)Jacques Dirand, Head of Passenger & Freight Services, Community of European Railway and Infrastructure Companies (CER)Tariel Chamerois, Quality, Security and Environment Manager, DB SchenkerDenis Choumert, Chairman, European Shippers’ CouncilAlice Defranoux, Head of Rail Freight, GEFCO Group
15.30-16.30 Airport Briefing – Developing and marketing the airport economic logistics platform
Speakers include: Thomas Phillips, President, KPA Keiser Phillips Associates, LLCTrudy Wassel, Senior VP, Anchorage AirportProfessor Jane Tian, The Civil Aviation Management Institute of ChinaMichael J. Bednarz, Manager of Air Cargo Business Development,Port Authority of New York & New JerseyKwang-Soo Lee, Senior Vice President of Marketing, Seoul-Incheon International Airport, Board Member, TIACAChen Huaguang, General Manager of Marketing and Investment Department, Sichuan Province Airport Group (Chengdu Airport)
10.30-11.30 e-Business Challenges
Speakers: Amar More, CEO, Kale Logistics, Member of the TIACA Board (Chair)
Glyn Hughes, Global Head of Cargo, IATA
Jean-Louis Salfati, �e-Freight Project Manager, Air France Cargo
Frank Newman, MD, FedEx
Jérôme Balbi, CEO, Sodexi
Valerie Dubuisson, Vice President International, Parcel Division, La Poste
10.30-11.30 European Shippers’ Council Discussion Platform –How can shippers maximize on the Air Cargo Proposition?
Speakers: You, the audience
Enno Osinga, former Vice Chairman, TIACA (Chair)
Lucas Kuehner, �Global Head of Air Freight, Panalpina
Steven Polmans, Head of Cargo, Brussels Airport Company
Marcel de Nooijer, EVP, KLM Cargo
Marc Dellafaille, Purchasing Logistics Expert, Agfa –Gevaert N.V.
12.00-13.30 Power lunch: Impact of the new economy on cargo Speaker: Matthieu Pélissié du Rausas, Director, McKinsey & Company
ACF 2016Thursday 27th October
14.00-15.00 Manufacturing and market trends that will shape the industry
Speakers: Essa Al-Saleh, CEO, Agility Logistics, Member of the TIACA Board (Chair)
Chris Welsh, Secretary General, Global Shippers’ Forum
Lars J.T. Droog, Manager – Supply Chain & General Affairs, TOSOH Corporation
Pascal Meyer, �Head of Transportation and Customs, CHANEL Fragrances and Beauté
Adriana Diener, Global Lead and Managing Director, Accenture Freight & Logistics
Andy Schmahl, Partner, PwC Strategy&
15.30-16.30 The Cargo Hub of the Future
Speakers: Sanjiv Edward, Head of Cargo Business, Delhi International Airport, Chairman, TIACA (Chair)Uwe Beck, Managing Director, BeCon Projects GmbH
Franck Goldnadel, Executive Director, Chief Airport Operations Officer, Groupe ADP
Managing Director, Paris-Charles de Gaulle Airport
Jean-Yves Chaumet, �Senior Vice President Operations, Air France Cargo
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For years the central topic for many on air cargohas been innovation. From e-freight to Cargo iQ,and from data pipelines to Cloud solutions,everyone sees the need for innovation.
However, the discussions should not be onwhat kind of innovations the air cargo marketneeds, but on how we can implement them.Frankly, the air cargo supply chain needs allthe innovation it can get as this will ensure ourmarket continues to improve and is fullyprepared for a changing world.
Worryingly, according to the State of LogisticsReport for 2016, logistics service providers(LSPs) feel threatened by technological
innovation, yet are looking to it as a way toattract new customers. LSPs see stagnation ofgrowth and high competition as the majorthreats and innovation as an opportunity. Thereport also conducted a survey – interestinglyenough, 46% of the LSPs surveyed expected togain most of their business in the 12 monthsahead through innovation. So while innovationis viewed by LSPs as a competitive tool, theyare also deeply wary of it.
Technological advancement in automation andintelligent software is regarded as a potentialthreat to the business as well. Not surprisingly,in the same survey, shippers’ benchmarkingcriteria was focused mainly on value for money,
and therefore cost and reliability. This might bea somewhat disappointing outcome at first,seeing shippers sticking to the same dogma ofcost and reliability. However, these will improvethrough innovation. Further digitalization,sharing of documents, track and trace, and theconnection data platforms should lead to arange of improvements. These include areduced administrative burden, less waitingtime, more transparency of the operation, thereduction of margin of error, and increasing thesafety and security of operations, with theeffect of lowering costs and raising reliability.
Tough competition
We know competition is high within air cargo,especially among LSPs who are fighting for theservices of shippers. This tough competitiondoes not leave much room for cooperationbetween the LSPs and other parties within the
Fall 2016
Denis Choumert, Chairman, European Shippers’ Council,calls for an open source platform for the air cargo market.
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Innovation is already here,the trick is to implement it
www.tiaca.org | TIACA Times | 29
GUEST COLUMN
supply chain and has led to a standstill ininnovation. The best way to successfullyinnovate new products and ensure theirsuccess, as well as continued evolution, is ifthere is an industry-wide consensus to shareeveryone’s developments and experience.
It is not without reason that one of the greattechnological and business pioneers of the 21stcentury, Elon Musk, released all the patents thatwere owned by Tesla Motors for advancedelectric vehicle technology. The patents arenow in an open source environment to sharewith whomever. Tesla understands that the onlyway to achieve growth and to further mature itsproducts, as well as to encourage furthertechnological breakthroughs, is to share itsinformation with its competitors.
The alternative is for every motor company tobe isolated and stuck in its own system. Themethods employed would never improve fromthe experiences of other companies. Thissecond option hampers efforts to be anindustry pioneer and innovator. In fact, if you copy a competitor’s system you
risk being sued because you are breachingintellectual property rights. This meanseverybody is trying to invent the wheel, buteach wheel has to be significantly different.
Another company adopting open sourcetechnology is, of course, Google. It knewopen source would allow smaller techcompanies to feed off the Googlesystems and grow, but also becomeinseparably connected with Google.You only have to look at the wayGoogle Maps has been implementedby many companies and vice versa.
Low trust
Innovation within the air cargo supplychain fails because competition is highand trust is low. But by breaking thiscycle we can also break freefrom the stagnation in themarket, increaseshippers’ interest in airfreight and resurrectthe sector as amodality.
There is another reason that the open sourceoption should be on the table. All innovativeproducts within air cargo touch on governmentaspects in one way or another. Whether it isCustoms related, a phytosanitary inspection, orrelated to security and safety, cooperation andaccess in some form is needed. Governmentscannot favor one commercial system, or theywould get into trouble with competitionregulators. Regulators are also not keen onaccessing innovations separately because it istoo time consuming. The best way forward inworking with governments is through an opensource product.
Cargo figures
We have all seen the International Air TransportAssociation (IATA) cargo figures for July 2016:measured in freight ton kilometers, demandincreased 5% compared with July 2015, thefastest pace of growth in almost 18 months.However, there is no reason to lean back,because global trade growth is sluggish andbusiness confidence is weak. We only have tolook at the container liner shipping market,another sector challenged by overcapacity, tosee the issues, such as the demise of Hanjinand its effects ripple throughout the market.But Hanjin was just investing in capacity andcost, and not innovating.
Fortunately, there are exceptions to the rules inthe air cargo market, which we hope will leadthe way to an open source platform. In fact,TIACA would be the ideal platform to createthis open source community because of its
position, the parties involved, andthe goals of the association.Maybe the Air Cargo Forum inParis should conclude withthe creation of a TIACAOpen Source InnovationPlatform (TOSIP). It has anice ring to it…
Fall 2016
Maybe the Air Cargo Forum in Paris shouldconclude with the creation of a TIACA OpenSource Innovation Platform (TOSIP).
– Denis Choumert, European Shippers’ Council
Tesla patentsare now in anopen sourceenvironmentto share withwhomever.
30 | TIACA Times | www.tiaca.org
The Freight Transport Association (FTA) hasbeen around for over 125 years. How havethe needs of the freight industry changed inthis time?In some ways not much. The FTA’spredecessor association was founded by agroup of businessmen led by the then LordMayor of London to challenge the dominanceof the rail and canal companies in setting non-negotiable tariffs for shippers. The results ofthat early collaboration led to an Act ofParliament which established that all rates hadto be consulted upon, and ultimatelysanctioned by, civil servants. Price and tarifftransparency remains as topical today as it wasthen. Although modern supply chains areconsiderably more complex than 127 yearsago, the fundamentals remain the same.
How do you feel the industry will evolve overthe next 20 years?I wish I had a crystal ball. Probably the greatestchange and impact on the freight industry inthe last 20 years has been the development ofthe internet and information communicationstechnology. I do not think we have reaped thefull potential and economic benefits of that,particularly in air cargo, but the future of aircargo may well hinge on exploiting thepotential to reduce transaction costs andspeed up door-to-door delivery times. Onesenses though, that our industry will be heavilyimpacted by the climate change challenge. Theneed to cut growing transport emissions in linewith the December 2015 Paris Agreement,particularly in aviation and shipping, couldpresage major changes in the global supplychain and sourcing strategies, and could bethe spur for further innovation andtechnological solutions. I hope so.
What motivated you to pick a career in thetransport industry?Like a lot of people in our industry, I fell into theindustry when I became responsible for freightprocurement working for a global papercompany. Like others, once in it I got hooked.At times it is the most infuriating of industries,
but it is also dynamic and exciting. With myinterest in politics and the policy process, Ijumped at an opportunity of joining the UKFTA. I have been privileged to represent thefreight industry and help affect some changesthat have hopefully had a positive impact onthe industry, particularly for shippers.
What aspect of your role do you enjoy themost?I still get a tremendous buzz from the challengeof leading the Global Shippers’ Forum andFTA’s Global & European Policy, and seeingour policies influencing national andinternational transport policy and legislation.For example, FTA’s ‘SKY High Value’ documentput air cargo center stage in the policy andpolitical debate over future airport capacityin the UK, and Sir Howard Daviesspecifically referred to this whenannouncing his recommendationfor a third runway at Heathrow –the FTA’s preferred option.
What have been the proudestmoments in your career?There are many, including thosementioned above. In the mid-1990sI was a strong advocate fordeveloping a global shippers’representative organization. Seeingthe realization of this in June 2011when the GSF was formallyincorporated as a non-governmentalorganization (NGO) is close, if not top, ofthe list. Today it has 33 national andregional shippers’ organizations inmembership and is going from strength tostrength. In the maritime arena, sitting in theEuropean Court of Justice in Luxembourg andhearing that we had won our cases in a seriesof anti-trust complaints against variousshipping cartels was vindication of aten-year campaign to end seriouscartel abuses in thecontainer shippingsector. Similarly, therepeal of the liner
conference block exemption from EUcompetition rules, which has totally transformedthe liner shipping industry following a 20-plusyear campaign, stands out as one of myproudest moments, even if it has not exactlyendeared me to the shipping industry!
Can you describe a typical day in your job?No, there is no typical day – that is theattraction of job!
How should the airfreight industry beresponding to challenges such as modalshift? Is the future of freight multimodal?In 1995 I authored a paper entitled ‘Air Cargo2000 and Beyond’ for the European AirShippers’ Council which summarized whatleading European shippers thought the aircargo industry needed to do. Much of that isregrettably still relevant. The key message wasthat the air cargo product needed to emulatethe simplicity and price attractiveness of theexpress industry. Today, there is the addedcompetition presented by deepsea shipping asshippers have moved away from air freight tocut their costs for what many believe is anexpensive mode that does not add sufficientvalue. For the want of sounding like a stuckrecord, the air cargo supply chain needs to bequicker and slicker. That means embracing e-
commerce and simplifyingprocedures to reduce costs and
cut door-to-door transittimes by a half.
Fall 2016
A passion for modernizing the air freight industryChris Welsh, a member of the FTA’s senior managementteam, has played a leading role in representing shippers tothe European Union and global organizations for over 30years. In June 2011 he became the first Secretary General ofthe Global Shippers’ Forum (GSF).
