Supply chain: Air Freight long-term contract challenges
Explore the challenges in the global air freight sector, the pandemic’s impact on logistics, and how digital transformation could offer solutions.
Modern supply chains face difficulties, including complicated long-term contracts, which are important for global business. These problems have been made more pressing by the pandemic, underscoring the demand for improved efficiency and streamlined procedures. The potential of the digital revolution in freight and transportation is, however, also highlighted by these difficulties as a key opportunity.
The Problem
Changes in Air Freight Contracts
Due to the pandemic, air freight contracts were extended from short to lengthy terms, allowing clients to secure space. However, stiff penalties for premature termination limit flexibility.
Documentation and Compliance Issues
Global trade necessitates sophisticated documentation, which is exacerbated by longer contracts. Significant delays are caused by administrative inefficiencies, particularly in customs.
Fragmentation of the Supply Chain
The fragmentation of the supply chain leads to inefficiencies owing to the lack of a uniform platform. International shipments can include 20–30 parties and 40 or more paperwork, which raises expenses and reduces service quality.
Pandemic Effects on Logistics
COVID-19 intensified the uncertainties in the logistics domain. The fluctuating contract landscape and erratic cargo movements led to a stark demand-supply mismatch. Interestingly, in April 2023, IATA reported that even as air cargo demand fell by 6.6%, the available capacity rocketed by 13.4%, creating an overcapacity dilemma.
Digitalization: The Solution?
The numerous problems highlight the critical importance of digital transformation in freight and transportation. With potential benefits like streamlined operations and enhanced visibility, is the digital overhaul the key to resolving these long-standing issues?
Indeed! Integrated digital platforms in the supply chain use blockchain, smart contracts, and predictive analytics to transform operations.
Read this article for a comprehensive understanding of how digitalization can solve the challenges.
These tools offer complete visibility, expedite operations, and improve decision-making. Data transparency is ensured by blockchain, smart contracts decrease manual intervention, and predictive analytics improve routes and pricing. Putting an emphasis on analytics-driven contract management allows businesses to assess contract viability and ROI, boosting efficiency and cost savings.
Are you ready to revolutionize your supply chain?
Unlock the potential of digital transformation today. Schedule a free strategy session with us and let’s explore unique, cutting-edge solutions for your supply chain challenges. Don’t let hurdles hold you back — leap forward with technology and watch as your problems transform into opportunities. Let’s shape the future of your supply chain together.
