IBS Software leads the air cargo march towards artificial intelligence
IT IS encouraging that a significant number of operators within the air cargo industry have now accepted — embraced may be going too far — the realisation that only with new technologies will they have a fighting chance of remaining competitive in an increasingly volatile business environment.
It is disappointing though that it has taken a global health pandemic and tumultuous supply chain disruptions to force this evolution, writes Thelma Etim.
When you add into the airfreight soup the emergence of surging e-commerce sales and the war in Ukraine, along with soaring fuel costs, the need for flexibility and enhanced efficiency, it is obvious that greater visibility has never been more critical.
The number of airlines which are now rushing to partner with a raft of digital disruptors’ e-booking platforms is reliable evidence not only of the new-found respect for the value proposition of digitalisation but also of the improved return on investment (ROI) potential it brings. This is especially true of the increasing electronic access to the much sought-after small and medium freight forwarders and their shipments.
Ashok Rajan, head of cargo and logistics solutions at IBS Software, sits in the middle of this digital wind of change and the volte-face shows no signs of abating, he says. In an exclusive interview with aircargoeye.com at the International Air Transport Association (IATA) World Cargo Symposium (WCS), he also revealed that, over the past 12 months, there has been a noticeable significant mind-set change towards investing in digital tools.
“Honestly, the big thing [we have witnessed] is people are now willing to spend more [on this],” he admits. “There is sometimes a fear amongst carriers of missing out, which was not the case a long time ago, and this [realisation] is also leading to further innovation,” he observes.
The software-as-a-service (SaaS) company is not only a disruptor but is also a digital facilitator within the industry due to the creation of popular products such as its Application Programming Interface (API)-inspired iPartner Customer platform, which enables data exchange in real-time with forwarders, regardless of their legacy processes. This development is true of all digital sales channels such as Cargo.One and other e-bookings platforms. Their products effectively reduce airlines’ deep-rooted expensive costs of internal IT integration infrastructure and messaging exchanges, Rajan underscores.
Digital benchmarks
IBS Software’s digital expertise has recently been celebrated by Lufthansa Cargo, which credits their fruitful 10-year partnership with the success of its own internal digital evolution. The decision to jettison Mosaik, its core 30-year-old legacy IT platform, has created a new system that, ever since, has “formed the nerve centre of operations”.
The disruptor’s main iCargo platform inspired the creation of a highly complex iCAP transformation project, which involved more than 300 global locations across the German airline’s network and at its major hubs in Europe, including the Frankfurt base.
The expansive project now manages the movement of the carrier’s volumes of cargo, embracing its freighters, its ground handling agents (GHAs) as well as at airports. Following the success of a pilot programme, the airline eventually entrusted the full ownership of hosting and maintenance of the iCAP platform to IBS Software.
Dorothea von Boxberg, chief executive and chairman of the executive board at Lufthansa Cargo, underlines that IBS has been a strong partner in guiding the airline’s digitalisation journey over the years. “The replacement of legacy IT systems, the laying of the foundation stone in the area of digital fulfilment, to the development of more far-reaching IT solutions have now become the backbone in our IT operations,” she reveals.
“It is our goal to continue to work together to drive the [further] digital transformation of our industry, improving data quality and connectivity with our customers in the process and making our own processes more efficient as well.”
Back in 2018, by charging customers a mandatory ‘penalty’ fee for handling their paper airwaybills, the carrier emerged as a global standard bearer in digitalisation when its e-airwaybill (e-AWB) penetration reached almost 74 per cent. That development was lauded as a simple but radical move within the otherwise analogue air cargo industry.
Rajan emphasises: “I view our decade-old strong partnership with Lufthansa Cargo with immense pride. It truly represents what can be accomplished through a partnership that goes above and beyond that of a buyer-supplier relationship. This partnership has created several innovative business practices, many of which are industry firsts revolutionising and improving quality across cargo operations in a rapidly changing industry,” he adds.
The two entities also collaborated to pioneer the iPartner Handling platform in 2021, which they insist is also an industry first. That system, now involving 50 airports and 30 handlers, eliminates paper-based processes across the airfreight division’s ground handling portfolio by digitalising tasks and processing checks conducted by its business partners on the ground.
AI supply-chain management
These important digital benchmarks — by both the disruptor and the airline — point to how technology, along with careful ‘change management’, can transform the industry’s unwieldy operations. However, in order to implement some of the new technologies available such as the Internet of things (IoT) or Artificial Intelligence (AI), the elephant in the room — the ubiquitous paper-stuffed flight-accompanying pouch — still needs to be addressed once and for all.
Excuses about this aspect blaming the complexity of the industry are now redundant given that, virtually overnight, the same industry was able to replace human travellers and flight attendants with cargo on passenger aircraft and then, at the request of governments and the World Health Organisation, successfully delivered life-preserving COVID-19 vaccines around the world despite unpredictable widespread border closures.
The implementation of AI into airfreight, is at another level. Research conducted by analyst McKinsey and Company espouses the rewards of investing in this technology to manage supply chain disruption. A 2021 article entitled ‘Succeeding in the AI supply-chain revolution’ points out that market volatility, which was severely exacerbated by the COVID-19 pandemic, elevated the dire need for greater agility and flexibility. Furthermore, increased attention on the environmental impact of supply chains is now triggering regionalisation and the optimisation of traffic flows. As a result, companies and stakeholders have suddenly become more focused on supply-chain resilience and sustainability.
“Supply-chain management solutions based on artificial intelligence are expected to be potent instruments to help organisations tackle these [particular] challenges,” the report says. “AI’s ability to analyse huge volumes of data, understand relationships, provide visibility into operations and support better decision making makes AI another potential game-changer.
“Getting the most out of these solutions is not simply a matter of technology though. Companies must take [the necessary] organisational steps to capture the full value from AI,” it underlines.
Rajan, who is widely known for his passion and enthusiasm for digitalisation, insists that IBS Software is already ‘an old hand’ when it comes to knowing and utilising the capabilities of AI and, as a result, is poised to disseminate its AI tools to those who want to undertake that ambitious digital leap forward. “AI is something we introduced into our platforms a very long time ago,” he reveals.
“We actually have a feature in iCargo called ‘a digital pouch’. It provides a toolset for airlines to utilise,” he explains. “It takes two types of documents, one where you can take electronic pictures of documents, so you do not have to physically carry the [paper] versions around. You can load them and tag them with different attributes [such as invoices]. With the second [type of document] the information can be captured by a digital scan. With all this capability, you don’t physically have to handle tonnes of paper.
“[We have been] trying to provide baby steps [in this] for companies to progress. The scans, which are physical records, can be tagged with numerous attributes allowing the airline [and Customs authorities] to peruse all documents including the invoice from the country of origin,” he explains.
Rajan is quick to point out that it is for the carrier and the carrier alone to decide whether it wants to embark on the AI route. “The thing is we really couldn’t push adoption by airlines, because a lot of the documents are not generated by them, but by their shipper/forwarder [customers].
“There are two types of documents — those that are data created from the processes the airline controls. The airline does not directly capture the bills, the invoices, tax clearances etc — it just transports them. They are the documents over which it has limited influence.”
Rajan notes that it is for the forwarders and regulators to insist all these documents must be digitised. “And, [then] none of this can be paper anymore. All of this could happen overnight,” he believes.
That said, the McKinsey and Company article warns that any airfreight companies considering adopting AI should proceed with caution. They first need to ensure they fully understand the requirements that affect not only the company’s existing processes but also its staff culture.
“Any sizable technology investment must be matched by [relevant] organisational changes, business process updates, and up-skilling efforts. Only then will companies capture the expected ROI,” it concludes.
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Originally published at https://aircargoeye.com on November 4, 2022.
