Comment: what a Nobel Prize winner can teach us about the air cargo industry
The 2016 Nobel Memorial Prize in Economic Sciences was jointly awarded to Oliver Hart (pictured ...
3PLs have come under fire from shippers for “isolating” them from airlines.
During a shipper session at the World Cargo Symposium in Shanghai, looking at how to improve the customer experience, shippers said they needed better visibility but their 3PLs were not allowing them to understand or see into the air freight chain.
“We have very much been isolated by the 3PLs,” said Robert Mellinn, head of distribution logistics at Ericsson. “They do not want us to talk to the airlines. The first time I saw the airport process was last week.”
Mr Mellinn was calling for better visibility in the air cargo supply chain through more effective use of IT.
“But the 3PLs will hate it because we will see other opportunities. Information is power.
“Information sharing is not there – but I don’t know why it’s protected. There are ways and means to protect commercial information but more sharing can be done.
“I’d like to see, within 12 to 18 months, a big data cloud where information is digital and available. It would save billions of trees, give us faster speed and better execution, and better lead times.”
His comments were backed by Alex Xu, associate supply chain director of Lilly Suzhou Pharmaceutical.
He said: “We are talking with forwarders, but I don’t have any control or information. If something happens, where in the chain did it happen? It’s not only that we want better track and trace, but we need action taken on sharing information.”
Chris Welsh, head of the Global Shippers’ Forum, said that for the cool chain in particular, road, rail and shipping had integrity in the supply chain.
“Problems can be quickly monitored and rectified, but there are gaps in the air cargo supply chain and that’s where you get product failures, and that’s where you get shipper frustration.”
IT providers were also singled out as not serving the industry well enough. While Mr Mellin acknowledged that shippers were also “part of the problem”, he said the stakeholders could collaborate better.
“But no software companies have approached me to ask me what I want, so I am worried we are developing software solutions which don’t do what we need.
“E-freight addresses some problems, but it’s more than that, it’s about more than just what you need to get goods into a country.”
Mr Welsh added: “There are a number of IT providers, but are they the right people? Do we need to bring in someone from the outside to see it differently, do something differently?”
Mr Xu added that with effectively so much sub-contracting in the air cargo industry, it was a challenge for shippers.
“We need different players at each stage, but we have to be careful about what all the parties are doing. There are sub-contractors and sub sub-contractors – are they all qualified?”
During the session, IATA presented the results of its shipper survey, which found that – for the 336 who took part – air freight scored 7 out of 10 in terms of satisfaction. But, noted Tom Windmuller, IATA’s svp for cargo, 7% of the respondents were very unhappy with the service provided.
“It’s a $60bn industry, so if 7% of our customers are unhappy, that’s $4bn we could lose – and more: unhappy customers talk to others.”
Mr Mellin, whose company Ericsson spent $264m on air freight last year, believed other modes of transport were better.
“In air freight, I haven’t seen much change in 10 years, but surface transportation is really moving forward. We are more connected to surface transport than we are to air.
“We’ve implemented tools and systems that help us to integrate better, but we don’t have that with air – it’s disconnected.”