IBS Software: Pioneering digitization in the air cargo industry
“Despite many airlines being late to expand into freight, we have seen a strong movement towards the use of new innovations in the sector to get ahead of traditional cargo-focused airlines which are stuck using older, legacy technology. Undoubtedly, airlines that were already on their digital transformation journey were able to adapt fast.” – Ashok Rajan, Senior VP & Head – Cargo & Logistics Solutions at IBS So.
The air cargo industry is in the midst of a major transformation and digitization is crucial to its success. The changes have led into more efficiency in streamlining approach to managing air cargo, with various processes being automated and made more transparent.
Airlines and other companies in the air cargo industry are turning to digitization in order to gain a competitive edge. By investing in new technologies, they are able to improve their operations and offer a better experience to their customers. In particular, digitization can help reduce costs, improve efficiency and provide a better customer experience.
Firstly, the mind-set in the industry towards digitization has undergone a sea of change, from being a backend cost center to being central to all business initiatives. Visibly, there have been changes on several fronts (a) Most airlines have invested into modern core platforms that are providing reasonably clean and accurate data (b) Selling has gone digital in a big way whether through common channels or direct connectivity (c) Automation on the ground and in warehouses are seeing significant investments and these are giving a good uplift to quality of service (d) Integration between partners and stakeholders are becoming less cumbersome and ( e) generally IT landscapes are becoming far cleaner, simpler and more efficient.
Digitalizing and automating air cargo systems, and moving away from the traditional, old-fashioned paper-based
processes, means airlines can gain actionable ins ight from how their operations are running and make genuinely
informed business decisions that serve customers better and impact the bottom line.
Ashok Rajan, Senior VP & Head – Cargo & Logistics Solutions at IBS software, explains to Air Cargo Update the importance of digitization in the air cargo industry in an email interview.
Boosting cargo revenues
The boost in cargo revenues have been a lifeline for many in the air cargo industry, which has faced unprecedented challenges since 2020. The pandemic has disrupted traditional trade routes and led to a sharp decline in demand for certain types of cargo, such as containerized freight. At the same time, it has caused a surge in demand for other types of cargo.
The boost in cargo revenues have been a lifeline for many in the air cargo industry, which has faced unprecedented challenges since 2020. The pandemic has disrupted traditional trade routes and led to a sharp decline in demand for certain types of cargo, such as containerized freight. At the same time, it has caused a surge in demand for other types of cargo.
Traditionally side-lined by airlines, air freight represented a gilt-edged opportunity for airlines to generate revenues with passenger fleets largely grounded. With cargo yield at previously unheard-of levels, for many airlines, air freight became their lifeline.
“Digitalization is critical to boosting air cargo revenues. Going digital is a 3-pronged approach to boosting the top line. (a) Reach – Take your product to customers and regions that otherwise wouldn’t be serviced by feet on the ground, this either through digital channels or direct connectivity (b) Value Addition – The pandemic has shown
that higher price points are affordable to customers, as long as value can be offered. Being digital can provide the means to creatively construct new offerings and make sure service delivery against those is possible (c) Dynamic Pricing – For long price has been a constant in this industry – this tech backed approach for dynamic pricing is
trying to discover the right price at the right time and therefore allowing airlines to price their services in line with market fluctuations,” says Rajan.
Evolving digital landscape
It’s no exaggeration to say that digitalization has been the difference between airlines that were able to fully capitalize on the opportunity, and those that were not, according to IBS.
“Despite many airlines being late to expand into freight, we have seen a strong movement towards the use of new innovations in the sector to get ahead of traditional cargo-focused airlines which are stuck using older, legacy technology. Undoubtedly, airlines that were already on their digital transformation journey were able to adapt fast.”
While the pandemic has significantly boosted the profile of air cargo with airline decision makers and pushed them to re-evaluate their business models, the onus is now on the air freight sector to keep freight in the boardroom long-term as passenger volume returns.
That requires evidence of value. Key to that is switching the focus to the value of shipments rather than focusing on capacity alone. And digitalization provides the means to do just that.
“At IBS Software, we always stay well ahead of times, advocating the need for a digital push in the airline industry in general and particularly in the air cargo industry. Our core focus has been to build and offer digital platforms ease airlines and GHAs along the digital journey.
“Our efforts are on three fronts (a) Offering a strong digital platform for core operations – this has been done through our market leading iCargo platform, enabling core business transactions to be digitized, allowing for a strong and clean data to be collected and utilized and drive efficiencies (b) A suite of products under the iPartner umbrella which are meant to bridge the digital divide between the disconnected stakeholders in the industry be it between customers and airlines or airlines and GHAs or between airlines themselves (c) We also have a medium to long term strategy in expanding beyond the airport-2-airport operations and offer a holistic logistics platform. The majority of airlines and many ground handlers on board are helping move the industry forward on this front,” Rajan explains.
To support this, IBS Software has developed a vibrant community of airline and ground handling customers and partners that has grown around the platform, encouraging best practice shared to drive air cargo’s digital transformation.
‘Democratization’ of AI technology
When we asked about the use of AI-based tools to drive digitization in the cargo industry, Ashok described the use of AI tools as putting the cargo business on steroids.
“Businesses that embrace digitalization and make the mindset shift to rework legacy systems suddenly find themselves with access to the data they need to make informed decisions. That level of analysis – increasingly enriched by the introduction of AI to the tech mix – helps airlines map their air cargo business end-to-end and make informed, data-driven decisions about their operations. The shift being envisaged.
He continued further that the benefits of digitization are manifold. They can test and refine new products, provide personalized services and eliminate inefficiencies, to name a few. The upshot is that they are far better positioned to increase revenues while also providing a superior customer experience. “We’re also seeing these technologies evolve at great pace and become increasingly available to the entire value chain. The ‘democratization’ of AI technology is a critical development as traditionally access to cutting edge digital capabilities was limited only to the businesses with the deepest resources. This is quickly changing and will continue to change in the coming years, making these tools more and more accessible to any size of business.”
Personalization in digitization
Personalization is intrinsically linked to digitalization in the air cargo sector. This is part of the journey to unlock potential by moving from offering the customer ‘What we have’ to offering them ‘What They Need’, said Rajan.
At a fundamental level, personalization is all about delivering enhanced custome experiences that balance revenues with value and relevance. It’s of paramount importance because it builds deeper relationships by showing customers that cargo businesses understand and value their needs and preferences.
“In a digital landscape with so much information and choice, personalization helps overcome “paralysis by analysis”,
accelerate decision-making, and boost conversion by influencing and guiding customers.
Advances in data analytics and AI help players in the air cargo value chain tailor products and solutions that make customer experiences more relevant and targeted. What’s especially exciting is that there is so much more innovation to come. But that innovation is only enabled by airlines and GHAs fully embracing digital technology.”
Recommendation engines
Recommendation engines in air cargo serve the same purpose as in other industries – they provide a way for businesses to analyze available data and make suggestions to customers based on known preferences and behavior. This is long overdue for any industry that has operated on fixed offerings and pre-negotiated rates.
“As consumers, we are all subject to recommendation engines – whether searching for a flight, picking a movie on
Netflix, or shopping on Amazon. They work behind the scenes to propose one offer over another.”
According to Rajan, broadly, they can be split into two classifications:
1-Content based filtering categorizes products and services according to specific features and attributes, aiming to make a link with the user’s past behavior.
2-Collaborative filtering is a broader behavioral recommendation approach that looks at a user’s previous history and interactions, matching them with that of similar users.
“In the Air Cargo industry, this is a fundamental shift in how businesses are conducted, we ourselves in our platforms are moving the commercial aspects from being a booking system to a selling system, and this shift is a win-win for both the customer and the airline. The recommendations are in routing, timing, add-on services all of which allow customers to play on both axis – (a) moving the service up or down (b) Moving price points based on affordability. The underlying shift is moving the industry more towards B2C behavior from its current B2B approach,” Rajan shared.
For airfreight, there is so much to be gained from improving modern data-driven sales and recommendation engines, he added.
A look into the future
According to Rajan, the air cargo industry is undergoing a digital revolution, in reality digitization is a journey not a destination. The question arises, are we at the forefront of that journey or are we back-markers? The reality is that the sector was initially slow to embrace digital technology compared to other industry sectors, meaning the industry is working from a comparatively lower bar.
“Our vision for a Digital Freight Enterprise is one which (a) engages with its customers digitally (b) Can fully outsource or run its operations on a digitally managed SLAs and workflows (c) completely manages its revenues or finances digitally (d) collaborates with its partners on digital ecosystems (e) can completely engage and clear regulators over digital data and finally makes data and insights core to its operations,” said Rajan.
