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The global air freight market is experiencing strong growth. Last year (2021), the market experienced the highest year-on-year growth since 2010, according to International Air Transport Association (IATA), a trade association for airlines around the world. And the market will grow from $270.3 billion in 2021 to $390.7 billion in 2027, projects the IMARC Group, a market research firm.
During the pandemic, the growing demand for air freight was initially driven by the need to ship protective personal equipment and medicines. Later on, the strong growth of e-commerce kept volumes growing.
With more cargo being transported by air, there will be more demand for unit load devices or “ULDs”. (It’s the pallets or containers that house the cargo that’s shipped around the world by air.) Annual spending on ULDs is expected to reach $2.67 billion by 2027 — up from $1.98 billion in 2027. 2020, according to Fortune Business insightsa research and consultancy firm.
Carrying a heavy load
About a million ULDs exist, according to the IATA, and each has a different identification code, which is embedded with information such as a bill of lading, waybills and the voyage number. With this information, each shipment can be tracked.
With much of today’s flight operations digitized, the movement of ULDs can be traced through various loading, unloading and transfer points. Several airlines use Global Positioning Systems (GPS) to monitor their ULDs and track their movements. This helps to streamline air freight operations.
But ULDs are only partially digitized. Most carriers, freight forwarders, and ground management teams stop tracking once the cargo is at the point of departure. This robs shippers of information that could help make the global supply chain more reliable and secure. Likewise, when ULDs are on the tarmac, in a warehouse, or elsewhere, they can be invisible unless manually tracked.
These issues raise security concerns. Like the IATA points out“ULDs are the only aircraft parts that leave airline control, return after passing many unregulated hands and have an impact on flight safety.”
ULD operations are typically outsourced to ground service providers, LATA points out. This, coupled with the demand for “shipper-built ULD” from shippers and freight forwarders, has made it “a critical challenge for airlines to monitor and monitor safety compliance in ULD operations.”
Digitize cargo equipment
This underlines the need for further digitization of ULDs. However, this is hampered by challenges with tools such as radio frequency identification (RFID), global mobile communications system (GSM), and GPS. They can all rely on expensive infrastructure for startup and ongoing support.
For example, RFID relies on scanners, but they often have a short range, as the frequencies that provide long range may not be viable on an airport ramp. And GPS and GSM rely on batteries that consume huge amounts of power, meaning they always need a backup.
Another critical issue related to ULDs can be traced back to connectivity – and the costs associated with their repair and disappearance. These costs add up to $400 million per year, according to to the IATA. And the visibility limitations in the ULD network can lead to empty ULDs being stored in warehouses and not used for long periods of time. This undermines inventory management for airlines, drives up costs and sometimes leads to flight cancellations.
The key is to find viable digital solutions as they can provide real-time information on the movement of ULDs wherever they are in the world. Attaching wireless sensors to ULDs is an attractive option. The sensors can capture information that improves tracking, while airlines can also distribute this information to their partners. This may also ultimately help automate demurrage to drive improved asset turnaround and better asset utilization.
Combining demurrage automation and tracking technologies will also bring commercial benefits associated with running air freight shipments as it will reduce business losses due to shortage of shipping resources. By helping airlines reduce asset loss, match capacity with asset inventory, and reduce costs associated with misplaced equipment or the need to lease additional assets, digitization can help immensely.
The information tracked through connectivity can also go beyond location and include factors such as temperature and humidity, which are often critical for goods that cannot be exposed to high temperatures or extreme cold. This tracking addresses critical shipping issues: flight delays and cancellations, as well as cargo that has been misrouted, misloaded or lost. It also helps maximize asset utilization and rationalize costs.
The AI connection
Artificial intelligence (AI) holds great potential with ULDs. It can be used to predict flight departure times and improve load optimization and operational planning. Similarly, data in the cloud can be used to track ULDs more accurately and for better inventory management. Understanding exactly where ULDs are located in real time is essential to getting them back from third parties.
The ultimate goal is greater ULD transparency throughout the air freight supply chain. This makes shipping more efficient and products can be delivered faster and cheaper, with fewer errors and more safety as added benefits.
Mitrankur (Mit) Majumdar is Senior Vice President and Regional Head of Services, Americas at Infosys.
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