It’s tough to plan for the long term when a crisis is happening now—especially in the air. Supply chains that have traditionally been set up with air cargo as a critical step now have to radically adjust their routes. Freight space on passenger aircraft—known as “belly cargo”—will not return to normal until 2024 according to The International Air Traffic Association (IATA). Operators with idle planes have tried putting small package cargo in seats and in the aisle of passenger craft to keep revenues coming in as well as to stay in the game with customers.
In the meantime, air cargo operators have been increasing capacity where possible. Freight forwarder divisions of large third-party logistics (3PL) firms continue to scramble for ways to get customer deliveries done in an environment of limited capacity and—wait for it—“sky-high” prices.
For brokers, there are opportunities to make larger margins on the higher prices, but the risk is that customers will shop around for solutions that involve other providers across modes or through direct chartering. When manufacturers and marketers step back and look across their international supply routes, they now need to look beyond transportation to capacity planning and scheduling.
Longer lead times and backup supply points mean logistics, purchasing and production planning need to coordinate more than any time before. These three major portions of business operations are referred to as key functions in supply chain management.
For many companies that have resisted integrating these functions, time is up. In all types of organizations, a holistic approach to operations is critical for an “agile” response to changing business conditions. While operators pivot to find new capacity to offer, the shipper has to re-engineer the production and logistics processes for the short term—and ultimately for the long term.
For non-asset freight service providers, sustainability means broadening relationships with carriers and assisting shippers in thinking through alternative supply and distribution scenarios.
Now is the time for talented logistics analysts to crunch data and build new models for both buyers and suppliers.
This increases the value of the relationship with customers and exposes the service provider to more customer management functions such as
production, purchasing and finance. If they can find solutions for shippers now, they will be welcome in the “C-suite” as a business partner in the future. These can be career-defining moments for supply chain professionals.
For asset-based operators, agility creates sustainability. We’ve seen space sharing, schedule shifting, re-purposing equipment and utilizing multi-model solutions, and it would be a shame if these fell into disuse as the business cycle returns to normal.
Air cargo operators will make serious profits selling the limited capacity they have. The smart folks will invest those funds in a more flexible, scalable offering to the market.
Critical to success is data collection and integration with shippers and other service providers. As we continue to learn, instantaneous information sharing increases velocity by reducing holds caused by Customs as well as partners along the route.
In the end, it’s about pleasing the customer. Air cargo is all about the time value of the movement, and the trend toward faster order-cycle times has pushed manufacturers to increasingly consider air. Now air cargo providers need to be creative and agile in order to demonstrate their professional abilities to shippers across the globe.
Read full article at Logistics Management
