Mercator Blog

Digital Transformation in Air Cargo: Creating an Ecosystem

By Mercator Insights on 13 March 2017

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In 2016, the amount of cargo transported by airlines reached 52 million tons, with the total value of goods equal to about $6.8 trillion. 

Clearly, the shipment of goods via air is vital to the health of the world economy. A more efficient air cargo ecosystem could improve profitability for carriers (air cargo generates about 9% of revenue for airlines),but also enhance transparency and predictability across the supply chain. 

The challenge is that the air cargo industry is still affected by outdated technology, poor data, and limited information sharing. This impacts the financial performance of carriers, creates unnecessary complexity across the supply chain, and drives up costs for customers. It’s time for fundamental change.

Harnessing the Power of Disruptive Technology

The need for faster transit times, greater reliability, and improved visibility in air cargo have never been greater. As the role of technology in air cargo management shifts from being a driver of efficiency to an enabler of fundamental innovation and disruption, digital platforms will play an increasingly transformative role in the global air cargo ecosystem. 

Brendan McKittrick, Mercator’s Chief Technology Officer, commented:

“Mobile technology and open API platforms will revolutionize the industry, allowing carriers to get a real-time digital view of the entire air cargo supply chain. Technology can really transform the industry, providing much greater transparency, predictability, and above all, the ability to simplify complex and challenging processes.”

McKittrick believes this platform-based ecosystem can reduce costs, improve efficiencies, enhance flexibility, and allow for greater speed and scale—which will encourage innovation on a previously unforeseen level.  

But what exactly does this platform look like? Here are some of the most critical components.

Offer & Order Management The ability to streamline shopping, booking, and data management based on a catalog of air cargo services.

Logistics – Platform-based solutions should enable air cargo tracking and more efficient planning of the logistics operation.

Warehousing – Smart warehouses should allow for real-time management of all warehouse operations, including buildup, delivery, breakdown, and billing.

Regulatory Broker – Seamless exchange of information through a single window environment that ensures harmonization for air cargo customs and security reporting. This window should allow for real-time updates and alerts from suppliers, customers, and officials.

Revenue Management –The platform should leverage data on shipments, bookings, flights, and customers to optimize profits. Specifically, the system should optimize bid pricing, more accurately forecast capacity, manage overbooking better, and more effectively control inventory and allotment of cargo space.

Quality Management – The reliability of the supply chain will be improved by enabling carriers to monitor the service attributes that are most important to their business.

Analytics - The intelligent air cargo ecosystem should utilize advanced analytics tools to usher in an age of intelligence and predictability in air cargo management.

Seizing the Opportunities of an Air Cargo Ecosystem

Dramatic changes are coming to the air cargo industry, like driverless aircraft and augmented reality. That’s precisely why air cargo carriers need an intelligent cargo ecosystem. It will allow them to drive intelligence, predictability, and value across the supply chain.

Here’s a quick look at the opportunities an intelligent air cargo ecosystem can help capture: 

  • Realize more intelligent ways of managing mobility through an open platform that fosters innovation and interoperability.
  • Improve efficiency and capacity by streamlining the management process, allowing for increased capacity of aircraft and warehouse storage facilities.
  • Enable the introduction of new services, like guaranteed delivery and other premium options, thanks to better transparency and predictability.
  • Identify and stop potential delays and other issues in the supply chain with the use of advanced data analytics, which will ensure greater customer satisfaction.
  • Adapt quickly to emerging trends because an agile platform can evolve as technologies do, enabling seamless adoption of new technologies like IoT, robotics, and automation for a long-term competitive edge.

The move to an intelligent digital ecosystem is not an option for the air cargo industry—it is an imperative. Successful carriers will be willing to combine their offerings with digital sophistication to create new ways to deliver value to customers and differentiate themselves from less adept competitors.

Topics: Aviation, Cargo


See how an intelligent cargo ecosystem digitally connect goods, people, data, and processes to make the air cargo value chain more intuitive and interoperable.

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