Disrupting the Air Cargo IndustryThrough Digital Transformation
Digital Transformation
Opening Remarks
David SauvProject Manager, eAWB
IATA
IATA Competition Law Compliance
Welcome Address
Cormac WhelanChief Executive Officer
Mercator
How Digital Innovations Transformed or Disrupted Other
IndustriesEmma LoxtonAssociate Partner
McKinsey & Company
Digital disruption
15 March 2017
10
… doesn’t own any cars
The world’s largest taxi service…
… doesn’t own any stores
The world’s largest retailer…
… doesn’t own any beds
The world’s largest hotel service…
11McKinsey & Company
Value creation is happening at a greater scale and fasterBillion dollar + enterprise value companies that did not exist in 2006
12McKinsey & CompanySOURCE: McKinsey DOTMatrixTM
Four dimensions of digital disruption
Demand Supply
Modest
Extreme
Undistort demand
Uncon-strain supply
Make new
markets
New value propo-sitions
Reimagine business systems
Hyperscale platforms
13McKinsey & CompanySOURCE: MGI, McK Digital survey 2016
1 Market share of entrants gained in last 7 years; difference at no digitization would have been 8% growth or an impact of 1.8% points in growth per year
7.6
8.3
Media
16.8
Business services
15.4
Healthcare
Telecom
Automotive &assembly
17.5
13.5
26.3
CPG
12.7Transport & logistics
Financial services
16.0
Sample Average
16.9
High-tech
Retail
24.5
Disruption is happening across all sectorsEstimated market share of new digital entrants/adjacencies, %
14McKinsey & Company
-1.2
-4.5-3.5
-6.0
Avgrev
AvgEBIT
Median EBIT
Median rev
-5.3
-10.2
-7.3
-12.1
Median EBIT
AvgEBIT
Avgrev
Medianrev
1 Estimated effect via regression on EBIT and revenue growth of disruption
… at current level of digitization … and at full level of digitization
SOURCE: MGI; McKinsey Digital Global Survey
And creating growing economic pressure
Change in growth rate due to digital…% growth, estimated1
15McKinsey & Company
Inefficiencies in freight logistics make it prone to disruption
Operational
Structural
Likely disruptionInefficiencies (examples)
Real-time tracking as new standard, increased prediction
Lack of data integration – limited transparency
Substitution of labor, new advanced-analytics-enabled solutions
Commercial processes largely manual
Secure transactions with upfront payment
Complex financial flows – high number of transactions
Improved market transparency and E2E integration
High degree of fragmentation – many handovers
16McKinsey & Company
There are opportunities from greater data exchange across all parties in the value chain
SOURCE: McKinsey; Port of Antwerp; Logindex; Leidos; Transparency Market Research
Opportunity for improved operational efficiencies Opportunity for new revenue pools
Berthing slots and labor can be better utilized by forecasting ship ETAs more accurately resulting in up to 8 p.p. of EBITDA potential for terminals
Selling of trade insights provides a new revenue pool for existing data
Optimizing steaming speed in line with berth and pilot availability can reduce bunker spend by 1-2%
Example: As one of the most advanced ports Antwerp has deployeda collaboration suite (APCS) to connect port stakeholders digitally
Sharing real-time data on ETAs and terminal con-gestion withinland operators could reduce waiting times of trucks by 25%
Managing data end-to-end across shippers, carriers, and ports would create new revenue pools (e.g., production steering of consignees) and address the ~20% admin costs of trade
17McKinsey & Company
Digitized customer interactions
Enhanced data ecosystems
Increased door-to-door business
In air cargo there are digital opportunities across the value chain
SOURCE : McKinsey; WCA China Global
Digital sales channels are already increasingly becoming standard
Strong focus on SME customers without large logistics departments
Improved operational efficiencies
Advanced analytics to be strongly utilized, e.g. for predictive maintenance
Further improvements in yield management due to learning algorithms and distributed computing
Standardization toward electronic Air Waybills well under way enabling increasing data exchange across stakeholders and with that new value-added services
Digital channels offer new opportunities to upsell, e.g., on hinterland operations and services
18McKinsey & Company
How might disruption play out?
SOURCE : Web and press search, McKinsey analysis
Potential role
Quoting & booking
Pick-up & terminal Line haul Terminal
and inlandWarehouse & delivery Payment
Competitive advantage
Customer(own volumes)
Consolidator(market place volumes)
Carrier Fulfillment Specialist
Forwarder(own volume)
Forwarder(third party volumes))
Today’s activities
431 2 5 6
Competitive advantageLow High
–
19McKinsey & Company
Time horizon
Com
petit
ive
adva
ntag
e1
HIGH
LOW
SHORT-TERM LONG-TERM
Clean data
Standar-dize
Digitize operating model
Innovate product and E2E offering
Integrate across value chain
Leverageadvancedanalytics
ENABLERS
New adaptive strategy development approach
Actions to tackle digital disruption
SOURCE : McKinsey
1 Competitive advantage more pronounced for first movers and decreasing over time
Digital foundations Future proof New orientation
Lead industry innovation
Initiate long-term transition
Define your playing field
|McKinsey & Company
Emma [email protected]
Digital Platform: Foundation for a Successful Digital
Transformation Journey
Brendan McKittrickChief Technology Officer, Mercator
DigitalPlatform:FoundationforaSuccessfulDigitalTransformationJourneyBrendanMcKittrick- ChiefTechnologyOfficer
Digital Transformation
We’ve been on a journey to revolutionize air cargo
Source:ICAO,IATA(Afterinterestandtaxation)
WorldScheduledAirlinenetprofitmargin(%)
Economic Backdrop to the Airline Industry
*e-commercebusinesswillgrowfrom1.3trillionUS$in2015to3.5trillionin2019
0
500
1000
1500
2000
2500
3000
3500
4000
2014 2015 2016 2017* 2018* 2019*
Salesinbillion
USdo
llars
• Theriseofdigitalcommerce(e-commerce)hasempoweredconsumers,whocannowsourceproductsfromanywhereintheworldorcomparepriceswithjustthetouchofasmartphone.
• Theroleofairlinesintheglobale-commerceboomisimportant,because:
A Changing e-Commerce Landscape
– 64%ofonlineconsumerssaydeliveryspeedisimportant(Accenture)
– 61%ofsurveyrespondentsstatedtheywouldbewillingtopaymoreforsame-daydelivery(PricewaterhouseCoopers)
3,551
2,991
2,485
2,046
1,6721,343
• Somecasestudies:
A Changing e-Commerce Landscape
– Amazonbrandeditsairline“PrimeAir”– Alibaba’spartnershipwithUSPSandSingapore
Post– IsetanSingapore’sE-commercesiteand
YamatoTransportandANACargo– Cathay’spartnershipwithChinaPostandHong
KongPost
02468
101214
2015 2016 2017 2018
Wearablemarketgrowth
$7.1b
$8.9b
$10.9b$12.6b
Digital Transformation
Augmented Reality – A Case in Point
MarketGrowth
Industrypredictsthatby2017theARmarketwillgrowtoUSD5.2
billion.
NewPerspective
Augmentedreality(AR)providesnew
perspectivesinaircargo’splanning,
processexecution,andtransportation.
HandsFreeOperation
AR-poweredwarehouseoperationsutilizesmartglassesforthehands-freeoperationofvarioustaskswithinawarehousesuchasproductpicking,packing,
sorting,andevenassembly.
RightInformation
ARempowersworkersbyprovidingtheright
information,attherighttime,andintheright
place.
Digital Technology – Macro Trends
AugmentedReality
BigData Cloud Mobility On-DemandLogistics
IoT
SelfLearningSystems
OmniChannel
DigitalCurrency
LogisticsMarketplaces
Robotics&Automation
Blockchain
Greatest Challenges Facing Organizations
Lackofoperationalefficiency
CapacityUtilization
Lowyields
Outdated/complexLegacysystems
Lackofdataavailability/visibility
Inaccurate/sub-optimalpricing
Assetutilization(ULDmanagement)
Poorcustomerrelations(trackandtrace,claims)
MeetingCustomerpreferences
2…
2…
21%
8%
8%
4%
7%
6%
1%
25%
20%
21%
8%
8%
4%
7%
6%
1%
Lackofoperationalefficiency
CapacityUtilization
Lowyields
Outdated/complexLegacysystems
Lackofdataavailability/visibility
Inaccurate/sub-optimalpricing
Assetutilization(ULDmanagement)
Poorcustomerrelations(trackandtrace,claims)
MeetingCustomerpreferences
Source:Accenture2015AirCargoSurvey
Challenges Related to User Experience
Designing for an Enhanced User Experience
PublicAPI
Management&Monitoring
ConnectivityandIntegration
Analytics
Self
Service
Shop
Book
Billing
Regulatory
Pricing
Wareh
ousin
g
Quality
CMS PSS RevAcct CustomsAPIEnabledProductSupportingaMarketplace &PartnerEcosystemFully SelfServiceEnabled
DataConfigBusinessRules Pricing Warehouse
QualityManageme
nt
Enter your title here
Technology is irrelevant… when it works
The user experience is paramount
Operate at the speed of change
4As Approach to provide access to informationAnytimeAnywhereAnychannelAuthorized
User Experience is the Key Differentiator
Product Design: Warehouse App
Existing FlightCapacity Dashboard
Real-Time Command & Control Dashboard App
Visitwww.mercator.com
Thank you
Big Data and Artificial Intelligence: Opportunities for Smarter, Faster and
Safer Operations
Martin KraemerHead of Marketing
Jettainer
ULDmanagementinthedigitalageResearch,activities&futurescenarios
IATAWorldCargoSymposium2017,AbuDhabiMartinKraemer,HeadofMarketing&PR,JettainerGmbH,
WhoisJettainer? WearetheworldleaderinULDmanagementoutsourcingsolutions
500stations around the globe
25airlines served with full ULDmanagement
ULDsteerers implanted into cargo department athubs
Worldleader inoutsourced ULDmanagement solutions
Ateam of 80highly dedicated air-cargoprofessionals
World‘s largest fleet of about 100.000active ULDs
We offer the entire ULDsupply chain &logistics
„Immediateness“
Speedis standard,smartuse is king!
Digital=Quantity +Quality
„Digitarget“Customerfaces asystem?
Customerfaces aperson „made smart“by asystem
„Digitizaccuracy “
„Digitizaction“Systemreplacing humans?Systemsupporting humans!
digital=smart?How does acustomer benefit?What is the business case?
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
Shipper FreightForwarder
ULDManagerCustoms Airline
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
Shipper
Shippersbookonline,getconfirmationfromforwarder‘ssystem.Shippersprovidesomeforecaststoforwardersorevenhavecontractsabout(some)constantcapacity.
Shipper FreightForwarder
ULDManagerCustoms Airline
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
FreightForwarder
Freightforwardersbookelectronically(eAWB)withairlines.Theyhave(some)capacitybasedagreementsandprovidesomeforecaststoairlines.
Shipper FreightForwarder
ULDManagerCustoms Airline
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
Customs
Customs(inmanyplaces)receiveelectronicdocumentationandclearfreightelectronically.
Shipper FreightForwarder
ULDManagerCustoms Airline
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
Airline
Receivessomeforecastfromforwardersandcan(atleastpartially)plantheirflights,extrasections,andpeakcapacitydemandaccordingly.
Shipper FreightForwarder
ULDManagerCustoms Airline
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
ULDManager
ULDmanagersact„ondemand“withnonoticeandnoforecast.Makingthebusinessextremelychallenging.Solutions:- Jettainer’s smartsteeringlogic- longtermexperience(humans,data)- intelligentsystemstocombineboth
Shipper FreightForwarder
ULDManagerCustoms Airline
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
Wearepushingaheaddigitalization:
• Digital/automatedprocesses:Electronicin/outbooking,stocktakes etc.(Tool:JettWaremobile onJettApp,JettPad,Smartphone)
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
Wearepushingaheaddigitalization:
• Digital/automatedprocesses:Electronicin/outbooking,stocktakes etc.(Tool:JettWaremobile onJettApp,JettPad,Smartphone)
• Software/IT:Jettainer‘s decisionsupportsystem,bigdata/expertsystem.ArtificialintelligenceusedtobettermanageULDfleets.
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
What if we connect with other players:- Bookinginformation from shippers- Forcasting information from forwarders &airlines- Customdatacould be integrated into our artificial intelligence.
Outcome:Evenbetter efficiency inULDusage and management.
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
Wearepushingaheaddigitalization:
• Digital/automatedprocesses:Electronicin/outbooking,stocktakes etc.(Tool:JettWaremobile onJettApp,JettPad,Smartphone)
• Software/IT:Jettainer‘s decisionsupportsystem,bigdata/expertsystem.ArtificialintelligenceusedtobettermanageULDfleets.
• Hardware(ULDs):IntelligentULDsthatcommunicateautomatically(Tool:GPS,othersensordevices)
TheULDmanager HowcananULDmanagersupportefficiencyincreasesinthechain?
TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?
Whatifweconnectwithotherplayers:- Bookinginformationfromshippers- Forecastinginformationfromforwarders&airlines- Customsdata…couldbeintegratedintoourartificialintelligence.
Outcome:EvenbetterefficiencyinULDusageandmanagement.
ThesmartULD ManifoldopportunitiesderivefromanintelligentULD
Humidity
Temperature
VibrationDamages
Geolocation
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
Shipper
FreightForwarder
ULDManagerCustoms Airline
Customs
FreightForwarder
ShipperULDManager
Timeadvantage to generate solutionIncident
Theaircargosupplychain Manyplayersrunordevelopdigitalprojectsinordertosmoothentheirownprocess
• Reducerepairtime(prealert)• Determinerepairincidentorigin(cause)• Earlyalertincaseshipmenterror• „perhour“usagefee• Tellgroundhandlinghowtobuiltup
• Sharethesedatawithothersalongthetransportchain
SmartULD
Summary Quantity,qualityandcollaborationwillleadtocustomer-orientedbusinesscases
• Ensuredataquality• Defineeffect/target• Calculatebusinesscase
• Thinkalongthelogisticschainandcollaborate!
Blockchain: What Opportunities for the Air Cargo
Industry
Wassilios LytrasCo-Founder & Chief Operating Officer
Gatechain
Blockchain:whatopportunitiesfortheaircargoindustry?
March15,2017– IATAWCSAbuDhabi
WassiliosLytraswww.gatechain.com
Disclaimer
• Simplifiedviewtocoverin15minutes• Narrativechosentoexplaintheusecase,notthetechnology
Technologyandapplication
Internet WWW
WebsitesShopsPortals
Browser
Internet Blockchain Digitalassets(money,frequentflyermiles,music,votes,art,…)
Internetofinformation
SharedLedgers
Copyinformation
Internetofvalue
Store,move,transactassets
Blockchain – Trustbywitness
Source:IBM
Ledger
Ledger
Ledger
Ledger
Ledger
Ledger
Ledger
Peer
ValidatingEntities
Transaction
End-user
● Transactionscan bepayments (Bitcoin)
● Transactionscaninclude smartcontracts(Hyperledger/Etherium)
Peer
PeerPeer
Peer
Peer
Client
Smartcontractscharacteristics
• Self-executinglogiccontainingrulesforatypeoftransaction• Invokedbyend-users,systems,devices,throughtriggers• Runsnetworktransactions,ifvalid,addedtoblockchain
Let’stalkairfreight
Now
BookcargoSh
ippe
rForw
arde
rAirline
Consigne
e
VerifyandBook
Verifyandconfirm
Verifyandconfirm
Verifyandinform
Verify
Now
BookcargoSh
ippe
rForw
arde
rAirline
Consigne
e
VerifyandBook
Verifyandconfirm
Verifyandconfirm
Verifyandinform
Verify
Instructpick-up
Verifyandconfirm
Pickupcargo
Verifyandsign
DropCargo
Verifyandsign
Wareh
ous
eForw
arde
rTrucker
Airport
Now
BookcargoSh
ippe
rForw
arde
rAirline
Consigne
e
VerifyandBook
Verifyandconfirm
Verifyandconfirm
Verifyandinform
Verify
Instructpick-up
Verifyandconfirm
Pickupcargo
Verifyandsign
DropCargo
Verifyandsign
Wareh
ous
eForw
arde
rTrucker
Airport
Efficiencydrivers:
• Copyinformationelectronically• Printpaperfaster
Thinkassetandvalueinsteadofinformation
Blockchain differentiator
• Distributedinsteadofpointtopoint.Transactionsarebroadcasted.• Accesstodataisgranted,notthedataitself• Assetscanbedigitizedandattachedtosmartcontract
Let’smakeassetsandcontracts
Shipper Buyer
PaymentObligatio
n
Goods
Smartcontract
Condition:Shippedprior{date}Condition:Compliancecheckby
{someparty}
Ifconditionsmet:swapownershipofgoodswith
paymentobligation
Ledger
Execution
Shipper
Goods
Forwarder
Complianceauditor Ledger
Execution
Goods
Forwarder Trucker
Smartcontract
Condition:ifGPStrackerofcargoreportlocation
{somewhere}at{sometime}
Ifconditionsmet:ExpressfeeappliesIfconditionnotmet:Normalfeeapplies
Airline
FlightInfo
Ledger
Execution
Goods
Driver
FlightInfo
Ledger
Swappingassets
Shipper Buyer
PaymentObligation
Goods
Smartcontract
Condition:Shippedprior{date}Condition:Compliancecheckby
{someparty}
Ifconditionsmet:swapownershipofgoodswith
paymentobligation
Ledger
✔
✔
Execution
Goods
Driver
FlightInfo
Ledger
Execution
Goods
FlightInfo
Smartcontract
Condition:ifGPStrackerofcargoreportlocation
{somewhere}at{sometime}
Ifconditionsmet:ExpressfeeappliesIfconditionnotmet:Normalfeeapplies
Ledger
✔
✔
Summary
• Nomanualchecksneededtobemadeifsomeonecanpickupordeliverycargo
• Automaticswapofassets• Distributionofmostcurrentinformationavailabletoeveryone• Secure,trustembedded• Removepaperfromthecompleteprocess
Attheend
Thank you to our Networking Break Sponsor
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Drones: Game Changers of the Air Cargo?
Svilen RangelovCo-Founder & Chief Executive Officer
Dronamics
Uberization of the Air Cargo Industry: Myth or Reality?
Panelists:Ö Celine Hourcade, Head Cargo Transformation, IATAÖ Laurent Petitmangin, VP Marketing, Digital & Communication, Air
France KLM Martinair CargoÖ Wojciech Soltysiak, Chief Technology & Innovation Officer, Champ
Cargosystems S.A.Moderator:Ö Remo Eigenmann, Lecturer, Zurich University of Applied Sciences
«Uberization» of the Air Cargo IndustryDefinition in the context of this track:
“To modify a market or economic model by the introduction of a cheap and efficient
alternative using digital technology”
Uberization of the Air Cargo Industry: Myth or Reality?
Panelists:Ö Celine Hourcade, Head Cargo Transformation, IATAÖ Laurent Petitmangin, VP Marketing, Digital & Communication, Air
France KLM Martinair CargoÖ Wojciech Soltysiak, Chief Technology & Innovation Officer, Champ
Cargosystems S.A.Moderator:Ö Remo Eigenmann, Lecturer, Zurich University of Applied Sciences
Closing Remarks
Cormac WhelanChief Executive Officer
Mercator
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