Cargo leaders from many of the world’s airlines and freight forwarders, along with several shippers and support industries, will gather May 6-8 in Miami for the annual Cargo Network Services (CNS) Partnership Conference. CNS is an International Air Transport Association (IATA) company that serves the U.S. air cargo industry, but the conference promotes networking and pulls in many cargo leaders from Europe, Asia and Latin America as well. The theme chosen for this year’s conference is the “e-Commerce Revolution.” It’s a new topic for the conference, but appropriate as the air cargo industry faces slower growth, declines in general cargo shipments, and criticisms about being slow to adapt and innovate to evolving customer needs.
FreightWaves spoke with Michael (Mike) White, President of CNS and host of this year’s conference, who pointed out that e-commerce is growing at twice the rate of domestic trade and “changing so many of the things we do” in air cargo. Boeing estimates that the global e-commerce market will grow 20 percent per year to $4.9 trillion in 2021. The FreightWaves SONAR index (RESL.ONLN) for electronic shopping and mail-order house sales tracks well and portrays this rapid U.S. e-commerce growth, averaging nearly 14 percent annually since 2014.
The growth of e-commerce has created new complexities for the industry to tackle. Airlines have for many years successfully handled consolidated small parcel shipments from integrated carriers such as FedEx, UPS and DHL Express. E-commerce companies, which also act as third-party resellers, such as Amazon, Alibaba and others, are also using air carriers, either directly or through freight forwarders and express parcel firms. Beyond that, White noted the traditional boundary between freight shipments and mail shipments has been blurred, with e-commerce shipments moving in both channels. Freight forwarders and various postal entities now compete for the shipper’s e-commerce business.
Of the various air cargo industry challenges, White viewed the biggest challenge with e-commerce is defining how it fits into freight, and to manage the dynamics of e-commerce into the highly structured programs U.S. and foreign government regulators have around air cargo security, customs and compliance. The historical definition of who is the shipper and who is the owner of the cargo are changing with e-commerce. Apple’s movement of production from China to India, moves by others to relocate manufacturing from China to Vietnam, Bangladesh or Indonesia, and even the pending United States-Mexico-Canada Agreement (USMCA) further globalizes the issue. More forwarders and airlines are starting e-commerce specialty departments, and niche third-party logistics specialists in destination markets are tapping into local e-commerce import demand, all driving new opportunities and needs for more industry solutions – and faster ones.
Setting the overall tone for the meeting in opening plenary sessions on May 6 are three featured speakers. The first is Ruth Snowden, Executive Director of the Canadian International Freight Forwarders Association (CIFFA), who is leaving the industry and will provide a historical perspective and according to White, “very honest feedback on air cargo’s challenges.” Next is Dr. Peter Urlich, Vice President and Partner from IBM, who will provide a forward-looking view, addressing future technology, artificial intelligence and computer power. Following is Kenneth Furton, Provost and Executive Vice President of Florida International University (FIU), who will speak about educating the industry’s employees of the future, different ways to train and new ways to teach.
Following the plenary, the meeting will use an “Innovation Stage” concept pioneered at the conference last year, with a portion of the larger room partially partitioned off and set aside for presentations. This allows for broader uses of the conference area, including exhibits and networking among the over 600 participants already registered, the largest CNS conference to-date. Among topics to be addressed using this format include “The Effects of eCommerce on Customs,” “Automating the Acceptance of Dangerous Goods,” “Increasing Operational Efficiency in Air Cargo by AI and AR,” “Economic Update – Future of eCommerce,” “Need for Speed and Meeting Customer Expectations in the World of eCommerce” and “Customs and Security Challenges in the Fast-Growing eCommerce Sector.” In addition, there are other presentations using this format to discuss technology enhancements around payment collection and settlement processing, air cargo security, lithium battery detection and smart warehousing.
To address some of these large industry e-commerce challenges, senior representatives from the U.S. Transportation Security Administration (TSA) and Customs and Border Protection (CBP) will have both speaking and panel roles. Other customer expectations around e-commerce such as expedited handling and tracking drive a need to reassess and redesign some of the traditional ways airlines, forwarders, cargo ground handlers and trucking companies have done business. Hopefully, putting all of these complex issues front and center in front of a large multi-industry group will not only educate, but also spark faster progress and drive real solutions to these challenges.
Airlines, especially passenger airlines, have a continuous flow of economical cargo capacity available to meet the regular, expedited shipping needs of firms involved in e-commerce. With the air cargo industry recognizing its e-commerce gaps and tackling them as a group in this way, ultimately there should be a benefit for all stakeholders, including the shippers, third-party logistics providers and trucking companies that work with airlines and that are integral to serving the customer. It promises to be an interesting conference.
