Digitalization of airfreight

By: | Issue #672 | at 10:00 AM | Channel(s): Air Cargo News  General News  

German startup Cargo.One is attempting to digitize the airfreight market with a booking platform linking forwarders to carriers.

Shippers who use airfreight obviously put a premium on time, otherwise why would they bother with the added expense? But the process of booking an airfreight cargo carrier is about as clunky as it is with a ship: Freight forwarders sending and receiving numerous email from airlines or general service agents, processing different offers, standardizing terms, making deals. It amounts to hours, if not days, of wasted time.

“We were quite astonished at how this is done,” said Oliver Neumann, the founder and managing director of Cargo.One, a Berlin-based startup attempting to digitalize the process. “We saw a [freight-forwarding] process where a young man received an email from some shippers or a company that wants to transport something. ‘I have 800 kg of milk powder that needs to go from Frankfurt to Shanghai. Please give me an offer and quick.’ This freight forwarder sat down and wrote an email with five or six different airlines and general sales agents in a blind copy,” said Neumann whose team spent time with freight forwarders looking at the process. He stressed the irony: “We have a product that’s time sensitive and the solution to book this cargo is by sending email and waiting basically to get offers. “Airlines working with forwarders also rely on a lot of manual tasks to bid for work, cutting and pasting quotes on an email. Cargo.One has created a platform that completely automates that booking, linking forwarders to carriers. In June, the year-old company got a major boost when Lufthansa signed up to be on the Cargo.One platform. Neumann won’t say when he expects the service to go live, only “hopefully as soon as possible.” He said that if the company can attract three or four of the major airfreight carriers in the region, it can inaugurate the service to and from Europe. “Technology can make the process faster, easier, it can decrease cost and it can create structured data in a way that airlines can use it to better forecast demand, but also freight forwarders can use it to make their shipper able to book digitally, Neumann believes.

Airfreight may still be stuck in the non-digital age, but there are many forces at work that will transform this part of logistics, whether forwarders like it or not. In a February paper on the subject, consultancy McKinsey & Co. identified three sources that are pressuring traditional airfreight forwarders: digital forwarding specialists offering solutions for “one or two elements of the value chain,” digital forwarding specialists competing with traditional forwarders and able to offer “a better customer experience at relatively low cost” and carriers using digital channels to directly serve customers, especially smaller ones.

New technologies, such as advanced analytics and machine learning, “will disrupt airfreight forwarding profoundly over time,” McKinsey believes.

Unlike, say, Flexport, which competes directly with freight forwarders, Cargo.One, for one, isn’t attempting to dis-intermediate brokers, Neumann stressed. In fact, he said, freight forwarders are the lynchpin of the service. “We are actually empowering the freight forwarder,” said Neumann. “We are simplifying the process, thus decreasing the cost, therefore helping the freight forwarders do better offering to their shippers. On the other hand, we are giving them a technology layer to do their own offers to their shippers.”

The Cargo.One platform instantly offers carrier alternatives, comparing both price and time to destination.

Because airfreight transport is so heavily regulated, licensed forwarders will continue to dominate, Neumann believes, Cargo.One plans to charge a commission on each deal.

American Journal of Transportation