disrupting the air cargo industry - iata - home€¦ · · 2017-03-16billion dollar + enterprise...

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, %


-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


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


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


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


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

–


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


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

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


Shipper

Shippersbookonline,getconfirmationfromforwarder‘ssystem.Shippersprovidesomeforecaststoforwardersorevenhavecontractsabout(some)constantcapacity.




FreightForwarder

Freightforwardersbookelectronically(eAWB)withairlines.Theyhave(some)capacitybasedagreementsandprovidesomeforecaststoairlines.




Customs

Customs(inmanyplaces)receiveelectronicdocumentationandclearfreightelectronically.




Airline

Receivessomeforecastfromforwardersandcan(atleastpartially)plantheirflights,extrasections,andpeakcapacitydemandaccordingly.




ULDManager

ULDmanagersact„ondemand“withnonoticeandnoforecast.Makingthebusinessextremelychallenging.Solutions:- Jettainer’s smartsteeringlogic- longtermexperience(humans,data)- intelligentsystemstocombineboth



TheULDmanager HowcananULDmanagersupportefficiencyalongthechain?

Wearepushingaheaddigitalization:

• Digital/automatedprocesses:Electronicin/outbooking,stocktakes etc.(Tool:JettWaremobile onJettApp,JettPad,Smartphone)




• Software/IT:Jettainer‘s decisionsupportsystem,bigdata/expertsystem.ArtificialintelligenceusedtobettermanageULDfleets.


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.




• Software/IT:Jettainer‘s decisionsupportsystem,bigdata/expertsystem.ArtificialintelligenceusedtobettermanageULDfleets.

• Hardware(ULDs):IntelligentULDsthatcommunicateautomatically(Tool:GPS,othersensordevices)

TheULDmanager HowcananULDmanagersupportefficiencyincreasesinthechain?


Whatifweconnectwithotherplayers:- Bookinginformationfromshippers- Forecastinginformationfromforwarders&airlines- Customsdata…couldbeintegratedintoourartificialintelligence.

Outcome:EvenbetterefficiencyinULDusageandmanagement.

ThesmartULD ManifoldopportunitiesderivefromanintelligentULD

Humidity

Temperature

VibrationDamages

Geolocation


Shipper

FreightForwarder


Customs

FreightForwarder

ShipperULDManager

Timeadvantage to generate solutionIncident


• 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

+41796021089

[email protected]

@Gatechain_com

WassiliosLytras

Thank you to our Networking Break Sponsor

Save the dates !

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

Save the dates !

disrupting the air cargo industry - iata - home€¦ · · 2017-03-16billion dollar + enterprise...

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