When we think of the “future” in terms of the global supply chain, advanced technology and new forms of disruption are usually among the things international shippers are most concerned about. With 2021 at its end, the “future” is right around the corner. Meaning, what supply chain players do now (and what has been done thus far) will inevitably impact 2022 and beyond, and the more one understands this market’s evolving patterns, the more successful they will be in managing what is to come.
Throughout the past year, the air freight market has seen various shifts, particularly with global capacity constraints, remnants from pandemic-driven disruptions, and an overall increase in demand. To fully understand the future of air freight, we must look at the big picture. To do this, BDP International’s VP of Global Airfreight, Patrick Olyhoeck, shares what global shippers can do to navigate 2022.
The first shift is perspective.
“Industry players can be more proactive by learning to fully understand industry challenges from a customer’s perspective to help them collaboratively overcome challenges,” Olyhoeck says. “The industry is impacted by factors including COVID-19 recoveries… and fundamentally, proactivity can only come from understanding key market challenges, thinking forward and engaging across stakeholders to find future solutions.”
He shares the following shifts are among the most significant currently being felt across the market:
-Impacts on capacity due to lower passenger numbers
-Impacts from the re-balancing of trade relations
-Impacts from the knock-on effect of capacity needs from ocean to air
-National level challenges including HGV drivers in the UK impacting final the distribution of air cargo
Despite these shifts, in addition to the ones not yet seen or felt by the market, it is quite clear that some challenges are here to stay–pandemic or no pandemic.
“The basics of the market did not change,” Olyhoeck says. “Compare it with a soccer game, two decades ago. The speed of today’s game is enormous with real athletes on the pitch but still, you need to score to win the game–this is equal to our industry. Although regulations and customer needs are changing, we still move air cargo from A to B. The nature of air cargo remains focused on speed and safety to justify the choice.”
In addition to the evergreen nature of regulations and customer needs, Olyhoeck stated that global capacity constraints are expected to be felt for at least another season, and the key to managing this can be found in verticalization strategies. Limiting transport methods not only hurts your business but can be felt by your customer base as well. Maintaining reliable, transparent customer relationships is more critical now than ever before to remain competitive.
“Verticalization is the way to move forward where expertise and experience meet,” Olyhoeck says. “Digitalization will play a significant role. It is necessary to control your capacity to meet your customer expectations throughout the supply chain and therefore not limited to the airport-to-airport move only. From a company view, we need to stay resilient, embrace technology and keep pace with innovations in close relations with our customers.”
Streamlining information with the help of technology is a considerable factor that separates the good from the great. We live in a world where having the latest technology no longer cuts it. A shipper’s competitive advantage is not found in the kind of technology used for customer needs but more of what data is provided through technology to better understand, predict and manage customer needs.
“We need not only to embrace technology but also accelerate the exchange of data as the impact is significant,” Olyhoeck adds. “Currently, too many stakeholders operate different systems with diverse needs. The use of digital pricing and booking platforms will help to increase efficiency and improve turnaround time, and it does get the attention from the shipper playing field to serve them with their best interest in mind.”
Collaboration is key and gathering the right data will further streamline processes to success. BDP manages its customer needs through the utilization of technology platforms that provide relevant, timely, and critical information. Combining the best of both technical capabilities and data, customers can rely on this approach to share the information needed to overcome market shifts.
“BDP technology forms a fundamental part of how we manage complex, high care, dynamic supply-chains through both normal and abnormal market conditions,” Olyhoeck says. “We invest in platforms to provide insight into data integration and aggregation, platforms which support communication and exception management, and platforms that automate and simplify processes to help manage complexity and streamline our communications with customers. Our customers and partners are kept informed every step of the way in critical journeys.”
Even more significant is the need for more attention to budgeting and forecasting in the air cargo sector. According to Statista, 2021 will end with an expected 63.1 million tons of freight carried globally.
“Unfortunately, forecasting is underexposed,” Olyhoeck shares. “As in various industries, the budget and forecast for shipping pure air cargo is zero, but shippers still end up shipping millions of kilograms by air each year.”
So, is there such a thing as a formula shippers can rely on for the future of the industry? Simply put, yes. But without key components of communication, technology and data, customer relationships and operations are projected for complications.
“Energized teams supported by the latest technologies plugged in and managing global networks is not new to the industry,” Olyhoeck notes. “The chaos brought on from the pandemic, within the ocean markets impacting air, shows that having teams that can react, adapt, collaborate and solve using insight and intellect many times outstrips the technical component of competition.”
Simply put, modern market relationships and collaborations cannot be compromised. As Bob Hooey once said, “If you are not taking care of your customers, your competitor will.”
Patrick Olyhoeck has more than 20 years of experience in the logistics sector. Having joined BDP in 2009, he filled local and regional positions before recently being promoted to vice president, Global Airfreight. In this role, he is responsible for one of the strategic key contacts for the international airline industry and the evolvement of offering premium global supply chain transportation service to a wide range of valued customers through the designed Global Consolidation Model. He can be reached at email@example.com.