Ocean carriers are far-and-away outpacing the air freight industry when it comes to progress on digital connectivity, leading in three key benchmark categories, according to a new report by online freight specialist, Freightos.
Leading in each of the three categories, the ocean freight carriers scored a benchmark of 38 per cent, compared to air cargo carriers which came in at 22 per cent.
“In every category, ocean carriers are, on average, more mature than their air counterparts,” states the report, noting that the highest differential where airline cargo carriers generally lag most, was transformation.[pullquote]Carriers should be proud to be the backbone of world trade, powering unprecedented job creation and consumer choice.
But for twenty years while retail, passenger travel and financial services were transforming through digitalisation, our industry was still pushing paper airway bills and bills of lading, and manually emailing Excel-based rate sheets.
This survey shows that finally the change has started. The first horses are out of the gate. And like in other industries there will be digital winners and losers.” – Zvi Schreiber, Freightos CEO.[/pullquote]
In this all important top-down focus on changing systems, process and culture – internally and externally, ocean carriers were far ahead at 45 per cent, versus air cargo’s 10 per cent showing.
Making the salient, if not obligatory observation, Freightos says of the poor air cargo showing: “For a time-sensitive mode, there is an even more urgent need for digitalisation.”
There are some diamonds in the rough, however, with the standouts on the air side including: Lufthansa Cargo, Air France KLM Cargo and Delta Cargo. On the ocean side, Maersk, CMA CGM and Hapag-Lloyd lead the pack.
The report, which provides a framework for benchmarking carrier digital maturity, measures progress of three categories – Digital Connectivity, Online Experience and Transformation – across 26 parameters. The survey’s aggregated results benchmark the current state of carrier digital maturity, but also flags just how much further there is to go.
Freightos notes that, even recently, a benchmark study on carrier digital maturity would have had very little to measure other than “outdated EDI connections and some largely non-interactive websites”.
However, “in 2015, it became apparent that there was a groundswell of change,” according to Freightos. “When, in 2015, Delta Cargo, IAG and Etihad all introduced eBooking, it was suddenly game-on… and since then one breakthrough has succeeded another.”
But clearly there is a lot of work to do, on both modes. Out of the 30 freight carriers (20 air and 10 ocean) surveyed, only five were identified as having real-time API connectivity to customer systems, namely Lufthansa Cargo, Air France KLM Cargo, Maersk, MSC and Delta Cargo.
The report notes that air carrier digital maturity scores were more erratic across categories than their ocean counterparts. Lufthansa had the highest digital connectivity score, followed by Air France KLM Cargo, while Delta Cargo had the best online experience score, followed by Air France KLM and LATAM. Lufthansa Cargo had the best transformation and cross-category scores.
With a cross-category score of 22 per cent, air carrier digital maturity lags well behind ocean carriers (38 per cent). Freightos cites WebCargo CEO Manel Galindo, who considers this is likely the result of cargo businesses having lower budgets than airlines’ passenger business.
Indeed among the hurdles to digital maturity, the lack of relative influence of cargo vis-à-vis the passenger business, industry fragmentation and airline cargo carrier technology issues were cited as being key issues.
Indeed, as the report notes, before modern APIs (or carrier websites) can even deliver instant service, carriers must internally connect their booking, allocation and pricing functions in real-time.
“Only a few carriers have managed this so far,” the report notes, citing SAS Cargo (not in the survey) as the pioneer. It adds that Lufthansa even publishes their APIs online.
“Carriers should be proud to be the backbone of world trade, powering unprecedented job creation and consumer choice,” says Zvi Schreiber, Freightos CEO.
“But for twenty years while retail, passenger travel and financial services were transforming through digitalisation, our industry was still pushing paper airway bills and bills of lading, and manually emailing Excel-based rate sheets.
“This survey shows that finally the change has started. The first horses are out of the gate. And like in other industries there will be digital winners and losers,” Schreiber says.
“While these benchmarks show much has been done, we may be entering global trade’s most pivotal decade of innovation. Automation and APIs means on-demand decision making, smarter supply chains, and an acceleration in the already breakneck speed of the movement of goods.”
To download a free copy of the full report, click here.