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The global air freight market is experiencing robust growth. Last year (2021), the market had its biggest year-over-year expansion since 2010, according to the International Air Transport Association (IATA), a trade association for the world’s airlines. And the market will grow from $270.3 billion in 2021 to $390.7 billion in 2027, projects the IMARC Group, a market research company.
During the pandemic, growing demand for air cargo was initially driven by the need to ship out protective personal equipment and medications. Later, strong growth in ecommerce ensured the volumes continued to boom.
With more cargo being transported by air, there is going to be greater demand for unit load devices, or “ULDs.” (They are the pallets or containers that house the freight that gets transported by plane throughout the world.) Annual spending on ULDs is projected to reach $2.67 billion by 2027 — up from $1.98 billion in 2020, according to Fortune Business Insights, a research and consulting firm.
Bearing a heavy load
There are approximately one million ULDs in existence, according to the IATA, and each one has a different identification code, which is embedded with information such as a waybill, consignment notes and the voyage number. This information enables tracking of each consignment.
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With many of today’s flight operations having been digitized, the movement of ULDs can be traced through several loading, unloading and transloading points. Several airlines use global positioning systems (GPS) to monitor their ULDs and trace their movement. This helps to streamline air freight operations.
But ULDs are only partially digitized. Most carriers, cargo operators and ground management teams suspend tracking once the cargo is at its departure point. This deprives shippers of information that could help bring greater reliability and security to the global supply chain. Similarly, when ULDs are on the tarmac, in a warehouse, or stored elsewhere, they can be invisible unless they are tracked manually.
These issues raise security concerns. As the IATA points out, “ULDs are the only aircraft parts that leave the control of the airline, return after passing through many unregulated hands, and have an impact on flight safety.”
ULD operations are typically outsourced to ground service providers, LATA points out. This, coupled with demands for “shipper-built ULD” from shippers and forwarders, has made it “critically challenging for airlines to control and supervise the safety compliance in ULD operations.”
Digitizing cargo equipment
This underscores the need for further digitization of ULDs. However, doing so has been hampered by challenges with tools such as radio frequency identification (RFID), global system for mobile communication (GSM) and GPS. All of them can depend on costly infrastructure for startup and ongoing support.
RFID, for example, depends on scanners, but they often have short ranges, as the frequencies offering long range may not be viable on an airport ramp. And GPS and GSM depend on batteries that consume massive amounts of power, meaning they always need backing up.
Another critical issue related to ULDs traces back to connectivity — and the costs associated with their repair and their disappearance. These costs run to $400 million annually, according to the IATA. And the limitations on visibility across the ULD network can lead to empty ULDs being stored in warehouses and going unused for long periods. That undermines inventory management for airlines, driving up costs and occasionally leading to flights being canceled.
The key is to find viable digital solutions, as they can provide real-time information about the movement of ULDs no matter where they are in the world. Attaching wireless sensors to ULDs is an attractive option. The sensors can capture information that enhances tracking while also enabling airlines to disseminate this information to their partners. This can also eventually help automate demurrage processes to drive improved asset turnaround and better asset utilization.
Combining demurrage automation and tracking technologies will also bring in commercial benefits associated with fulfilling air cargo shipments, as this will mitigate business loss due to the shortage of shipping assets. By helping air carriers reduce asset losses, match capacity with asset inventory, and reduce the costs associated with misplaced equipment or the requirement to lease additional assets, digitalization can help immensely.
The information tracked through connectivity can also go beyond location to include factors such as temperature and humidity, which are often critical for goods that cannot be subjected to high heat or extreme cold. This tracking addresses critical issues in shipping: flight delays and cancellations, as well as cargo being misrouted, misloaded or lost. It also helps maximize asset utilization and rationalizes costs.
The AI connection
Artificial intelligence (AI) offers great potential with ULDs. It can be used to predict flight departure times and to enhance load optimization and operations planning. Similarly, data in the cloud can be used to drive more accurate tracking of ULDs, as well as for better inventory management. Understanding exactly where ULDs are in real time is instrumental to getting them back from third parties.
The ultimate objective is heightened ULD transparency across the air cargo supply chain. This will create greater efficiencies for shipping and enable products to be delivered faster and cheaper, with fewer errors and greater security as added benefits.
Mitrankur (Mit) Majumdar is senior vice president and global head of services at Infosys.
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