Ecommerce traffic is a low-yield business for airlines – consolidations of large numbers of low-value shipments that would not be viable for air transport if customs processing costs were to arise. Software provider Kale Logistics offers functionality that could turn this into a more profitable revenue stream for carriers.

Stan Wraight, president and CEO of air cargo consultants SASI Worldwide, argues that airlines are positioned to move ecommerce faster than integrated express carriers can.

However, this requires a change in approach and technology. The airlines’ current setup cannot handle the requirements of online merchants, he said.

IT systems used in the air cargo industry are geared to tracking cargo at the master air waybill level, which is inadequate for ecommerce, said Amar More, CEO of Kale Logistics Solutions. If one bag is offloaded from a consignment, it drops off the radar. E-tailers are operating at the piece level, which is what the integrators can provide today. Hence, airlines typically receive ecommerce in consolidations.

Customs requirements are the other major hurdle. Operators need functionality that can handle customs declarations, absorb messages from authorities and accommodate the push toward more detailed information and extended product codes that regulators are calling for, More noted. Again, item level visibility is crucial to pinpoint individual packages, he added.

Kale has introduced a cross-border management platform called AvSys that covers these elements, from package-level handling and tracking to harmonization for customs clearance, as well as producing routing labels and managing different layers of packaging, from individual bags to containers. It can also integrate first- and last-mile provider systems to create seamless end-to-end coverage of package shipments.

The system enables airlines to compete with integrators for ecommerce traffic, said Wraight. As airlines fly directly between points – without a stop at a hub for transloading – they can offer faster transit times than the express carriers.

Moreover, they can do this at lower costs. Not only are they saving money on hub operations, but they do not have to cover the return leg of the flight, Wraight argued. “In a hub-and-spoke operation with ecommerce, you suck wind on the return leg. You have to sell both directions,” he said.

Passenger airlines, with their vast networks and the lower cost structure for cargo than freighter operators and integrators, are ideally placed to tackle this segment, he pointed out, adding that this would meet with lively interest from a rising customer segment.

“Ecommerce firms want to deal directly with an airline, not with third parties,” he said.

Kale has performed a successful proof of concept of AvSys and is now in active discussions with a number of interested companies, More reported, adding that he has met with lively interest – not only from airlines.

“Handlers can use the system. We’re talking with the top handlers,” he said.

Kale offers AvSys on a subscription basis.

Implementation with a single customer can be carried out in about 3 to 6 months, according to More.

“We start with proof of concept, which can run for about a month or so. Once that’s done, you identify trade lanes and segments here to start,” he said

If interfaces are required in the event of customers joining hands, such as an airline bringing in some of its vendors, he estimates that it will take about 12 to 18 months to fully establish the system.

One company is moving to offer the entire end-to-end package as a virtual integrator suite. eSmart Logistics, founded by former AirBridgeCargo executive Denis Ilin, is marketing its system to airlines. It is based on Kale’s AvSys.

“Kale is crucial. For visibility along the entire chain you need an integrated IT platform,” said Ilin. “Kale’s system is an integral part of our product.”

AvSys has applications beyond ecommerce, noted More. “The system can be extended to wherever you need to track at the parcel or SKU level,” he said.

This makes AvSys interesting to sectors like the pharma industry, he remarked, adding that Kale has also been approached by postal agencies.

These avenues are for exploration down the road, though, as far as he is concerned. “We address ecommerce first. I’m a big fan of doing small things right,” he said.

By Ian Putzger

Correspondent | Toronto