Different strategies to deal with the pain points the air cargo industry is contending with emerged at IATA’s World Cargo Symposium in Singapore last month.

The air cargo industry is facing simultaneous challenges, with growing pains in the booming e-commerce sector accompanying more usual concerns such as creaking infrastructure and the lack of trade facilitation and other supportive measures.

E-commerce is very much at the forefront at the moment as growth eases, but the sector acknowledges that its future will be increasingly determined by the need to move lots of small packages through increasingly lengthy chains.

On the plus side, giant Chinese e-commerce companies are set to go global, taking with them their pledge to deliver products within 24 hours in China and within 72 hours in the rest of the world.

“We are working with our partners to create a global logistics network,” Xiong Wei, chief of staff and head of strategy at Cainiao, told the symposium. Cainiao is the logistics wing of Chinese e-tailer Alibaba.

This is, presumably, in addition to the four distribution centres the Chinese e-tailer already has in Hangzhou, Hong Kong, Liege and Colombo, although the company is keeping quiet about where, and with whom, it wants to partner next.

“We are looking forward to ideas and collaboration with people around the world to build (them),” Wei told Asia Cargo News. “We don’t have an exact number in our own mind and we don’t say.”

A more considered response came from Singapore Airlines, whose strategy is based on the new verticals – long industry lines such as pharma, perishables and live animals. This is a follow up to its recent pharma product Thrucool, said Yau Seng Chin, SIA’s senior vice president for cargo.

“We have been building up our capacity to support the verticals,” Chin told Asia Cargo News. “For us it’s the value of speed, utmost care and handling pharmaceuticals (in) temperature-controlled areas which is very important.”

Bringing that expertise to other sectors though doesn’t mean moving across to other sectors but moving up and down their supply lines to understand what they want. “We get in touch with manufacturers and shippers to identify (their needs),” Chin added.

One retread specifically mentioned was customs clearance. “That has been a tremendous problem,” Ludwig Hausmann, a partner with McKinsey & Company, told the conference. “The logistics industry has to solve that problem,” he added.

Customs matters now, and will matter more so in the future because e-commerce means more individual packages moving through the system. Nor is that the only big upcoming and complicating change as consumer behaviour evolves – with consumer behaviour sometimes ahead of what the industry can deliver.

Cainiao’s Wei mentioned increasing pickiness about delivery, with consumers demanding more delivery spots other than the doorstep, with goods needing to go to lockers and other pickup stations.

Cainiao has already solved the customs problem, as Wei reported, by increasing automation to reduce processing time to five seconds rather than five minutes. It has also eased other problems by going tech and digital. Robots are extensively used at its logistics facility, as are smart voice assistants or chatbots in helping with last-mile delivery processes.

This is the likely start of something very big. “We want to digitize the logistics infrastructure,” said Wei.

On the customs side, one symposium session quickly agreed that for reforms to be effective, there must be more trust and information up and down the line. One part of the session was tellingly taglined “from supply chain to supply community,” and looked at the benefits of community apps.

“One challenge has been trying to get the information much sooner in the supply chain,” said Pashupati N. Pandey, technical officer for the World Customs Organization (WCO). The WCO was “looking at opportunities,” added Pandey, without providing details.

This might be a slow process as other issues were forcing their way onto the customs agenda. One example Pandey gave was returns, which is “becoming a big challenge.” This was complicated by the existing challenge customs officials have of trying to levy a lot of small amounts of tax on lots of small parcels.

There is, though, industry support for solving the customs challenges. TIACA secretary general Vladimir Zhukov urged attendees “to work closely with customs and aviation security. We need to continue this.”

China Customs is also doing its bit, which could be very important given the centrality of China to e-commerce and increasingly air cargo.

“China Customs is thinking of [amending] the customs law,” said Julianna Zhu, a professor at Shanghai Customs College. Zhu said that by 2020, China would be paperless – just one of the many challenges air cargo will face if it is to make the most of the e-commerce driver in the coming years.

By Michael Mackey

Southeast Asia Correspondent | Singapore