Digitalization matters

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Amidst a generally stable air freight market, the industry’s digitalization transformation continues apace as Finnair focuses on specialized cargo and operational excellence.  

Surveying the current state of the global air freight market, Janne Tarvainen, Managing Director of Finnair Cargo, likes what he sees. But he understands that the market, and Finnair, have entered a period of profound change.

“We are seeing air freight growing faster than global trade, and can point to increases in sea freight, manufacturing inventories and consumer confidence as other encouraging signs for our industry.” 

Tarvainen is quick to point out: “On the other hand, an uptick in passenger traffic has led to new deliveries of wide-body aircraft, and consequently more air freight capacity. This in turn has resulted in a short-term oversupply of cargo space, which is less favorable for pricing and something we are keeping an eye on.”

Focus on high-value cargo

While the overall air freight picture looks steady, Tarvainen sees a healthy shift in the composition of air cargo that bodes well for the industry.

“We enjoy a competitive advantage by being able to quickly deliver high-value, time-sensitive cargo that other types of carriers are unable to match.  If we take the entire amount of freight carried on air, land and sea, air carriers account for only one percent. In terms of value, that translates into thirty-five percent of the total.” 

Tarvainen notes that the three fastest growing sources of air cargo at Finnair Cargo – fresh seafood, pharmaceuticals and e-commerce parcels – fit that high-value cargo profile and represent a positive change from the kinds of cargo transported only a few years ago.

But while the overall outlook for the air freight industry continues to improve, it is the ongoing transition to a fully digitalized delivery chain that consumes most of Tarvainen’s attention.

Industry pushes digi

According to Tarvainen, digitalization of the delivery chain remains the top strategic priority for air cargo carriers globally, a subject that was addressed in great depth at the IATA World Cargo Symposium and the Nordic Air Cargo Symposium in March this year.  

“We recognized that our delivery chain is quite fragmented, particularly when we compare it to air courier services such as DHL and FedEx which control their delivery chains from end-to-end.  Air cargo carriers still rely to some extent on paper-based legacy processes, something that all the attendees at the symposiums agreed must change if we are to speed deliveries, lower costs, reduce losses due to spoilage of perishables and help our customers reduce inventories.”

Changing an entire delivery chain, however, is no easy task, admits Tarvainen. Finnair has been transitioning to use the advanced cargo management system, SkyChain and building the state-of-the-art COOL Nordic Cargo Hub opening this year.  

“Success depends on the participation of everyone in the chain. It’s not been without challenges, and we have unsurprisingly had our own share of surprises and delays along the way, but we are getting there,” says Tarvainen. 

“Our SkyChain team has really learned how to learn, while our COOL terminal partners – Lodige, Inform and others –- are committed to having our warehouse management system fully integrated and automated for a September launch,” adds Tarvainen.

Text by Michael Larkin
Photo by iStock

 

 

Published April 25, 2017

Category: Market updates, Finnair Cargo

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