Get service levels up, mega shipper tells airlines

Get service levels up, mega shipper tells airlines

SHANGHAI — Ericsson head of distribution logistics Robert Mellin took a swing at the air cargo industry that he said was delivering service levels well below expectations and was failing to evolve at the same pace as other modes of transport.

Poor lead time and lack of real time information in the air freight business were frustrating when compared to other modes, he told delegates at the International Air Transport Association World Cargo Symposium.

“I don’t get the information in time, it is very ad hoc and generates huge amounts of paperwork that I need a battalion of people to deal with. I don’t want to have people working on this. I have outsourced it and don’t want to insource it again. That’s why I am not happy,” he said.

Working at a communications technology company had raised his “expectation bar,” the logistics executive said. “I know what is out there when it comes to information technology, and it is not technology that is holding back the airline industry.”

Ericsson spends $250 million a year on air freight and ships products to more than 160 countries, but Mellin said if the air cargo industry could cut down transit time he would consider shipping even more cargo by air.

“If you pay more you get an express service, but I am not willing today more. I spend 72 percent of my international transportation on air freight already. But if the lead time could be reduced, with better information provided at all points of the supply chain, air freight would become an even more attractive option,” Mellin said.

Jason Frerich, director of global logistics infrastructure and sustainability for Nike Inc., agreed that the air cargo industry needed to improve.

“We don’t get updates as often as we want. The updates from ocean carriers come more often and I don’t really know why that should be the case,” he said.

For a relatively fast moving shipment process, shippers of air freight are desperate for real time information to keep track of their shipments and react quickly to problems. Mellin said this was a critical factor that was lacking.

“Every time something goes wrong, it needs to be fixed fast,” he said. “We need to be informed about the problem, because the faster we know what has happened, the more we can save on costs. What we don’t need is to hear from the customer that the shipment has not arrived.”

The Ericsson and Nike executives were not alone in their criticism of the air cargo industry. A recent IATA shipper survey was a damning indictment of an industry that was failing to adapt to a changing environment. In a slide titled “What is wrong with air cargo,” the shippers complained the industry was too complex, was a painful experience, had a weak value proposition, poor customer service, was old fashioned, had no real time information and was inefficient.

Leif Rasmussen, SAS Cargo president and CEO, presented an airline perspective, in which he said that although there were a host of shipper-created issues, the air cargo industry required “radical change.”

“The value chain from shipper to consignee is struggling with incorrect weight declarations, incorrect pallet size, missing shipment details, missing documents and invoicing errors,” he told an Industry Trends gathering. “But the airline is the biggest part of the value chain. We looked into SAS Cargo and found that from booking to billing, we have more than 50 touch points in the process.”

Among the touch points were some red flags, such as a time consuming price quoting process with too many phone calls. He also said SAS Cargo received and sent tens of thousands of emails every month, and there was a general lack of simplicity in the industry.

“The booking to billing process is a complete maze,” he said. “If we could save 90 percent of the booking time it would save costs for the airline and for the customer. Just imagine if we could have full transparency from booking to billing.”

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.