If there’s one lingering lesson from the supply chain crisis of COVID, it’s that digitization can help organizations navigate crises…but that digitization can’t be put in place DURING that same crisis.
The recent air cargo impact from the Red Sea diversions is a case in point in how airlines that invested in digitization in advance were able to maintain operations.
Ports in India were among those hardest hit by the Red Sea diversions that started in mid-December. Schedules were quickly disrupted and capacity shifted to China – Europe and North America lanes to accommodate the longer voyages. These changes made ocean capacity (and empty containers) scarce, sending container rates out of India spiking.
That reached air cargo quickly.
Since January, the ocean freight shakeup has pushed many shippers to the air.
WebCargo data shows that as air cargo demand and rates climbed, and backlogs at India’s warehouses and receiving terminals grew, the degree to which air carriers’ operations were digitalized was a determining factor in how smoothly they were able to handle the surge.
Freightos Terminal data showed that from mid-December to March S. Asia air cargo rates increased 43% to N. America and 67% to Europe as Red Sea disruptions pushed demand for air cargo.
The Digital Impact
All airlines on the WebCargo platform provide digitized, real-time rates reflecting available capacity on specific flights that freight forwarders can then view and book instantly. But when things in India got hectic, carriers who did not also have real-time, digital visibility of their warehouse and receiving terminals lost visibility of their overall effective capacity and suspended all eBookings on both third-party platforms and their digital portals.
For these carriers, February eBookings out of India on WebCargo dropped by well over 50% month-on-month.
The strong demand in the market likely meant that their planes still left India full, but for forwarders to make those bookings and provide their customers with accurate ETAs, forwarders had to scramble to make multiple phone calls to multiple warehouse and terminal representatives on the ground as well as with the airlines.
Meanwhile, carriers who – in addition to real-time capacity visibility and digitalized rates – also had digitalized visibility of their warehouse and terminal capacity, were able to stay online, provide real-time rates adjusted for the increase in demand, and let forwarders book quickly, easily, and with confidence that their customers’ cargo would get moved on the given selected flight. These carriers saw bookings increase more than 50% month-on-month as demand surged.
What this episode shows is that digitized rates and even capacity visibility are only the tip of the iceberg. True resiliency through digitalization is only achieved when applied end-to-end to each part of a carrier’s – or any logistics professional’s – operations and when worked on in advance. One weak link can break the chain when pressure is applied. And when it does break everyone – carriers, forwarders, and shippers – suffers in time, cost, reliability, and customer satisfaction.
