Smarter warehouses and new strategic alliances to transform cargo industry by 2020: Unisys

October 13, 2017: The Asia Pacific air cargo industry is experiencing growth and transformation driven by rapidly increasing capacity supply on passenger flights, and the shift to business-to-consumer small parcel shipments as a result of e-commerce. Growing passenger demand will increase the number of passenger flights and add to cargo capacity supply.

“The cargo industry needs to embrace disruptive technologies from the consumer world, including Internet of Things (IoT), digital assistants and drones, to increase efficiency and meet customer expectation for greater transparency throughout the supply chain,” said Venkatesh Pazhyanur, senior industry director of Freight Solutions for Unisys Corporation.

The International Air Transport Association (IATA) expects the number of air passengers globally will almost double between 2016 and 2035, with the greatest growth in Asia Pacific – particularly in China and India. Simultaneously, the popularity of e-commerce is changing the nature of cargo shipments, incrementally increasing the number of small parcels – which is predicted to grow 5 percent annually in mature markets and 17 percent annually in China.

“At Unisys, we predict these market pressures will bring innovation in three areas in the cargo supply chain: smart warehouses will become even smarter, drones will finally take off in the cargo supply chain – but inside the warehouse and new alliances between airlines and global distributors will enable longer-term capacity management. Much of the underlying technologies are already being used in other sectors – including the consumer world. But now, more than ever, cargo operators will be forced to embrace such innovation to be more efficient, nimble and proactive in an increasingly competitive and price conscious market,” added Pazhyanur.

Unisys cargo experts believe the following predictions to be over the next five years or less:

Smart warehouses will become a reality

To meet the growing demand for small parcel deliveries, warehouses will transform from a storage location to a dynamic facility using IoT and voice artificial Intelligence (voice AI) enabling faster processing of more shipments to generate a higher return on the real-estate investment. Just as connected wearable devices such as smartwatches are becoming mainstream in the consumer world, IoT-based technology will create the ‘smart warehouse’ of the future. Recent innovations such as smart glasses used to display information triggered by a barcode or QR code on a container will be taken to a new level by incorporating scanners to capture and input information into the warehouse system automatically and integrating voice AI to initiate actions. Similar technology is already used in digital assistants such as Siri, Cortana or Amazon Echo. Unisys expects cargo operators to invest in converting machine commands to voice within the next three years.

Drones will be used inside the warehouse

While drones have become a familiar way to provide TV sports aerial footage, the much-anticipated mainstream rollout of drones to deliver parcels to the customer’s doorstep is hampered by flight space restrictions, government approvals and privacy considerations. Unisys predicts the more immediate application of drones in the cargo supply chain will be within the confined space of warehouses to conduct inventory checks more often and more accurately, replacing the largely manual process. Beyond locating lost or misplaced items, the drones will use sensors to monitor environmental information such as light or temperature for perishable food, pharmaceuticals or livestock, and raise alerts to unusual noise or movement that may indicate animals are in distress. Unisys predicts this within the next 12 months.

New alliances between airlines and global distributors will be forged for long-term revenue optimisation

With cargo capacity potentially increasing faster than cargo demand due to extra passenger flights and larger aircraft, cargo capacity management has become the number one challenge for airlines. In this environment of unconstrained capacity, the traditional approach to yield management will not work as airlines may dump cargo space onto the market, creating a price war. Unisys predicts a fundamental move to longer-term revenue optimisation based on strategic alliances between airlines and organisations with large ongoing delivery requirements such as postal authorities, major online retailers, global distributors and supply chain management companies. This will require airlines to provide their alliance partners with transparent real-time access to available capacity and predictive analytics to determine best routes based on speed, reliability and cost. This expectation for visibility will also extend to the ‘last mile’ of the business-to-consumer cargo supply chain, leading to the development of mobile apps to allow the final recipient to be able to track the approach of their delivery – similar to how consumers currently track an approaching taxi or Uber.