Air cargo shippers facing many new challenges, says prominent analyst

One of the major questions surfacing in our recent annual feature, 2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward, was how traditional air carriers will compete with Amazon in the near future. Chuck Clowdis, managing director of consulting firm Trans-Logistics Group, Inc., believes that the initial challenge will come from Amazon’s ability to move cargo in “back-haul” or empty miles directions.

“Existing air cargo service providers must decide if they want to compete on these lanes, with possibly reduced rate levels, and maintain their market share,” he says. “Or they may wish to simply abandon these lanes to Amazon. At this stage, it is my opinion that Amazon’s fleet may disrupt traditional movements in only select lanes.”

At the same time, Clowdis feels that the traditional providers will not be facing a major revenue challenge, “however, as e-commerce develops their likely will be plenty of freight to fill any void,” he adds. 

 Another trend capturing his attention is the use of artificial intelligence (AI) in air cargo operations. He maintains that it may play a major role sooner than many shippers expect.

“With the alignment of so many technologies, i.e. scanning, tracking, routing still emerging daily it seems, AI will soon – in next 2-5 years – be making decisions based upon expected variables,” he says. “And while it will not be 100% accurate at its inception, safeguard measures will prevent major errors as systems are refine.”

He cautions, though that “data alone” is not just the point.  

“The logistics manager without sufficient and correct data is just a person with an opinion,” he says. “It is a fine balance and the choices are proliferating wildly.”

Clowdis adds that Big Data faces the same challenges: It isn't how much data can be captured…but rather how it is used to solve problems in visibility, traditional movements, freight history, diversion, and analysis.

In tomorrow’s exclusive LM interview, Clowdis shares his views on new players in the air cargo industry and how they surmount barriers to entry.