Digitization as a Cost-Cutting Strategy to Sail through Tough Times in Logistics

Digitization as a Cost-Cutting Strategy to Sail through Tough Times in Logistics

The year 2020 began on a gloomy note for the whole world due to COVID-19 outbreak, which is now creating havoc across the world. The first victim has been the logistics fraternity. Now, we see some light with the restrictions lifted and cargo movement happening across the borders. Yet, to see a complete recovery, we are some months away. 

Cost-cutting initiatives are more prevalent across industries. Some laid-off and some cut wages. Yet, realizing synergies seems to be tough. But cost-cutting can be on a different mode altogether. What if, cost-cutting was on non-essentials? What if, cost-cutting can help you achieve efficiency building than layoffs? 

Documentation is one part where cost-cutting is essential. Yes, in a fast digitizing world, why would someone still invest on physical documents rather than triggering the documents instantly online? This is more valid for the logistics industry (both air and maritime). Cutting down the rigid documentation process will not only help one save costs. But help the organization to adapt to the new normal of digitization.

Let us see the challenges faced by each stakeholder in the air cargo ecosystem.

Cargo handler is facing staff shortage at the terminal to handle incoming and outgoing freight. This leads to longer waiting times for truck drivers. Cargo handler does not has advance shipment information. Also, the available staffs are at the risk of getting affected due to the pandemic as they are exposed to physical contact with freight forwarders, truckers, etc. 

Freight Forwarder is finding it difficult to deal with physical documents such as Air Waybill, Delivery Order, Transport Order, Slot Booking to name a few. Lockdown restrictions have limited the movement of people and there is staff shortage. Also, it is not aware of the freight status after it passes through the handler.

Airline is waiting for the handler to pass on the approved documents as it is time to take-off. But delay at the end of the customs authorities caused by manual approvals is limiting them from delivering cargo at the destination on agreed timelines. 

Customs authorities are burdened with a huge chunk of physical documents to be approved. With this, they’re not able to maintain the balance between effectiveness and efficiency for cargo inspection. This is caused by inaccuracies in documentation which leads to documents sent back and forth for data correction. As a result, this leads to an operational deficiency of handlers and forwarders.

How will Automation help in Cost Reduction?

Here the issue lies in not having information in advance especially for the cargo handler. If the truck driver can inform his expected arrival time beforehand, the handler can organize the resources. This will enable efficient handling of the freight in a short span and let it move ahead swiftly.  

This is where automation has a large role to play. Platforms such as Air Cargo Community Systems ensure seamless communication between handlers, forwarders, truckers, airlines to name a few. Systems like these immensely automate functions to enable trade facilitation and also improve communication between all stakeholders. 

Moreover, these automation initiatives are driven by Artificial Intelligence (AI), Machine Learning (ML) and Optical Character Recognition (OCR). All these enable geofencing, electronic seals, bar codes and QR codes for end-to-end tracking of milestones. Therefore, cargo handler, forwarder and others involved in the process can have a complete track on the freight movement end to end. 

To avoid the physical documentation process, automation also enables the conversion of documents and generating EDI messages triggered to all. Therefore, the information is shared with all involved in the process i.e. right from the freight forwarder to the airline. 

Moreover, this ensures accuracy in data. Therefore, the document is not sent back and forth for corrections. Also, it is shared in the common platform with access to everyone. The carrier need not wait for the handler to give the document and the customs authority can instantly approve it. 

Here, there is no risk of disease spreading due to paper trails. Well, here we solve the case of cutting down cost on physical documentation. Therefore, no risk of COVID-19.

Rising to the New Normal

Everywhere we see people asking what will be the new normal. Precisely, digitized operations will be the new normal as we come out of COVID-19 pandemic. Already, to a large extent, the employees in the logistics industry are working from home and they’re achieved with digital automation. Now, overcoming the cues of documentation will cut costs significantly.

With all this, digitization, integrations, advance information is the key to thrive in a new normal world. Rather than layoffs and pay cuts inculcating digitization as a cost-cutting strategy will not only pay off in the short term but also in the long term. Also, this will increase the dynamics of the workforce and enable them to deliver like never before.