As a result of pandemic-triggered lockdowns, social distancing, and mask mandates, not to mention worry about contagion from a potentially deadly virus, consumers took to ordering everything online, from the latest computer to toilet paper. People in the industry expected e-commerce to grow from $2 trillion in 2019 to $4.4 trillion by 2025. Instead, e-commerce sales jumped ten years ahead in the first 90 days of 2020. According to IATA, global e-commerce value is expected to reach over $4.8 trillion by the end of 2021. E-commerce has opened trade opportunities, especially among those who did not have access before, namely, small business owners. E-commerce sets the standards for air logistics and expands trade opportunities for non-traditional sectors.
Because of e-commerce, a consumer can buy artisanal jewelry or organic soap online. See below IG page below of my favorite soap maker. The seller may do this as a hobby or side hustle. Before the Internet, these same hobbyists would only sell to people as far as they could reach. They never had the volumes for big-box sales, resources, or market share to justify shipping costs. I used to work with such small business people in another career. We struggled to get products to market because of the small output size. Today, through e-commerce, the world is your oyster. This is why the expectations of consumers are changing. We all have the power of instant gratification in our hands. The same technology provides speed, visibility, and ease of return.
Driven By Consumer Expectations
I was on a hike a few Summers ago with some friends in Kennesaw Mountain, Georgia. One lady was so exhausted that she asked if she could order a rideshare to pick her up where she was. It occurred to me that the Internet and e-commerce have made us impatient. We expect instant gratification wherever we are, whenever we want. Studies show we have lost the ability to be patient and to wait. Self-control is mainly gone. Cultures of YOLO tell us to do and get whatever it is now because we may not be around for much longer. With your credit card and bank connected to one-click purchases, impulse spending is super easy.
When conversing with someone about a good book they read, I usually take out my phone and either download it from my online library or order it from Audible. Immediately, I have the same book. Our phones are packed with instant gratification apps: Instacart, Amazon Prime, Netflix, Hulu, Libby, Lyft, and Tinder, to name a few. The logistics sector must also augment itself to understand this new consumer expectation. As the head of SASI, Stan Wraight, pointed out, Airports, airlines, ground handlers, and all stakeholders must aim for 48 hours of door-to-door, high-quality, and complete transparency throughout the system.
Cargo Community System
I must include my thoughts on digital cargo anytime I write about logistics. Just as the Internet has brought us things like online gambling, a topic I wrote about a few blogs ago, it also offers opportunities to use the same technology to fulfill consumers’ desires. The Amazons and Alibabas of this world have figured out using analytics to predict demand and influence it. They are, in turn, linking their entire supply chain to demand creation. That’s why Amazon’s distribution warehouses are on the outskirts of major cities. They have warehouses stocked with what we will soon want so that they can satisfy the instant gratification of same-day delivery.
My team and I were the first to bring an airport cargo community (ACS) with our partners in India and several private sector early adaptors systems to the U.S.A. At first, I was surprised that the cash-saving technology did not have a fast and universal uptake. I now understand that several factors have slowed that. The main one is the unawareness and unacceptance of how technology and the Internet have shifted the international trade system. Whether B2B or B2C, the business or consumer always wants to know where their shipment is. Traditional cargo is not yet geared for instant gratification. Many in the sector still use manual methods, with physical paper and ink.
Automation and Warehousing
The paper and ink folks are watching the market share erode, believing they are safe because their target market is different. Meanwhile, as the world expands, they consider that they are still making money, so why invest in new infrastructure? Connected Internet of Things (IoT) technology can lead to greater efficiencies, combined with warehouse management systems, scanners, material handling systems, customized electronic scale build-up pits, and storage retrieval systems. They need to have a technical team in-house to deal with hiccups or breakdowns, more so than a throve of lower-skilled labor committed to repetitive tasks.
Many of you have realized we are in a blue-collar labor market crunch. The signs were there long ago, with slower natural population growth and immigration politicized. Plus, partly because of the death toll of COVID-19, people are refusing to work for poverty-maintaining wages in harsh labor conditions. Companies, including in the logistics sector that underpays their workers are now seeing long-term profits threatened. They certainly can’t grow as they used to because even though blue-collar workers are in abundant supply, they demand better pay. They also want to be treated better. Treating low-wage staff as valued as white-collar workers is a tall order for many companies accustomed to treating their blue-collar workers as second-class. But it must change if they want to survive in the long run.
A friend who manages a ground handling company told me they hire extra people during winter and spring. During the Hotlanta summer months, staff working on the ramp quit after feeling the 120 degrees temperature on the ramp. That’s a whopping 41 degrees Celsius for my non-US-based followers! Who could blame them? The warehouses become ovens in the summer. They should have wind curtains at their doors and measure climate control and insulation for staff comfort. Then there is equipment that generates heat, like material handling systems, but needs to operate cool. Ramp tugs, forklifts, and hydraulic lifts should all come with a climate-control cabin.
Design or retrofit the landside where possible to allow more automation to move cargo from the plane to the warehouse with as few people outside in the elements as possible. Plus, automation forces innovations that use the IoT and technology, such as Autonomous Ground Vehicles (AGVs). I know warehouse operators still have difficulty locating cargo in their facilities. An IoT geolocation solution platform can solve that. Some ground handlers in large airports often cannot keep track of their unit load devices (ULDs). IoT tech can help with that. AGVs provide tremendous prospects for moving cargo in containers between planes parked some ways from the warehouse without having people in the heat or cold for an extended time.
Let’s not forget the people. I have heard of managers working 16-plus hours a day and even executives visiting their ground handling outpost only to take up manual labor during their visit. I mentioned the need to pay and treat staff better, including better benefits. It’s not hard to figure out. Look at the United Parcel Services of the world and figure out what companies like these are doing to keep the same staff for years while maintaining high-quality service.
The design of the warehouse, the type of equipment, and the leadership quality must all consider profit and efficiency and answer the question, does the entire system encourage your labor supply from top to bottom to feel comfortable and proud of their work? Many successful companies not hindered by short-sighted shareholders are examples of those who care for their workers as if they were family. Studies show that a positive work culture will provide more productive output. It’s straightforward to figure out whether your bosses care about your welfare. As this labor-crunched economy shows, just as no one owes anybody a job, blue-collar (or white-collar) workers do not own just about anyone their labor without fair reward.
Lastly, logistics needs leadership that understands cargo’s value in keeping cities alive and fueling economies. How else would I get my mangoes and papaya from the tropical region without air cargo? What about roses for my sweetheart or fresh fish from the farmer’s market in a landlocked city? Leadership, and the board rooms, need people aware of global connections and their role in the supply chain. Ground handlers who try to implement innovations using their experience on the ground are often blocked by short-sighted leadership.
The writing is on the wall for those who don’t innovate. Don’t just sit in the office and listen to your middle management. Listen to the guy or gal working in the warehouse. Visit the warehouse, and not in your suit. Ask them how they believe their work could be improved or made more accessible through innovative procedures, resources, or technology. I learn much more when I leave my office and head to the ramp, a construction site, or a warehouse with one of the managers. When a problem arises, I have a full spectrum of knowledge of the challenges, and I now have a great relationship with the people who will help implement the solutions.