20 Sep SPOTLIGHT: Asia Pacific logistics navigating towards digitization
COVID-19 pandemic has transformed global logistics in profound ways. How has this affected the Asia Pacific region?
As with most other industries, the COVID-19 pandemic has indeed been a transformational period for global logistics. However, unlike most other industries, the decline in economic activity during the pandemic has not had a negative impact on global logistics. The consumption of goods and, thus, the corresponding logistics need for making these available has created a new demand that has largely left the global logistics industry unaffected.
Throughout 2020, businesses have been re-evaluating their supply chain needs. The health protocols have led to an increase in cost, delivery delays, congestion, steep freight rates, shortage of manpower, and tighter cross-border processes leading to the cancellation of shipments are a few of the challenges faced by the logistics industry. To cope with a capacity shortage, airlines have brought freighters out of storage and used aircraft more intensely; passenger planes have been converted into all-cargo operations, restructuring the logistics supply chain to enhance resilience.
The Pandemic also highlighted the vulnerability of the logistical chain and how reliance on one region’s manufacturing and distribution systems could have negative consequences on an organization’s ability to trade efficiently during a crisis. As businesses and economies reopen, and demand begins to restore to pre-pandemic levels, attention is now shifting towards seeking recovery of the global supply chain in the Asia Pacific, offering opportunities for businesses to diversify their supply chains beyond China and into emerging market hotspots like Vietnam, Malaysia, Bangladesh, India, etc.
Asia is the highway for global logistics. How do you think Kale can play a pivotal role in making it more robust in the near future?
The Asia Pacific region’s air cargo market has remained resilient — a contrast to the “suppressed” passenger market, according to the Association of Asia Pacific Airlines (AAPA). AAPA’s preliminary June 2021 air traffic figures show that international air cargo demand for Asia-Pacific-based carriers, measured in freight tonne km (FTK), increased by 25.7% year on year, with volumes matching the same month in 2019.
Logistics has been in the midst of a tech-driven revolution. Companies with robust digital capabilities allowing them to provide cargo visibility/traceability and do business online are at an advantage. This would entail investments in technology, such as the Internet of Things (IoT), cloud computing, automation, and data analytics. In the long term, robotics, drones, and autonomous vehicles might reduce logistics services providers’ exposure to labour shortages.
All indicators point to Asia’s recovery from the pandemic outpacing the rest of the world in the coming year. This may make Asia the single-most-important region for global trade and logistics activities going forward. Those who leverage this window of opportunity to create a lasting competitive advantage and a strengthened market position will emerge from the pandemic as leaders.
Kale offers IT solutions to various stakeholders within the logistics industry. These solutions include IT systems and services to automate the internal processes of the entities while enabling them to adapt to best-in-class processes and controls, integrating them digitally within the larger logistics fabric, and facilitating cross-border trade. These solutions, when implemented, solve problems and issues around cargo visibility, revenue leakages, dwell times, manual processes, multiple interfacing systems, etc. The entities that benefited are the airports, seaports, cargo airlines, shipping lines, freight forwarders, customs agents, warehouse operators, transporters, airport cargo ground handlers, etc.
Thus, Kale will play a crucial role in the digital transformation of the Asian logistics industry and rid it of the problems commonly shared with most logistics operators in developing countries, like infrastructure limitation, trade barriers, bureaucracy, etc.
The pandemic has catalysed the growth of global logistics. Throughout 2020-21, businesses have been re-evaluating their supply chain needs, and the industry has suddenly understood the importance of digitization. How do you think community systems can play a vital role in streamlining the supply chain?
Kale’s cargo community platforms or trade facilitation platforms level the playing field for stakeholders in cargo logistics and cross-border trade. The latest technologies like Blockchain, IoT, AI, ML, etc., used on these platforms negate the physical limitations faced by these entities while participating in cross-border trade and transactions.
As businesses re-access their supply chain needs and protect against supply disruptions. They would most likely create multiple supply options, which would lead to more transactions or deals of smaller value. Digital trade platforms like the Airport Cargo Community System (ACS) and the Port Community System (PCS) would make handling larger shipment volumes easier and more manageable. Security and compliance with cross-border controls have become very critical today. The community platforms support the effective planning of inspections and digitize the security certification of shipment.
Furthermore, shipment visibility would reduce dwell times and overall reduce the cost of a trade. Thus, the cargo community also plays a pivotal role in maximizing the output from infrastructure limitations at most Asia ports and airports. During these pandemic times, technology is now accessible to SME players in the supply chain through CCS. APIs, smart Apps, and SaaS models work perfectly well for them. The entire supply chain, from the shipper to the consignee, is on the CCS platforms and can reap the benefits of paperless trade, lower costs, data authenticity/integration and data harmonization. These Platforms make contactless transactions from the safety and comfort of homes or offices a possibility.