At the Air & SeaCargo Americas luncheon in Miami on Wednesday, a large cross-section of the global air cargo industry was offered a clear vision of the world of tomorrow according to Jim Butler, president of American Cargo, the biggest airline in the world.
     Mr. Butler has been mostly silent since he was named to the top AA Cargo post in 2013, laying back during the USAir into American Airlines era and preferring instead to allow for a learning curve whilst combining the forces of two cargo departments into one greater airline.
     Jim’s speech wasted no time getting right to the point; delivered in a rapid style, it was honest and forthright in tone.

     Jim zealously delivered a view of air cargo through a fresh set of eyes. He's looking for answers, but without apology for airline or industry.
     Jim Butler is a tall guy, maybe 6-foot-four. He has a youthful exuberance about him. He engages easily in conversation with a room full of people, yet you feel he cares about what you, personally, are saying.
     He is the new generation air cargo executive who appears to be thinking seriously about things with whic the industry at large (judging by panel content at most gatherings) has not entirely engaged.
     The urgency and deep thought in Jim Butler’s comments stood in stark contrast to what appeared to be artificially jacked-up blah-blah at the earlier public cargo meeting sessions.
     Jim Butler adds a clear, new-generation voice to the air cargo experience.
     If his first major public proclamations are any indication, air cargo can only hope he sticks around for a few years in this business. Here, edited a bit for space, is his rather amazing address.

Differentiate And Leverage

     “Now is a great time for our industry to recognize the challenges, and to get ahead of the change by demonstrating forward thinking as an industry.
     “We must differentiate air cargo and leverage our inherent advantages to a far greater extent than we do today.
     “As an example of this lack of differentiation, ever since I entered this industry, I have heard that one of our biggest competitors is ocean. If you take transit time alone, that is like saying that the biggest competitor to a passenger carrier for long haul travel is a car.
     “We must be better at differentiating our benefits.”

The World Around Us

     “The risk of standing still is significant. Consider the landscape that we are living in right now—a world where manufacturers and service companies alike are all facing much shorter deadlines, rapid technological change, and more competition than ever before.
     “Product lifecycles are faster and innovative labor is more accessible to a larger audience.
     “Everyday we see a new technology platform emerge that could produce near term transformation in the logistics industry.
     “We all know about Uber and even Uber cargo.
     “This 40 billion dollar company began experimenting with small parcel movements in Hong Kong earlier this year.
     “Just last week, there was significant press coverage around a small startup in the Western U.S. which intends to be the Uber of short and medium haul trucking. It is an ambitious undertaking, but they are well funded and focused.
     “That’s just two examples, but there’s plenty of potential disruption opportunities in logistics.
     “Consider also the evolution of production. 3D printing is expanding at a blistering pace.
     “This can dramatically change the manufacturing landscape and again change consumer and vendor expectations for the delivery of components and finished goods.”

Change Is In The Air

     “The reality is that what we deliver today may not at all be what we deliver tomorrow.
     “Localized distribution or near sourcing has changed the way we all experience commerce on a daily basis.
     “Within a few miles of my home near Dallas sits a massive distribution center run by Amazon, one of several in the DFW area.
     “These centers have allowed Amazon to move from two-day business delivery to same day, including Sundays, and now even one-hour delivery in a growing number of cities across the U.S.
     “This is having a tangible effect on consumer expectations for convenience and service.
     “While I understand that Business-to-Business is different than Business-to-Consumer, experiences on the consumer side are quickly changing the expectations customers have on the B2B side.”

Time Lines Contrast

     “Our industry logistics chain still averages about a seven-day move, while ocean provides a 35-day transit time.
     “I would argue that 35 days transit in ocean may be sustainable for large scale shipments that are of lower values, are typically less perishable, and are used to boost general inventories.
     “Air cargo on the other hand is used for higher value, perishables, and urgent shipments, and thus are more susceptible to the disruptive forces around today.”

Great Expectations

     “So we are not left behind, let’s talk a little about what our partner will be looking for in the very near future.
     “Think for a second the last time you printed a receipt for something you purchased online. The process from selection, to checkout, to arrival on your doorstep is all accomplished in the digital world and we have simply come to expect the same in almost all walks of life.
     “Yet as an industry, air cargo still provides significant pushback on moving towards electronic solutions, such as e-AWB. We have got to move past this and prioritize a strong push toward e-freight as the benefits of aggregated data alone will ultimately open up new strategic opportunities. I am encouraged by recent momentum but we must get there quickly.
     “Second, shippers increasingly expect to have visibility on the location and status of their shipments in real time, accessible across a variety of platforms such as mobile. Our customers don’t view this as just nice to have, not in a world where such visibility has a tangible effect on coordinating production schedules and contingency planning. We must make headway in this area and learn to leverage our own data to meet our customer’s needs.
     “Frankly, air cargo needs to leverage the data to also meet our own needs. We should have enough visibility into our own operations that we can see a failure coming long before it happens.
     “A failure in the future should be no accident, but instead should be a choice we make based on what is best for operations and our customers.
     “Air cargo must be strong—a transformational leader in the logistics space going forward, because if we don’t, some[one] will.”

The Road To Change

     “So how can we be ready and what will be our roadmap for change?
     “We all have to embrace technology and partnerships that drive real change, and that means focusing on speed and visibility, while driving additional value for our customers.
     “Despite air cargo having a global reach where you can fly to almost any major commerce center with 24 hours, together our inefficiencies have combined to slow the time to delivery.
     “We need to be faster.
     “The industry has been very fractured and speed will require alignment from the key players: forwarders and airlines.
     “We need to look for opportunities to improve all aspects of our business when it comes to tender, transit, and delivery times.”

Transparency Is Key

     “But before we can talk about integrated options for shippers, we have a long way to go toward providing timely and accurate updates to one another to increase speed and improve efficiencies. A quick example, ‘tendered vs. booked’ has historically been a challenge, as has extensive driver queues at the dock.
     “Both of these problems could benefit from automated communication platforms as an easy way to exchange information and allow better planning. Being able to quickly transmit last-minute changes to shipments, prior to arrival at a cargo facility, would enable air carriers to reduce the potential for refusals.
     “And knowing when drivers are en route could lead to better traffic flow at the airport facility, helping drive cost efficiencies for the forwarder through better resource utilization.
     “It also means creating partnerships between the shipper, forwarder, and airline.
     “The lack of stronger partnership today drives inefficiency and causes issues and shippers are increasingly asking for more long-term integrated solutions.”

The Bottom Line

     “It’s no longer about simply connecting more dots on a map, it’s about ensuring product integrity throughout the supply chain, and delivering an expected level of service from one handoff to another. There’s an opportunity, with the right partners, to provide long-term solutions that shippers will truly value, and in many cases may be willing to pay a premium to access.
     “The bottom line will ultimately drive more value for the shipper.
     “What does that mean?
     “Reduced transit times, increased reliability and less damage, and new services built around specialty products, all of which can help differentiate air cargo.”

The Partnership

     “I recognize prior reluctance by our partners, as there was fear airlines would go directly to the shipper. As an airline I see little opportunity to do this.
     “While I do believe more passenger carriers like American are seeing cargo as strategic, our forwarding and integrated customers provide services an airline can never provide.
     “With these steps and more, we believe we’re on the right path to providing a significantly enhanced customer experience in the near future, and are preparing the team to innovate and collaborate with our partners going forward.
     “And as we create a renewed platform, remove paper, and look to build a complete offering, we are looking at partnerships in a whole new light in order to, ultimately, provide customers with a better, more reliable and differentiated experience.
     “We’re excited and optimistic about the future in the air cargo industry. That future comes with change, but it is the only path if we are going to see the industry thrive and grow.”
Geoffrey