Sharing the impact of shift towards e-commerce in international air cargo industry, Kannan Nachiappan, Chief Executive Officer, GSA Global Cargo LLC, delves into the significant changes shaping the future of global air cargo and logistics sectors. He was speaking to CARGOTALK in an interview.
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Could you tell us about the new freight trends in the region?
When I started 33 years ago, the region saw a high volume of air-sea cargo, with Dubai serving as a major transit hub. The transit charges and related factors make it cost-effective for businesses. However, today, air-sea cargo volumes are declining, while e-commerce is growing rapidly. There is now a strong focus on e-commerce cargo among freight forwarders and general sales agents (GSAs). That, in my view, is one of the most significant shifts in the air cargo industry.
Do you think integrated single window systems for cargo help agents?
It is a positive move. Simplifying procedures benefits the cargo industry. In the past, the documentation process was much simpler. Today, it is more complex, with increased paperwork and longer processing times. This has made cargo operations more challenging. If documentation and administrative costs can be optimised, it could help us regain the air cargo volumes that have shifted elsewhere.
When it comes to transshipment, do you think the high costs are a challenge?
It is not necessary that local transshipment costs are high, but other transit ports offer more competitive charges. This price gap can result in a loss of cargo volumes for us. Increasing sea freight capacity from the Far East, along with faster ships, has made air-sea combinations less attractive.
Direct air freight routes to Europe and the USA from Asia are also becoming more competitive, in terms of pricing as well as efficiency.
What is your opinion on AI and disruptive technologies entering the business?
Artificial Intelligence (AI) will be a part of the industry. I have seen the evolution—from the pre-fax era to email, and now to AI. Initially, there is resistance to any new advanced technology, but eventually, it becomes part of how we work. Advanced technologies might face initial hesitation, but they will bring valuable innovations. Over time, I believe, these technologies will enhance efficiency across logistics processes.
What is your opinion on the air cargo industry in the region?
I believe this year will see growth. E-commerce volumes are on the rise, and I am considering setting up a dedicated office for the sector.
The business model in logistics is undergoing a transformation. Forwarders are adapting to optimising sea movements and rethinking sea-air strategies due to faster ships. Overall, air cargo volumes are poised to grow, and I believe the cargo industry will continue to thrive.
