Though 2020 was a turbulent year for the air cargo industry, the year ended on a high note, and many industry experts see recovery in sight. According to the International Air Transport Association (IATA) and data from CLIVE Data Services, air cargo demand is expected to return to pre-pandemic levels during 2021.
However, recovery comes with its share of challenges, especially in an industry like air cargo that has historically dealt with many ups and downs. Internally, many cargo organizations are still struggling with operational hurdles and business complexities to stay productive. Further, many carriers have dealt with hundreds of schedule changes in 2020, due to the opening and closing of markets and rapidly shifting demand, which made shipping extremely complicated. Even in 2021, air cargo companies have to manage new regulations, assess disruptions to flight operations, and adjust rapidly to changing requirements that differ across multiple countries.
Because of the constant changes, financial performance is hard to predict more than three months out. Presently, low capacity and high demand have caused prices to spike. Air cargo companies are forced to balance capacity constraints while remaining focused on keeping costs down to survive any future downfalls. This could all change in the second half of the year as more air capacity goes online, the demand for shipments spurred by eCommerce and trade increase, and transportation companies get a clearer picture of how sub-industries like trucking and shipping play out.
The Industry Digital Imperative
What is clear, however, is that the pandemic has created a new digital imperative, even in industries like air cargo. To better serve their customers, while remaining agile and capturing much-needed revenue, air cargo professionals in pricing, revenue management, and selling are looking to completely shift their business strategy. Much of this shift is no longer just a nice-to-have, it’s a requirement to remain competitive and win customer deals.
According to a 2020 Hanover Research study, 35% of respondents in the B2B buying space indicated that they were challenged by slow and inefficient responses from their current vendors. Many pricing professionals within air cargo are still using spreadsheets, causing their market reaction time to fall behind that of their customers. Furthermore, three out of ten purchasing professionals indicated that inconsistent and highly variable pricing was a major pain point for them. Three out of ten buyers also felt their vendors were not providing the desired transparency into inventory. For air cargo, this means a shipper choosing a competitor instead.
Now more than ever, forwarders and customers want to create quotes online with available routings offers and the ability to book a dynamic rate with their carriers. To enable this experience, carriers need a real-time and integrated quoting, pricing, and revenue management platform that accepts inputs from market conditions and other carriers to influence the rates and routes available for shipments. A phased approach to delivering value could be the best path forward.
A Phased Approach to Winning in Air Cargo
We know that as an air cargo carrier, you need more resources, you can’t do everything right away, and you need to prioritize your investments and strategy. So, how do you do that? There are many considerations to make when shedding outdated methods of pricing and adapting technologically advanced selling capabilities so that you can succeed in today’s digital commerce marketplace.Let’s weed through them together and focus on what’s important.
The first step is reviewing your pricing strategy. Pricing leaders need a holistic view of the latest and greatest information to make informed decisions and build pricing strategies. This is where pricing technology comes in. Approximately one-third of pricing leaders have changed their perceptions about old methods of pricing and recognized the need for prioritizing and obtaining advanced, integrated pricing technology. This allows sales teams to navigate complex pricing scenarios with more efficiency, which means less time wasted and less money left on the table. Spreadsheets simply can’t keep up with today’s diverse buying trends and multiple variables.
Next, is empowering your sales team. Pricing and quoting to win are the end game, and sales teams need to be able to focus on it. A single source of pricing truth allows for pricing guardrails for salespeople so they don’t have to spend time going back to the deal desk while being bogged down with email correspondence and quotes that require manual approval. Shippers typically have a price range that will work for them, and any price in that range is likely to be accepted. The air cargo carrier able to offer the first acceptable price often wins. A single source of pricing truth is crucial so that sales can manage and rationalize pricing across all channels.
And the final piece — empowering both the sales and pricing efforts with AI. It’s important to note that it’s not just about implementing a powerful, AI-driven software solution; it’s also about empowering the teams that need this technology by helping them understand that this will free up their time to focus more on strategic accounts, strengthen customer relationships, acquire new logos, and earn more revenue. Handling data, creating forecasting models, and even attempting to predict future demand manually takes up valuable time and resources. Technology such as AI is complex to understand, but when implemented correctly, it can support the workforce and provide added insight to ensure airlines have sure-fire strategies and product packages ready for the recovery fight ahead.
The airline industry is looking to air cargo to lead them into recovery. There are still many challenges as we ease into 2021, but pricing technology provides hope. To learn more about PROS air cargo solutions, please check out Rethinking Pricing, Revenue, and Sales in the Air Cargo Industry.
About the AuthorMore Content by Genevieve Todd