Obsolescence: Are you willing to risk it?
In the currently fragile global economic environment made all the more challenging by a barrage of seemingly ever changing regulations, air cargo carriers need to be at the top of their game.
March 15, 2012
By Donald Urquhart
In the currently fragile global economic environment made all the more challenging by a barrage of seemingly ever changing regulations, air cargo carriers need to be at the top of their game. But many carriers still rely on old, cumbersome and rigid IT systems for managing their cargo business. For IBS Software, reluctance to switch over to next generation cargo management systems potentially puts carriers at a competitive disadvantage. Donald Urquhart reports from Mumbai.
There are a number of less than desirable, immutable truths about the air cargo industry – the most obvious and vital one – it’s a business with razor thin margins. If ever in doubt, one need only look at International Air Transport Association (IATA) figures for both passengers and cargo – for 2011 an estimated global profit of US$6.9 billion with an overall margin of just 1.2 per cent and the forecast for 2012 even more dismal with profits dropping to as low as $3.5 billion and a paltry net margin of 0.6 per cent.
And while this is certainly a low point in the industry, the forces now buffeting the industry are not going to go away anytime soon. Security, fuel prices, over-capacity, predatory pricing, ash clouds, the list goes on and on. “There are also significant economic financial disruptions that are happening, from the Euro-zone to unrest in the Middle East,” notes IBS Software’s CEO Rajiv Shah. And although the passenger side has always had more attention focused on it, with margins under severe pressure more focus has been placed on cargo as a revenue generator, he adds.