By Deepak Wadhwa , Managing Director , IT India-FedEx Express
Founded in 1971, FedEx Express is the world's largest express transportation company, providing fast and reliable services for more than 3.6 million shipments each business day. The company is headquartered in Memphis, U.S. and has the current market cap of $42.02 Billion.
Air cargo logistics has emerged as a radical facilitator of international trade and promoting global economic growth. World trade is expected to nearly double, rising at more than twice the rate of global GDP growth, with China, India and other emerging markets leading the way. With the Indian government raising the limit of FDI in cargo airlines to 74 percent, the aviation sector is expected to grow about 25 percent over the next decade. Today, cargo contributes to sustainability and reduction of waste by avoiding unnecessary hold time. Customers have come to rely on, and expect the fast service of air cargo to optimize the level of their stocks. However, these benefits come at a cost.
Today, air transport has become a vital component of many industries' global supply chain, used primarily for the transfer of goods that are light, compact, perishable and have a high unit value. While accounting for less than 0.5 percent of the tonnage of global trade, air freight makes up over a third of the value of international trade. Rapid delivery is particularly important to those businesses whose customers are running streamlined production processes or who need urgent delivery of spare parts for machinery and equipment. Air cargo logistics also plays a key role in the pharmaceutical industry and export of perishables like flowers that require speedy delivery because of their time-sensitive nature.
In any country the air cargo industry, trade and GDP are interdependent and interlinked. The air cargo industry connects cities, countries and continents, thereby connecting diverse markets and forming global supply chains. As far as the air cargo industry is concerned, the impressive growth shown by India in international and domestic trade over past few years has helped the sector in India to grow. The last few years have seen the air cargo market evolving rapidly in India. It has overtaken the ocean freight & rail freight market by expanding at nearly 19 percent in the last 3 years, as against 10.3 percent growth registered by ocean freight and 9.2 percent by railways. Around 40 percent of India's trade in terms of value is done through the airport mode which leaves a huge market for logistics companies to tap.
New Trends Shaping the Industry
In the past decade, the industry has seen more players like FedEx offering comprehensive portfolios covering an array of services ranging from express services, ground services, value added services, warehousing, 3PL and others. There has also been a tremendous augmentation in the shipping of pharma related commodities using aviation as a means over the last few years. FedEx offers several options for temperature-controlled packaging for shipments in and out of India and is evaluating other products and services to serve the growing pharmaceutical and biomedical industries.
The improvement of infrastructure and technology used in the air cargo industry due to government participation is significantly adding in to the growth. These improvements are speeding up cargo handling, sorting and ultimately delivery. Also, development of international airports provides with opportunities to introduce dedicated freighter services, ensuring faster movement of cargo. Similarly, the development in technology as an enabler for e-commerce logistics has also become a huge trend.
Winning over the Challenges
Despite the rapid growth of the industry, customer understanding of the processes involved in e-Commerce transactions is still limited, resulting in a huge scope for development of the technology. e-Commerce will speed up transactions, make it easier for customers to book and track their shipments and reduce wastage of resources such as paper. As FedEx continues to expand and grow, there are key opportunities in the areas of continuing to enhance our customer experience and in parallel, optimizing our cost. Working closely with our business partners, the FedEx IT teams across the globe are focused on projects to improve each FedEx experience, increase system-wide productivity and lower operating costs. Our endeavor is to provide more user-friendly experiences to our customers. Our goal is to simplify and modernize IT systems as we collaboratively manage our technology infrastructure and maximize our cost efficiencies.
Automation is the Key to Excellence
FedEx is continually innovating and designing new technologies to help us provide our customers with even-greater levels of service. To build cutting edge capabilities, FedEx encourages automation to simplify the process involved in handling diverse shipments on ground and air, and improve operational efficiencies, customer relations, increase in productivity and cost reduction. FedEx has a wide array of automation tools that assist in improving operational efficiency. Deploying automation has also helped the industry to streamline operations by shedding conventional methods. For an instance, Manual Airway Bills are steadily being replaced by superior software tools which have not only increased the quality of performance but also increased operational efficiencies.
In 1978, Fred Smith was famously quoted as saying, "The information about the package is just as important as the package itself". Along with physical packages, the express industry also moves shipment information and making information management a major factor in achieving quality excellence. IT helps manage these significant amounts of data thereby improving efficiencies and providing an invaluable backbone by creating management information systems that assist organizations in planning and operations management. The FedEx PowerPad acts as a personal gateway to convey data directly to and from the FedEx internal network.
With the increase of B2C shipments in the Europe, Middle East and Africa, a feature called Address Residential MAximize first Delivery Attempt (ARMADA) was created to ensure that we maximize on delivery attempts, reduce costs and provide a better experience. It will also help in providing early notifications of a potential delivered package to the recipient by email and SMS as well as allowing the recipient to make alternative delivery options.
Delivering Promises for Its Future
Our strategy at FedEx is to maintain our position through the introduction of new products and services that will be supported by newer technologies. This will enable us to offer Indian customers unparalleled access to global and domestic markets helping them to compete effectively at a global level. We are witnessing enhanced usage of technology, resulting in speeding up of cargo handling, sorting and delivery. Globalization and the rapidly evolving demands of industry are also increasingly driving the use of technology in operations, in order to improve efficiencies and offer enhanced value added services.