The Digital Transformation of Air Cargo: In Conversation with Thomas Gerstner, President of CODEX by Virtual Control

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Thomas Gerstner started tracking the movement of vaccines before the pandemic.

“The WHO estimated in 2019 that up to 50% of all vaccines go to waste because of lack of temperature control during the shipping process,” Gerstner said during a recent video conference conversation.

Gerstner’s company, Virtual Control, has launched CODEX, an AI-powered logistics solution concentrating on the digital transformation of air cargo logistics. Some of his revelations are shocking, even for those who follow B2B logistics and its widespread adoption of technology going back almost two decades.

Gerstner understands the shock.

“After 25 years in B2B working in logistics in the software business, when I saw what was happening with air cargo, my comfort zone in stepping onto a plane dropped significantly,” he remembered.

“The various logistics systems have experienced very different levels of digitization,” Gerstner explained. “If you look at the trucking of containers it has attracted a lot of attention, but in the airline industry and especially the air cargo segment, paper-based systems are still very much the practice.”

Most investment in the airline industry has been directed toward carrying passengers, so the same paper-based processes that have been in place for 40 years that require all the various parties involved to sign off and then keep the papers for 6 months has remained largely untouched.

“The pandemic was a booster for making transparency more important, and for airlines and other agencies involved in cargo carriage and transfer to adopt rapidly developing technologies,” Gerstner said.

Under current systems, there is a lack of transparency about which of the up to 12 parties involved is in charge of the container, and therefore responsible for any damage, at any given period in the air cargo shipping process. According to Gerstner, this is a problem for insurance companies.

“When containers are not properly handled, the revenue loss for the airlines can be up to $5 billion per year, not just because the cargo gets damaged, but because the shipping containers can also damage the plane itself. It’s a significant cost concern with the repair costs for planes can range from $1 million up to $500 million per year.”

The CODEX platform gives every party in the shipping process the documentation for the detection of damages to track them and their repairs.

“It’s the same level of transparency that has existed in car rental agencies for years,” Gerstner said. “When you rent a car at the Calgary airport, you do a walk around and take pictures to track any damages and limit your liability. We provide opportunities to collect data on shipping containers that can be fully-trusted by whomever is charge of the cargo at a given point and of any of the deviations from the plan.”

Now that cargo is bringing in 40% airline of the revenues and 35% of the world’s good shipped between countries is send by air cargo, including our precious vaccines, CODEX’s adoption speaks to the urgent need for a higher level of digitization in air cargo.

“Over the next two to three years, every container and pallet will be integrated into our system,” Gerstner said. “We believe the data itself can be of extreme value in negotiating insurance policies as we come to see which parties are liable for damages outside the core logistics systems. Eventually, we will develop a risk ranking system, or a clearing house, to see which logistics companies are the safest.”

Is this another example of how AI tools will replace human involvement in a process? Gerstner said CODEX won’t be taking on all of the responsibility of safer air cargo logistics.

“We give suggestions and recommendations, but the final decisions are made by the people on the ground.”

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Kate Baggott

Kate Baggott

Kate Baggott is a former Managing Editor of B2BNN. Her technology and business journalism has appeared in the Technology Review, the Globe and Mail, Canada Computes, the Vancouver Sun and the Bay Street Bull. She is the author of the short story collections Love from Planet Wine Cooler and Dry Stories. Find links to recent articles by following her on LinkedIn