The aerospace sector comprises the production of civilian and military aircraft and components thereof. It is considered a hi-tech sector, and hence production is primarily located in a few select countries.
The US aerospace sector is the largest in the world for both military and civil aerospace hardware. Within the US, the aerospace sector is one of the largest industries, supplying five markets: military aircraft, missiles, space, commercial airliners, and general aviation.
The aerospace sector is rapidly evolving, with the expansion of subsectors such as unmanned aircraft systems (UAS), space systems, and aviation security.
According to the American Aerospace Industries Association (AIA), the US aerospace & defense industry’s turnover in 2021 was $892 billion, an increase of 2.1% over 2020.
The sector is also an important source of employment, with a workforce exceeding 2.1 million employees in 2021. Jobs supported by the A&D industry represent approximately 1.4% of the nation’s total employment base, with over 57% of employment coming from the shared A&D supply chain.
The importance of the sector to the American economy can be gauged from the fact that even in 2020, when the Covid pandemic adversely impacted most industries, the A&D industry’s sales activity contributed 18.8% of all non-food manufacturing revenue in the nation. Additionally, the industry accounted for 1.8% of the total U.S. GDP, a figure of around $382 billion.
Aerospace equipment manufacturers anticipate global passenger traffic returning to pre-Covid levels as early as the end of 2023, which will positively influence aircraft production and ancillaries.
The outlook for the sector is bright, as the easing of travel restrictions and opening up of the global economy portend an increase in business and leisure travel, with the commercial aerospace sector witnessing increased orders for new aircraft. Additionally, non-traditional players such as shipping companies and global freight forwarders have made forays by investing in air capacity as they seek to position themselves as integrated logistics service providers (as a strategy to dilute sector-specific exposure and diversify into new verticals).
Deliveries of new large commercial aircraft in 2023 are forecast to increase by 20%, over 2022, with production rates remaining relatively stable during 1H 2023 and potentially increasing toward the end of 2023.
Aerospace logistics market and international trade
The nature of the aerospace industry is such that a large proportion of the manufacturing output is export-oriented. The sector constitutes activities such as the manufacture of components, transport to plants, assembly of the final product, and delivery to the final destination.
The scale and scope of these activities have led to the creation of a burgeoning aerospace logistics sector, which plays a critical role in facilitating the rapid growth of aerospace and allied industries.
Designing aerospace supply chains requires considerable expertise and sectoral knowledge to ensure smooth, timely, and reliable deliveries.
In 2021, the value of American A&D exports surpassed $100 billion. America exported to 205 countries in 2021, indicating the geographically broad-based nature of the sector.
Supply chain and logistical challenges faced by the Aerospace sector
The challenging macro-level environment and operational complexities have combined to present certain challenges for the aerospace sector, which are explained below:
1. Availability of raw materials and impact on production and revenues:
With major firms ramping up production, there is a race to procure raw materials. In time, companies who can obtain an adequate amount of raw materials and components gain a competitive edge, as they are well poised to meet market demand. Conversely, the inability to source the raw materials required to maintain stable production levels can result in revenue loss and market share erosion.
2. Supply chain disruptions and reliability:
Even when companies have raw materials in stock, deliveries thereof are delayed due to supply chain disruptions. To ensure production as per schedule, smoothly functioning and reliable supply chains are imperative.
3. Selecting logistics partners with aerospace expertise:
Considering the complexity of aerospace supply chains, it is vital to partner with logistics service providers with expertise in handling aerospace equipment. Finding a logistics provider with staff knowledgeable and trained in the transport of aerospace equipment can be quite difficult.
4. Real-time visibility:
Given the value and time-criticality of aerospace components, companies find it expedient to track shipment status and condition. This is for aircraft spare parts or for the componentry required in the complex manufacturing processes. Therefore, real-time visibility of components and parts (or lack thereof) is a critical concern for aerospace companies.
5. Compliance with customs procedures, documentary requirements, and trade policies:
Since most aerospace equipment has dual-use capabilities, i.e., it can be used for both civilian as well as military purposes. Countries generally impose restrictions on exports to hostile nations as well as to entities who might misuse such technology, besides laying down stringent customs and documentary requirements. Aerospace companies are legally obligated to ensure compliance with all relevant policies and laws, which implies thorough knowledge of applicable legislation. Aerospace supply chains, therefore, need to be designed with robust safeguards to mitigate the possibility of even unintentional violations, as the consequences in the form of monetary and non-monetary penalties can be severe.
6. …As mentioned above, perhaps the biggest challenge is finding quality staff in a very tight labor market in the US. add a paragraph here on that and then segway into what we can do to help.
What KlearNow can offer the Aerospace sector
KlearNow’s proprietary AI-powered platform helps the Aerospace sector overcome challenges and optimize supply chains by digitizing customs and logistics workflows.
This is achieved by:
1. Using technology to allow your existing staff to do more. We have proven to save logistics teams in the aerospace sector up to 72 minutes per shipment of administration time in gathering, collating and preparing customs declaration data sets. For teams that are handling multiple shipments per day this is a lifesaver, allowing them to leave work on time and bettering their productivity while at work.
2. Simplifying documentation process and compliance with Customs requirements: KlearNow’s AI-powered data ingestion platform eases the task of collating and deciphering data from the plethora of documents involved in international transactions. This improves the accuracy of information submitted to Customs and eliminates the probability of human errors. Consequently, the company can ensure complete regulatory compliance.
3. Digital transformation: Digital capabilities are increasingly a source of competitive advantage and can help companies cater to existing customers and also secure new business. KlearNow’s sophisticated technological solutions facilitate such digital transformations by automating workflows and reducing customs compliance and transportation costs.
4. Providing real-time visibility: KlearNow has partnered with Project44 to offer real-time visibility. This enables companies to monitor shipment status and manage inventory more efficiently. These factors boost the quality of supply chain planning and help the management make faster and better-informed decisions.
Specific functionalities and benefits of the KlearNow product
Some of the more notable functionalities of the KlearNow product and associated benefits are explained below:
- Data ingestion:
This involves creating digital assets using artificial intelligence and machine learning to complete and deliver customs entry filings. Data can be captured from multiple unstructured sources, like emails, email attachments and even handwritten notes and transformed into structured data for use in other applications. This helps ensure that the documents and data filed are accurate, comply with all statutory requirements, and are filed with authorities within stipulated timelines.
This includes visibility on documentation and information sharing, shipment status and Customs milestones (regardless of carrier/ forwarder/ mode of transport), and terminal-level visibility and Port Intelligence.
This helps timely and accurate sharing of relevant information with all parties, makes it possible to plan onward cargo movements in advance, and reduces demurrage and detention charges.
KlearNow also allows importers to select a drayage partner weeks in advance.
This helps the cargo owner to control costs and receive live ETA’s, thus reducing the probability of being stuck in supply chain bottlenecks.
As the aerospace sector experiences rapid growth, companies have recognized the need to invest in technological solutions to deliver superior customer service and maximize internal efficiency.
Also, while extraneous factors influencing the industry cannot be controlled, the magnitude of their impact can be lessened by using supply chain software to improve the quality and pace of the decision-making process.
In this context, KlearNow has emerged as a pre-eminent player in this segment. Its AI-powered data ingestion platform includes features such as real-time visibility, drayage partner selection, and customs documentation processing, which helps automotive companies manage their supply chains much more effectively.
For more information on how KlearNow can help your business, click here.