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Optimization Could Reduce Backlog at West Coast Ports – a BoldIQ byline in Material Handling & Logistics

Earlier this month it was leaked that the ports of Seattle and Tacoma are discussing merging to try to create efficiencies to combat the growing ports of Vancouver (Canada) and those in California. This comes right after nine long months of dispute that finally ended with West Coast port employers and union members reaching a tentative five-year agreement on a new contract. The two sides were praised for their compromise, and the ports were slated to resume full operations the following day. However, the need for increased efficiency and throughput—both in times of calm and times of disruption—is still very much there.

According to Peter Friedmann, executive director of the Agriculture Transportation Coalition in Washington, D.C., this specific port backup is projected to continue for two months or more, which will affect countless American workers, businesses and consumers. And, that’s not even taking into consideration the daily disruptions and slowdowns that occur in a normal operating week.

So what can the ports do to be more competitive and more resilient to disruptions? The answer is implementing technology to dynamically optimize their operations—in other words, use data already available to the ports to find the most efficient solution possible in the same way that they operate: in real-time, all the time.

The aviation industry is a perfect example of how companies are utilizing technology to plan ahead and then react in real-time to changes. In fact, some retailers and manufacturers turned to the air to move goods during the port shutdown. The aviation industry—similar to the ports—must function within an environment that is not only highly regulated, but also prone to ongoing changes and disruptions like changing customer demand, mechanical failures, employee illness and weather.

The aviation industry has turned to dynamic optimization that provides real-time optimal plans for both planning ahead and reacting to ongoing changes. While ports crawl through backlog trying to recover, and discuss potential mergers to gain some competitive advantages, the aviation industry can react to disruptions, like unexpected sick time and weather, all while using minimal resources to meet demand and reduce fuel burn and emissions. The result? A 16% reduction in operating costs and 20% increase in capacity using their existing resources. Time and money saved—two things the ports could benefit from.

To clarify, this is not about reducing equipment or staff. That would be the ‘easy’ obvious answer because while it might cut costs for a port, it will not do much for the economy or employees. This is about addressing better planning and reacting to change, in real-time, of the use of the equipment and staff, so that increased throughput is enabled in the port. In fact, when applied correctly, this will lead to top-line growth in any given port and thus probably to hiring of more staff.

Optimizing operations could make a difference of millions, if not billions, of dollars. Beyond the pure dollar impact, harnessing this type of technology will help ensure the longevity of importers and exporters, employers and employees, and the economy as a whole.

Until the ports have implemented a system to optimize their operations, they will continue to be held hostage by inefficiency and inertia. The model for this new streamlined operation is out there, and it’s working. The question is whether or not the ports will follow the trend and get on board.

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Is The Private Jet Charter Market Ready To Be Disrupted?

A story by Doug Gollan in Forbes

Today booking a private air charter is still something akin to Abbott & Costello’s epic comedy routine, “Who’s On First?” Multiple companies are claiming they are ready to make it easier, faster and more transparent. But, what is fast? And how close is the private jet charter segment to real-time booking as opposed to just quotes and estimates?

When I was Editor-in-Chief of Elite Traveler, I always attended the big annual conference for business aviation referred to as NBAA, short for the industry’s trade association, National Business Aviation Association. Every year we would have numerous people approach our stand pitching us to cover a new product or service that was going to revolutionize the industry, from in-flight entertainment and air filtration systems to innovative ways of selling individual seats, real-time booking and the proverbial holy grail, finding a way to effectively fill or reduce empty legs. I still joke if I had a dollar for everyone who was going to change the private jet industry, I would be rich enough to fly by privately.

With that in mind, I took note of some of the breathless coverage surrounding the recent launch of a new booking app by private aviation provider Victor, focusing on how technology was going to correct a broken and inefficient market. The company’s literature states, “Victor’s unique business model disrupts and brings transparency to a largely unregulated industry. It offers private jet operators and owners with a channel to market and consumers with a trusted brand, transparency and value for money.”

Many of the articles compared the Victor app to Uber, yet it is hardly the first private aviation company to be paralleled to the rideshare phenomenon, or in some way claim a seat in the temple of disruption. Look up Jet Smarter, Jump Jet, Jump Seat, Black Jet, Charterscanner, PrivateFly or Ubair. You may remember DayJet and Pogo, both of which joined the anticipated revolution of Very Light Jets that was predicted to be Uber-like before Uber.

Here is a quote from Clive Jackson, the CEO and co-founder of Victor, in a story by Digital Trends that was largely reflective of the reasons he gave me for launching the app when I spoke with him: “It’s predominantly a telephony-based old world economy where email plays a part, but there’s no transparency and no regulation. Although the U.S. Department of Transport is pushing for regulation, it hasn’t yet come through.

“Traditionally, it’s a very labor-intensive process: (flight) operator to broker, broker to personal assistant (PA), PA to boss. Using the phone and email to talk to multiple brokers is grossly inefficient, and typically brokers don’t tell you who their sources are. Customers know they’re sort of getting ripped off along the way, so they’re going through three brokers. So you have three brokers going to three operators, that’s nine quote requests from one guy. It’ll be 13 phone calls before the PA even gets the quote.”

Granger Whitelaw, a serial entrepreneur, who regularly charters and in the past has bought jet cards from MarquisJet and FlexJet, says there is an opportunity for one stop shopping in the on-demand segment if somebody can create a real-time platform, enabling operators to directly bid the lowest price for his business. “I get two to three offers a day from brokers. I play them off against each other,” he says.

In commercial aviation, the pathway from rotating file cards to real-time booking for consumers across a broad spectrum of airlines was a journey that took nearly half a century. I covered this part of the industry in the late Eighties, and many of the enhancements that the computer reservations systems vendors would announce at their annual conferences for travel agency users never made it to market, or were severely delayed. I am not sure that the term vaporware had been coined back then. Jackson believes the launch of the iPhone in 2007 has set the table to make the transition for private aviation much faster. Yet the question remains, how close are we to private jet nirvana of real-time booking on a scalable basis? Scott Liston, Executive Vice President of Argus International, an aviation service company that also provides ratings of operators and data remembers, “When I started 30 years ago we used a floor to ceiling magnet board” to track airplane and crew scheduling. He says, the industry has made great strides but has a ways to go.

Jackson hopes if he can convince you his app is the only place you need to go, it will lead to less shopping and high close rates on leads – meaning he will be bugging operators less to quote trips that never materialize, and operators will view him as a more important and buttoned up customer. That, he thinks, will translate into better pricing and service from operators for his company and his consumer audience. Others believe the same about their technology.

A former airline and digital advertising executive with a tech bent, Jackson champions that he is marking up the price an operator charges Victor by a fixed 10 percent, whereas currently brokers don’t disclose their margin. Ricky Sitomer, co-founder and CEO of Blue Star Jets, a large player in the charter market, dismisses the idea that disclosing the mark up is meaningful. He says Blue Star has greater buying power with operators than smaller players. “Wal-Mart is going to get a different price buying Levis than the corner store. If my price to the customer is lower than Victor’s price, what does it matter what my mark up is,” he asks. Jackson’s response is “the majority of (his) bookings made are not based on the lowest price quoted price,” and within a short window, he will have a similarly large volume. By being transparent on margin, he thinks he can win the hearts and minds of his affluent consumer target.

The other news appears to be Victor is providing consumers with more information at an earlier stage, when it returns the quote, revealing the operator and tail number of the plane that mightactually be flying you. This means you can now go to the operator to get a competitive bid. Jackson believes the service he is providing to members (membership is free) through ease of use and having your profile and preferences will make you stick with Victor. He is willingly taking the risk of bypass, providing users a direct line to potentially save 10 percent, which on a $25,000 transaction is not small change.

Sitomer and others debate the transparency provides much benefit because, they say, the first jet or even operator you see isn’t necessarily the one you are going to get. Another executive called the Victor app “a useful directory but nothing to do with real-time availability or real-time transactions.” Jackson counters that regular air charter customers have operators they like and avoid based on past experience, so for these folks disclosure is a strong feature.

If you are a private charter veteran, you probably know that many brokers don’t operate the jets you fly on. Brokers are intermediaries reaching out to a network of operators, who actually fly the planes. The operators quote a price back to the broker who marks it up and sells it to you. In this sense, Victor is no different.

What you also may know is that the operator (who also will broker as well) often doesn’t own the plane they are operating, so there is another step in the process. Charter operators’ fleets, with several exceptions, such as XOJETTMC or JetSuite(about 150 aircraft combined), are made up mainly of planes they manage on behalf of an owner. The owner, who wants to gain some income to offset his or her expenses, allows the operator to offer it for charter. Part 135 is the Federal Aviation Regulation that allows the operator to charter the plane, and you will sometimes hear referenced. Industry executives I spoke with estimate as much as 90 percent of typical operator fleets are not owned by the operator, but are simply managed for third party owners. While nobody could put a percentage on it, executives say most times the operator has to get owner approval for the trip, which can be rejected for any of a number of reasons. These include needing the plane for their own use to not wanting children, or not wanting their plane loaded to the gills, or even who’s flying. Jackson and others try to minimize this by focusing sourcing on operators they know have jets where owners are “charter friendly,” and in fact Jackson says the quotes he provides within 60 minutes are all owner-approved unless noted.

Back to the Victor app: It is quick and slick, however, as a newly registered user I wasn’t able to request a quote online. I had previously made a request from Flyvictor.com on my laptop, had already received a follow-up call and within a bit more than an hour had an email offer of three prices from New York to Los Angeles, two of which provided a tail number. The third was from XOJET, which operates a floating fleet of essentially interchangeable aircraft. For these type of operators that own and control their aircraft, tail numbers are assigned closer to the flight, but in essence you know what you are getting, most of the time. I say that because even operators such as XOJET and NetJets (which sells fractional and jet cards, not charter) go on to the charter market when their own fleets can’t handle demand. The parallel would be when your American Airlines flight is cancelled or oversold, and they rebook you on United. You get where you are going. The experience for better or worse, is at least slightly different.

The quotes I had previously requested were already loaded on the Victor app when I downloaded it to my iPad. I tried to use the app on my iPad for another request. You enter your trip requirements and within seconds you get back a selection of aircraft types that fit your criteria that could be available with estimated pricing. At this point I wasn’t provided the names of the operators or tail numbers, but as a new member was prompted to call and complete a “know your customer process.” Later on, after I was approved, I again tried its search function leading to a request for a quote, which comes back within an hour. It’s at this point Victor gives three options with operator names and tail numbers (Jackson says, they will give up to six, but after that members feel like they are being overloaded unless there is something “attractive.”). I also filled in a request form on the Blue Star website and received a callback 30 seconds later. After an awkward transfer from the person who called me to the broker (she didn’t have any of the information I had just submitted on the Blue Star website, and I had to give it again) I was in business. Within another couple minutes the broker gave me a confirmed price and two types of potential aircraft and sent a confirmation email, subject to owner approval. The next day he called to follow-up and told me he had found a similar jet for $2,000 less. I reached out directly to one of the provider’s Victor gave me in their response, Priester Aviation, requesting a quote via an online form and about eight hours later, at 9 a.m., received a call. I confirmed I was looking for the same type of plane that Victor had offered up on the same date and same route and was told it would take 15 minutes to two hours to confirm availability, which I was told meant getting in contact with a plane owner. Nearly five hours later I got a quote that offered two plane types, no tail numbers and stated it was “subject to owner approval.” Victor had quoted me $60,518 from Priester for a Challenger 300 with a specific tail number to fly from Teterboro the Van Nuys one-way so I was surprised to get a direct quote of $31,568 from the operator for a like Challenger 300. Calling to the operator, it turns out their quote wasn’t for a plane they managed, but for an XOJET Challenger 300, which Victor had also given me at $31,238. I then queried the agent at Priester about the tail number Victor had offered up and was told it might be available for around $55,000, but he would need to check as there was a “note” indicating a possible hold. Why the price difference? The Priester managed plane would have to fly back to New York empty after dropping me off in Los Angeles, so in essence I was paying for the roundtrip (empty leg) flight. For what it’s worth, when I researched the tail number, according to FlightAware it is owned by QuadAir, LLC, a subsidiary of QuadGraphics, a leading printer of magazines.

Jackson says the estimated pricing one sees instantly before they request a quote on his app is based on what operators actually charged for previous trips so the idea is when you get the offer back with confirmed price, it is going to be very close if not exactly in line with the estimate.

Carol Cork, co-founder and marketing director for PrivateFly, a broker that has been on the forefront of promoting technology in the charter arena says, “We welcome them. It validates the role of technology in the market.”

Jackson is already on record as saying his approach is not making any friends, so perhaps Sitomer’s comments should not be surprising. But I guess my question is will the technology, Victor’s or others, tear apart a market, or in MBA speak, “Is it disruptive?”

Another executive I spoke with who didn’t want to be named, put it this way: “To have a true marketplace (where technology can be a disruptor), you have to have a healthy supply of willing buyers and a healthy supply of willing sellers and active, accurate information. In private aviation you are missing the last part,” he says. This is where the technology driven brokers, marketplaces or whatever they want to be called seem to fail the disruptor test. Or maybe they just haven’t connected all the dots yet?

Part of the problem is unless an operator owns the plane, which most do not, the contracts with owners to manage their planes vary widely and generally requires owner approval for each flight, although this too varies. An executive from one company that provides operations support systems adds, “Each contract is different. If an operator is managing 10 planes, each of the 10 contracts with owners is different in some way.” This means even once the broker is in contact with the operator, by phone or electronically, the owner much of the time still has to sign off on the trip, adding a layer of complexity that technology has yet to automate. David Hackett, President & Chief Executive Officer of Coastal Aviation Technologies, a software company that also offers a fleet schedule optimization system for operators, says he has identified 30 typical variables in owner contracts with operators, many of which can impact signing off on a charter or availability of aircraft. These can include, who provides the pilots? Who pays for maintenance? How many people are allowed aboard for charters regardless of seat capacity? What is the minimum stage length the owner will accept? He points out landings and takeoffs, cycles in aviation speak, are the measurement which triggers expensive maintenance requirements, so while an owner might be happy to charter his jet for six hour Boston to Los Angeles runs, he won’t let his management company offer it for short hops. He says the bigger, newer and more expensive the plane type, the more likely there are to be a barrage of owner-imposed restrictions.

Now think that the typical charter customer does so for convenience, to save time, to go when he or she wants to. This means the consumer ends up making multiple changes before they fly (I am told anywhere from two to five), including things like departure time, arrival or departure airport and even type of plane. You know, we invited a couple more people, now I need a bigger jet or fewer people. Can we save some money by downsizing?

Complicating things, operators use multiple, non-compatible platforms to manage their fleets, and their information isn’t always up to date. “A lot of these operators are small companies, where sometimes the person who is flying you is also responsible for (updating) the information (in their systems). They are professionals, but they are stretched,” says another person who works with operators. Owners sometimes have the rights to pull their planes back even after contracted. Hackett says it is not unusual for operators and brokers to have to scramble to find replacement planes because of weather, when an airplane goes mechanical or another user upstream showed up late perhaps putting the crew for your flight over federally imposed duty limits. Yes, pilots can only fly so many hours per day, so if they had delays today, they may not be able to fly for you tomorrow morning. The scramble to find a replacement crew or plane begins.

Multiple executives say all of the above underscores the complexity of the empty leg market, an industry problem that has launched any number of companies trying to come up with solutions. Since the empty leg is based on repositioning a plane, when the originator of the trip changes their flight or any one of the other mentioned factors comes into play, the availability of the empty leg changes. This can happen within a day or even hours of your scheduled empty leg departure. And you were pissed off last time Airline X cancelled your flight. Hmmm.

One person I spoke with who tried to offer empty leg solutions said, “The prices that most people offered were below what the owner of the plane was willing to accept, and each operator has a minimum they can sell that is set by the owner.” Why wouldn’t the owner want to put $3,000 in his pocket? “You’re talking about a $30 million plane, and you break a handle, it costs $13,000 to replace. It’s not worth the trouble,” he says. If you can’t sell them, get rid of them! Richard Kane, Chief Technology Officer and founder of Coastal thinks his company is on the verge of solving “the holy grail” by aggregating the scheduling function, including crewing and scheduled maintenance between multiple operators, something that will cut down on the massive percentage of empty legs, estimated at between 30 and 40 percent of flights.

On its website, Victor claims, “We are the only provider to offer an end-to-end charter booking on both web and mobile” though Victor nor any provider so far seems to have automated the owner-operator relationship into real-time. Without that, can there be real-time bookings and disruption? Jackson says yes, by focusing on planes that are owner-approved for charter and integrating his technology with those operators. Roei Ganzarski, President and CEO of BoldIQ, a company that offers dynamic real-time optimization software for operators (including JetSuite), says the technology for some operators he works with is there today and just hasn’t been turned on. He wouldn’t disclose the number of operators or aircraft that use his system or how many planes they control. Still, out of the over 2,500 charter operators in the U.S., according to NBAA, and 7,311 active Part 135 aircraft (fixed wing and helicopters) that the Federal Aviation Administration classified in the air taxi segment, how many need to be online to fulfill the needs of a real-time charter market?

Victor and other brokers typically tout access to between 5,000 and 10,000 aircraft in their marketing materials, but the truth is many of these planes are seldom used, and to enable an efficient, real-time solution will take aggregating a far smaller portion. According to statistics provided from Argus there were 1,233,819 Part 135 hours flown in 2014. The top 25 operators using 835 aircraft accounted for 353,828 of those hours, or 28.7 percent of the total. Making the math fuzzy, those hours include hours flown by owners of the planes. Nobody I spoke with could determine what percent of the hours are represented by owner activity. Where availability runs into a problem is during peak periods, peak times or bad weather where more of the fleet is needed. Alex Wilcox, the CEO of JetSuite says there are 35 high demand days but private jet travelers favor the 10 a.m. to 2 p.m. period to fly, meaning on a daily basis, if you want to fly, it is easier to find availability early or late, again, assuming that you can find pilots with duty time available.

Virtually everyone I spoke with questioned how up to date smaller operators keep information regarding availability of aircraft. Ganzarski drew the parallel to Kayak where you get a list of prices, but sometimes when you click on the rate and go through to the vendor site that rate is no longer available. Examples here would be finding a plane that fits the criteria of your flight, but it turns out the pilots don’t have the necessary legal duty hours available to fly or it is sidelined for some minor maintenance, yet this wasn’t updated in the operator’s system. We see the human factor in commercial aviation marketing technology when somebody forgets a couple zeroes loading fares, and all of a sudden that $9,500 first class ticket to Hong Kong is selling for $95 until somebody catches it.

The Coastal executives say to create an effective marketplace system won’t need all the planes out there. They say most charter activity is north to south on the east and west coasts and transcontinental, so the key is to aggregate fleets which are positioned to serve this market, something they are trying to do under their platform. Ganzarski believes that through the efficiencies of the technology he is offering, operators will be able to serve the same demand with 50 percent of their current fleet. That would be meaningful as there would be less need to source planes from owners who are picky about approvals. He predicts operationally driven scheduling alliances where operators using his platform will be able to integrate requests and offer more cost efficient solutions to brokers and consumers. He likens it as the business aviation version of Star Alliance, SkyTeam or oneworld.

Still, if part of the benefit of private aviation is access to 5,000 airports instead of several hundred served commercially, widespread real time booking from any place to any place looks like it’s a ways off. Sitomer, Ganzarski and Coastal executives all say the key is to focus sourcing on operators who have planes they can charter without case-by-case owner approval or own their planes. The Coastal executives believe once they release their product with major operators signed up, they can gain critical mass to pull off a real time solution within a year. Ganzarski sees the horizon as much longer in terms of reaching critical mass, but agrees that when owners see they are losing revenue they will be more likely to give their operators broader freedom chartering their planes. Think back to the emergence of frequent flier programs in the Eighties. Eventually all airlines fell in line because they had to.

I also caught up to Scott Duffy, who was CEO of Virgin Charter, an attempt to use technology to create a marketplace and disrupt the charter market launched in 2008 and badly timed to first the spike in fuel prices and then the recession. He believes like travel agents in the luxury arena, traditional brokers are not endangered. He says, “The question is do you have a good broker? There are thousands of Gulfstreams on the charter market, and each of them is a little bit different, so you want a broker who is knowledgeable.” Sitomer says, the fragmented and deconstructed structure of the market means that experienced brokers, who know where to source various planes from thousands of potential suppliers, have a powerful advantage, particularly when there are problems. “You have to know the operators. Each has strengths and weaknesses. If you are putting a multi-leg trip together, there are ways to do it to save money. There are lots of variables, including where the fleet is based, ferrying, floating fleets and other aspects. These are things (so far) an app can’t do,” he says. Asked for more detail, Sitomer provides the veil of mystery that Jackson says he is trying he trying to remove telling me, “That’s my secret sauce.”

Victor and other Uber wannabes, as well as traditional brokers, seem to understand that this is a high touch market. Most offer concierge type services and keep detailed profiles of customer preferences to provide a higher level of service. They all provide human interaction when needed. PrivateFly’s Cork says consumers like the customer facing technology to do preliminary research on aircraft types and pricing, but want to speak with a human to confirm details and payments that can range in the tens of thousands of dollars. Much of the logistics of trips for High Net Worth and C-Suite private jet travelers fall to personal assistants who can’t say, “It wasn’t my fault, the app gave me bad information.” From that point, Ganzarski questioned how valuable real-time booking is in that many times the first stage is merely information gathering by the assistant for the boss. On the other hand Liston says the industry has to move with the customer. “It is not about today, it is about how the customer will want to book in 2020 or 2025,” he says.

Coastal’s Hackett says when his company unveils its product later this year both consumers and brokers will be able to use it. “It will enable brokers to focus on the service aspect of the business, instead of the technical side,” he says. Ganzarski says the reason operators that have the capability to take real-time, online bookings have not done so varies, but is driven by wanting to ensure they have planes to serve regular customers and VIPs as well as making sure they manage their inventory around high demand peaks such as the NCAA Final Four basketball championship, holiday weekends and such. JetSuite’s Wilcox, who uses the BoldIQ technology, says when he implements the next software update he will be months away from offering real-time booking. Of course, owning his fleet, he doesn’t need to seek owner approval.

oth technology led brokers I looked at, PrivateFly and Victor, are enjoying success. “The proof is in over 1,000 bookings in 12 months last year and we will have over 3,000 this year,” Jackson told me from Mallorca, the place he first got the idea after now-defunct British Midland Airways cancelled its route from London. Victor boasts over 16,000 registered members on its website and PrivateFly over 30,000, according to Cork. She is a former Conde Nast executive whose husband is CEO and an active private aviation pilot who I first met at an NBAA conference. The two companies have each seen triple digit revenue growth over multiple years and have had success raising multiple millions of dollars to fuel expansion. Both are on solid enough footing they are now expanding into the world’s largest private aviation market, the United States.

Duffy, who has moved away from private aviation since Virgin Charter ceased, believes the place technology can make a big impact is the corporate market, where big companies already have a limited number of contracted operators, but want to integrate the booking process into their existing corporate travel reservations platforms. “There is a lot of money out there for somebody who can do that,” he says.

And while traditional brokers like Sitomer evangelize human knowledge and interaction, he is planning to launch to launch an app of his own called “Jets on the Fly,” he says, will provide a guaranteed price within 15 seconds. He is not planning to reveal his margins or the providers up front. Right now, the various apps being presented as breakthrough technology seem more like tarpaulins, covering the anthill of activity beyond the scenes. Wilcox believes the real benefit of having real-time availability in booking will be “demand aggregation” that will enable consumers to easily buy single seats, another concept that has yet to take hold. While he is a fan of what Victor is doing and plans to work with the company, he says in response to all the press releases about disruptive technology “caveat emptor.” In terms of who the power players will be when the private jet charter market does see seismic change, chances are it will be names you are not familiar with, companies currently in the background that are providing the flight management solutions for operators.

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From Paralysis To Recovery, Optimization Offers Ports New Tech Remedy – a BoldIQ byline

Eight weeks is what the port of Oakland estimated it would take to recover from the paralyzing effects of the west coast port labor disputes. As much as eight weeks of delays for domestic car manufacturers to receive parts, grocery stores to receive food and retailers to get their hands on the new Apple Watches. And eight weeks for the U.S. exporters to get their goods to market overseas – at least those goods that will not have lost precious shelf life in this period of time.

With West Coast ports handling roughly a quarter of U.S. international trade valued at $1 trillion annually, the cargo backlog at its 29 ports is monumental. Associated Press recently noted that if you stacked all the backlogged containers from the ports of Los Angeles and Long Beach alone, they would rise to more than 300 miles, higher than the orbit of the International Space Station.

Did the port backlogs really have to reach this excessive level, or is it just a part of doing business when importing and exporting by sea freight? In today’s world of big data and advanced analytics, why can’t the ports have systems in place to recover more quickly from these types of events? Or better yet, how can they be poised to minimize the backlogs to begin with if we are to assume that disruptive events like the port slowdown can and will happen again?

The recent crisis is not an isolated event — there have been disruptions in the past and there will be again – whether from labor disputes, political strife or catastrophic weather conditions.

The ports cannot expect an improved result by waiting for the next disruption to occur and again try to figure out how to recover in the midst of a crisis. Ports must re-examine the overall philosophy that governs their entire operation, so when they are faced with the next disruption, they can recover far more quickly and the impact will be minimized.

Right now ports operate with various degrees of computer-assisted decision-making. Where it exists, like in staffing, container planning or berth scheduling, it provides more of a planning aid.

Systems such as these certainly offer a degree of efficiency. But they largely still rely on human intuition, offer little to no insight into how decisions impact the port as a whole, and don’t provide a level of planning and solutions that exceed the operators’ own planning capability. The vulnerability of this philosophy is dramatically heightened whenever there is a disruption because the port is trying to react to a disruptive situation in an already non-optimized operating environment.

To overcome and preempt this damaging ripple effect, ports need to deploy an operations philosophy that accounts for and takes advantage of the entire sum of their parts. Within a very complex and unpredictable environment, ports need to know that they are maximizing each and every resource within a port for their own benefit and the benefit of their customers. And they need to be able to adjust rapidly to any change or disruption they face.

Ports should not have to question whether resources are in the most optimal location to minimize wait-times, cost and maximize the efficient transport of goods. Once ports accept a holistic view of operations management, they can then look at the technologies available today to realize their full potential.

So ports may wonder, what does an optimized port system look like? Do the technologies even exist to provide real-time dynamic operations optimization? The ports don’t need to look any further than the aviation industry.

Take private jet company JetSuite. Built by one of the founders of JetBlue, JetSuite’s business model of affordable, on-demand air travel depends on a holistic operations philosophy. The company has figured out how to maximize its resources relative to the needs of the entire airline rather than just its individual parts.

Like the ports, JetSuite must operate within a highly regulated, complex and unpredictable environment, managing factors such as fluctuating customer demand, regulatory and operational constraints, resource maintenance, changing fuel prices, staffing schedules, and of course unpredictable weather.

But unlike the ports, JetSuite deploys a technology to manage all of its resources in a dynamic real-time fashion. Despite daily changes and disruptions and fierce competition among more established airlines, the young airline has risen to fourth in total revenue hours flown and second in aircraft utilization among its peers.

Similar systems have been deployed for transportation, drones and staffing management, which have realized as much as 16 percent reductions in operating costs and 20 percent increases in capacity using only existing resources. These industries have begun to realize the value of operations-focused advanced technologies.

Our ports can realize this value, too. They can increase throughput of their ports without investing in capital or trying to enlarge their geographic footprint. And they can diminish the damage done to global trade by such a labor dispute.

Instead of taking eight weeks to recover, what if the port only took four? This is attainable with the technologies we have today. This kind of operations optimization could make a difference of millions, if not billions, of dollars. Beyond the pure dollar impact, harnessing this type of technology will help ensure the longevity of importers and exporters and the economy as a whole.

Just as any other dynamic industry, the ports have very little control of when or what disruptions will happen in the future. But they do have the ability to transform the way they run their operations and how to best optimize resources so that every disruption recovery is far faster, less costly and, as a result, less burdensome on our economy.

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BoldIQ Looks To Mitigate Supply Chain Disruptions – An Industrial Distribution story by Mike Hockett

The manufacturing supply chain is still recovering from a nine-month long standoff between longshore workers and employers on the U.S. West Coast ports, and will for months to come. The labor dispute caused major disruptions resulting from port shutdowns, accused slowdowns, and all-in-all created a massive backlog of cargo that prevented goods from reaching warehouses and store shelves.

The port labor mess, which finally came to a resolution Feb. 20, was the most prominent example in the last few years of the major effects such a crisis can have on the supply chain. Other disruptions caused by labor issues, weather, accidents, or human error are unpredictable for those at ports, distribution centers, and factories.

Roei Ganzarski, President and CEO of BoldIQ, envisions a world where disruptions don’t need to be so disruptive. While supply chain crises can’t be predicted, their effects can be minimized through preparation, and that’s the purpose behind Seattle-based BoldIQ, which pilots a resource optimization and disruption management software.

In a nutshell, the software uses real-time data to create the best possible operating plans for an organization, taking all of its data into account including resources, demand, costs, rules, and constraints.

The key word with BoldIQ is optimization – designed for during times of disruption, as well as times of calm. The software takes into account all the moving parts of an operation and finds the solution that maximizes efficiency. So even when things are running smoothly, BoldIQ can find ways to increase profitability and growth.

Any company could grow by adding more resources. It can buy more trucks, hire more people, add warehouse space, etc. But that kind of growth is very costly. The aim of BoldIQ is to spur growth by maximizing resources already in place.

“By optimizing your business in real-time, all the time, you’re able to grow without investment,” says Ganzarski.

BoldIQ’s origins and most prominent applications so far have been in aviation, but the company is looking to branch out into more supply chain operations. Be it in shipping, fleet management, distribution, staffing, inventory, or beyond, there’s a wealth of opportunities.

“The key that we focus on right now is world complex dynamic industries,” says Ganzarski. “So basically it’s any industry in which you have a lot of resources, a lot of demand, where your environment continues to change every day – be it for good reasons or bad. They include transport, staffing, on-demand delivery, healthcare, energy distribution, aviation, etc. In all those industries, there is no such thing as a “plan” – there is just the best thing to do right now. And it changes, it could be a minute from now or an hour. That’s where our software sits, takes all that data, and continues to pump out the best solution for that specific operation and that specific organization for that period of time.”

How it works

So how exactly does BoldIQ work? How does it create an optimal operation solution? The software uses an algorithm that breaks an environment into four key parts: Resources, data around demands, rules and regulations, and business drivers. To illustrate this, let’s apply it to the ports industry.

  1. Resources – This would include ships, cranes, trucks, and employees, as well as the cost for each.
  2. Data around demands – This would include the number of ships/containers/trucks needed, how many of each are going in and out, how many are going on cranes, trucks, and trains.
  3. Rules and regulations – This would include port labor agreements/contracts, safety rules and limits.
  4. Business drivers – This includes operational goals such as easing the trade of goods, and the ports’ financial goals.

The software takes those four factors in real-time and says “with what I see now, what should I do?” and creates a solution that minimizes disruption and maximizes efficiency.

“It’s a chess game. You want to look 3-4 steps ahead, but every move of your opponent makes you adjust,” Ganzarski says. “This software says ‘this is the best plan right now.’ Now all the user has to do is see what options it gives them.”

The software can take much of the guess work out of supply chain disruptions. For example, if truck or shipment of valves is going to be late to a distribution center, or machinery breaks down, delaying an outbound shipment, the platform creates a solution that optimizes current inventory. Instead of naturally saying, ‘these valves were supposed to go to these 10 stores, so now those 10 stores will be out,’ inventory can be optimized to say, ‘I could now move this truck of valves to different stores where sales would be higher.’

“The engine, because it’s not very industry specific, can adapt to various problems with industries,” Ganzarski says. “You can apply it all the way up and down the supply chain to improve the overall industry.”

Origins

BoldIQ’s roots are in aviation. The software was built in the early 2000’s by PhD members of global software company Citrix as a means of driving all the moving parts of DayJet, an on-demand airline. DayJet operated with Citrix’ software for three years before going bankrupt in the 2008 economic downturn. But out of that, the software and key members of DayJet were retained, and the operation was moved to Seattle, where it eventually became BoldIQ.

“What we do today is basically – for lack of a better word – generalize that original engine, and continue to enhance it and expand on it,” Ganzarski says. “Today what it does is produce schedule plans in real time – and I’m talking milliseconds and seconds – for the best use of all of your resources to meet your demands – at any given time, given all of your data.”

Success Story

One of the best examples of what BoldIQ can do for an operation is what it’s done with private jet company JetSuite. In 2011, the California-based company had approximately 35 staff members and five planes servicing California, Nevada, Arizona, New Mexico, and Oregon. JetSuite set out to provide its service to a wider audience, but ran into challenges surrounding logistics and inventory. Things like last-minute customer requests, operational constraints, aircraft maintenance, staffing schedules, and changing weather limited growth.

JetSuite selected BoldIQ and implemented its software, managing the airline’s day-to-day operations. Today, the results speak for themselves. Since partnering with BoldIQ, JetSuite has grown from a $7 million company to more than $50 million in 3½ years, doubling its top-line revenue for four years straight. The company now has more than 200 staff members and 20 planes, servicing around 3,000 cities in the U.S., Mexico, Canada and the Caribbean. Recently, JetSuite was ranked fourth in total hours flown and second in aircraft utilization by aviation research group ARGUS International, even as the youngest charter airline of all companies considered.

What’s new?

BoldIQ is certainly staying busy. Following the lead of JetSuite, several other companies that provide airlines with operations management systems have recently partnered with with BoldIQ to utilize its software. Merlot.aero announced their partnership last November, and Jeppesen Solution followed suit in December. Back in June 2014,GlobeAir announced BoldIQ as its software provider in its integration of private jet platform PrivateFly.com. BoldIQ has also been looking into drone management.

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GlobeAir unlocks new API set to become benchmark in mobile booking

In today’s permanently connected world, GlobeAir believes that the future of private jet charter booking is through mobile commerce, according to the way online purchases have recently impacted the buyers’ decision process.

In support of the modern traveller, GlobeAir, the leading European air charter operator, together with BoldIQ, a leading resource optimization software company, is now offering a revolutionary application program interface (API), which incorporates enhanced features for a streamlined online booking experience based on bold new technologies.

With deeper-than-ever access to the GlobeAir enterprise resources and fleet scheduling system, all web-based brokerage companies and travel booking platforms will be able to integrate their systems with this new API and offer additional features and benefits to their customers to create better, easier, and more customized experiences, providing them with extra confidence and satisfaction.

For instance, users can create their own travel itineraries in mere seconds, choosing between more than 1.500 airports across Europe available for the Citation Mustang (including those not accessible to the traditional airliners), check for a jet availability at a specific time, request a quote, presenting a guaranteed price and book the flight instantly, in different languages, and make the payments via mobile devices.

Furthermore, this innovative API will enable customers to filter GlobeAir´s “Daily Deals” and book them directly, given that some aircraft have to position themselves to the next scheduled departure airport, and therefore on such flights there is an opportunity to travel at advantageous pricing.

The GlobeAir booking system can also adapt and liaise with the existing online platforms to reflect individual requirements, giving the flexibility to offer specific options and special offers.

GlobeAir is breaking down barriers in the travel industry using cutting edge technology, revolutionizing private jet charter now and for years to come.

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Drone Management The Next Frontier

A Network World story by Colin Neagle, Once commercial drones start filling the skies, how will they be managed?

About a year ago, Amazon CEO Jeff Bezos made a bold publicity move – he sat down for a 60 Minutes interview and showed off the company’s planned use of drones for same-day delivery to its customers.

Those familiar with the reluctance surrounding drones in the U.S. knew that Bezos was being overly optimistic. Among many other obstacles to commercial drone use in the country, the Federal Aviation Administration (FAA) has been slow to permit widespread commercial use of drones in U.S. airspace. Bezos was getting the public excited for a technology despite the uncertainty over when and how exactly his company will be able to launch it.

If Bezos and every other organization that is eager to launch commercial drones have their way, the U.S. could see an entirely new form of air traffic. How this network of drones is managed carries a lot of implications, from the millions of dollars in costs for the companies that own them to the safety of the people who live on the ground below them.

“Right now when I look at the environment, it seems that the reason we don’t have things in place is exactly that network level,” Roei Ganzarski, CEO of resource optimization software company BoldIQ, says. “So the drone capability exists, including if they get lost or lose control with the operator they fly back home, they identify people around them, they’re very technologically capable. The thing that is missing right now, I believe, from an FAA level, is to say ‘how do I know that there won’t be 10,000 of those flying around, and let alone hitting each other, hitting passenger planes?'”

To solve this problem, many companies are adapting software designed to optimize resources and the supply chain in other industries for unmanned aerial vehicles. BoldIQ’s software was originally created for a now-defunct air taxi service and creates automatic plans based on the resources at hand, the user’s immediate needs, and the regulations to which it needs to adhere. Extending it to drones only seems natural.

Ganzarski points to transportation services like Uber, Lyft, and taxi services as examples of what could happen if drones are mismanaged.

“The only way for me to promise that you’ll have a car within five minutes right now is to load the streets with cars,” Ganzarski says. “That’s very inefficient.”

Just like the taxi industry, flooding the skies with an excess of drones is not only inefficient, but it’s a safety risk. This puts higher value on the tools and techniques that will allow companies to do more with fewer drones.

A potentially game-changing dynamic for the drone network – one which has been nonexistent in the cutthroat competition between Uber and Lyft – is cooperation between the companies using the drones. Steve Banker, service director for supply chain management at analyst and consulting company ARC Advisory Group, wrote in a Forbes  responding to Bezos’s 60 Minutes interview last year that “to achieve higher volumes [of deliveries], multiparty retailer/courier collaboration would be very helpful.” Banker’s article pointed to optimization tools that can forecast delivery routes for drones and process data in real time to create a more efficient route. These tools open all kinds of possibilities, from cheaper delivery to flexible pricing. But they all require an open drone ecosystem that maximizes access for every organization that needs them.

“If the courier company can flex and add new couriers that use their own vehicles, then demand spikes can be easily accommodated,” Banker wrote. “However, if there are transportation capacity issues (the number of delivery vehicles is static), variable delivery fees can be used to shape demand fulfillment. In effect, a buyer is told if we can deliver between 3 and 4 pm, the cost is $5, if you want it between 6 and 7 pm, the fee will be $25.”

Ganzarski also suggested drone sharing to supplement optimization techniques. Different organizations using similar drones could use them more efficiently if they were open to sharing information, if not sharing drones themselves. As an example, Ganzarski mentioned the U.S. Forest Service, which to monitor wildfires before FAA restrictions forced it to shelve the plan, as the kind of organization that could find itself sharing data and even hardware to get better use out of drones.

“Since we know where the Amazon drones or the Google drones [are], as an example, then if there is a fire, we can optimize the use of the Amazon drones to deliver packages differently, and use some of those drones as an emergency need for the forestry service to look at where the fires are,” he says.

This same kind of collaboration could be applied among drones used to deliver packages ordered on Amazon or Google and delivered by couriers, some of which have expressed interest in drone delivery, to ensure the most efficient delivery time. As long as deliveries are made, it doesn’t necessarily matter who owns the vehicles that carried them out.

The impending drone ecosystem presents a big opportunity for a lot of organizations. Those that use the data to manage the drone network more effectively just might be the ones to capitalize on it.

“It’s really not all about saying ‘what’s the empty drone?’ It’s not about which is the closest drone,” Ganzarski  says. “It’s all about which is the right drone with the right operator for the right mission given everything that’s going on right now.”

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BoldIQ Technology to Enhance Jeppesen Solution

BoldIQ, Inc. a global provider of dynamic real-time optimization software, today announced that Jeppesen, a part of Boeing Commercial Aviation Services, has selected BoldIQ’s scheduling technology to enhance development of its products and solutions for its business aviation customers.

“Enabling customers to make intelligent and integrated decisions in real time is what we are all about,” said Roei Ganzarski, president and CEO of BoldIQ. “This relationship is in line with the quality and customer focus that Jeppesen is renowned for in aviation and is a great affirmation of the value we provide aviation and other industries worldwide.”

In addition to aviation, BoldIQ’s technology is used within the transportation, energy, healthcare, and defense industries to significantly increase operational efficiencies.

“BoldIQ offers remarkable scheduling technology that will further Jeppesen’s ability to provide industry leading information and planning solutions for our customers in business aviation,” said Dr. Stefan Karisch, director, Jeppesen Optimization and Value Strategy. “As we continue the development of products and services that provide our customers with a distinctive competitive advantage, BoldIQ technology will serve an important role in this process.”

BoldIQ has helped its customers in complex business environments drive significant increases in productivity, decreases in operating costs, and increases in their revenue-generating capacity.

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Avoiding Christmas Past: Use Technology to Ensure Timely Holiday Deliveries – a BoldIQ byline

The holiday season is quickly approaching, and that means it’s only a matter of time before Santa’s sleigh is filled up with presents from online orders and cross-country relatives. FedEx is anticipating an increase in holiday shipments of 8.8 percent, and UPS is anticipating an 11 percent increase over 2013. Will UPS and FedEx be prepared to meet their delivery dates in 2014, or will we see the industry crumble once again under the load?

Last year, Cyber Monday saw a 20.6 percent jump in online retail sales – a new record, according to the IBM 2013 Holiday Benchmark Reports. And in the final weekend before Christmas, online sales were up 37 percent over the previous year. The massive amount of orders and data snowballed until networks couldn’t manage the resources. As a result, the shipping industry was hit with a snowstorm of a problem.

The number of orders, coupled with weeks of bad weather hindering delivery services, made it so packages were not delivered by their promised dates. Companies like FedEx, Amazon, and UPS tried to remedy the problem. UPS brought in additional workers on Christmas night to sort through packages for Thursday and Friday deliveries, and FedEx rushed some packages so customers could pick up items at local FedEx Express centers on Christmas Day. Despite this, many people were left disappointed when packages didn’t show. While bad weather was a factor in the delivery delay, UPS acknowledged in a statement the real problem was that the network was overloaded. The system couldn’t manage the resources necessary to ensure timely delivery, and as a result, real people felt the burden in real-time.

So how can the delivery industry better manage their resources vis-à-vis growing demand, while readjusting to real-time disruptions like bad weather and icy roads?

Real-time operations optimization technology helps many industries manage their resources in an ever-changing environment. On-demand aviation industry is an example where the technology is already helping companies increase efficiency and reduce costs. Aviation companies like charter airline JetSuite use this technology to manage airplane fleets and staff in an industry with constant real-time change requirements and unpredictable disruptions (like bad weather and mechanical failures). The solution enabled the airline to manage their potential revenue and maximize resources, while at the same time lowering fuel costs and waste, and providing superior customer service, all in real-time.

If the shipping industry had introduced real-time operations optimization technology, the delays of last year’s shipping debacle could have been minimized. Delivery companies would have been able to optimize the massive number of orders received and utilized their resources more efficiently. FedEx, for instance, handled more than 275 million shipments between Thanksgiving and Christmas, but how many of those shipments were truly optimized, taking into account all elements of their operation to include resources, demand, cost structure, labor rules and more?

As consumers continue to see the ease of online shopping, the demand for shipping only continues to grow. Ongoing disruptions, such as bad weather or mechanical breakdowns, are unavoidable, especially during busy seasons. To ensure a successful and happy holiday delivery season, companies should focus on technology that allows the system to react in real-time to whatever comes its way. A more efficient allocation of resources allows shipping companies to better manage their delivery service, keep their customers happy, and avoid being deemed the “Grinch” of the holiday season.

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Merlot.aero and BoldIQ to Provide Airlines with Industry’s First Integrated Real-Time Dynamic Optimization solutions

Merlot.aero and BoldIQ are to work together to address and solve an airline industry critical and ongoing issue – optimized planning and irregular operations.

Merlot.aero provides airlines with an integrated operations management system that allows management of everything from crew planning and payroll to aircraft tracking and following. BoldIQ provides real-time operational optimization software in dynamic industries such as transportation, energy, and healthcare. The two companies have agreed to work together to bring the global airline industry a new level of real-time operational planning and disruption recovery.

Efficiently and effectively solving irregular operations – a $7bn problem in the US alone – has been an industry challenge, and doing so in real-time has been a dream. The challenge is a complex one, solving a multi-variable, multi-objective problem taking into account a multitude of data, regulations, constraints, and business goals to include aircraft, crew, passengers, and the operating environment. And doing so over and over again in real time. By providing this capability in an integrated way, airlines are able to actually take intelligent action when changes and disruptions occur.

“Providing our customers with an ever growing suite of value added tools and solutions has always been our goal, right from the start,” said Mark McCaughan, CEO of Merlot.aero. “Enabling them to plan and recover from ongoing changes and irregular operations without having to leave their regular operations management system is the next evolution. In our view, preparing for irregular operations, and the ability to manage them, can reduce costs for ground and flight operators, as well as improving safety, efficiency and customer satisfaction”.

Unlike conventional planning optimization systems, the Merlot.aero solution will have the BoldIQ operational optimization engine built into the regular operations platform. This means that when a change or disruption occurs, the optimization will take into account all elements currently in the system and provide an integrated actionable solution to the airline within seconds that meets the needs of the passengers, crew, and airline as a whole.

“There are a lot of continuously moving parts in this problem and moreover, a significant ripple effect that happens any and every time a change or disruption occurs,” said Roei Ganzarski, President & CEO of BoldIQ. “Our dynamic real-time optimization engine has been used for exactly such environments and we look forward to working with Merlot.aero as they trail blaze this effort for commercial airlines”.

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How the Transportation Industry Can Do More with Less A BoldIQ byline in Mass Transit

As if our roads aren’t cluttered enough, a report from the International Energy Agency projects there will be 1.7 billion vehicles on the road by 2035 – double the current number. Not only does this mean highly congested streets, but it also means an unhealthy increase in emissions and pollution. (Even if we move to electric vehicles, there is still maintenance, oils, paint, manufacturing, and more). Transportation accounts for 20 percent of the world’s energy consumption, leaving the transportation industry under increased pressure to operate more efficiently with fewer resources, while still having to meet the growing demand.

It seems that demand for transport continues to grow hand in hand with the outcry to reduce the number of cars owned by people. Thus the advent of so-called “on demand app based” series such as Uber and Lyft. However, these are simply less than efficient additions to our streets, creating yet another layer of congestion and inefficiency. While they may be very flexible for the passengers, they are adding multiple vehicles to the streets that significantly surpass demand – but I will not be discussing these services in this post.

On the other hand, public transportation departments seem to be facing ongoing budget cuts and their immediate and understandable response is to cut services. In the Seattle area for example, bus services will be reduced by 16 percent due to so-called budget cuts. While it would seem that service cuts are the only remedy for budget cuts, this is an antiquated thought process and these days, simply wrong. Transportation agencies should be continuously finding ways to provide more service with less budget as opposed to wait for a budget cut and simply cut service as a reaction. And with sophisticated optimization technology readily available, this is doable.

Operations optimization technologies are already transforming the way other industries are managing their resources. Take the aviation industry as an example. Airlines are using optimization technology to manage large fleets of planes and staff amidst constant complex planning requirements, unpredictable disruptions due to weather, mechanical failures and staff illness. In an optimized system, resources are more efficiently managed to maximize potential revenue, maximize productivity of pilots and crew, minimize fuel costs and waste, all while providing superior service to their customers. And they do this in real-time, all the time.

Imagine the possibilities for fleets of taxis, buses and other ride-sharing services. With real-time optimization, these transportation services would be able to work efficiently to not only meet demand, but to also improve congestion on the streets and reduce fuel consumption and emissions. Think of how much fuel taxis and ride-sharing services burn driving around looking for their next customer. Through an optimized “central nervous system,” these drivers could receive the best fitting on-the-spot assignments in real time. This provides value not only to the driver and passenger, but to the network as a whole.

According to Robert Burn, “The best laid plans of mice and men often go awry.” No matter how well-planned long-term and short-term scenarios are, disruptions and changes will always occur – be it machines breaking down, a change in weather or even a changed requirement or deadline from a customer.

The U.S. has the largest transportation system in the world. It serves over 300 million people and 7.5 million businesses. It shouldn’t be managed by antiquated technology (if using technology at all) as it largely is today. The transportation industry must rethink its approach to operations and resource management.

The future of transportation will be centered on efficiency. Let’s stop waiting for the future to arrive. We have the technology at our fingertips to make the best possible transportation decisions when it counts most – right now.

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