Subscribe | Advertise | Contact Us | About Us |    

Think Tank

Bookmark and Share

Paper Planes: What's Keeping Air Cargo Carriers From Automating?

Fast and innovative: that's the image conveyed by the air cargo industry. So why is it lagging so badly when it comes to automating documentation and standardizing key procedures?

Every transportation mode is on the path to paperless documents, but they’re not all moving at the same rate. The e-freight initiative of the International Air Transport Association (IATA) is aiming for the rather modest goal of 22-percent global penetration of electronic air waybills (eAWBs) by the end of this year. As of March 2014, the actual number stood at just 12 percent, according to Desmond Vertannes, IATA’s global head of cargo. (Subsequent targets are 45 percent by the end of 2015, and 80 percent in 2016. They were established by the Global Air Cargo Advisory Group, of which IATA is a member.)

Launched in 2012, the IATA effort looks to achieve 100-percent paperless transactions for air cargo. It’s not a hard sell. Benefits include lower processing costs, more accurate information, higher productivity, tighter security and improved customer service. Who wouldn’t want to participate?

Many have. Some 61 airlines and 774 freight forwarders have signed a multilateral e-AWB agreement, and the number continues to grow. The single pact eliminates the need for service providers to maintain a mishmash of bilateral arrangements with individual governments.

Speaking at IATA’s recent World Cargo Symposium in Los Angeles, Vertannes said the last 12 months have seen “great advances” in IATA’s dealings with customs agencies around the world, to pave the way for paperless. In mid-2013, the group ran an e-freight pilot for shipments into India. Later in the year, the program was extended into China.

So why has e-AWB been so slow to catch on? Vertannes said the program’s ultimate target “is based on the assumption that everybody is committed to this goal.”

Now IATA is wondering whether it was overly optimistic about industry’s ability to go electronic so quickly. The legal framework for the effort was only made available to industry at the end of last May, he said. Even then, cargo executives didn’t exactly jump at the opportunity.

Major airlines were facing a third year of stagnation. “That called for some very difficult decisions that they could not devote resources and investment into enhancing their I.T. platforms,” Vertannes said. “If you’re not growing, and barely able to meet financial goals, you’re not likely to get manpower resources to dedicate to something of that nature. The focus has been on chasing your dollar of revenue.”

Vertannes hopes a recent boost in consumer confidence will motivate cargo executives to invest in automation. But the state of the economy hasn’t been the only barrier to progress. Many providers have found themselves unable to enact the sweeping operational changes that are needed to meet e-freight goals. Even the most compelling I.T. application is useless without an accompanying transformation of business processes.

Tom Windmuller, senior vice president of IATA, drew the distinction between paper tickets and paper airway bills. Airlines control the former, he said, and can phase out supply at will. Today, just 28,000 paper tickets are being issued each year, out of some three billion passenger journeys.

Paper airway bills aren’t so easy to eliminate, Windmuller said. “It’s incumbent upon us to demonstrate to people the value of moving in that direction.”

IATA continues to lobby governments to sign the Montreal Convention 1999 (MC99), which sets global standards and procedures for both passenger and cargo liability. The pact is key to the worldwide expansion of electronic trading platforms and networks, Vertannes said.

Then there’s the Electronic Consignment Security Declaration (e-CSD), which automates the exchange and archiving of security data on cargo that has been shipped. Vertannes called that effort “a wonderful opportunity for this industry to start to using one single harmonized document, to bring efficiency across our operating platforms and demonstrate to the regulators that we can indeed introduce some form of self-regulation.” IATA members ran eight e-CSD pilots last year, all of which were adopted by member states.

For airlines and their forwarding partners, the challenge today extends beyond the mere automation of documents. IATA members worry that the industry has a serious service problem. Over the years, traditional airlines and their forwarder partners have ceded business to agile integrators such as FedEx and UPS, who are handling larger and heavier freight. They’ve also seen some of their high-value cargoes migrate to less-expensive truckers and ocean carriers.

Vertannes challenged the air-cargo industry to shave as much as 48 hours off end-to-end transit times by 2020. On the international side, he said, traditional carriers have maintained a six- to seven-day shipment cycle for some four decades, “without any movement.” At the same time, he questioned how they can succeed in that effort when they’re so far from the goal of fully electronic documentation.

Carriers must broaden their focus beyond airport-to-airport moves, even to the point of engaging directly with shippers. “We’ve got to do something,” Vertannes said. “We’ve got to revolutionize the process.”

It begins with automation. If carriers and forwarders are to hit that 22-percent target for electronic waybills in 2014, Vertannes said, “we’re going to have to work extremely closely together.”

Comment on This Article

No entries

Nothing found in the guestbook.

Message *

CAPTCHA image for SPAM prevention

SCB TRANSLATOR (Over 60 languages)
Sponsored by: