Going electric

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FORWARD FOCUS: Emirates' Niranjan Navaratnarajah is proud to pioneer e-freight in the Middle East.

The IATA e-freight initiative is set to go live in a total of 14 locations around the world by the end of this year. In this report, Air Cargo Middle East & India speaks to a number of carriers to ascertain how the challenges and benefits of implementing the financially rewarding plan.

With the airline industry facing a massive need to cut costs following drops in a capacity, a high fuel price and a sudden lapse in the amount of investment available following the ‘credit crunch' that has hit Western economies, the onus has been on trying to locate ways to slash margins.

Industry body IATA has been at the forefront of a number of new initiatives that are set to save the sector much needed finance. One of those initiatives has been e-freight, a project that was first addressed in 2004 with a strategy to remove paper documents from the airfreight supply chain, thus saving the industry US$1.2 billion per annum.

"E-freight first went live in November 2007 in six pilot locations: Canada, Hong Kong, the Netherlands, Singapore, Sweden and the United Kingdom," says Steve Smith, e-freight project director for IATA.

"The scope of the project is to implement e-freight capability in all feasible locations by the end of 2010. There are 13 documents currently in scope that account for between 50-60% of the total paper generated across the supply chain."

So far, e-freight has gone completely live in an additional two locations - Germany and South Korea - and IATA's plan is that a total of 14 locations should also be live by the end of this year. In fact, 2008 has been a year of some importance, as IATA's focus was to secure the e-freight product to allow scalability, i.e. for the industry to adopt e-freight and increase the volume of e-freight participants, a target which the body appears to have hit with some success.

In order to facilitate the transition, says Smith, IATA has implemented transit and transhipment freight as it was initially focused on point-to-point traffic. It has also produced the technical electronic messaging standards for three of the documents originating from the shipper (Certificate of Origin, Customs Invoice and the Packing List).

Furthermore, IATA has also produced an e-freight handbook - to be released in the next few weeks, which is a guide that allows carriers to be able to adopt and implement e-freight in their respective organisations. Also due to be released before the end of the year is IATA's revalidation of the industry business case and savings.

In terms of how difficult the undertaking of this initiative has been, Smith is in no doubt. "It is a massive and complex project," he says.

"That's why during the first stage in 2007 the goal was to achieve a standard e-freight operating procedure (e-FOP). This was achieved by mapping the current business processes in each of the initial six locations and then adopting a common e-FOP across these locations, to have one simple e-freight process. Once this work was finally completed, this then formed the template for implementation in all our subsequent locations."

Finalising the e-freight project has been easier for some carriers than others. British Airways World Cargo (BAWC) was lucky in that the UK had already established an electronic customs reporting system for exports, so the concept was not too difficult for the carrier to implement for those shipments leaving Heathrow.

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