By Dr Majdi Sabri
Question: IATA's global project to make the cargo industry paperless is fraught with complexity. Is the market ready?
IATA's global project to make the cargo industry paperless is fraught with complexity. Is the market ready?
Dr Majdi Sabri
MENA regional vice president, International Air Transport Association (IATA)
The case for change
For far too long air cargo has been living in the technological dark-ages. Our processes, which pre-date the fax machine and the internet, continue to be bogged down by paper.
Today, every cargo shipment travels with up to 38 documents at a cost of US$30 dollars. Over the course of one year the amount of paper shipped could fill 39 747-400s, burning 1.43 million tonnes of fuel and generating 4.5 million tonnes of CO2.
On top of that, shipment times have been reduced by only 12 hours in 33 years. We are not taking full advantage of technology. Air cargo produces 35 million airway bills every year and even though electronic airway bills have been around for 17 years, only 15% of cargo shipments make use of electronic airway bills today.
Alongside reducing costs, IATA e-freight aligns with three global trends. First is the emergence of e-trade on a global scale. This is being driven by UN/CEFACT and the World Customs Organisation. Second is the requirement for stricter security measures. Customs organisations increasingly need accurate air cargo information electronically before flights arrive. Third, shippers, manufacturers and importers are demanding online access to timely, accurate and end-to-end information for tracking and cost control to improve their own efficiency.
Just-in-time manufacturing needs reliability.
The best approach
IATA's approach is to lay a solid foundation with effective industry participation from the entire air cargo supply chain. Standards, processes, and documents have been developed. The next challenge is implementation.
E-freight pilots will set the tone for broader industry rollout of paper free cargo. In December, IATA signed five locations for pilot projects in Canada, Hong Kong, UK, Netherlands and Singapore that have the right business, technical, and legal environment to operate e-freight. In each of these locations the government customs organisations, key cargo carriers and freight forwarders have signed to demonstrate the benefits and develop a proven set of standards for other countries to follow. The key carriers committed include Air Canada Cargo, Cathay Pacific Cargo, British Airways World Cargo, and Singapore Airlines Cargo. The freight forwarders that have signed up are DHL, Shenker, Kuehne + Nagel, Panalpina and ABX.
Another foundation for e-freight is IATA's message improvement programme. Today, 75% of electronic data that accompanies shipments is incorrect or missing. To enable e-freight worldwide, the industry must improve the quality and reach of this data. IATA is therefore driving a programme to achieve this for the airway bill and house manifest.
Finally, IATA is driving wider industry engagement on e-freight. We are working closely with the Universal Postal Union to bring mail operations on board. We have a growing list of locations supporting e-freight initiatives including Korea, Chinese Taipei and other locations. These will drive the second wave for paper free cargo by 2010. In the Middle East, Dubai is currently in best position.
Delivering e-freight is incredibly complex, but the benefits are compelling. E-freight will improve efficiency, contribute $1.2 billion in savings, help air cargo improve its competitive position with shipping and make it easier to do business worldwide. The industry is aligning, and gradually governments and customs organisations around the world are coming on board. Lured by the prospect of more efficient trade and by the realisation that air cargo is an important enabler of global commerce, e-freight is inevitable. The quicker we implement it, the sooner we will all see the benefits.