E-freight takes off at Panalpina

ONE gets accustomed to hearing about small-scale trials and tests of e-freight, that it is gratifying to report that one forwarder at least is making big strides towards full implementation.
On 19 November a Panalpina B747-8 freighter (which it leases from Atlas) set off from Huntsville, Alabama to Luxembourg on what was claimed to be the world’s first entirely paperless round-trip flight for general air cargo.
That is to say, the freighter flew from Huntsville to Luxembourg and back – without being accompanied by a single paper document: not only airwaybills, but all other shipper documents were electronic.
Actually, the achievement was a bit more than that, because the previous leg from Guadalajara had also been paperless. Cargo from the flight could also have connected to another Panalpina freighter that flies paperless from Luxembourg to Hong Kong, and the return flight from Hong Kong will be paperless to the USA and Europe from the end of this month (January).
Overall, Jeannette Goeldi global head of airfreight standards and governance for Panalpina, says that 22-25 per cent of shipments are now fully electronic at the forwarder, which is not bad considering that it only started doing full e-freight shipments, including all shipper documents, in September. (Previously its focus had been on making the master airwaybill electronic.)
Nor is it just what Panalpina calls its “own-controlled capacity” – that is, scheduled freighters that fly on routes it specifies, that are being converted to e-freight; it is also increasingly doing it on normal commercial flights.
But Goeldi admits that it is easier to convert own-controlled flights, because there is no third-party carrier to deal with and Panalpina also has a direct relationship with the ground handling agent.
By contract, for commercial flights, both the carrier and the handler have to be willing and able to implement e-freight, and the second of these requirements is sometimes lacking. “Everyone wants e-freight – no-one now says it is a bad idea. But between willingness and capability there is a long way to go,” says Goeldi.
Panalpina knows how hard it can be to get from one state to the other, because when it started pushing e-freight two years ago it faced a number of issues. “It was a learning process. We first realised we did not have the quality of data needed and that our ground handlers were not always ready,” she says.
It also had to do a lot of work to integrate customers into the pro-cess: getting them to book electronically, persuading them to take an e-airwaybill as a formal contract once the booking was made and, where possible, getting electronic information from them for the shipper documents.
The latter, insists Goeldi, is not always possible, and depends both on the customers’ capabilities and the nature of their supply chains. “Big multinational companies with advanced systems might still be dealing with sup-pliers which are not equipped to work electronically,” she explains. “So if they need to send paper, we need to scan those documents into our system.”
Still, the effort has paid off, with Panalpina reckoning it is pulling ahead from its rivals in e-freight implementation, and being on track to have 80 per cent of shipments moving under e-freight by 2015. So what is the secret of its success?
Goeldi says the first factor was a firm corporate decision to implement e-freight. “It is not something we question anymore,” she says. “It is the future and we can’t escape it. We don’t pay hotel invoices or book passenger flights using paper any-more, so it is senseless to still be using paper in air cargo.”
A second key was creating ‘ambassadors’ for e-freight within the company – not managers formally in charge of the project, but enthusiasts in each station who are keen to drive the project forward.
This bottom-up approach has produced some interesting results. Goeldi tells the story of one ambassador at Panalpina’s Luxembourg hub who realised that some European offices were still unnecessarily sending paper documents for certain flights. So rather than sending the documents with the shipments, he let the paper pile up in his office for three weeks, then sent it all back to the originating stations.
“They were quite shocked at first, and then they were a bit annoyed, asking: ‘Why did you not tell us before that you didn’t need these documents?’,” says Goeldi.
“But to my surprise this technique worked very well. Those offices realised that the world had become easier and they no longer needed to send the paper.”
Meanwhile, the enthusiasm of another ambassador, this time in Chile, persuaded Panalpina to start e-freight shipments sooner than it had planned. Goeldi admits that Latin America had not been an early priority for e-freight implementation because it is still a place where officials like to stamp pieces of paper. “But our ambassador in Chile approached us and said ‘I think we can do this’ and so that is what we are going to do.”
Another key to implementing e-freight has to focus initially on specific routes, rather than trying to launch it out of an entire hub all at once. By ironing out any problems on one route with one carrier and one handler, Panalpina creates a proof of concept that can then be used to persuade other par-ties to join in.
In opening up countries it has also taken a similar app-roach. In Poland, for example, it is working initially from Wroclaw to JFK, rather than out of Warsaw. This will then serve as a model for the rest of the country.
Elsewhere, Customs requirements hinder e-freight adoption, but some surprising places are now moving towards electronic clearance – Russia, for example. “IATA has done a great job in removing such barriers,” Goeldi says, adding that most European countries are now on board, as are the USA and Canada inbound.
Even outbound from the USA, Customs and Border Protection allows its local offices to go paperless if they are satisfied that all procedures are being fully met, and Panalpina has managed to convince Customs in Huntsville that it can do just that.
Arguably a bigger problem is the fact that many airlines still have legacy IT systems that have communications problems, or are on old versions of Cargo-IMP. Goeldi says version 16 is the minimum requirement to handle the full FWB message, although she says airlines can do it with version 9, by manually adding certain missing data. 
Some carriers do not even have that, however, and she wishes that IATA would include in its Cargo Agency Agreement a minimum requirement for data exchange capabilities. On the positive side she notes that newer carriers are making big investments in next-generation IT systems, and so hopes that within five years or so the communications problem will largely be history.
So, in general, she is optimistic, but feels a lot more effort is needed from all parts of the industry.
“Everyone wants e-freight, and a lot of companies are doing something about it, but airlines, forwarders, ground handlers and IATA all need to do more,” she says.
Having said that, she stresses that air cargo companies and their employees have to be persuaded that e-freight is a good idea, and not forced to do it. “People need to believe that this is the future, and then they will start making investments.”