Edging towards e-freight
21 / 03 / 2015
IF you have the idea that targets for the IATA e-freight programme keep slipping, you are not wrong.
At the 2010 Air Cargo Forum the expectation was that the whole air cargo industry would be paperless by 2014, but the target IATA now has is for 22 per cent of feasible shipments (ie those where the regulatory environment is in place) to use paperless airwaybills by the end of this year.
Sceptics might find even that ambitious, given the past record. In 2013 IATA was targeting 20 per cent, but by December it had managed only 12.3 per cent.
This, admittedly, was double the 6.8 per cent achieved the year before (when the target was 10), but seems a long way from full adoption. Can any credibility then be given to goals of 45 per cent adoption for 2015 and 80 per cent for 2016?
Des Vertannes, IATA’s head of cargo, does not hide from the fact that 2013 was a disappointing year, but he points to two major factors outside of IATA’s control.
One is the sluggish uptake of paperless Customs clearances in several key economies. Two notable examples are India and China, which have signed the 1999 Montreal Convention [MC] that makes paperless carriage possible, but still insist on physical documents for Customs clearances.
Vertannes says both nations have done successful pilots with paperless methods, which were endorsed by Customs and so is hopeful this will broaden into wider acceptance later this year.
But Brazil still insists on a paper airwaybill with the original signature on it, and Russia has yet to ratify MC99, though it hopes to do so this year. Bangladesh, Indonesia, the Philippines, Thailand and Vietnam (among others) have also yet to ratify.
Another drag on e-freight, Vertannes reckons, has been the sixth consecutive year of air cargo market stagnation. “The pressure is on airline heads of cargo to look for every extra dollar of revenue, while any-thing transformational or requiring IT spend is put to one side,” he says.
An encouraging thought here is that November 2013, which saw the best rise in air cargo traffic in some time, also saw the biggest ever growth in e-freight shipments. So the hope is that if an economic recovery takes hold, so will e-freight.
While these are areas IATA can do relatively little about, it is working away at the areas it can. One is the interface between forwarders and airlines. A common complaint from forwarders is that they can’t maintain two separate processes, one for paperless shipments and one for the rest. So IATA has been trying to persuade airlines and handlers to offer a single paperless process.
“The idea here is that irrespective of whether a shipment is going to be sent paperless or not, the forwarder can deliver the shipment with an e-airwaybill, and if a paper copy is needed, then the airline or handler will print one off,” Vertannes says.
“This also answers the common question asked by forwarders of e-freight, which is what is in it for them? This simple process means they can just send the FWB and miss out altogether the stage where the driver has to go into the reception office and stand there while data is typed into the system. This saves them both time and transport costs.”
It is this kind of thinking which is indicative of a new spirit of cooperation between IATA and the forwarder association FIATA, which includes an IATA-FIATA Consultative Council (IFCC) that meets before all IATA cargo conferences.
“All the tensions of the past have dissipated,” reveals Vertannes, referring to the high profile complaints voiced by FIATA a few years back. “For example, they were a huge help in the production of the multilateral e-airwaybill. Their legal people and ours worked very hard to get a document which would stand the test of time.”
One project the IFCC is now working on is a Cargo Agency Modernisation Programme (CAMP) – acronyms seem to flourish at IATA – which will, as Vertannes puts it, “take the relationship between airlines and forwarders into the 21st century”.
In particular it will finally recognise that forwarders are principals – customers – of the airline, not agents of it.
CAMP will include a less onerous way for forwarders to become accredited with IATA, and should be ready to roll by the end of this year. “If forwarders still want to be agents – which we know remains important in some markets –it will still be possible to do this, but we’re expecting most to become IATA-FIATA Cargo Partners under rules set jointly by the two bodies,” Vertannes says.
IATA is also thinking about how it can help smaller forwarders to get on board with e-freight. It has had talks with FIATA on this topic and helped forwarding group WCA to develop its own software. Now Vertannes says IATA is considering creating a desktop solution for smaller forwarders based on the current CASSlink remittance and settlement software tool.
“We are trying to get approval to develop this to enable small forwarders to send FWB data,” he says. “We have got a business plan for this and are taking it to our board to get approval.”
Cooperation is also key to relationships with the World Customs Organisation, and with the regulatory authorities in the USA and the EU. Vertannes says the days when such bodies just handed down directives is past, and through GACAG – the Global Air Cargo Advisory Council of which IATA is a part – the industry is now able to offer solutions rather than just receive instructions.
One big project here is Secure Freight, which seeks to offer a standard of air cargo security to those countries whose regimes are not yet as rigorous as those in the USA or Europe. Pilot tests have been run in Malaysia, Chile, Mexico, the UAE, Jordan and Bahrain, and Vertannes says other key nations are now showing interest, including Brazil, Russia, Turkey and the Philippines.
IATA has also created an electronic cargo security declaration form, which it hopes will start to standardise the information required by national security regimes. “This has been so well received that it is now embodied in the material ICAO sends to all its members,” he says.
Meanwhile in Europe, IATA has been busy training independent validators who will inspect and approve the security regimes of third country airlines when the European ACC3 rules come into effect in July. “We have [so far] trained 101 validators and the EU has certified 79, which will climb to 84 shortly. Had IATA not done this, there would be no independent validators at all, as no one else has done this [project].”
While all these are separate initiatives, Vertannes sees them all coming together in coming years. “For example, in 2016, new rules under the WCO Safe Framework Standard will force people into providing data electronically.
“Quite a few countries are also merging Customs and security requirements. Governments are beginning to see how they can invest in one IT platform rather than having two or three for different purposes.
“For all of these different requirements, if you want efficiency and productivity gains, the only answer is e-freight. So if you ask me if e-freight is really going to happen, the answer is yes. Because everyone realises it is now just a formality.”