IATA: Speaking out for air cargo’s global image

IT BEGGARS belief that an industry vital to international trade remains so invisible to the rest of the world, writes Thelma Etim, deputy editor.

This may be one of the reasons why the air cargo industry has been allowed to operate in a technological time-warp for so long, while other industry sectors seem to be light years ahead.

With the golden age of air cargo (10-plus years ago) now supplanted by uncertainty, volatility, encroaching modal shift and a plethora of belly capacity, the need for a seismic shift in mindset is all the more acute. So where does the comeback start?

“We need to be more aggressive as an industry. I think we’ve got a tremendous future, but we just need to get the basics right,” insists Glyn Hughes, the new global head of cargo at the International Air Transport Association (IATA).

“We don’t display as much pride in our industry as we should do – even though air cargo transports approximately 35 per cent of world trade by value.”

We need to be more proud of that fact, because airfreight has such a positive impact on our lives and we don’t talk it up as much as we should, he ventures. “We want to be able say we’re a high-quality, predictable, reliable, business-plus, premium transportation mode.”

Hughes clearly recognises that air cargo needs a makeover, not least because of the dearth of fresh, young talent operating in it. A firm believer in supporting the next generation of industry leaders, he spends a large portion of his personal time working on outreach programmes with training and other educational establishments. “The sustainability of air cargo involves not only profit, but people,” he stresses.

To raise awareness among the general public, IATA launched an Air Cargo Makes It Happen promotional campaign, which involves leaving postcards and other visual aids with information about the products (Formula One cars and Kenyan cut-flowers, for example) that are transported by the industry – in public places, such as hotels lobbies.
The feedback from this exercise has been very positive, notes Hughes who has been involved in air cargo for more than 30 years, having started his career with British Caledonian Airways in the UK.

He joined IATA in 1991 and previously headed IATA’s Cargo Agency and Cargo Accounts Settlement System (CASS) programmes, growing the CASS network to cover some 80 operations in more than 75 countries, which processed 18 million paper airwaybills with a combined settlement value in excess of US$29bn.

Hughes is well aware of the big shoes he has stepped into following the retirement of stalwart Des Vertannes – and the expansive IATA cargo agenda, which includes modernisation, which he has been tasked to implement.

“We need to reassert ourselves. If we don’t believe in our product, then others will not. This is where Des and Ram (Menen, former head of Emirates SkyCargo) were inspirational,” he reflects.

Since he took up the IATA cargo baton from Vertannes in June this year, Hughes has been jetting around the world issuing his rallying cry. “So far, it has pretty much been non-stop travel – east, west, north and south. But I consider it an incredibly big honour and a privilege to succeed Des, because he was instrumental in setting IATA cargo’s new agenda and bringing us to the market with increased relevance than previously,” he observes. “I think it is a tremendous opportunity, but equally you have to recognise the challenges going forward are pretty sizable, as well,” he adds.

He believes there are a number of key areas that IATA must prioritise over the next couple years. “I think the first thing we have to look at is the value proposition for air cargo, because this is such a broad aspect which will eventually facilitate a significant amount of change within the entire process,” he adds.

“We know that air cargo in the last four years has suffered quite a considerable downturn in fortunes versus the passenger side of the business. Passenger revenues have been up 25 per cent, while cargo revenues are down five per cent on an industry basis in that period.”

Hughes’ approach will involve taking a long, hard look at the entire end-to-end process, with a view to engaging and working much more closely with the freight forwarding and shipping communities – “to ensure we can deliver on what they need: predictability, transparency and, of course, efficiency and quality of service.”

It will not be easy, given how fragmented the supply chain has been historically, resulting in poor or non-existent communication that still spawns avoidable, costly errors, such as temperature excursions caused by pharmaceuticals shipments being left on the tarmac, or cargo being stuck in a Customs warehouse for far longer than it ought to be.

“In order for us to deliver on that value proposition, we need to have significant change in how we work together in terms of interactive and integrated processes with supply chain partners,” he adds.
“Up to now, freight moves, stops and starts, things happen, it starts and stops again. This stop-start is effectively diluting or devaluing the overall value proposition of cargo – yet our uniqueness is triple-speed and reliability,” he states.

On security, another area of global change, IATA advocates a multi-layered approach based on data and risk assessment, rather than a “broad brush invasive screening” for every consignment.

The association’s Electronic Consignment Security Declaration (e-CSD), as a means of providing regulators with information in a transparent and harmonised manner, is gaining momentum (Swiss WorldCargo went live with its e-CSDs in April).

The principles of IATA’s Se- cure Freight programme are also assisting a significant number of countries to enhance their own national air cargo security regimes.

Meanwhile, the announcement of ACC3 (air cargo or mail carrier operating into the European Union from a third-country airport) was beset with initial controversy and confusion, but its introduction last month was uneventful.
The EU has three classifications for countries: green warrants no special requirements, ACC3 rules apply for those in the white category, whilst additional security measures are required from those placed on the red list.

“ACC3 was a challenging activity prior to the July 1 deadline and we were very pleased to receive no notices of adverse impact on members, or shippers, ultimately the users of the air cargo infrastructure. We also know there is quite a lot going for-ward, because the EU member states have had quite a backlog in actually approving all the carriers’ security programmes that have been submitted for validation.”

Hughes is unable to comment on the reported impasse involving Russia’s status, “which falls outside the norm of the (non-political) area of activity that we get involved in,” he says. “I can’t speak specifically about dialogue between two independent sovereign states simply because we are not privy to the full extent of the discussions that are actually under way,” he adds.

Away from security and politics, the association appears to be doing a commendable job laying the groundwork for e-freight with the introduction of its successful Multilateral eAWB Agreement in April of last year. To date, 77 airlines and 1,099 forwarders have signed up.

In June, eAWB penetration reached 16.2 per cent (up 1.2 per cent from May), with Cathay Pacific as the carrier processing the highest number of eAWBs during that month.

“If we want to improve the process end-to-end, if we want to become seamless in how supply chain members talk to each other, then we have to talk about digitisation of the paper process,” he says. “I have been very pleased to see quite an acceleration of momentum over the last couple of months in the eAWB programme.”

Industrywide penetration is now up to 15 per cent, whilst that is still shy of the target (22 per cent) that the industry has set itself this year, it’s moving in the right direction and is moving quite sizably.

Without an expiration date on digitising processes and therefore no penalty, where is the incentive for air cargo operators such as forwarders to embrace e-freight? “This project is about the carrot. There is no stick yet,” he reveals. “But when there is significant critical mass operating e-freight processes, that’s when the business/industry stick will appear – when a shipper expects there will be no paperwork.”

Hughes is also determined to accelerate the environmental agenda during his tenure, although he admits the air cargo industry has been slow in measuring CO2 emissions and has been largely silent in the debate.

He continues to underscore how crucial it is for the air cargo industry to collaborate and become aligned. 

“Once we start breaking down silos, then the more we will speak together as an industry. You cannot innovate in isolation when you are part of a supply chain,” he concludes.

“Over the next 12 months, I would like to see sustainable growth, shippers using air cargo for the long run – not the bounce-back we had in 2010. “I would also like to see an industry that delivers on its promises, such as reaching its eAWB target.”