When IATA first started to seriously promote e-freight to the air cargo industry in 2005, there was more than a little doubt expressed about the project. For a start, the cargo arm of IATA's "Simplifying the Business" initiative was bound to be a lot more complex than the passenger part. In cargo there is not one document that needs to be eliminated but 30, and it is not just airlines that have to make the change but also their freight forwarder customers and customs authorities worldwide.
There was also the record of Cargo 2000, an IATA-sponsored initiative designed to improve the quality and speed of shipments, which was launched with much fanfare in 1996 but has only just started to deliver benefits, and then only to a core group of enthusiastic carriers. There was widespread expectation that e-freight would similarly get bogged down in detail.
Even in May of last year scepticism might not have been unjustified. More than three years after launching e-freight, IATA had only just completed trials among six pioneer countries and airlines. A few shipments given special treatment do not a revolution make, critics might have suggested. But in the months since, e-freight has acquired a real momentum and is starting to look unstoppable. IATA had a target of getting a further eight countries on board by the end of 2008 to make 14 in all. In fact, it has managed to boost the total to 18.
 |
|---|
The list includes most of the key European air freight markets, the USA and Canada, the United Arab Emirates, Australia and New Zealand, and three key Asian countries - Hong Kong, Singapore and South Korea. True there are still some key gaps, but the coming year will see many of those plugged. Philippe de Bruyere, head of Simplifying the Business at IATA, says Belgium, Switzerland, Japan, Malaysia and, crucially, China will join soon.
That still leaves some important holes, such as India, Italy, Thailand, all of Africa and South America, but will give e-freight a critical mass on the key Asia-Europe-US trade lanes. And with the countries come airlines - 16 of them at last count - and 31 forwarders, including big global names and local players.
Interest in e-freight even seems to be getting to unexpected corners of the industry. Royal Jordanian says it is keen to be in e-freight, and in October Leisure Cargo, an umbrella freight organisation for various European passenger charter operators, launched a solution to allow customers to send it paperless documents with e-freight compliance in mind.
All of this is music to the ears of Bruyere, who says the need to build rapid momentum and critical mass was a key learning from the passenger e-ticket project, which was completed at the end of May. "It is expensive to maintain dual processes and if you take too long to transition, you lose the attention of the market. So speed is vital," he says.
Part of the reason for the success is that e-freight has found it has been pushing at an open door in several areas. For example, far from national customs authorities being a bureaucratic barrier, many are in fact pushing for the electronic filing of customs documents in order to free up staff resources for more value-added and investigative work. Meanwhile, the advanced electronic requirements of various countries for security reasons - most notably the US, but also Canada and India with the European Union to follow in July - have focused airlines' minds on providing electronic documents.
"Customs have created the wave, and we are jumping on the surfboard," says Henrik Ambak, vice-president and head of ground services and commercial IT for Luxembourg-based cargo carrier Cargolux. For many carriers, the successful implementing of e-ticketing on the passenger side may also have focused minds. However, this does not mean e-freight is home and dry. Probe participating airlines and they admit that the volumes of e-freight shipments they are handling are small so far: globally IATA says it was about 800 shipments a week in November.
SAS was part of the original trials, but it is still only offering e-freight on a few routes - from Stockholm, Gothenburg and Malmo to Dubai, London, Madrid and Hong Kong. Oslo, Stavanger, Bergen and Copenhagen followed in November. Meanwhile, newcomer Cargolux, which went live with e-freight on 1 November, was at the time of writing only using e-freight for shipments from Luxembourg to Singapore, which Ambak admits is a tiny market. The key, he says, is to get procedures in place for transit traffic that is trucked from Frankfurt, Amsterdam or London to Luxembourg to fly on to Singapore, a far bigger chunk of the airline's traffic.
Ambak hopes to achieve this in the first quarter of 2009, as well as adding more destinations out of Luxembourg. "It is not a technical issue or a legal one - it is more procedural, a matter of change management," he says.
There also might be a question as to whether carriers who are not already members of Cargo 2000 will find e-freight so easy to adopt. Jan Vreeburg, director of operation innovation for Air France-KLM Cargo's Amsterdam hub, says the fact that it had already ironed out glitches in its electronic messaging systems as part of its implementation of Cargo 2000 made a big difference when it came to e-freight. Ambak agrees: "If we had not already done Cargo 2000, it would have been a very large development."
Freight Forwarders
There is also the fact that while airlines can prepare for e-freight shipments and open up trade lanes between all the countries that have become members, they can't actually initiate e-freight shipments. Instead, as Steen Otterstrøm, project manager for SAS Cargo, points out it is freight forwarders who have to make the effort to create and send the electronic messages. This requires them to have different processes for e-freight shipments, and in the case of three documents - the packing list, the invoice and the certificate of origin - actually scan the documents to send as an electronic attachment. File sizes for these three documents - which originate from shippers (manufacturers and exporters) and so have no electronic messaging standard - can be enormous and strain communications bandwidths.
IATA is working with shipper representatives on a solution, which Bruyere hopes will be ready soon, but some countries still insist that original certificates of origin accompany shipments. Bruyere says IATA will be launching a lobbying campaign to change this policy during 2009. He nevertheless defends the decision to include a wide range of freight documents in e-freight, rather than just the air waybill. The list includes flight and house manifests, import and export goods declarations, and customs release documents. "There was scepticism when we first suggested this, but our vision has been proved correct," he says. "Early adopters are in fact providing electronic documents for all 12 documents."
Bruyere signals that e-freight will continue to grow on all fronts - more countries, more participants, more documents. He also plans to nearly double the number of airports where e-freight is available, and to target domestic cargo in the five largest global markets too.
Much will depend on how forwarders respond in the coming year, however. There were some rumblings of discontent in September when William Gottlieb, president of global forwarders organisation FIATA, criticised IATA and the e-freight project as being out of touch with the needs of forwarders.However, airlines report the opposite: "We have been favourably impressed by forwarder attitudes, and their attitude has been very co-operative," says Vreeburg at Air France-KLM Cargo, adding: "It is not only the big ones either smaller local heroes have also shown enthusiasm as well." Ambak admits that forwarders have more work to implement e-freight, but he insists the benefits are clear to them: "They have less paper handling, less re-keying the data and so fewer errors."
Bruyere adds to that a whole list of benefits that IATA predicts once e-freight is fully implemented. These include an average one day reduction in journey times a reduction in inventory holdings by shippers once they can rely more on air freight a reduction in customs penalties and a 1% shift of cargo from air to sea. Totting all this up, IATA now calculates $4.9 billion in potential benefits from e-freight, four times its original 2005 estimate of $1.2 billion.
Most carriers insist that they will not slow implementation of e-freight because of the current economic crisis. "If you believe that a substantial amount of cost can be taken out of air freight, and if you believe that taking out paper would make air freight more competitive, then you have to prioritise it," says Dave Brooks, president cargo at American Airlines, which joined e-freight in October.
Source: Airline Business
