Delivery Time - Cargo
The air cargo supply chain is uniting to solve its common challenges
Air freight is an essential component in aviation’s success. As Des Vertannes, IATA Global Head of Cargo, puts it: “Even a volume gain of 0.5% against maritime freight would make an enormous difference to the long-term sustainability of air cargo. The sector is worth $66 billion in revenue to the airlines.”
That figure represents about 11% of global airline revenue but cargo can be considerably more important to individual airlines. About 30% of Cathay Pacific’s revenue is derived from air freight, for example.
Individual projects are making a difference to components of the value chain. But what has been missing until now is a joint effort by the cargo community to lobby governments or focus strategic investment. Realizing the potential in industry programs such as e-freight requires the participation of the entire value chain.
A year or so on from its formation, the Global Air Cargo Advisory Group (GACAG) has already created a buzz. Vertannes acknowledges that a lot of hope is being pinned on the group but believes the hype is justified. “This is the first time the industry has spoken with one voice and agreed to travel along one path,” he says. “GACAG simplifies how the industry tackles its problems. We can now look at issues from a number of different perspectives. All partners are benefiting from this broader understanding of the supply chain while regulators profit from improved feedback and a united industry position.”
GACAG unites four industry associations. The International Air Cargo Association (TIACA) forms the secretariat and carries out all lobbying efforts on behalf of the air cargo sector. IATA represents airlines; the forwarders and logistic community are represented by the International Federation of Freight Forwarders Associations (FIATA), and the Global Shippers’ Forum (GSF) will speak on behalf of shippers.
GACAG is running four task forces, each chaired by one of the four organizations and addressing a key industry priority decided at the last World Cargo Symposium: security, e-commerce, trade facilitation, and sustainability.
Relevant experts will join the task forces to ensure the correct level of detail is achieved in any discussions and resolutions.
“This is a unique project,” says Vertannes. “These four associations have agreed that this is what the air freight sector wants and we are united on how to achieve these goals.”
Security Task Force
IATA will chair the security task force as its Secure Freight program will form the basis of much of the work. This promotes a multi-layered approach to security that looks as much at the point of origin of a shipment as it does at the point of loading. There have been two successful trials in Kenya and Mexico, and the aim is to get as many states as possible to officially recognize the program.
Creating standards will form a crucial part of the work. Documentation will need to state not only who shipped what, where, and when, but also who secured the shipment and how. The task force will also study EU Regulation 859/2011, which requires a recognized audit of all airlines and agents sending packages into the EU. An independent audit program that covers all partners may limit the costs involved in this regulation.
The security task force will also fully support ICAO efforts to find ways to better manage high-risk cargo.
E-Commerce Task Force
The e-commerce task force will be guided by FIATA. Its goal is a truly paperless environment for air cargo and it will build on the progress already achieved by e-freight. A key IATA Simplifying the Business project, e-freight has reached close to 10% penetration on live trade lanes. More importantly, a lot of vital regulatory work has been done. Various approvals are in place and treaties have been amended. Governments still need to do more to actively implement and encourage e-commerce friendly procedures, however.
The e-commerce task force will focus on any obstacles to a fast-track implementation of e-freight. It will break up these roadblocks and assign tasks to individual partners such as the airlines or forwarders to ensure a speedy adoption of e-freight principles. Changing the air waybill, for example, is something airlines can do to kickstart changes in other processes further down the line.
“The future for our industry and for the individual businesses that take part in our global air cargo supply chain depends on our ability to provide the best possible service to international traders and their customers and facilitate further development of global commerce,” says Bill Gottlieb, Chair of the E-Commerce Task Force and Treasurer and Past President of FIATA. “Customers want to see actual, tangible change—no more rhetoric—and a clear shift in the way we do business.”
Trade Facilitation Task Force
Trade facilitation, chaired by TIACA, will evolve harmonization work with customs organizations. The World Customs Organization (WCO) already has a set of usable standards; the challenge is to ensure these global norms are adopted by all members of the WCO. The task force will also study how early in the shipping process advance information can be sent and the form that information should take. “Such aspirations are not new but the point to underline is that this is the first time all the relevant parties have been involved in the process,” says Vertannes. “Because GACAG comprises the four main agencies, whatever work TIACA endorses through the task force has the implied consent of IATA, FIATA, and the GSF.”
Furthering the Air Cargo Advanced Screening (ACAS) program will be equally vital for the trade facilitation task force. ACAS is voluntary and uses advance information from forwarders to target high-risk cargo. ACAS aims to establish the correct communication protocols and will encourage participation for all relevant shipments going into the United States.
The United States Customs & Border Protection (US CBP) agency invited GACAG to a meeting in early December to discuss ACAS trials. UPS has already trialed the system out of Dubai and the US CBP is now eager to see how ACAS works with a combination (passenger and cargo) carrier. “There was a genuine desire to cooperate,” says Oliver Evans, Vice Chair of TIACA and Chief Cargo Officer for Swiss International Airlines. “Both the US CBP and the Transportation Security Administration have noted that their agenda is the same as ours. They are delighted that air cargo now has a single voice through GACAG.”
Overall, the risk assessment of shipments is improving enormously and getting proof of concept for ACAS will be another step forward.
Sustainability Task Force
The GSF will chair the sustainability task force. Because the GSF has only just become a legal entity it is in catchup mode but the Secretary General, Chris Welsh, insists it will waste no time in establishing the foundations for a sustainable air freight industry.
The huge interest GACAG is creating will be respected through project transparency. A logo has already been decided upon and a website will be up and running in 2012.
“A scorecard will be presented at the next World Cargo Symposium in March 2012 in Kuala Lumpur,” concludes Vertannes. “This will explain the current picture, including any proof of concept projects that are running. It will also detail the next set of deliverables and the timeline involved. We will reconfirm the four priorities and ask if any other topics have become more relevant.”
For more information on cargo, visit www.iata.org/cargo