Rome - The International Air Transport Association (IATA) called on the air cargo supply chain to coordinate efforts to drive an industry agenda for change that will improve customer service and competitiveness.
“Air cargo is a US$50 billion business that is losing competitiveness. World trade grew 7.5% last year and our growth forecast for this year is 4.0%,” said Giovanni Bisignani, IATA’s Director General & CEO. He was speaking at the association’s second World Annual Cargo Symposium attended by 900 air cargo industry leaders in Rome, Italy. “Our sea competitors are gaining market share with faster ships, lower prices and innovative solutions. And new capacity coming into the market - 200 to 300 wide bodies entering the market each year to 2011 - will put even greater pressure on yields. This is a tough business that is only getting tougher. The only way to succeed is to please the customer.”
IATA is in a unique position to lead change in the cargo industry. With operations in 72 countries, the IATA Cargo Accounts Settlement System (CASS) now handles US$21 billion annually, “IATA is serious about air cargo. Our network grew by 60% in the last four years and we have aggressive plans to expand coverage and diversify services in 2008,” said Bisignani.
Bisignani identified an air cargo supply chain agenda to please the customer based on safety, security, quality, efficiency and the environment.
Safety: “Last year there were 16 cargo accidents - 16% of the industry total. This is down from the 25% recorded in 2006 but it is still not good enough. IOSA plays an important role. 136 airlines are on the IATA Operational Safety Audit (IOSA) registry but cargo is behind with only one airline on the registry. Our goal is to bring all carriers on board by the end of the year,” said Bisignani.
Security: “Security is still a US$5.9 billion uncoordinated mess for the air transport industry. Our risk management capabilities are excellent but our stakeholders still want to treat air freight like baggage. It is not. Effective security must involve the entire logistics chain,” said Bisignani. “To clean up this mess we need a coordinated effort across the supply chain. The Air Cargo Security Industry Forum, that brings together 27 industry associations, is key to influencing regulators with a common message and coordinated action. We are working on internationally recognised security accreditation standards and a security audit. This includes a global registry of secure supply chain operators, including known shipper details to be used by regulators and the supply chain.”
Efficiency and Quality: “Shippers demand quality and efficiency. Cargo 2000 was established over a decade ago to simplify processes and implement effective quality standards from order to delivery. We simplified the supply chain process from 40 to 19 steps and developed common parameters for quality measurement. Now we need to move faster to increase Cargo 2000 participation and implementation. The key is leadership. The most successful Cargo 2000 members have dedicated quality managers to drive the programme forward. It is time now to consider giving the process some teeth with an IATA quality audit based on Cargo 2000 standards,” said Bisignani.
“Air cargo business processes belong to another age. It’s time to modernise and drive paper from the business. E-freight is the answer to our customers’ call for lower costs, improved reliability and more speed. Today e-freight is a reality in six key locations covering 10% of cargo volumes. What have we achieved? First, we replaced 12 paper documents with electronic messages and a single point of data entry. More importantly, we have proved that e-freight can work. Our target for 2008 is to expand the benefits of e-freight to another 8 locations,” said Bisignani. “But data quality is still an issue. One key benefit for e-freight is time. Fast track customs clearance with e-freight could save up to 24 hours per shipment. But we will only achieve that if data is consistently accurate.”
- Environment: “Environment is an issue the entire supply chain must address quickly and with a common goal - to achieve carbon neutral growth leading to a carbon-free future. The industry is united behind IATA’s four-pillar strategy on climate change: invest in technology; fly planes effectively; build and operate efficient infrastructure; and use positive economic incentives. Our first target is a 25% improvement in fuel efficiency by 2020. In the last two years, IATA’s efforts in shortening routes, spreading best practice and improving operations saved 25 million tonnes of CO2 emissions,” said Bisignani.
“Air cargo is a tough business. The entire value chain must be united to deliver critical solutions against aggressive targets. The priorities are clear: to provide safe and secure transport that is environmentally responsible with consistent quality and lower costs. The only way to do this is by working together with a common vision that meets customer expectations,” said Bisignani.
Notes for editors
- IATA represents some 240 airlines comprising 94% of scheduled international air traffic.
- IATA e-freight was launched in 2004 as part of the industry’s Simplifying the Business programme.
- IATA e-freight pilots were launched in six locations in 2007 - the Netherlands, UK, Hong Kong, Singapore, Canada and Sweden. Pilots cover 20 trade routes representing 10% of available volume.
- Cargo 2000 is an industry group that was established over a decade ago to simplify processes and implement effective quality standards. It reduced 40 steps in the logistics chain to 19 and agreed common standards and measurements for customer satisfaction.
- IATA has aligned the industry with a four-pillar strategy to address climate change: (1) invest in new technology, (2) fly planes effectively, (3) build and operate efficient infrastructure and (4) call for positive economic incentives to encourage improved fuel efficiency and a reduction in CO2 emissions. This strategy, along with a target to improve fuel efficiency 25% by 2020, was endorsed by the States of the International Civil Aviation Organization at their Assembly in September 2007.