- 800 Industry Leaders Attending-

MEXICO CITY – Giovanni Bisignani, Director General of the International Air Transport Association (IATA) opened the World Cargo Symposium by laying down three challenges for the industry and governments: (1) to implement e-freight by 2010, (2) to harmonise risk-based security measures globally and (3) to take a balanced and realistic approach to the issue of the environment.

The IATA World Cargo Symposium is taking place in Mexico City and has gathered 800 of the top leaders of the US$55 billion global air cargo industry.

IATA e-freight: E-freight is one of IATA’s five Simplifying the Business projects. It has the potential to save up to US$1.2 billion by eliminating the up-to 38 documents that accompany air cargo shipments. “Cargo processes have not changed in three decades. It is time for the industry to crawl out of the technology dark ages,” said Bisignani.

“We will be up and running by the end of this year in five key locations—Canada, Singapore, Hong Kong, the Netherlands and the United Kingdom. This is IATA’s biggest challenge ever. The benefits are clear, the plan is in place, the industry is committed and we are on target to deliver, where viable, by 2010,” said Bisignani. In each of the locations, pilot projects will see the implementation of e-freight locally with the commitment of the major local carrier(s), freight forwarders and governments (primarily customs).

In parallel, IATA is leading efforts to improve the quality of data exchanged throughout the supply chain. “With up to 75% of electronic data either missing or incorrect, there is a clear need to improve,” said Bisignani. To date 17 airlines and 5 freight forwarders have joined IATA’s e-freight Message Improvement Programme (MIP), launched in January 2007. The MIP will focus on improving the quality of data contained in the Airway Bills and House Manifests while moving them to electronic formats.

Security: The challenge for security is to embed security throughout the supply chain, rather than just focusing on screening at the end. “The US is proposing 100% screening of cargo on passenger flights in three years. This is not smart, but it is expensive—US$3.6 billion over ten years. The solution is a risk-based approach that involves the entire supply chain and cost efficient technologies such as advanced canine techniques. Then we can target screening to achieve the best results,” said Bisignani.

Environment: Bisignani also cleared the air about the industry’s commitment to limiting emissions, citing fuel efficiency gains that eliminated US$1.8 billion in industry costs and up to 15 million tonnes of CO2 last year alone.

“The industry has a clear strategy to address the role of aviation in climate change. First, get the best out of new aircraft and engine technology. Second, eliminate the 12% inefficiency in global air traffic management that wastes 73 million tonnes of CO2 a year and adds US$13.5 billion to the fuel bill. Third, convince politicians that, when economic measures are considered, emissions trading is a better option than taxes or charges, provided any such schemes are harmonised globally,” said Bisignani.

The Future: IATA estimates that Air Cargo will grow at an average of 5.3% for the 2006-2010 period. Bisignani noted that the majority of the growth will be in Asia with intra-Asia routes accounting for 8.3 million tonnes of cargo (26% of the global total) by 2010. “That is good news, but it also presents challenges. China alone will account for 30% of the industry’s growth and we must work particularly hard to overcome potential infrastructure bottlenecks and IATA’s role in promoting global business standards will be critical. So much growth in one area will result in a unique challenge: how to add capacity to meet outbound peak demand from Asia, while effectively utilising the equal inbound capacity,” said Bisignani.

The Bottom Line: “The bottom line is that the industry as a whole will return to profit in 2007—US$2.5 billion globally. This is good news, but a long way from the 7-8% return that the industry must generate to cover its cost of capital. Cargo shares the industry imperative to focus on efficiency,” said Bisignani.

Full text of the speech.