Ladies and Gentlemen, good morning and welcome to the 11th World Cargo Symposium. It is an honor for me to be here in Abu Dhabi and to have the opportunity to address the air cargo industry for the first time in my capacity as IATA’s Director General and CEO.

Before I begin, I’d like to thank Etihad Cargo, our host for this event. James Hogan, Etihad Aviation Group President and Chief Executive Officer and all his team are great supporters of the industry and have made us feel very welcome.

It is appropriate that we are meeting in the capital of the United Arab Emirates. The UAE has long been an important crossroads for trade between Europe and Asia. And the Deputy Director General of the General Civil Aviation Authority (GCAA) Omar Bin Ghaleb, has shared a clear vision of how that historical role continues to manifest itself. It is great to see such forward thinking at the highest levels of government on the strategic benefits of aviation to the national economy.

Air cargo is, of course, a key part of that vision. Indeed, about 14% of global air cargo passes through the Gulf countries. It is a success story in a very tough industry.

A Moment of Optimism

This World Cargo Symposium is meeting at a time of cautious optimism—which is far too rare in the air cargo industry. After several years of virtually no growth, we are starting to see demand pick up. Freight volumes began to grow in the second half of 2016. And the momentum is carrying over into this year with January demand rising nearly 7% over the previous year.

There are some positive forces supporting growth.

  • Export orders are strong. That’s a welcome development after world trade has essentially flat-lined for the last several years.
  • E-commerce, which depends heavily on air cargo, is growing at a double digit rate. The world continues to transform into a global cyber-store. Customers in the internet age are demanding almost immediate fulfillment of their orders.
  • High-value specialized cargo is also showing great potential. The total global pharma market is expected to reach $1.12 trillion by 2022, creating significant opportunity for air cargo. A substantial part of this market is the transport of temperature-sensitive healthcare goods such as cold chain drugs and biopharma products - typically shipped by air. Currently $12 billion is spent worldwide on cold chain biopharma logistics. By 2020, it is estimated that this will rise to $16.7 billion.

Of course, we all know that growth and profitable growth are very different concepts. And even though the year has started with some positive signs, we are still in a very tough business. Yields are under lots of pressure. Airlines are taking delivery of long-haul aircraft to meet growing passenger demand capacity. And each long-haul aircraft comes with a belly hungry for cargo.

More broadly, we must all be concerned about the protectionist rhetoric that is spreading. Aviation is the business of freedom. The industry is premised on borders that are open to people and trade. That is at the heart of the important role that we play in globalization. Some hold the view that globalization has not benefitted all equally. But the important role that globalization—with the help of aviation—has played in lifting hundreds of millions of people from poverty is undeniable. By value, a third of the goods traded internationally are delivered by air cargo. We can be proud of the role global supply chains play to connect developed and developing markets. And we must join forces to remind governments of the benefits of globalization.

Opportunities

We must also pay attention to what our customers are telling us. Two of the fastest growing and most profitable parts of the business are focused on meeting specific customer needs—e-commerce as well as time- and temperature-sensitive cargo. That’s proof that we are successful when we are able to understand customer needs and create products to satisfy them.

So what else are customers telling us? I hear two messages pretty clearly:

  • They are frustrated with complicated and convoluted paper-based processes that belong in the 16th century. They want simple modern, electronic processes.
  • And they want high quality cutting-edge services.

Simple modern electronic processes

Let’s start with processes.

We all travel with e-tickets. And people like them because they not only made travel easier they made shopping and buying travel easier because it can be done online. We could probably argue that the development of the e-ticket actually led to growth. That is certainly the case with the transformation in shopping habits that took place with the success of online shopping with companies like Amazon, Baidu and Rakuten.

Innovations like these cut across modern society—with the exception of the air cargo world. A single cargo shipment can require up to 30 pieces of paper! That’s a ridiculous and unnecessary waste of resources in our internet-connected world. And our customers are disappointed in the bureaucracy of our complicated processes.

Our industry is not without a vision for the transformation of air cargo’s antiquated processes. Our solution is e-freight. This is the 11th World Cargo Symposium and e-freight has been on the agenda for most editions of this conference. I am sure that for all of us e-freight is taking far longer to implement than anyone would have thought or hoped for.

But we are making progress. On one important aspect of the e-freight vision, we are close to achieving a significant milestone. Global e-AWB penetration is nearly at 50%. And the target expectation—set by the IATA Board of Governors—is to be at 62% by year-end.

It is your hard work that has brought us this far. And it will be your hard work that will eventually see e-AWB become as common as the e-ticket. IATA is doing everything that we can to facilitate and support the transition process.

  • Recognizing that e-AWB implementation is a team effort, we launched e-AWB360. Essentially the idea is to work with the entire airport community to facilitate adoption. The approach is proving popular. Already 21 airlines and many of their forwarding partners have benefitted from e-AWB360 in 21 airport communities. And, of course, the plan is to spread the program further.
  • Another example is e-AWBLink. This helps small- and medium-sized freight forwarders to create and send e-AWBs with very minimal IT investment.

As needs arise, we will find solutions that move us towards the vision of an industry with simple, modern processes. The work is fundamental and the approach must be methodical. At the same time, we must find ways to accelerate the pace of change.

High Quality Services

That brings me to my second point—that our customers also demand that we do better on quality. That’s only natural. It costs us more to provide the air cargo product. We can command a premium to cover that cost because we alone can offer speed.

Market expectations are evolving. We should not put all (or most) of our eggs in one basket—that of speed. The fast-growing e-commerce, and time- and temperature-sensitive goods markets demonstrate the need for quality. And the speed with which companies like Uber, Booking.com and Airbnb disrupted their respective industries tells us that we must constantly innovate.

I am not proposing change for the sake of change. Finding solutions to unfulfilled (or even unrealized) expectations creates value for customers. And that propels a business forward.

Innovation is happening in air cargo. For example many of you use smart GPS solutions to track the location and condition of high-value, time-critical, or other important shipments. And the use of sensors, analytics and digital data can allow us to respond dynamically to market changes during shipping.

The question is what other value can we unlock? For example, shippers today want responsive services based on intelligent systems able to self-monitor, send real-time alerts and respond to deviation. Technologically speaking, this is totally possible. The key to this and other innovations is using data efficiently and effectively. The StB Cargo program is taking the lead in pulling the various opportunities for data-led innovation together. There will be an opportunity in this symposium to hear more about StB Cargo’s five project areas.

In parallel, Cargo iQ is using data to guide quality improvements. Already the program, monitors over 150 million lines of performance data. This enables Cargo iQ members to gain a valuable insight into their own performance and that of the industry which can inspire value-adding service adjustments. By harnessing the power of data and new technology air cargo carriers can streamline their operations, avoid costs, and optimize their efficiency. If you are not already one of the 33 airlines taking advantage of Cargo iQ, I strongly urge you to join!

Partnerships

Driving change—whether it is to modernize processes or unlock value through innovation—is challenging in any industry. But it is particularly so for air cargo. We are highly regulated--so governments must be on-board with change. And we are a complex value chain, so building industry consensus is critical. In other words, to be successful we must work in strong partnerships.

With governments we have some big agenda items primarily focused on the global standards needed for an industry that does business globally. The agreement by governments through the International Civil Aviation Organization (ICAO) of the Carbon Offset and Reduction Scheme for International Aviation, or CORSIA, is a big success story.

CORSIA creates a structure for managing our carbon footprint. It comes with a cost. But it is far better than the alternative—a costlier patchwork of taxes and charges that would have been a nightmare to manage. It is an example of the important role that global standards play in our industry. Achieving CORSIA demonstrated the importance of industry unity when dealing with our partners in government.

Let me highlight three other areas where we are working with our government partners for implementation of global standards:

  • The Montreal Convention 1999 (MC99) creates a common and modern liability regime for aviation. It includes provisions for the acceptance of digital documentation by governments—a critical perquisite for the e-AWB. If countries have not ratified MC99, we cannot move forward. Fortunately, 124 countries are on-board. The aim is 100%. And the priority countries—to which we need to send a united and strong message—are Vietnam and Thailand.
  • Similarly we ask our government partners to adopt revisions to the Kyoto Convention of the World Customs Organization, which facilitates smart border solutions that reduce complexity and cost.
  • And a third request for quick implementation is the World Trade Organization’s Trade Facilitation Agreement, which will make trade cheaper, faster and easier.

In addition, we are working with governments to address the issue of rogue shippers and manufacturers of lithium batteries. The risks to safety are real. Effective global standards exist to safely ship lithium batteries. And governments, working with industry, have the regulatory framework in place to support the standards. The problem is that the regulations are not being enforced. We still see too many examples of abuse including mislabeling of batteries.

IATA has joined with partners in the battery industry, as well as with shippers and forwarders, in a joint effort to ask governments to step up and take a tougher stance. They have the power to impose significant fines and custodial sentences on those violating the regulations. We ask that they put these in place to stop the violations. And in parallel we are working to better educate the shipping community on the importance of following dangerous goods regulations.

Lastly we recently made a critical breakthrough on one of our most important industry partnerships. IATA and the International Federation of Freight Forwarders (or FIATA) reached an important agreement on a new jointly-managed IATA FIATA Air Cargo Program (IFACP). The business relationship between forwarders and airlines has evolved from its roots as an agent-principal relationship into a true partnership. And the IFACP institutionalizes that in an agreement that I am confident will create great value for the air cargo sector.

Business of Freedom

I will bring my remarks to a close by reflecting on aviation as the business of freedom—to which the air cargo industry makes a vital contribution. Every day we support the global supply chains that secure the jobs of hundreds of millions of workers around the planet. Among the important cargo that we deliver are medicines that improve health. And in times of crisis and natural disaster, the humanitarian aid we carry can be life-saving. Our work is helping people live better lives.

Let’s keep that in mind as we navigate the many challenges of our tough business and drive change needed for a more prosperous future.

I wish you a very successful conference.

Thank you