- Dr. Lam Pin Min, Senior Minister of State, Ministry of Transport and Ministry of Health, Singapore
- Mr. Goh Choon Phong, CEO, Singapore Airlines
- Distinguished Guests, Ladies and Gentlemen
Good morning and welcome to the 13th World Cargo Symposium. I would like to begin by thanking our host, Singapore Airlines, for their support for this event. Choon Phong and all his team have made us feel very welcome.
We are meeting at a challenging time for the air cargo business.
To begin with, key performance numbers are not moving in the right direction. After a decade in the doldrums, air cargo had an amazing 2017, with 9.7% growth.
Extraordinary circumstances in the re-stocking cycle supported that boost. That situation gradually faded over the course of 2018. The industry finished that year with 3.5% growth.
Last week, we had our first look at what 2019 holds in store. Freight traffic actually contracted 1.8% in January. So there is already a gap between that and our projection of 2.0% growth this year.
Our Chief Economist, Brian Pearce, will outline the headwinds that the business faces in his presentation later today. I will begin by looking at the political situation.
Developments in the political climate are (also) not going in our favor. This is cause for deep concern. Protectionism, trade friction, BREXIT and anti-globalization rhetoric are part of a genre of developments that pose real risk to our business…and broadly across the economies of the world.
As you may know, I call aviation The Business of Freedom. That is a big statement. And it is absolutely true.
We bring people together, deliver 35% of global trade by value, foster commerce and make the world a smaller and more accessible place.
As such, aviation is closely linked to most of the UN's Sustainable Development Goals. And it is a vector of globalization which has lifted a billion people from poverty since 1990.
The theme for this conference—Enabling Global Trade—is a direct reference to this. With borders that are open to people and to trade, I am fully confident that aviation will be a powerful force for an even more inclusive globalization.
With that in mind, and as leaders of the air transport industry, we need to be a strong voice reminding governments of three key points:
- The work of aviation—including air cargo—is critically important;
- Trade generates prosperity;
- And there are no long-term winners from trade wars or protectionist measures.
Governments seem to understand this in crisis situations.
- Press reports attribute the end of the political deadlock that shut the US government at the beginning of the year to the realization that aviation would be impacted.
- We are seeing something similar with BREXIT. The UK and Europe have prioritized the continuation of air connectivity regardless of the conditions on which the UK leaves the EU. Now we need to convince the governments to extend that concern to customs facilitation. Critical medicines, supply chain components, and time and temperature sensitive products must not fall victim to poor contingency planning.
It is understandable that aviation gets the attention of governments when connectivity is threatened. But that is not good enough.
The value of aviation needs to be continually recognized. And that should stimulate governments to ensure a business environment and regulatory framework that allows aviation to do business safely and efficiently each and every day.
What do we need most from governments? The short answer is global standards consistently implemented and enforced when necessary.
In terms of facilitating trade and the good work that aviation does, the universal ratification and effective implementation of three international agreements is critical. These are:
- The World Trade Organization's Trade Facilitation Agreement
- The Montreal Convention 1999 (MC99)
- And the revisions to the Kyoto Convention of the World Customs Organization.
Together, they make trade simpler, cheaper and faster. And we encourage all governments to adopt them because we all prosper in a more efficient trading regime.
The most critical manifestation of the importance of global standards, however, is for safety and security. Keeping our passengers, crew and cargo safe and secure is the top priority.
The recent tragic accidents of Atlas Air and Ethiopian Airlines are reminders that the quest for zero accidents and zero fatalities in aviation continues.
Our thoughts are with the family and friends of those affected by these and all accidents. And our efforts remain focused on making flying even safer and more secure.
With respect to the safety of air cargo, transport of lithium batteries is the most topical issue.
If properly labeled and packaged, they can be shipped safely. And the global standards for this are stipulated within the ICAO Technical standards and codified in the IATA Dangerous Goods Regulations (DGR).
IATA's DG AutoCheck product even enables checking to facilitate compliance between what is in the Shippers Declaration for Dangerous goods with the DGR.
The problem is that the global standards are being ignored by rogue shippers. And governments are not enforcing the rules.
In some cases, we see more effort going into stopping counterfeit production of Louis Vuitton bags than lithium batteries. Both need attention. But lithium batteries are a safety risk. And we need governments to do better at enforcement.
Another issue with global standards is harmonization—so they work together efficiently. The Pre-Load Advance Cargo Information (PLACI) initiative will certainly help secure the supply chain.
So we are supportive of its implementation in the US and the European requirement for it from 2021. PLACI standards are laid out already in the well-established World Customs Organization Safe Framework.
Governments must ensure that the two work together seamlessly.
Global standards are not just the responsibility of governments
The industry has a role to play in developing standards and ensuring their implementation. But when I look at the way that air cargo works, I worry.
We live in a world where business success is driven by data and speed. But many of our processes still use paper, phone and fax. And when we do use digitized data, the quality is often poor and there is an overall absence of common data standards across the value chain. This is not sustainable.
Our 2017 Annual General Meeting unanimously adopted a resolution to modernize air cargo. This included the digitization of the supply chain and using data to drive improvements in operational quality.
In other words, there was a recognition that we need to get better at using data to power the business. And that makes a lot of sense.
- To start, the biggest growth areas are in cross-border e-commerce and special handling items like time and temperature- sensitive payloads. Customers for these products want to know where their items are and in what condition at any time during their transport. That requires data.
- Second, the size of the industry is expected to double over the next two decades. The system is bursting at the seams now. With double the volume, we simply cannot survive with today's processes, let alone satisfy customers.
I would like to review four areas where we are working towards a digital vision:
- The first is global implementation of the e-Air Waybill (e-AWB). The pace of implementation is slower than anybody would like, especially our customers. More than a decade into the initiative, we are at 61% penetration.
The good news is that we have achieved critical mass. We are now amending resolutions and recommended practices to make e-AWB the default on enabled trade lanes.
- The second is universal adoption of a common language—the Cargo XML standards. If all the supply chain speaks the same language, efficiency improves. It makes perfect sense. Adoption is progressing—increasingly among custom authorities—but there is more work to be done.
- Thirdly, we are pursuing the idea that all the stakeholders in the supply chain should be able to directly access shipment data using modern web standards—the ONE Record program. It is still early days, but there is cause to be optimistic. Just two days ago, the first standards for end-to-end supply chain data connectivity were agreed.
- And lastly, through the Cargo iQ program, we are using performance data to drive quality improvements and to understand where there are opportunities for value-adding service adjustments.
These are big projects. And they are moving us in the right direction. So that is good.
But the speed of the transition is not keeping pace with evolving customer demands
The growth of e-commerce is exponential. And the demands of shippers who entrust us with their most valuable cargo are ever increasing.
There are innovations—some realized through our own Innovation Awards. I can give you two interesting examples:
- Cool chain dollies to keep pharma products at a constant temperature during trans-shipment;
- Sensors, analytics and digital data to respond dynamically to market changes during shipping.
We are also working on processes to improve the quality of our special cargo handling. The Center of Excellence for Independent Validators (CEIV) concept is already helping to ensure the effective and efficient handling of pharmaceuticals and live animals. And today we are adding perishable goods to the portfolio.
But, even with these examples, I doubt that anyone in this room can raise their hand and truthfully say that air cargo as a whole is ahead of the curve on innovation with speed.
Take e-commerce, for example. The speed with which it has grown has devastated the retail world. In North America, famous brands like Sears and JC Penny have almost disappeared. They were pioneers in catalogue sales, but they could not get their head around the e-commerce world.
Is air cargo doing any better? Customers expect end-to-end track & trace, reliability in delivery time, smooth cross-border operations; and so on. Are we satisfying or disappointing the market?
Another example where urgent innovation is needed is the facilities we use.
The e-commerce world is looking for fully automated high-rack warehouses, with autonomous green vehicles navigating through the facility, and employees equipped with artificial intelligence and augmented reality tools. The average cargo warehouse today is an impressive sight. But there is a huge gap to fill.
The problem is not technology. The problem is the speed to market.
Taking years to develop a standard and then years more to implement it is not a winning proposition.
We started talking about e-AWB when Nokia and Motorola were on top of the cell phone market. Blackberry phones came and went. And smart phones in general have revolutionized our lives in little more than a decade. How much has the air cargo world changed over the same time period?
I know that it is exceptionally tough to drive change in a global industry with a huge number of stakeholders and where safety is top priority. But it is not mission impossible. And in this room, we have the leaders who can make it happen.
My challenge to you is to use this conference as a springboard to find ways of driving the digital agenda with much greater speed.
Business of Freedom
I am an air cargo optimist. Our world is full of possibilities to connect far-flung businesses to global markets.
Enabling Global Trade is a mission of great importance. It helps economies to grow. And in doing so, it promotes better livelihoods and a better quality of life for real people in every corner of the planet.
As an industry, we have a responsibility to keep pace with the demands of our customers for modern, efficient and global cargo connectivity.
And we have a very solid basis to call on governments to deploy and enforce the global standards that we need to operate safe and efficient businesses, to abandon protectionist temptations and to keep borders open to people and to trade.
Nothing should stand in the way of air cargo delivering its unique contribution to the prosperity of our world. It is an integral part of the Business of Freedom.
I wish you a very successful conference.