Harnessing the power of e-freight
Technology is making the world an easier place to live in. The need is to understand and embrace it whole heartedly. For the air cargo sector, e-freight carries the same potential. It allows for online track and trace functionality and can reduce the industry cycle time by an average of 48 hours.
In 2016, airlines transported 52 million metric tonnes of goods, representing more than 35 percent of global trade by value but less than 1 percent of world trade by volume. That is equivalent to $6.8 trillion worth of goods annually, or $18.6 billion worth of goods every day. The figures very well explain why air cargo is vital to the health of world economy.
However, the sector is capable of contributing much more with a little help of technology and innovation. A more efficient air cargo ecosystem could improve profitability for carriers and also enhance transparency and predictability across the supply chain. Much of the key requisites like faster transit times, greater reliability, and improved visibility can singularly be solved by e-freight.
Accelerating the digitization of business processes
While the air cargo industry was struggling with paper-based complicated processes that caused bottlenecks in the supply chain, digital innovations offered a much simplified solution, wherein all the required information is exchanged electronically between the parties, both industry to industry and industry to government. This alternative, widely known as e-freight initiative gave the sector an opportunity to do away with at least 30 documents that were generated and needed by the various parties involved, in order to process cargo by air.
Launched by IATA in 2006 as part of the Simplifying the Business Program (StB), e-freight became an industry-wide initiative involving carriers, freight forwarders, ground handlers, shippers and customs authorities. The roadmap outlined a shared end-to-end industry approach with clear leadership roles, around three core components, or "pillars": engaging regulators and governments worldwide to create an ‘e-freight route network’ with fully electronic customs procedures; working collaboratively within the cargo supply chain to digitize the core industry transport documents, starting with the air waybill and; developing a plan to digitize the commercial and special cargo documents typically accompanying airfreight today, in or outside of the ‘Cargo pouch’.
The goal is ambitious with complex legal, regulatory, technical and business process components. Difficulty also arises because the air cargo industry is still affected by outdated technology, poor data, and limited information sharing.
Bart Jan Hasbeek, Business Development Manager e-cargo, CHAMP Cargosystems thinks the industry player’s approach towards e-freight should be more aggressive. “I think it should be more aggressive. At the moment it’s the carrot approach, the stick approach like making something mandatory we haven’t seen. Some airlines are doing it in some markets but not across the board,” he said.
During the 11th World Cargo Symposium in Abu Dhabi, held in March, IATA once again called on the air cargo industry to abandon “convoluted” paper-based processes in order to better serve its customers. Speaking at the symposium, IATA Director General and CEO Alexandre de Juniac said that the expansion of e-freight has been a positive force that has supported the industry growth. De Juniac also cautioned the industry to listen to its customers, especially when it comes to e-commerce and the shipment of time- and temperature-sensitive goods. He said most customer complaints come in two areas- frustration over “complicated and convoluted” air cargo processes and the lack of “high-quality, cutting-edge services.” According to IATA, e-freight can eliminate more than 7,800 tonnes of paper documents, the equivalent of 80 Boeing 747 freighters.
Benefits e-freight offers
E-freight provides an open platform system where information from all stakeholders in the supply chain is seamlessly integrated and is accessed by all, which helps in reducing or eliminating wasteful information re-entry and boost transparency. It allows one time electronic data entry at the point of origin and reduces delays to shipments due to inaccurate or inconsistent data entry.
“E-Freight is all about electronic messaging across the service chain. Our event-based software system provides the visibility of information in real-time to all members of the cargo chain. We can communicate using legacy CIMP messaging or a more recent C-XML Messaging to support robust facilitation of paperless documentation across a range of documents. We provide automatic e-pouching and provide unlimited storage facility on the cloud. All e-freight requirements are available, as long as the partners can communicate electronically,” says Jay B. Shelat, executive vice president, sales & marketing, SmartKargo.
SmartKargo, which is a provider of cloud-based IT software, for the management of sales and operations of airlines, is getting an encouraging response from the industry and has grown from 3 to 14 airlines in the past 4 years and has helped the carriers to remain compliant with IATA standards. “SmartKargo has a variety of tools built-in to assist revenue enhancement. A simple example is automating the dimensioning process, which right off the bat arrests revenue leakage due to incorrect capture of volumetric weight. Real-time Capacity Planning, Efficient Hub Control mechanism, and optimization of ULD buildup process are some of the features the product offers. In addition to these advanced features, a very simple single screen environment for our entire process allows all users to access same set of information—from booking through acceptance, build, flown, delivery and invoice. This avoids any leakage, and more importantly, eliminates waste in terms of time by eliminating steps and streamlining the end-to-end process,” explains Shelat.
Born in the ‘Cloud’
Air cargo industry experts note that innovative carriers are transforming themselves into data-driven businesses that are responding dynamically to market changes, using cloud, sensors, analytics and digital business. This is creating a fast-growing gap between leaders and the rest. The willingness to invest and migrate from legacy IT systems to cloud-based computing is definitely there, according to them. “When you talk about investment – if one does the math – it’s far more efficient to deploy and use a cloud system. No hardware to buy. No software to buy. It’s all pay per use Software as a Service and the solution pays for itself,” says Shelat.
Cloud solution makes setup, implementation and customization quicker and affordable. However, there is a concern regarding the safety of the data that is lying with the software. Technological experts say the most obvious way to keep the data safe is through encryption, both while the data is in transit and while it is "at rest" on the cloud servers. Customers can choose to control their own encryption keys as well as set the rules for who can and can't access the data or applications. Cloud platforms have invested heavily on infrastructure, particularly on design and operational security; encryption; and identity and access management. For instance, the amount of security built in Microsoft Azure Cloud is far more in comparison to what a data center or an in-house system can provide. Microsoft leads the way with a USD 10 Billion + investment in infrastructure.
E- Air Waybill
A key element of e-freight is the market adoption of the e-Air Waybill (e-AWB), which will replace the paper waybill. Enthusiasm is widespread for advancing the use of electronic documentation that would help in getting rid of paper documents and the hassles surrounding it. Global penetration for e-AWB has nearly reached 50 percent and the industry is targeting 62 percent by year-end on enabled trade lanes. Industry players feel the need for more operational procedures to get the most out of the initiative.
“The e-AWB is the first step in the process towards e-Freight. Personally, I feel that most people that work in our industry see the value of digitalization but operationally we need to make more progress with governments as to assure its acceptance. The technology is there but we are still lacking the operational procedures to get the most out of this initiative,” says Eric Hartmann, vice president, SkyTeam Cargo. The global cargo alliance comprising 20 member airlines has been persuading its members to adopt 100 per cent e-AWB implementation. “On e-AWB authorized routes, it has not been difficult to gather interest from the cargo community. The challenge is to have more routes in the world authorized to document digitally,” says Hartmann.
The International Air Transport Association also feels that they have started gaining trust of the players. Interest in IATA's electronic air waybill (e-AWB) project is particularly high. “I have really been fascinated and encouraged by the change in discussion. A few years ago, when we used to make a presentation on the topic of e-freight or e-AWB, quite often people would say ‘why should I do it, what’s in it for me?’ We had to spend a lot of time within the industry to actually share and promote best practices, best case scenarios, business cases etc. The topic then changed to ‘How can I do it?’ That’s when you start to see the take off of the e-AWB penetration really moving rapidly. Now the statement is ‘let’s just do it’,” says Glyn Hughes, Global Head of Cargo, IATA.
Members of the SkyTeam Cargo have shown immense interest in taking up the e-AWB as a key component of their overall package to customers. “Our focus has been to meet and surpass IATA’s targets for e-AWB usage. During 2016 the target set by IATA was 56 percent on e-AWB authorized routes. We surpassed this as an alliance by reaching 60.1 percent in December while the rest of the market only reached 48.9 percent. This shows our members push to embrace technologies that will make the process of sending air cargo more efficient. This year IATA has set the target for e-AWB penetration at 62 percent a number we feel our alliance members will greatly surpass,” says Hartmann.
The possibilities created by internet and new technologies like cloud computing have shown way to myriad opportunities for the air cargo sector. E-freight has the capability to significantly increase productivity by freeing up manpower that can be redeployed for other essential operations and by facilitating just-in-time freight as different stakeholders can analyze the electronic data simultaneously. And amid growing concerns over environment, e-AWBs mean a lot less paper used, making it a much more environmentally-friendly process.