Air cargo industry-- strives for digital transformation
e-AWB and e-freight remain elusive for now
he digital age has radically transformed the way we live and do business today and all indications point to a gradual Tprogressive change towards more paperless transactions in the near future for convenience and speed.
Globally, retail and a host of other industries have successfully transitioned from the traditional way of doing business to doing it online or electronically. The same goes for the governments of many developed or affluent nations across the globe.
But the air cargo industry, though directly linked to the multi-billion e-Commerce industry, however, remains struggling to become e-friendly.
There is no doubt that the electronic processing of cargo transactions has clear savings in terms of time and cost for both exporters and importers, but individual country regulations and resources come into play, officials and industry experts said.
Low penetration
According to an International Air
Transport Association (IATA) 2016
research covering 135 countries, the
electronic penetration in the global air
freight industry is just 35 percent
c o m p a r e d t o t h e m a s s i v e e –
Commerce industry.
The technology-driven UAE, with its
smart government initiative, topped
the list of e-freight friendliness index
(EFFI) at over 47 percent, closely
followed by Denmark, Singapore,
Hong Kong and Sweden. South
Korea, Canada, Netherlands, South
Africa and the United States ranked
6th to 10th, respectively.
“Electronic documentation and
processing can result in shorter
delays at borde r s , l o w e r
transaction costs, and enhanced
security and reliability—all of
which can be beneficial to firms
involved in GVCs (Global Value
Chains),” said Ben Shepherd and
his team in their report for IATA
titled “Value of Air Cargo: Air
Transport and Global Value
Chains.”
The research partly covers the e-Air
Waybill (eAWB) use, disaggregated
by bilateral country corridor and
information on eFreight transactions
relative to the total number of AWBs.
“This second indicator captures a
broader range of information than just
eAWB use, including the ability to run
the whole transaction electronically.
Data are again provided bilaterally,
and are aggregated by origin and
destination country. In addition to the
IATA data, the EFFI includes indicator
2 from the Customs Capability
Database above. Weights for the EFFI
a r e a s f o l l ow s : 1 . I ATA e AWB
Penetration (35%) and 2. IATA
eFreight Usage (35%),” the report
noted.
“eFreight Friendliness as measured by
the EFFI is also an important
determinant of trade performance
a n d G V C p a r t i c i p a t i o n . A o n e
percentage point increase in the EFFI
is associated with a 2.5 % increase in
the value of trade. Moreover, a one
percentage point increase in the EFFI
is associated with a 0.3 percentage
point increase in GVC participation as
measured by the proportion of
backward and forward linkages in
total exports,” it added.
Africa, some parts of South Asia,
Southeast Asia and the Middle East
are still struggling to be digitally
smart.
Analysts said the air cargo industry
must catch up with the trends in the
digital age or it stands to lose more. In the logistics industry alone at stake is
about $1.5 trillion and a further $2.4
trillion in related industries.
Industry experts said the digital world
has entered its third phase of
revolution with the Internet of Things
(IoT)—network of smart devices,
sensors and the cloud that allow the
physical world and computer
systems to interact directly—which
will practically impact more aspects on how we live and do business.
Modernization
Vladimir Zubkov, the new secretarygeneral
of The International Air Cargo
Association (TIACA), said it is about
time to modernize the industry to
speed up the process and enhance
business in the supply-chain.
“We must also continue to push for
the modernization of the industry,
championing e-commerce and efreight
penetration and talking
convincingly to the World Trade
Organization (WTO), the United
Nations Conference on Trade and
Development (UNCTAD), regional
development banks, and relevant
regional organizations to form new
alliances in order to drive faster
and more complete adoption of ef
reight , ” said Zubkovina
statement when he was installed
to lead TIACA.
In an interview in Johannesburg,
South Africa during the three-day Air
Cargo Africa 2017 show, Zubkov said
the first thing to do is for governments
of countries to ratify the Montreal
Convention also known as MC99.
This multilateral treaty adopted in
1999 essentially calls for uniformity
and predictability of rules relating to
the international carriage of
passengers, baggage and cargo. It
also amended specific provisions in
the Warsaw Convention to do away
with paper transactions in air cargo in
favor of the electronic system.
“ It lays the foundation for an
electronic system in the cargo
industry,” said Zubkov who spent
m o r e t h a n 2 0 y e a r s w i t h t h e
International Civil Aviation (ICAO)
w h e r e h e w a s D i r e c t o r o f A i r
Transport Bureau and later Director of
Planning and Global Coordination
before joining Volga-Dnepr in 2008.
TIACA said digitalization of the air
cargo industry will essentially reduce
manual data input error, speed up
shipment cycle time, reduce loss of
paper documents, as well as enhance
efficiency and cut on labor costs.
Multi-layered cooperation
Airlines and airports agree a digital
system works better to do away with
human errors and speed up the
process.
But at issue are each country’s
customs regulations, technical
read in ess and resources to
implement the changes.
Saudia Cargo VP for Commercial
Operations Rainer Mueller said
seamless electronic connectivity
among key players like airports,
airlines, warehouses, freight
forwarders and customs are
essential to the growth of the
industry.
“Cooperation is definitely needed
to link them,” said Mueller who has
been in the industry since 1978
before moving to Saudia about six
years ago.
He said some countries have to
catch up with the technology that
more affluent countries like the
UAE and the Kingdom of Saudi
Arabia are utilizing to enhance
cargo business transactions.
Saudia Cargo is one of the biggest in
the Middle East with plans for further
expansion. Known for its efficiency
and reliability, it is also leading in
terms of using technology to enhance
its services with e-booking options
for clients.
Emirates Divisional Senior Vice
President, Cargo Nabil Sultan, for his
part said, a joint effort from all
relevant stakeholders is necessary to
move the global air cargo industry
from paper-based to digital.
“As we move into a new era oimplement the changes.
Saudia Cargo VP for Commercial
Operations Rainer Mueller said
seamless electronic connectivity
among key players like airports,
airlines, warehouses, freight
forwarders and customs are
essential to the growth of the
industry.
“Cooperation is definitely needed
to link them,” said Mueller who has
been in the industry since 1978
before moving to Saudia about six
years ago.
He said some countries have to
catch up with the technology that
more affluent countries like the
UAE and the Kingdom of Saudi
Arabia are utilizing to enhance
cargo business transactions.
Saudia Cargo is one of the biggest in
the Middle East with plans for further
expansion. Known for its efficiency
and reliability, it is also leading in
terms of using technology to enhance
its services with e-booking options
for clients.
Emirates Divisional Senior Vice
President, Cargo Nabil Sultan, for his
part said, a joint effort from all
relevant stakeholders is necessary to
move the global air cargo industry
from paper-based to digital.
“As we move into a new era of
transporting goods and services, it is essential that the regulations that
govern transport of goods facilitate
rather than hinder the flow of goods
from one location to another and the
concept of e-freight and e-airway bill
is critical in this regard,” said Sultan in
an email to Air Cargo Update.
“Digitization has been evolving at a
slow pace and continues to be a
major challenge for the air cargo
industry. It is necessary that we have a
j o i n t e f f o r t f r o m a l l r e l e v a n t
s t a k e h o l d e r s t o e n c o u r a g e
digitization which will in turn ensure
that transportation of goods becomes
seamless and efficient delivering
more value to our customers,” he
added.
In an interview in Johannesburg,
South Africa on the sidelines of the
Air Cargo Africa 2017, Group CEO
Et h i o p i a n A i r l i n e s Te w o l d e
GebreMariam told Air Cargo
Update a political will to change
the system is necessary to reach
the level that other developed
nations are now enjoying.
The state-owned Ethiopian Airlines,
the largest cargo operator in Africa, is
leading in the use of new technology
in the region.
GebreMariam said the company is
run like a private corporation though
it is owned by the government.
“We need the cooperation of each
country to change their customs
system to make digitalization happen
in the industry. We’re trying to bring
on board all stakeholders to address
this issue,” he said.
Ethiopian Cargo is one of the fastest
growing companies in the region. It is
scheduled to open a new cargo
terminal soon to increase its capacity
to 1 million tons per annum from just
600,000 tons a year.
The new cargo hub costing $115
million is envisioned to be an
important point of connection
b e t w e e n A f r i c a , E u r o p e , t h e
Americas, the Middle East and Asia
and digital transactions also play a crucial role in its success.
