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IATA strives to make air cargo more competitive

By control on October 17, 2013

The International Air Transport Association called on all participants in the air cargo value chain to work together toward improved quality, increased efficiency through e-AWB and E-freight and more effective security.

These measures will improve air cargo’s competitiveness in the face of stagnant demand growth and unfavorable market developments.

Air cargo is suffering from a prolonged slump that has seen falls in yields, revenues and market share. Since 2010, world trade has grown by 12 percent whereas air cargo demand growth has been almost flat.

Cargo revenues in 2013 are expected to be US$59 billion (43 billion euros), some US$8 billion (5.8 billion euros) below the 2011 peak.

“No business or business model survives over the long term without evolving. Air cargo is being buffeted by forces for change. These include changes in the economics of just-in-time manufacturing, longer delivery lead times, innovation by alternative modes of transport and environmental pressures. In the face of these challenges, air cargo needs to work together as an industry to improve competitiveness and protect its value proposition,” Tony Tyler, IATA’s director general and CEO, said to the Air Freight Institute at the World Congress of the International Federation of Freight Forwarders Associations (FIATA) in Singapore. “By working together, we have made global air cargo safe, secure and reliable – so reliable, that it is often taken for granted. It is the unsung hero of the global economy – underpinning global supply chains and delivering products to markets. But if we are to return the business to growth, the industry must collectively embrace an agenda for enhanced quality, efficiency and security.”

IATA announced that it will work with FIATA and the Global Air Cargo Advisory Group to enhance the Cargo2000 master operating plan.

“We need to see air cargo through the eyes of our customers who have high expectations right across the value chain,” Tyler said. “Air cargo is a premium product. Customers valuing speed or a 100-percent cool chain need to be certain that their goods will be delivered on time and be handled appropriately. By working together, I know that we can generate real momentum in the race to drive up quality and reliability.”

IATA reiterated its commitment to improve competitiveness by modernizing industry processes with the E-freight program. Replacing paper process with electronic documentation will drive efficiency, quality and customer service improvements.

“E-freight will improve the competitiveness of air cargo. Delivering it is a mammoth task involving a complex chain of stakeholders, which includes governments and Customs. Progress has been slower than expected. Even the e-airway bill penetration – a critical enabler of E-freight – has only reached 9 percent,” Tyler said.
“Airlines alone cannot deliver E-freight, but we can do a lot on e-AWB. It is encouraging that the whole air cargo industry is aligned behind the target of 100-percent e-AWB adoption, and there are some excellent examples of success in markets like Hong Kong, Singapore, Seoul and Dubai. But more airlines and forwarders need to sign up.”

Governments in the European Union and the U.S. have imposed new directives tailored to managing air cargo’s security risks.

An example is the EU’s ACC3 regulation. By July 1, 2014, all carriers transporting goods into the EU from selected non-EU countries will need to have their operations from those states independently validated in terms of security.

“My message to the airlines, ground handlers and forwarders is two-fold,” Tyler said. “First, make plans to get validated as soon as possible. Second, look for areas to cooperate. There is only a limited number of validators, so it makes sense for certain markets to coordinate requests to be validated. This should maximize efficiencies and minimize costs, as well as increase the chances of the industry meeting this very tough deadline.”

He said the Cargo Agency Modernization Program will strive to make the relationship between carriers and forwarders more equal in order to resolve air cargo’s challenges to competitiveness.

IATA is developing the program with FIATA, and the proposal is expected to be announced at the World Cargo Symposium in Los Angeles in March 2014.