e-freight incentives will get forwarders on board

At a recent air cargo symposium, outgoing International Air Transport Association (IATA) Director General Giovanni Bisignani announced the organization’s cargo agenda for 2011. The goals, he said, are to “catch up” on using technology, improve safety and security and implement quality standards.

Hopefully in the airfreight arena, Tony Tyler, Bisignani’s successor, will continue IATA’s nascent engagement with freight forwarders, especially in using technology as the most effective way to meet these worthwhile objectives.

One of the key drivers of the IATA platform is to alleviate the use of paper in air cargo transactions. The group’s e-freight initiative seeks to accomplish this goal, but has been slow in gaining traction both in the forwarder community and in several countries.

Let us be clear about the role of airforwarders in this important initiative. Forwarders understand the value of electronic data transmission as a way to possibly save money and gain cargo-handling efficiencies. Many small- to medium-sized companies have already invested significant resources toward meeting the e-freight requirements. Since forwarders control 80 percent of the shipments in the commercial airline industry, listening and responding to this group’s concerns is essential in attaining its success.

IATA’s input from the freight forwarders has been limited, as many feel that the e-freight initiative has simply failed to explain the benefits in an easily understood manner. In 2004, IATA’s late technology chief Ron Cesana compared a good speech to a miniskirt: “It has to be long enough to cover the essentials, but short enough to keep your attention.” Has e-freight failed to heed his advice and become so complicated that IATA is losing the attention of the industry?

Thus far, IATA has demonstrated its commitment to cargo in its selection of industry veteran Des Vertannes to head its cargo concentration. This seasoned pro knows the business and its people, and his upfront manner and pleasant style mean the former Etihad cargo head is just the man for the job.

Vertannes made a smart move by joining the Global Air Cargo Advisory Group, formed last year by IATA, the Federation of Freight Forwarders Association, the Global Shippers’ Forum, and the International Air Cargo Association. The group seeks to establish a vision and strategy for the global air cargo supply chain; present joint industry positions to inter-governmental organizations; and assist nation states moving to implement programs impacting international cargo trade. The group’s ambition is one that all forwarders can appreciate — developing harmonized regulatory and legislative schemes benefiting the industry.

There is no question that air cargo plays a significant role in the airline industry. IATA suggests that cargo will generate more than $60 billion of the airline industry’s $598 billion in 2011. IATA projects that by 2050, the airline industry will be handling 400 million tonnes of freight yearly. Currently, 26 million tonnes travel by air cargo, comprising 35 percent of the value of goods traded worldwide.

Only 1 percent of air waybills worldwide are currently transmitted electronically. This means that to close the gap, more cooperation is needed, especially from those nations (Thailand, Indonesia, Russia, Vietnam and others) that have been slow to adopt electronic transmission of shipping documents. Forwarders cannot be expected to invest in an electronic data transmission program that is not universally accepted by all nations.

Bisignani recently said that while most governments have legislation that accepts some form of electronic documentation, these nations must act fast or “risk being left behind.”

IATA should also begin considering the wisdom of attracting more flies with honey than with vinegar by providing incentives for forwarders to join the e-freight initiative. For example, in the U.S., forwarders arriving at the airport with pre-screened cargo by virtue of joining of the Certified Cargo Screening Program could file documents electronically. IATA carriers could reward these two time- and cost-saving measures with shipment discounts or faster processing. These incentives speed the loading and delivery of cargo, representing a value-add to the carriers and shippers.

IATA should take the lead in working with carriers to develop these incentives for e-filing.

Brandon Fried is the executive director of the U.S. Airforwarders Association.

One Comment

  1. John Henley says:
    What is the percentage that a freight forwarder will receive for a iata or direct shipment and how will that impact the percentage with e-file

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