Recently, while speaking at the World Cargo Symposium in Berlin, IATA’s CEO Tony Tyler called for a further transformation in the airfreight industry, saying that quality of service should be its priority. Indeed, industry performance has been lackluster over the past few years. As global recessionary pressures reduced yields, shippers began seeking the shelter of other transportation modes to save money. Forwarders agree that adverse economic conditions continue to create challenges, but from our perspective, we are damn good at what we do and working harder to be even better.
Despite low volumes, airfreight continues to be a premium service, generating enormous value for shippers and significant revenue for forwarders. The sector carries about a third of global shipping volume by value, as speed and flexibility provide essential characteristics that other modes find hard to deliver. There is always room for process and quality improvement, but most forwarders believe that we are on the right track.
Forwarders also understand that we cannot ignore customer sentiment. The recent IATA survey finding that shippers rated the airfreight industry a 7 out of 10 in terms of service was a significant call to action for the forwarding industry and its airline service partners. But while we welcome new initiatives geared to industry improvement, we remain leery of solutions that advocate for a one-size-fits-all solution. Forwarding is a diverse industry that has thrived on tailored solutions to complex problems and, in the long run, rigid “standards” can stifle innovation.
An initiative announced in Berlin was the rebranding of Cargo 2000, an IATA-sponsored interest group now called Cargo iQ. Its goal is to implement a new cargo management system worldwide for the air cargo industry. Its processes include quality standards and a system of measurements focused on improving air cargo efficiency.
We at the Airforwarders Association applaud the hopefully new-and-improved Cargo iQ as the program focuses on worthwhile goals, such as:
- cutting operational costs by reducing door-to-door air cargo processes from 40 to 19;
- dividing export forwarding, air transport, and handling to just seven steps each; and
- reducing import forwarding to only five levels.
The program depends on electronic data interchange transmissions between the parties, called “milestones,” to keep track of progress throughout the shipment process.
But while the former Cargo 2000 provided an ambitious roadmap to service performance quality, participation waned as its complexity and expense seemed reserved only for the privileged few possessing the manpower and financial resources able to afford its steep price tag. Hopefully, the new Cargo IQ addresses this challenge with a more reasonable pricing structure for smaller forwarders wishing to participate.
The new Cargo iQ will probably need to address market realities all too familiar to forwarders, who understand that punctuality is often more important than speed itself. When dealing with heavyweight shipments, for example, most successful forwarders work to understand their customer needs, shipment characteristics, an array of routing options, and a raft of other factors, then work to set realistic expectations. For instance, a skid picked up on Monday afternoon in Omaha, destined for Frankfurt, arrives in Chicago on Tuesday morning, where the pallet gets screened, built, AES-filed and tendered to the airline. The cargo hopefully makes a flight that evening for arrival in Frankfurt on Wednesday morning. But customs clearance and recovery may take a day, so forwarders must allow for delivery on Thursday if the consignee’s schedule coincides with the cargo’s arrival. If not, a mutually agreeable acceptance time may push the delivery to Friday. Are four days from Omaha to Frankfurt slow service? In this and many cases, not if it meets customer needs and expectations, in which case the forwarder is providing punctual service when the client expects it.
During his speech in Berlin, Tyler questioned why cargo has not seen the same transformation process experienced in the passenger business, with developments including e-tickets, bar-coded boarding passes, airport self-check-in kiosks and in-flight wi-fi. We agree that electronic sharing of shipment information has been slow to occur, and if Cargo iQ is to be a benefit to forwarders, a way to electronically transmit milestones, as well as meeting external security and e-commerce demands, will be required. But be careful when comparing passenger to cargo processes since differences outweigh similarities.
Forwarders achieve their success through personal interaction with customers, often viewing technology as a tool but not an overall solution to complex shipping challenges. Some customs organizations outside the U.S. still demand original paper for clearances, and even the airlines are not on a common, unified platform necessary to complete electronic transactions. This inconsistency may be why electronic airway bill adoption rates have been slow, as forwarders see a benefit to the airline but struggle to understand its value to them.
Also, the passenger e-ticket had a target by which all carriers had to comply. In the absence of an absolute deadline, and financial uncertainty, why would forwarders rush to make technology investments with such an unsure return on investment? Still, electronic sharing of data is coming and, as with wi-fi service on planes, there is more work to be done.
As an industry, forwarders and their airline partners can always improve our business, but the first step begins with open and honest dialogue acknowledging that personal service and process improvement starts with communication. Technology is a tool that is bound to make us more successful but will never replace the face-to-face meeting and a handshake.