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Commerce 2.0: cargo's push toward paperless.

It was the declaration heard 'round the world: Instead of advocating for an all-at-once method regarding e-freight implementation, the International Air Transport Association announced in March that it would hone in on what many in the industry deem a more feasible goal, pushing for 100-percent e-air waybill implementation by 2014. Although the airway bill is only one document in a shipment--consignments can require up to 30 documents--it's arguably the most important one. And eAWB advocates say that digitizing them can reduce errors associated with rekeying the same data multiple times; it also helps prevent the falsification of information. But from a total e-freight perspective, paperless air waybills are only a small piece of the puzzle.

Tim Scharwath, executive vice president of air logistics at Kuehne + Nagel, says the eAWB is an essential document, but he believes the true value for freight forwarders is in full e-freight implementation. After all, Scharwath explains, forwarders utilizing eAWBs still have to carry pouches for other documents, such as packing lists and deliveries. "Therefore," he says, "we think it's okay to put an emphasis on eAWBs, but it's not really the real deal."

Despite setting a new benchmark for e-commerce implementation, IATA holds a similar viewpoint, Des Vertannes, the association's global head of cargo, maintains. A key misconception, he says, is that IATA has shifted its focus away from e-freight. Not so, Vertannes asserts.

"We are simply progressing the goal through areas we can most influence," he says. "Because of its central role in the cargo transportation process, we see the eAWB as a natural first step toward a full paperless industry." Vertannes says eAWB facilitation familiarizes industry stakeholders with defined paperless procedures, establishes electronic links, and promotes accurate data quality, "which all contribute and catalyze the removal of other documents in the e-freight scope."

The full implementation of e-freight remains IATA's top objective, however, with the association citing December 2015 as the industry's latest deadline for going paperless. Still, Vertannes says IATA is reviewing the feasibility of this goal with its partners from the Global Air Cargo Advisory Group, the coalition encompassing IATA, The International Air Cargo Association, the International Federation of Freight Forwarders Associations (FIATA) and the Global Shippers' Forum.

Bill Gottlieb, chairman of the GACAG E-Commerce Task Force and former FIATA president, isn't convinced that the industry will hit IATA's targets. For starters, Gottlieb says, IATA's goal of total e-AWB implementation by 2014 is rather aggressive. "It would be nice to assume that it would be ready by then, but I think it will take a bit longer than that to see usage reaching a fairly high level," Gottlieb says. "E-commerce is motherhood and apple pie--everyone supports it and wants to drive its implementation, but there are significant costs involved."

Cost isn't the only barrier to e-freight acceptance. Industry insiders point to both system-integration issues and the Warsaw Convention, which mandated in 1929 that carriers must contain paper air waybills to keep their liability limits intact, as other roadblocks. Such impediments have even led some to question whether total e-freight implementation is a realistic goal or simply a pipe dream.

Digital demands

Even Vertannes, who touts e-freight as "the cornerstone of modernizing our industry," admits that the Warsaw Convention could impede progress. Although the Montreal Protocol and the Montreal Convention 1999--which both validated the use of e-documents--counteracted the Warsaw Convention, some nations haven't ratified the newer laws. It's only a small number--around 10 percent--but this is a problem, nonetheless. Vertannes points to technology as another challenge. Digitizing air waybills requires carriers and freight forwarders to have access to IT systems to facilitate the exchange of information, he says.

K + N's Scharwath cites a related issue. From a technical perspective, he says, many carriers are utilizing outdated systems, which can com promise data quality. Take Cargo Interchange Message Procedures, or Cargo-IMP, for example, he says. Because the system is 20 to 30 years old, Scharwath says it doesn't provide all the information necessary for effective e-commerce. "And it definitely doesn't make all the information as good as it should be when it comes to printing or when it comes to using the information on these e-documents," he says. Overcoming this obstacle often requires forwarders and carriers to upgrade their systems to an XML format, Scharwath says.


Stan Wright, manager of cargo systems and e-freight at Emirates SkyCargo, agrees that implementing such a change is challenging, but says the biggest hurdle to overcome is altering the cargo community's mindset. To some, the idea of going paperless seems taxing, Wright explains. But he says it's well worth it.

"Once businesses and organizations recognize the advantages of e-freight and e-commerce, greater cooperation and coordination will be seen across the board, and the process will gather pace," he says. "There is a perception that it will cost more. However, in reality, it reduces cost and increases the overall efficiency of the supply chain, which should benefit the end consumer."

Wright has witnessed these benefits firsthand, he explains. Since November, Emirates SkyCargo has utilized eAWBs on all shipments out of its Dubai hub. Wright acknowledges that the carrier was already equipped to meet IATA's 2014 deadline for AWBs--since more than 50 of the destinations it serves are e-commerce-compliant--but says the execution of this demonstrates Emirates SkyCargo's commitment to progress. "We firmly believe e-freight will become the industry standard, and those who embrace the changes first will be best placed to reap those benefits," he says.

In addition to eliminating paper air waybills in Dubai, Emirates SkyCargo has achieved other milestones in the past year and a half, Wright says. In December 2010, the freight carrier completed its first paperless flight--a Boeing 777-300ER traveling from Mauritius to Dubai--and operated its inaugural paperless freighter flight in April 2011, flying from Nairobi, Kenya, to Amsterdam.

To Wright, these accomplishments do more than show Emirates SkyCargo's fulfillment of industry goals; they put the carrier in a category of "forward-thinking" airlines and forwarders, he says.

Global initiatives

Cathay Pacific Airways was one of the first airlines to make headlines for its paperless initiatives. The carrier removed all paper air waybills from its Hong Kong International Airport hub on Jan. 1, 2011, and introduced eAWBs in Singapore and Malaysia 14 months later.

Hong Kong Air Cargo Terminals Ltd., HKIA's largest freight-handler, has also made significant strides in the push toward paperless, explains Hactl's general manager of information services, Cindy Ng. After IATA selected HKIA as one of its five pilot airports for e-freight in 2007, Hactl began defining targets for the new regime, she says. Two years later, Hactl initiated the process of rolling out its fully e-freight-enabled COSAC-Plus cargo management system. Ng calls the web-based system a game-changer for Hactl, opening up e-freight to smaller cargo agents who can't afford heavy IT investments.

"As it is, Hactl and Hong Kong are ahead of the game," she says, "but we all have a very long way to go." After all, she says, change takes time and energy--but it's a fruitful pursuit. Ng reveals that Hactl is currently enhancing COSAC-Plus to enable freight forwarders to submit house and master AWBs directly into carriers' systems.


Without progress, Ng fears that the airfreight industry will suffer. "The industry is lagging behind the business sectors it serves, and that makes us very vulnerable," she says. "Airfreight must collectively change its attitude to this technology." It's sink or swim, Ng says: "If you do not adapt, extinction is the penalty."

Vertannes holds a similar viewpoint, explaining that achieving full eAWB utilization--and eventually, e-freight implementation--will require a sea change in the airfreight sector. Still, he points to significant strides around the globe, including Russia's cross-governmental initiative to implement e-freight and China's "real dialogue with authorities, which we believe will translate into practical steps in 2012." The U.S. has also made immense progress in the push toward paperless, Vertannes says, with e-freight for domestic shipments live at most U.S. airports.

"But we must recognize these are significant changes for the state administrations," he says. "This cannot happen overnight and must align with their government's own policies and constraints, including topics like security and fiscal compliance."

IATA is currently working within GACAG on a three-pronged approach to e-commerce. The gameplan includes expanding the e-freight route network, defining a joint roadmap to full e-freight implementation and adding new data and resources for industry stakeholders.

"At the end of the day, successful implementation remains a task for leaders from key industry players," Vertannes says. Because of this, he hopes to get more shippers on board with e-commerce, collaborate more closely with regulators, and more effectively merge resources of IATA and FIATA.

The future of the entire global airfreight sector depends on it, he says.
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Title Annotation:feature focus: e-freight
Comment:Commerce 2.0: cargo's push toward paperless.(feature focus: e-freight)
Publication:Air Cargo World, International ed.
Geographic Code:7UNIT
Date:Jul 1, 2012
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