ANALYSIS: Paperless system to revolutionise air cargo

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A major hurdle has been cleared from the path to IATA's goal of modernising the air cargo industry through its e-freight programme by eliminating paper documents, with the multilateral acceptance of its electronic air waybill.

Agreed in Doha in March and set to be approved by the US Department of Transportation, the electronic waybill  called the e-air waybill by the association  is the most important transportation document in air cargo, says IATA.

"It's the contract between the airline and the shipper for transporting its freight; we're trying to remove the paper document and convert it into electronic format in a similar manner to the e-ticketing evolution that was embraced [by passenger airlines] in 2006," says IATA head of cargo Des Vertannes.

He says bringing the project to the attention of airline chief executives is a priority, "so it remains on their radar for the rest of the year".

With adoption of the e-air waybill in all enabled countries  where policy allows for electronic commerce  planned to be completed by 2015, Vertannes says the target for the end of 2013 is adoption in 20% of those countries. "We are outlooking very close to that level," he says.

He adds that while IATA's statistics for March suggest adoption has only taken place in 8% of countries, he is confident the 20% target will be achieved by the end of the year because a number of barriers that prevented it happening in 2012 are no longer hindering progress.

Foremost among these is the multilateral agreement ratified by the cargo services conference in Doha at the World Cargo Symposium. "What this agreement facilitates is a single contract being signed between the parties with IATA. That allows them to then transact electronically on any lane in the network," says Vertannes. Prior to the agreement coming into force, he says, "every party had to sign a bilateral agreement for every single lane in which it wanted to transact electronic commerce".

Now, he says, "they just sign one agreement and register it with IATA, the other party does the same and they can start transacting across the world on any network and any airline that offers the e-air waybill capability and the same with the forwarder". The impact of this simplification will "revolutionise the air cargo industry", says Vertannes.

Another barrier that impeded progress in 2012 was the global economic climate, which, he says meant a limitation on focus and resources being put into the project.

"Capital investment for any IT upgrades were deferred, while in some instances the customs regimes were not adapting quickly enough to accept paperless documentation," he says.

What has changed their behaviour "is the fact that they are wanting electronic data or risk assessment and for tighter border control", says Vertannes. "In exchange for wanting the air cargo industry to provide advance electronic information, they've had to facilitate the capability and thereby accommodate the e-air waybill as a means to receive such information."

As a result of the stagnation of the global economy, Vertannes says there has been evidence of what he calls "modal" shift in air cargo, with goods that would normally be going through the air freight supply chain being diverted to shipping by sea as consumer confidence and purchasing slowed.

"What IATA is trying to do with our electronic vision, our electronic trading vision, e-freight vision and e-air waybill is to try and introduce greater efficiency and reduce cost, thereby making air cargo more competitive in the future."

To do this, he says IATA must hit "its 20% target for adoption this year first and foremost", and that for this to happen, "all the airlines and all the key participants such as ground handlers [and] custom authorities in all the key markets must begin adopting the e-air waybill".

"What we're suggesting is that the rest of the world follow the example established by four particular markets that are leading this game-changing evolution," he says, citing "Hong Kong, Singapore, Dubai and Seoul, with their respective carriers Cathay Pacific, Singapore Airlines, Emirates and Korean Air".

He asks for other carriers to "adopt the same philosophy and practices and ensure their home hubs have the capability of handling electronically data shipments".

Finally, Vertannes asks that for the home carriers in countries such as Russia, Indonesia, Sri Lanka and Vietnam, the governments of which have not signed up to the treaty allowing electronic trading to take place, to assist IATA's efforts to help them join. "It's all very well if we go to governments, but they listen to their national brands," he says.