In October 2010, e-freight - the project to remove all paper documents from air cargo - was given new impetus, with new targets set by IATA and the creation of the Global Air Cargo Advisory Group, a joint forum with freight forwarder and shipper bodies. Its task, among other goals, was to help drive e-freight forward. But has the re-launch worked? A year on, there are signs of hope but criticism of the project remains in some important quarters. There seems to be no lack of consensus that the air cargo business needs to embrace ways to work electronically, but there is dispute about whether e-freight is going about it in the right way.

That the adoption has failed to go as fast as expected is undeniable. E-freight launched in 2005 promising "to take the paper out of cargo" by the end of 2010. The then director general of IATA, Giovanni Bisignani, said the project had "a clear mandate from airline CEOs" and would involve 265 airlines and more than 15,000 freight forwarders. "Our approach will be methodical and fast," he said.

Five and a half years later, in July 2011, IATA figures show only 56,268 e-freight shipments globally, perhaps 2-3% of the total, with 35,817 of these being domestic shipments that should require relatively few documents. International e-freight shipments were 11% higher in July than in June, and have more than doubled in the past year - undeniable progress - but only 33 airlines and 1,658 forwarders have signed up to the project so far. IATA's target is now 10% e-freight adoption on live lanes by the end of the year - and it says it is on track to meet this target. For the electronic air waybill - the key air cargo document, analogous to the passenger ticket - it aims for 6% adoption across the entire industry by year-end, 100% by the end of 2014.

IATA cites several key successes in the past year, notably Cathay Pacific's implementation of a 100% e-air-waybill policy in Hong Kong, and carriers like Lufthansa, Air France-KLM and Korean Air on the way to achieving comparable goals. In several key locations the wider air freight community, including shippers and forwarders, is also working towards 100% adoption by 2014. Examples include the Netherlands, Singapore, South Korea and Dubai.


Those involved in these projects say resistance to e-freight can be overcome by pragmatic day-to-day contacts. For example, Saskia van Pelt, director of business development (cargo) for Amsterdam Schiphol airport, says that when different parties in the supply chain sit together, they often discover major barriers to e-freight can be overcome with ease.

"Time and time again we see in these meetings that there has been a lack of understanding," she says. "Company A has the information electronically but doesn't know how to send it electronically to party B, so they just print it out. But if you sit them down together, these issues can be identified and resolved."

Cathay Pacific also says that by working with the Hong Kong freight-forwarding community it was able to implement 100% e-air waybills in its home market from the start of 2010. It is now working on Singapore and other stations. Nick Rhodes, its director of cargo, says Cathay Pacific plans to add several stations a year during the next few years, with the next targets being Singapore, Dubai and Amsterdam. However, it is also worth pointing out there is a difference between forwarders sending e-air waybills and those doing full e-freight - sending all documents electronically. Cathay has only five e-freight-enabled stations (five stations where it is even able to handle e-freight shipments) and nine forwarders using them, although it has a target that 6% of its 35,000 monthly shipments should be e-freight ones by the end of this year.

Set against these enthusiastic adopters are the vast majority of freight forwarders still not onboard for e-freight - evident by the fact IATA records only 1,658 forwarders adopting e-freight, against its original target of 150,000. FIATA, the international federation of freight forwarder associations, says the reason for this low uptake is the project is too ambitious and requires forwarders to do too much of the work, while the benefits accrue to airlines.

On the first point, Bill Gottlieb, immediate past president of FIATA and its spokesman on e-freight, says that by trying to include the whole range of documents which accompany air cargo - shipper manifests, export declarations and so on - IATA over-reached itself and made the project unnecessarily complex.

In all, IATA says electronic standards have now been created for 20 documents, with a proof-of-concept under way for the security declaration. Gottlieb's point is that many of these documents are transmitted between shipper and consignee, and thus outside IATA's remit. "How these documents are formatted and transmitted is a matter for those parties," he says. "95% of what is in commercial documents is of no relevance to air freight, and only 10% of it is relevant to Customs clearance. Forwarders don't want to be creating those documents electronically because they will be responsible for any errors."

Meanwhile, on the document central to the forwarder-airline transaction - the air waybill - Gottlieb says e-freight puts the burden on forwarders to create and transmit it electronically, while airlines get all the benefits of lower processing costs. FIATA's solution is to no longer regard the forwarder as the agent of the airline, responsible for issuing the air waybill on the airline's behalf, but to treat it as a customer, supplying data electronically that the airline then uses to create the air waybill.


This, he says, would provide significant benefits to forwarders and be a powerful incentive to adopt e-freight. "Historically, the forwarder had to issue the air waybill for the airline because there was no time to send someone with the information to the airline office. But in the electronic age, this is now obsolete," Gottlieb says.

FIATA has been talking to IATA for some time but Gottlieb says airlines have been reluctant to change the way they do business. "So carriers expect forwarders to change but are not prepared to change themselves," he says.

John O'Connell, director - trade services for the UK freight forwarding association BIFA, makes the telling point that "forwarders are by nature entrepreneurial, and I can assure you that if they could see an opportunity to save money by embracing e-freight, they would grab it with both hands".

He accuses IATA of being the problem, suggesting airlines and forwarders could sort the issue out between them. Gottlieb says IATA "has looked to lead but been short on co-operation, simply expecting the supply chain to embrace their vision".

Asked for its views for this article, IATA said "the e-air waybill was created in conjunction with FIATA", and a paperless approach would have "benefits across the whole cargo chain, including higher efficiency, reduced costs, enhance transit times and enhanced visibility for customers". It added that "we recognise that airlines are only a part of the chain and therefore we need the whole supply chain to participate, contribute their ideas, and mobilise towards enhancing the efficiency of the industry". However, it failed to say if FIATA's ideas were being entertained or not.

For his part, Gottlieb leaves the way open for dialogue, saying there is "still a fair amount of discussion to be done". One forum for that ought to be the Global Air Cargo Advisory Group (GACAG), created last November to bring together IATA, FIATA, The International Air Cargo Association, and the Global Shippers' Forum. At the time, IATA said GACAG would have "a critical role to play" in driving e-freight adoption. Not much has been heard from the body on the topic since, however, and Gottlieb seems to see it as a parallel process to e-freight that will look at air cargo processes "from a broader perspective".

IATA says it expects to work with its GACAG partners for the rest of the year and into 2012 to "formulate the overall industry approach to e-freight and agree who takes responsibility for the various segments of the supply chain that play a role in e-freight".

A cynic might ask how this differs from the position a year ago? An optimist might point out that at least all parties now seem to agree electronic processes are a priority for air cargo. "We as FIATA would be happier than anyone if we could get the benefits of e-commerce into air freight," says Gottlieb.

"Other modes of freight transport have the same challenges as air and the same international component and customs issues, but they are way ahead in electronic processes. It is time for air freight to catch up."

Source: Airline Business