Release Date: 10 March 2010
Release ID: 4574
Entire Supply Chain Must Back Industry Initiatives
Vancouver - The International Air Transport Association (IATA) called upon the entire air cargo value chain to drive efficiencies and improve competitiveness by supporting IATA e-freight. IATA also called for a renewed focus on quality via Cargo 2000 and a more effective and cost efficient approach to security with IATA’s Secure Freight program.
“We are starting to see some signs of optimism on the horizon. But we cannot rebuild on the old foundations. This recession has changed global business. To remain competitive, air cargo must improve its quality and reduce its costs,” said Giovanni Bisignani, IATA’s Director General and CEO in a message to 750 industry experts attending the IATA World Cargo Symposium being held in Vancouver, Canada.
The global recession continues to challenge the global air cargo industry. Cargo revenues were down by one quarter in 2009 compared to the previous year—the most precipitous drop ever. The end of 2009 and the beginning of 2010, however, saw a strong upturn in cargo volumes to a level 28% higher than the low point seen in late 2008, according to the new IATA Cargo E-Chartbook released today. This is still 3-4% below the early 2008 peak level. There are new signs of yield increases on specific routes and regions, with Asian markets bouncing back the strongest.
In 2009, the wide-body fleet saw utilization fall by 7% and the freighter fleet specifically is down by 160 aircraft. The industry is expected to take delivery of 50 freighters in 2010 and the wide-body fleet overall looks to expand by 4-5%.
“The recession has hit the industry hard. We have lost two to three years of growth. We are starting to see some encouraging signs with traffic volumes improving. Volumes don’t automatically translate to profits. The challenges are many, including low yields, volatile fuel prices and matching capacity to demand,” said Bisignani.
E-Freight Improves Efficiency
Bisignani highlighted the work on the e-freight agenda as a way to accelerate the recovery and improve prospects for future profitability. “E-freight has the potential to eliminate US$4.9 billion in costs across the air cargo supply chain. In 12 months, e-freight volumes increased five fold. We have come a long way but we need to spread the capability of e-freight even wider,” said Bisignani. E-freight now operates in 24 countries or territories and at over 100 airports. So far, 16 of a planned 20 air cargo documents have been converted to electronic format.
“This year will be critical for e-freight. We will convert a further four documents to electronic format and add 20 countries to program. This will give us the capability to remove 64% of the paper from the system and cover 80% of international shipments. With this capability, now is the time for customers, customs and governments to insist on e-freight as the standard way to do business,” said Bisignani.
The electronic airway bill (e-AWB) is one of the 20 documents planned for conversion with e-freight. An industry standard e-AWB that will eliminate the need to print, handle and archive paper airway bills is being trialed by three airlines and 11 freight forwarders. In addition to greater efficiency, the trials are demonstrating that e-AWB can deliver faster air freight shipments with reduced delays because the electronic documents cannot be lost or misplaced. The e-AWB standard has been filed with governments around the world for approval. Importantly, earlier this month the US Department of Transportation endorsed the new standard.
Global quality standards and process simplification are critical for air cargo. Under the IATA umbrella, Cargo 2000 is a group of over 70 major airlines, freight forwarders, ground handlers, trucking companies and IT providers. The organization has streamlined cargo processes and publishes global quality standards. “IATA e-freight can only be successful in the quality-controlled environment that Cargo 2000 is building. We need the whole supply chain to embrace Cargo 2000 as the quality standard for the entire industry,” said Bisignani.
More Effective Security
“Besides removing paper from the shipping process to improve efficiency, 2010 will also be a critical year for security. Our Secure Freight strategy focuses on a data-driven, risk-based approach with shared responsibility throughout the supply chain,” Bisignani said. Secure Freight aims to secure the supply chain by defining, auditing and registering secure operators that act in compliance with a quality assurance system. IATA’s target is US$468 million in cost savings with enhanced security through consistent standards and procedures. The first pilot is in Malaysia and there are three more planned for this year.
The IATA World Cargo Symposium is taking place in Vancouver, Canada from 8-11 March 2010. Under the theme of “Bounce Back – Rebuild for the Future,” the World Cargo Symposium is looking at building a solid future for air cargo. IATA will release an updated industry financial forecast on 11 March.
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