The head of the International Air Transport Association (IATA) has called upon the entire air cargo value chain to rebuild the air cargo industry by focusing on e-commerce, quality and security to help drive the recovery from last year’s devastating effects of the global economic meltdown.

“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 annual IATA World Cargo Symposium, held last month in Vancouver.

It is vital to drive efficiencies and improve competitiveness by supporting IATA’s e-freight initiative, renewing a focus on its Cargo 2000 quality initiative and supporting its Secure Freight programme, urged Bisignani.

The global recession continues to challenge the global air cargo industry, he added noting 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 per cent higher than the low point seen in late 2008, according to IATA figures. But these numbers, while providing much needed relief for the air cargo industry, are still three to four per cent below the early 2008 peak level. There are however new signs of yield increases on specific routes and regions, with Asian markets continuing their strong recovery.

“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.

Indeed the issue of capacity is foremost on every carrier’s mind as the industry is expected to take delivery of 50 freighters in 2010 and the wide-body fleet overall looks to expand by four to five per cent. And this, while a significantnumber of the 160 freighters parked last year have yet to return to service. Agood number will never return to activeservice simply because they no longeroffer the efficiencies today’s environmentdemands.

E-freight high on agenda
A key agenda item for IATA is its e-freight programme which has been a long, up-hill struggle for the global carrier association. It’s persistence appears to gradually be winning the day with the number of e-freight stations growing substantially, although volumes are still disappointingly low.

In as much as acknowledging this, IATA’s senior vice president for industry distribution and financial services, as well as interim global head of cargo who acted as Symposium chairman, Aleks Popovich, reprimanded a good portion of the industry for not getting onboard. “Some of you are on the train, others are still standing on the platform looking at your ticket. It’s up to you to get moving,” he said.

“To remain competitive, the air cargo industry has to address its long standing issues of efficiency, quality and security. The customer expects it,” Popovich said. “This year is a critical year for the development of IATA’s e-freight and Cargo 2000 initiatives to drive paperless transactions and quality standards within the industry.”

But painting an optimistic stroke on the issue, 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 eliminateUS$4.9 billion in costs across the air cargo supply chain,” he said adding thate-freight volumes increased five-foldin 12 months, but did not specify theperiod.

“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 and territories and at over 100 airports. So far, 16 of a planned 20 air cargo documents have been converted to electronic format.

IATA plans to convert a further four documents to electronic format and add 20 countries to programme this year. This will give air cargo carriers the “capability” to remove 64 per cent of the paper from the system and cover 80 per cent of international shipments, IATA said. “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 air waybill (e-AWB) – the key document of air freight – 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 air waybills is being trialled by three airlines and 11 freight forwarders, according to IATA.

The e-AWB standard has been filed with governments around the world for approval and in early March the US Department of Transportation gave its important endorsement for the new standard.

But Bisignani highlighted that besides removing paper from the shipping process to improve efficiency, this year will also be a critical year for security, in large part because the US requirement for 100 per cent screening of cargo carried on passenger aircraft will come into effect in October.

“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, according to IATA.

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.