IATA has called on the cargo supply chain to battle
the current air cargo crisis by improving security, delivering a better
product and boosting efficiency.
“The industry is in crisis and nobody knows that
better than our cargo colleagues. Cargo demand has fallen off a
cliff. After a shocking 22.6% decrease in December it dropped a
further 23.2% in January,” said Giovanni Bisignani, IATA’s
Director General and CEO in a recorded message to the 700 industry
experts attending IATA’s World Cargo Symposium.
represents about 10% of industry revenues. As 35% of the value of
goods traded internationally is transported by air, air cargo is a
barometer of global economic health. “The continued decline in
cargo markets is a clear sign that we have not yet seen the bottom
of this economic crisis,” said Bisignani.
In December 2008
IATA forecast 2009 freight volumes to fall 5%. Combined with a
decrease in yields, this would result in a 9% drop in freight
revenues to US$54 billion.
“Unfortunately, the shocking
fall in demand that followed is making these projections look
optimistic,” said Bisignani.
“As we battle this crisis, we
must look for opportunities that will build our future with a more
efficient industry focused on meeting customer needs. Customers
want a good price and a great product, delivered via the supply
chain with speed and reliability. And in crisis, customers will
only get more demanding. To meet their expectations and build a
solid future for the industry, change is required,”
Bisignani highlighted three priorities for the
supply chain: security, e-freight and Cargo 2000:
Air cargo security costs continue to rise. Screening technology is
not being optimised and definitions, requirements and enforcement
vary from country to country. IATA called for a strong industry
effort to convince the US that its plans to implement 100% cargo
screening in 2010 are misguided.
“Scanning everything loaded onto the
aircraft is a waste of precious resources. To be
effective, we must identify the risks involved with a
supply chain approach. IATA’s Secure Freight strategy
focuses on a risk-based approach with shared
responsibility throughout the supply chain. Governments
must remember that this is a global industry. We need a
globally coordinated approach that looks at the entire
supply chain,” Bisignani said.
Efficiency with e-freight: In the
face of falling yields and demand Bisignani stressed that
e-freight as a key driver for efficiency and savings is more
important then ever. “Improving quality without reducing costs
will not get us far. We need to modernise the old paper-based
processes of air cargo with e-freight,” said Bisignani.
freight shipment is accompanied by more than 30 documents.
E-freight currently has the capability to convert 12 of these to
electronic documentation. Already it is operating at 18 locations
covering 26 airports.
“E-freight is not a theory. It is
working and putting in place the basis to deliver efficiencies and
cost reductions throughout the supply chain. By 2010 our target is
to have the capability to remove 64% of the paper from 81% of
international shipments. In other words, we will eliminate 20
documents and be live in 44 locations,” said Bisignani.
“To be successful, we need the
commitment of the entire supply chain to generate
economies of scale. The benefits are enormous: US$4.9
billion in cost savings for the supply chain, a 22%
reduction in shipper buffer stock, a 25% reduction in
customs penalties, an average 24 hour decrease in
shipping time and a 1% increase in market share against
sea shipments. Everybody benefits. Everybody needs to
participate,” Bisignani added.
Quality - Cargo
2000: Bisignani also called for greater industry participation of
the entire supply chain in Cargo 2000 to improve quality. “Cargo
2000 quality standards are even more important in this crisis.
IATA is committed to Cargo 2000. It is part of our recommended
quality standard. But to be effective, we need the whole supply
chain to be aligned with a common vision on how to deliver
quality. That is what Cargo 2000 is all about,” said Bisignani.
Cargo 2000 was established over a decade ago to simplify
processes by reducing 40 steps in the logistics chain to 19 and to
implement effective quality standards.
The IATA World
Cargo Symposium was held in Bangkok, Thailand between 2-5
March 2009. Under the theme of “Focus on the Customer: Delivering
in Turbulent Times,” the World Cargo Symposium looked at
how best to build a solid future for air cargo, while battling the crisis
that currently envelops the global economy.
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