IATA appeals for cooperation to improve air cargo efficiency

Combined, these measures will improve air cargo’s competitiveness in the face of stagnant demand growth and unfavourable market developments, IATA says.

Air cargo is suffering from a prolonged slump that has seen reductions in yields, revenues and market share. Since 2010 world trade has grown by 12 per cent, whereas air-cargo demand growth has been basically flat with only a 2-per-cent increase. 

A divergent trend in passenger demand, with growth continuing in the historical range of 5-6 per cent, has complicated the situation. As airlines grow fleet capacity to meet rising passenger demand, capacity has been introduced into weak cargo markets, putting considerable downward pressure on yields. Cargo revenues this year are expected to be US$59 billion (Bt1.8 trillion), some $8 billion below the 2011 peak.

“No business or business model survives over the long term without evolving,” said Tony Tyler, IATA’s director general and chief executive officer. “Air cargo is being buffeted by forces for change. These include changes in the economics of just-in-time manufacturing, longer delivery lead times, innovation by alternative modes of transport, and environmental pressures. 

“In the face of these challenges, air cargo needs to work together as an industry to improve competitiveness and protect its value proposition,” Tyler told the Air Freight Institute at the World Congress of the International Federation of Freight Forwarders Associations (FIATA) in Singapore.

“By working together we have made global air cargo safe, secure and reliable – so reliable that it is often taken for granted. It is the unsung hero of the global economy – underpinning global supply chains and delivering products to markets. But if we are to return the business to growth, the industry must collectively embrace an agenda for enhanced quality, efficiency and security,” he said.

IATA announced that it would work with FIATA and the Global Air Cargo Advisory Group to enhance the Cargo2000 (C2K) master operating plan to measure the service promise of the industry to shippers. C2K is an industry initiative working towards embedding benchmarked quality standards across the industry.

“We need to see air cargo through the eyes of our customers who have high expectations right across the value chain,” Tyler said. “Air cargo is a premium product. Customers valuing speed or a 100-per-cent cool chain need to be certain that their goods will be delivered on time and be handled appropriately. By working together, I know that we can generate real momentum in the race to drive up quality and reliability.” 

IATA reiterated its commitment to improve competitiveness by modernising industry processes with the e-freight programme. Replacing paper processing with electronic documentation will drive both efficiency and quality improvements. It will also improve customer service by enabling shippers to have the same level of data about their shipments that they get from the integrated delivery companies, the association believes.

“Airlines alone cannot deliver e-freight, but we can do a lot on e-AWB,” Tyler said, using industry jargon for electronic air waybills. “It is encouraging that the whole air-cargo industry is aligned behind the target of 100-per-cent e-AWB adoption, and there are some excellent examples of success in markets like Hong Kong, Singapore, Seoul and Dubai. 

“But more airlines and forwarders need to sign up. We cannot build a better, more competitive future for air cargo without individual contributions and leadership,” he said.

Governments in the European Union and the United States have imposed new directives tailored to managing air cargo’s security risks. An example is Europe’s ACC3 regulation. By next July 1 all carriers transporting goods into the EU from selected non-EU countries will need to have their operations from those states independently validated as to the security standard of their cargo supply chain. 

“My message to the airlines, ground handlers and forwarders is twofold. First, make plans to get validated as soon as possible. Second, look for areas to cooperate. There is only a limited number of validators, so it makes sense for certain markets to coordinate requests to be validated. This should maximise efficiencies and minimise costs, as well as increase the chances of the industry meeting this very tough deadline,” Tyler said.