TIACA ACF 2014

Workshop 2: Shredding the Paper Burden
October 7, 2014 3:30pm-5:00pm

Implementing e-freight is not a simple process, but no one could expect it would take this long to get where we are. Forward-Thinking companies have been busy tackling its complexity though and now the financial and regulatory cost of not being digital is becoming obvious to all. We are left with the same old questions that have stopped its earlier implementation: where is the money for it comingfrom and who wants to take the risk of being an early adopter. Also, when it becomes commonplace, how will it impact the industry? How will big data be managed in the future, and who pays?

Subject Matter Experts:

  • Moderator: Martin Eran-Tasker, Technical Director, Association of Asia-Pacific Airlines (AAPA)
  • Amar More, Vice President, Kale Logistics
  • Ganesh Vaideeswaran, Managing Director – AFLS Product Management, Accenture Freight and Logistics Software
  • Jos Nuijten, Vice President of Network Integration Strategy, Descartes
  • John DeBenedette, Managing Director, Worldwide Information Network (Thailand) Ltd.
  • Mike White, Regional Director, IATA
  • Murray Kidd, VP & Global Head of Sales, IBS Software Service (P) Ltd
  • Myoung-dae Kang, Deputy Director, FTZ management, Incheon International Airport Corporation
  • Steve Hill, Principal Industry Consultant, CHAMP Cargosystems UK
  • Joseph S.B. Yoon, Deputy General Manager of Cargo Business Administration, Asiana Cargo

OVERVIEW

Workshop moderator Martin Eran-Tasker provided an overview of the key issues the industry must confront as it seeks to move into a paperless environment. They include:

  • Air cargo is a complex industry, with a multiplicity of stakeholders and segments. These numerous stakeholders tend to fall into two groups when it comes to the digital environment: those that are forward thinking and willing to be among the first innovators, and those who prefer to wait and see what happens. Beyond the integrators, this makes it difficult to coordinate digital initiatives and to ensure that all parties in a transaction are able to operate without paper.
  • This is further exacerbated by the fact that there are numerous IT systems available, and many vendors compete with each other by offering “the right solution.” Selecting the best IT system and ensuring interoperability are difficult decisions.
  • To go paperless, many issues must be resolved. These include: appropriate processing of information, redundancy and possible re-use of data, regulatory capability and requirements, costs, and financial resources. Regarding the issue of who will pay, the industry has been stuck in a slow period with limited profits, making investment decisions more difficult.
  • Thus far, most people have focused on e-freight in general and e-AWB in particular in terms of digitizing the air cargo environment. Progress has been slow but, for e-AWB in particular, there have been recent impressive gains. There are many reasons for the slow uptake: people don’t like change; people prefer paper and are comfortable with it; and people worry about overreliance on technology (and about how to handle the inevitable glitches, shutdowns, etc.). However, the industry may have finally reached a pivotal point where progress will be more rapid in the future.
  • Creating standards is a lengthy process, but one that the industry eventually accomplishes. Harmonization, however, is a tougher challenge. And, even with the ability to create standards, the industry needs to ensure they are adopted.

SUBJECT MATTER EXPERT COMMENTS

The Subject Matter Experts expanded on many of these themes:

  • e-AWB and, now, e-CSD are gaining traction and penetration should grow considerably more rapidly in the future. One helpful step is holding discussionsat events such as the ACF, as this helps move the needle. At this stage in the e-AWB process, the focus should shift to small and mid-sized firms, as it’s a real challenge to get them to participate. The industry is currently in a period of considerable change in terms of going digital, but it is almost exclusively the bigger companies that are engaged in the process. They are the ones that are figuring out how to use digital innovation to drive revenue growth.
  • It is time for the air cargo industry to move past the “training wheel” stage. The entire industry needs to cast off its training wheels and embrace digital fully. In terms of getting closer to paperless operations, it may be helpful for regulators, at least in the largest trading countries, to set deadlinesby which the industry must file electronically, as that will compel lagging companies to come onboard. It will also drive change in other countries.
  • To date, the industry’s approach to going digital has been to re-create what is provided in the paper world. This loses the opportunity to re-shape business processes in a fundamental way, utilizing technology.
  • The industry should explore how to effectively “re-use” data. For example, a Singapore study demonstrates that more than 90% of the data from a HAWB can be re-used for creating a MAWB. The industry needs to identify and enhance opportunities in this regard.
  • We need to address the “mindset challenge” in which certain people resist going digital. TIACA’s thought leadership in bringing together all the parties to understand each others’ challenges is a helpful step in this direction.
  • While we may seek harmonization, the fact that the WCO is only an advisory organization, without any enforcement capabilities, is a big challenge. ICAO can mandate Standards, but the process is a lengthy one.

SUMMARY OF GROUP DISCUSSION

The workshop moved on to group activity, in which participants at each table in the room were asked to discuss the key concerns, obstacles and issues they were confronting with regard to the various discussion themes. Each table then summarized their discussion, adding the following points to the overall dialog:

Standardization/Harmonization

  • In developing standards, IATA should work with all supply chain partners from the start. This may lengthen the development process, but it will hasten adoption throughout the supply chain.
  • While we have talented people developing standards, and the standards generally are quite good, there is no industry ability to enforce their adoption. Therefore, implementation lags – meaning multiple standards are in use at the same time. As an industry we need to focus on how to change this. Standards are essential to ensure interoperability, but the lack of adoption (and multiple standards in use simultaneously) defeats that purpose.
  • Industry needs to work with customs authorities, to demonstrate to regulators that theycan do their jobs in a paperless environment.

Digitization/e-freight/e-AWB

  • There was some debate over the need for studies to demonstrate the benefits of e-AWB and other digital initiatives. Some attendees felt it would be helpful to have academic studies confirming that e-AWB saves money, as a persuasive tool for late adopters. Other discussants felt the focus on quantifiable, monetary benefits is misplaced, as the true value of digital comes from predictability, transparency, better customer service, and improved speed/efficiency. Still others felt that survival would dictate the decision to go digital – with or without persuasive studies - as more and more shippers will demand it.
  • The industry should explore working directly with regulators to mandate automation/e-freight on a feasible schedule. Associations representing shippers, forwarders, etc. should discuss appropriate target dates for mandating such a change, and should bring regulators into these discussions.
  • Air cargo needs something similar to the e-ticketing phenomenon to drive digital adoption. For ticketing, the Internet exposed passengers to many new options, and passengers developed the desire to ticket for themselves, rather than relying on the airlines. Air cargo needs a similar re-set.
  • It’s hard to fault non-airline members of the supply chain for lack of adoption, when many airlines have yet to make the necessary investments to implement e-AWB.

Coordination/Operational Challenges

  • Cost remains a critical issue that many companies must still address.
  • The industry needs a common platform to ensure interoperability, and to enable re-use of data to maximize efficiencies.
  • Fear of change, and of the potential loss in customer revenue account for much of the hesitation to automate.
  • Data quality remains an issue for many industry operators.
  • Shippers need to be at the heart of the digital process, as they have the vast majority of the necessary information.

CONCLUSION/STRATEGIC IMPLICATIONS

Workshop 2 discussion generated the following conclusions and potential action items:

  1. Developing a single platform for shared access and re-use of data, by all industry members, is a critical next step for industry. As an industry, we should shift the digital conversation to this subject, to pursue better efficiencies, adoption rates, etc. This is the next frontier for industry.
  1. The industry needs a “re-set” that embraces digital innovation. As part of this, industry members should think in terms of data, not documents. This would enable a re-engineering of current processes to take advantage of the shift to digital. In hiring new employees, the industry should seek people who are prepared to change, and who are comfortable with it.
  1. The industry needs to use the Standards we have. We need to find agreement on deadlines for implementing the newer Standards and for shutting down older ones.
  1. Shippers are the key to digital innovation. Others in the air cargo supply chain need to be mindful of shippers’ needs, and need to keep the customers’ needs in mind as they make their investment decisions.
  1. The industry is ready for “takeoff” on digital initiatives.