Value of Air Cargo Connectivity Seminario Transportes & Negocios November 09 th 2017 Oporto
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1 Value of Air Cargo Connectivity Seminario Transportes & Negocios November 09 th 2017 Oporto Francisco Batáglia, IATA GDC Manager Customer Services To represent, lead and serve the airline industry
2 Meet the International Air Transport Association 270 Airlines is the total number of IATA Member Airlines The Trade Association of the World Airlines IATA Provides numerous services to its members/customers. IATA Advocates on Behalf of the Airline Industry 83% Is the percentage of global traffic represented by IATA IATA Helps developing Standards For the Industry Our mission; to Represent, Lead and Serve the Airline Industry
3 Aviation in billion Passengers 52 million Freight tonnes 18,429 Unique city pairs $6.8 trillion Trade carried Source: ATAG, IATA Economics
4 AVIATION: POWERING WORLD TRADE Lightweight by volume, Heavyweight by value! Almost 340 billion letters and 6.7 billion postal parcels are sent every year $6.8 trillion Value of cargo handled By air in 2016
5 What are the key Air Cargo drivers? Reliability Connectivity Speed Safety
6
7 1881
8 1914
9 2016
10
11 Over 95% of the world population and economic activities within wide body range from Portugal! Source: Turkish Airlines
12 i.e. : Direct access to landlocked countries
13 IATA study on the value of Air Cargo Study on the Value of Air Cargo: Air Transport and Global Value Chains Countries with more developed air cargo connections and smarter borders are more integrated into Global Value Chains reaping the associated benefits. IATA Economics
14 IATA study on the value of Air Cargo Essential for integrating into Global Value Chains Source: Klaus Meinhardt, JETRO2012, ATAG, pinterest.com
15 Some Air Cargo customers feedback! Other modes are moving faster We need a Cargo cloud where everybody is connected we need more visibility and transparency Air cargo processes have not been modernized over the last twenty years Air cargo is often a black space Shipper s voice: European Shipper Council White Paper 2014 World Cargo Symposium Shipper Panel, March 2015
16 Why Air Cargo full potential limited? Cross-border challenges is limiting Air Cargo potential (source Doing Business index, World Bank)
17 What do we do about it? Digitized the Air Cargo process alike for the Passenger!
18 What do we do about it? e-freight is an industry-wide program that aims to build an end-to-end paperless transportation process for air cargo made possible with regulatory framework, modern electronic messages and high quality of data e-freight is part of the StB Cargo program aiming at making air cargo easier, smarter and faster. The program portfolio holds 5 projects with the objective to accelerate change in the areas of digitization, visibility and safety e-freight & e-awb Digital Cargo Interactive Cargo Smart Facility ACID - Air Cargo Incidents Database
19 Why digitization is key for Air Cargo connectivity? +1% +6%
20 To conclude Aviation is critical for our modern life. The Air Cargo Customer experience through Portuguese Airports will be critical to connect global markets to power the Portuguese economy! Urbanization rate 2015 Source : The World Bank, United Nations
21 e-awb Where do we stand now? Back to Table of Contents
22 Status as of August 2017 In August 2017, the Air Cargo industry processed more than 2.3 million Air Waybills (AWBs) 13% 2% Africa Asia Pacific Europe Middle East North Asia Canada-LATAM USA 22% 6% 24% 4% 29% The industry is driven by three main regions representing 75% of the AWBs: Europe, Asia Pacific and North Asia Back to Table of Contents 22
23 e-awb penetration: 50.7% as of August % 62.6 % 46.0 % 72.0 % 67.8 % 51.2 % The global e-awb penetration reached 50.7% on the legally feasible trade lanes (~ 67% of the AWBs) Back to Table of Contents 23
24 TOP 10 performers / August 2017 TOP 10 AIRPORTS BY e-awb VOLUME TOP 10 AIRLINES BY e-awb VOLUME TOP 10 FREIGHT FORWARDERS BY e-awb VOLUME e-awb e-awb e-awb (%) (%) (%) HKG - Hong Kong International 67.0 % CXG - Cathay Pacific Group 82.3 % DGF - DHL GLOBAL FORWARD % PVG - PuDong 53.9 % AKG - Air France - KLM Group 64.8 % SCHENKER 63.0 % SIN - Changi 71.5 % SQ - SIA Cargo 76.2 % EXPEDITORS GROUP 67.9 % ICN - Incheon International 55.0 % QR - Qatar Airways 77.7 % KUEHNE + NAGEL 39.3 % TPE - Chiang Kai Shek 70.4 % EK - Emirates 38.3 % PANALPINA 60.5 % FRA - Frankfurt International 38.1 % LH - Lufthansa Cargo 44.3 % BOLLORE 56.8 % AMS - Schiphol Airport 54.2 % KE - Korean Air 55.6 % NIPPON EXPRESS 45.9 % DXB - Dubai 89.3 % CI - China Airlines 65.9 % UPS - UNITED PARCEL SERVICE 57.2 % ORD - O'Hare International 44.0 % DL - Delta Air Lines 73.0 % DSV AIR & SEA 55.5 % LHR - Heathrow 36.3 % AA American Airline 67.7 % KINTETSU 48.8 % Back to Table of Contents 24
25 e-awb adoption / main challenges In December 2016, the global e-awb penetration reached 48.9% on the feasible trade lanes, a shortfall of 7.1 p.p. against the industry target of 56%. Main challenges are: 2016 target Actual 56% Regulatory constraints e-awb is not possible in all airports and all trade lanes due to regulatory limitations Lack of harmonization e-awb procedures are not harmonized between freight forwarders, airlines and ground handling agents in key airports where e-awb is live 48.9% Technology limitation Many of the SME forwarders do not have the technical capability/edi enabled systems to enable them to transmit shipment data to airlines Some large forwarders face the same issue: their local branches are the result of SME forwarders acquisition and their IT system have not been aligned with the rest of the company Complex process Perceived complexity to do e-awb for forwarders dealing with multiple airlines Maturity threshold Some markets reached a certain level of maturity where major actors (airlines / freight forwarders) already achieved the biggest potential Back to Table of Contents 25
26 e-awb adoption / supporting initiatives In order to address the e-awb adoption challenges and to accelerate the growth in the penetration rate, the following supporting initiatives have been identified in 2016 and will be continued and strengthen in 2017 Expand number of trade lanes where e-freight and e-awb are possible Continue the government supported e-freight initiatives in key locations Harmonize e-awb procedures in key airports across forwarders airlines/gha Complement the list of SOPs at e-airports (especially airports to be included in the 2017 eawb360 roadmap) Facilitate adoption by SME forwarders Launch on November 8 th of an e-awb desktop solution for Small and Medium sized Freight Forwarders (eawblink), low-cost alternative to existing solutions Provide implementation guidance and materials Develop an implementation playbook to support the adoption of e-awb Coordination efforts of industry in key e- airports Strengthen the e-awb penetration rate in the existing eawb360 airports Deploy eawb360 initiatives at additional airports (in particular in Europe) Back to Table of Contents 26
27 2017 e-awb industry target: 62% Based on the historical achievement, the forecasting model shows that an e-awb penetration rate of 62% can be achieved by end of 2017 Accelerate trend leading to a global e-awb penetration rate of 62% - corresponds to the e- AWB adoption pace under the condition of successful achievement of supporting initiatives Accelerate +1.3 p.p. per month Industry effort 62% by end of % by end of 2017 Build +1.2 p.p. per month Mature / Sustain +0.6 p.p. per month Mature trend leading to a global e-awb penetration rate of 51% - corresponds to the natural e-awb adoption pace, without any specific supporting initiative in place. The slow pace is mainly due to maturity of certain markets Launch +0.3 p.p. per month Back to Table of Contents 27
28 eawb360 The concept Back to Table of Contents
29 Single Process Airport SOP Communication eawb360 Community driven approach HARMONIZED IMPLEMENTATION + SYNCHRONIZED COMMUNICATION SINGLE PROCESS eawb360 Airlines commit to implementing Single Process AIRPORT SOP Common e-awb SOP for GHAs at eawb360 airports COMMUNICATION Coordinated and synchronized communication that e-awb is the preferred means for shipping cargo from eawb360 airports Back to Table of Contents 29
30 eawb360 Synchronized communication eawb360 airlines need to send the following core message to their Freight Forwarder customers during the same agreed week We are switching over to e- AWB as the preferred means for shipping cargo to all destinations by using the e- AWB single process at ABC airport effective XYZ date. Back to Table of Contents 30
31 eawb360 Communication activities eawb360 communication rely on two key components 1 2 LOCAL ASSOCIATION FORWARDERS FORWARDERS IATA FORWARDERS AIRLINES INDUSTRY Participating Airlines send the same core message to their customers After Airlines communication, a joint statement will be issued by industry associations Back to Table of Contents 31
32 eawb360 Engagement activities MeA CAMPAIGN e-awb WORKSHOPS eawb360 EVENTS MeA adoption campaign to increase number of MeA forwarders Conduct e-awb workshops to help MeA forwarders implement e-awb Conduct an eawb360 targeted airports to prepare forwarders for eawb360 Back to Table of Contents 32
33 e-awb How do we implement it? Wrap up Back to Table of Contents
34 e-awb implementation - Wrap up 1. Join the Multilateral e-awb Agreement 4. Ensure business processes are set Start your journey on to join the Multilateral e- AWB Agreement Engage with your business partners Agree on a standard business processes and think Single process Comply with the Standard Operating Procedures (SOP) where applicable. The list of applicable SOP are available at: 2. Ensure your technology supports e-awb 5. Roll out e-awb Ensure your organization is capable of sending and receiving Cargo-XML or Cargo-IMP messages Consider the use of eawblink on Define your e-awb roll out strategy Airlines to activate Freight Forwarders in Matchmaker Consider to join an eawb360 initiative. More info available at 3. Ensure high-quality electronic messages 6. Report e-awb shipments Ensure your system produce high quality messages Validate your Cargo XML message for free on Join the Message Improvement Program (MIP) on Report your e-awb shipments through the Message Improvement Program (MIP) Details on Back to Table of Contents 34
35 CASS Settlement Statistics Portugal
36 36
37 37
38 THANK YOU
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