Road Map version 3.0 IPC Future of Mail by Air initiative Document Version History Version Specification change Date By 1.0 Original Draft 23/04/06 Jörgen van Mook 2.0 Update 28/10/08 Jörgen van Mook 3.0 Update 7/03/2011 Jörgen van Mook Document Approval Approved by Date FoMbA Executive Meeting 8/11/2006 FoMbA Executive Meeting 6/11/2008 FoMbA Executive Meeting 7/03/2011 1. Summary Draft Road Map for the Future of Mail by Air This paper sets out the draft Road Map for the IPC initiative on the Future of Mail Transport by Air between IPC member Posts and a selected group of Carriers, an initiative to achieve a reliable and sustainable network for mail carriage with higher quality at lower cost through optimized business processes and a new level of system integration. The paper describes the background, the scope and the results of the process mapping exercise between the participants of the initiative. The first phase of the Road Map is the development of the vision and the identification of the potential solutions and challenges. The second phase is the initial pilot testing of processes with those Posts that do not need to implement major changes to the operational processes and the systems for testing. The third phase is the use of centralized solutions to try out new business processes or tools to help define specifications for new EDI messages or tools to improve visibility whilst avoiding additional cost for participating posts and carriers. The fourth phase is the drafting of business rules, operational and messaging procedures, modification of UPU regulation and development of standards. The fifth phase is the pilot testing and implementation of message standards and operational processes and modification of systems. The sixth phase is the implementation and expansion of paper free transport of mail by air and expansion of optimized business processes and integrated systems. The testing and implementation of process alignment and system integration will go at a different pace for each participant, with frontrunners starting up bilateral arrangements IPC 07/03/2011 Page 1 of 7
that will be the pilot test from which other participants learn. Each participant may be a frontrunner on one particular process and join in later on another process. In this way maximum progress will be made by having parallel activities, which will be developed into a de facto standard between participants, and at a later stage become a formal standard for the larger community. To support and facilitate the progress of business process optimization expert working groups will cooperate with the IATA and UPU, and also with customs, system providers and ground handlers, in order to deal with the issues around ruling conventions, conditions of carriage, mail handling manuals, EDI messaging standards, centralized system solutions and security and border agency requirements. 2. Background The initiative started at the end of 2005, when Posts expressed their concern to the Airlines regarding developments and trends in the airline industry, due to macroeconomical trends as well as due to the aftermath of the 9/11 events. The mail carriage is expected to be increasingly impacted by more stringent security measures, more demanding requirements from border agencies, Network Carriers bankruptcies, focus on passengers and cost cutting resulting from increasing competition, growing market share of the low cost carriers (LCC) not carrying mail/cargo. Posts asked the Carriers Will there be a reliable and sustainable network of air transport to carry mail in the future? They cited the following developments: Lack of interest to carry mail by a number of Carriers Lack of control and management by Carriers of Mail in transport Lack of visibility for Posts whilst Mail is in possession Carriers Increasing lack of frequency, capacity and availability air transport on network Carriers passenger flights. The Network Carriers confirmed that for them Posts are key customers, and Mail is an important product, but they had the following concerns: Decreasing yield of mail product Increasing demands by Posts for track and trace, hence investment in separate mail systems required Handling of mail product requires unique systems, separate from cargo. The meeting in Miami in January 2006 agreed to start the initiative of the Future of Mail transport by Air and to work on win-win solutions. 3. Objective of the initiative as agreed to in the Miami meeting The objective is to ensure a sustainable and reliable network for mail carriage by air that provides sufficient capacity for mail carriage, improves the management and visibility of mail in transport, whilst reducing the overall costs. Posts are to become lower cost and higher quality customers, and Carriers to become higher quality and lower cost suppliers. After the Miami meeting the subsequent meetings agreed on the potential ways forward: optimize and align business processes, find system synergies, reduce waste and become paper free. 4. Scope The scope of the initiative includes all short, medium and long term actions that support business process optimization, system synergies and which are required to achieve a paper free transport of mail: Capacity planning and scheduling processes IPC 07/03/2011 Page 2 of 7
Operational processes and ground handling Proof of Acceptance(POA), Proof of Delivery(POD), event monitoring, track & trace and performance reporting Administration and invoicing Rules, regulations and general conditions of carriage Customs and Security requirements 5. Identified potential steps on the road towards the future Improving processes one by one: Forecasting and capacity reservation procedures and communication processes Nesting and Transparent Handover Procedures Expand use of EDI messages and implement electronic invoicing Aligning and connecting the processes and systems: Common entity and common definition on Consignment Associate a MAWB number with mail consignments Expand and Improve CARDIT RESDIT messaging Develop piece level ID tracking in Cargo Imp Further synergies by using central portals, central data management platforms and central accounting systems Booking portals for capacity reservation of mail Cargo 2000 and CAPE*Vision are linked for monitoring/reporting purposes CASS (and or postal) central accounting systems Deal with the challenges surrounding the development of optimized business processes such as: Border agency and Security requirements Ruling convention and general conditions of carriage Standard mail handling procedures for ground handling agents Solutions for structural lack of capacity on particular routes in constrained regions 6. Workgroup recommendation on optimization of business processes and system synergies The workgroup agreed that the proposed optimization measures and options should not be seen as an attempt to impose a generic solution to be implemented by all in the same way at the same time. The front runners amongst us, which see most added value in particular optimization measures, will initiate these measures through pilot testing. If pilot testing is successful it will become practice between some Post and Carriers on some routes and expanding to become a de facto standard for a particular optimized business process. The workgroup also agreed that in order to achieve the objective it is not sufficient to only improve different business processes in isolation. Conditions have to be created that allow Carriers to manage Mail for all business processes more effectively in their core (Cargo) systems, whilst not giving up the legal status of Mail. As a final step further efficiencies can be achieved by centralized processes through central systems. The workgroup identified potential links to start up pilot testing. The testing will be agreed bilaterally and coordinated for follow up and monitoring with IPC. 7. Road Map Phases and Milestones IPC 07/03/2011 Page 3 of 7
Phase 1 Agree vision and prepare pilot testing In Phase 1 the aim is to reconfirm the objective and the scope of the initiative and to endorse the findings resulting from the business process mapping. At this stage opportunities will be identified in general terms without specific solutions. The agreement required is to commit to work towards achieving the objective and to confirm a common vision on the future. Phase 2 Pilot testing based on current process and system During phase 2 the idea is to identify options on how to optimize and align business processes and how to create system synergies. During phase 2 some aspects of process optimization and system synergies will be pilot tested. The specific set up of different Posts and Carriers determine which Post and Carrier can be the frontrunner to start pilot testing for the various processes. Those participants that are not fully ready need to assess cost and lead time, through a on the back of the envelope assessment for the applicable processes for pilot testing. During phase 2, the challenges posed by authorities, ruling conventions and regulations that impact the business processes as well as the concept of paper free transport of mail by air have to be identified. The identified issues will be dealt in coordination with the existing UPU-IATA groups and other stakeholders Phase 1 and Phase 2 have been completed Phase 3 Central Solutions to try out new business processes, concepts and to develop message requirements and specifications The electronic and interactive space allocation between post and carriers is a new business process and IPC has developed a tool to support FoMbA participants to try out the concept. Following evaluation of the trials the requirements for a standard allocation message will be defined. To make use of the expansion of EDI exchange IPC is developing a service performance monitoring tool that can be used between posts and carriers to set bilaterally agreed KPIs to address performance issues and that could serve once finalized to support pay for performance schemes. Once the PAWB number assignments starts IPC will assess technical options to link CAPE to CARGO 2000 and the participants will assess feasibility of using existing cargo central accounting solutions Phase 4 draft EDI business rules, operational and messaging procedures, proposals to modify regulation and develop messaging standards (in cooperation with UPU-IATA groups) To expand paper free transport the UPU regulation needs to be modified to support explicitly the replacement of paper documents by EDI without the need for tri-partite agreements to overcome the ambiguity in the regulation. The security regulations of EU and TSA require posts to provide the security status of the consignment to the carrier or to provide tendering statements, which may require modification of CARDIT. Also a standard security declaration message may need to be developed. To make full use of the additional functionality in the M39 standard, business rules for the proper use of CARDIT and RESDIT events have to be agreed. Best practice operational and messaging procedures need to be agreed. PAWB operational and messaging procedures need to be agreed. Standard space allocation and electronic invoicing messages need to be agreed. IPC 07/03/2011 Page 4 of 7
Phase 5 Pilot test & implement standards, modify systems and processes IPC and FoMbA participants to complete transfer to IPC MRD production mode to support expansion of POA and POD process. Implement nesting in CARDIT where posts build units and by carriers in RESDIT where carriers build units for efficiencies in data capturing to support POA and POD process. The posts to modify where required the consignment build up and closure process to ensure that all receptacles physically loaded in equipment handed over to airlines are included in the consignment document/cardit and nested where applicable and that CARDIT is transmitted before physical handover. Airlines to expand RESDIT event reporting to report all critical events to establish custody, acceptance, uplift and delivery (handover for interline transfer). The PAWB assignment shall be pilot tested. Posts to modify systems to take into consideration agreed allocations when closing consignments. Posts to implement Correction CARDIT based on agreed business rules. IPC to identify with participants the lanes which are closest to meeting pre-conditions for FoMbA business process implementation covering all processes from space allocation to invoicing and to establish % volume FoMbA compliant. Participants to implement replacement of all transport related transport documents by EDI, such as security and customs related documents and paper invoices (phase II paper free). Implementation of standard space allocation messages and electronic invoice messages. Phase 6 continuous optimization, standards modification and paper free expansion The posts and carriers will continue to improve data quality in EDI, operational processes to reduce waste, and improve alignment of processes and systems. Where required proposals to modify standards will be put forward based on lessons learned. The posts and carriers will further expand replacement of paper based handling by automated processes using EDI message exchange. Milestones Phase 3 central solutions to try out concept and develop specifications IPC Forecasting & Booking (F&B) tool, allotment template 2011 IPC Service performance monitoring tool phase 1 2011 IPC F & B tool integration carrier booking system 2012 Assess feasibility use of existing cargo central solutions 2013 Phase 4 draft business rules, modify regulation and develop standards Modify UPU regulation to replace paper docs by EDI 2011 CARDIT modification & security declaration message 2011 EDI best practice and business rules 2011 PAWB operational and messaging procedures 2011 Space allocation messages 2012 Electronic invoicing standard message 2012 Phase 5 pilot test & implement standards, modify systems and processes IPC MRD production mode implementation 2011 Implement nesting in CARDIT & RESDIT 2011 Consignment building & closure, physical = EDI/doc 2011 Send all critical RESDIT events on intra FoMbA lanes 2011 Pilot test PAWB assignment 2012 Consignment closure in line with agreed allocation 2012 Implement correction CARDIT 2012 Pilot test & implement FoMbA business process on lanes between FoMbA participants to X% target 2013 IPC 07/03/2011 Page 5 of 7
Implement extended paper free (customs, invoice docs) 2013 Implement space allocation messaging 2013 Implement electronic invoice messaging 2013 Phase 6 continuous optimization, standards modification and expansion Expansion phase I paper free transport to 10 % 2011 Expansion phase II paper free transport to 35% 2012 Expansion use of IPC MRD in production mode 2012 Expansion FoMbA business process implementation 2013 8. Action List and Milestones (status March September 2011) Action: implement phase I paper free for 10% of volumes exchanged intra- FoMbA Action Group consisting of DEA, LH and CDA will work with IPC on a proposal to include in CARDIT data elements currently required by security regulation on paper Delivery Bills, specifying two key options: a) include all required data elements of consignment security information in CARDIT in the same way done by IATA in regard to the cargo FWB message b) what is minimally required in CARDIT either using flags, codes or free text to comply with regulation next to a (new) standard consignment security declaration message; requires coordination with IATA on the electronic format of the standard Consignment Security Declaration for alignment with cargo Action Group consisting of USA, NLA, UPU PTC, IATA, ASI, AC to draft a paper with IPC proposing options on how to use pre-departure EDI exchange to facilitate a green lane concept and reduce impact security regulation on operations and service. The paper is to be shared with applicable UPU and IATA groups dealing with security regulation Action: IPC to draft a proposal on the recommended ways to revoke RESDIT info sent in error. A undo flag in the consignment event code will be proposed for inclusion in the code list. The proposal will also include the business rules for the use the interpretation mechanism where posts and airlines agree to use interpretation. Action Group consisting of BEA, DKA, FRA, NLA, NOA, SK, AA and AC will pilot trial the interactive electronic pre-season allotment template building with the IPC Forecasting & Booking tool. Action Group: consisting of AA, AC, AF, SK, DKA, FRA and Accucode (ACC) will work with IPC on a modification of the proposals for EDI best practice in line with the conclusions, specifying the pre-conditions that have to be met to be able to interpret RESDIT events in line with the agreed business functions: custody, POA, uplift/export, POD. The group will also come up with proposals for a step by step closure of gaps aimed at meeting pre-conditions, prioritizing the key challenges to be addressed to help close the gaps between current and proposed EDI best practice. Action: DEA and LH will pilot trial the PAWB assignment on a new route and are asked to check the option of assignment of the PAWB number in RESDIT 6. Action Group consisting of QF, AA, LH, DEA, ACC, ASI will work with IPC on a proposal that will focus on defining the pre-conditions and business rules for IPC 07/03/2011 Page 6 of 7
correctly assigning the PAWB in a way that all business functions of the PAWB can be used and options are kept open for alignment of mail and cargo processes and systems. Action: IPC will start the development of the Service Performance monitoring reports according to agreed specifications. Action: IPC, FRA, BEA and DKA to propose draft text for modification of UPU regulation to be proposed at upcoming POC meeting Action: IPC, FRA to take lead in drafting proposed modification CARDIT to comply with security regulation requirements and to assess if IATA standard security declaration message can be used by posts Action: posts that build containers to implement nesting (normally using M39 and container journey ID), airlines to nest when building containers at origin for correct uplift reporting and onward tracking efficiencies. Airlines to nest (where mail is scanned for delivery whilst building equipment for handover to the post) at destination to correctly report delivery by registering nest at handover (MRD) for correct date-time stamp delivery Action: posts to take measures to ensure that receptacles prepared for handover are all correctly included in CARDIT and where applicable nested. Posts need to comply with security regulation and consignment information needs to be correct. Correct consignment information improves efficiency in handover and accounting avoiding need for correction of consignment information or cumbersome claims procedures. Action: carriers to verify and make sure to implement all critical RESDIT events when reporting on all intra FoMbA lanes to establish custody (74, 82), acceptance (6) uplift (24) and delivery (21, 23) and transfer where applicable (42,43). Note: acceptance (6) only where posts meet pre-condition of correct and timely CARDIT with handover mail in one lot. IPC 07/03/2011 Page 7 of 7