Managing Cargo in Crisis
-IATA Calls for a
Supply Chain Approach-
Bangkok - The International
Air Transport Association (IATA) 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
Air cargo 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,” said
Bisignani highlighted three priorities for the supply
chain: security, e-freight and Cargo 2000:
Security: 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,” said Bisignani.
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. Each 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,” said
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 is taking place in Bangkok,
Thailand from 2-5 March 2009. Under the theme of “Focus on the Customer:
Delivering in Turbulent Times,” the World Cargo Symposium is looking at
building a solid future for air cargo, while battling the crisis that
currently envelops the global economy. IATA will release an updated
industry financial forecast on 24 March.
View Giovanni Bisignani's full speech
Notes for editors: