The International Air Transport Association (IATA) has launched a program that promises paperless cargo processing by 2010. The initiative could save $1.2 billion annually (based on current cargo volumes) and reduce shipping times by up to 25%.
A 1972 IATA report showed that the average transport time for a consignment from a shipper to a consignee was 6.5 days (excluding flight time). Over a quarter of a century later, Unisys commissioned a similar study in 2004 that analyzed 2,000 international shipments. The results were almost identical.
Based in Geneva, Switzerland, IATA represents 265 airlines comprising 94% of international air traffic. The IATA e-freight program is the cargo component of the association's "Simplifying the Business" initiative. Annualized, a shipment time reduction of 25%, or 1.5 days, translates into a 0.41% improvement of the total value of the goods carried by airfreight (more than $1 trillion in 2004).
"Our mission is to take the paper out of the cargo by the end of 2010," says IATA Director General and CEO Giovanni Bisignani. "This is more than just a change, it is an industry revolution."
"Paperless" means the adoption of radio frequency identification (RFID). According to Jerry Mc-Nerey, senior director at Symbol Technologies (Holtsville, N.Y.), RFID has proven its worth in aviation environments and is good to go. "We've done several luggage roll-outs [at Hong Kong's Chep Lap Kok airport and Las Vegas' McCarran International airport] and some pilots," says McNerey, "which have identified the value in leveraging RFID technology around baggage tracking."
He adds that IATA is working with its member partners to develop standards that can be embraced on an international scale. "They're beginning to coalesce around the common standard," says McNerey, "and it looks like it will be the Gen2 EPC standard, using the technology in the aviation environment."
Bisignani describes the IATA efreight program as a harmonized material handling system that reduces costs, facilitates global trade, improves security and helps customers with a more user-friendly product, simply by using existing technology more effectively.
"The air cargo business is drowning in paper," says Bisignani. "Every cargo shipment travels with up to 38 documents. Each year we could fill 39 747 freighters with the paper wasted on this documentation. We are slow. Despite having an agreement on electronic Airway Bills (e-AWB) as early as 1985, only 15% of shipments make use of this facility."
IATA e-freight is one of five projects launched by the association with a combined goal of reducing industry costs by $6.5 billion, while making travel and shipping more convenient. In addition to e-freight, the organization has targeted 100% electronic ticketing by the end of 2007, common use self-service kiosks for check-in, bar-coded boarding passes and RFID for baggage management. On November 17, IATA announced it was making RFID a recommended practice for luggage tracking among its airline and airport members.
McNerey says the greatest benefit RFID will bring to baggage handling is accuracy for routing luggage. The costs of re-handling and getting lost bags to their owners can be enormous.
"Currently, the industry is getting about 85% of the bags caught correctly. At our RFID installations, we've been getting read-rates in the 98-99% range," says McNerey.
IATA's airfreight program will be implemented in a two-stage process. "By the end of 2007 e-freight will be a reality on key targeted trade routes. And, by the end of 2010, 95% of world trade air cargo volume will be paper free. The vision beyond 2010 is to completely eliminate all paper across the full multi-modal supply chain," says Bisignani.
"If we don't arrive at our solutions-tailored to air transport, change will be forced upon us on three fronts," Bisignani adds, pointing to United Nations efforts to implement paperless world trade, stricter customs security requirements and customer calls for more efficient service.