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 Symposium.
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.
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 data-driven, 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.