The recent announcement from IATA that effective 1 January 2019, the electronic Air Waybill (e-AWB) will become the “default contract of carriage” for all air cargo shipments on enabled trade lanes, was a bit of stunner for the industry. A stunner perhaps, but stunning? Not so much.
On closer look, the question becomes: “Does it actually change anything?” Most would argue no. For all intents and purposes, precious little changes. Clearly stopping short of making e-AWBs mandatory, as some in the industry argue is necessary if it is to ever reach 100 per cent penetration, the new measure is really just about sweeping away some cobwebs.
In the tomes of IATA rules, the AWB rules are apparently written such that paper AWBs are required and electronic AWB’s are optional, subject to agreement by the business partners. Hence, the rules from 1 January 2019 will now state that electronic AWBs are the standard method and that paper AWBs are optional and in fact considered “nonstandard”. Stunning stuff.
It seems likely it was motivated, as much out of frustration, as anything else. Frustration over the lack of progress on getting the air cargo industry up to speed on the digital world as represented by the painfully slow creep upwards of e-AWB penetration rates. One additional push, after so many other pushes.
The press release of course speaks of a slightly more saccharine e-AWB environment, extolling the virtues of righting the rule book at this perfect juncture in e-AWB glory.
At the current moment, e-AWB penetration has reached 55.9 per cent of “feasible trade lanes”, or 884,422 shipments, representing a 1.7 percentage-point improvement over the previous month. Feasible trade lanes now represent 69 per cent of AWBs, the organisation said.
Needless to say, it’s taken quite a while to get even to those numbers, in a process that includes a few iterations of IATA strategy.
Remember 11 years ago when the air carrier association proudly announced the industry was taking a giant leap forward with e-cargo? You will be forgiven if your memory fails you on this… it was after all, quite awhile ago. And probably IATA would prefer everyone forgets those heady days anyway.
“The paper-free era for air freight begins today,” proudly claimed then director general & CEO of IATA, Giovanni Bisignani in his uniquely over-the-top style, one chilly morning in November 2007.
“IATA e-freight effectively eliminates the need to send 13 core paper documents with air cargo shipments, hence streamlining processes, improving speed and reliability and cutting costs,” IATA shouted from its rooftop overlooking Geneva airport.
And a gutsy initiative it was, replacing 13 of the over 20 documents often involved in moving cargo by air. How all the lofty ambitions now seem like a distant, foggy dream.
While clearly well-intended and needed even at that time, the global economic crisis of 2008 diverted much of air cargo’s attention to more pressing matters – like simply surviving.
To give credit where credit is due, IATA was close to the edge of the curve in terms of recognising the need to get the industry up to speed on the rapidly digitalising world. And this, without even really having an inkling of coming tsunami of e-commerce a good half dozen years or more later.
But despite Giovanni’s cheer-leading and that of the Tony Tyler who followed, alongside whole-hearted support by a number of key airlines and global forwarders, the initiative just… lumbered.
Its progress wasn’t helped much by the fact that the fractious relations between IATA and the International Federation of Freight Forwarders Associations (FIATA) had reached a dismal low. I remember covering my second FIATA World Congress in Vancouver in 2008.
A prominent figure in the freight forwarding world replying to my question on e-freight, laughed (out loud), saying: “E-freight? NOT in my lifetime!”. He may be right on that – and that’s nothing to do with his lifespan. Although I’m pretty darn sure his freight forwarding outfit is fully e-AWB compliant today.
Rapprochement did ultimately did come for the two sides, with an agreement in 2016 to replace the ‘no longer fit-for-purpose’ IATA Cargo Agency Programme with a new structure and relationship. And this surely had a positive spin-off on the ‘e’ front.
And so, after probably much discussion, hand-wringing and possibly head-banging against the wall, IATA relented on its lofty goals, sacrificed some face (as they say in Asia) and eventually wound the e-freight initiative down from 13 documents to just one – the electronic Air Waybill.
It wasn’t that e-freight was canned, just that a more realistic, bite-sized approach was being applied and thus the new campaign for e-AWB adoption began.
By the end of 2012 e-AWB penetration was lingering in the single digits at 6.8 per cent with IATA targetting 20 per cent implementation by the end of 2013 and, quite astonishingly we might add, a full 100 per cent by the end of 2015. That Holly Grail, needless to say, still eludes the industry.
It has become a familiar story, this over-estimating and under-realising when it comes to nearly all the ‘e-initiatives’ in this seemingly technology-averse industry.
To be fair, there are significant impediments to e-AWB adoption – it’s taken some time for a number of countries to sign on to the Montreal Protocol/Convention (MP4/MC99) enabling this form of electronic commerce and even some of those that have, still insist on having reams of paper to stamp. But IATA’s figures already take this into account and exclude these numbers from its penetration figures.
There is of course the blame-game: Forwarders blame carriers and carriers blame forwarders. To some extent this runs in both directions. Last year Australian forwarders told AsiaCargoBuzz.com of their utter frustration that they were 100 per cent e-AWB capable, but the national carrier was dragging its feet. We’re not sure what progress has been made there. And then of course forwarders, especially smaller ones, are blamed for not being willing to invest in order to digitalise.
In this day-in-age, there is no excuse – for anybody. So many IT solutions exist in the industry, ranging from the most basic (and relatively inexpensive) to the ‘full-meal-deal’ versions with all the bells and whistles, that no one can complain of the difficulty of boarding the digital train.
One thing is very clear in the industry, there is a palpable sense of frustration, irritation and impatience that in the year 2018 some companies are still apparently ambivalent over the need to go fully digital.
And yet many of these same industry executives wonder aloud about how they’re not benefiting from growth in certain cargo products. Theirs will continue to be missed opportunities because of their lack of transparency and timeliness as a result of being paper-bound. The gathering tsunami of e-commerce will most certainly wash aside anyone and everyone who is not digitally prepared.
Some airlines have begun charging forwarders for using paper AWBs – like Lufthansa which has said it will charge EUR 12 for each paper version. This clearly has its merits. Perhaps forwarders should do the same with errant carriers. In either case, when the carrot doesn’t work, use the stick.
IATA of course wants to sensibly steer clear of that kind of fracas. “It is up to each individual airline to define their product and commercial policy and IATA is not involved in such decision,” IATA has said.
And if there was ever any doubt of the importance – and benefits – of the air cargo world going digital, one need only look at Cainiao, the logistics arm of Chinese e-commerce giant Alibaba. Cainiao is fast moving away from the physical world. What the company has become is a conductor in a vast logistics orchestra.
Rather than moving and storing, Cainiao orchestrates the movements of what it expects, for example, will be nearly 1 billion shipments this coming 11.11 Global Shopping Festival, amongst a raft of logistics companies, nearly 2 million delivery personnel, and so on.
None of this could even be dreamt about without even the most basic digital processes – in Cainiao’s case they have become among the most sophisticated in the industry, easily approaching the same league with the giants like UPS, FedEX and DHL.
Perhaps its time that IATA, or more accurately IATA’s membership, bites the proverbial bullet and declares the e-AWB not simply as ‘the default’, but rather, ‘the mandatory’. Only then will the tardy digital miscreants of the air cargo world (which surely includes at least some IATA members) heed the obvious writing on the wall and do what needs to be done.
Until that happens we have no choice but to humour IATA on its perennially upbeat monthly e-AWB update. “Oh look! E-AWB penetration went up 1.7 percentage points from last month!” – quick, pop the Champagne.