Air Cargo Competitiveness
Global trade grew 7.5 percent during 2007, however air cargo is not keeping pace as growth projections show an anticipated growth of only 4 percent in 2008.
There are a few different reasons for the lagging growth in air cargo:
1. New innovative offerings from the steamship lines
LCL expedited, Time guaranteed LCL – These services provide shippers with an alternative who don’t want to wait for traditional ocean freight and also don’t want the expense of costly air freight.
2. Introduction of faster vessel strings
3. Lower overall costs by shipping ocean freight vs. air freight
4. A fourth item I would suggest is better planning and buying strategies put in place by companies with large global supply chains.
IATA’s CEO, Giovanni Bisignani, speaking at IATA’s second World Annual Cargo Symposium, suggested that the only way for air cargo to remain competitive is to become customer service focused.
This is a tough business that is only getting tougher. The only way to succeed is to please the customer.”
IATA is in a unique position to lead change in the cargo industry. With operations in 72 countries, the IATA Cargo Accounts Settlement System (CASS) now handles US$21 billion annually, “IATA is serious about air cargo. Our network grew by 60% in the last four years and we have aggressive plans to expand coverage and diversify services in 2008,” said Bisignani.
Bisignani also laid out an air cargo supply chain agenda focusing on safety, security, quality, efficiency and the environment.
Safety: “Last year there were 16 cargo accidents – 16% of the industry total. This is down from the 25% recorded in 2006 but it is still not good enough. IOSA plays an important role. 136 airlines are on the IATA Operational Safety Audit (IOSA) registry but cargo is behind with only one airline on the registry. Our goal is to bring all carriers on board by the end of the year,” said Bisignani.
Security: “Security is still a US$5.9 billion uncoordinated mess for the air transport industry. Our risk management capabilities are excellent but our stakeholders still want to treat air freight like baggage. It is not. Effective security must involve the entire logistics chain,” said Bisignani. “To clean up this mess we need a coordinated effort across the supply chain. The Air Cargo Security Industry Forum, that brings together 27 industry associations, is key to influencing regulators with a common message and coordinated action. We are working on internationally recognised security accreditation standards and a security audit. This includes a global registry of secure supply chain operators, including known shipper details to be used by regulators and the supply chain.”
Efficiency and Quality: “Shippers demand quality and efficiency. Cargo 2000 was established over a decade ago to simplify processes and implement effective quality standards from order to delivery. We simplified the supply chain process from 40 to 19 steps and developed common parameters for quality measurement. Now we need to move faster to increase Cargo 2000 participation and implementation. The key is leadership. The most successful Cargo 2000 members have dedicated quality managers to drive the programme forward. It is time now to consider giving the process some teeth with an IATA quality audit based on Cargo 2000 standards,” said Bisignani.Environment: “Environment is an issue the entire supply chain must address quickly and with a common goal – to achieve carbon neutral growth leading to a carbon-free future. The industry is united behind IATA’s four-pillar strategy on climate change: invest in technology; fly planes effectively; build and operate efficient infrastructure; and use positive economic incentives. Our first target is a 25% improvement in fuel efficiency by 2020. In the last two years, IATA’s efforts in shortening routes, spreading best practice and improving operations saved 25 million tonnes of CO2 emissions,” said Bisignani.
Another item of interest in his speech was on the topic of E-freight. Currently E-freight is offered in 6 key locations covering only 10 percent of cargo volumes. During 2008 they plan to expand the offering to an additional 8 locations.
Source – Iata.org
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