January 26, 2017

IATA's air cargo messaging language integrated into UNCTAD customs system

Link-up enables air supply chain, customs regimes in 90 nations to talk same digital language, IATA cargo chief says.

By Mark B. Solomon

The International Air Transport Association (IATA), the leading global airline trade group, said the United Nations Conference on Trade and Development (UNCTAD) has integrated IATA's cargo messaging standards into its automated system, which is used by 90 countries to support their customs procedures.

The integration of the IATA system, known as "Cargo-XML," standardizes the electronic communications between airlines and customs authorities using the program, IATA said. The system is designed to simplify communications by eliminating message duplication. It is part of a broader plan to unify messaging protocols between the air cargo supply chain and global customs authorities in an effort to improve the flow of air-shipped goods.

The international airfreight industry has struggled to develop and implement advanced digital procedures to streamline messaging flow. The result has often been frustrating delays in getting cargo moved from airports to final destinations, which neutralize the time-to-market benefits of air transport—by far the costliest form of international delivery services.

The UNCTAD partnership means "airlines, freight forwarders, shippers, and border agencies in over 90 countries can now talk the same digital language," said Glyn Hughes, IATA's global head of cargo, in a statement. "It takes the industry one step closer to achieving the global adoption of a standard air cargo messaging system."

The adoption of Cargo-XML will make it easier for airlines, freight forwarders, and shippers to comply with specific technical guidelines established by the various customs bodies and regulators, according to IATA. It also facilitates custom risk assessments for air cargo shipments and improves compliance with security regulations.

"Considering the complexity of trade flows [and] increasing demands on advance risk assessments and operational efficiency, electronic data interchange is an integral component of customs modernization programs," said Shamika N. Sirimanne, director of UNCTAD's division on technology and logistics, in the same statement.

Established in 1964 as a permanent intergovernmental body, UNCTAD is the principal organ of the U.N. General Assembly that deals with trade, investment, and development issues.

Much of IATA's cargo-related focus has come in the area of improving digital connections among multiple stakeholders to support the movement of high-value, time-sensitive air shipments.

An IATA-commissioned study released last month found that a 1-percent increase in a country's air cargo connectivity with the rest of the world translates into a 6.3-percent increase in total trade by value. The study is believed to be the first to quantify the impact of improved air cargo IT connections on world trade growth.

Only 1 percent of global trade tonnage moves by air. However, air transports 35 percent of world trade's value, which is equivalent to US$5.6 trillion a year, according to IATA. Many high-value international goods move by air because the mode's swift transit times are necessary to get expensive products to market as fast as possible. But the lack of connectivity among supply chain stakeholders can slow down the end-delivery cycle, offsetting air's natural speed advantages.

The IATA study also found that air transport is vital to facilitate what the authors called "Global Value Chains" (GVCs), a relatively new model in global trade. Rather than centralizing all product-development and manufacturing tasks in one location, companies can perform individual and narrowly defined tasks in different countries. The efforts are then combined into a network of trade and investment links to provide the finished products. The World Trade Organization (WTO) estimates that almost half of global trade now takes place within a GVC framework, according to the report.

"Cross-border movements of component parts are a key element of the business model. These components are often relatively small, but high value. This characteristic makes them well suited to air transport," according to the authors. A fast and reliable airfreight network enables participants to "keep inventories low, and rapidly bring together components for final assembly," they wrote.

A 1-percentage-point increase in the connectivity is associated with a 2.9-percentage-point increase in GVC participation, according to the report.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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