By the end of 2020, the international air cargo supply chain needs to reduce the time it takes to transport a shipment from origin to destination by as much as two days, the head of cargo for the International Air Transport Association (IATA) said today.
Des Vertannes told the association's World Cargo Symposium in Los Angeles that compressing end-to-end transit times by between 30 to 40 percent would strengthen the sector's value proposition and stanch the flow of cargo that has been shifting from air to ocean services.
A typical international shipment booked by a freight forwarder and flown in the belly of a passenger jet takes, on average, six to seven days to reach its final destination. That time window has remained virtually unchanged since the 1960s. Shipments spend as much as 80 percent of that time languishing in customs, waiting to be processed and cleared, or stuck in a supply chain maze that can include the ground-handling agent, a trucker, an importer, and a customs broker.
The industry's inability to shrink these cycle times has neutralized air transport's speed-to-market advantages and has led many shippers to rethink the notion of paying a premium price for the service. In recent years, container ship lines have improved the speed and reliability of their transit times, resulting in an ongoing shift to lower-priced ocean services from air. The traditional airport-to-airport cargo sector, where goods are tendered by a forwarder to an airline, flown to destination, and then turned over to the forwarder, faces severe competition from integrated carriers like FedEx Corp., UPS Inc., and DHL Express, which operate their own international networks supported by their own technology to deliver door-to-door service within their so-called closed loops.
The blunt-spoken Vertannes told the group that a "game-changing innovation is sorely needed in air cargo," adding that the industry has "been mostly stagnant since 2008." Vertannes said that the industry must overcome multiple challenges if it is to benefit from any global economic recovery and stay relevant to its users. "Our customers pay a premium price to ship by air-they deserve to receive a premium service," he said.
One of the industry's biggest challenges is to wean itself off of paper documentation and make greater use of digital platforms. Each international shipment requires 30 or more paper documents to process and transmit, IATA has said. In 2006, the group began an industrywide initiative called "e-freight" to replace paper with the electronic exchange of data and messages. The next year, it began laying the groundwork for an e-air waybill, which would replace the paper air waybill with an electronic data interchange (EDI)-based digital agreement between an airline and a forwarder.
IATA is aiming for a 22-percent global penetration of electronic air bills by the end of the year. Currently the penetration rate stands at about 12 percent.