1 IATA e-freight Simplifying the Business. Simplifying the Business INTERNATIONAL AIR TRANSPORT ASSOCIATION 2005 2 IATA e-freight: is a priority for

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IATA e-freight

Simplifying the Business

Simplifying the Business INTERNATIONAL AIR TRANSPORT ASSOCIATION 2005

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IATA e-freight: is a priority for the industry IATA’s Board of Governors have mandated a project designed to

remove all the paper for all stakeholders from air cargo transportation by 2010

This project is now called IATA e-freight E-freight has a “pilot” programme to accommodate those parties that

are able to free their supply chain processes from paper by 2007 The project has the full support from the industry:


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Air Cargo Industry: Needs to change

A good news story… Until recently air cargo carriers outperformed passenger carriers

…but a traditionally complex business Average consignment E2E transport time stuck at 6.5 days Average 38 paper docs accompany MAWB for each consignment 35 million AWBs

…. facing increasing challenges Fuel cost: now accounts for 25% of airline costs Reducing volumes: 13.4% in 2004 to 3.6% in first 8 months of 2005


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Strong forces for e-freight

Security Customs demanding advanced electronic manifest information Large penalties for non-compliance Need for globally coordinated drive for industry simplification

Customers (world trade) Shippers, manufacturers and importers—for their own efficiency

Efficiency Our industry is carrying paper-work costs it can no longer afford.

Alignment and Mobilization Many are joining forces: IATA, WCO, WTO, FFI, Cargo 2000, UN

CEFACT, US agencies


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UN/CEFACT

WCO

Stakeholders

World Trade Harmonization GATT

UN/ECE TF Recommendtions including Single

Window UNeDocs

BP & Data Models

UMM & CCTS Methodologies

UNECE

EU Customs - TAXUD

World Customs

IATA e-freight

Airlines

Freight Forwarder

Integrators

Single Window Data Model v2

e-Customs

EDIFACT & UN XML

World Trade

ISOISO7372 ISO 15000

ISO TC154

IATA

US DoT

ASEAN ASW

C2K

GHA’s

The increasing pressure for e-freight


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IATA e-freight: document issues Today there are several problems with the manual creation and handling of paper documents

Missing / incomplete documentation Slows down the process Customs “holds and snagging” Security aspects from customs regarding time and quality

Documents accompany the freight Handover points Duplication Manual


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Paperless?An air cargo industry which prints no paper

Paper-Free?Air cargo industry processes which are not paper-dependent

Paper-Work?Air cargo industry cost of processing paper, including data quality

IATA e-freight:

Delivers a paper-free industry reducing paper-work!

So, are we entering a paperless era?


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IATA e-freight: in a nutshell What is it?

A joint air cargo industry programme of carriers, forwarders and customs, led by IATA

Aimed at eliminating need to produce and transport all paper documents for air cargo shipments

What is it worth? 1.2b US$ air cargo supply chain cost saving, driven by 80%

reduction in cost of paper-work

When will full benefits be delivered? Dec 2010 onwards with early adoption Dec 2007 onwards

What is our approach? Business change supported by automation if necessary E-freight complimentary but aligned to Cargo 2000 E-freight will enable enhanced supply chain integrity to customers


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2007

2010

2020

All cargo (general & special) Air freight Forwarder to consignee Eliminating the need to

produce and transport typical paper documents

Early adopters (airlines & forwarders) on specific trade flows (general)

Air freight Global implementation

enabling world trade air cargo volume to operate IATA e-freight (general & special)

Eliminate the need to produce and transport all paper documents within the full multi-modal

Shipper to consignee supply chain (buyer to seller) for all cargo at a piece level

e-billing e-booking

Quality Management System

Scope / Objectives

Scope / Objectives

Vision

IATA e-freight: business vision


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IATA e-freight: engaging stakeholders

IATA has formed an Industry Action Group representing air cargo stakeholders made up of Airlines, the World Customs Organization and Freight Forward International

The process is complex with more than 16 000 stakeholders including:

270 carriers 200 customs authorities Well over 15 000 freight forwarders At least 20 industry bodies Ground Handlers


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IATA e-freight: challenges

Customs commitment to e-customs & IATA e-freight Customs present both a challenge and opportunity as a force for

change Industry engagement across the supply chain;

It is critical that all stakeholders in the air cargo industry are engaged


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IATA e-freight: project structure

The Project is divided into three Streams;

Business Stream; Facilitates local implementation plans, process and messaging standards, IATA

e-freight business requirements and other IATA e-freight business process related matters

Legal Stream; Facilitates the identification of legal, governmental, regulatory, and treaty issues

and the generation of solutions for the same. Supports the IATA e-freight programme with legal analysis & advice

Technical Stream; Facilitates technical direction, technical requirements, systems solutions and

delivery, and other IATA e-freight systems related matters


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Business Stream

ScopeJune 05

ProcessSep 05

PilotsApr 06

DeliveryJun 07

Vision, Scope &Objectives

Process alignment

Preparation Implementation

Business workshops Document analysis Multi modal / end-to-end 2007 early adopters 2010 market penetration Beyond 2010 full multi-modal

Customs (WCO) Industry (C2K) Standards (UN CEFACT) Policy

Smart pilot selection Standard delivery plans Cargo Committee

Commitment Airline fast track Country and cluster

workshops

Major trade lanes Cluster delivery


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PRIMARY Documents

Shippers Letter of Instruction House Air Waybill Master Air Waybill (Consolidation) Air Waybill (Single) Commercial Invoice Packing List Proforma Invoice Flight Manifest House Manifest Import Goods Declaration Import Cargo Declaration Export Goods Declaration Export Cargo Declaration Customs Release Airline Delivery Note Forwarder Delivery Note Forwarder Pickup Note

Process & Data : primary docs identified

Document Raised By Document Viewed By

Key


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Process & Data: “to-be” data flows mappedHigh level e-freight data-flows (draft) ver. 0.2 08/02/06 < Responsible Roles >

Import Customs (goods

clearance)Import forwarderExport Forwarder

Create House AirWaybill

message (FHL)


message (FHL)

Consignee

Import Customs(security)

Import BrokerCarrierExport CustomsExport BrokerShipper

Create “Cargo”information

Message- Shipper details- Consignee details- Pieces- Weight- Dimensions- Marks/numbers- Gen. description- Payment method- Dep/Arr airports- Routing (optional)- Value – carriage- Insurance requested- Handling info/remarks- Date / signature

Create “Goods”information

Message- Detailed description of goods- Commodity codes- Value for CustomsEtc…..


message (FZB)

Create Master Air Waybill

message (FWB)

Create Export Goods Declaration message(may be done by shipper, forwarder or separate broker)

Receive & “accept” FWB

Fwdr / carrier contract

Create Flight Manifest

message (FFM)

Post flight confirmation of departure

Create “post flight”

confirmation of departure” message

Flight departed

Goods cleared for export

Clear Export Goods

Create “export goods release”

message

yes

Goods cleared?

Create Import Goods Declaration message (part)

Complete Import goods

declaration message

Clear Import Goods

Clear import cargo

(security)

Create “goods released import”

message

Goods ok to release to forwarder

Goods ok to collect from carrier

Create Consolidation

List (FHL)


List (FHL)


List (FHL)


List (FHL)

Goods cleared for export

Requires one FHL per HAWB since shipper/consignee details are required by Import customs (security)

Shipper /fwdr

Contract


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Smart pilots survey conducted Q4 2005 Covered all airlines globally Targeted specific Customs authorities and freight forwarders Determined high level messaging capability and interest to participate in e-freight trials

Pilots filtered on volume and messaging capability for customs, carrier, forwarder

IATA e-freight: identifying pilot countries


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Canada United States of America Chile Sweden United Kingdom Germany Netherlands Spain South Africa

Dubai (UAE) China Hong Kong Singapore Malaysia Korea (south) Japan Australia

IATA e-freight: customs surveyed

Chosen on the basis of:-

•WCO recommendations

•Global cargo volume

•Geographical split


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Total number of Freight Forwarder locations (16 countries): 96

Total number of Freight Forwarder companies: 58

FFI members 8

Others forwarders 50

IATA e-freight: forwarders surveyed

Involving the wider community of freight forwarders will be key


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IATA e-freight: plan for pilot country selection

Systems/Business

Jan 06

Legal – Government Audit

Mar 06 – May 06

Legal - MOUs Early Adopters

Feb 06

Legal - MOUs Local Clusters

May 06

Analyzing Horizontal and Vertical

Surveys

Government and Customs

Audit

Assess Impact of

Treaties

Analyze airline response.

Analyze Vertical response.

Initial Selection Smart Pilot Countries.

Conduct country governmental and customs audit.

Refine selection of Pilot Countries based upon results.

Assess need to add countries to and/or amend list of Pilot Countries.

During Cargo Week, Obtain commitment from Cargo Committee Airlines.

Obtain commitment from other participating non-Cargo Committee Airlines (Air Canada, Iberia).

Obtain MOUs from all other stakeholders involved in Local Clusters: Airlines, Freight Forwarders, and Customs Authorities.

Obtain Commitment

Local Clusters

Legal – Assess Treaties

May 06

Government treaties audit.

Use MP4/MC99 treaty matrix to assess status of treaty ratification and compatibility of Pilot Countries.

Use results as filter for further screening of pilot countries to refine selection and create Local Clusters.

Obtain Commitment From Early Adopter Airlines


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Governmental, Customs, and Regulatory Issues

Customs Authorities Must Adopt, Develop, and Implement a WCO Compliant Single Window Concept Determine whether each customs authority intends to develop and implement a single

window concept Determine whether and extent to which the custom authority’s single window concept is compliant with the

WCO Data Model Determine manner in which it differs from the WCO Data Model Determine manner in which the custom authority’s single window concept allows for the identification and

recognition of Authorized Economic Operators Determine realistic timeline within which the customs authority will be able to implement the single window

concept

Determine the legislative and regulatory environment that must exist within the government in which the customs authority operates for the single window to implemented

Determine whether the government’s customs code or similar construct need to be expanded and/or amended Identify branches of government involved in these processes Identify what the processes entail and determine timelines within which the governmental and regulatory

environment of the government will be ready for implementation of the single window


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Governmental, Customs, and Regulatory Issues

Ownership of Customs Data - Responsibility for inaccurate and incomplete data Determine laws and regulations that exist within each government regarding liability for

inaccurate and incomplete data Develop industry position (for airlines, forwarders, customs authorities) and push

governments to adopt the same

Authentication of Data and Electronic Signature Requirements Determine status of each government with respect to the regulations and requirements for

authentication of data and electronic signatures

Ownership of Documents Determine which, if any, documents within each government’s e-freight air cargo supply

chain have ownership issues attached at the international, national, local, or private level


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Treaties: assessing the globe

Warsaw Convention (for the Unification of Certain Rules for International Transportation by Air) and Warsaw as Amended by the Hague Protocol. Paper air waybill required for carrier to assert liability limits stated in Warsaw,

Warsaw-Hague.

Montreal Protocol No 4 (MP4) (Amends Warsaw Convention) Allows electronic air waybill. Carrier may assert liability limits stated in

Warsaw-Hague. Montreal Convention 1999 (MC99) (for the Unification of Certain Rules for

International Carriage by Air) Allows electronic air waybill. Carrier may assert liability limits stated in the

Montreal Convention. New Treaty. Prevails over Warsaw and MP4.

Government of Origin and Destination must be party to the same treaty (MP4 or MC99) for the treaty to apply


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Treaties: status of “smart pilot” governments


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Pilot clusters: selection criteria Matching treaties for MC99 & MP4 countries

Minimum 1 EU country in each cluster Easy to expand to other EU countries Easy to transfer to another EU country if one drops out

Risk assessment of likely compliance Put countries more likely to drop out in separate clusters

Trade volumes Ensure at least 1 large trader in each cluster

IAG Champion in each cluster to drive implementation


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e-freight implementation: capability roadmap

Shipper

Shipper

Shipper

Shipper

Forwarder

1

Forwarder

3

Forwarder

5

Customs 1

Customs 3

Customs 2

Customs 4

Forwarder

2

Forwarder

4

Forwarder

6

Customs 5

Customs 6

e e

Forwarder infrastructure in placeCarrier infrastructure

in place Customs SW roll-out

e

Shipper infrastructure

in place


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CA

US

CL

GBSE

DE

ES

NL

ZA

UAE KR

SG

JP

MY

AU

CN

IATA e-freight: pilot clusters

HK

MP4

Both

MC99

Neither

MC99?


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Pilot clusters: why 4- 5 countries per cluster?

Simplifies pilot implementation If all 17 pilot countries set up e-freight pilots with each other, 136

pairs of O&D pilot e-freight lanes would have to be set up

Enables more penetration opportunity than simply grouping countries in pairs

Protects against the risk of individual countries dropping out Remaining countries in the cluster will still have e-freight

partners to work with


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Develop Global

Implementation Plan

Complete Global Agenda

Meet with StB Reps

Organize Local

Workshops Workshops

PlanFeb 06

AgendaFeb 06

OrganizeFeb 06

WorkshopsMay 06 >>

HandshakesMar 06

IATA e-freight: business implementation plans

Develop global standard implementation plan

Output;

Provide a “standard” implementation plan for country managers

Clear idea of e-freight deliverables for 2006

Output;

Standard Agenda do be distributed to StB Reps

Develop strategy for organizing meetings, where, when and who

Output;

Draft workshop plan per cluster:

Implementation Managers meeting

Output;

Agree on plan, deliverables, targets, roles and responsibilities

Initiate workshops

Output;

Workshop deliverables


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IATA e-freight: global implementation plan

The IATA Business Process Stream will develop a global “standard” implementation plan which will be used as the basis for each individual pilot country’s implementation plan

The global plan will be tailored to fit each local situation – at country and cluster level – by the local StB representative with support from the central e-freight team

The overall management of each local plan will be coordinated by IATA Regional Programme Managers (RPMs), with support from the central IATA e-freight project team


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IATA e-freight: local implementation plans

The e-freight implementation plan for 2006 includes three workshops per country

For economic areas with several potential participating countries and a single Customs Code, country workshops will be combined to ensure a common approach. This applies to EU and ASEAN and will reduce the total workshop requirement

Some of these workshops will be for “clusters”, enabling O & D country pairs to prepare for implementation


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Technical Stream

Current Technicalcapabilities

Technicaldirection

IndustryAudit

Jul 05

Technical Solutions

Nov 05

Supplier Coordination

June 06

DeliveryJul 07

Alignment Implementation

Air freight industry Airlines Freight Forwarders Related industries Technical workshops CCS E-commerce

RFI Supplier workshops Technical workshops WCO data model v2/3 UN CEFACT C2K / WCO Process

Detailed requirements E-freight timelines Preferred supplier(s) Contracts / MoU’s

Develop Test Technical accreditation Pilot Implementation


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Fully commercial environment Three potential options in a fully commercial

environment Those Who Can, Do Independent, industry neutral body Commercial Solutions

Directions not exclusive Multiple providers

Combinations inevitable in a commercial environment

Technology: options to support delivery


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Milestones

Legal Country

Legal FrameworkDevelopment

2005 2006 2007

Current Technicalcapabilities

Technicaldirection

IndustryAudit

Technical Solutions

Alignment Implementation

Supplier Coordination

Technical

Treaties /limitations

Government & Customs

Carriage

Cluster commitment

Legal solutions

Legal

Vision, Scope &Objectives

Process alignment

Pilot preparation

Pilot Implementation

Scope Process Pilots

Business


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Gathering Momentum

CEFACTUN e-docs

UnitedNations

50+ FreightForwarders

IATA e-freight

16 x Customs

9 x Forwarders

6 x Airlines

World CustomsOrganization

(WCO)

14 x Airlines

C2K

E-customs

ASWASEAN

SingaporeTradeXchange

HongKongTradeVision


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