WCS faces up to industry challenges

The International Air Transport Association (IATA) concluded its 10th World Air Cargo Symposium (WCS) after facing up to the numerous challenges confronting the industry with a substantial number of unanswered questions and a handful of new commitments and initiatives to deliver greater value to customers and enhance air cargo’s ability to bring economic and social benefits to the world.

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“The air cargo industry has had a rollercoaster ride over the last decade. But the continued success of the World Cargo Symposium, culminating in a record attendance of over 1,100 delegates in Berlin this year, shows the commitment of the industry to share best practice and generate action plans to tackle the industry’s greatest challenges,” said Glyn Hughes, IATA’s global head of cargo.

pic2Discussions over four days at the WCS focused on the challenge of potentially disruptive new technologies and changing business models. The international economy is also changing, as growth markets mature and the global supply chain evolves. “Air cargo must be ready for this uncertain future,” Hughes added.

In his opening address on day one of the event, IATA director general and CEO Tony Tyler called for continued transformation in the air cargo industry with a focus on raising the quality of its offering.

The global air cargo sector continues to face a difficult business environment. The anemic growth experienced since 2010 continued in 2015 with a 1.9  per cent expansion of volumes but yields have contracted every year since 2012.

IATA estimates that volume growth will increase to 3.0 per cent in 2016 but under ever greater pressure from integrators, competing modes of transport (land and sea) and increased cargo capacity in the passenger fleet, yields are expected to fall a further 5.5 per cent in 2016.

“Air cargo continues to be a challenging environment for airlines to keep revenues ahead of costs. The business, however, generates enormous value. Over a third of goods traded internationally—measured by value—are delivered by air cargo. To do that profitably, the air cargo sector must bolster its key strengths of speed and flexibility with modern processes and improved quality. That means transformation,” said Tyler.

“Compared to other modes of shipping, air cargo is a premium service. Yet shippers give the industry a satisfaction rating of only 7 out of 10 on average. That is not good enough. The industry must raise the service quality of air cargo and provide a more personalised customer service,” said Tyler.

Industry transformation
Tyler questioned why cargo has not undergone the same thorough transformation process that has reinvigorated the passenger side of the business.

“Developments like e-tickets, bar-coded boarding passes, airport self-check-in kiosks and inflight Wi-Fi have transformed the passenger experience. Is it a coincidence that after a decade of change, load factors are at record highs and airlines are finally rewarding their investors with adequate returns?

“We need similar breakthroughs on the cargo side of the business. There are lots of potential disruptors out there—data-sharing platforms, new market entrants, or e-commerce. The challenge is to stay a step ahead in satisfying customer expectations,” said Tyler.

Paperless processes and customised services are critical to the sector’s future, he emphasised. Noting that although the foundations are being laid, substantial challenges remain, including: The slow pace of adoption of the e-Air Waybill (e-AWB) which, as at the end of 2015 e-AWB penetration stood at only 36 per cent. To speed this up, the industry, through IATA, is engaging governments and airports to achieve targeted initiatives.

There are still concerns over the quality of service for time- and temperature-controlled shipments, especially pharmaceuticals. Patient safety is a key concern and compliance certification programmes (such as the CEIV Pharma initiative) are a step in the right direction, Tyler noted. But the breadth of adoption must evolve quickly for shippers to have full confidence in the system.

Teamwork is critical in resolving many of these issues, Tyler urged. “The value of air cargo is so great because it is a team effort. Only if the different participants in the air cargo value chain pull together behind a common vision will the industry thrive in the coming decades.

“If the air cargo business can stay focused on the customer, delivering a reliable, high-quality service at a competitive price, and build on the speed and flexibility for which air freight is renowned, then this business will not only survive but prosper,” Tyler said.

Progress at the 10th WCS
The WCS saw a number of key announcements in line with this agenda including lithium batteries, unit load device (ULD) safety, simplifying the business and CEIV Pharma certification.

Lithium batteries
The various executive forums at the WCS continued to discuss the issue of lithium batteries. IATA will look at measures to track, measure and report on lithium battery incidents. Additionally, the industry will step up its campaign to demand stronger oversight of the battery manufacturers and firm penalties for anyone found in breach of the Dangerous Goods Regulations. Coalition-building with the representative organisations of the world’s battery manufacturers will be pursued.

ULD safety
A safety campaign to reduce the number of ground handling incidents involving ULDs was launched, to minimise flight safety risk and reduce the number of incidents of aircraft and container damage from mishandling. The campaign will be rolled out across the industry throughout 2016 in parallel with the ULD Regulations (ULDR), a single set of regulatory requirements and industry standards applicable to overall ULD operations.
Simplifying the business
Continued innovation in the passenger side of commercial aviation has simplified processes and given the customer much greater control and self-service over their journey. Use of new technology, enhanced use of data and digital information sharing, and streamlined regulatory processes have improved the passenger experience and cut costs for airlines. Similar breakthrough innovations are urgently required in the air cargo business to give greater customer value and increased efficiency and IATA has committed to working with the industry to apply our ‘simplifying the business’ expertise to assist the industry.

Amsterdam Pharma Gateway
An agreement for a new CEIV Pharma community at Amsterdam Schiphol airport was signed between IATA and nearly a dozen airport community partners. The CEIV Pharma covers all air cargo processes, and provides a uniform global set of standards for safe and reliable pharmaceutical transport.

Cargo 2000 rebirth
The nearly 20-year old Cargo 2000 quality initiative with the mission of creating and implementing quality standards for the worldwide air cargo industry was officially given a breath of life and and a new brand. Now known as Cargo iQ, the rebrand is part of a much larger change programme which has seen the 82-member IATA specialist interest group embark on a Smart Data Project, as well as a new audit and certification scheme.

Cargo Innovation Awards
The Air Cargo Innovation Awards initiative which seeks to drive greater innovation by encouraging entrepreneurial ideas for the air cargo industry returns for its second installment. After the first round of the cargo innovation awards in 2015, the second round was launched in Berlin with winners to be chosen at the next WCS in 2017.

The awards are judged on three main categories:
*    Be an enabler for the Industry, leading to increased competitiveness of Air Cargo compared with other modes of transport and/or enable commodities that were not possible to carry in a safe and cost efficient way in the past

*    Increase quality and/or decrease cost of operations

*    Develop technologies that optimise revenue and/or capacity utilisation and/or shorten the lead time and/or enhance service availability

The Symposium concluded with the announcement that the 11th WCS will be held in Abu Dhabi, 14-16 March 2017, sponsored by Etihad Airways.

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