Balancing Air Cargo’s Heavy Load

Air cargo

The global air cargo industry is facing an undeniably challenging year ahead. Volumes increased slowly but steadily over the course of 2013, and some markets picked up faster than others.  Current indicators suggest we will continue to see a small upturn — welcome news for an industry that plays a key role in world trade.

Unfortunately, even this limited growth has its price, as reflected in lower yields in some areas. If the 2008-09 recession and its lingering impact on the global economy have taught us anything, it’s to temper optimism with a dose of realism.

We continue to be challenged on all fronts with increasing regulatory requirements, and the cost of compliance remains high. Airlines must implement the European Union’s ACC3 requirements within the first six months of the 2014, and the process to do so is physically challenging, time-consuming and costly.

U.S. Customs and Border Protection is preparing a public rule-making for advance cargo data reporting later in the year, an initiative that one Customs official said would “impact everyone’s business model forever.”

Douglas BrittinDouglas Brittin

Both actions emphasize the need for increased awareness across the global air cargo supply chain regarding the potential impact on costs and services. More important, they underscore the need for standardization of regulations, practices and procedures to the greatest extent possible. The industry can’t afford the cost of complying with a multitude of unilaterally applied measures, and should instead be able to reap greater efficiencies from common standards. This is especially significant in light of the pressure on yields. It is critical to find ways to enhance security without disrupting vital air cargo flows.

Within the air cargo industry, the adoption of e-cargo must remain a high priority. In terms of a paperless air cargo supply chain, some of our industry’s leading companies are already there, but there is a considerable amount of work to be done. Industry commitment is still needed to achieve the goal that core transportation documents become paperless on at least 80 percent of the world’s trade lanes by the end of 2015, and that the traditional cargo pouch accompanying air shipments be eliminated for a large set of shipments. As part of this, a key goal will be to make airway bills 100 percent electronic within the same timeframe.

These goals also must mesh with the regulatory requirements for advance data, which heightens the importance of getting this task done as quickly as possible.

Although our attention is inevitably drawn to the decisions being made (often unilaterally) in Washington and Brussels, we also must be attuned to developments outside of these traditional regulatory powerhouses. The BRICS countries — Brazil, Russia, India, China and South Africa — must be a key focus, but we can’t lose sight of the need to implement “e” capabilities globally. The myriad of smaller and medium-sized forwarders and carriers around the world must be on the same playing field for the industry to have a system that operates fluidly, and that does not alienate or frustrate shippers.

In the last 10 years, regulators have focused on three issues: security, security and security. That focus must expand to include customs and trade facilitation, the environment, market access and other critical matters affecting the flow and speed of air cargo. Security will continue to top the regulatory agenda in 2014, and The International Air Cargo Association will reiterate its strong view that security must be addressed through a common, unified approach. As 2013 demonstrated, it’s possible to reach international agreement on key issues facing the aviation industry, with the decision by 191 countries at the International Civil Aviation Organization General Assembly in Montreal to develop a global market-based measure for aviation emissions from 2020. This is a major breakthrough in the development of global standards for the industry and one that we will continue to support.

We must deliver a common message to regulators and quasi-regulatory bodies so they understand the broader impact of their decisions, not only on industry but the wider economy, as well. A key part of TIACA’s role is to make sure legislators and regulators understand the valuable role air cargo plays in world trade. With 35 percent of global trade by value moving by air — goods worth $6.4 trillion a year — we must ensure they are fully aware of the potential impact of their actions.

In recent years, we have started to see measurable recognition that our message about greater collaboration with legislators and regulators is getting through. We will be working even harder on behalf of all industry segments in this area in 2014, encouraged by the growing willingness of all sides to get around the table. 

Douglas Brittin is secretary general of The International Air Cargo Association. Contact him at secgen@tiaca.org.

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