eAWB not as pressing a priority as IATA hopes

ELECTRONIC airway bills (eAWBs) may be the future but at the current rate of
adoption that future is a long way off. Devised and pushed by the International Air
Transport Association (IATA), the eAWB was expected to tear airfreight from the
1080’s and into the 21st century.

Whether through arrogance, ignorance or a comprehensive failure to recognise the
antiquatedness of the sector it was addressing, IATA’s targets fell well short of
the mark. Launched in 2012, the association had hoped for full market penetration
within a few years. But as those years rolled on the targets dwindled.

Latest penetration figures show 42 per cent uptake in eAWB shipments, and that’s
only in the countries that ratified Montreal Convention 99. In Brazil, China, Costa
Rica and Egypt, eAWB suffers from a complete withdrawal of government support, while
12 other nations, including Turkey, have said they are not open to the idea.

With these no-shows, that 42 per cent figure suddenly drops even further. It is
certainly nowhere near IATA’s revised target of 56 per cent uptake by the close of
2016. Why? On the face of it, removing paper from the supply chain is a fundamental
strong ideal. Paper documentation can be lost of destroyed and in any case it seems
ludicrous that for more than 20 years passenger airlines have been supplying tickets
online and yet a forwarder cannot track a shipment via mobile phone.

John DeBenedette, managing director of Worldwide Information Network (WIN), says
that there are strong economic and operational benefits in switching to eAWB. He
notes that Lufthansa, as an example charges EUR 12 per house bill compare to EUR 1
for those sending the data electronically. “We are not even talking about paperless
e-AWB shipments, just the electronic AWB data,” he adds. “When you advance to
paperless, you can save a fortune on forms and paper handling.”

While this may be the case, tour principal at Sound Moves John Corr says that for
smaller forwarder they need to look at the costs associated and how they can be
allocated, especially as it is presently quite simple to pass that EUR12 fee onto
the client.

“How could you pass the cost of a new IT system onto the client?” he asks.
Furthermore, Corr says it is all very well having the ability to send data
electronically but some countries are not set up to use these systems. “We see the
logic but it just does not work for us,” says Corr.

He says that a lot of the more “esoteric” countries have yet to adapt to electronic
documentation and as such Sound Moves uses Carnet Documents – an international
customs document to clear customs in 86 countries and territories without paying
duties and taxes on merchandise that will be re-exported within 12 months. “There is
no electronic equivalent to these,” he continues. “When I discussed this with IATA
their response was ‘what’s a carnet?’.

Corr says he would adopt the system if it provided the certainty that goods would be
delivered but as it stands the concerns over certainty do not outweigh the potential
benefits. To DeBenedette’s claim that sending data electronically generates
automatic tracking alerts as the shipment moves, Corr responds: “It is only a matter
of minutes to check these statuses manually.”

However, another leading UK-based air freight forwarder agrees with IATA – and
possibly common sense too – that eAWBs are the future but says the hindrance in
market update is that there is just not the impetus to switch over from paper. “I
appreciate that we should not need to be forced or dragged into the modern era, but
it is about priorities and this is not far enough up the list at this point,” he
says. “Developments will incorporate this as we make them but we have no committed
timeline to it currently.”

Robert Mellin, engagement lead for the logistics customer unit industry and society
at Ericsson, backs this view, noting that the industry does not need to switch to
eAWB to function correctly. “Taking your business specifically, revenues from
imports are roughly three times those of exports, and as an independent we won’t
drive our partners to progress eAWB in their own origins, at least not until their
use becomes compulsory,” says Mellin. “Likewise in the UK we can function without
this so we don’t have to commit resource to the solution.”

On top of this, there is very little encouragement for sign from carriers that they
are eAWB-ready, with Mellin citing mild enthusiasm from the likes of IAG to switch.
This, however, is not sufficient enough to offer any real commercial benefit to the
company at this stage. “There is really no pressing demand for us to conform from
carriers we work with,” he says.

DeBenedette strongly disagrees with this position: “It is sad that the perceptions
don’t match the reality.” Of course every company has a limit on IT resources, and
for many independent forwarders the priority over the last half-decade has been on
customer-centric projects, such as developing order and supply chain management
solutions. “This is a greater priority for us in terms of maintaining and winning
clients,” one says. “We have made some real progress with this and have a solid
solution which is improving all the time. However, this has left little resources
and budget for initiatives that aren’t immediately adding value.”

And Corr backs this stance: “eAWB has to have some benefits to offset the costs
involved in switching. When a system exists that does, then we will switch.” But the
industry is divided on the issue. Mark Hall, commercial director at Embassy Freight,
a customer of WIN, disagrees with this position. “eAWB is happening, there is
information coming out about this all the time from the sheds and the airlines,” he
says. “There really is not counter opinion for eAWB – and WIN has been saving us
money for over a year on FWB, so it only going one way and WIN is free”

Mellin believes that there is also an issue posed by the IT incumbents who, he says,
have locked themselves into messaging schemes rather than moving into data
exchanging. “The transformation [to eAWB] is then made difficult as transport is not
a very appealing industry as it is complex, very hard to get in, and margins are
low,” says Mellin. “In such an environment, I believe that current IT incumbents
have been busy solving short-term key challenges such as advance information and
security requirements.

“Changing processes, driving cost and lead-time out of the supply chain for the
difference stakeholders has not been priority. With all that said, it’s just a
matter of time before the changes and modernisation has been done with or without
the support from the IT incumbents.”

That matter of time, says Corr, will not be within the next five years: “And I do
believe there will be some nations that trust won’t go for it.”

~ Source: Voice of the Independent, December 2016. No. 060

Categorised in: Airfreight, Supply Chain Trends

This post was written by Ilse Venter