E-FREIGHT

EARLY ADOPTION OF IATA E FREIGHT

The 3rd Annual Middle East Aviation IT Forum 2005 November 2005 Niranjan Navaratnarajah Manager Cargo Systems & Revenue Airline

TODAYS REALITY….

Average of 38 documents per shipment at a cost of US$30 Early adopter implementation (end 2007) will generate savings of US$800 million per year.

Industry savings will be US$1.2 billion per year when fully implemented (2010).

Paper used in processing shipments every year could fill 39 B747-400 or 81 A-300F4-600R freighters.

20 years ago it took 6.5 days on average to send a shipment internationally, today it still takes 6.0 days - 1 day to fly, 5 days to wait for the paper.

INDUSTRY ACTION GROUP IATA has formed a preliminary Industry Action Group representing air cargo stakeholders made up of British Airways, Cargolux, Emirates, Fedex, Lufthansa Cargo, Singapore Airlines, World Customs Organisation and Freight Forward International.

GATHERING MOMENTUM

HOW WILL E-FREIGHT HELP YOUR BUSINESS?

Reduce costs by eliminating duplication.

Speed up processing.

Improving overall data quality.

Expedite security and customs compliance.

As customs are increasingly demanding electronic information in advance will also help avoid fines and other costs associated with non-compliance.

Better transparency and reduced shipping times for your clients.

BENEFITS

Shipper:

Expedited movement of goods, improved quality of service.

Forwarder:

Process efficiency, reduced cost of compliance.

Airline:

Process efficiency, cost reduction, improved competitiveness of air freight.

Customs:

Faster, more accurate information for security screening & clearance.

Consignee:

Reduced transit times.

TARGET Eliminate the need to produce and transport paper documents for air cargo shipments by moving to an industry-wide, simpler, electronic, paper-free environment.

Early adopter implementation by end 2007, full industry implementation by end 2010

ACTION PLAN Develop governance to effectively represent early adopter forwarders, carriers, shippers, customs and also ensure effective engagement with key industry bodies.

Harmonise current industry data and communication standards.

Define user requirements and system functionality to support a potential technical solution RFP process.

Identify roadblocks to the elimination of paper, and develop a plan to remove them.

Develop a legal framework to operate a paper free end-to-end process.

ACHIEVEMENTS IN FIRST 6 MONTHS

Roadblocks identified

Process & Standards, Stakeholder Mgt, Legal & Regulatory, Technology.

Business Process and Data Standards set

Detailed “As-Is” and “To-Be” business processes and documents mapped out.

Engagement and alignment underway

Inc: Industry Action Group, FFI, FIATA, WCO, Cargo 2000, Cargo Committee, UN, EU.

Legal and Regulatory challenges mapped out

Scale of challenge understood to achieve MC99 and MP4 treaty ratification.

Technology options under evaluation

Technical options under evaluation to support IATA e-freight Business Change.

E-FREIGHT IS ABOUT

ALIGNMENT

World Trade Organisation

World Trade Harmonization DOHA

WTO

UN/ECE TF Recommendtions including Single Window

UNECE

EDIFACT & UN XML UNeDocs BP & Data Models UMM & CCTS Methodologies

UN/CEFAC T

ISO 15000 (ebXML)

ISO

ISO 7372 (UNTDED)

ISO TC 154 WORLD CUSTOMS

Framework of Standards Data Model v2 EU Customs - TAXUD e-Customs 2007

IATA

e-freight Airlines Forwarders Integrators Agents

WCO STAKEHOLDERS

BUSINESS VISION DEC 2015      DEC 2010   AIR CARGO Industry Shipper to Consignee Eliminate ALL DOCS MULTI-MODAL Cargo Buyer to Seller Piece level Enabling IT   Forwarder to Forwarder including Customs    Eliminate PRIMARY DOCS E-freight on major trade-lanes Enabling IT (inc. RFID) 95% E-freight penetration Enabling IT (inc. RFID)

PILOTS Surveys being completed.

covers all Airlines globally targets specific Customs and Freight Forwarders.

Campaign for countries targeted as "Smart" Pilots.

Based on volume and technology for customs, carrier, forwarder.

BUSINESS STREAM SCOPE Jun 2005 Vision, Scope & Objectives PROCESS Sep 2005 Process Alignment PILOTS Jan 2006 Global Harmonisation DELIVERY Jun 2007 Implementation       Business workshops Document analysis 2007 early adopters 2010 95% air   (UN Customs (WCO) Industry (C2K) Standard Docs CEFACT) Standards  Smart pilots agreed  Local delivery plans  Commitment (MoU)   Top 20 Gateways Local cluster workshops

LEGAL STREAM Carriage Oct 2005 Treaties / limitations Legal Country Dec 2005 Customs regulations Legal Framework Development Mar 2006 Accreditation / commitment Delivery Jun 2007 Implementation Solitions    MP 4 & MC 99 Solution generation Remove obstacles  Local agreements  Technical contracts  Document ownership   Local cluster MoU’s Solution generation  Remove obstacles  Legal strategy & plan   Treaty resolution Regulation resolution

TECHNICAL STREAM Industry Audit Jul 2005 Current Technical capabilities Technical Solutions Nov 2005 Technical direction      Air freight industry Airlines Freight Forwarders Related industries Technical workshops    BP 1 BP 2 Supplier workshops Supplier Coordination Jun 2006 Alignment Delivery Jun 2007 Implementation      WCO data model v2/  3  UN CEFACT C2K / WCO Process E-freight timelines Contracts / MoU’s   Develop Test Accredit Implement

OPTIONS TO SUPPORT E-FREIGHT DELIVERY

Three potential directions for technical solutions

Those Who Can, Do Independent Body Commercial Solution

Directions not exclusive

Multiple providers

Combinations possible

NEXT STEPS THROUGH TO DEC 2005

Business

Construct “Smart Pilots” of O&Ds, customs, carriers, forwarders Develop Implementation strategy (local clusters)

Technical

Finalize technical direction / and preferred suppliers

Legal and Regulatory

Evaluate customs regulatory environment Develop “global e-freight index” Develop plan to accelerate MP4 / MC99 ratification

DOCUMENTS IN CONTENTION FOR EFREIGHT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Forwarder reserves space with airline/airline confirms Shipper Booking with Forwarder and route map initiation Forwarder receives shipment and information from Shipper Forwarder due diligence on shipment Forwarder declares goods for export Customs performs risk assessment goods export Customs grants goods for export Freight and information prepared fro transit to carrier (consolidation) Freight and information are transferred to carrier Carrier goods acceptance, pre-manifesting & notification to customer Customs performs risk assessment cargo departure Customs grants cargo release departure Flight loading and final information check Flight Departure Carrier advises origin Customs of cargo departure

PROCESSES 16 16a 17 18 19 20 21 22 23 24 25 26 27 28 29 Carrier ensures destination Customs is pre-advised prior to arrival, where necessary Forwarder ensures destination Customs is pre-advised of goods, where necessary Destination Customs performs risk assessment cargo arrival Aircraft arrival at destination airport Report manifest to customs & appropriate regulatory agencies Offload of freight and transfer to warehouse Check freight and information against manifest Report to forwarder Report discrepancies to customs Forwarder collects & verifies information Customs grants in bond movement of cargo to Forwarder Forwarder receives freight from carrier (in bond) Forwarder declares goods for import Customs performs risk assessment goods import Customs grants good release import

PROCESSES 30 31 32 33 Forwarder notifies consignee Arrange pick up/delivery Consignee receives freights and information and performs freight check Proof of delivery

QUOTES

" Simplifying the Business is a platform for much-needed industry change. Strip out the complexity and the cost. Air freight is too important to be left behind. This industry needs the improved service, competitive edge and $1.2 billion in annual savings IATA e-freight offers."

Giovanni Bisignani, Director General & CEO, IATA

QUOTES

" There is growing demand to conduct business in the same language used by much of the business world -- and that language is increasingly electronic. Customers are demanding it. Regulatory authorities are demanding it. Business partners are demanding it. The time for E-Freight is now."

David J. Bronczek, President and CEO, FedEx Express

QUOTES

“ The only way we can combat costs is to bring in better efficiencies that will enhance productivity. Electronic transactions will not just save the world from inefficiencies of physical paper pushing and associated red tape, but will also create better transparency and speedy real-time processing spanning the entire supply chain. IATA e freight is the way forward, those who are reluctant to adopt this change will be left out in the cold.”

Ram Menen, Senior Vice President Cargo, Emirates

IN SUMMARY….

What does e-freight aim to do?

Eliminate need to produce and transport all paper documents for air cargo shipments.

What is e-freight worth?

1.2b US$ cost savings (reduce cost of paper issue and process by 80%, and shipment time by 25%).

When will e-freight benefits be delivered?

Dec 2010 onwards, with early adoption Dec 2007.

What is our e-freight approach?

Business Change, driving Process and Standards, enabled by Technology.

Align and mobilize all air cargo supply chain participants, led by IATA.

Use critical mass to address current government and regulatory obstacles

THANK YOU