Less and Better Data to build Trust and Efficiency

1. Less and Better Data to build Trust and Efficiency Pioneering Paperless Trade: The way covered and the way ahead Experience of IATA UN/CEFACT Executive Forum Geneva , 20-21st June 2005

2. Who we are and what we do • Who we are: • IATA: International Air Transport Association • What we do: • represent, lead, and serve the airline industry • drive “Simplifying the Business” (via CEO mandate) • Simplifying the Business covers: • Air Passenger: 100% e-ticket, CUSS, RFID, Bar Coding • Air Cargo: IATA e-freight

3. Background/Business Drivers • Air cargo: a good news story • Air cargo: a complex business! • In 25 years average end-to-end transport time for a consignment remains at approx 6.5 days (excluding flight time). • Average of 20-30 paper documents accompany “Master Air waybill” for each consignment (enough to fill 39 747-400 freighters p.a.!) • Air cargo: a simplification opportunity! • Cost to issue and process paper docs is c.30 US$ per consignment when electronic methods could reduce this figure by 80% • Cost saving opportunity for air cargo industry of 1.2b US$ p.a.

4. IATA e-freight: Objectives • Eliminate need to produce and transport paper documents for air cargo shipments by moving to an industry-wide, simpler, electronic, paper-free environment • Enable air cargo industry benefits of c. $1.2billion per annum, arising from freeing the supply chain process from dependency on paper. • Target “early adopter” implementation by end 2007, full adoption by end 2010

5. IATA e-freight: Strategy • Drive a simpler, electronic, paper-free, air cargo industry. • Alignindustry energies • Harness forces for change from Customs / Security, and Forwarder “voice of the customer”. • Enable industry infrastructure that delivers a simplified electronic operating environment for air cargo.

6. IATA e-freight: Blueprint

7. IATA e-freight Roadblocks: Today we would have paper free air cargo business processes if…….. • Governments & Customs have agreed to accept electronic data records as a paper substitute • We have satisfied Security Requirements • We have agreed industry common procedures for handling electronic versions of ancillary paper documents (invoices etc.) • We have introduced an updatable FWB record into airline systems • We have improved industry messaging quality • We have justified the required programme investment

8. …And Their Removal We can start now by: • Building pilot network linking those authorities ready to move now. Identifying key gaps in major trade flows, and lobbying those authorities to sign necessary treaties, or grant necessary permissions. • Ensuring compliancewith existing security regimes, and working through WCO / UN to harmonise future requirements. • Using data imaging to capture non-standard documents for electronic storage and transmission. In conjunction, promote use of digital signatures or other means of document authentication. • Developing necessary messages & system protocols to provide for updatable FWB records. • Building onCargo 2000’s work to date on quality improvement. • Developing standard cost/benefit templates for individual use, and providing supporting industry data.

9. IATA e-freight: Progress so far Dec 04: Development of initial proposal. Mar 05: Broad agreement of IATA Cargo Committee Mar 05: Preliminary “Industry Action Group (IAG)” (CV, LH, BA, EK, SQ, FX) Apr 05: IAG commitment to be “early adopters” Apr 05: IAG commitment to IATA e-freight approach May 05 ->: Forwarder and Customs engagement

10. IATA e-freight: Current Structure IATA StB Program Director IATA e-freight Project Director Process & Standards Legal and Regulatory Systems Communications Stakeholder Management

11. IATA e-freight: Current Structure IATA Board of Governors IATA StB Program Director IATA e-Freight Industry Action Group IATA e-freight Project Director IATA e-Freight Pilots IATA e-Freight Stakeholder Gps Process & Standards Legal and Regulatory Systems Communications Stakeholder Management Planned

12. IATA e-freight: What are the Benefits?General • Accelerated delivery • Satisfies new and forecast customs requirements (e.g. US AMS) • Reduced error and corresponding dispute rates • Reduced labor costs • Greater process efficiencies and opportunities

13. IATA e-freight: What are the Benefits?Airlines and Freight Forwarders • Decrease in FTEs • Reduced printing, warehousing and distribution costs • Improved cash flow • Diminished working capital requirements • Revenue retention and growth • Increase in market share (versus other transport modes) • Aggregate industry financial benefits of USD 1.2 billion per year

14. IATA e-freight: What are the Benefits?Importers and Exporters • Reduced levels of buffer stock • Decrease in insurance premiums • Recovery of unclaimed duties • Improved cash flow • Diminished working capital requirements

15. The Top 5 Crucial Success Factors… and Lessons Learned • Mandate from the “top” • Force for Change (e.g. Customs / Security) • Skills and Experience (e.g. Change Management) • Critical mass of “early adopter” forwarder, carrier, and customs authorities • Implementation focus (e.g. pilots) • All paper, not just the Master Air Way Bill! • Stakeholder (“Ego”) Management!!!

16. To sum up:To make paperless trade happen we need to deal with…. • Inconsistent Legal and Regulatory Frameworks • Customs requirements • Data and Communication Standards • Data Confidentiality and Security • Systems ownership and control

17. Thank you! <Aleks Popovich (popovicha@iata.org)>