As global air cargo rises, aviation is working to revamp operations

In a year characterised by positive growth, global air cargo is setting the stage for dramatic modernisation and transformation, the International Air Transportation Association (Iata) said on Wednesday.

Air cargo accounted for about $6-trillion in goods value, representing 35% of global trade by value, in 2017, a number which is expected to grow to $6.2-trillion in 2018, Iata chief economist Brian Pearce told delegates during the yearly Iata cargo media day, held in Geneva, Switzerland.

The cargo business’s strong revenue growth, rising 15% to about $50-billion and generating 9% of airline revenues on average, is expected to continue into 2018, albeit at a slower growth pace.

Growth is being driven by better volumes, at well over 60-million tonnes a year, above world trade growth, the firming of cargo yields, the double-digit growth of e-commerce and a strong economic upturn, said Pearce.

He added that cargo freight tonne kilometres were expected to grow by 4.5% in 2018, slowing from the 9.3% growth registered this year as companies restock inventories quickly to meet unexpectedly strong demand.

“Restocking cycles are usually short-lived; the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018,” said Pearce.

This followed several years of virtually no growth before an upsurge in 2016, when freight tonne kilometres grew by 3.8% – nearly double the industry’s average growth rate of 2% over the preceding five years.

“The good news is that it has been a good year for cargo. Growth far outstripped capacity,” said Iata cargo border management head Gordon Wright.

“We are at the point now where there is real growth in cargo,” he added, further noting that 2017 had also been marked by several developments in digital cargo, smart facilities and smart data, among other developments, with modernising and digitalising safety, security and operations firmly on the cards.

Iata aims to unlock a fully digitally connected and integrated air cargo supply chain built on innovative technology, high-quality and available data, streamlined processes and global standards.

In line with this, Iata cargo transformation head Celine Hourcade said that the Simplifying the Business (StB) transformation programme – an umbrella for any transformational initiatives in air cargo – capitalised on e-commerce, data on demand, real-time interaction, end-to-end journey optimisation and the modernisation of cargo distribution.

There are currently six projects under StB, including the e-freight and e-airwaybill (e-AWB); digital cargo and One Record; interactive cargo; smart facility; the air cargo incident database (ACID) and cargo connect.

The e-freight and e-AWB project comprises the digitisation of the core industry transport documents, enabling end-to-end paperless transportation processes for the air cargo supply chain, starting with AWBs.

The use of e-AWBs is now above 50%, with the industry targeting a 68% e-AWB uptake in 2018, according to Digital Cargo head Henk Mulder.

“The development of the e-freight programme has created the foundations of the digitalisation of the air cargo industry and has driven the transformation of the industry with electronic processes and systems,” he added, pointing to One Record, the natural transition from digital cargo.

Digital cargo, which is currently driving e-freight, is being followed by the development of One Record, another StB cargo project that goes beyond document digitisation and is centred on replacing the documents with smart data and ensuring a single-data-entry methodology, with a single input and multiple outputs.

It, in effect, envisions one single master digital shipment record along the end-to-end transport chain that adopts a global “plug-and-play” standard.

“We want to cover the entire supply chain,” he said, highlighting the ambitions of consignees, forwarders, truckers, customs officials, airlines and insurers, among others, with a standard hoped to be defined and set by March 2019.

Meanwhile, on information sharing, Iata is continuing work on its air cargo incident database as part of the StB cargo programme.

“This database of de-identified airline incident reports will offer a secure environment for airlines and ground handlers to pool their safety and operations information, supporting a proactive data-driven approach for advanced trend analysis, predictive risk mitigation and improvement programmes,” the company assured.