Pioneering Paperless Trade:

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.
• Align industry 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

1. 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.
2. Ensuring compliance with existing security
   regimes, and working through WCO / UN to
   harmonise future requirements.
3. 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.
4. Developing necessary messages system protocols
   to provide for updatable FWB records.
5. Building on Cargo 2000s work to date on quality
   improvement.
6. 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
-gt 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 upTo 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!

• ltAleks Popovich (popovicha_at_iata.org)gt