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An end in sight to the paper chain?

An end in sight to the paper chain?

By Hpanchal on February 14, 2013

A second issue the industry highlighted was the need for a single, multilateral agreement for electronic data interchange between forwarders and carriers, replacing current bilateral EDI agreements. The front of the traditional paper air waybill, showing shipment details and the agent’s or shipper’s signature, converts happily to an electronic freight waybill (FWB) message through which the forwarder can transmit shipment details to the airline. The back side of the document, containing the limitation of liability plus conditions of contract, currently requires an individual EDI agreement to convert it into eAWB format.

IATA is trialing a multilateral agreement under which any forwarder entering into an agreement with IATA is effectively making an agreement with all carriers that have authorized IATA to act as their agent in this regard. The organization hopes to adopt a framework for multilateral agreements at its upcoming World Cargo Symposium in Doha.

Under the rules as they stand now, web e-freight business solutions provider Calogi has calculated that to go completely electronic in its home market of Dubai would require 100-plus airlines to sign bilateral agreements with around 470 forwarders, resulting in 47,000 separate EDI agreements.

The company has developed a new system that sidesteps the need for this. A forwarder simply agrees the limits of liability and conditions of contract online with the airline, and a digitally signed copy of the reverse side of the air waybill is made available to both parties.

IATA meanwhile hopes to adopt a framework for multilateral forwarder agreements at its upcoming World Cargo Symposium in Doha, after Swiss WorldCargo became the first carrier to sign up for proof of concept.

The new-look agreement will reduce the legal burden, says Oliver Evans, chief cargo officer at Swiss. “A lot of negotiating time is tied up on company-to-company and location-to-location agreements and this has slowed the adoption of e-freight.”

Evans says he is “relieved, not disappointed” that IATA is now working to a more realistic timetable. “Its initial e-freight targets were based on the thoughts of airline CEOs who had little awareness of the amazing complexity of cargo. They thought it would be like e-ticketing, where only a single document was involved.”

Swiss is upgrading its back-office systems to handle successive air waybills, recognizing that forwarders may be making adjustments right up to the last minute. This is not only a feature of consolidations, Evans says.

Jan Vreeburg, director of logistics at KLM Cargo, says the original Cargo 2000 concept when the group started looking to streamline the supply chain was that only the first message was valid and later updates to the air waybill were not acceptable. “But volumes and weights may change frequently and in the paper-based chain, it is the waybill that goes to the handler that qualifies as the legal document,” he says. “All major forwarders need to update documents, and we had to adapt to this reality.”

Evans says the IT investment is “relatively minor” for most carriers. “We’re having to upgrade but we would be doing it anyway.”

He accepts that IT and infrastructure costs are more challenging for smaller players, but says community services such as those established in Hong Kong and the Netherlands can help. Switzerland is looking to set up something similar, he says. “It enables you to send and accept the necessary messages at low cost.”

Saskia van Pelt, cargo business development director at Amsterdam’s Schiphol Airport, believes some forwarders have had a negative attitude toward e-freight, slowing progress. Unable to see a payback, they have been unwilling to change their working methods or invest in new systems without a financial incentive from airlines, who they see as the chief beneficiaries.

This view is flawed, van Pelt claims. “The fact that a single data set can be input by one party at the beginning of the supply chain, and then used to populate fields in every process along the way, must surely save time and money for everyone.”

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