57

ICT for 03
airfreight
management
ROBERT MAYER

Air cargo has not had its data revolution yet.

GUILLAUME DRUCY, HEAD OF CARGO E BUSINESS
MANAGEMENT AIR CARGO WORLD, 2015

Introduction
Airfreight is a key component of many modern supply chains, supporting
the competitive advantage of companies in a range of industries from
pharmaceuticals to fashion to agriculture. While air transport contributes to
around 1 per cent of global freight movement by tonnage, in value terms the
share is much higher at around 35 per cent (Boeing, 2014). This highlights
that goods sent by air are often of high value, particularly when compared
to maritime transport. However, goods transported by air are not limited to
high-value items. The perishability of many products (eg owers, vegetables)
requires fast transport from centres of production to centres of consumption.
Airfreight provides fast and reliable movement of these perishable goods.
Other products such as pharmaceuticals are highly sensitive to changes
in the physical transport environment, which demands a focus on quality
management during the transport process; airfreight can offer the required
environment to ensure the appropriate transport of these goods.
The airfreight sector consists of many players. Besides airlines, numerous
other organizations are involved in the movement of goods by air. Unlike
passengers who mainly book directly with airlines, airfreight is frequently
channelled through freight forwarders or integrators, with shippers being
58 E-Logistics for Transport Modes and Nodes

less likely to book directly with the airline. This adds to the complexity of
the sector.
Although airfreight is mainly transported by air (with the exception of
some ‘air’ freight that is occasionally purely trucked), it is highly dependent
on road transport as a form of access and egress to airports. Therefore the
communication between hauliers, ground handlers and airlines is of importance
to ensure limited disruption in the process.
The diverse nature and requirements of goods transported by air create
unique challenges for airlines, freight forwarders and other organizations
involved. Information and communications technology (ICT) can play a
vital role in addressing these challenges and issues in a very competitive
market. In response to the many players in the airfreight sector, ICT in airfreight
needs to be standardized to enable a smooth exchange of information
between the different participants. Despite the advantages that ICT can
bring to this sector, the introductory quote by Guillaume Drucy highlights
the low ICT development in airfreight.
In recent years, another airfreight business model has developed, with
integrators (eg UPS and FedEx) who traditionally focused on the air express
market (eg parcels) expanding their portfolio into larger consignments.
These companies base their operations on an existing transport infrastructure
(such as aircraft, vans and warehouses), supported by external logistics
capacity. As many of the processes are ‘in-house’, this improves the ef ciency
of ows (information ow, material ow and monetary ow).
In this chapter, the role of ICT in airfreight will be discussed. Initially, the
challenges that airfreight faces are examined, followed by an introduction to the
airfreight supply chain, identifying the key steps and players in this industry.
The application along the airfreight supply chain, namely customer interfaces,
booking, documentation, tracking, payment and claim handling are further
explored in this chapter. Finally, major issues that have prevented the ‘data
revolution’ in airfreight in the past, and possibly in future, will be discussed.

Airfreight: the challenges

The airfreight sector over the years has faced some unique challenges, both
in comparison to other transport modes as well as airline passenger markets.
Airfreight since the 1970s has witnessed a signi cant growth measured in
freight tonne kilometres (FTKs). More recently the sector struggled to keep
up the momentum and lost ground relative to maritime transport, but also
the passenger side of the airline industry. The economic downturn of the late
 ICT for Airfreight Management 59

2000s affected the global economy, but airfreight was particularly hit by a
lack in consumer and business con dence and a modal shift towards maritime
transport. In the years following the 2008–09 recession, airfreight struggled
to grow, even at a time when passenger markets, and indeed also maritime
freight, started the recovery process.
Leading up to the economic downturn in 2008–09 oil prices were con-
tinuously rising to previously unexpected high levels. Transport in general is
highly dependent on fossil fuels, yet while the shipping industry introduced
measures such as slow-steaming and super/ultra slow-steaming, this option
is not available to aircraft operators. As such, airfreight is at a competitive
disadvantage and, consequently, over time lost market share. On most inter-
continental routes, airfreight competition is limited to maritime transport;
however, developments in the rail sector mean that in future on the Asia–Europe
trade lanes a new competitor is emerging. It is estimated that this new rail
corridor (‘New Silk Road’/‘Silk Railway’) will contribute to a further modal
shift away from airfreight. Tony Tyler, CEO of the International Air Transport
Association (IATA), addresses the key point relating to the challenge of the
modal shift:
Speed is our biggest selling point. But it comes with a price that is many times
more expensive than shipping by sea. So there is tremendous pressure to further
improve our competitiveness. (Tyler, 2013)

Improving airfreight’s competitiveness is therefore important in addressing

the challenges stemming from a modal shift away from airfreight. ICT,
particularly in the form of e-freight, can play a signi cant role in simplifying
and streamlining airfreight management and operations and thus driving
down costs in the sector and so making it more competitive.
The need to improve the competitiveness of airfreight not only results
from external pressures, but also from challenges arising within the airfreight
sector. The rise and dominance of integrators (eg FedEx and UPS) and the
overcapacity in many markets have forced the sector to change and address
these key issues.
Developments in aircraft manufacturing have resulted in an increase in
available freight capacity. Traditionally more than half of global airfreight
has been carried on dedicated freighter aircraft. However, with the increase
in the freight-carrying capacity of passenger aircraft (belly-hold capacity),
the share of freight transported on freight-only aircraft has declined. For
example, the Boeing 777-300ER passenger aircraft can carry more freight
than a Boeing 747-400 passenger aircraft (Jumbo Jet). As developments in
passenger markets mainly drive this trend, excess capacity in freight markets
60 E-Logistics for Transport Modes and Nodes

is generated as a by-product. Resulting from this are often low freight-load

factors and pressure on yields (revenue per revenue tonne kilometre). To address
this challenge, airlines increasingly have started to adopt revenue management
techniques, supported by ICT, to drive up freight-load factors and stabilize
yields.
The traditional set-up of the airfreight sector consists of many different
players along the airfreight supply chain. In the movement of goods from
shippers to consignees, many organizations are involved in the management
of airfreight shipments. As such, communication between the different supply
chain partners is crucial to avoid delays and provide traceability for legal
and customer service requirements. ICT provides a platform for information
exchange between the different organizations.
There are signi cant challenges that the airfreight sector encounters.
While ICT itself cannot address singularly all these challenges, it is a vital
component in the solution. However, it needs to be borne in mind that
changes in working processes, culture and organization need to complement
the application of modern ICT in airfreight management.
As part of the Cargo2000 initiative, IATA aims to update the working
processes in airfreight, by providing a standard end-to-end process map for
the shipments of goods by air. ICT, and in particular e-freight, is a major
driver in the Cargo2000 programme.

The airfreight supply chain

The airfreight supply chain is supported by a range of different organizations,
which in many cases makes the movement of goods fragmented and requires
a high degree of coordination between the different participants. However,
supply chain management not only consists of the physical movement of the
goods (material ow) but also the ow of information and ow of funds
(monetary ow). Particularly these two latter ows are signi cantly supported
by developments in ICT.
Traditionally, freight forwarders take over the role of coordinators in
the airfreight supply chain by arranging the movement of goods from the
consignor (shipper) to the consignee. Freight forwarders, on top of their
own assets, often contract other companies to ful l transport and storage
obligations. For many airlines, freight forwarders are their major clients in
the freight sector. Freight forwarders, through mergers and acquisitions,
have gained signi cant power over the airfreight supply chain and thus have
been able to dominate the market.
 ICT for Airfreight Management 61

F I G UR E 3 . 1 The traditional airfreight supply chain

Freight Forwarder

Ground Ground
Ground Ground
Transport Transport
Handling Handling
(Freight (Freight
Consignor (Airline Airline (Airline Consignee
Forwarder Forwarder
or 3rd or 3rd
or 3rd or 3rd
party) party)
party) party)

Airport Airport

Monetary flows
Information flows
Physical flows

Figure 3.1 shows an example of the set-up of a traditional airfreight supply

chain, bearing in mind that arrangements can vary dependent on the type of
goods and contractual arrangements between consignor and consignee. The
gure illustrates the three types of ows and the complexity that stems from
the range of different actors involved in the movement of goods by air. In the
example, the consignor (shipper) contracts a freight forwarder to transport
goods from the consignor to the consignee. The freight forwarder picks up
the shipment from the consignor (either using their own assets or a third-party
haulier) and delivers it to the airline or its handling agent at the airport.
Dependent on the shipment type and security requirements, the consignment
gets loaded onto an aircraft and is freighted to the destination airport, where
the airline or its handling agent makes the goods available to the freight
forwarder or its nominated third-party transport provider to be delivered to
the consignee. This process seems to be straightforward, yet security and
customs regulations have a signi cant impact on the processing of airfreight
shipments. These regulations also affect the exchange of information along
the freight supply chain; eg customs authorities require export and import
declarations.
Whereas the physical ow is unidirectional, information ows in the
airfreight supply chain are multidirectional. Traditionally, these information
ows were synonymous with the ow of paper documentation, which in
many cases physically accompanied the shipment. In airfreight operations,
62 E-Logistics for Transport Modes and Nodes

the requirements often include 30 different documents, hence the application

of ICT can generate signi cant bene ts along the supply chain. Recently,
with the development of e-freight, paper documentation is being substituted
with electronic messages between the different supply chain participants.
In the following sections, the focus is on the information ows within the
airfreight supply chain that are supported by ICT.
While the freight forwarder has a coordinating role, not all information
ows go through the freight forwarder. Particularly the ‘air’ element of the
airfreight supply chain is organized by airlines, which results in information
ows being centred around them. For example, the airlines have separate
information ows with ground handlers and airports that mainly cover oper-
ational issues at the airport (eg position of unit load devices on the aircraft;
aircraft movements). The ‘air’ side of operations is unique to the airfreight
sector (rather than the road transport element of the airfreight supply chain),
therefore the rest of this chapter will predominantly focus on ICT around
the airline and the ICT-links between freight forwarders and airlines.
The following sections address the developments of ICT along the
airfreight supply chain. Initially, the technological advances in the customer
interfaces of airlines and freight forwarders are examined (ie the electronic
booking process, Figure 3.2). Thereafter the different stages of the airfreight
process will be discussed, including the shift towards e-freight, the e-Air
Waybill, which covers the application of ICT to ful l the documentary
requirements of airfreight.

F I G UR E 3 . 2 Airfreight booking process

Quotation Booking Confirmation Tracking

Customer interfaces
Customer interfaces are a key element of modern e-logistics. They enable
communication and information exchange between customers and logistics
service providers. Customer interfaces act as a front-end that allow customers
to request quotations, review quotations, book shipments, track shipments,
as well as exchange any documentation associated with the consignment.
Both airlines as well as freight forwarders have started to offer to their
respective customers ICT-driven customer interfaces to facilitate the booking
process and to track shipments.
 ICT for Airfreight Management 63

C A S E S T U DY KN FreightNet

Kuehne + Nagel is one of the largest airfreight forwarders in the world, with over
1,000 offices in over 100 countries. In 2014, the Switzerland-based freight forwarder
introduced KN FreightNet. KN FreightNet was primarily developed to allow smaller
shippers to get instant access to the services of a large freight forwarder. However,
the Swiss freight forwarder also saw some uptake by mid-sized shippers that do
not have their own logistics department. KN FreightNet is a web platform that
addresses three key elements in the airfreight process: quotation, booking and
tracking. Up to this point, these processes were primarily conducted by telephone
and e-mail. Contrarily, Panalpina, another major freight forwarder, only offers a
web form to submit a request, with quotations provided by telephone, e-mail or
fax. However, Panalpina is working towards updating its global IT system to better
connect with its customers as well.
Following initial trials in Germany and the United States, Kuehne + Nagel rolled
out KN FreightNet globally. After signing up to the service, customers of the freight
forwarder can obtain quotes on airfreight shipments by providing the basic
elements of the shipment (origin, destination, weight and volume). Quotes can be
obtained for shipments in the following 14 days as well as being saved for that time
frame. Quotes are offered for several delivery options with a binding all-inclusive-
pricing approach. Bookings can be made directly from the quotations that are
provided. The system further allows for the exchange of the necessary transport
documents. Once the shipment has been collected, customers can track the
shipment and have full access to the required documentation.

Access to customer interfaces of freight forwarders is usually restricted to

shippers rather than individual private customers. Similarly, airlines limit
access to their online systems to shippers and freight forwarders.
Many of these interfaces are web-based. While web-based customer
interfaces offered by freight forwarders and airlines are particularly used by
smaller shippers (and in the case of airlines for smaller freight forwarders),
larger shippers and freight forwarders often have integrated electronic data
interchange (EDI) systems (host-to-host) that enable direct communication
between shipper and freight forwarder or freight forwarder and airline,
using standardized messages (eg XML).
 64 E-Logistics for Transport Modes and Nodes

Besides the freight forwarders’ and airlines’ own systems, local organiza-
tions, often supported by airports (eg Amsterdam, Dubai, Paris), are working
together and have developed ‘cargo community systems’ (CCSs). Airports
that facilitate the use of CCSs have witnessed a higher uptake of ICT-supported
freight processes (eg e-freight).
The CCSs are ICT-based platforms (web portals as well as host-to-host
solutions) that allow shippers, freight forwarders, ground handling agents,
customs authorities and airlines to manage the airfreight process through a
range of services offered, eg booking, management of capacity, tracing,
documentation, etc. The local CCSs are often developed together with inter-
national ICT providers (eg CHAMP Cargosystems) that offer standard
packages to the airfreight community. These platform packages enable the
integration of various systems that are used by the airfreight organizations
through reformatting and converting different types of messages as required
by the participants. That means that even companies that use different
messaging standards are able to participate and exchange information
through the CCSs.
Host-to-host solutions are particularly aimed at larger organizations as
these require substantial investments in the ICT infrastructure and maintenance.
Only freight forwarders with large shipment volumes will be able to offset
these costs through economies of scale. For smaller freight forwarders, web
access to a CCS is a more ef cient way of using ICT. While this approach
requires more human interaction (eg uploading of documents), there are still
signi cant bene ts to be obtained for these companies (Figure 3.3).

F I G UR E 3 . 3 Freight forwarder – airline ICT integration

ICT integration

Freight forwarder Host-to-host Airline

In-house system (Integrated EDI) In-house system

Freight forwarder Host-to- Host-to- Airline

CCS
In-house system host host In-house system

Web platform

Host-to- CCS Host-to- Airline

Freight forwarder
host (Web platform) host In-house system
 ICT for Airfreight Management 65

Customer interfaces are at the core of the ICT-supported management of

airfreight processes. In the following ve sections, the application of ICT in
key elements of the airfreight process will be discussed in more detail, namely:

● booking;
● documentation;
● tracking;
● payments;
● claim handling.

Booking
The booking process of airfreight varies dependent on who makes the booking.
Most shippers book through freight forwarders rather than with the airlines
direct. Both airlines and freight forwarders offer their respective customers
ICT-enabled booking options, as well as the traditional phone, fax and
e-mail booking options. In comparison to the passenger market, the booking
horizon for airfreight is much shorter, rarely exceeding two weeks in
advance. Nevertheless, most large freight forwarders have some form of
allotments with airlines, ie guaranteed access to a negotiated capacity with
an airline (eg Guaranteed Capacity Agreement or Capacity Purchase Agreement),
which is either purchased at a particular price and is non-refundable or
allows freight forwarders to cancel up to several days before the ight if the
capacity is not needed.
With regard to capacity management, airlines more and more introduce
revenue management techniques, which have been in place in passenger
markets for a long time. With the help of revenue management systems,
airlines aim to manage capacity through improved yields and load factors.
In a market that is characterized by overcapacity this creates signi cant
challenges. The need for reliable data on market conditions (eg advance
booking, available capacity, etc) is therefore of high importance for airlines.
Resulting from this, airfreight revenue management depends on an ICT
environment that provides the latest information on developments in the
airfreight market and thus allows quick response to any changes. Revenue
management drives pricing in airfreight management and therefore the
booking process.
Modern ICT-driven customer interfaces offer a one-stop solution for the
process management of air cargo shipments. The initial phase of obtaining
quotes and generating bookings gives instant access to available capacity on
66 E-Logistics for Transport Modes and Nodes

different routes, as well as con rms the price for the shipment. Besides one-off
bookings, the systems allow for back-to-back bookings as well as allotment
bookings, with the latter ones traditionally being reliant on daily, weekly or
monthly updates through e-mail or fax. For example, Qantas’s online booking
system gives information on allotments, as to whether the allotment is com-
pletely available, partially booked, fully booked or released (ie no longer
bookable).

C A S E S T U DY American Airlines Cargo – online booking

Measured in freight tonne kilometres, American Airlines is the third largest US

combination airline, ie airline that carries passengers and freight, after Delta Air
Lines and United Airlines. American Airlines (AA) Cargo launched its dedicated
cargo website (www.aacargo.com) in 2001 and started to offer online cargo
bookings in 2004. In 2013, the airline updated its website in response to customer
feedback.
Users need to log in to the airline’s website in order to get the full functionality
of the booking system. Unlike other airlines, such as Emirates, AA Cargo does not
provide quotes or information on available capacity without logging in.
Once logged in, customers can undertake different types of bookings on the AA
Cargo website: a single booking, single allocation booking and multiple allocation
booking. The latter two take advantage of prearranged capacity agreements,
where space is reserved on a recurring basis.
For a single booking, customers need to choose the origin and departure airport
along with the departure and arrival date. Then the type of goods transported
(commodity), whether the goods are containerized or delivered in bulk, and other
characteristics such as weight, dimensions and number of pieces are required as
part of the booking process. Finally, customers need to state what kind of product
they want to book (ie the service level). Once all this information is entered,
the booking system shows the capacity available for this particular shipment.
Dependent on the origin and destination, the customer can choose from a range
of routings and timings where capacity is available. Besides the availability, the
system also provides information with regards to the latest drop-off time at the
origin airport and the earliest pick-up time at the destination airport. The customer
then chooses the preferred routing, enters the air waybill number and submits the
booking. Following from this step, the customer receives instantly information on
whether the booking is confirmed.
 ICT for Airfreight Management 67

For allocation bookings, the customer chooses from a list of flights for a
particular origin and destination for which the customer holds some form of
prearranged capacity allocation. From the list, the customer selects the required
flight(s) and books the required capacity from the capacity allocation.
Most other freight-focused airlines offer their customers similar online booking
systems.

Particularly integrated EDI systems that are based on host-to-host commu-

nication between shippers/freight forwarders and airlines result in a reduction
in duplicating process steps, such as re-entering consignment information,
and thus leading to a reduction in typing errors and reducing lead times.
Although web-based tools might require re-entry of certain data (that is
when the in-house system of the shipper/freight forwarder cannot commu-
nicate with the airline’s system), certain information can be saved in web
forms, which speeds up future booking processes.

Documentation, e-freight and e-Air Waybill

Airfreight is traditionally highly reliant on documents associated with the
shipment. Dependent on the shipment type, there are up to 30 different
documents needed. IATA has been at the forefront to reduce the need for
paper documentation along the airfreight supply chain by supporting the
development of e-freight in the air transport industry. The vision of IATA’s
(2013a: 10) ‘e-freight’ project is to transform:
The process of transporting cargo by air into a paperless process, where all
the required information is exchanged electronically between the parties, both
industry to industry and industry to government, and paper documentation will
not be required any more.

IATA’s e-freight development particularly focuses on the 20 most common

documents that are substituted by electronic versions. These 20 e-freight
documents are shown in Table 3.1.
68 E-Logistics for Transport Modes and Nodes

TAB L E 3 . 1 Top 20 e-freight documents

Invoice Packing List

Certificate of Origin Letter of Instruction

Dangerous Goods Declaration CITES Certificate

Master Air Waybill House Waybill

House Manifest Export Goods Declaration

Customs Release Export Flight Manifest

Transfer Manifest Export Cargo Declaration

Import Cargo Declaration Transit Declaration

Security Declaration Freight Booked List

Import Goods Declaration Customs Release Import

SOURCE: IATA (2015a)

The introduction of e-freight in the air transport industry is dependent on

the backing of the different players involved in the transportation of goods
by air. Therefore, the development of e-freight needs to be supported and
implemented by the wider airfreight community, such as airlines, freight
forwarders, shippers, ground handlers, airports and customs authorities.
Common standards need to be introduced that allow all parties to access the
required information without additional manual input.
There are signi cant disadvantages resulting from the reliance on
physical documentation, which can be addressed by introducing electronic
documentation. Bene ts can be achieved particularly in the areas set out in
Table 3.2.
 ICT for Airfreight Management 69

TAB L E 3 . 2 E-freight benefits

Costs ● Through the introduction of e-freight, cost savings for

the whole airfreight sector are estimated to be around
US $4.9 billion per year, through:
– a reduction in manpower resulting from less document
handling and data inputs;
– reduced stock holding resulting from shorter order cycles;
– fewer customs penalties.

Lead Times ● Shipment documents can be sent in advance, which can

speed up the transportation process by 24 hours on average.
● Fewer shipment delays related to missing documentation.

Quality and ● Data entry at one point in the supply chain reduces the need
Reliability for data recapturing and increases data consistency
(reduction of manual entry errors).
● Improved data accuracy due to the elimination of hand-written
documents that can be illegible.
● Data source can be identified.
● Documents cannot be lost during the transportation process,
reducing any delays resulting from missing documents.

Visibility ● E-freight enables tracking and tracing of shipments and thus

improves visibility (real-time access).

Regulatory ● Accessibility to all required documents along the airfreight

Compliance supply chain reduces the risk of customs penalties resulting
from incorrect documentation and data.

Environment ● The full rollout of e-freight will result in the elimination of

7,800 tonnes of paper documents per annum.

Security ● Documents are only available to those parties that need

access for operational or regulatory purposes.
● Documents are available to authorities (eg customs) before
the physical freight arrives, enabling them to undertake a
security risk assessment in advance and so speeding up the
process.
● Shipment routes can be tracked.

SOURCE: IATA (2013a); Lim (2014 ; author

70 E-Logistics for Transport Modes and Nodes

With the introduction of e-freight, many physical documents have been

substituted for electronic documents. Nevertheless, for information, audit
and regulatory purposes, access to these documents is important and in
many cases legally necessary. Therefore, ICT needs to enable all authorized
entities along the airfreight supply chain to get access to the documents.
Traditionally, paper documents are organized in the ‘cargo pouch’ that
accompanies the shipment. In the case of electronic documentation, the
physical cargo pouch is replaced by an electronic cargo pouch (a form of
document management system) that is either fed by automated EDI (eg in
XML format) or through user uploads of scanned documents (eg in PDF
format) via a web portal. Besides giving access to the documents, the elec-
tronic cargo pouch can be used to print, archive and transfer documents as
required by the supply chain partners or government agencies.
While IATA’s e-freight development covers 20 documents, particular focus
is given to the air waybill (AWB). The AWB is one of the key documents in
the movement of goods by air and ful ls a range of functions (eg contract of
carriage, certi cate of insurance). The contract between the airline and
freight forwarder is also referred to as the master air waybill (MAWB),
which is different to the house waybill that is issued by the freight forwarder
to the shipper. As a rst step towards e-freight, IATA developed the
electronic air waybill (eAWB) to replace paper (M)AWBs. Paper AWBs are
substituted by electronic messages and a signed eAWB agreement (the latter
one traditionally being printed on the reverse of the paper AWB). This eAWB
agreement can either be bilateral between airline and freight forwarder/shipper
or multilateral (ie a standard agreement signed once with IATA for carriers
and freight forwarders). This agreement contains the conditions of carriage,
the consent of all parties to use an eAWB instead of a paper AWB and formalizes
the contract of carriage. Furthermore, operational standards regarding the
data exchange and other technical aspects (eg security, access) are de ned in
this agreement. To ensure that technical issues do not prevent or delay
the shipment, fallback and recovery procedures are in place. Once this
agreement has been signed (and activated), the eAWB process shown in
Figure 3.4 is used.
 ICT for Airfreight Management 71

F I G UR E 3 . 4 eAWB process

Freight forwarder sends eAWB data to airline before the freight

arrives at the airline’s premises (airport)
eAWB data
is sent

eAWB has been initiated in the airline’s system before freight

arrives at the airline’s premises
eAWB is
initiated

Status: cargo ready for carriage

– Shipment is accepted
Status: freight on hand
Airline sends – Shipment received but not ready for carriage
status update – Once ready for carriage: status sent

Consignee can access eAWB information

Access
eAWB

eAWB is archived

Archiving

The implementation of eAWB in the airfreight network is not only dependent

on the signing of the eAWB agreement between the parties involved but also
needs to be supported by the regulatory environment. On trade lanes where
the Warsaw Convention (1929) applies, eAWBs cannot be introduced as a
paper AWB is required under this treaty. Generally eAWBs are only feasible
on routes where origin and destination country have signed the same treaty:
ie where either the Montreal Protocol No. 4 (1975) or the Montreal
Convention (1999) apply. However, even on some routes where the Montreal
Protocol No. 4 (MP4) or the Montreal Convention (MC99) apply, local
customs regulations might still require a paper version (in some cases a
printed version of the eAWB is accepted).
72 E-Logistics for Transport Modes and Nodes

For auditing, regulatory and legal reasons, eAWBs are archived by freight
forwarders and airlines. Usually these records are kept for three years, unless
local legislation stipulates a longer period.
Initially, IATA aimed at a 100 per cent implementation for eAWB for the
end of 2014. However, this target was overambitious and had to be moved
several times. In 2015 the new target for 100 per cent eAWBs is the end of
2018. In April 2015, the eAWB penetration rate (where legally feasible) was
just over 25 per cent, showing the slow progress of moving away from paper
documentation in airfreight. However, there are signi cant differences in the
uptake of eAWB by country, airport, airline and freight forwarder. Table 3.3
gives examples of the eAWB penetration at airports, airlines and freight
forwarders in April 2015, and shows that some airports, airlines and freight
forwarders are more advanced in the implementation of the eAWB than others.

TAB L E 3 . 3 eAWB penetration

Airports ● Dubai: 87%

● Singapore Changi: 60%
● Los Angeles: 23%
● Frankfurt: 13%

Airlines ● Cathay Pacific Group: 61%

● Delta Air Lines: 54%
● Singapore Airlines Cargo: 41%
● Lufthansa Cargo: 18%

Freight Forwarders ● Panalpina: 37%

● DHL Global Forwarding: 34%
● CEVA Group: 28%
● Kuehne + Nagel: 13%

SOURCE: IATA (2015b)

 ICT for Airfreight Management 73

C A S E S T U DY Hong Kong International Airport eAWB

implementation

As of April 2015, Hong Kong International Airport (HKIA) is the airport with the
highest eAWB freight volumes. Over 60 per cent of possible shipments at the
airport use the new technology. The major airline based at the airport, Cathay
Pacific Group, is also one of the leading airlines in the eAWB implementation
process, with over 60 per cent of possible shipments benefiting from this new
technology. Furthermore, Hong Kong Air Cargo Terminals Limited (Hactl), one of
the two largest air cargo terminal operators at the airport, is similarly supporting
the development of e-freight and eAWB. These three main players managed to
turn HKIA into one of the most advanced airports when it comes to the
implementation of the eAWB.
As early as 2007, IATA chose HKIA as one of the five pilot airports for e-freight,
with Cathay Pacific removing all paper AWBs from its HKIA operations in 2011.
Hactl launched its e-freight enabled cargo community system (COSAC-plus) in
2012, which now also includes an eAWB generation module (COSAC-AWB).
Following trials by two major freight forwarders in Hong Kong (BEL International
Logistics and Rhenus Logistics Hong Kong), COSAC-AWB provides a platform for
further growing the use of eAWB at the airport. In particular, small and medium-sized
freight forwarders that are based in the Pearl River Delta can benefit from the
cargo community system and the adoption of eAWBs, and so further grow the use
of the paperless process.
The case of HKIA shows that when all involved supply chain partners (airport
operators, airlines, cargo terminal operators and freight forwarders) work together
to use eAWBs, it can boost its uptake and generate benefits along the whole
airfreight supply chain.

E-freight and eAWB are some of the key developments in airfreight that can
generate signi cant bene ts for the sector. However, as the numbers above
illustrate, the uptake is slow, yet steady.

Tracking
Visibility along the whole supply chain has increased in importance over
time. As such, visibility of airfreight shipments is key for shippers. While
74 E-Logistics for Transport Modes and Nodes

visibility particularly relates to the geographic position of the consignment,

for certain goods (eg pharmaceuticals) other information such as temperature
is signi cant to the airfreight customer. Alain Guerin, head of marketing for
Swiss WorldCargo, highlights the need for visibility:
Information exchange, for instance, looks like it’s a big topic for our own
customers. They want to know just about everything about the shipment at any
time. (Guerin, 2014)

Once a shipment is dispatched, freight forwarders and airlines offer different

types of shipment tracking. Besides the use of integrated EDI (host-to-host)
between the airline and the freight forwarders’ in-house systems, most
airlines and freight forwarders offer tracking of consignments on their
website by using house waybill (freight forwarder web portals) or AWB
numbers to identify shipments. This has become a standard in the airfreight
sector.
Shipments are labelled with standardized barcodes (Figure 3.5) that are
regularly scanned along the airfreight supply chain. The shipment location
is then fed into the tracking system that enables supply chain partners to get
information on the progress of the shipment.

F I G UR E 3 . 5 Airfreight label
 ICT for Airfreight Management 75

Over the years the airfreight sector has been trialling the use of radio
frequency identi cation (RFID) to replace barcodes. While IATA originally
included RFID in their ‘Simplifying the Business’ programme, the association
concluded: ‘Because the value of RFID is subject to the individual merits of
each business case, there is no mandate for the universal adoption of RFID
from IAT.’ (IATA, 2008). This means that developments in RFID for airfreight
are mainly in the domain of individual airlines and airports. Airlines such as
Air France-KLM and Lufthansa have tested RFID to track airfreight;
however, so far this technology has received little further expansion in the
industry, while barcodes continue to be necessary to manage shipments.
More recently, new tracking technology has been introduced in airfreight
management. Particularly for high-value and/or temperature-sensitive ship-
ments GPS/GSM tracking has been offered by airlines (eg Air France-KLM,
American Airlines, Lufthansa, Southwest Airlines). GPS/GSM tracking uses
a battery-operated device that is attached to the consignment and sends live
information (while on the ground) on the status of the shipment.
Besides tracking the location of the consignments, this technology can also
monitor temperature, vibration, barometric pressure, light exposure and
humidity. In comparison to traditional tracking using barcodes, GPS/GSM
tracking allows real-time tracking of shipments. While many airlines offer
these tracking services, the nature of GPS/GSM tracking enables shippers
to monitor the progress independently, without using airlines’ or freight for-
warders’ ICT infrastructure. In these cases the providers of the GPS/GMS
tracking devices offer web access to trace the shipment.
As the GPS/GSM tracking devices send information, they require special
certi cation from aviation regulators (eg Federal Aviation Administration,
European Aviation Safety Agency) to ensure that they are in full compliance
with the current air transport regulations. The tracking devices detect when
they are on board an aircraft and automatically switch to an airplane mode
that stops transmitting signals until the consignment has been of oaded.
Because of the sensitive nature of radio transmissions, airlines need to
approve the use of GPS/GSM tracking devices. In some cases the carriers
impose restrictions on the number of devices per aircraft or on the trade
lanes where these can be used.

Payments
Customer interfaces in airfreight management enable the central functions
of booking, tracking and documentation of shipments. Beyond these, ICT in
airfreight also supports the monetary ows between the organizations
involved in the transport of goods by air.
76 E-Logistics for Transport Modes and Nodes

A range of companies offer cargo accounting solutions that deal with the
billing of airfreight. Automation of the process improves invoicing accuracy
and enhances cash ows for the companies that provide airfreight services.
Cargo accounting systems can be fully integrated in the wider ICT infra-
structure, including the companies’ enterprise resource planning (ERP) systems
(eg SAP) and external payment systems (eg CASS).
The wide range of players in the industry create unique challenges in
dealing with monetary ows. Particularly freight forwarders deal with a
large number of different airlines. This can result in a signi cant amount of
nancial transactions, invoicing and reporting between freight forwarders
and airlines.
To address this issue, IATA introduced the ‘Cargo Accounts Settlement
System’ (CASS) that facilitates the invoicing and payment of airfreight ship-
ments between airlines and freight forwarders. CASS offers similar features
as the ‘Billing and Settlement Plan’ (BSP) that is used to ease the invoicing
and payment of passenger tickets. Instead of each freight forwarder dealing
with invoices from each airline they are working with, and each airline
receiving payments from each freight forwarder, invoices and payments are
channelled through CASS (Figure 3.6). Therefore, from the freight forwarder’s

F I G UR E 3 . 6 The CASS process

 ICT for Airfreight Management 77

perspective, they only have to deal with one invoice and one payment, while
airlines only receive one payment from all freight forwarders. CASS is
available to IATA and non-IATA airlines, IATA cargo agents and airlines’
General Sales and Service Agents (GSSA) as well as certain other airfreight
participants.
CASS is ICT-driven through an internet-based system called ‘CASSLink’.
The use of EDI, ‘CASS-EDI’, will link the in-house systems of airlines, freight
forwarders and other users to CASS. In CASSLink, airlines upload les in a
standardized format that contains shipment information, including AWB
records. Within an invoicing period, CASS generates invoices for all freight
forwarders. CASSLink allows freight forwarders to view all shipment billing
data, and download them in a range of different formats (XML, TXT or
XLS). Given the nature of ICT-enabled payment systems, information on the
AWB history can also be retrieved by the freight forwarder. CASSLink,
furthermore, enables users to generate up-to-date sales statistics.
Over 500 airlines, GSSAs and handling agents use this system, covering
settlements worth around US $30 billion in 2014 (IATA, 2015c). As such, it
is one of the major ICT systems in the airfreight industry.

Claim handling
The use of ICT in airfreight extends to post-delivery services. In case of
damage, loss or delays of shipments, some airlines enable their customers to
le claims electronically. For example, Air France-KLM Cargo and Lufthansa
Cargo enable customers to submit a preliminary as well as a formal claim
for airfreight irregularities. Customers can log the claim, upload supporting
documentation (eg pictures, damage reports, repair invoices) and track the
claim-handling process on the Air France-KLM Cargo website. Other airlines
only offer reduced web-based claim-handling services, eg Cathay Paci c Cargo
allows for preliminary claims to be submitted online.
To facilitate the claim-handling process, airlines have started to develop
smartphone and tablet applications that allow for the submission of claims.
For example, the Lufthansa Cargo Feedback app enables users to submit
feedback, preliminary claims as well as compensation claims. A bene t of
using the smartphone/tablet app is that customers can directly take photos
of damaged shipments on the smartphone/tablet and attach them to the claim.
Traditionally, for many freight forwarders and shippers to receive
updates on the claim development was time consuming, as it was reliant on
telephone and e-mail updates. Mobile applications can streamline another
traditionally paper-based process in airfreight management and so contribute
78 E-Logistics for Transport Modes and Nodes

to the visibility of the claim process. This enables freight forwarders and
shippers to monitor the progress of their claims as well as estimate the time
by which the claim is resolved and whether a possible compensation is paid
out. This visibility can strengthen the relationship between airlines and their
customers and improve their service quality.

Issues
As indicated at the start of the chapter, ICT development in airfreight has
been relatively slow, particularly in comparison to other industries, including
the logistics industry and the air transport industry. There are several reasons
why the uptake of ICT in airfreight has lacked pace, resulting in inef ciencies
and competitive disadvantages of the sector. There are four main reasons for
the slow deployment of ICT in airfreight management:

● cultural and managerial reasons;

● legal and regulatory reasons;
● technological reasons;
● economic and nancial reasons.

Cultural and managerial reasons

The airfreight sector can be de ned as a ‘legacy sector’ that is highly focused
on traditional working practices, with little changes over time. For example,
paper AWBs have been in use for over 40 years; the regulatory framework
(particularly in the pre-deregulation era) allowed for little innovation in air-
freight marketing and, even after many airline markets had been deregulated,
airfreight developed at a much slower pace than, for example, passenger
markets. This legacy culture is also manifested in the little uctuation at manage-
ment level in airfreight, with many managers staying in their positions for a
long time. While this highlights the attractiveness of airfreight, it also hinders
a younger generation from bringing new ideas to this sector.
As such, there is reluctance to adopt new working practices and embrace
ICT developments. Linked to this issue is that the airfreight sector nds it
dif cult to attract younger employees who are more con dent in the use of
ICT and bring a different view to the sector. Ram Menen, former head
of Emirates SkyCargo, addresses the bene ts of attracting new talent to the
airfreight sector: ‘It took the industry over 25 years to adopt a common
barcode standard. This will change as members of the younger generation,
who are extremely comfortable with technology, take over’ (Lennane, 2015).
 ICT for Airfreight Management 79

The cultural and managerial implications cannot be overlooked in the

introduction of ICT in airfreight. There have been some changes to the
processing of airfreight through IATA’s Cargo2000 programme that revisited
the historic approach to the movements of goods by air. However, companies
in the airfreight supply chain need to communicate to their staff the bene ts
of changing working practices as well as train them in the use of new
technology. Furthermore, the attractiveness of the industry for new, younger
employees needs to be increased. The success of introducing ICT in airfreight
is therefore not only dependent on technological developments but also on
managerial aspects such as recruitment and training.

Legal and regulatory reasons

For decades, air transport was dependent on key agreements (particularly
the Warsaw Convention and the Chicago Convention) that were signed in
the rst half of the 20th century, with little development over time.
The Warsaw Convention (W29) of 1929 has had a signi cant impact on
the working practices in airfreight.1 As a form of international private
law, it deals with the liability of a party of one country to a party in
another country. This treaty, signed by most countries in the world, in
Article 5(1) prescribes the need to issue an ‘air consignment note’ (today’s
paper AWB):

Every carrier of goods has the right to require the consignor to make out and
hand over to him a document called an ‘air consignment note’; every consignor
has the right to require the carrier to accept this document.

While there have been updates over the years (eg in 1955), only the Montreal
Protocol No.4 (MP4) of 1975 rst established the possibility to substitute
the paper AWB with ‘any other means’ that contains the same information
as the AWB.2
In 1999, the Montreal Convention (MC99) updated the different versions
of the Warsaw Convention by providing a contemporary treaty that is more
suitable for air transport in the 21st century.3 Similar to the MP4, it allows
for the use of eAWBs, as addressed in Article 4 (1) and (2):

In respect of the carriage of cargo, an air waybill shall be delivered.

Any other means that preserves a record of the carriage to be performed may
be substituted for the delivery of an air waybill. If such other means are used,
the carrier shall, if so requested by the consignor, deliver to the consignor a
cargo receipt permitting identi cation of the consignment and access to the
information contained in the record preserved by such other means.
80 E-Logistics for Transport Modes and Nodes

The MC99 still refers to an AWB, yet it allows the use of ‘any other means’
that contain the relevant information (record) and identi es the requirement
for shippers or freight forwarders to access this record (as with the MP4).
The treaties signed between origin and destination country of a shipment
have an impact on whether an eAWB can be used instead of a paper AWB.
Despite the age of the W29, there are still countries that have only signed
this treaty, yet not one of the more recent updates to the convention. Figure 3.7
shows those trade lanes where eAWBs are possible under the international
treaties signed by origin and destination countries.
Those trade lanes where eAWBs are possible cover about 80 per cent
of the cargo volume (IATA, 2013b); however, there are several countries
that have not signed the MC99 (eg Philippines, Indonesia and Russia).
On some routes, this means that it is necessary to provide a paper AWB.
Unless these countries sign the MC99, there are still legal barriers in
the implementation of eAWBs. Legally, the W29 does not prohibit the use
of eAWBs; however, using an eAWB under the W29 regime increases the

F I G UR E 3 . 7 eAWB and international treaties

Origin Applicable International Treaty Destination

W29 + MP4 MP4 W29 + MP4

W29 + MP4 MP4 W29 + MP4 + MC99

MC99 MC99 MC99

MC99 MC99 W29 + MC99

MC99 MC99 W29 + MP4 + MC99

W29 + MC99 MC99 MC99

W29 + MC99 MC99 W29 + MC99

W29 + MC99 MC99 W29 + MP4 + MC99

W29 + MP4 + MC99 MP4 W29 + MP4

W29 + MP4 + MC99 MC99 MC99

W29 + MP4 + MC99 MC99 W29 + MC99

W29 + MP4 + MC99 MC99 W29 + MP4 + MC99

SOURCE: IATA (2013b)

 ICT for Airfreight Management 81

risk for airlines, as there would be possibly no liability limits. Airlines would
not want to risk this, therefore there are practical barriers due to this
uncertainty.
Other legal barriers, besides the international treaties, are local customs
regulations. These often require paper documentation as part of the customs
inspection process. The eAWB implementation project included discussions
with local customs authorities in many parts of the world. The aim of this
consultation was to make sure that the customs authorities are involved in
the development process and thus accept the eAWB. Despite this, some
countries require paper AWBs and will not accept eAWBs, though some
accept black-and-white printouts of the eAWB.

Technological reasons
The air transport industry has identi ed the need for standardized messages
to be used in airfreight management. As a result, the Cargo Interchange
Message Procedures (Cargo-IMP) have been developed. However, this
standard is over 20 years old and has signi cant technical limitations that
are not t for purpose in the 21st century. Therefore, this industry standard
is being phased out and replaced by Cargo-XML. Table 3.4 shows the different
characteristics of the two standards.
The new Cargo-XML standard provides signi cant advantages over the
old Cargo-IMP standard. However, many companies in the industry use
Cargo-IMP and this will result in a lengthy period when companies upgrade
their systems. Similar to the cultural problem, many airlines and freight
forwarders use ‘legacy’ IT systems that for years have not been upgraded to
newer versions. Some companies use older versions of Cargo-IMP, which
causes problems when exchanging data. Therefore, unless companies in the
airfreight supply chain move to the Cargo-XML standard soon, technological
barriers may slow down the process of introducing e-freight on a wider
scale. These upgrades require investments from the supply chain partners
with regards to equipment, training and change in working processes – and
many companies will be hesitant to invest.

Economic and financial reasons

Another reason for the slow implementation of ICT in airfreight management
is the perceived costs of introducing new or updating current systems. While
ICT over a period of time should materialize in cost bene ts, the initial outlay
is seen by many companies as prohibitive in employing up-to-date ICT.
82 E-Logistics for Transport Modes and Nodes

TAB L E 3 . 4 Cargo-IMP versus Cargo-XML

Features Cargo-IMP Cargo-XML

Extended character set ✗ ✓

Unlimited characters (size) ✗ ✓

Covers the full supply chain ✗ ✓

Unlimited occurrences ✗ ✓

Flexible message structure ✗ ✓

Extended data type ✗ ✓

Internet-based communication medium ✗ ✓

Platform dependent ✓ ✗

Enhanced data quality ✗ ✓

Simplified error handling ✗ ✓

Data validation ✗ ✓

UN/CEFACT standards compatible ✗ ✓

Multimodal ✗ ✓

Cross-border ✗ ✓

SOURCE: IATA (2014)

Many companies look for short-term solutions rather than seeing the nan-
cial bene ts in the long term of reduced document-handling costs, reduced
storage costs, reduced processing costs, etc.
Furthermore, there is uncertainty about who will bene t from ICT develop-
ments in airfreight. The fragmentation of the industry means that there is a
perception that some players bene t more from the increased use of ICT,
at the expense of other supply chain partners. Particularly larger companies,
such as the large cargo airlines and freight forwarders, nd it easer to make an
 ICT for Airfreight Management 83

economic case for ICT upgrades. Smaller companies, often freight forwarders,
see imbalances in the cost savings and perceive that airlines bene t more from
e-freight. It is therefore important that the technological development in
airfreight generates economic and nancial bene ts for the whole supply chain.

Summary and conclusions

The airfreight sector has been slow in adopting modern ICT. Nevertheless,
in many areas of the airfreight supply chain there is a push towards imple-
menting ICT practices. This is driven particularly by IATA as well as other
large players in the sector. However, there are signi cant differences in the
uptake of modern ICT in airfreight, with some companies leading the eld
and others depending on legacy systems. Together with the fragmented
nature of the airfreight sector this creates, and will create for the foreseeable
future, barriers to the ef cient use of ICT. Those companies that have
embraced the trend towards these technologies have started to see bene ts
with regards to reduced costs as well as customer service.
In this chapter, the focus was on the application of ICT in the movement
of goods by air, so particularly from a supply chain perspective. It needs to
be borne in mind that, in the background, the airfreight sector also depends
on a large number of systems that are not directly related to the supply chain
and are not part of the airline/freight forwarder interface. For example,
Lufthansa Cargo have started to introduce the ‘electronic ight bag’ that
removes the requirement for paper documents and manuals in the cockpit.
Other developments include the use of ICT to direct hauliers to the right
loading dock at Amsterdam Airport and therefore speeding up the process
in airport access. There are innovative ideas and technologies developed in
the airfreight sector; however, in many instances, they are limited to a few
showcases rather than a system-wide implementation.
While the ‘data revolution’ in airfreight has not happened yet, the signs
are that the sector is moving in the right direction and changes will happen
in the years to come. This data revolution will bring bene ts for the whole
airfreight supply chain.

Notes
1 ‘Convention for the Uni cation of Certain Rules Relating to International
Carriage by Air, signed at Warsaw on 12 October 1929’.
84 E-Logistics for Transport Modes and Nodes

2 ‘Montreal Protocol No.4 to amend Convention for the Uni cation of Certain
Rules Relating to International Carriage by Air, signed at Warsaw on
12 October 1929, as amended by the Protocol done at The Hague on
28 September 1955, signed at Montreal on 25 September 1975’.
3 ‘Convention for the Uni cation of Certain Rules for International Carriage by
Air, signed at Montreal on 28 May 1999’.

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