A high-flying industry is going to have to cut off some excess fat to continue ascending, and in the case of airlines recent months have seen companies leave paper behind for the prospect of cost savings and more efficient operations.
It was in the past year that the digitization of air cargo really took off, with with the industry exceeding 24 percent of international e-air waybill penetration in 2014, according to Logistics Manager. With the process already started, the International Air Transport Association hopes that 2015 will bring further progress to the initiative to remove paper from air cargo processes. The intent is to increase e-air waybill penetration to 45 percent through this year and to 80 percent in 2016. By 2017, the IATA expects that nearly the entire industry – 90 percent – will be following digital processes.
"Business improvement will only come by constantly improving the value of cargo," Tony Tyler, IATA director general and CEO, said. "There is a long haul ahead to recapture lost revenues, nevertheless the prospects for the future are bright because the industry is really starting to act strategically and plan for the future."
The e-air waybill is the most important document in the air cargo industry, according to the IATA. The document, sometimes referred to as an air consignment note, is basically a receipt – non-negotiable proof of a contract of carriage.
Air freight switching to content management systems in China
In a direct effort to expand the influence of digital air freight processes, the IATA just signed a deal with six organizations within China to promote e-air waybill use in Shanghai. E-freight pilot programs have been launched at Shanghai Pudong Airport, Guangzhou Baiyun Airport and Beijing Capital Airport.
"China is the second largest market for international freight by air. With much of the world's manufacturing taking place in China, it is essential that processes are kept as efficient as possible. This can be achieved through partnership and adoption of global standards. This agreement will bolster Shanghai's position as a leading air freight hub in China and in the world," Zhang Baojian, IATA's regional vice president for North Asia, explained to The Financial.
How removing paper from the process will boost air cargo profits
Digitization is so important to the traditionally paper-intensive air cargo industry due to its potential to speed up certain processes and significantly reduce costs. Other corners of the airline sector have also begun their own transitions away from paper. For instance, many airlines have begun phasing paper out of their cockpits, making pilots' jobs easier by reducing the total weight of their gear, speeding up certain process and making required documents easier to access.
"We still have work to do to help businesses transition, but there has been a big change in the mentality of the industry. We can now look ahead and plan for the digitization of other air cargo documents, through a collaborative industry approach," Tyler explained, according to Logistics Manager.
He added that the industry cannot do "more work for less money," the South China Morning Post reported. The air freight industry has been consistently losing money over the years, and experts are looking for ways to turn the unfortunate trend around. Last year saw global air traffic fall by 4.3 percent and revenue for the industry remains below the peak of $5 billion in 2011. Hopes are that digitizing much of the air cargo industry will be enough to turn this around and put airlines on track to begin saving, rather than losing, money in the future.