AIR CARGO DIGITALIZATION: FROM EDI TO COMMUNITY SYSTEMS PHOTO BY: © 2017 JAROMIR CHALABALA/SHUTTERSTOCK Port Community Systems 1 Air Cargo Digitalization: From EDI to Community Systems 2 Port Community Systems Executive Summary Key Takeaways ■ International air cargo shipment times have remained stubbornly high for four decades despite significant advances in technology and cross-border trade. ■ Legal issues, legacy practices, lack of regulatory backing and the absence of neutral champions of digitalization have held back progress, especially in developing countries. ■ There is still significant data duplication and manual paperwork in air freight, leading to ineffi- ciencies, delays, and congestion. ■ Several top-down “global” initiatives emerged in the early 1990s to tackle digitalization chal- lenges in the air cargo supply chain: Global Air Cargo Community Systems, Cargo Media, and E-freight. ■ Airport Cargo Community Systems (ACCS), digital platforms connecting stakeholders in the air cargo supply chain around a specific community, have boosted collaboration and efficiency. ■ The emergence of over 10 new ACCSs, mainly in the EU and United States, highlight a growing trend towards the development of participatory platforms. ■ COVID-19 and cloud computing have been catalysts for increased digitalization in air cargo handling. I n the 21st century the primary business of most airports is getting people - not products - from A to B. For ports, it is the other way around. Despite rapid advances in technology and digitali- zation around the world, international air cargo shipment times have remained stubbornly high for four decades. Legal issues, legacy practices, and lack of regulatory backing have held back digitalization, espe- cially in developing countries. There is still significant data duplication and manual paperwork in air freight, leading to inefficiencies and delays. Much remains to be done to reduce complexity and cost. Process complexity and data fragmentation is seen as one of the main culprits: end-to-end delivery times for international air cargo shipments average 6-7 days. Cargo can spend about 3 days on average at the destination airport. Variability in delivery times is also significant. From airlines and ground handlers to Customs and freight companies, there are many players in moving cargo across our skies. There are also many processes, permits and much paperwork. Air Cargo Digitalization: From EDI to Community Systems 3 Port Community Systems The air cargo supply chain involves multiple private and public stakeholders, including airlines, ground handlers, freight forwarders, consignors, and customs. Electronic messaging is still the workhorse of digital air cargo cross-border transactions. This is because in most cases, the import processes are accomplished by at least four independent entities, each of which usually operates its own IT system: airline, ground handler, Customs, and destination freight forwarder. But maritime ports are just as complex. The big difference has been that cooperation – championed by a neutral operator – has been more common in maritime ports than at airports, at least until recently. While moving cargo has been central to most ports, it has traditionally been seen as peripheral at most airports. All too often, air cargo is seen as an issue for “tenants” that lease airport space from the airport “landlord.” Several top-down “global” initiatives emerged in the early 1990s to tackle digitalization challenges in the air cargo supply chain: Global Air Cargo Community Systems, Cargo Media, and E-freight. Airport Cargo Community Systems (ACCS), digital platforms connecting stakeholders in the air cargo supply chain around a specific community, have boosted collaboration and efficiency. And they are gaining traction in developed countries. The emergence of over 10 new ACCSs, mainly in the EU and United States, highlights a growing trend towards the development of participatory platforms. Both “top-down” and “bottom-up” solutions to digitalize air cargo handling have had mixed results. The digitalization of air cargo has often been driven by regulation, from advanced filing requirements to a government’s commitment to phasing out paper to replace red tape with more effective and efficient digital cargo handling. Standard-setting institutions like the International Air Transport Association (IATA) work jointly with other international bodies to pursue standards harmonization. However, they can only produce recommendations for industry users to implement. They do not have the powers to enforce adoption. The Montreal Convention of 1999 (MC99) establishes the legal framework allowing airlines to make use of electronic documentation for air shipments, without impacting the airline’s ability to rely on liability limits. However, some 60 of the 191 ICAO Member States have not adopted the norm. COVID-19 has increased the role of airports in cargo handling. They are shifting from being “land- lords” to becoming “orchestra conductors.” Cloud-based systems are also projected to change the digital landscape globally for air cargo. While air cargo has experienced “waves” of top-down (global) and bottom-up (local) digitalization, there is no one-size fits all solution to expedite digitalization. At the end of the day, the pace at which digitalization transforms air cargo handling hinges on the benefits it provides to the whole community. And that, for now, remains a work in progress. Air Cargo Digitalization: From EDI to Community Systems 4 Port Community Systems 1.  Introduction The pace of digitalization and automation has picked up since the of the ICT implementation work delayed widespread implemen- internet emerged for the public three decades ago. Globalization tation. To achieve critical mass, the program was narrowed to has deepened and value chains lengthened. The logistics indus- focus on digitizing the Air Waybill document. try has harnessed IT platforms and digitalization. While some industries and sectors have been quick to embrace the power The top-down global digital initiatives for air cargo were not of technology and digitalization, others have been slower to act. always suitable for “local” airport markets, as they would not In air cargo, both digital success stories and laggards coexist, cater to their specific problems or the pace of adoption. This led creating a more fragmentary environment for supply chains. to the emergence of Airport Cargo Community Systems (ACCS). ACCSs are digital platforms that connect various stakeholders in The air cargo supply chain is complex and fragmented, involv- the air cargo supply chain around a specific community, allowing ing the exchange of at least fifteen documents and additional for collaboration and improving efficiency of operations. ACCSs permits and licenses for border clearance. Even though air ship- are airport-specific in nature and offer a range of functionalities ments are priced at a premium, and conceived to provide speed based on the needs and priorities of that community. to market, legacy procedures are not necessarily conducive to ease the flow of goods Local initiatives in the air cargo industry vary in their approach to defining the community they serve, their strategic objectives, Electronic Data Interchange (EDI) is the foundational piece of neutrality and ICT governance, and their initial motivation for air cargo digital information flows, as it involves several inde- creating the initiative. Successful initiatives have a clear and pendent entities, each operating their own IT system. However, measurable strategic objective that motivates the community. challenges exist in the cross-border movement of air cargo due ACCSs also differ by the local challenges that they are aiming to legal issues, legacy practices, and lack of regulatory backing, to overcome -from truck slot management to regulatory control hindering the adoption of digitalization initiatives, especially in transparency. Neutral leadership is one of the main issues that developing countries. seemingly define the success of these communities. Moreover, whereas some communities and their platforms have grown Processes are still burdensome and inefficient, with a disrup- organically from a strong belief of their value proposition, other tive double-entry process based on manual entry, making data cases have been rather motivated by exogenous mandates by recapture impossible, and border control agencies requiring regulators to digitalize partly or wholly the processes around non-standard data that slows the process. Advanced cargo infor- the airport. mation is not fully used, and EDI standardization and quality still generate issues, causing errors and delays that propagate across The latest ACCSs are taking a more integrated approach by the entire chain of custody of the cargo. combining legacy elements with new technologies. The emer- gence of over 10 new ACCSs, mainly in the EU and United States, Advanced cargo information regulatory filing requirements, in shows a growing trend towards the development of participa- large destination markets like the United States or the European tory platforms. These platforms have a wide range of services Union, will drive adoption of digital tools. provided. The latest ACCSs are now powered by advanced tech- nologies, such as Blockchain, AI, and modular user apps, which Several top-down “global” initiatives emerged in the early 1990s allow for customization of user needs. Using a Software as a to tackle digitalization challenges in the air cargo supply chain: Service (SaaS) approach, small communities benefit from paying Global Air Cargo Community Systems, Cargo Media, and E-freight. only for what they use. Globally, air Cargo Community Systems (CCSs) generate value Local airport cargo community systems and platforms have by making connections and providing translation services. They adopted various governance models, mainly: (i) For-profit inde- were designed to serve mostly one stakeholder in the chain, pendent vendor. (ii) Subsidiary operator of large community which causes them to narrow their scope to concentrate on member. (iii) Community-controlled non-profit. (iv) Statutory Value Added Network functionalities – such as translation and single provider. relay of messages. Subsidiaries of large community players were responsible for The E-freight program was launched in 2005 to increase the early attempts to set airport cargo community systems. Due to use of digital documents in the air cargo industry. The goal was leadership neutrality issues, adoption by community users was to convert about half of the industry’s documents to electronic typically compromised. For-profit providers have also emerged messages, seeking to introduce efficiencies and creating roughly to combine the community needs with a robust business model, $5 billion in annual savings for shippers, forwarders, and airlines. which includes the airport authority and the ICT provider of the However, early concerns from stakeholders and the magnitude local ACCS. Key to this arrangement, is to transparently identify Air Cargo Digitalization: From EDI to Community Systems 5 Port Community Systems benefits for all stakeholders and implementation costs, which a similar manner as advanced cargo information had when intro- are typically the pain points that thwart user adoption. duced after the September 11 terrorist attacks. The comparison of the different experiences is useful to distill This chapter looks at the evolution of digitalization in air cargo. common “traps” or issues that have thwarted the success of It also looks at barriers and gateways to local and global digital airport cargo community systems in the past: initiatives which support the global movement of goods by air. • Bias toward one type of air cargo stakeholder: Initiatives that strengthen one stakeholder at the expense of another, or even 1.1.  Basics of the air cargo supply chain appear to favor one stakeholder, jeopardize the chances of success. To avert this, a coalition of winners is needed. The The air cargo supply chain is a mix of many private and public benefits and costs for all and how they will be distributed and stakeholders. The main private stakeholders include airlines, when must be transparent. freight forwarders, ground handlers, consignors, importers, customs brokers, and border control agencies, among others. • High/uncertain costs: If costs are uncertain, participants They interact around business processes for the import, export will likely assume the worst-case scenario, which may delay and transshipment of cargo hauled by air. Public entities usually a decision to adopt indefinitely. conduct border compliance functions, above all (but not only) customs. • Not thinking about user adoption from the start: Past expe- riences show that few participants are quick adopters, while Historically, the air freight industry has operated under the freight some are slow followers, and most are change-averse. The forwarder-airline relationship. Essentially, the air carrier takes over community must think about adoption schemes early, build the airport-to-airport haulage, and the freight forwarder arranges critical mass with champions and incentivize participation. shipment consolidation and handles all the logistics services related to the transport of cargo before and after the airport. • Weak ICT governance: A for-profit ICT vendor will not neces- They often act as the clearing agent for the customs release of sarily deliver the best outcomes, especially if it is a non-neu- goods and provide other formalities on behalf of the shipper or tral party (e.g., subsidiary of a dominant industry player). the importer (e.g., producing payments, insurance, etc.). When the scale of operations of an air carrier does not justify allocat- • Leaving laggards behind: The solution to be implemented ing its own assets and personnel at a specific airport, a ground should be aware of the different levels of technology adop- handling agent is nominated to act on behalf of air carriers. tion across the entire stakeholder base. Ensuring solutions They carry out activities related to the processing and handling are available to laggards can help to drive a fragmented user of physical and information flows for shipments, including stor- base that is not IT-enabled. age and regulatory filing with border control agencies, among others. In some geographies, the role of the customs brokers and Some final observations are useful to identify commonalities bonded warehouse operators is also central in handling physical with the seaport environment. and information flows. A more detailed description of the roles along the air cargo supply chain can be found in the box below. Seaports have traditionally been more active and successful in Express carriers or integrated carriers, in contrast, combine all implementing digitalization initiatives. This has been aided by functions above providing all services within a single vertically having port authorities which are seen as neutral community integrated company. leaders in initiating a PCS. Airports, on the other hand, have traditionally viewed cargo as a subsidiary business and struggled The organization of legacy cross-border air cargo supply chains is to find a neutral party to oversee wider coordination between complex and fragmented. Even though air movements are priced different stakeholders in freight. at a premium, and conceived to provide speed to market, legacy procedures are not conducive to ease the flow of goods across This is slowly changing, especially since air cargo became a borders transported by air. Figure 2‑1 shows the movement of lifeline during the pandemic. physical and information flows of a typical international air ship- ment. This involves information exchange contained in some 15 Increasingly, coordinating ‘landside’ (truck) operations is increas- documents or more, between commercial, transport, trade, and ingly important, reflected by the demands of new communities regulatory documents (see Appendix, Table 5‑4). This does not on the ground. reflect additional permits and licenses needed to obtain border clearance at the destination. Congestion naturally occurs in compressed time frames and reduced physical space. Pre-loading screening regulations (e.g., Process complexity and data fragmentation are seen as the ACAS or ICS2) will probably also change the landscape as the main culprits of elevated lead times and unreliability in air cargo use of digital tools will be needed for compliance purposes – in supply chains. End-to-end delivery times for international air Air Cargo Digitalization: From EDI to Community Systems 6 Port Community Systems Figure 1. Air cargo supply chain process Invoice Packing List Invoice Packing List Invoice Air Waybill Packing List House Manifest House Waybill Shippers Consignees Cargo acceptance Origin Freight Forwarders Carrier Export Goods Decl. / Customs Destination Release Export Freight Forwarders Air Waybill House Manifest Flight Manifest Import Cargo Decl. / Air Waybill Customs Export Cargo Decl. / House Manifest Release Export Customs Release Export Export Authorities Advanced Advanced Import Goods Decl. / electronic Information electronic Information Customs (goods data) (goods data) Release Export Import Authorities Freight flow Information flow EDI Information flow EDI or Scan Source: IATA. cargo shipments have remained stubbornly high in the last four freight forwarder prepares the house manifest as well as the decades, averaging 6-7 days. However, dwell time at the desti- master air waybill, which is sent to the air carrier. nation airport averages about 3 days, waiting to comply with the local requirements which, for the most part, hinder the process of • Advance Cargo Information (and where applicable pre-load- 3 freeing goods. In the worst third performing destination airports, ing information) is sent to destination customs by the cargo idles for approximately 6 days until it is released. More- airline or the origin forwarder, to perform an advance risk over, the variability in dwell times for 75% of all air shipments is assessment. about 5 days.1 The latter figures provide a sobering picture of the operational performance of air cargo supply chains, considering • The origin freight forwarder may send a pre-alert to the desti- that its main value proposition is “speed to market” and “time nation freight forwarder and prepare customs clearance in definite” delivery at a significant premium. A succinct description advance. The pre-alert may include the invoice, packing list, of the cross-border air cargo procedures is useful to highlight house waybill, house manifest, and master air waybill, or other the relevance and delineate the functions of each stakeholder required documents. The origin freight forwarder presents the in the chain:2 cargo ‘ready for carriage’ to the air carrier. • The original freight forwarder, when acting as a customs • In lieu of an air carrier, a GHA can accept the freight on its agent or broker, prepares and sends an export goods decla- behalf, and later transmit an export cargo declaration to the ration to customs, using the information provided by the origin customs to release the cargo for departure. The air provided . After goods are released by customs, the origin carrier manifests the flight and transmits cargo information 1 Logistics Performance Index 2023, World Bank 2 Moving Air Cargo Globally. Second Edition. Montreal. ICAO, WCO, volume 36 (2016) 3 Advance Cargo Information is part of WCO’s SAFE Framework of Standards. For air shipments, the time limit for the submission is at time of “Wheels Up” of the aircraft, in the case of short haul flights, and 4 hours prior to arrival at the first port in the country of destination, in the case of long haul flights. Available at: https://www.wcoomd.org/-/ media/wco/public/global/pdf/topics/facilitation/instruments-and-tools/tools/safe-package/safe-framework-of-standards.pdf Air Cargo Digitalization: From EDI to Community Systems 7 Port Community Systems Box 1. Non-exhaustive description of key roles in the air cargo supply chain • Broker: A broker is an independent agent who helps facilitate the movement of goods from the seller to the buyer. They help with customs requirements and arrange for air transport, among other things. They may be integrated with forwarding and warehousing functions within a single entity. • Buyer: The buyer is the purchaser of the goods in international trade. They are also known as the importer. The buyer may clear consignments on their own or use a broker to assist with various requirements of border regulatory agencies. • Consignor: The consignor is the entity or individual who initiates the movement or transport of the goods. In other words, it is the sender. The term ‘shipper’ is often used to describe the entity or individual who initiates the trade in goods. Consignor and shipper have separate roles but can be the same entity or individual. • Consignee: The consignee is the party designated on the invoice or packing list as the recipient of the goods at the end of the transport movement. They are the ones who will receive the goods from the transport operator or freight forwarder. • Freight Forwarder: A service provider which fulfills the dual role of (indirect) air carrier and shipper. To the shipper the air freight forwarder is an indirect air carrier because it receives freight for reward yet does not actually operate the airplanes. A freight forwarder and logistics service provider may offer a service relating to the preparation, storage, carriage, handling, packing, and final delivery of goods, including the applicable documentary and facilitation formalities. Ancillary services offered include customs clearance and fiscal matters, procuring insurance, and collecting or procuring payment or docu- ments relating to the goods. • Ground Handling Agent: Ground handlers are third-party companies that provide ground handling services for freight forward- ers and/or aircraft operators. These services can include the acceptance, handling, preparation, tagging, loading/unloading, transit, and storage of cargo and mail. Ground handlers are responsible for dealing with operational aspects, based on the instructions of freight forwarders and aircraft operators. • Airport Operator: They are responsible for the provision and security of the airport infrastructure. They establish a secure environment through which goods move and may also be responsible for the provision of ‘on airport’ cargo services. In some cases, an airport operator will be the party responsible for the protocols for dealing with incidents resulting from a positive identification of a physical threat in air cargo. • Aircraft operators: They provide air transportation for goods through a transport contract called an air waybill. The air cargo may be transported on passenger aircraft or all-cargo aircraft, and in some instances, particularly for short distances, aircraft operators may also transport air cargo by road. • Express carriers or integrated carriers: These combine the work of a broker, freight forwarder, ground handler, and aircraft operator into one single company or group. Express carriers manage end-to-end multimodal supply chains, operate sophis- ticated track-and-trace information technology systems, and typically transport high-value-added, time-sensitive cargo with a time definite delivery. Source: Moving air cargo globally, Second Edition, World Customs Organization and International Civil Aviation Agency. at “wheels up” as a pre-alert to the destination forwarder and/ to the destination freight forwarder. The destination freight or local representatives of the airline. Prior to flight arrival, forwarder collects the freight, where applicable, and transmits some national customs authorities may require additional the import goods declaration (often prepared in advance) information that can be performed by ground handling agents to import customs to clear the goods (physical and fiscal on behalf of the operator. release). • At or before a flight’s arrival, the air carrier at the destination • When the goods are cleared, the destination freight forwarder transmits to destination customs an import cargo declaration ensures that the goods are loaded on to the means of and receives a response to release the cargo to be delivered Air Cargo Digitalization: From EDI to Community Systems 8 Port Community Systems Box 2. Electronic Data Interchange (EDI) EDI is the direct computer-to-computer exchange of standard formatted business transactions between one or more mutu- ally agreeable business partners. EDI standards are agreements between users of EDI on how data is to be formatted and communicated. Standards provide a common syntax, set of rules, and procedures for their maintenance and enhancements. In general, EDI formatting standards address the following issues: (i) What documents can be communicated electronically; (ii) What information is to be included; (iii) What sequence the information should follow; (iv) What form the information (i.e., numeric, ID codes, etc.) should use; and (v) The meaning of the individual pieces of information. There are two main standards used in air cargo: CargoIMP and CargoXML, both developed by IATA (International Air Transport Association). The CargoIMP standard was first introduced in the early 1990s and has undergone several updates and revisions and became the workhorse in the industry. In 2014, it was decided that no more revisions (after version 34) would be made, but instead a transition to CargoXML, a new standard, would be made. While CargoIMP uses a fixed-length message format (each message has a specific number of characters and fields, and these fields must be filled in a specific order) CargoXML is a flexible, XML-based messaging format that allows for more detailed and customized data to be included in each message. CargoXML also includes features such as digital signatures and encryption, which enhance the security and integrity of cargo data exchanges. Both standards, on the other hand, are based on UN/EDIFACT, although largely designed for the specific use of the air cargo industry. CargoXML has also been made compatible with ASYCUDA Customs Systems, within the scope of the UN/CEFACT, to promote trade facilitation. Source: IATA. transport that delivers the goods to the final consignee or to the legal framework allowing airlines to make use of electronic another identified delivery place. documentation for air shipments, without impacting the airline’s ability to rely on liability limits. Some 60 of the 191 ICAO Member • The best practice for cross-border air cargo movements still States have not adopted the norm. The mandatory use of paper makes heavy use of EDI. Despite the spread of shared data (either the original matrix form or a printed laser copy) airway- platforms and APIs, electronic messaging is still the main bill is still common (see Figure 1‑2). Whereas border control workhorse of digital air cargo cross-border transactions. This agencies have generally embraced digitalization many still is because in most cases, the import processes are accom- do not accept electronic messaging, from the airlines or the plished by at least four independent entities, each of which importing party. usually operates its own IT system: airline, ground handler, customs, and destination freight forwarder. A detailed Data recapture is typically not possible, causing duplication. description of EDI messages typically used is provided in Due to the lack of EDI implementation, a disruptive manual Table 5‑5. double-entry process usually persists, preventing data recapture. The carrier or its agent at destination receives the manifest and Digitalization today is a basic management tool. Electronic waybill documents from the airline’s origin office, either by print- messaging standards have been adopted across much of the ing off a scanned file that was emailed to them, or by printing off world. Despite widespread EDI use, air cargo still faces barri- the documents from the airline’s computer system. In either case, ers to the smooth rollout and adoption of digitalization. This is the destination staff manually recaptures the data, typing again especially, but not exclusively, the case in developing countries. the document contents in the customs system web interface. Legacy practices, or lack of regulatory backing, are still hamper- This can take at least 1-2 hours per flight and creates significant ing wider digitalization. risk of errors that will later delay the shipments. Border control agencies require non-standard data that slows the 1.2.  Main barriers to process. Even when Customs do have EDI capabilities, it is not digitalization of air cargo uncommon that the carrier or its agent are required to produce information that is not part of standard data models. An example Paper documentation and old practices persist in air cargo. is to ask for the tax ID number of the consignee. This may cause Legal issues and legacy practices of border control agencies delays as additional data fields need to be updated, while airline require paper documents or do not accept electronic messages staff or its agent obtain this information. This information can (EDI). The Montreal Convention of 1999 (MC99) establishes be incorporated earlier if participants know this requirement in Air Cargo Digitalization: From EDI to Community Systems 9 Port Community Systems Figure 2. Customs acceptance of Air waybill (imports) N/A Traditional AWB Required Laser copy eAWB enabled Source: IATA. Note: Traditional AWB refers to the color, matrix printed physical form that includes the original and eight copies and contract conditions printed in the back. Laser copy is a message-generated or scanned image of the AWB which is laser printed. Note: This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Figure 3. Advanced cargo implementation (ACI) (left) and standards use (right) in LAC ACI implementation ACI message Standards use Finalized Cargo XML In progress XML compatible Not started Not used/not compatible Source: IATA. Note: This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Air Cargo Digitalization: From EDI to Community Systems 10 Port Community Systems advance, using flexible message data fields – something that IATA, who also work jointly with other international bodies (e.g., does not always occur. The EDI messages are transmitted to WCO, UNECE, FIATA, etc.) to pursue standards harmonization, can Customs, but after several hours of delays. only produce recommendations for industry users to implement, and do not have the powers to enforce its adoption. The role of Advanced (pre-arrival) cargo information is not fully imple- governments in the adoption and enforcement of international mented. Despite being part of WCO SAFE Framework of Stan- standards is key to the digitization of air cargo. dards, advanced cargo information has not been implemented across the board (see the example of Latin America in Figure IT capabilities and adoption costs can play a large role in blocking 1‑3). When border control agencies receive pre-arrival data, digitalization. Whereas large firms are IT-capable, smaller outfits whether via EDI or via manual entry by airline staff into the might struggle with the investments needed to phase out legacy customs website, the norm in the developing world is that this use of physical documents. In addition, the relative cost of labor data is not really used for faster clearance upon arrival. This to IT software is such that in some regions, the financial equation negates the benefits of transmitting such information early, so favors the use of manual procedures instead or outsourcing such that time is saved downstream. functions to the carrier. EDI standardization and data quality still generate issues. Stan- Regulatory requirements will increase the pressure on the supply dards harmonization issues create obstacles and elevate costs for chain and will likely create a new push to “go digital”. The same different parties. A considerable number of electronic messages way that the pre-arrival manifest filing created (and continues to are still exchanged in CargoIMP standard, which was developed do so) a push towards digitalization since 2005/6, the Pre-load 30 years ago for airline-to-airline messaging. Many versions of advance information (PLACI) requirements by the largest import- this standard exist. This presents limitations in the type and size ing countries (ACAS in the United States, ICS2 in the European of data elements that can be incorporated into it. Full conver- Union) will create additional pressure to keep up with upstream sion to Cargo XML, its successor, can be a costly endeavor for formalities. This will encourage the industry to embrace digital many parties, or alternatively done through “translator” services tools for compliance reasons. In practice, this requires that unit- (see Section 3.1 on “Global Air Cargo Community Systems”), as ized cargo is already deemed “OK for boarding” when tendering direct communication is not an industry-wide reality. Moreover, the cargo to the air carrier or its agent at the airport. Moreover, data quality and message integrity still cause errors and delays the air carrier or handling agent, in turn, will not proceed to the that propagate across the entire chain of custody of the cargo. physical buildup of Unit Load Devices until pre-loading clearance One element to consider is that standard-setting institutions like is received. 2.  Historical initiatives on air cargo digitalization Several initiatives emerged in the early 1990s to tackle digi- GACCS provide connections and translation services. For many talization challenges in the air cargo supply chain. There are air cargo stakeholders, it is not possible to maintain an ICT team three initiatives that deserve our attention: (1) “Global” Air Cargo that can build connections to every business partner (airline, Community Systems; (2) Cargo Media; (3) E-freight. Meanwhile, forwarder, ground handler, customs, etc.). By contracting with Section 5 deals with airport-specific initiatives that we will call a GACCS operator, a party can have a single connection (to the collectively “Local Initiatives”. GACCS), leaving it up to the GACCS to re-transmit data to/from the operator’s business partners in multiple locations – hence its “Global” denominator. In addition, the GACCS provides ‘trans- 2.1.  “Global” Air Cargo Community lation services’ to convert messages into whichever standard/ Systems (GACCS) format is required by the system of the other parties along the chain. These services of “transmission and translation” “Global” Air Cargo Community Systems (“GACCS”) emerged in the remain very valuable even today, so GACCS still send millions early 1990s. GACCS introduced electronic messaging to air cargo of messages each year to/from airlines and other stakeholders, transactions. Back in the early 1990s, Electronic Data Interchange both B2B and B2G. (EDI) was cutting-edge technology. The quality of telecommunica- tions improved sufficiently to carry data transmissions (without The GACCS were not originally designed to serve the community expensive, dedicated telephone lines). The software for electronic at large, but rather centered around one stakeholder in the chain. data interchange (EDI) to connect separate and independent The GACCS emerged not long after the airline Global Distribution ICT systems became widely available. EDI was widely used for Systems (e.g., Sabre), which radically altered passenger travel coordinating supply chains in retail and automotives. business. Seeing this success, the cargo industry looked for Air Cargo Digitalization: From EDI to Community Systems 11 Port Community Systems Figure 4. Schematic view of GACCS architecture Airlines Worldwide GSA’s Forwarders Worldwide Worldwide CMP/FWB16 CMP XPWB 6 /FWB ED WB XML/ IFA P/F Truckers 6 CT AN y CM r Worldwide ta S rie IX 12 op We 2 Pr b unication Forma HL GU I mm P/F Co Formats ts CM GHA’s Data Carg oFac i Engine c G UI Worldwide t Log Web Other CCS’s Proprietary Worldwide CMP/CXML Cargo Community S S System XML/X MIP/CA FWB I CM b GU P/F WB We 9 y t ar We b rie GU op I Shippers Pr B6 Worldwide ED FW IFA P/ CT XML XML CM XML XML Consignee’s Worldwide Airports Worldwide Health Security Authority Tax Customs Authority Authority Source: SITA CHAMP Brochure. similar ICT feats. When launched, different stakeholders showed GACCS narrowed their scope to concentrate on Value Added resistance because they feared that the GACCS’ controlling Network (VAN) functionalities, acting as data relays. When parties (e.g., mostly large legacy airlines) would disrupt commer- GACCS first appeared, one goal was to achieve “door-to-door cial relationships with their clients (e.g., bypassing forwarders functionality,” transmitting a wide array of information about to deal directly with shippers), or misuse their pricing power in schedules and availability to shippers, forwarders, etc. However, future – which also slowed adoption in smaller cargo carriers. early reluctance by the freight forwarding community to adopt the tool, due to its perceived lack of neutrality, led GACCS to Originally, GACCS formed a network of regional systems. Each abandon the door-to-door “goal” in 1992.4 Instead the focus regional system would be owned and controlled by the dominant was put on EDI translator and data relay functionalities. This carriers of that region. In 1990, four global legacy air carriers signed approach does not necessarily incentivize high usage rates an MOU to form a “Global Logistics System”, with one European (e.g., over 80 percent) necessary to enable process redesign in franchise and one Asian franchise, owned by the participating carri- a specific airport. Therefore, it is outside their scope to invest in ers domiciled in each region. SITA’s Champ eventually acquired the customized solutions where there is limited critical mass (e.g., European franchise and remains a recognized name in this segment. smaller markets). 4 Ellen Christiansee, John Been, and Tonja van Diepen, “Factors Determining the Failure of Global Systems in the Air Cargo Community,” Proceedings of the 29th Annual Hawaii International Conference on System Sciences, 1996, page 422. Air Cargo Digitalization: From EDI to Community Systems 12 Port Community Systems 2.2.  Cargo Media and CargoIQ from digitalization for the entire supply chain. The vision was ambitious: convert about half of the industry’s documents to The industry concentrated on standard-setting and adoption electronic messages, creating $5 billion in annual savings for rather than digitalization. By 1995, GACCS operators realized that shippers, forwarders, and airlines.5 the pace of digital tools adoption in the industry was stagnat- ing. Moreover, the different data standards used by the GACCS E-freight was focused on global standards and EDI messaging: created a new barrier to smooth interactions. Industry groups The first push of the E-freight program was to work towards (e.g., IATA) sponsored the “Cargo Media” initiative. Around 20 air global messaging standards for the documents used the most. carriers were on board when it was first created. Cargo Media’s This meant aligning multiple standards that had developed over goal was to improve the usage of 4 electronic messages (related the years or creating new ones. The program assumed that all to bookings and status update), by adopting a single global stakeholders would turn to the use of EDI messages, whether via format and promoting the use of that format. The group quickly a GACCS or via direct peer-to-peer communications yet avoiding adopted a format, and by the end of 1996 they had achieved their advocating for specific ICT solutions or providers. goal among their airline members. As with the GACCS initiative, strenuous concerns from some Motivated by this success, industry groups adopted a grander stakeholders delayed the widespread implementation of vision to digitalize air cargo supply chains. IATA members and E-freight: Reluctance to participate in the program was related Cargo Media’s carriers aimed to reinvent the non-integrated (e.g., to the short-term implementation costs, and the distribution all airlines barring FEDEX, UPS, DHL) supply chain to emulate of the benefits. Freight forwarders, at the time, believed that the integrators, thereby giving shippers time-definite delivery E-freight would give productivity improvements to the recipient commitments, using detailed routing instructions and real-time of the data (e.g., airlines), and even raise the costs of the sender piece-level tracking. To achieve the vision, airlines and forward- of the data (e.g., software development expenses or GACCS ers would jointly develop and adopt new operating procedures, charges). A deadlock persisted until 2010, when the Global Air radically expand the use of EDI to collaborate, and affix bar codes Cargo Advisory Group (GACAG) was formed, including a wider to every piece to track its movements. based of stakeholders. They included forwarders, airlines, and shippers. E-freight was then restructured into phases to balance To achieve that vision, a sector-broad coalition was formed, efforts and rewards. under the banner “Cargo 2000.” Air carriers recognized that such a vision could not be achieved if the airlines alone designed Stakeholders struggled with the ICT work needed. Many supply the solutions and then asked freight forwarders to adopt them. chain participants have made sincere efforts to adopt E-freight To attain their input and buy-in, airlines invited the forwarding standards yet struggled with the magnitude of the ICT implemen- community to participate. Ten of the largest global freight tation work. It was expected that E-freight would have a global, forwarders joined. The scope of Cargo2000 was wide and some- top-down implementation, with the largest carriers and forward- times exceeded the needs/capabilities of some participants ers moving first to get the industry to critical mass. While the very (e.g., piece-level tracking) at the time. Moreover, the events of determined players have the finances and ICT skills to drive the September 11, 2001, and the dot-com crash slowed adoption project to completion, others either cannot independently make as the sector experienced a marked contraction. Cargo2000 changes to their ICT (because the software is vendor-controlled) continued to push forward and was rebranded to CargoIQ later, or they cannot afford to pay for ICT changes. Without common gradually incorporating more members to expand beyond the systems or common operating processes, each stakeholder “airport to airport” movements. must reengineer and pay for ICT changes to replace paper with digital processes. 2.3.  E-freight To achieve critical mass, the scope of E-freight was narrowed. Out of the 40 documents exchanged during the entire process to In 2005, the “E-freight” concept was launched to increase the move cargo from origin to destination, the program was reduced use of digital documents. Airlines and forwarders realized to focus on just one to achieve critical mass: the Air Waybill. It that the GACCS would not lead the industry toward paperless is the common denominator between forwarders, airlines, and supply chains. So, they joined forces under IATA’s leadership to ground handlers – hence the top candidate to digitize. introduce “E-freight” as a multi-year program to create benefits 5 A pilot project by Cathay Pacific showed benefits for carriers. The carrier pushed E-freight in its home hub of Hong Kong (HKG), where Cathay enjoys a market share of ap- proximately 35%. In 2010, Cathay announced to its forwarders that for exports from Hong Kong it would only accept electronic Air Waybills, effective January 1, 2011. The few forwarders who refused to comply were denied access to Cathay’s space, and within days their resistance cracked. With 100% of the Air Waybills coming electronically, Cathay reengineered processes and reduced staff. In 2012 they published a paper describing that they had improved productivity in their offices by at least 19%, which is a great result. Moreover, a pilot project by Kuehne & Nagel has shown that E-freight has great benefits for forwarders too. Building on Cathay’s success in HKG, K&N developed paperless processes downstream to the airline (Cathay) but also upstream to their shippers in HKG. K&N reported that their productivity savings were in the range of 28% to 44%, depending on how many documents they were able to send digitally to the airline. Air Cargo Digitalization: From EDI to Community Systems 13 Port Community Systems Figure 5. Monthly Electronic Air Waybill volumes transmitted and Penetration Box 3. Forward-looking industry- 1,000 800 wide initiatives – IATA ONE Record In 2017, the IATA ONE Record initiative was first conceived by the International Air Transport Association (IATA) to simplify and standardize data sharing across the air transport indus- 100 80 72 try. ONE Record’s objective is to move from a peer-to-peer messaging model to a data sharing model that creates a “Virtual Shipment Record”, i.e. a single record view of the ship- ment. There are three pillars under the ONE Record concept: 10 • Data model: provides the air cargo industry with a stan- 5 dard data structure for data exchange that facilitates data integration with existing and new data services. 1 • API: specifies the interface and interaction that allows E-AWB Penetration (%) E-AWB Volume (000') airlines and their partners to connect their system directly using best in class web technologies. Dec-2012 Dec-2020 Source: IATA; Note: December. Penetration is computed as the transmitted electron- • Security specification: uses an industrywide and ic Airwaybills as percentage of total electronic Air Waybills in enabled O-Ds. federated trust network to manage identification and authentication of data sharing systems and ensures data privacy and confidentiality for all parties. Despite the early challenges, e-AWB usage increased significantly in the past decade: According to Figure 3‑2, e-AWB use increased Whereas many businesses have switched to APIs, most air between December 2012 and 2020, from 5 to 72 percent. Mean- cargo stakeholders – forwarders, airlines, ground handlers while, the volume of AWBs transmitted electronically expanded – still use old electronic data exchange technologies to tenfold, from 80,000 to 800,000 in “enabled” routes. This only share data. In contrast to legacy systems and messaging takes into consideration those routes, where parties at the origin standards, APIs are relatively easy to develop and maintain, and destination are enabled to conduct electronic AWB transmis- and based on technology standards that are agnostic in sions from a legal standpoint. Hence, the penetration rate might terms of programming language Entities of the cargo supply not be informative of the pace of digitalization in less developed chain need to share and access different types of data, such economies, as compared to more advanced regions. Today China as bookings, ULD identifiers, documents, addresses, etc. In is the largest origin country in terms of transmitted e-AWBs, and ONE Record, these are referred to as Logistics Objects. To responsible for about 10 percent of the total volumes, increasing retrieve the data related to a Logistics Object through the tenfold between 2015 and 2020. ONE Record API, the client only needs the unique identifier of that object. Currently, over 40 large industry participants have joined the initiative. The stated objective is to achieve full implementation of the standards by 2026. Source: IATA. Air Cargo Digitalization: From EDI to Community Systems 14 Port Community Systems 3.  “Local” air cargo digitalization initiatives While global digital initiatives were heavily promoted, some ACCS are flexible and differ heavily in approach. Some local initia- industry participants perceived that the top-down approach tives were inspired by the GACCS movement, while others were would not satisfy all their needs. In many local airport markets, inspired by E-freight. None of them are necessarily restricted to the time-definite applications (e.g., piece-level tracking) the vision or scope of predecessors. Each local initiative is at promoted globally were not a priority. Similarly, in other locations liberty to pursue its own development. Although their visions the top-down scope did not address local procedures and prob- might be similar, their approaches vary widely in the aspects of lems that needed customized solutions (e.g., truck congestion “community”, scope, leadership/neutrality, and ICT governance. management, perishable goods tracking, and interface with regulatory agencies). Lastly, some air cargo communities sensed Local initiatives differ on how they define and approach ‘commu- that they could move further or faster toward achieving “critical nity’: some have a clearly defined and broad community while mass” by pursuing their own “local” initiatives. Early movers, others take a ‘user group’ approach. Those who have defined the no wonder, emerged at the largest and more mature global air community broadly have extended invitations to all government cargo hubs. and commercial stakeholders, including border control agencies, shippers, forwarders, handlers, airlines, truckers, etc. For these There is no single standard definition of what an Airport Cargo community members, there are communications channels to Community System (ACCS) is. However, for simplicity, we refer learn about the status of the initiative, and there are forums to to an ACCS as a “local” initiative (herein used interchangeably), give feedback. Other initiatives may have a community vision consisting of a digital platform that connects stakeholders in the but continue to rely on their “user groups”. This is especially true air cargo supply chain of that community (e.g., airlines, freight when there are rival ICT providers/solutions present. forwarders, ground handlers, road freight operators, customs authorities, etc.). It allows these stakeholders to collaborate ACCS differ by the local challenges that they are aiming to over- more efficiently to improve the speed, accuracy, and reliability come. In the case of HKG, the market has a stakeholder that is of air cargo operations. ACCSs provide a centralized data hub not present in other markets (e.g., co-loaders) so the ICT solu- where all stakeholders can share information on cargo status, tions in HKG needed customization to account for this. In the documents, and shipment details in real-time. They might also case of BOM and DXB, the traffic flows peak at certain times of provide additional services, such as cargo tracking, connecting day, so the technology solutions needed to accommodate dock with regulatory agencies, landside operations coordination (e.g., scheduling management and truck permits. In the case of AMS, trucking slots) and data analytics to optimize operations. One of many shipments involve flowers and live animals, each of which the main value additions of the ACCS is the reusability of infor- require special procedures and notifications to regulators that mation, which eliminates redundancies and delays in obtaining may be irrelevant in other markets. A clear, measurable, and information already in the system. In addition, some of the ACCSs attainable strategic objective that motivates the community is combine commercial functionalities (e.g., rate quotes) as well as a common feature of successful initiatives. payment handling. The gamut of functionalities offered by the ACCS is (and should be) directly related to that local communi- The Initiatives differed on neutr”Iit’ anI ICT governance. Some ty’s needs and priorities. A sample of the functionalities can be communities have invested substantially and endured challenges found in the Table 3‑1 to create neutrality, via community-ownership, advisory-board decision-making, or other schemes. On the other hand, some initiatives feature a leader who is profit-motivated, whether acting 3.1.  Comparison of key features at arm’s length from the main air cargo stakeholders or not. In some cases, the community clearly controls or influences the All the local initiatives are airport specific. Local initiatives behavior, planning, and pricing of the ICT provider. In other cases, are independent of each other and focus on a single airport, the ICT provider independently defines terms. despite those having a common ICT provider. In some cases, the airport is the only major cargo airport in the country (e.g., The initial motivation is also heterogenous. Some communities HKG). Even when there are other major airports in the country, the and their platforms have grown organically from a strong belief in local initiative restricts its activities to that airport (e.g., BOM). their value. Others have been prompted by regulations promoting No matter which stakeholder is the leader (airline, ICT vendor, the partial or complete digitalization of airport processes. In government agency), each local initiative is aiming to create addition, there are cases of profit-motivated providers who incen- benefits for the community at-large and for each stakeholder. A tivize community building, typically sponsored by one anchor non-exhaustive comparison of legacy ACCS is presented in Table stakeholder. Finally, communities have preemptively moved in 3‑2 for a sample of large air cargo airports. An update of more their “self-interest” when facing a perceived “greater harm” – such recent developments (e.g., FRA, HKG, AMS) is also presented as government plans to introduce systems that were not well in this section. suited for that environment. The success of such transitions Air Cargo Digitalization: From EDI to Community Systems 15 Port Community Systems Figure 6. Sample features of ACCS Scenario before ACCS implementation Shipper / Consignee / Delivery order Customs House Agents / Ground Handling Agent / Carrier Carting order Terminal Operator request Freight forwarder BoE no request SB no Gate pass AWB details Carting order Terminal charges Cargo status invoice enquiry Delivery order Cargo status Bank challan Cargo status Agent pre-deposit enquiry account information Cargo status BoE no Bank challan Terminal charges Banks Customs SB no Out of Charge Request for payment Examination Agent pre-deposit Let Export Order account information Forwarded for Terminal charges Out of Charge Examination invoice Lorry Recipient Book Container MBL Book Carrier Book Transport Transporter CFS/ICD Liners Scenario after ACCS implementation Railway CHA/CB Shipper / Forwarder Transporter Liner Consignee Web Portal Airlines CHA/CB Internal System UPLIFT Adapter UPLIFT Adapter Internal System Custodian/ Transporter Ground Handler Customs Gateway Customs Bank Forwarder Sample features by stakeholder Shipper Forwarder Airline Customs Ground Handler • Online booking • View airlines schedule/rates • Receive booking/quotation • EDI Between Customs • Online receipt of • Documents generation • Creation of AWBs • Receive AWB data and Forwarders / CB validated shipment • Status updates • Filing of AWBs & Manifest • AWB stock allotment • (e.g., customs data • Online document • Label printing • Manifest filing w/Customs declaration documents, • Proactive milestone transfer • Customs declaration filing • Timely status updates to Customs, Queries, Consol alerts • EDI between Shippers • e-Docket facility • forwarders manifest) | • Terminal charge and Forwarders • EDI between Forwarders and • EDI between Forwarders • EDI Between Customs creation (Invoice, Packing List, • Carriers (e.g., FWB, FHL, MBL, HBL) and Ground Handlers (FHL) and Carriers (e.g., • Online auctions SLI) • Online booking manifests) • Vehicle management • Documents generation • EDI Between Carriers and • Status updates GHA (e.g., FFM, FBL) • Online document transfer • EDI between Shippers and Forwarders (CI, PL, SLI) Source: adapted from Kale Logistics brochure. Air Cargo Digitalization: From EDI to Community Systems 16 Port Community Systems Table 1. Non exhaustive comparison of legacy ACCSs KSF Amsterdam (AMS) Mumbai (BOM) Hong Kong (HKG) Visible Community? YES. 100% partiapation by all YES. (1) ICT provider works via NO. No efforts to bring entire AMS-based commercial parties, agent’s association (ACAAI) to community together: Each stake- airport authority, regulators, and 1800 members. (2) Pilot project holder (GIS, Cathay, etc.) interacts national government departments involved 5 airlines, 5 forwarders with its own customer (e.g. Police). (agents), 5 brokers, BOM airport, 1 base. ground handler, 2 exporters, 2 importers, 1 bank, Customs. Neutral leader? YES. Board of community-owned MAYBE. Partnering between NO. For-profit companies are ICT provider. agents association and ICT rivals, each pursuing e-business provider gave appearance of for their own benefits: Cathay, GIS, neutrality. TradeLink, etc. Flexible Scope? YES. Cargonaut pursues YES. Kale provides solutions that NO. Vendors have been slow to solutions that are unique to AMS are unique to the BOM community. pursue custom solutions to local community. problems. Adoption Plans? YES. Community ownership of YES. Offered long free-usage SOME. Cathay forang every Cargonaut promotes adoption period to stimulate trial and gener- forwarder to use e-AWB is a strat- because new developments reflect ate critical mass. egy, although it is disliked. community’s wishes. ICT governance? YES. Co-op (community-owned UNCLEAR. Consultative process n/a non-profit) agreed between ACAAI and Kale is being tested by introduction of agent-paid fees in November ‘14. KSF Singapore (SIN) Frankfurt 2011-13 (FRA) Dubai (DXB) Visible Community? NO. No broad community group NO. Fraport worked mostly with its MOOT. Users of monopoly because there are rival ICT camps. handling austomer base, not the handler = Community. entire community New initiative launched in 2014 is broad-based). Neutral leader? YES. Civil Aviation Authority NO. Airport Authority (Fraport) MAYBE? ICT vendor is a monop- (CAAS) via an initiative named owns a for-profit handler, and they olist, but its leader is popular and e-freight@Singapore have Lufthansa execs on their well-known in the community. board, so they are not neutral. Flexible Scope? YES. Consortia are able to pursue N/A. Never reached this stage. YES. From its beginnings, the solutions as they see fit. Calogi team has felt empowered to find austom solutions to local problems. Adoption Plans? NO. Rival consortia each have their N/A. Never reached this stage. YES. For each function, there is a private marketing plans, but no benefit to the user. For example, community-wide adoption plan users of the truck scheduling func- tion get access to peak times. ICT governance? NO. ICT vendors run the consortia, N/A. Never reached this stage. NO. ICT vendor is a monopolist. and are believed to be at liberty to set prices, determine direction. Source: World Bank own analysis. often hinges on how robust the “community” is. More outreach during peak times at the handler’s warehouse. In BOM, the local work will be required with “candidate” communities that might initiative handles more than a million messages a year, and has want to adopt such platforms, to align their expectations with several local customizations to accommodate advanced ship- the capabilities of these platforms, and their primary objective. ment information (ASI) to the handlers and airport, the approval of carting order process, payment of export & import fees, making Several local initiatives have been successful. In DXB, the local paperless deliveries (an initiative called D-cube – Digital Docu- initiative has achieved 90% adoption, and has created several ment Delivery), scheduling truck docks at the handler warehouse, solutions for local problems, such as efficiently scheduling trucks etc. In AMS, the local initiative handles many messages, including Air Cargo Digitalization: From EDI to Community Systems 17 Port Community Systems images of documents (through uploads of scans), plus the community has developed several industry-leading innovations Box 4. More recent initiatives such as a paperless/touchless truck admittance process (e.g., in Hong Kong, Frankfurt, and E-Link, Milk Run) which in real-time verifies the truck driver’s Singapore identity, the security of the trailer, and assigns the truck to a dock at the warehouse. Each of these examples show that local initiatives can tackle real issues and develop valuable solutions. • Hong Kong. The Airport Authority has launched the HKIA Cargo Data Platform as a neutral and open data The latest wave of ACCS is combining legacy elements with sharing platform. The platform aims to enhance ship- new ones. In the last few years, more than 10 airport community ment traceability, unifies communication and infor- systems emerged, mostly in the EU and United States. Their mation exchange, synchronizes and standardizes scope (range of services provided) is mixed. This raises ques- process workflow and enables a paperless working tions about the nature and scope of the ACCS. Among those that environment. The Platform supports the International made an appearance there are global cargo hubs and cargo-in- Air Transport Association’s (IATA) One Record. tensive airports, such as: • Frankfurt. The launch of FAIR@Link as a neutral • Ahmedabad International Airport (ASI, e-payments, e-accep- data platform in 2015 was a milestone for the tance and delivery, tracking, full data sharing) digitalization of air freight handling in Frankfurt. • Atlanta International Airport (ATL) (truck congestion Together with investor Fraport (airport operator), management). the Forwarding and Logistics Association Hessen- • Bengaluru International Airport (BLR) (ASI, e-payments, e-ac- Rheinland-Pfalz (SLV), the Association of Air Cargo ceptance and delivery, tracking, full data sharing). Handlers Germany (VACAD) and the customs office • Brussels International Airport (BRU) (full data-sharing responsible for freight at Frankfurt Airport, DAKOSY platform). has implemented the FRA/OS module, which builds • John F Kennedy International Airport (JFK) (Truck Congestion on the FAIR@Link communication platform, and Management). includes important site-specific features. With the • London Heathrow (LHR) (cargo intelligence and truck load FAIR@Link Slot Booking module, forwarders and consolidation). truckers can also manage trucking slots to save • Liege International Airport (LGG) (full data-sharing platform). time and money. • Paris Charles De Gaulle (CDG) (electronic data exchange platform for Customs tracking). • Singapore. Launched in June 2020, the Changi ACCS • Vancouver International Airport (YVR) (Truck Congestion is an open ecosystem of collaborative and commu- Management, e-docket, ASI). nity-based applications underpinned by an informa- • Vienna International Airport (VIE) (truck congestion tion-sharing platform that aggregates data from all management). parties involved in the cargo handling process, to opti- • Other airports such as Philadelphia International Airport mize operational efficiencies and enable end-to-end (PHL), Chicago Rockford International Airport (RFD), Hyder- digitization of the air cargo supply chain. abad International Airport (HYD), Lucknow International Source: DAKOSY, Hong Kong International Airport, Civil Aviation of Singa- Airport (LKO), Ted Stevens Anchorage International Airport pore. (ANC), Sharjah International Airport (SHJ), Goa International Airport (GOI) have also launched their community system initiatives. a Software-as-a-Service (SaaS) approach. That means small “Third generation” ACCS are emerging: Whereas the first ACCS communities can use and pay for what they use instead of the were portals enabling EDI messages, or just displaying flight and full development of IT. cargo statuses, new platforms are now powered by Blockchain, Artificial Intelligence, and modular user apps. These will take Airports are slowly embracing new role in respect to cargo, from advantage of user adoption to incorporate logistics e-market- “landlords” to “orchestra conductors” –COVID-19 helped to cata- place and sea-air corridors (e.g., backhaul load search). More- lyze this trend. Airports have gradually shifted away from the over, the use of the cloud is increasingly changing the approach traditional “landlord” model for cargo and recognized the need towards data sharing platforms that remain more flexible, as well to step up as neutral leaders to break down silos and address as modular apps that allow for customization of user needs. coordination market failures. Although the drive towards digita- The latter approach takes advantage of the digital capabilities lization precedes the COVID-19 pandemic, the need to maintain of firms in more advanced economies, which do not need to goods flowing across borders, and the complete standstill of back-end system integration to the Community System, as they passenger flights helped cement the relevance of cargo as a already have those. The flexibility of these new systems allows strategic imperative from an airport perspective. The role of the Air Cargo Digitalization: From EDI to Community Systems 18 Port Community Systems Box 5. Legal and regulatory basis relevant for air cargo community platforms International Conventions and organizations • Montreal Convention of 1999 (MC99). The Convention for the Unification of Certain Rules for International Carriage by Air is a multilateral treaty adopted by a diplomatic meeting of ICAO member states in 1999. MC99 establishes the legal framework that allows airlines to make use of electronic documentation for domestic and international shipments. • ICAO Annex 9 (Fifteenth Edition). Standard 2.9 and 4.13 of ICAO Annex 9 urge the use of electronic means over paper for formalities. Recommended Practice 4.17.1 and 4.17.2 request from member countries best endeavors to use/set up single entry electronic points; and in Recommended Practices 4.9.1 and 4.30.1 to set Authorized Economic Operator schemes and provide facilitation benefits to them. • ICAO Annex 17: Standards provide the basis for security custody chain and e-CSD. • WCO Framework of Standards. Standard 1.3 establishes the basis for Advance Electronic Information filing and Pre-Loading Data for Security for air cargo shipments. • IATA. As standard-setting body, IATA not only establishes messaging standards and recommends its adoption but also is the platform for the Multilateral E-AWB Agreement (IATA Resolution 672) that provides the legal basis to conclude cargo contracts electronically with all other participating parties, with the signature of one single agreement. • WTO. Trade Facilitation Agreement establishes standards and recommendations for the treatment of expedited cargo, and the use of electronic supporting documentation. Advanced filing initiatives for imports in key import markets • Pre-Loading Security Clearance. These programs in the United States (ACAS – enforced since 2018) and EU (ICS2 – to enter into force in March 2023) mandate the electronic filing of cargo information before loading the goods on the aircraft, for all consignments to be shipped from overseas. National regulations The national legislative basis associated with ACCS operations, are not necessarily specific to it, but those that involve digitali- zation of international trade operations in general. The airport environment might be less subject to intervention on a regulatory basis, as compared to the seaport example, nonetheless, the following instruments should be considered: • National Customs Acts: Dictates the disposition/accounting procedures for the cargo. • Air Codex, Airports Law, or Edicts: Should it be necessary to entrust or legally define, delegate functions, or entrust legal powers to existing or new actors involved in the cargo transportation or handling. • Competition Law: Competency of competition law might be invoked when the nature of the service provided by the ACCS operator is deemed subject to economic regulation as the single point of entry to conduct international trade activities through an airport. • National AVSEC Program: Deals with secure supply chain participants and implementation of electronic Cargo Security Declaration (e-CSD). • Other (general) legal Acts: • Data Protection Act • Digital Act; Digital Government act • Cybersecurity Act • Intellectual Property Rights (IPR) Act • Transparency Act • PPP Act Air Cargo Digitalization: From EDI to Community Systems 19 Port Community Systems pandemic in breaking the resistance to embrace digitalization, as collaboration: stakeholder engagements, data governance and contactless operations became a must, has not been uniform. orchestration, change management, and financial sustainability. The feedback from some industry participants is that, as activi- ties returned to normalcy, this element of “forced” digitalization has not receded. However, certain geographies have been seem- 3.2.  Governance models ingly less resolute to address this issue for good. Sanitary goods (e.g., vaccines, PPE) were given priority and facilitated processes, Local airport cargo community systems and platforms have yet improvements lasted only during the COVID outbreak – as adopted various governance models. A survey of air cargo many governments still rely on paper-based processes. communities shows that there are four main models: (i) For-profit independent vendor. (ii) Subsidiary operator of large Technology can power interconnected global digital corridors. community member. (iii) Community-controlled non-profit. (iv) Cloud-based systems are projected to change the digital land- Statutory single provider. Table 3‑3 presents a comparison of scape globally for air cargo. An interconnected global data these models, including the main pillars of governance, risks, stream can be achieved not by a single system but by inter- and attractive features. connected ones that speak one single language and provide full transparency. The blockchain-powered Digital Air Freight Subsidiaries of large community players were responsible for Corridor between airports in India and the Netherlands has early attempts to create airport cargo community systems. In been developed to provide transparency through exchange of most airports, the hub air carrier occupies a dominant position. real-time status of consignments and streamline processes. Subsidiaries of large airlines was the first to try to create ACCS. These initiatives should consider principles of public-private data The benefits of this approach include shorter start-up times Table 2. Governance Models commonly seen in “local” air cargo communities Model Governance details Attractive feature(s) Risk(s) For-profit, independent Vendor owns the product, invests, sets Accelerates start-up because vendor Adoption may be slowed if community service provider (e.g., prices (subject or not to regulatory brings investment, experience, skilled members object to costs/pricing BOM) approval), has strong voice in product ICT staff Innovation could be deferred due to development vendor issues: distraction to other Initial motivation is either from projects; merger/acquisition, etc. vendor, the community, or as part of government mandate to drive digitalization Vendor liaises with an existing community organization or forms an Advisory Board with community members Subsidiary of large The large player summons the Accelerates start-up because subsidi- Adoption largely compromised community member community, defines requirements, ary knows community because community members object (e.g., HKG) invests in the ICT, etc., just as a vendor Better ICT product, because subsidiary to subsidizing a competitor or fear a would knows business, can customize disruption in their commercial relation- Subsidiary sets up an Advisory Board ships with the end client to communicate with the community, sets prices (subject or not to regula- tory approval), drives adoption efforts Community-controlled Community organizes a Steering Community leadership maximizes Start-up can be delayed (or fail) non-profit (e.g., AMS) Committee, forms Working Groups to buy-in, contributions if “champion(s)” not available to define requirements, set prices, etc. Increases adoption by removing motivate others, push project during Community either creates non-profit sources of hesitation start-up company to develop the ICT, or creates Slower to launch and innovate a non-profit entity to procure services because time needed to build commu- from vendors (e.g., a purchasing co-op) nity support Statutory single Gov’t/single provider organizes Faster startup because gov’t/single Innovation slowed if mandate causes provider (e.g., DXB) community discussions to identify provider can cover investment resentment problem, define requirements, etc. Fastest, highest adoption because Gov’t/single provider then invests, usage can be mandated, or operator is manages the ICT development, drives statutory single provider adoption, etc. Source: World Bank. Air Cargo Digitalization: From EDI to Community Systems 20 Port Community Systems and (potentially) better ICT. Adoption by community users can This pitfall of ‘insufficient benefits’ was shown pointedly by the be seriously compromised because they object to subsidizing a E-freight project. Here the forwarders resisted the initial scope competitor or fear a disruption in their commercial relationships of the project because it would create additional work for them, with their end client. without clear benefits to compensate for that additional work. For-profit providers have also emerged to combine the commu- Suggested preventive remedies include: nity needs with a robust business model. Such providers could include the airport authority and the ICT provider of the local • Define scope so that every party sees meaningful benefits ACCS. Like in any profit-motivated business, the users might in the short run. be fearful about how balanced the benefits of introducing this solution are among all stakeholders, and if the pricing of such • Have explicit discussions about benefits. Make it clear that services is reasonable. The leadership must balance the inter- the benefits might not be equal. Help members to see that ests of all community members. Community members must their expected benefit is meaningful, yet not identical to also understand how the proposed project will benefit for-profit others. providers. Transparency is key. • Make all costs known up-front. If costs fall disproportionately Single statutory providers in ground handling or terminal custo- on one stakeholder/party, a compensation mechanism could dians have a unique position. In this case, adoption is straight- be negotiated. forward, because the statutory single provider can simply dictate the new business process and the charging mechanism. Since Pitfall 3: High/uncertain costs. An initiative will lose critical there will be no resistance to the new process or charges, the support if the costs are deemed too high, or the costs are uncer- provider can procure ICT services as they see fit, and then “distrib- tain. If the costs are uncertain, participants will likely assume ute” these services (and user fees) as they would for any other the worst-case scenario, which may delay a decision indefinitely. service they provide. Unreasonably high fees, however, might cause discontent. Pitfall 4: Not thinking about user adoption from the start. Some initiatives take the approach “if you build it, they will come.” Stake- holders believe the new functionality will be sufficiently appealing 3.3.  Usual pitfalls and to attract users. Past experiences show that few participants possible remedies are quick adopters, while some are slow followers, and most are change-averse. The community must think about adoption There are common “traps” that thwart the success of airport schemes early, in tandem with forming the community, setting cargo community systems, according to users, providers and the goals and scope, and procuring the ICT. experts. They are summarized below: Suggested preventive remedies: Pitfall 1: Bias toward one type of air cargo stakeholder. The non-integrated supply chain is, by definition, an industry that has • Include all target users (“adopters”) in coalition/community several independent, for-profit parties collaborating to deliver a from Day One. single service. If any initiative strengthens one stakeholder at the expense of another, or even appears to favor one stakeholder, • Define scope so that every party sees meaningful benefits then that initiative will be seriously jeopardized. in short order. Suggested preventive remedies include: • Do not proceed until “critical mass” of members makes firm commitments to adopt. This might be a “coalition of the will- • Form a coalition (community) to steer the initiative. ing” and not necessarily all stakeholders. • Define scope so that all parties benefit, to answer the question • Incentivize “leading adopters.” “What’s in it for me?” Pitfall 5: Weak ICT governance. Some sector participants think • Create a transparent fee schedule that is “fair” to all partici- that a for-profit ICT vendor will produce the best outcome for pants. This is especially crucial if the operator is a for-profit a community project. This is rooted in the belief that such an ICT vendor, or is aligned with another stakeholder (e.g., entity will be more motivated to invest in high-quality, innovative subsidiary of an airline). software. While this might be the case, that benefit is almost always negated by the presence of a for-profit ICT provider that is Pitfall 2: Insufficient benefits to one stakeholder type. Any indus- the subsidiary of a dominant industry player (e.g., airline, ground try-wide initiative that needs cooperation from multiple parties handler). must give each party meaningful benefits within a short time. Air Cargo Digitalization: From EDI to Community Systems 21 Port Community Systems Box 6. Cargonaut - Amsterdam’s ACCS history and development In the early 1980’s, the Netherlands national government developed the “Mainport” strategy: betting on the country’s airport as a transit point for goods, with a leading role in ICT and logistics planning. In 1986, the airport authority sponsored the “Schiphol 2000” study, advocating infrastructure investments, and speedy customs handling through digitalization between customs and commercial parties. The airport authority sponsored a pilot project to allow airline-forwarder e-communication, and later developed an IT system for import goods declarations, and an interface that allowed all commercial parties to interact with the customs system. By 1989, the system was widely adopted by most of the community, giving Cargonaut a broad “user base” for which to develop additional tools. Several airports attempted to launch local CCSs, defining their own messaging standards, but those attempts failed. Cargo- naut was already up-and-running with its services, giving it experience and the user base needed to be a fast adopter of IATA Standards. Cargonaut quickly became a full ACCS offering translation services and continued innovating by launching pre-ar- rival airline manifests in 1993 (more than ten years before WCO SAFE). This gave customs time to conduct risk assessments in advance, to speed up release of the goods upon arrival. This airline-customs IT service was very popular and was quickly adopted by most airlines. Cargonaut became an independent company in 1996. For its first ten years, Cargonaut was operated by the ICT department of the airport authority. Then, in 1996 was partially privatized by distributing shares to the community, based on their usage of Cargonaut’ s services (cash was not paid to acquire the shares). Until recently, the airport authority owned 37%, KLM owned 15%, and another 13 shareholders own a combined 48% of Cargonaut. The Amsterdam community has been always broad and comprehensive. The community includes passenger airlines that carry cargo, express airlines, freighter airlines, freight forwarders, general sales agents, handling agents, truckers, and ICT providers. All these stakeholders are united by a single community organization called Air Cargo Netherlands (“ACN”). A project can be led by any member organization, and the structure of the project will be determined by the participants. This decentralized structure can support numerous projects at one time and address a wide variety of business goals that benefit the community at large. Earlier projects included E-link (touchless truck slot management), Milk Run (truck pooling), Smartgate (speeds import clearances by enabling multiple regulators to make their release decisions), European Green Lanes (speedy export clearances via Amsterdam), and Venue (simplified pre-declaration for e-commerce). An idea can come from: a single member or sector councils but must earn support from the community to both win investment for development, but to also ensure adoption of the idea after the development is finished. Once an idea becomes a project, progress is shared transparently by the project manager to the overall community via the ACN organization. Projects can receive funding from a variety of sources, often including government. The community organization (ACN) does not fund all the projects; it has only limited ability to contribute to project development, mostly by contributing employee time to help with project management. Sometimes the large, motivated members (like KLM or Rhenus, a large forwarder firm) will contribute staff time to a project, but they are never the single source of cash funding. Cargonaut may contribute substantial staff time to develop new software tools, especially when it expects to have its investment repaid after launch by user fees. One government entity that is a frequent funding contributor is the airport authority, which can tap its general fund for cargo projects. Lastly, the national government, through a variety of departments, invests in projects regularly. Cargonaut is involved in most community projects, but it is never the leader. Cargonaut is involved in almost all projects, because almost all projects require ICT support. Nevertheless, Cargonaut is never used as the project leader. Based on members’ opinions, while Cargonaut is an essential player in almost any project, Cargonaut must play a subordinate role of ICT service provider. Furthermore, even if ICT is needed for a project, it is not guaranteed that Cargonaut will be selected as the ICT provider (yet has almost insurmountable advantages because most new projects re-use existing information and they leverage the already-shared digital infrastructure). Cargonaut also offers a regulatory Single Window. Cargonaut includes all trade-to-trade connections plus links to other enforcement agencies including Immigration, Health Care Inspectorate, the Inspectorate for Health Protection and Veterinary Public Health, National Inspection Service for Livestock and Meat and the Plant Protection Service. Because of this broad set of connections, it serves more than 600 customers, and deals with 70 million electronic messages annually. Cargonaut’s B2G connections are not granted on exclusivity. Air Cargo Digitalization: From EDI to Community Systems 22 Port Community Systems Box 6: Cargonaut - Amsterdam’s ACCS history and development (continued) Despite the community-based nature of the endeavor, different members expressed dissenting views about how costs are distributed, considering that largest members receive some form of “volume discounts”. Some actors believe that innovations move too slowly, because the community prefers to see everyone move forward together (the “polder” model) rather than letting the most motivated parties drive the developments (the “front runner” model). Lastly, some are concerned that Cargonaut could lose focus on local developments. Consensus and high participation rates are the result of efforts by Air Cargo Netherlands (ACN), making it a pivotal player in the project. Nevertheless, there are two downsides to this drive for consensus. The first is slowness, because it takes a great deal of time to generate community consensus. Second is ACN’s inability to drive projects forward, mostly because ACN needs to maintain its neutrality and avoid pushing/offending any members. To find project leaders, the community generally looks to the airport authority, or commercial organizations (airlines, forwarders, handlers) who wish to be a “front runner” and push the project forward. All CCSs used to set their prices like phone companies, using the principle “sender pays” and varying the charges according to the number of messages and the size of the messages. Since then, the internet has removed the telephony costs from the equation, and websites run by forwarders, airlines, and others permit free-of-charge data entry. Given these developments, local ACCSs like Cargonaut now aim to set prices based on value delivered. That has been difficult to implement, because one company’s price decrease must be another company’s price increase. Pricing issues are a challenge even for a mature community like Amsterdam and a community-focused non-profit service provider like Cargonaut. Cargonaut has undergone major restructuring. The main motivation was that the authorities sensed that the airport’s strategy needed profound changes to reflect the critical role of data and its shared use. To that end, large investments were needed – that could best be undertaken by a public partner. Hence, the Royal Schiphol Group (a management company wholly owned by the government) took full ownership of Cargonaut in 2020. This was driven by the government’s new digitalization strategy, which could not be achieved if the ACCS remained privately owned. Box 7. Recorded Benefits of ACCS in India According to Kale Logistics, the ACCS provider at Indian airports, several parameters can be compared before and after the implementation of the platform at Mumbai International Airport, as a proof of the benefits brought to the community at large. According to the statistics provided by the above-mentioned ICT vendor, the following benefits attributed to the project could be identified: • The number of documents handled (copies included) dropped from 100 to 25 • The average queue time for document/payments was reduced from 1h to nil • The number of airport counters required to process documents dropped from 9 to 1 • The average time per export/import document handling dropped from 22-28 minutes to a third of that • Accuracy of data increased from 85 to 94 percent • Dwell time for export trucks was reduced from 2 hours to 30 minutes Source: Kale Logistics website. Air Cargo Digitalization: From EDI to Community Systems 23 Port Community Systems Box 8. pre-existing conditions to successfully implement an ACCS Pre-condition #1: Border control agencies (especially customs) are motivated and capable. Previously, we noted that Amsterdam in the 1980s had at least three government entities that were supportive. Among those, having a motivated and capable customs department (above others) is a pre-requisite. Other government support is helpful, such as from the national government, the provincial government, or the airport authority, and that support is especially helpful if funding is availed to support local digitalization initiatives. Nevertheless, this additional government support is not a pre-condition. Pre-condition #2: Local champion exists. Any successful project has a champion behind it. A cargo community ICT project needs someone who can bring together the stakeholders, help them to agree on a vision/strategy, and then line up resources to make the project a reality. In the Amsterdam case, their champion was at the airport authority, which was a neutral (non-com- mercial) party that already had access to all the stakeholders. Pre-condition #3: Air cargo supply chain participant want to improve. Both government and private parties must be motivated to either solve a common problem or seize a benefit. That motivation will drive the formation of a community organization and the selection of a goal. Perhaps, like Amsterdam, the airport participants feel the need to compete with a regional rival airport. Or perhaps they want to attract new foreign firms (and jobs) to the airport area, and the way to do that is to have faster exports or imports. Regardless of the specific goal, the participants at the airport need to desire improvement. Suggested preventive remedies: Pitfall 6: Leaving laggards behind. The solution to be imple- mented should recognize the different levels of technology adop- • One possibility is to consider creating a non-profit entity, tion across the entire stakeholder base. Whereas large players owned by the community, to develop and manage the soft- might have budgets to transform and lead IT investments, smaller ware (e.g. Amsterdam model). Such a non-profit would have players (especially in the more fragmented parts of the industry a Board of Directors that represents the entire community. like forwarding, trucking, or brokerage), may not. Limited access • Create a strong community committee to govern the for-profit to IT tools can jeopardize adoption by this wide base of users. ICT vendor. Participation in a new system must not disrupt business continu- • At a minimum, a steering group must exist to control devel- ity for big or small firms. The cost recovery of this development opment priorities and costs. should be passed to users until investment costs are recouped. Air Cargo Digitalization: From EDI to Community Systems 24 Port Community Systems 4.  Conclusion 4.1.  Commonalities and differences increases the stress and strain on airports and supply chain with the seaport environment participants. The increased atomization of shipments, motivated by the e-commerce boom, increases the challenge of dealing with documentation for the handling of the goods at airports. 4.1.1.  Neutrality of community leaders Pre-loading filing requirements entering into force in the largest Cargo is the principal business of most maritime ports. For import markets will shake up procedures. This will also drive the airports the opposite is the case. Transporting people is their use of digital intermediaries to comply with these new require- principal business. This explains, in large part, why air cargo ments. This could eventually become a catalyst for more and digitalization lags maritime cargo digitalization. There are only broader digitalization for ai cargo. a few successful air cargo initiatives against a much longer list in the maritime sector. 4.2.  Trade-offs between Port authorities have played a much more active role in digitaliza- global and local focus tion than their airport counterparts. In maritime trade they have driven the creation of the PCS as neutral parties representing the Air cargo has experienced “waves” of top-down (global) and interests of all the port community as PCSOs. That has not been bottom-up (local) digitalization. the case for airports. Far from cargo being central to business – as is the case in most maritime ports – cargo is often considered Both global and local initiatives have experienced successes peripheral by airport operators and airport authorities. Cargo is and failures. frequently seen as an issue for “tenants” that lease airport space from the airport “landlord.” Global initiatives have set solid foundations for the industry. They have also been setback by limited adoption “on the ground.” On the one hand, digitalization of air cargo operations has been held back by the lack of natural, neutral leadership in airport Some “local” initiatives have been highly successful. Others cargo community systems. On the other hand, change is often have failed to take off. Fragmentation, a local rather than global driven in response to regulation rather than voluntary adoption. approach and a lack of interoperability between systems are just some of the barriers to progress. 4.1.2.  Coordination of physical movements 4.3.  Regulations can also drive progress While airside operations are not covered by ACCS, landside operations are. As a result, landside access coordination and The digitalization of air cargo has often been driven by regulation, congestion are increasingly influencing the ACCS digital envi- from advanced filing requirements to a government’s commit- ronment. Airports operate under shorter time windows. Facilities ment to phasing out paper to replace red tape with more effective are limited by land availability and narrow access to landside and and efficient digital cargo handling. In fact, the overall success airside operations, creating major truck congestion. As a result, of any local initiative will remain subordinate to regulatory effi- digitalization of truck queueing slots is quickly gaining ground. ciency even in airports that have created successful communi- “Local” communities are striving to reduce truck process times ties. The experience in Latin America illustrates that this might to reduce congestion and costs. Major hubs like Amsterdam not materialize until governments decide to (i) Align all actors (and more recently Atlanta) have implemented such systems in the supply chain to provide information under international to control and organize truck traffic. standards. (ii) Use this data for the decision making and faster merchandise release. 4.1.3.  Time constraints and advance filing requirements Airports face tighter turnaround times than ports. Even long- haul flights take hours to reach their destinations. Ships take days or weeks. That gives the maritime sector more time to transmit regulatory and other information. At airports the time between departure and arrival of cargo is much shorter. That Air Cargo Digitalization: From EDI to Community Systems 25 Port Community Systems Appendix Table A1. Global Best Practice for import process Step From To Action EDI Messages6 1 Airline Ground Handler Send all cargo details for incoming flight At least FFM, FWB, FHL, FZB, FUM. 2 Airline Customs Import Cargo Declaration Usually FFM+ FWB+ FHL; alternate is CUSCAR 3 Airline Ground Handler Notification that flight has arrived (movement FSU with status code message) ARR (“arrived”) 4 Ground Handler Airline Count pieces and check for damage, but do FSU with status code NOT reweigh. If shipment OK, then notify RCF (“received freight”) airline that shipment has been received. 5 Ground Handler Customs Notification of the arrival of the freight and its Varies depending by Customs agency (or Airline) current location, if required. 6 Ground Handler Airline Handler updates tells the airline that the FSU with status code paperwork is ready, and airline alerts forward- NFD (“notified”) ers via EDI. 7 Forwarder Customs Import Goods Declaration and required docs, CUSDEC, INV, PCL most often the Commercial Invoice and Packing List. 8 Customs Ground Handler, Notification that goods are cleared, held, etc. CSN (‘customs status notice’) or CUSRES Forwarder Often called ‘Customs Release Import’ 9 Ground Handler Airline Goods loaded onto forwarder’s truck, then FSU with status code notification sent that delivery is done. DLV (“delivered”) Source: World Bank. 6 For a list of the most common messages used for air cargo, see IATA’s E-freight Handbook, Version 4, page 56. Air Cargo Digitalization: From EDI to Community Systems 26 Port Community Systems Table A2. Non-exhaustive list of airport cargo community system platforms Airport Solution ICT operator Description Amsterdam Schiphol, Cargonaut Cargonaut Cargonaut as a community information platform, facilitates parties in the AMS cargo supply chain with accurate, complete, timely and reliable information needed for seamless airport operations as orchestrator of information flows. Cargonaut manages the cargo community information platforms in the Netherlands and France. Working in close cooperation with local communities wanting to improve their airport collaboration and turnaround times. http://www.cargonaut.nl/ Mumbai, BOM UPLIFT and GMAX Kale Logistics Kale Logistics Solutions Pvt. Ltd. is a leading IT solution provider focused Solutions on the Logistics and Airports industry. Its broad solution spectrum ranges from ‘Internal Business Automation Systems’ to ‘Community Solutions’ that help various players in the logistics value chain from shipper to consignee to communicate and transact with each other electronically. Kale’s solutions help Freight Forwarders, Container Freight Stations, Custom House Agents, and Airport Cargo Terminal Operators achieve faster growth, standardized processes and operational efficiencies. They offer the ACS “GMAX” and also the Community Platform “UPLIFT” to enable a multi-modal unified electronic collaboration platform. http://www.kalelogistics.in/ Hong Kong, HKG Tradelink Tradelink (B2G) Tradelink Electronic Commerce Limited is a leading provider of e-commerce and Cathay´s GLS services for Hong Kong business community (B2G). It was established subsidiary (B2B) in 1988 by eleven corporations. Since 1997, Tradelink has been providing Government Electronic Trading Services (GETS) for the trading community. In 2013, Tradelink set up a new wholly owned subsidiary, Tradelink E-Biz Secure Solutions Limited (TESS) to take over Digi-Sign’s non-digital certifi- cation related businesses. http://www.tradelink.com.hk/eng/index.html Singapore(SIN Rival consortia Three consortia: The government of Singapore has promoted the implementation of the Innosys Pte Ltd, paperless solutions to increase productivity and enhance the competitive- Kewill Pte Ltd and ness of the air cargo industry: e-freight@Singapore. It was championed by vCargo Cloud Pte the Civil Aviation Authority of Singapore (CAAS). The solution was devel- Ltd. oped by three consortia selected by CAAS and the Infocomm Development Authority of Singapore (IDA). Frankfurt (FRA) FAIR@Link Dakosy The CCS operator Dakosy implemented “FAIR@Link” at Frankfurt airport. The first participants are companies that were involved in the develop- ment and test operation during the pilot phase: the global air forwarders DACHSER, Kühne + Nagel and Panalpina, the LUG air cargo handling GmbH and Fraport Cargo Services ground handling agents and Lufthansa Cargo and Fraport AG, the operator of Frankfurt Airport, which has a neutral cargo consignment area (NFÜP).The FAIR@Link platform provides automated process support: Truck Appointment, Customs Process, Security/eFreight and Hazardous Goods Management modules. Dakosy is currently imple- menting the next expansion to add additional modules. https://www.dakosy.de/en/solutions/ccs-airport/ Dubai, (DXB) Calogi Dnata Dnata is the air cargo operator of Dubai Airport and is a government-owned handler (no other ground handler operates in that Airport). The subsidiary Calogi is a secure internet service portal that gives a one-stop platform for a range of air cargo businesses from around the world to negotiate and sell products and services online. It offers a multitude of services, including flight schedules and space availability, shipment tracking and stock management. https://www.dnata.com/en Air Cargo Digitalization: From EDI to Community Systems 27 Port Community Systems Table A3. Historical summary of paperless global initiatives in air cargo Initiative Description Date Main Drawbacks Current Status Cargo Traxon Lufthansa, Air France, Japan Early 1990 Focused on airlines so the Traxon was sold in 2011 to Community Airlines (“JAL”), and Cathay Pacific initiative lacks neutrality of the Sita Champ. Traxon cargoHUB Systems formed the “Global Logistics system and did not involve all is an engineered platforms (CCSs) System” in 1990 with Traxon the stakeholders of the airport (B2B) for worldwide electronic Europe and Traxon Asia. Traxon community. data interchange of the global Europe was sold in 2011 to SITA’s airfreight community Champ. Originally conceived to Forwarders opposed to CCS as http://www.champ.aero/ offer door-to-door services, but in they feared that airlines would products/communi- 1992 abandoned these goals in make business directly with the ty-integration-services/ order to get forwarders on board. It shippers traxon-cargohub/ provides services of transmission and translation of messages. Smaller airlines opposed as they thought that bigger airlines would steal their customers or may charge a fortune for the CCS services Lack of neutrality reduced the CCS to “Airline Data Relays”. Cargo Media Cargo Cargo Media was a committee of 1995 Narrow goals that were achieved No longer operating. In 1997 & Cargo 2000 Media 18 airlines sponsored by IATA in quickly and integrated only by the airlines voted to disband it 1995, once airlines realized the airlines and voted to form Cargo 2000 limitations of CCS. The aim of the committee was to select one standard for EDI and promoting the adoption of that standard. The goal was to improve the usage of 4 messages (related to bookings and status update), by adopting a single global format and promoting the use of that format Cargo This is a quality management 1997 A positive aspect is that airlines In 2016, the group changed 2000 system that was developed by recognized the need to invite its name to “Cargo IQ”. Cargo IATA to assist airlines and freight forwarders as members of the iQ operates as a not-for-profit forwarders monitor and benchmark committee. However, the ambi- membership group supported delivery performance against their tious vision led to a complicated by IATA. It currently has 82 service promise, define common wide scope that was beyond the members that include 33 processes and procedures, and capabilities of the airlines and airlines, 14 forwarders, 18 promote best practices. The C2K forwarders. So, the aim of Cargo GHA, 11 IT companies, 3 Master Operating Plan is an open 2000 later was trimmed. airports and 1 RFS operator. resource free for airlines to adopt. http://www.cargoiq.org/ E-Freight It is an IATA managed, multi-year program to 2005 E-freight had the presumption that The initiative is currently under create benefits for the entire supply chain and all stakeholders would use EDI execution. IATA has published pursue paperless operations. The aim was to messages either by a CCS or direct the “e-freight Handbook 4.0” in convert industry’s documents to electronic peer-to-peer communications. 2013 as the latest version. messages, focused on global standards for the It did not consider a communi- http://www.iata.org/ highest volume of documents and EDI messag- ty-owned ICT solution. whatwedo/cargo/e/efreight/ ing. Prior initiatives to e-freight were the Pages/index.aspx development of the first EDI standard: Cargo- IMP in the 1970s, and the Cargo Paperless Transportation project (CPTP) in the 1990s. A large pilot was conducted in 6 airports. First 2007-2008 There was opposition from the paperless shipment begin in 2007. forwarders who slowed the project, as they were concerned on the software development costs or CCS charges. Global Air Cargo Advisory Group was formed 2010 Stakeholders struggle with the ICT as a grand coalition that include FIATA work needed to achieve E-freight. (Forwarders Association), TIACA (The Interna- Without common system or tional Air Cargo Association), a pan-industry common operating processes, conference operator and the Global Shippers each stakeholder must do his own Forum process reengineering and pay for the ICT changes need to accommo- date the new paperless processes. Air Cargo Digitalization: From EDI to Community Systems 28 Port Community Systems Initiative Description Date Main Drawbacks Current Status IATA narrowed the scope to focus on the Air 2015  Customs was identified as a major Waybill “e-AWB”. Montreal Convention 99 barrier to the implementation (MC99) and Montreal Protocol 4 (MP4) trade due to potential vulnerabilities in lines allow the use of an e-AWB, accounting terms of the security level of data for 80% of the cargo volume. (Danciou and Franz, 2015). The study considers Ikarus Airways (IKA) and Pegasus Xpress Airways (PXA) as case studies IATA introduced e-AWB360, which is an IATA’s e-Freight is not on-course to airport community-based approach to e-AWB reach the developing world. implementation that aligns carriers, forward- ers, and ground handlers around a common industry standard operating procedure and implementation plan. Schiphol was the first e-AWB360 airport. Source: World Bank. Air Cargo Digitalization: From EDI to Community Systems 29 Port Community Systems Table A4. List of documents required in air cargo supply chain Air cargo manifest Air cargo manifest is a document issued by an aircraft operator, and available in hard copy or electronic form. This document contains the details of consignments loaded on to a specified flight and provides a list of all the air waybill and master air waybill numbers referring to the goods loaded on to an aircraft. The nature of the goods, weight, and number of pieces composing each consignment on a specified flight, and the unit of loading used, are also identified in this document. Air waybill A document prepared by or on behalf of a shipper that evidences the contract between the shipper and aircraft operator(s) for the carriage of goods over routes of the operator(s). Air waybills have several purposes, but their two main functions are as a contract of carriage (behind every original air waybill are the conditions of contract for carriage), and as evidence of the receipt of goods. An air waybill is the most important document issued by an aircraft operator either directly or through its authorized agent (freight forwarder) and covers the transport of cargo from airport to airport. Air waybills have eleven-digit numbers used to make bookings and to check the status of a delivery and the current position of the shipment. The first three digits are the aircraft operator prefix. House air waybill A freight forwarder offering a consolidation service will issue its own air waybill to the shipper, called a house air waybill, which may act as a multimodal transport document. The house air waybill and the forwarder’s general conditions may be seen as a part of the contract between the freight forwarder and each shipper whose goods have been consolidated. There are two reference numbers on a house air waybill, the number of the master air waybill to which it is linked and the house air waybill number itself, which is always different from one freight forwarder to another, without limitations or standard digits, and which may be used to trace a shipment through the freight forwarder. Master air waybill Master air waybills are issued by or on behalf of freight forwarders offering a consolidation service. This document specifies the contract between a freight forwarder (or consolidator) and aircraft operator(s) for the transportation of goods originated by more than one shipper but destined for the same final State, airport or other destination. Master air waybills are linked to several house air waybills, and the master number can be used to trace a shipment with an aircraft operator. Certificate of Origin A specific form identifying the goods, in which the authority or body empowered to issue it certifies expressly that the goods to which the certificate relates originate in a specific State. This certificate may also include a declaration by the manufac- turer, producer, supplier, exporter, or other competent person. Consignment A consignment security declaration is a document used to establish the security status of cargo. It allows tracking of the security declaration security status of cargo and mail throughout its movement within the secure supply chain. This document helps to ensure (CSD) that regulated agents, known consignors, and aircraft operators are held accountable regarding the security controls applied to cargo. A consignment security declaration, which may be in hard copy or electronic form, should be issued by the entity that renders and maintains the cargo secure. A CSD template can be found in the ICAO Aviation Security Manual (Doc 8973 — Restricted) Customs release A document whereby a Customs authority releases goods under its control to be placed at the disposal of the party export concerned for export (also called a Customs delivery note). Customs release Same as above but for import import Dangerous Goods Document(s) issued by the consignor or shipper to certify that the dangerous goods being transported have been packaged, Declaration labelled, and declared in accordance with the provisions of international standards and conventions. Export cargo decla- A generic term applied to the document, also referred to as a freight declaration, providing the particulars required by ration (departure) Customs concerning outbound cargo carried by commercial means of transport. Export goods A document whereby goods are declared for export Customs clearance. declaration House cargo A document containing the same information as a cargo manifest as well as additional details on freight amounts, etc. manifest Import cargo decla- Same as above but for inbound cargo ration (arrival) Import goods A document whereby goods are declared for import Customs clearance. declaration Invoice A document required by Customs in an importing State in which an exporter states the invoice or other price (e.g. selling price or price of identical goods), and specifies costs for freight, insurance, and packing, as well as terms of delivery and payment, for the purpose of determining the Customs value of goods in the importing State. Packing list Documents specifying which goods are in each package Source: WCO and ICAO, Moving Air Cargo Globally, Second Edition. Air Cargo Digitalization: From EDI to Community Systems 30 Port Community Systems Table A5. Best practices in EDI use for import air shipments In Step 1, the Airline sends to the GHA all the details about the inbound flight, as if the GHA had direct access to the airline’s computer system. The EDI messages usually include: (1) FFM: Flight Cargo Manifest, with flight information and list of air waybills; (2) FWB: Air Waybill information, includ- ing shipper, consignee, commodity; (3) FHL: for consolidation shipments, this is the list of “house” AWBs; (4) FZB: House air waybill details; (5) FUM: Container contents (AWBs and piece counts); (6) FSU: Flight Status Updates, with event codes like ARR (arrival). In Step 2, the Airline makes an “Import Cargo Declaration,” made up of three electronic messages: FFM, FWB, and FHL. A few Customs authorities may instead adopt the WCO’s Cargo Declaration message, known as WCOCAR (data model 2) or GOVCBR (data model 3). Customs departments start working before flight arrival to identify which shipments will need physical inspection, and which shipments can be cleared after the importing party has filed a goods declaration. In Step 3, the Airline system notifies the GHA that the flight has arrived. This is done by sending an FSU with the code ARR. At big airports this can be critical to make sure that crews are ready to get the goods off the flight and ready for Customs inspection and release. In Step 4, the GHA brings the freight to the warehouse and conducts the “check-in process”. For each AWB, the GHA employees inspect for damage and then count the pieces to confirm that all the goods have arrived. If the shipment details match the manifest, the GHA updates its computer system, which notifies the Airline by sending an FSU message with the code RCF (“received freight”). Ground handling rely completely on the weights that are transmitted electronically using the FFM (manifest) and FWB (air waybill) messages, although in some countries re-weighing is mandatory on arrival. In Step 5, the GHA communicates with Customs to let them know that the shipment has arrived, and it is available (in a specific location) for inspec- tion. Surprisingly, there is not a global standard message for this activity, because the format is most often defined by local Customs to meet their needs and their coding scheme for warehouses and sub-warehouse locations. In Step 6, the Forwarder is notified that the goods are on-hand. In the best case, the GHA updates the Airline system (with an FSU message with the code NFD), which transmits an EDI message to the Forwarder. In many cases, the GHA uses telephone or email to alert the forwarder, and then updates the Airline system with the time of the notification. In Step 7, the Forwarder completes the Import Goods Declaration. This is not a single document; rather, it is a general term to describe all the docu- ments required by Customs. The Import Goods Declaration often includes these documents: house air waybill, Commercial Invoice, Packing List, and other trade documents. The requirements vary by country and by commodity. In Step 8, Customs communicates the result of their review, using the IATA message CSN or the WCO message CUSRES. In Step 9, the Forwarder collects the goods from the GHA’s warehouse. When this is completed, the GHA transmits to the Airline an FSU message with the status code DLV for “delivered.” Air Cargo Digitalization: From EDI to Community Systems 31 Port Community Systems Table A6. Number of activities by use cases of ACCS Use Case No Use Case No Track and Trace 12 Operational and Finance Reports 1 Additional functionalities 11 Consignee Master 1 EDI Interfacing 10 Reminder Notice Status 1 RFQ 8 e-docket - Download 1 Reports and Dashboards 6 Send Email 1 e-AWB 6 e-docket - Reject the uploaded documents 1 Payments 6 IGM 1 Vehicle token Management 6 Vehicle movement tracking 1 e-Booking 5 Numbering Master 1 e-Customs 5 Cancel ADO and Generate Credit Note 1 Slot Dock Summary 5 Organization Setting 1 e-Docket 4 SEZ 1 Check-in 4 Agent Credit Limit Configuration 1 AWB Stock 4 Ticker 1 Carting order 3 Reports 1 Delivery Order 3 Cancel CAN 1 ASI 2 ADO 1 Dock Configuration 2 Generate DO - Non Credit Customer 1 Slot Configuration 2 Bank Guarantee Configuration 1 Book Slot 2 Generate ADO 1 My Shipment 1 Status Upload 1 Ancillary Revenue Invoice 1 View Documents 1 Payment Handling Charge Master 1 Tax and GST &Master 1 BOL & DO 1 Weekly/ fortnightly Invoice Payment 1 Hold/ Release ADO 1 Audit Trail 1 ADO Charge Configuration 1 ADO Waive off Charge Configuration. 1 Operational and Finance Reports 1 Generate DO - Credit Customer (Credit) 1 Consignee Master 1 EGM 1 Reminder Notice Status 1 Website Management 1 e-docket – Download 1 Email Configuration Master 1 Send Email 1 e-Signature Master 1 e-docket - Reject the uploaded documents 1 Generate CAN 1 Source: ACCS vendor.