CIFFA report
The Electronic Air Waybill
With the 1998 signing of the Montreal Protocol Four (MP4), the air cargo industry paved the way to introduce the electronic Air Waybill (AWB) on a worldwide basis as a further means to enhance logistics and supply chain management efficiencies. Until now, the air cargo industry has transacted business under the Warsaw Convention (signed in 1929 and updated in 1955 with the Hague Protocol). To state the obvious, it is time that the international community recognized the rapid technological advances made with commercial tools that can meet the need for speed and accuracy. The lack of a uniform approach across the industry has been one reason why so little headway has been made in the air cargo industry, except within the ‘closed-loop’ systems of the integrated express carriers. Given the glaringly obvious benefits, most players would argue that the industry should have embraced a paperless environment a long time ago. “Cargo lags behind the passenger side in embracing new technology to get business done. The electronic AWB is long overdue for the industry as a whole” states Sam Okpro of International Air Transport Association (IATA).
Until the signing of MP4, the convention required the cargo industry to produce an Air Waybill with 32 different fields of which 21 were mandatory to validate the air carriage contract. With MP4 the air waybill can now be replaced with an information record that fundamentally requires only four key elements: a reference number to access the information record; airport of origin and destination; transit; and weight of shipment.
Hand in hand with this initiative, the World Customs Organization has, under The Kyoto Convention, included a provision that customs authorities should permit electronic means of document transmission that would eventually lead to ‘wheels up’ customs clearance. In other words, allow the cargo to be customs cleared upon arrival of the aircraft.
IATA’s own efforts to eliminate the paper AWB and develop the framework for a paperless regime include the development of an implementation guide for industry; the identification of any changes to IATA resolutions that may be required; a recommendation for best practices; and development of a database and of electronic messaging requirements. IATA will also conduct pilot projects to evaluate specific areas and measure results thereof.
The platform for all of this will be the Internet as this would provide better flexibility than EDI based messaging. Bill Gottlieb, Chair of the International Federation of Freight Forwarders Associations’ (FIATA’s) Airfreight Committee agrees that the Internet has become “the expressway of choice for electronic transmissions.” And even though there is still no clear and agreed definition of an XML message, it is hoped that a consensus can be built quickly for messaging standards and protocols.
Now that the building stones are finally in place to find ways and means to match ground-handling times with air transit times, we can proceed to the next step: implementation. To this end IATA has formed four working groups to examine the various aspects of air cargo movement. The first group is looking at operations that include booking, freight staging, shipment release and physical handling of related
documents. The second group is investigating trade facilitation issues that include customs and government agencies, while the third group will focus on revenue systems, flow of accounting information, CASS, spot rates and interlining. The fourth group will tackle messaging standards and support issues including such items as legal considerations and the all-important methods by which the EDI based carrier-systems can translate to an Internet-based set-up.
It is interesting to note that as we near the end of 2001, there is no sign of implementation. This is due to the complexity of international transport finding agreement on an international basis. For example, as of May 2001 only five of the G7 members have signed the MP4 Protocol and worldwide only 51 countries have so far ratified MP4.
Nevertheless, step one of the initiative, the mapping of current processes common to all airlines, was completed by late spring of this year. Also earlier this year, work started to identify paper dependencies and constraints to the existing process and work on best practices. The implementation guide should be completed by May 2002. Pilot projects are to begin in November of this year, and should be finished by mid-June of next year.
One last reservation is yet to be overcome. Bill Gottlieb of FIATA points out that “Paper is a security blanket for a lot of people. In Canada, for example, we have electronic releases, yet there is a great hesitation amongst brokers to use it because of liabilities involved.” He adds that this involves “a liability issue… because in an electronic environment we are guilty until proven innocent… resulting in customs brokers wanting paper documents to back up values and other elements. This becomes an even more worrisome issue with the imminent introduction of AMPS (Automatic Monetary Penalty System) by the CCRA.”
In the next issue, we will look at the legal implications and complexities of the electronic environment.