e-AWB: The Future is Here
As people around the world become increasingly concerned with sustainability, the air cargo industry has had to make some changes to its business. Demand from the end consumer for green products and processes has started a trend that reverberates throughout the entire supply chain. Lead by various associations such as the International Air Transport Association (IATA), the air cargo industry is gradually making the shift toward e-freight. The push for e-freight is an industry-wide effort to replace paper documentation with electronic data and messages.
e-Airway Bill (e-AWB) is the first step toward achieving e-freight, replacing the paper Airway Bill with an electronic message. As of January 2014, e-AWB global penetration stood at 11.6 percent. IATA has set a target for 80 percent e-AWB penetration by 2016. Some of the world’s top airlines, freight forwarders and ground handling agents have already adopted e-AWB. In Thailand, however, e-AWB adoption is still very low, due to a number of reasons, which include lack of awareness and limited resources. In this issue of AFL, we delved into the benefits of using e-AWB and the challenges involved in implementing it. We spoke with Mr. Erez Agmoni, Head of Airfreight, Asia Pacific region for Damco Logistics (Thailand) Co., Ltd. and Ms. Montra Sae-Bae, Airfreight Export Manager for SDV Logistics (Thailand) Co., Ltd.
e-Airway Bill (e-AWB) is the first step toward achieving e-freight, replacing the paper Airway Bill with an electronic message
THE BENEFITS OF E-AWB
In order for e-AWB to work, four parties in the supply chain must agree to use it: government agencies such as customs, airlines, ground handling agents and freight forwarders. Freight forwarders and airlines can sign the IATA Multilateral e-AWB Agreement; all parties that sign the agreement can use e-AWB with each other. In the past, each airline had to sign a separate agreement with each forwarder, which led to an innumerable number of agreements. IATA has come in and simplified the process in an effort to encourage e-AWB usage. The most important part of pushing e-AWB, however, is getting all parties to recognize the benefits of going electronic.
e-AWB obviously provides some important benefits in terms of sustainability, but the use of electronic data actually offers some even more significant benefits which are not immediately obvious.
Of course, replacing paper documents allows airlines and freight forwarders to save on the costs of paper handling, processing and archiving. However, this cost is smaller than one might expect. For large global freight forwarders, the savings may be substantial, but for some of Thailand’s smaller freight forwarders, monetary savings are not a major draw of using e-AWB. Mr. Agmoni explains, “For the airlines, the benefit is more obvious. They save a lot of hassle by getting rid of the paper documentation. But some small and medium-sized freight forwarders can’t see much benefit in using e-AWB. They may save a few hundred dollars a year on the cost of paper.”
However, there’s one big reason that his company has invested in e-AWB, says Mr. Agmoni, “The most important benefit of e-AWB is efficiency. We save time by eliminating the printing and processing. But more importantly, our track and trace capabilities are enhanced by using electronic data. The moment we submit something electronically, it’s immediately communicated with our systems and people can see the real-time status of the shipment. With e-AWB, we’re able to increase transparency and reduce processing times.” There’s no need to key in data manually at each step of the shipment’s journey, which is slower and may be subject to human error.
This is not only a benefit for freight forwarders – it translates directly to their customers.
The most important benefit of e-AWB is efficiency. We save time by eliminating the printing and processing.
Another, smaller benefit to come from using e-AWB is improved information security. If paper documentation is lost, it could cause massive delays for a shipment. With electronic documentation, however, it is much more difficult for such losses and privacy breaches to occur.
DRIVING CHANGE IN THAILAND AND BEYOND
With the global air cargo industry gradually making the transition to paperless processes, it is the perfect time for Thailand’s air cargo leaders to follow suit. Thai Customs already accepts electronic documentation, and a number of airlines are now using e-AWB in Thailand. Some ground handlers can handle e-AWB, while others are in the process of implementing it. The biggest challenge is to get all of the country’s many small and medium-sized freight forwarders on board, because e-AWB awareness is lagging among local companies.
Ms. Sae-Bae comments, “Currently there is a lack of awareness about e-AWB in Thailand. Many local forwarders have not made the move to implement it, because they don’t see any need for it at the moment. The local players will be more interested in using e-AWB if they have additional details about how it works and how it can boost their business. Otherwise, some forwarders will not make a change until it becomes mandatory.”
For smaller companies, this is a significant investment which has to be carefully considered. If they are not aware of the full benefits of using e-AWB, they may not see the value in making that investment.
Promoting awareness and adjusting attitudes are essential steps for improving e-AWB penetration, but another important hurdle for local forwarders is the cost inherent in getting equipped for e-AWB. “There is an initial investment cost in becoming e-AWB capable. Forwarders have to invest in the IT systems, make upgrades to any outdated hardware and software, and also train staff on how to use the new technology. For smaller companies, this is a significant investment which has to be carefully considered. If they are not aware of the full benefits of using e-AWB, they may not see the value in making that investment,” says Ms. Sae-Bae.
The currently spotty adoption of e-AWB also presents another problem which is not limited to Thailand. Those that use e-AWB have to keep track of which of their partners accept it, and which don’t. To make things even more complex, there are also airlines, ground handlers and forwarders that use e-AWB at some, but not all, of their locations. “We always need to be aware of which destinations and airlines support it. As the industry is making the transition into using e-AWB, this can get a bit complicated to keep track of. Once the paperless system becomes the industry norm, it will make things a lot simpler,” adds Mr. Agmoni.
There are many pieces to the e-freight puzzle, with e-AWB being just the first. Taking the first step can be a daunting task due to the necessary changes in working processes and the added cost. Industry leaders need to work together to provide knowledge and incentives to encourage the market to make the switch to e-AWB, because adopting paperless processes benefits every party in the supply chain, from the shipper to the end consumer. There’s still a long way to go before we can achieve fully paperless systems across the globe, but there’s no denying that this is the way of the future.