CHAPTER THREE: KEY ISSUES AFFECTING INDUSTRY GROWTH AND DEVELOPMENT

3.1 SECURITY

3.1.a In general....

In today’s climate of continuing political unrest, the threat of terrorism is ever present. Sadly civil aviation remains an ideal target for terrorist groups. If their mission succeeds, they are automatically assured maximum worldwide media coverage.

Terrorism is only one threat to the air cargo industry. Organized crime is another serious threat accounting for millions of dollars in annual losses due to the theft of merchandise. These losses threaten the very survival for some in the air cargo sector.

The need for strict security extends in many different directions. Above all, it must ensure the protection of people, passengers, customers, and staff. It must recognize that the air transportation industry risks its reputation each time someone places their trust in its representatives, whether an airline passenger or a manufacturer who relies on a safe secure supply chain for business. Successful protection of goods is key to industry survival. Failure to do so will have a dramatic impact on the reputations and already slim profit margins of organizations within the industry.

The vulnerability of the air transport industry has been highlighted because of world wide tragic events. Air cargo has been extremely vulnerable while transiting on ground. Security has become the industry’s primary concern, as well as, a major concern for all governments and international organizations. Its effectiveness depends on the reliability of all parties. Governments must formulate viable anti-terrorist policies. Industry can assist in all of these endeavors by ensuring that shipments move quickly, anonymously, and are at all times traceable.

3.1.b The problem areas....

As a result of the increased incidence in hijackings in the early 1980s, stringent security measures were undertaken to secure the safety of the passenger cabin. These measures proved so effective that terrorists switched strategies and attacked the aircraft through the baggage compartment. Rather than simply seizing an airplane, it became preferable to destroy it in flight thus challenging the industry to develop and implement anti- terrorist rather than anti-hijacking measures.

Several sophisticated measures and techniques have been developed to combat these new tactics, notably the screening of hold contents and containers capable of containing a fire or explosion (in development). However, implementation of comprehensive screening is expensive, complicated, and can result in serious operational problems and capacity loss. Inevitably, the question arises, who pays? It is vital that measures remain economically balanced.

The lack of guidelines for the application of recommended practices and procedures (RPP), as well as state-of-the-art technology merely compound the problems. Furthermore, air cargo has its own particularities that make security more difficult.

Air cargo unlike passenger baggage, is not accompanied by the sender. During transportation, a far greater number of parties are involved in the handling process – the consignor, freight forwarder, and cargo agent, shipper, cargo handling agent, and air carrier. Additionally, the type and amount of documentation involved (airway bills, dangerous goods declarations, customs forms and licenses, security declarations) further complicate processing.

Agencies responsible for airline and air cargo security in some countries have brought more focus to air cargo and in some instances, have implemented rigorous procedures. The initial norms and recommended practices proposed by the ICAO under Annex 17 of the Chicago Convention have been revised and reinforced by IATA’s recommendation 1630. Measures designed to implicate all elements of the air cargo security chain have been introduced. One notably new concept is The Known Shipper.

Unfortunately, no legal obligation exists on an international basis for countries to conform to such rules and recommendations. Consequently, not all countries have taken serious steps to establish and implement a sound cargo security program based on these recommendations.

The terrorism threat is not always perceived in the same manner among countries. Those directly effected will immediately reinforce measures to guard against future attacks whereas; neighboring countries not effected will not recognize the utility of such measures. Consequently, the system of worldwide security is unequal, disjointed, and therefore inefficient.

TIACA’s Recommendations

TIACA’s position on air cargo security is that:

• Countries involved in the business of air cargo should become more consistent in their approach to the regulations. The Association feels that all partners in the air cargo chain have to meet minimum educational security standards ensuring that employees charged with air cargo handling are determined to be honest, trustworthy, and adequately trained. A major objective is to ensure responsible public safety without jeopardizing economic stability.

• TIACA firmly recommends that all countries involved in the business of air cargo should subscribe to the International Civil Aviation Organization's (ICAO) International Standards and Recommended Practices, As laid down in the sixth edition of Annexe 17 dated March 1997 entitled "Safeguarding International Civil Aviation Against Acts of Unlawful Interference."

• All partners in the air cargo security chain should subscribe, at minimum to IATA's Recommended Practice 1630 – Cargo Security.

• Furthermore, security should not become a bureaucratic nightmare. The industry does not need a paper-tiger resulting in a general lack of security because, procedures were put together hastily in the face of recent tragedies. Also, it is important that security measures do not inhibit the smooth handling of cargo or effect service quality. As opposed to other transport means, air cargo has as an important factor speed — particularly on intercontinental routes — must therefore be preserved.

• Security must involve all players throughout the air cargo chain to guarantee that once cargo enters the system at the shipper level, it remains sterile and secure until arrival at its final destination. Controls should be carried out at each important point in the chain and reinforced at different stages with random checks.

• TIACA recommends worldwide co-operation to improve security. Through better industry standards and enforceable regulations, the industry can ensure greater coherence between passenger security requirements and the air cargo industry. This should induce greater vigilance resulting from enhanced training to industry and government staff through a mandatory training program.

3.2 TRAFFIC/OPERATING RIGHTS

3.2.a In general....

The last two decades have seen the development of global marketing and widespread international trade. Logistics has become a key business discipline. Global outsourcing and manufacturing is common with 34 percent of world trade (by value), moving by air. Whole industries now depend upon air cargo for the distribution and delivery of their product. Air transportation is a vibrant, expanding industry, moving into a new century with an extraordinary growth potential.

Concerns about traffic rights are indeed vital to industry growth and development. However, use of the term traffic rights is perhaps too restrictive. Essentially, it implies issues directly linked to the airlines. TIACA, as the representative of the entire air cargo industry – carriers, forwarders, airports, manufacturers and many varied support services – suggests using the term operating rights as opposed to traffic rights, thereby expressing, more appropriately, the issues at hand.

Early industry growth and expansion has been controlled by agreements between various governing authorities. Specific service points, tariff conditions, schedule frequency, equipment type and carriers are negotiated and executed through bilateral agreements after industry input and diplomatic exchange.

3.2.b The problem areas....

Traffic/operating rights and bilateral agreements have been governed by protectionism and political considerations. Officials dealing with the diplomatic process are largely influenced by passenger considerations with air cargo issues being overlooked.

Although the majority of air cargo is still carried in the baggage compartment of passenger aircraft, (an estimated 60 percent), the growing importance of dedicated cargo fleets is undeniable. Carriers like Lufthansa, American Airlines, and Air France are separating their passenger and cargo operations. They are establishing organizations with altogether different priorities and goals. Forecasts predict that the world’s freighter fleet, both new and conversions, will double by the year 2015, totaling 2,260 aircraft. This number exceeds the predicted growth in the passenger aircraft fleet. The all cargo carrier market share is expected to increase from 34 to 39 percent.

The separation of cargo operating rights from those linked to passenger interests appears amply justified. Protectionism, perhaps necessary early on, is an obstacle to the health of the a global economy and contradictory to the needs of shippers and international trade.

An Open Skies policy and the demand for the attribution of fifth freedom operating rights is becoming more and more essential. Indeed, free competition is the best way to achieve healthy and productive industries. With regard to changes in gauge restrictions, bilateral agreements can still provide useful solutions for hub operations.

TIACA’s Recommendations

• The primary objective is to find a balance between the protection of national air carriers and the necessity to develop national economies.

• Bilateral air traffic negotiations should separate governmental functions from market-driven functions that are responsive to economic factors. Freighters, for example, could benefit from a balanced liberalization of air traffic rights.

• Government concerns should focus on safety, operating practices, financial stability, and public policy matters such as wages, benefits and historic performance.

• Frequency of service, type of equipment, prices and routings should be market-driven and free to respond to regional, community, and shipper needs. Service frequency should be controlled by demand and the economics of cost versus revenue. Similarly, equipment type should be controlled, not by government but by the availability of current and potential traffic. Business judgement and operating economics should control service levels.

• TIACA proposes to continue its ongoing research programs by designing a precisely targeted questionnaire aimed at determining which countries represent the greatest problems in regard to protectionism, obsolete practices and reluctance to negotiate market driven agreements. Subsequently, lobbying actions can be rendered more effective.

• Questions should be designed to touch upon the following areas of concern: specific city authorizations, operating restrictions, frequencies, type of aircraft, charters, tariffs, airport restrictions, national carrier protection, forwarders, and integrators. Once the data are analyzed and the problem areas identified, the most pressing problems can then be addressed.

• TIACA, coordinating with the World Trade Organization (WTO), can help governments balance their national and international market needs, while acknowledging government responsibility for safety, security, environmental and other issues. Aviation matters should become a mandatory negotiation item rather than an "exception" while applying for WTO membership.

3.3 CUSTOMS PROCEDURES

3.3.a In general....

Within the air cargo service chain, customs procedures interact at both the origin and destination. Perceived as source of red tape and delay, customs nevertheless, provide a necessary force of commercial and economic control, as well as establishing a protective barrier against drug trafficking and fraud.

3.3.b The problem areas....

As with all administrative procedures, the more simplified they become the greater the timesavings. When speed of processing is applied to customs procedures, the results are beneficial. Outdated administrative habits and economic concerns no longer in tune with today's market-driven economies inhibit progress. Revision of such procedures is necessary.

Disparity of standards among countries further complicated procedures on an international basis and can result in serious delays in the cargo transport chain.

Today's technology brings us ever closer to the so-called "paper-less society." Although it is unrealistic to expect that paperwork will completely disappear, substantial economies of scale are achieved through electronic data transmission via networks.

Furthermore, network technology offers the possibility of instant up dating of information, safeguarding of international data through encrypted access, and an efficient means of tracking and tracing merchandise throughout the transportation process.

Simplification of customs procedures can be accomplished through the widespread use of network technology, e.g., EDI, Internet, etc., and establish compatible links between different world networks.

Effective networking of computer systems enables the pre-clearance of shipments. Data, accessed by various operators within the transport chain, can be progressively updated enabling rapid processing upon arrival in the destination country and even direct delivery to the consignee. Certain data may be guaranteed confidential by restricting access. This information is generally customs data regarding shipment tracking, entering or exiting shipment information, facilities and administrative constraint information, and times when the merchandise is available in each country.

TIACA’s Recommendations

Major objectives for the industry should include reduction of the negative effects of outdated practices and needless bureaucracy while maintaining effective control levels against fraud, illicit trafficking, and counterfeiting:

This may be achieved through:

• Simplifying procedures through more widespread use of today's modern technology, notably EDI via inter-linked computer networks.

• Recognizing accepted standards worldwide with the creation of an international customs tariff, simplified and limited, offering a standardized classification of certain goods.

• Reduction of paperwork to a minimum with suppression of licenses and other formalities (e.g. certificates of origin, EUR 1 forms etc.) with the introduction of issuance, control, follow-up and imputation through EDI or similar computer services from a national service center.

• Encouraging and promoting the modernization of custom’s philosophy

All future actions must naturally be based upon a new international cooperation and a continuous dialogue among customs authorities and members of the air cargo industry. The revision of archaic procedures, facilitated by today’s technology, can be effectively conducted to meet today's air cargo industry needs and at the same time ensure effective controls. Customs philosophy should be based on being a facilitator of commerce rather than a policing agent.

3.4 ENVIRONMENTAL ISSUES

3.4.a In general....

In recent years, public awareness of the effects of industry on the environment has increased dramatically. Environmental issues can therefore no longer be ignored and indeed impact all aspects of today’s industry, including that of air cargo and its components.

Today airport capacity, access, and user charges take into account the environmental impact of aircraft and engine types, thereby impacting cargo availability and tariffs. Effective management of the environment is an integral consideration in determining profitability. Environmental concerns extend to all other transport modes in the air cargo chain.

3.4.b The problem areas....

As markets develop, so does the need for efficient transport networks, intermodal platforms, and infrastructures. As traffic volumes increase resulting in raised levels of noise and pollution, the environment suffers. Therefore, how does our all-encompassing industry balance the needs of the environment with the needs of natural economic development?

Public opinion, when defending a favored cause, is an awesome adversary, particularly when the cause in question effects every layer of the population.

Air transportation in general, and air cargo specifically, has a poor track record when it comes to environmental issues. Because of this, authorities have a tendency to encourage the imposition of national limitations and restrictions.

Night is the most economical period for freight traffic. Next day delivery services widely offered by integrators, means that goods collected during that day are sorted and then transported over night.

The increasing demand for night time airport curfews is an area of concern for the air cargo industry. Whether the curfews are full or partial, the restriction of aircraft to certain categories of performance represent limitations to the free movement of trade and adversely impact the future of air cargo. Operators whose strategies are based on 24-hour operations and worldwide networks will be adversely effected.

With an emphasis on aircraft noise reduction, carriers are faced with the economical challenge to upgrade their fleets. This can be accomplished by either older aircraft conversion or through the purchase of newer, quieter airplanes.

The ICAO has successfully managed aviation’s environmental issues for over thirty years. Unfortunately, the ability to seamlessly move cargo worldwide is being compromised by locally imposed environmental standards that reduce service and add considerable costs to the customer.

TIACA’s Recommendations

The global nature of air cargo operations requires harmonized environmental standards that meet aircraft safety and performance needs.

• Any environmental regulations must balance the following objectives:
• technological feasibility
• environmental improvement
• economic viability

• They should be progressively introduced in order to be supportable and achievable in a cost effective manner for all affected by such measures.

• TIACA strongly advocates that members adhere to ICAO recommendations and that these standards become the norm for all operators worldwide. It is clear that, if certain current practices continue, our industry will be plagued with increasingly restrictive operating measures that will prove expensive and prejudicial to us all.

3.5 PROCEDURES AND PERFORMANCE STANDARDS

3.5.a In general....

Customer satisfaction, as in any service industry, is the industry’s ultimate goal. It provides a means to increase customer confidence, attract new markets, and will be achieved by offering quality performance standards.

A UNISYS survey in 1996 disclosed that the average air cargo shipment passes through 40 hands and requires 12 individual pieces of paperwork as it moves from shipper to consumer. This process still takes six days, the same amount of time it took a decade ago despite improvements in aircraft, airport facilities, and communication technology.

In the face of such a devastating assessment, it is evident that performance standards within the industry are in need of dire change and improvement. Because the air cargo industry is diverse and the issue complex, the question is "where do we begin"?

3.5.b The problem areas....

Today, global industry standards do not actually exist. What exist are several distinct categories, each with their own individual standards. A classic example is the certification process for carriers and forwarders, where each body has its own approach to quality and standards.

The traditional air freight product is characterized by a single service level which is not guaranteed and pricing policies that are often determined by the opportunistic attitudes of the various players involved.

Integrators have another approach that appears to provide a means to improve and stimulate overall performance of the air cargo system. Their success is demonstrated through a spectacular growth rate, coupled with projected annual development exceeding 18 percent over the next twenty years. Their service focuses on quality of service, speed, flexibility, and prices adapted accordingly, coupled with a customer money-back guarantee if they fail to keep their delivery promise.

Shippers have long held the view that traditional airfreight suppliers have failed to understand their needs as customers and have failed to adapt their services to meet these needs. Indeed, research illustrates that the integrators continue to attract business because of the perception that they are more reliable and faster than airlines and forwarders working in tandem.

Shippers’ priorities focus on getting their shipments delivered in good condition, at the agreed place, on time, and at the agreed price.

Although the needs of individual shippers vary significantly, door-to-door integrated services are becoming more and more the air cargo industry standard because of the value-added guarantees that they offer.

Airports are often perceived as a problem area responsible for cargo delays. Delays result because of the various processes and business partners involved in the transport chain, e.g, customs and sanitary controls, conditioning, collection, grouping and breaking up of loads, containerization and palletization.

The most obvious way to improve cargo flow is to ensure that freight moves quickly through airports by reducing warehousing time, a function that adds cost but no customer value.

TIACA’s Recommendations

• In order to meet market requirements, all cargo operators, especially airlines and forwarders, must attempt to speed up cargo through-put by streamlining processes, eliminating redundancies, reducing costs, and integrating their services. Time-definite services with set levels of quality and performance are necessary with an aim toward providing a seamless product covering physical handling, information flows, and legal liability.

• To achieve improvements in industry performance standards and thus enhance customer satisfaction, it is vital that we survey our customer service perceptions. This should be achieved by researching customer needs. Identifying customer priorities is conducted all the time in other service industries, but is sadly lacking in the air cargo business. Once customer needs are identified, appropriate standards can be defined and encouraged.

• The industry must become far more customer friendly and less focused on its own process difficulties if it expects to grow and attract new markets. After all, customers are not irritants, but the means to survival!

3.6 TARIFF STRUCTURES

3.6.a In general....

In comparison to the pricing structure applied by integrators, the general cargo tariff structure is still largely based on the IATA tariff structure. This structure has evolved over many years into an unfathomable complex tariff mechanism confusing to shippers who require a tariff structure more adapted to the service levels required.

3.6.b The problem areas....

The IATA structure may well have had a useful role in the early development of air cargo, but was basically adapted essentially to the operational needs of airlines and the commercial requirements of the forwarder. Today, the industry has evolved substantially. The tariff structure is not sufficiently geared to meet the specific needs of shippers and is looked upon by many as a major obstacle in attracting new business.

Shippers compete in the global market according to prevailing competitive conditions. Therefore, it is natural that they expect service suppliers within the air cargo industry, notably airlines, to be subjected to the same disciplines of supply and demand and to offer a simplified, transparent pricing structure that is more in tune with their current needs.

Shipper needs vary considerably. Some shippers require the quickest route to destination, while others are prepared to accept longer lead times and others require the highest security levels to guard against theft while their products are in the agent’s care and/or that of the carrier. Some are happy with airport to airport services and others require door to door services. Regardless of the type of service, the customer expects service delivery standards and pricing that are fair and equitable and market driven.

TIACA’s Recommendations

• Tariffs should aim to reflect shippers needs, notably with regard to service quality levels and delivery speeds.

• Exclusive use of the term tariff when referring to pricing structures within the air cargo chain is too restrictive. The word "tariff" does not reflect the important elements of marketing, service level agreements, competition, customer satisfaction, and transparency that comprise and influence tariffs. TIACA therefore recommends adopting use of the term "price" as opposed to "tariff" to describe costs pertaining to the sale of products and/or services, since price more accurately reflects all the involved elements.

• Revision of current pricing methods, with efforts to simplify structures, in accordance with shipper and market needs is necessary.

• The elimination of superfluous ground operations (unnecessary handling, paperwork, stocking, and warehousing) will vastly improve cargo flows and go a long way in cost reduction

• Establishing geographical zone pricing based on the Euro or US Dollar currency as opposed to pricing based on routes between individual countries, is also an avenue to be explored.

• Airport traffic congestion can be effected positively through incentives based on off-peak pricing. This allows for the optimal use of available airport capacity and infrastructures. Likewise, the introduction of pricing structures linked to delivery times and/or the application of penalties for missed deadlines can improve customer service and enhance satisfaction.

• Price adaptation based on direct user costs will avoid users having to pay for installations or services that are neither useful nor beneficial.

• With the majority of cargo flown in the baggage compartments of passenger aircraft, scheduled airlines have a huge potential for developing innovative services at relatively low costs. For example a number of European airlines have developed overnight door to door services utilizing quick change aircraft used for passenger traffic during the day. Given that the capital investment is linked to passenger requirements, airlines could and should maximize this opportunity to provide services at very competitive prices.

• Pricing is a dynamic marketing tool and should be considered as such. Antiquated rules and regulations should not inhibit pricing.

3.7 INTER-PROFESSIONAL COMMUNICATION

3.7.a In general....

The air cargo industry is comprised of multiple functions and professions. Convincing members to work collectively towards the same goals and objectives, as opposed to simply catering to individual needs, is essential for the industry's continued growth and development.

Communication is the industry’s key to effective inter-professional dialogues and today's technology enables our industry to meet its objectives and make progress.

Inter-professional communication does not simply imply a verbal exchange among industry players, but encompasses the transmission and exchange of information using the latest computer technology. EDI and the Internet offer the possibility to access and link even the most remote parts of the world with the rest of civilization. Consequently, rapid and automated data transmission may be assured and greatly improve cargo flow.

3.7.b The problem areas....

Poor communication between the various partners in the air cargo chain has led to industry problems. As the needs of markets and shippers evolve, service providers, namely forwarders and carriers, should and must take note of market changes and adapt their services accordingly. Sadly, this has not always proved to be the case. Shippers, the veritable generators of business, feel that they are often treated poorly because the carriers and forwarders are pre-occupied with their own internal problems rather than those of the customer!

Inter-professional relationships, especially with regard to traditional freight services, need to be clearly redefined in order to establish who does what for whom and for how much. Despite the vital and valuable role of forwarders in the air cargo business, many agents are unnecessarily wary of involving shippers in airline relationships because they regard this area as their special preserve. This creates an unhealthy impediment to the development of service requirements and the need for better relationships.

This is equally true of many airlines. There is a regrettable reluctance on the part of many carriers to enter into a dialogue with the shipper. The carriers often use this excuse under the pretext of not wanting to upset the powerful position of forwarders. Sadly, the unwillingness of carriers to adopt a coherent communications policy, with regard to the treatment of their shipper and forwarder business partners, is a major impediment to the mutual development of business partnerships and of the air cargo product.

Furthermore, limited use of technology coupled with outdated practices means that vital shipment information is not readily accessible to those interested parties within the traditional freight markets and consequently, the quality of service suffers.

TIACA’s Recommendations

• By establishing communication with key representatives from various entities comprising the global cargo community, TIACA positions itself as a proactive leader in promoting the value and viability of air cargo as a key mode of transportation for the international shipper. TIACA may better serve the needs and interests of both air cargo users and suppliers and evolve as the industry voice in expressing its position on policies and regulations affecting the air cargo business.

• Improved communication between air cargo operators, dedicated to customer satisfaction, is vital in creating strong and durable industry partnerships.

• Diverse communications methods should be employed, e.g., Internet links, E-mail, interactive talk groups, regularly scheduled mailings, or faxed communiqués to disperse more in depth information.

• Creating and managing communication alliances among cargo transportation representatives will create more opportunities to further develop the air cargo industry resulting in increased market share (with other transport modes), profitability, and customer satisfaction.

• TIACA advocates specific inter-professional training programs designed to promote better inter-industry communication and understanding.

• A vital issue hampering industry development is security and safety awareness among industry representatives. TIACA believes this issue can be resolved through inter-industry communication and cooperation.

• Finally, air cargo should be promoted through inter professional communication as a key transport system for international shippers.

3.8 BOOKING AND TRACKING

Customer air shipment information technology

3.8.a In general....

Information processing includes a whole range of procedures, from beginning to end, that ensure reliability and security of air cargo throughout the transport chain

If the Montreal Protocol IV is ratified, the target of paperless shipping may well be achieved. In the meantime, there is a need for understanding and greater acceptance that information processing is a major competitive force in the transportation market.

Integrators have developed information systems that constitute one of their main commercial and operational advantages. The traditional air cargo transportation chain encompasses a wide range of partners. The lack of widespread use of global communication between partners results in the failure to guarantee global quality and performance. Additionally, it is critical that other service partners, e.g., insurance companies, banks, attorneys, etc., are linked to the air cargo market as part of the information chain.

Progress made in the development of certain links is identified only as "isolated cells." So far, these developments have proven to be difficult to integrate into a global information chain and subsequently, imply high costs.

Examples include:

• Cargo agents who control (either by themselves or with partners), information regarding ground operations.

• Airlines have developed worldwide information systems with regard to bookings and flights. They are often poorly equipped with respect to ground operations, most notably, where the information exchange between handling agents and/or other sub-contracted services is concerned.

Information processing can include, not only, real time data collection regarding merchandise identification but, the possibility of information exchange among partners linked into the same information sources. Successfully combining these elements should improve the rapidity, reliability and adaptability of vital data transmissions.

3.8.b The problem areas....

Package identification is currently carried out using bar-coding technologies, which are hardly considered new or revolutionary. The industry needs innovative technologies for identification purposes. These technologies can be inexpensive, intelligent microchips (currently in research and development and undergoing testing) that can be inserted in packages at the production stage.

Nevertheless, IATA has drafted up Resolution 606 offering guidelines to air cargo operators in the use of bar-coded labels. However it must be noted that:

• Package identification implies successive labeling throughout the air cargo chain regardless of bar code labeling. Certain types of information are not necessarily known at the initial pick-up stage, for example, the airway bill, house airway bill numbers, etc.

• Scanning each label in large shipments of 100 or more packages causes delays.

• Airline information systems are generally not equipped to provide specific information on a particular package within a shipment. The IATA label does include an area for total package identification within the shipment. This process allows for immediate identification of a particular package in the event of accidental off-loading or a missing parcel upon arrival at destination. Current information processing systems are not designed to deal with this particular data type.

TIACA’s Recommendations

• The rapid widespread use of an unique numbering system to track parcels throughout the air logistics chain is vital to upgrading industry service levels and indeed matches the manufacturer’s production standards.

• This unique numbering system must be implemented globally, as quickly as possible, using EDI and Bar-coding. Until that happens, it is recommended that inter-industry representatives develop package tracking model that is more user-friendly, flexible, and with less system constraints.

• The data contained in the communications model include not just transport and shipment information, but extend outside to include other data, e.g., insurance, contract and invoice details, which, in some instances may require restricted access.

• Radio technology and microchips appear to provide a promising solution for the future. TIACA will monitor all relevant developments in this area on behalf of the industry and keep members fully informed.

3.9 INTERMODAL TRANSPORTATION

3.9.a In general....

Air cargo by its very nature is intermodal. The air leg constitutes but one sector at the center of the air cargo transport chain. Pick-up and delivery of shipments at each end are assured by other transport modes e.g., by road, rail, ship, or in some instances by fluvial means, with various handling operations (forwarders, handling agents, consolidators) supplying the means of merchandise transfer to the carriers.

Intermodal logistic platforms, from origin through destination, have developed to provide the necessary infrastructures to ensure the smooth flow of cargo along the transportation chain.

To keep abreast of the world's marketing and trade trends, the development of international hub and spoke networks now constitute the mainstay of the international aviation network. This network is at the core of today's intermodal logistic platforms. Road and rail networks complete the picture by providing access to these platforms.

3.9.b The problem areas....

Essentially, problems lie in guaranteeing the smooth and rapid transfer of cargo from one mode of transport to another. Lack of standardization leads to multiple and often, non automated handling operations (conditioning, grouping and breaking up of loads, containerization, and palettization), adding substantial costs to the initial transport price.

Furthermore, the need to handle incoming freight and departing freight differently requires an optimization of airfreight logistics (ground handling, customs, accompanying paperwork) through the main dispatching centers.

The development and funding of such infrastructures is generally the decision of government and local authorities. Their decisions are geared to satisfy national interests and the needs of the air cargo industry are not always considered a major priority.

The provision of the heavy infrastructures, roadway and rail networks, as well as increased airport capacity (cargo terminals, offices etc.) requires advance planning and major investment. Careful attention to details is crucial during the planning process so that costly errors, that are extremely difficult to repair, are avoided.

The return on investment, particularly when dealing with cargo facilities is often poor. This poor return can be attributed to market fluctuations and the need to balance supply and demand resulting in lower revenues. Difficulties occur because each transport mode evolves and develops separately.

Environmental pressures, congested air space, and diminishing airport capacity constitute limitations which, although not specific to air cargo transport, are particularly penalizing to the latter. Moreover, mixed passenger and cargo operations are tied with passenger schedules, causing traffic jams and general congestion, often within urban areas, further penalizing cargo transport.

In addition, efficient air cargo transport demands a seamless information flow no longer complicated by the volumes of paperwork associated with merchandise transport (ATL, customs declarations, licenses, etc.). The lack of customer oriented information systems that provide instant access, similar to the types used with sea containers, emphasize the need for improvements. The advent of EDI offers the prospect of greatly simplified documentation, setting the stage for paper-less trading. The scope of this endeavor is restricted because a coordinated industry approach to this problem is lacking. Service enhancements in direct booking, billing, clearance, and tracking are possible through inter-industry, intermodal communication.

TIACA’s Recommendations

• Because air cargo is intermodal in nature, our objective is the elimination of disruptions between different transport modes within the air logistics chain and the coordination of different modes according to specificity.

• As previously noted, air cargo is not always a priority for government and organizational decision-makers. Passenger issues often constitute their primary focus. Therefore, TIACA must take an active role in precisely assessing industry and member requirements ensuring that the governing authorities are aware of such needs.

• It has been established that air cargo is indeed a necessity for all of today’s society and investment in improving intermodal networks is an investment in future wealth and a means to promote world trade and economic development.

• At the industry level, TIACA recommends that airfreight transport operators adopt the use of international standards for containers, (compatible with maritime standards and offering the same operational advantages) as covered in IATA’s ULD technical manual (dated September 1992). Operators should be encouraged to adhere to existing international standards.

• Further, international cooperation resulting in true ground-air intermodality, should be using as a model the work already completed within the realm of roadway and rail intermodality.

• TIACA must promote new intermodal infrastructures, equipment, and loading techniques aimed at solving congestion problems that do not adversely impact the environment. As part of this effort, and to ensure that air cargo becomes fully inter/multi modal, TIACA must work on making the airway bill an interline document compatible with other modes of transportation.

• TIACA recommends more widespread use of EDI and other technologies to enhance the seamless information flow. The expected effect of using these new technologies is the simplification of customs and documentation procedures, as well as providing indispensable booking and tracking services with resulting improvement in air cargo service in general. The results being major improvements to air cargo. Cooperation among shippers, forwarders, and airlines is critical in reducing the implementation costs for these information networks.

Finally, TIACA recommends that all modes of transport should establish a common communication network with regard to schedules and networks resulting in a veritable intermodal industry.

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