Enhancing Air Cargo Customs & Trade Facilitation14.12.2017
Air cargo has transformed the transportation of goods and, by extension, the global economy. Yet, customs and border delays are costly for air cargo and can impede their key advantage: speed. The industry has been pressed to find solutions to resolve these challenges and has made steady progress in recent years.
Cargo-XML, for example, was adopted early this year by the United Nations Conference on Trade and Development’s (UNCTAD) ASYCUDA World customs system. Ninety national supply chains can now communicate with each other using the same standard.
In this post, we’ll discuss Cargo-XML and other initiatives air cargo has taken to improve operations around the globe.
At its core, Cargo-XML is a standard that is used for electronic communication between airlines and other air cargo-related parties. Specifically, the standard aims to facilitate air cargo processes, adhere to Advance Cargo Information (ACI) requirements, and comply with security regulations. The previous standard, Cargo-IMP, will be phased out as the International Air Transport Association (IATA) will only endorse Cargo-XML moving forward.
This change affects everyone involved in air cargo, from border agents to shippers, and to their benefit. According to IATA’s whitepaper introducing the standard, benefits include:
Better facilitation toward the IATA’s goals of the widespread implementation of electronic messaging like e-AWB and e-Freight
Compatibility with standards set by the World Customs Organization (WCO) and International Standards Organization (ISO)
Easier implementation as compared to Cargo-IMP
Improved participation by e-commerce businesses (XML is a widely-accepted standard for electronic integrations)
Improved data availability and quality
Reduction in cost, development, and maintenance as compared to Cargo-IMP
The push toward Cargo-XML highlights the urgency IATA has for adopting digital operations. Adoption of the e-Air Waybill (eAWB), for example, had a penetration target of 49 percent in January 2017, despite having a penetration target of 56 percent by December 2016.
A Wider Impact
Of course, enhanced customs and trade facilitation isn’t limited to those using the ASYCUDA World customs system. Earlier this year, IATA passed the Trade Facilitation Agreement, (TFA) which aims to establish global standards for goods crossing borders. Included in this agreement is the commitment to accepting electronic documentation and e-payments.
The air cargo industry as a whole is expected to benefit from the TFA in the following ways:
Increased Global Goods Market: The TFA can possibly increase global exports by as much as $1 trillion. The increase will be driven by a reduction in international trade costs along with a reduction in import/export time. For air cargo, in particular, the agreement is expected to increase shipment volumes by as much as 4.4 percent.
Access to Higher-Value Products: Streamlined international shipping standards can also pave the way for air cargo to take on higher value items. This opportunity could position the industry as the standard for high-value item shipping (as opposed to ocean freight).
Further Transition into the E-Cargo Economy: The agreement makes the IATA’s push for a complete electronic supply chain all the more likely (including Cargo-XML).
Improved Data Visibility: An electronic trade facilitation system will give companies and governments alike greater insights into customs and international shipment processes. This will allow them to make well-informed business decisions and allocate resources where necessary.
An Ever-lasting Impact
2017 has been a significant year for the air cargo industry. The adaptation of Cargo-XML and the TFA are significant for participating nations and companies. Simplified communication also means improved security, modernized operations, and more. Consumer demand for cheap products delivered at fast rates is only set to grow. The industry has to adapt.
Author: Sandeep Fernandes