Aviation Business News

Air cargo logistics in a digital and sustainable world

In October 2023, the International Federation of Freight Forwarders Associations (FIATA) appointed Turgut Erkeskin as its new president
photo_camera Turgut Erkeskin, president, FIATA

In this interview with Air Cargo Management, Turgut Erkeskin, the president of the International Federation of Freight Forwarders Association (FIATA), discusses the power of leveraging digitalisation and technology, raising awareness of sustainability issues, and the importance of encouraging industry-wide collaboration.

As the new FIATA president, what specific initiatives or key areas of focus do you plan to implement to empower the air cargo logistics industry?

At FIATA, our goal is to unite the freight forwarding industry to represent and protect our members’ interests, and improve the quality of services across the industry by promoting standardisation and digitalisation.

In the air cargo industry, there has been a strong need for a uniform global programme for all regions.

Both airlines and forwarders recognise that the current IATA Cargo Agency Programme does not reflect the true nature of the commercial relationship between airlines and forwarders.

Forwarders are no longer the ‘agents’ of the airlines. They have evolved into commercial resellers of space that they purchased from the airlines.

Today, they function as customers of the airlines, as direct shippers, or as agents of the shipper.

Therefore, FIATA’s Airfreight Institute has been working in close collaboration with key industry stakeholders around the world, to develop a single Global Air Cargo Programme (GCAP) to redefine this relationship in a way that better reflects commercial realities and allows airlines and freight forwarders to collaboratively address market evolution.

We place utmost importance on GCAP and believe that having a uniform global programme, jointly administered by IATA and FIATA with common global standards, would strengthen the ease of doing business within the industry through harmonised rules and requirements, whilst addressing other important topics such as integrated services, digitalisation, safety, and security concerns.

Consultations have been ongoing with the industry, including multinational freight forwarding companies, to move forward on the global programme in 2024.

It will be on the agenda of the upcoming IATA-FIATA Consultative Council in February and the IATA Cargo Agency Conference in March.

What do you consider to be the core challenges or obstacles facing the air cargo logistics industry, and how can they be overcome?

In the past five years, several external shocks including the pandemic, global stagflation, energy crisis, political conflicts, and ongoing wars have deeply affected the global supply chains, to such an extent that external shocks to trade have become the new normal.

This unpredictable environment led to the restructuring of global supply chains with a more protectionist approach, giving rise to nearshoring and allied shoring policies and changing the course of globalisation.

As foreign direct investment flow is gradually shifting to geopolitically close countries, global trade is moving from a bipolar structure to a multipolar one.

This means an imminent need for new destinations and alternative transport corridors.

The air cargo logistics industry needs to adapt to the changing demand quickly and flexibly with new routes and diversified services.

Although diversifying services is important, the air cargo industry should also focus on protecting its strong position in core value markets.

While high-volume commodities are usually carried by sea/rail or road, air cargo can offer tailor-made solutions for niche sectors such as valuables, perishables, time-critical cargo, and express delivery.

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Air cargo loading
Air cargo offers tailor-made solutions for niche sectors such as valuables and perishables. Credit: Wolfgang/Adobe Stock

Today, no business is just booking freight with the airline – it is a door-to-door service, and such special cargoes need to be carried before or after the airfreight with the same sensitivity and care.

Therefore, forwarders and air carriers should design products for customers to grow together.

The ongoing rise of e-commerce also brings growth opportunities for air cargo; however, the industry must be ready to respond to increasing capacity demand and improve its operational efficiency with state-of-the-art technology and infrastructure.

Other core challenges include regulatory compliance and keeping up with the changing regulations and sustainability imperatives.

The industry players should be prepared as more stringent regulations and impositions might be on the way to help reduce the environmental impact and carbon emissions caused by air freight.

SME forwarders are vital contributors to the air cargo logistics industry due to their flexibility, regional expertise, personalised service, cost-efficiency, niche market focus, collaborative networks, innovation, and their role in fostering healthy competition.

Their presence enhances the overall resilience and responsiveness of the air cargo supply chain.

In what ways will FIATA support and encourage members to adopt innovative practices that align with the evolving needs of the air cargo industry?

Our strategy is to leverage digitalisation, automation, and technology to drive innovation in the industry.

FIATA has been working to ensure collaboration between governments and industry stakeholders to standardise the digitalisation of international trade.

Adoption of digital documentation and electronic customs clearance systems, for example, can enhance regulatory compliance and expedite trade processes.

We encourage the usage of standard digital templates and digitally signed documents.

We support our members by creating a network of trust that allows the exchange of authenticated and secured data between members.

Through its Airfreight Institute Taskforce, FIATA has worked alongside IATA on a master operating plan, and advanced cargo information implementation, as well as through its Advisory Body on Safety and Security to raise awareness of unit load devices (ULDs) and continued improvements to the awareness of dangerous goods rules and regulations.

FIATA is also now on the board of CargoiQ as an observer, working together with key stakeholders to strengthen collaboration between freight forwarders, handlers and airlines.

The board strives to improve standards, data use and processes in line with shippers’ requirements.

The collaboration hopes to streamline and enhance air cargo processes for all logistics supply chain stakeholders.

Education and training are also crucial to embrace new technology and upskill the workforce.

FIATA has a dedicated institute to equip the industry workforce with necessary competencies through initiatives such as the FIATA Diplomas, the ICAO-FIATA Dangerous Goods by Air Training Programme, and the Young Logistics Professionals Award.

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dnata air cargo loading
Education and training are crucial to upskilling cargo workforces. Credit: dnata
How does FIATA envision contributing to sustainability within the air cargo logistics industry?

Freight forwarders play a critical role in securing transport options for the movement of goods globally.

The efficiency of the forwarding process has a big effect on the sustainability of a shipment, and thus the larger logistics ecosystem.

Sustainability is an increasingly critical topic for the air cargo market.

In 2023, the sustainability pressure in air cargo has risen to 64%, compared to 55% in 2022; a growth mainly driven by customers and regulators.

FIATA works in close contact with IATA, TIACA, and other industry stakeholders to identify collaboration areas in line with shared sustainability goals including fuel efficiency and route optimisation to minimise fuel consumption.

The air carriers are expected to establish concrete sustainability targets and report progress transparently.

Besides minimising their own environmental footprint, they are supposed to review the sustainability practices across their entire value chain, including freight forwarders.

Currently, only 52% of air cargo businesses report on their sustainability performance externally. This rate is even lower with SME forwarders.

To raise awareness and improve sustainability reporting across the industry, FIATA provides its members with guidance and information on sustainability-related topics and encourages its members to measure and reduce their carbon emissions.

FIATA published a repository of recommended carbon emission calculators and is currently working on designing a carbon offsetting tool for our members.

FIATA provides insights from the Airfreight Institute Session at the 2023 FIATA World Congress. Read here.

 

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