While governments around the world have become increasingly vigilant about air cargo security and compliance, freight forwarders and air carriers have always understood that these are critical areas of concern. Increased demands in terms of visibility and reporting requirements have led to far more complex processes and, without the right technologies and tools in place, these processes can become alarmingly inefficient.
Today, freight forwarders are grappling with a number of process challenges as they strive to meet the performance metrics that their customers demand. Many lack real-time visibility into the status of their cargo shipments. Further, since their customers are the owners of the underlying supply chain data, freight forwarders face challenges in accessing, filing and amending regulatory filings in a timely manner that is consistent with the important confidentiality concerns of regulators and the customer. This is further complicated by the fact that freight forwarders can carry an administrative cost burden of between $2 and $9 a shipment associated with filing critical documents, which means any errors, omissions or delays can become costly.
Gaining the insight needed to enable these processes requires a highly sophisticated, complex and costly infrastructure. Historically, for most air cargo operations, the technology was simply too far out of reach to consider. Today, however, there are a wide variety of on-demand logistics management solutions that are becoming a driving force in bringing this level of technology sophistication to freight forwarders at an affordable and manageable cost.
The Importance of Security
Concerns around safety and security add additional complexity to traditional transportation process challenges. It is critical in today’s security-conscious world to know what is happening with all shipments at all times in all locations. That means having up-to-the-minute information on what is in a shipment, who is handling the cargo, where it is coming from and where it is going (among other details). Traceability is not a simple task, especially when one considers that freight forwarders must constantly adapt to meet changing shipper requirements and scheduling disruptions. Global sourcing for products and logistics services makes it even more challenging for freight forwarders to keep up with the regulatory compliance and security mandates that their customers expect.
Simple Steps to Addressing Complex Challenges – Example Forwarder/Carrier Workflow
Given the complexity and changing regulatory landscape, the air cargo industry is looking to automate the multi-party logistics processes with initiatives such as e-Freight. The growing demand for efficient and timely document processing have made it all too clear that disjointed paper and electronic filing processes simply will not meet the security and compliance requirements of the future. With on-demand logistics management solutions, freight forwarders and their carrier providers have a growing number of options to communicate electronically for everything from pricing and booking to tracking shipment status. The following workflow illustrates how automating a portion of the process can dramatically streamline the exchange of information, thereby reducing manual processes and increasing data quality.
- Once freight is received at the forwarder’s facility, the Master and House bills are entered into the appropriate systems. The Air Waybill (AWB) is then printed and the cargo dispatched for delivery to the air carrier’s terminal. At the same time the forwarder’s on-demand logistics system transmits the same Electronic AWB message electronically and that AWB is delivered in real-time to the designated air carrier’s host cargo system – all of which can be done before the freight leaves the forwarder’s office or actually arrives at the air carrier’s terminal freight dock.
- For US-origin international shipments, the Automated Export System (AES) message to Census for export shipments or the AMS message for import shipments to US Customs can be sent directly to the agency or to the air carrier. This allows the forwarder to meet the filing requirements for Customs authorities and the air carriers electronically. When the freight arrives at the air carrier’s cargo terminal, airline employees do not have to enter all of the Air Waybill data, since the information was already electronically captured in the air carrier’s system. Staff only need to verify a few items (e.g., pieces and weight) when they accept the cargo, thus reducing data entry errors and costly discrepancies.
- When the cargo departs, the air carrier’s host system will begin to send out status update messages automatically to the forwarder, electronically updating their internal tracking systems. The forwarder only needs to call when exceptions are noted in their systems. This saves a significant amount of time and greatly enhances productivity.
- Linking to on-demand transportation management services for managing the first and last mile of delivery significantly increase efficiencies associated with the end-to-end shipment. These services enable forwarders and air carriers to electronically tender loads to truckers, receive status messages on the movement of the loads, and process and audit freight invoices against their contracted rates. This can deliver even more productivity and optimization enhancements.
Through the electronic business document exchange capabilities that power these solutions, global shipment visibility, and ultimately, improved performance management are attainable. Automation can also increase documentation accuracy by as much as 30% by reducing the need for paper and re-keying of data. Delivery precision is possible with reporting and alert messaging functionality. Achieving what was previously viewed as costly investments in such areas as cargo yield management and load optimization are within reach by layering business intelligence reporting into the process.
Tapping into on-demand resources is a relatively straightforward process. Rather than paying up front capital costs for the hardware and software required to develop and implement an in-house infrastructure, on-demand solution subscribers usually pay a lower monthly fee on a per use basis in addition to relatively nominal set-up costs.
The bottom line is that on-demand logistics management solutions provide an affordable and highly effective way for freight forwarders to address the increasing challenges of moving cargo across borders while ensuring customer satisfaction. By simply embracing the features and functionality offered in these solutions, business processes can be streamlined; communications between business partners can be more easily shared; and efficiently meeting security initiatives designed to make the world of air cargo safer is more attainable for the freight forwarding community.
Cindy Yamamoto is Senior Vice President, Product Strategy at Descartes. She has over 25 years of experience in international business, including product management, financial supply chain management, business development, marketing, operational management and customer service. Prior to joining Descartes, Cindy held senior positions with OOCL, a leading global ocean carrier, and BillingZone, a technology company offering financial solutions for automating invoice receipt and payments.