cgoxchangeplanfeb13

Moving Small Air Freight Forwarders to e-Freight

A plan for substituting electronic communication and documents for telephone calls and paper in one sub-section of

the air cargo industry

February 12, 2013

CgoXchange is a Division of Sirius Business Solutions, Inc. Silicon Valley, CA USA

Summary The air cargo industry has reached consensus that it should transfer its reliance on telephones and paper to electronic communication and documents. Doing so is an enormous task requiring varying strategies for disparate market segments. Success requires an “all hands on deck” approach. Goal The Global Air Cargo Advisory Group (GACAG) has set a goal of universal eAWB usage by the end of 2015. CgoXchange proposes to serve as the mechanism for fulfilling the GACAG goal for the small forwarder subsection of the market. Small forwarder reluctance and resistance to e-freight is not expected to change. Logical paths for small forwarders migrating to paperless air cargo documentation are:

1. Governments mandating electronic documentation 2. Airlines mandating electronic documentation as a

condition for carriage, or 3. Small forwarders are sufficiently incented to use e-

freight Government mandate. Short of a United Nations proclamation, it is unlikely that all governments will simultaneously mandate eAWBs. Theoretically, each government could mandate eAWBs as it develops processing capabilities and bilateral or multilateral political agreements. But, is this likely? Airline mandate. It is competitively risky for an airline to mandate electronic documents unless many airlines do so. Through IATA, airlines could establish a date for simultaneous migration to eAWBs. If coordination is possible, the migration date will be when the last airline is prepared for the migration. CgoXchange’s coordinated plan incents the small forwarder by providing ad hoc rates in exchange for booking and documenting ad hoc shipments using the method of the carrier’s choosing. In the CgoXchange plan, incentives to small forwarders cost carriers nothing.

©Copyright 2013, Sirius Business Solutions, Inc. 2

Industry Overview and Situation Analysis Ten months of research with airlines, freight forwarders, associations, trucking companies and shippers indicates that enthusiasm for moving to e-freight is limited. Industry associations and leaders are keen to transform to e-freight but the remainder of the industry is not. Local airline staff (not seconded from their head offices) and small forwarders find it difficult to imagine what waits on the other side of a paradigm change. Given the enormity of the task, the industry would benefit from making a united effort in promoting e-freight. Nevertheless, the industry will probably not ascend e-freight steps in unison. Using different methods and timetables, each airline has developed and will continue developing e-freight capabilities. As the industry morphs from analog to digital communication and documents, forwarder/carrier data exchanges will be via various means. Airline strategies for establishing electronic links with larger forwarders will differ from strategies linking smaller forwarders. Arguably, linking with small forwarders will be more challenging. That the air cargo industry operates in a paper environment one day and digital environment the next is improbable. More likely is a gradual and steady migration from paper to electronic AWBs. Accomplishing this task requires flexibility to address the disparate users and their different data processing abilities. Few small forwarders currently participate in e-freight and few others desire to participate. The success of e-freight however, depends upon universal participation. The behavior of participants in other industries suggests the likelihood that small forwarders will enter the electronic world modestly and then expand their participation. They will try remedial e-freight functions before becoming comfortable taking the next steps. With new technologies, humans tend to “crawl” before “walking” then “running”. So far, most forwarders are resisting crawling into e-freight. With few exceptions, small forwarders have neither the ability nor the desire to begin generating eAWBs. They perceive a relative advantage from sustaining verbal communication and paper documents. Most small forwarders believe e-freight represents shifting the air cargo data capture workload to them from airlines.


Small forwarders have not judged e-freight’s value proposition to be sufficiently compelling. Industry Consensus The Global Air Cargo Advisory Group (GACAG) has four priorities and e-Commerce is one of them. GACAG includes representatives from four industry participant groups, The International Federation of Freight Forwarders (FIATA), Global Shippers Forum (GSF), the International Air Transport Association (IATA) and The International Air Cargo Association (TIACA).

The GACAG e-commerce committee spent two years developing The GACAG e-freight Roadmap which accurately describes the industry’s currenposition and desired e-freight destination but does not ide

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ntify he journey’s path.

ht is r how to accomplish the

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goXchange’s Plan for Small Freight Forwarders

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App Store will function similarly to app tores of Google and iPhone.

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Nearly everyone participating in air cargo agrees moving to e-freig“the right thing to do” but, no consensus exists fota C CgoXchange offers a cooperative plan for the air cargo industry to transition small forwarders to e-freight. CgoXchange will provide dashboard access to air cargo applications the same way smart phoneprovide dashboard access to applications that forwarders use in their personal lives. CgoXchange’ss


http://www.aircargoworld-digital.com/aircargoworld/201211#pg53

http://www.aircargoworld-digital.com/aircargoworld/201211#pg53

http://www.gacag.org/gacag/default.asp

http://www.fiata.com/

http://www.fiata.com/

http://www.globalshippersforum.com/

http://www.iata.org/Pages/default.aspx

http://www.iata.org/Pages/default.aspx

http://www.tiaca.org/tiaca/default.asp

http://www.gacag.org/images/gacag/pdf/GACAG%20e-freight%20Brochure.pdf

http://www.gacag.org/images/gacag/pdf/GACAG%20e-freight%20Brochure.pdf

CgoXchange created one application for the purpose of encouraging sforwarders to move toward electronic booking and air waybills. The criterion for creating this app’s function was its nearly universal applicability for small forwarders and the likelihood that its adoption would meet with least resistance

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. That function is ad hoc pricing. The ad hoc pricing app transforms a function currently performed via telephone to a digitally documented process. The ad hoc pricing app provides value by exchanging discounted rates for electronic bookings and documents. Airlines have traditionally provided ad hoc pricing without asking anything in return, other than shipments. CgoXchange’s plan calls for booking ad hoc-rated shipments and/or documenting them in the manner of the carrier’s choosing. In the beginning, carriers may require a telephone call to book the shipment but as development progresses, airlines can begin requiring electronic booking and documentation in order to receive ad hoc rates. Important Note and Disclaimer: CgoXchange facilitates the exchange of pricing data between consenting air cargo buyers and sellers. No pricing information is viewable without the secure username and password of the appropriate buyer or seller. CgoXchange takes no part in the rate determination. Anti-competitive practices are not condoned. Key Success Factors

Sufficient air carrier participation Sufficient willingness from small forwarders

CgoXchange Revenue Model CgoXchange’s revenue will be generated through subscriptions and advertising. Shippers, forwarders and trucking companies will pay subscription fees to use the CgoXchange tool. Airlines however, will pay no fees. Banner advertising will be offered around the border of dashboard pages for additional revenue. The Vision Once all parties are participating meaningfully, the future of e-freight looks bright. CgoXchange believes that adoption of e-freight by small forwarders will be similar to the adoption of personal online banking. Most will find e-freight indispensible once tried initially. As with online


banking, basic services are typically tried first and, when they are found acceptable, users try more complex functions.

It is generally believed that once the industry has universally adopted the use of electronic air waybills, e-commerce progress will accelerate.

The creation of unlimited application programming interfaces (APIs) for automatically exchanging data between systems of authorized parties is made possible by the use of extensible markup language (XML). The potential of e-freight will be realized as more APIs are developed to seamlessly and securely exchange data, reducing time and human errors. Moving Forward CgoXchange’s plan moves forward if and when a sufficient number of carriers choose to participate. All levels and departments of the air cargo industry need to mobilize to accomplish this task since small forwarders are unlikely to move to e-freight without adequate incentive. CgoXchange’s plan will be implemented first in select English speaking markets. CgoXchange’s first app will be developed, launched and tested in other languages and markets over a 24 month period. The digital air cargo dashboards and app store will be developed throughout 2013 and launched in early 2014.


The first app, for ad hoc pricing, will be the mechanism for incenting small forwarders to book and/or document air cargo shipments electronically as their chosen carrier has reciprocal abilities. Airlines should evaluate CgoXchange as a tool for moving small forwarders to e-freight while considering the impacts to their current system for ad hoc pricing. Moving to e-freight will have ripple effects on many business processes. Airlines must weigh the promised benefits of e-freight vs. the disruption to their business from change. Change does not occur without disruption, even when everyone agrees change is necessary. Local language versions will entice small forwarders worldwide. Local language versions will be developed and launched with guidance from the carriers operating in those markets. Besides English, probable language versions will be: Spanish Chinese Russian Japanese Korean Hindi Arabic Portuguese German Malay Vietnamese French Turkish Italian Thai Dutch Eventually, CgoXchange should be available in 17 languages. The possible timeline for the world’s small forwarders to achieve the goal of a paperless airport to airport air cargo environment by the end of 2015 is shown below. March 2013 Identify the carriers intending to participate. If critical mass is achievable, the next steps will be taken. If critical mass is not achievable, the plan is tabled. If the plan moves forward, launch markets will be selected that reflect guidance from carriers. Suggested inaugural markets are United States, Canada, the United Kingdom and Ireland. April 2013 Pre-launch efforts will commence in launch markets. These efforts include educating local forwarders and airline managers via webinars, demonstration videos, press releases, advertising and air cargo association presentations, among others. The most efficient combination of traditional and social media will be employed.


Development will commence on a mechanism to build and maintain CgoXchange’s digital dashboards and app store. May 2013 Continue pre-launch efforts in launch markets. June 2013

Launch CgoXchange in select markets Determine with participating carriers the language to be used in the

next version to be developed Important Note: CgoXchange will measure and share aggregate market data to the extent each individual user’s privacy can be assured and data is meaningful. Market data will be shared but competitive data will not be shared. July 2013

Begin developing language version 2 Begin pre-launch efforts in other English-speaking markets

August 2013

Continue developing language 2 version Continue pre-launch efforts in other English-speaking markets

September 2013

Launch CgoXchange in other English-speaking markets such as India, Australia and New Zealand

Begin testing language version 2 Begin pre-launch efforts in language version 2 markets

October 2013

Complete testing language 2 version of app Test digital dashboards in English and language 2 Begin pre-launch efforts for digital dashboards in English and

language 2 markets November 2013

Launch language 2 version of app


Continue testing English and language 2 dashboards Continue pre-launch efforts for digital dashboards in English and

language 2 markets Determine with guidance from carriers the languages to be used in

versions 3, 4 and 5 December 2013

Complete testing English and language 2 digital dashboards Begin developing language versions 3, 4 and 5

January 2014

Launch English and language 2 digital dashboard versions (From this time forward, digital dashboards will be launched inclusive of CgoXchange’s first app in the local language)

Continue developing language 3, 4 and 5 versions February 2014

Begin testing language versions 3, 4 and 6 Begin pre-launch efforts in markets applicable to language versions

3, 4, and 5 Determine with guidance from carriers the languages to be used for

app versions 6, 7 and 8 March 2014

Continue testing language versions 3, 4 and 5 Continue pre-launch efforts in markets applicable to language

versions 3, 4 and 5 Begin developing language versions 6, 7 and 8.

April 2014

Launch versions in languages 2, 4, and 5 Continue developing language versions 6, 7 and 8

May 2014


6, 7 and 8


June 2014


versions 6, 7 and 8 Determine with carrier guidance language versions 9, 10 and 11

July 2014

Launch app versions in languages 6, 7 and 8 Begin development of apps for languages 9, 10 and 11

August 2014

Continue working on language versions 9, 10 and 11 September 2014


9, 10 and 11 October 2014


versions 9, 10 and 11 Determine with guidance from carriers the languages to be used in

app versions 12, 13 and 14 November 2014

Launch language versions 9, 10 and 11 Begin development of language versions 12, 13 and 14

December 2014

Continue developing language versions 12, 13 and 14 January 2015


12, 13 and 14


February 2015


versions 12, 13 and 14 Determine with carrier guidance language versions 15, 16 and 17

March 2015

Launch language versions 12, 13 and 14 Begin developing app language versions 15, 16 and 17

April 2015

Continue developing language versions 15, 16 and 17 May 2015


15, 16 and 17 June 2015


versions 15, 16 and 17 July 2015

Launch language versions 15, 16 and 17 Conclusion The industry has agreed to achieve a paperless document environment for cargo movements between airports by the end of 2015. It is unlikely governments and/or airlines will universally mandate compliance. Small air freight forwarders resist e-freight because they have not found a

osition. sufficiently compelling value prop


With few exceptions, air cargo carriehave struggled to convert small forwarders to e-freight. Moving the air cargo industry to digital from analog communication and documents represents a paradigm

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change. Considering the enormity of the task, a

varying strategies. Converting mall forwarders to e-freight requires government mandates, airline

s who e

dustry cooperation is required. A plan for change is essential and goXchange’s is the only viable one being discussed at this time for the

r subsection of the market. CgoXchange’s plan is ositioned between mandating eAWBs and doing nothing. While no

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ith and

by the end of 2015. Optimally,

iscussions will involve every air cargo department with an interest in

ebruary 20 – Preliminary confidential surveys determine whether air

unified effort from all parts of the industry is warranted. Converting

disparate market segments will requiresmandates or incentives. Change in any industry does not occur on its own. Rather, leaderenvision “a better way” bring about change. The scope of this changrequires participation from all parties. InCsmall forwardepairline or forwarder likes every aspect of the plan, CgoXchange representa realistic compromise that allows the achievement of a common goal. Next Steps Over the past 90 days, CgoXchange’s plan has been discussed wmodified to reflect suggestions from 23 air cargo carriers, including 18 of the top 25, measured by FTKs. The decision to move forward with theplan or withdraw it will be made by March 1. The path to that March 1decision is as follows: February 12 - CgoXchange offers this plan for internal airline discussions. Airlines evaluate the plan and compare it to alternatives formoving small forwarders to e-freight dconverting communication and documents to digital formats. Fcarriers remain open to conditionally participate in CgoXchange’s plan. There is no obligation to participate.



however, the survey results indicate insufficient interest, all parties are

ain be opt in for those intending to continue in the

goXchange discussion.

d f appropriate, are offered to airlines

maining in the discussion.

he question being asked today is whether the airline portion of the air ready to get started moving to e-freight. We will all

now the answer very soon.

hank you for your participation in the discussion to this point.

Overview Video

February 25 - If critical mass appears achievable, aggregate survey results are shared. No airline names will be identified. Ifnotified and the plan is withdrawn. February 26 – If critical mass appears achievable, airlines will agsurveyed, serving as a doubleC March 1 – Based on survey results, CgoXchange decides whether sufficient airline participation is achievable. Notifications are issued anformalized continuing steps, ire Tcargo industry isk T Helpful Links

Discussion Slides First App Demo

cgoxchangeplanfeb13

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