CgoXchangePlanFEB13

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CgoXchange proposal for moving small air freight forwarders to e-freight.

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CgoXchangePlanFEB13

  1. 1. 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
  2. 2. SummaryThe air cargo industry has reached consensus that it should transfer itsreliance on telephones and paper to electronic communication anddocuments. Doing so is an enormous task requiring varying strategies fordisparate market segments. Success requires an “all hands on deck”approach.GoalThe Global Air Cargo Advisory Group (GACAG) has set a goal of universaleAWB usage by the end of 2015. CgoXchange proposes to serve as themechanism for fulfilling the GACAG goal for the small forwardersubsection of the market.Small forwarder reluctance and resistance to e-freight is not expectedto change. Logical paths for small forwarders migrating to paperlessair 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- freightGovernment mandate. Short of a United Nations proclamation, it isunlikely that all governments will simultaneously mandate eAWBs.Theoretically, each government could mandate eAWBs as it developsprocessing capabilities and bilateral or multilateral politicalagreements. But, is this likely?Airline mandate. It is competitively risky for an airline to mandateelectronic documents unless many airlines do so. Through IATA,airlines could establish a date for simultaneous migration to eAWBs. Ifcoordination is possible, the migration date will be when the last airlineis prepared for the migration.CgoXchange’s coordinated plan incents the small forwarder byproviding ad hoc rates in exchange for booking and documenting adhoc shipments using the method of the carrier’s choosing. In theCgoXchange plan, incentives to small forwarders cost carriers nothing. ©Copyright 2013, Sirius Business Solutions, Inc. 2
  3. 3. Industry Overview and Situation AnalysisTen months of research with airlines, freight forwarders, associations,trucking companies and shippers indicates that enthusiasm for moving toe-freight is limited. Industry associations and leaders are keen totransform to e-freight but the remainder of the industry is not.Local airline staff (not seconded from their head offices) and smallforwarders find it difficult to imagine what waits on the other side of aparadigm change. Given the enormity of the task, the industry wouldbenefit from making a united effort in promoting e-freight.Nevertheless, the industry will probably not ascend e-freight steps inunison. Using different methods and timetables, each airline hasdeveloped and will continue developing e-freight capabilities. As theindustry 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 forwarderswill differ from strategies linking smaller forwarders. Arguably, linkingwith small forwarders will be more challenging.That the air cargo industry operates in a paper environment one day anddigital environment the next is improbable. More likely is a gradual andsteady migration from paper to electronic AWBs. Accomplishing this taskrequires flexibility to address the disparate users and their different dataprocessing abilities.Few small forwarders currently participate in e-freight and few othersdesire to participate. The success of e-freight however, depends uponuniversal participation.The behavior of participants in other industries suggests the likelihoodthat small forwarders will enter the electronic world modestly and thenexpand their participation. They will try remedial e-freight functionsbefore becoming comfortable taking the next steps. With newtechnologies, 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 thedesire to begin generating eAWBs. They perceive a relative advantagefrom sustaining verbal communication and paper documents. Most smallforwarders believe e-freight represents shifting the air cargo data captureworkload to them from airlines. ©Copyright 2013, Sirius Business Solutions, Inc. 3
  4. 4. Small forwarders have not judged e-freight’s value proposition to besufficiently compelling.Industry ConsensusThe Global Air Cargo Advisory Group (GACAG) has four priorities and e-Commerce is one of them. GACAG includes representatives from fourindustry participant groups, The International Federation of FreightForwarders (FIATA), Global Shippers Forum (GSF), the International AirTransport 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 current position and desired e-freight destination but does not identify the journey’s path.Nearly everyone participating in air cargo agrees moving to e-freight is“the right thing to do” but, no consensus exists for how to accomplish thetask.CgoXchange’s Plan for Small Freight ForwardersCgoXchange offers a cooperative plan for the air cargo industry totransition small forwarders to e-freight. CgoXchange will providedashboard access to air cargo applications the same way smart phonesprovide dashboard access to applications that forwarders use in theirpersonal lives. CgoXchange’s App Store will function similarly to appstores of Google and iPhone. ©Copyright 2013, Sirius Business Solutions, Inc. 4
  5. 5. CgoXchange created one application for the purpose of encouraging smallforwarders to move toward electronic booking and air waybills. Thecriterion for creating this app’s function was its nearly universalapplicability for small forwarders and the likelihood that its adoptionwould meet with least resistance. That function is ad hoc pricing.The ad hoc pricing app transforms a function currently performed viatelephone to a digitally documented process. The ad hoc pricing appprovides value by exchanging discounted rates for electronic bookingsand documents.Airlines have traditionally provided ad hoc pricing without asking anythingin return, other than shipments. CgoXchange’s plan calls for booking adhoc-rated shipments and/or documenting them in the manner of thecarrier’s choosing. In the beginning, carriers may require a telephone callto book the shipment but as development progresses, airlines can beginrequiring electronic booking and documentation in order to receive ad hocrates.Important Note and Disclaimer: CgoXchange facilitates the exchangeof pricing data between consenting air cargo buyers and sellers. Nopricing information is viewable without the secure username andpassword of the appropriate buyer or seller. CgoXchange takes no part inthe rate determination. Anti-competitive practices are not condoned.Key Success Factors  Sufficient air carrier participation  Sufficient willingness from small forwardersCgoXchange Revenue ModelCgoXchange’s revenue will be generated through subscriptions andadvertising. Shippers, forwarders and trucking companies will paysubscription fees to use the CgoXchange tool. Airlines however, will payno fees. Banner advertising will be offered around the border ofdashboard pages for additional revenue.The VisionOnce all parties are participating meaningfully, the future of e-freightlooks bright. CgoXchange believes that adoption of e-freight by smallforwarders will be similar to the adoption of personal online banking.Most will find e-freight indispensible once tried initially. As with online ©Copyright 2013, Sirius Business Solutions, Inc. 5
  6. 6. banking, basic services are typically tried first and, when they are foundacceptable, 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) forautomatically exchanging data between systems of authorized parties ismade possible by the use of extensible markup language (XML). Thepotential of e-freight will be realized as more APIs are developed toseamlessly and securely exchange data, reducing time and human errors.Moving ForwardCgoXchange’s plan movesforward if and when asufficient number of carrierschoose to participate. Alllevels and departments ofthe air cargo industry needto mobilize to accomplish thistask since small forwardersare unlikely to move to e-freight without adequateincentive.CgoXchange’s plan will be implemented first in select English speakingmarkets. CgoXchange’s first app will be developed, launched and testedin other languages and markets over a 24 month period. The digital aircargo dashboards and app store will be developed throughout 2013 andlaunched in early 2014. ©Copyright 2013, Sirius Business Solutions, Inc. 6
  7. 7. The first app, for ad hoc pricing, will be the mechanism for incentingsmall forwarders to book and/or document air cargo shipmentselectronically as their chosen carrier has reciprocal abilities. Airlinesshould evaluate CgoXchange as a tool for moving small forwarders to e-freight while considering the impacts to their current system for ad hocpricing. Moving to e-freight will have ripple effects on many businessprocesses. Airlines must weigh the promised benefits of e-freight vs. thedisruption to their business from change. Change does not occur withoutdisruption, even when everyone agrees change is necessary.Local language versions will entice small forwarders worldwide. Locallanguage versions will be developed and launched with guidance from thecarriers operating in those markets. Besides English, probable languageversions will be:Spanish Chinese Russian JapaneseKorean Hindi Arabic PortugueseGerman Malay Vietnamese FrenchTurkish Italian Thai DutchEventually, CgoXchange should be available in 17 languages. Thepossible timeline for the world’s small forwarders to achieve the goal of apaperless airport to airport air cargo environment by the end of 2015 isshown below.March 2013Identify the carriers intending to participate. If critical mass isachievable, the next steps will be taken. If critical mass is notachievable, the plan is tabled.If the plan moves forward, launch markets will be selected that reflectguidance from carriers. Suggested inaugural markets are United States,Canada, the United Kingdom and Ireland.April 2013Pre-launch efforts will commence in launch markets. These effortsinclude educating local forwarders and airline managers via webinars,demonstration videos, press releases, advertising and air cargoassociation presentations, among others. The most efficient combinationof traditional and social media will be employed. ©Copyright 2013, Sirius Business Solutions, Inc. 7
  8. 8. Development will commence on a mechanism to build and maintainCgoXchange’s digital dashboards and app store.May 2013Continue 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 developedImportant Note: CgoXchange will measure and share aggregate marketdata to the extent each individual user’s privacy can be assured and datais meaningful. Market data will be shared but competitive data will not beshared.July 2013  Begin developing language version 2  Begin pre-launch efforts in other English-speaking marketsAugust 2013  Continue developing language 2 version  Continue pre-launch efforts in other English-speaking marketsSeptember 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 marketsOctober 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 marketsNovember 2013  Launch language 2 version of app ©Copyright 2013, Sirius Business Solutions, Inc. 8
  9. 9.  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 5December 2013  Complete testing English and language 2 digital dashboards  Begin developing language versions 3, 4 and 5January 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 versionsFebruary 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 8March 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 8May 2014  Begin testing language versions 6, 7 and 8  Begin pre-launch efforts in markets applicable to language versions 6, 7 and 8 ©Copyright 2013, Sirius Business Solutions, Inc. 9
  10. 10. June 2014  Continue testing language versions 6, 7 and 8  Continue pre-launch efforts in markets applicable to language versions 6, 7 and 8  Determine with carrier guidance language versions 9, 10 and 11July 2014  Launch app versions in languages 6, 7 and 8  Begin development of apps for languages 9, 10 and 11August 2014  Continue working on language versions 9, 10 and 11September 2014  Begin testing language versions 9, 10 and 11  Begin pre-launch efforts in markets applicable to language versions 9, 10 and 11October 2014  Continue testing language versions 9, 10 and 11  Continue pre-launch efforts in markets applicable to language versions 9, 10 and 11  Determine with guidance from carriers the languages to be used in app versions 12, 13 and 14November 2014  Launch language versions 9, 10 and 11  Begin development of language versions 12, 13 and 14December 2014  Continue developing language versions 12, 13 and 14January 2015  Begin testing language versions 12, 13 and 14  Begin pre-launch efforts in markets applicable to language versions 12, 13 and 14 ©Copyright 2013, Sirius Business Solutions, Inc. 10
  11. 11. February 2015  Continue testing language versions 12, 13 and 14  Continue pre-launch efforts in markets applicable to language versions 12, 13 and 14  Determine with carrier guidance language versions 15, 16 and 17March 2015  Launch language versions 12, 13 and 14  Begin developing app language versions 15, 16 and 17April 2015  Continue developing language versions 15, 16 and 17May 2015  Begin testing language versions 15, 16 and 17  Begin pre-launch efforts in markets applicable to language versions 15, 16 and 17June 2015  Continue testing language versions 15, 16 and 17  Continue pre-launch efforts in markets applicable to language versions 15, 16 and 17July 2015  Launch language versions 15, 16 and 17ConclusionThe industry has agreed to achieve a paperless document environmentfor cargo movements between airports by the end of 2015. It is unlikelygovernments and/or airlines will universally mandate compliance. Smallair freight forwarders resist e-freight because they have not found asufficiently compelling value proposition. ©Copyright 2013, Sirius Business Solutions, Inc. 11
  12. 12. With few exceptions, air cargo carriers have struggled to convert small forwarders to e-freight. Moving the air cargo industry to digital from analog communication and documents represents a paradigm change. Considering the enormity of the task, a unified effort from all parts of the industry is warranted. Convertingdisparate market segments will require varying strategies. Convertingsmall forwarders to e-freight requires government mandates, airlinemandates or incentives.Change in any industry does not occur on its own. Rather, leaders whoenvision “a better way” bring about change. The scope of this changerequires participation from all parties.Industry cooperation is required. A plan for change is essential andCgoXchange’s is the only viable one being discussed at this time for thesmall forwarder subsection of the market. CgoXchange’s plan ispositioned between mandating eAWBs and doing nothing. While noairline or forwarder likes every aspect of the plan, CgoXchange representsa realistic compromise that allows the achievement of a common goal.Next StepsOver the past 90 days, CgoXchange’s plan has been discussed with andmodified to reflect suggestions from 23 air cargo carriers, including 18 ofthe 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 airlinediscussions. Airlines evaluate the plan and compare it to alternatives formoving small forwarders to e-freight by the end of 2015. Optimally,discussions will involve every air cargo department with an interest inconverting communication and documents to digital formats.February 20 – Preliminary confidential surveys determine whether aircarriers remain open to conditionally participate in CgoXchange’s plan.There is no obligation to participate. ©Copyright 2013, Sirius Business Solutions, Inc. 12
  13. 13. February 25 - If critical mass appears achievable, aggregate surveyresults are shared. No airline names will be identified.If however, the survey results indicate insufficient interest, all parties arenotified and the plan is withdrawn.February 26 – If critical mass appears achievable, airlines will again besurveyed, serving as a double opt in for those intending to continue in theCgoXchange discussion.March 1 – Based on survey results, CgoXchange decides whethersufficient airline participation is achievable. Notifications are issued andformalized continuing steps, if appropriate, are offered to airlinesremaining in the discussion.The question being asked today is whether the airline portion of the aircargo industry is ready to get started moving to e-freight. We will allknow the answer very soon.Thank you for your participation in the discussion to this point.Helpful LinksOverview VideoDiscussion SlidesFirst App Demo ©Copyright 2013, Sirius Business Solutions, Inc. 13

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