EARLY ADOPTION OF IATA E-FREIGHT The 3rd Annual Middle East Aviation IT Forum 2005 Niranjan Navaratnarajah Manager Cargo Systems & Revenue Planning Emirates Airline 22nd November 2005

TODAYS REALITY…. Average of 38 documents per shipment at a cost of US$30 Early adopter implementation (end 2007) will generate savings of US$800 million per year. Industry savings will be US$1.2 billion per year when fully implemented (2010). Paper used in processing shipments every year could fill 39 B747-400 or 81 A-300F4-600R freighters. 20 years ago it took 6.5 days on average to send a shipment internationally, today it still takes 6.0 days - 1 day to fly, 5 days to wait for the paper.

INDUSTRY ACTION GROUP IATA has formed a preliminary Industry Action Group representing air cargo stakeholders made up of British Airways, Cargolux, Emirates, Fedex, Lufthansa Cargo, Singapore Airlines, World Customs Organisation and Freight Forward International.

GATHERING MOMENTUM

HOW WILL E-FREIGHT HELP YOUR BUSINESS? Reduce costs by eliminating duplication. Speed up processing. Improving overall data quality. Expedite security and customs compliance. As customs are increasingly demanding electronic information in advance will also help avoid fines and other costs associated with non-compliance. Better transparency and reduced shipping times for your clients.

BENEFITS Expedited movement of goods, improved quality of service. Shipper: Expedited movement of goods, improved quality of service. Forwarder: Process efficiency, reduced cost of compliance. Airline: Process efficiency, cost reduction, improved competitiveness of air freight. Customs: Faster, more accurate information for security screening & clearance. Consignee: Reduced transit times.

TARGET Eliminate the need to produce and transport paper documents for air cargo shipments by moving to an industry-wide, simpler, electronic, paper-free environment. Early adopter implementation by end 2007, full industry implementation by end 2010

ACTION PLAN Develop governance to effectively represent early adopter forwarders, carriers, shippers, customs and also ensure effective engagement with key industry bodies. Harmonise current industry data and communication standards. Define user requirements and system functionality to support a potential technical solution RFP process. Identify roadblocks to the elimination of paper, and develop a plan to remove them. Develop a legal framework to operate a paper free end-to-end process.

ACHIEVEMENTS IN FIRST 6 MONTHS Roadblocks identified Process & Standards, Stakeholder Mgt, Legal & Regulatory, Technology. Business Process and Data Standards set Detailed “As-Is” and “To-Be” business processes and documents mapped out. Engagement and alignment underway Inc: Industry Action Group, FFI, FIATA, WCO, Cargo 2000, Cargo Committee, UN, EU. Legal and Regulatory challenges mapped out Scale of challenge understood to achieve MC99 and MP4 treaty ratification. Technology options under evaluation Technical options under evaluation to support IATA e-freight Business Change.

World Trade Harmonization Forwarders Integrators E-FREIGHT IS ABOUT ALIGNMENT World Trade Organisation WTO World Trade Harmonization DOHA UNECE UN/ECE TF Recommendtions including Single Window EDIFACT & UN XML BP & Data Models UMM & CCTS Methodologies UN/CEFACT UNeDocs ISO ISO TC 154 ISO 15000 (ebXML) ISO 7372 (UNTDED) WORLD CUSTOMS Framework of Standards Data Model v2 WCO EU Customs - TAXUD e-Customs 2007 IATA e-freight STAKEHOLDERS Airlines Forwarders Integrators Agents

BUSINESS VISION DEC 2015 DEC 2010 DEC 2007  MULTI-MODAL Cargo  Buyer to Seller  Piece level  Enabling IT DEC 2010  AIR CARGO Industry  Shipper to Consignee  Eliminate ALL DOCS  95% E-freight penetration  Enabling IT (inc. RFID) DEC 2007  AIR CARGO Early Adopters  Forwarder to Forwarder including Customs  Eliminate PRIMARY DOCS  E-freight on major trade-lanes  Enabling IT (inc. RFID) Quality Mgt Systems (Cargo 2000)

PILOTS Surveys being completed. covers all Airlines globally targets specific Customs and Freight Forwarders. Campaign for countries targeted as "Smart" Pilots. Based on volume and technology for customs, carrier, forwarder.

BUSINESS STREAM SCOPE PROCESS PILOTS DELIVERY Vision, Scope & Jun 2005 PROCESS Sep 2005 PILOTS Jan 2006 DELIVERY Jun 2007 Vision, Scope & Objectives Process Alignment Global Harmonisation Implementation  Business workshops Document analysis Multi model / end-to-end  2007 early adopters  2010 95% air  > 2010 full multi-modal  Customs (WCO) Industry (C2K) Standard Docs (UN CEFACT)  Standards  Smart pilots agreed Local delivery plans Commitment (MoU)  Top 20 Gateways Local cluster workshops

LEGAL STREAM Carriage Treaties / limitations Customs regulations Country Dec 2005 Legal Framework Development Mar 2006 Carriage Oct 2005 Delivery Jun 2007 Treaties / limitations Customs regulations Accreditation / commitment Implementation Solitions  MP 4 & MC 99 Solution generation Remove obstacles  Local agreements Document ownership  Solution generation Remove obstacles  Technical contracts Local cluster MoU’s Legal strategy & plan  Treaty resolution Regulation resolution

TECHNICAL STREAM Current Technical capabilities Technical direction Industry Audit Jul 2005 Technical Solutions Nov 2005 Supplier Coordination Jun 2006 Delivery Jun 2007 Current Technical capabilities Technical direction Alignment Implementation  Air freight industry Airlines Freight Forwarders Related industries Technical workshops  BP 1 BP 2 Supplier workshops  WCO data model v2/ 3 UN CEFACT C2K / WCO Process E-freight timelines Contracts / MoU’s  Develop Test Accredit Implement

OPTIONS TO SUPPORT E-FREIGHT DELIVERY Three potential directions for technical solutions Those Who Can, Do Independent Body Commercial Solution Directions not exclusive Multiple providers Combinations possible

NEXT STEPS THROUGH TO DEC 2005 Business Construct “Smart Pilots” of O&Ds, customs, carriers, forwarders Develop Implementation strategy (local clusters) Technical Finalize technical direction / and preferred suppliers Legal and Regulatory Evaluate customs regulatory environment Develop “global e-freight index” Develop plan to accelerate MP4 / MC99 ratification

DOCUMENTS IN CONTENTION FOR EFREIGHT 1 Forwarder reserves space with airline/airline confirms 2 Shipper Booking with Forwarder and route map initiation 3 Forwarder receives shipment and information from Shipper 4 Forwarder due diligence on shipment 5 Forwarder declares goods for export 6 Customs performs risk assessment goods export 7 Customs grants goods for export 8 Freight and information prepared fro transit to carrier (consolidation) 9 Freight and information are transferred to carrier 10 Carrier goods acceptance, pre-manifesting & notification to customer 11 Customs performs risk assessment cargo departure 12 Customs grants cargo release departure 13 Flight loading and final information check 14 Flight Departure 15 Carrier advises origin Customs of cargo departure

PROCESSES 16 Carrier ensures destination Customs is pre-advised prior to arrival, where necessary 16a Forwarder ensures destination Customs is pre-advised of goods, where necessary 17 Destination Customs performs risk assessment cargo arrival 18 Aircraft arrival at destination airport 19 Report manifest to customs & appropriate regulatory agencies 20 Offload of freight and transfer to warehouse 21 Check freight and information against manifest 22 Report to forwarder 23 Report discrepancies to customs 24 Forwarder collects & verifies information 25 Customs grants in bond movement of cargo to Forwarder 26 Forwarder receives freight from carrier (in bond) 27 Forwarder declares goods for import 28 Customs performs risk assessment goods import 29 Customs grants good release import

PROCESSES 30 Forwarder notifies consignee 31 Arrange pick up/delivery 32 Consignee receives freights and information and performs freight check 33 Proof of delivery

QUOTES " Simplifying the Business is a platform for much-needed industry change. Strip out the complexity and the cost. Air freight is too important to be left behind. This industry needs the improved service, competitive edge and $1.2 billion in annual savings IATA e-freight offers." Giovanni Bisignani, Director General & CEO, IATA

QUOTES " There is growing demand to conduct business in the same language used by much of the business world -- and that language is increasingly electronic. Customers are demanding it. Regulatory authorities are demanding it. Business partners are demanding it. The time for E-Freight is now." David J. Bronczek, President and CEO, FedEx Express

QUOTES “ The only way we can combat costs is to bring in better efficiencies that will enhance productivity. Electronic transactions will not just save the world from inefficiencies of physical paper pushing and associated red tape, but will also create better transparency and speedy real-time processing spanning the entire supply chain. IATA e-freight is the way forward, those who are reluctant to adopt this change will be left out in the cold.” Ram Menen, Senior Vice President Cargo, Emirates

IN SUMMARY…. What does e-freight aim to do? Eliminate need to produce and transport all paper documents for air cargo shipments. What is e-freight worth? 1.2b US$ cost savings (reduce cost of paper issue and process by 80%, and shipment time by 25%). When will e-freight benefits be delivered? Dec 2010 onwards, with early adoption Dec 2007. What is our e-freight approach? Business Change, driving Process and Standards, enabled by Technology. Align and mobilize all air cargo supply chain participants, led by IATA. Use critical mass to address current government and regulatory obstacles

THANK YOU