Digitization in cargo

A paperless world? Air freight is lagging behind.

More than half of air freight transports worldwide are still accompanied by paper documents. That’s according to figures released by the International Air Transport Association (IATA).

Latest IATA results show the global e-freight penetration rate below 50%. Europe, with an e-freight penetration rate of 34%, bears the largest responsibility for the sluggish pace of digitization. 

Many airliners blame freight forwarders for the reluctance to go digital. The word in the industry is that they earn a pretty penny with paper documentation and have little interest in investing in air freight. Not everyone feels this way, however: Figures show that the leading third-party logistics providers have e-freight penetration rates of 60% to 65%.

Lufthansa CEO Carsten Spohr convened the first e-freight conference back in 2010, when he was in charge of Lufthansa Cargo. Spohr’s vision is a streamlined, cost-efficient, paperless supply chain for air freight. Seven years later, the industry is still far from that vision.

Figures from the International Air Transport Association (IATA) show a global e-freight penetration rate of under 50%. Lufthansa Cargo, with an e-freight rate of 40.4%, is among the stragglers, along with the entire European air freight sector, whose penetration rate of 34% lags far behind even Africa (58%). Leading the way toward paperless air freight is Northern Asia (59%) and, above all, the Middle East (68%).

Among third-party logistics providers, the US company Expeditors leads with an e-freight rate of 65%, followed by Panalpina (64%), and Integrator UPS (61.5%). Schenker (60.3%) and DHL (55%) are also well placed. Among the industry giants, only Kühne + Nagel (26.2%) lags behind.

Forty papers for one consignment 

Among airlines, Cathay Pacific is the global leader at 78%. Air France / KLM is the best-placed European airline at 61.9%, well ahead of Lufthansa (40.4%) and cargo giant Emirates (39.9%). As the airlines see it, the failure to adopt e-freight is the fault of the authorities in recipient countries that insist on paper documentation. Poor e-freight adoption rates among the airlines do not therefore necessarily indicate a lack of willingness to innovate. 

In an airport-by-airport comparison, Dubai leads the pack with paperless processing of 89.5% of its consignments. This is followed by Singapore and Hong Kong with over 70% each. The European freight hub of Frankfurt, by comparison, is just above 30%. The costs to air freight shippers are prohibitive. “In 2017, a single consignment from A to B still accounted for an astounding 40 pieces of paper on average,” laments Drew Crawley, CEO of IAG Cargo, in an interview with industry journal DVZ.