Changing dynamics of Air Cargo industry in 2023

TF Spotlight: Changing Dynamics of Air Cargo industry in 2023

Effective March 2023, the European Union (EU) will implement Release 2 of its new “Import Control System” (EU-ICS2) regulations. Do you think this will transform how the air cargo industry operates today?

ICS2 is based on the World Cargo Organization’s (WCO) and the International Civil Aviation Organization’s (ICAO) PLACI framework. This programme is one of the main contributors towards setting up an integrated EU approach to reinforce customs risk management under the standard risk management framework (CRMF). It serves as the first line of defence in terms of protection of the EU internal market and the EU consumers. The new programme will remodel the existing process in terms of IT, legal, customs risk management/controls and trade operational perspectives.

In the year 2021, the European Union began the rollout of the ICS2 to replace ICS. ICS2 is not an upgrade of ICS, but an entirely new platform. When a material is transported to the customs territory of the European Union, the stakeholders need to provide details on the transported material before they carry it into the customs territory of the European Union. This information must be submitted via the Entry Summary Declaration (ENS) or the safety and security declaration in the import control system (ICS). Based on this analysis, the European Customs Authorities will perform risk analysis on the data provided and decide if shipments need to be submitted for inspection. Improve the safety and security measures to protect the internal market better and protect people against threats. This is done by accurately identifying high-risk shipments and acting before they are shipped to the European Union’s customs territory.

We can simplify the information exchange between stakeholders via one central European database, facilitating legitimate trade when crossing the European border; improving the data quality received from the economic operators. All stakeholders (shippers, third-party Logistics companies and importers) need to evaluate their processes and, at a minimum, reach out to the carriers used to ensure that their carriers are preparing to change their IT systems to submit the required information in ICS2. Suppose the carrier requires more information than is currently provided. In that case, the Freight Forwarder needs to evaluate with his customer if this information can be provided to the carrier or if they will submit it separately in ICS2. The goods will be stopped at the EU customs border if it does not provide the required information to the Customs Authorities. This can lead to delays in the supply chain or other sanctions for non-compliance with the applicable regulations.

What are the five essential parameters any Airport should consider while choosing a Cargo Community System?

Being considered the most premium mode of cargo transportation, the Airport has to focus on providing more services to its stakeholders to create the ‘customer delight’. With global vision moving towards ‘Greener’ approaches, adapting to ‘Digital Innovations and paperless’ initiatives’ have become imperative, thereby supporting sustainability. Technology is becoming the driving force for the Airports to meet most of these initiatives.

The essential parameters to consider by an airport operator while implementing a Cargo Community System:

• Near zero to NO paper in their handling and promote other stakeholders to follow in their processes
• Moving from Cash, Cheque to digital options to collect, pay, and transact with stakeholders
• Attract more Non/Governmental institutions in the Logistics supply chain with digital processes which can be integrated and interfaced with government single windows.
• Security agencies to perform tasks by using/interfacing with other stakeholders like Agents, GHA and Airlines
• Support Governmental and Global regulatory agencies to help the country climb global initiatives such as ‘Single Window’, ‘Ease of doing business’, ‘IATA initiatives such as e-AWB, e-CSD’, ‘e-Corridors between countries and many more…

There are emerging trends, shipping lines getting into Air Cargo and 3PL space and freight being moved to different cross border air cargo hubs. what in your opinion are the causes for these unique trends?

The shipping industry is continually changing and adapting to meet the needs of the commercial marketplace so that it can become more competitive and cost-effective. It is a huge and complex industry that is constantly being affected by global trends and advances in technology, materials and fuels. These trends are making Marine technology such an exciting and challenging field to work in.

While traditionally, air cargo consisted of high-value time-sensitive items; interestingly, e-commerce had a significant impact. Data global air cargo data revealed an interesting picture. Global demand, measured in cargo tonne-kilometres (CTKs), fell 9.7% compared with July 2021 (-10.2% for international operations). The IATA says that capacity was 3.6% above July 2021 (+6.8% for international operations) but still 7.8% below July 2019 levels. Growth prediction, the association is cautious due to the range of issues influencing market behaviour; the near and medium-term challenges posed by a host of macroeconomic and geopolitical issues may offset bullish air freight demand.

With various airlines’ untapped and timely resource crunch, the e-commerce boom has suffered for a long time, leading to other modal players venturing into the air cargo business. Due to inconsistent or no proper policy push from airlines for multi-modal business directed to other entities capturing this space. Focusing on the current emerging country like India, where the world is looking at the phenomenal growth in infrastructure and Logistics, including all air, sea, road and rail modes being improved, there is an astronomical surge in demand. Global players like Maersk, Prologis, Mirae Asset, Alta Capital, and Panattoni are investing in such opportunities, improving the economies at various levels and making the Maritime Logistics market glow like a ‘supernova.’