28 Oct EDI – The Future of Communication & Data Exchange in Air Cargo?
When electronic data interchange (EDI) was introduced half a century ago, it rang in an era of business automation. Two decades later, in the eighties, standards began to converge towards the UN/EDIFACT standard, which set the foundations for global data exchange between businesses. Today, 95% of documents exchanged electronically in air freight use a “dialect” of EDI called Cargo IMP (interchange message procedures) or Cargo XML, its descendant and successor. Over a period of decades, EDI has steadily gained mainstream adoption throughout logistics worldwide as the preferred means to exchange information and data in the B2B transaction process.
EDI has facilitated “frictionless” commerce, helped to eliminate manual paper processes, and delivered significant and persistent broad supply chain efficiencies through automation. Although the overall volume of EDI message traffic worldwide continues to grow, organizations typically are not expanding their use of “classic” EDI formats, such as X12 and EDIFACT, to new use cases. When organizations deploy new applications of these EDI formats, it is normally to support an additional common document type, such as an ASN, with one or more specific partners.
According to industry experts, Ground Handlers in several regions are choosing specific tech modules and applications as well as holistic solutions like cargo community systems that would enable them to comply with the expectations of global carriers to communicate in IATA recommended standards. But is EDI going to be the future of communication in air cargo? Will there be paperless data exchange? Let us explore!
How EDI works?
In EDI, the first step is to collect and organize data. Let us imagine, Freight Forwarder is sending online Cargo Booking Request to airline. The system would generate an electronic document instantly based on the given inputs from the user. The same can also be imported from a spreadsheet etc. Then comes the process of translating the document to an EDI format. Finally, comes the process of transmission. Now, the receiving stakeholder let us say, Airlines would perform the same process in reverse. All of this happens in a matter of seconds so that the exchange of data is rapid, and it promotes efficiency. Leading ground handlers and airlines are widely using EDI in IATA recommended formats to enable efficiency in operations.
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Challenges in EDI implementation
Even though, EDI enables rapid transmission and reception of data, several ground handlers in USA are resisting to adopt it. Why? This is because of the exorbitant implementation cost involved that is usually slow and complex in nature. Also, after every update, the workforce needs to be trained on utility. This means the entire process might consume a hefty sum of the operational expenses and the concept of rapid communication and cost saving at no cost is lost. Experts say involvement of multiple stakeholders are involved and it becomes hard to get all of them on the same page. In addition to this, lack of standardization, lack of willingness as well as stakeholders not realizing the cost of non-adoption of e-AWB are other challenges involved.
How Cargo Community System can help?
In a Cargo Community System (CCS), right after every document is created, an EDI message is triggered based on the user inputs to the next stakeholder in line. EDI data transmissions help to expedite and resolve international customs check points, certificates of origin etc. Requirements for increased documentation presents a great opportunity to provide EDI and data exchanges support services between shippers and airline carriers. Some IT solutions providers offer EDI as an inbuilt feature and that comes with regular updates from the vendor. Therefore, a ground handler or an airline need not spend much on implementation and offer training separately as some of them provide an easy-to-use interface.
Is it the future?
With already a large number of ground handlers choosing EDI either as a separate module or as a holistic module that is part of a cargo community system, it is without doubt becoming a norm in the industry. However, resolving the huge implementation cost involved in standalone modules/applications might be a bottleneck. The same can still be sorted with a cargo community system in place. The sooner stakeholders understand the same, the sooner all such bottlenecks will be resolved.
Learn more on Cargo Community System