Cathay Pacific Case Study - Highlights e-freight The benefits of 100% e-AWB and e-freight implementation Cathay Pacific Case Study

1

e-freightThe benefits of 100% e-AWB and

e-freight implementationCathay Pacific Case Study

2

Background

HistoryHistory

ContextContext

ScopeScope

The e-freight project was launched in 2006In 2007 and 2008 pilots were conducted. In 2009 and 2010 an initial network of e-freight routes was developed and standards supporting the defined business process were createdIn 2011, the e-freight project entered the phase of industry adoption

The e-freight project was launched in 2006In 2007 and 2008 pilots were conducted. In 2009 and 2010 an initial network of e-freight routes was developed and standards supporting the defined business process were createdIn 2011, the e-freight project entered the phase of industry adoption

Stakeholders involved in the air cargo supply chain have an interest in understanding how the expected benefits of e-freight can be realizedIn 2012, we now have the possibility of looking at real cases tounderstand how the benefits are realized by leading stakeholders

Stakeholders involved in the air cargo supply chain have an interest in understanding how the expected benefits of e-freight can be realizedIn 2012, we now have the possibility of looking at real cases tounderstand how the benefits are realized by leading stakeholders

This document presents the case of Cathay Pacific implementation of e-freight and of 100% e-AWB (first to achieve 100%) in Hong-KongThis document presents the case of Cathay Pacific implementation of e-freight and of 100% e-AWB (first to achieve 100%) in Hong-Kong

3

MethodologyReceive freight at the airport

Perform incoming checks

Sort documents

Perform outgoingchecks

Deliverto the

aircraft

Repatriate documents & dispatch them

Retrieve documents

for consignee

Export process

Import process

Collate all air waybills for billing

Perform analysis &

checks

Accounting process

Archive documents

Destroy documents

Archive process

Invoice& manage

discrepancies

Receive freight at the airport


Sort documents


Deliverto the

aircraft

Repatriate documents & dispatch them

Retrieve documents

for consignee

Export process

Import process

Collate all air waybills for billing

Perform analysis &

checks

Accounting process

Archive documents

Destroy documents

Archive process

Invoice& manage

discrepancies

Process analysis of the existing business in

paper environment

Process analysis of the existing business in

paper environment

1. Formalise and describe activities for main processes in a paperenvironment (including key metrics and time spent per activity)

2. Identify the constraints and their impacts on the business

1. Formalise and describe activities for main processes in a paperenvironment (including key metrics and time spent per activity)

2. Identify the constraints and their impacts on the business

3. Identify the time savings per activity in various e-freight scenarios4. Calculate the overall time saving benefits per process & scenario5. Identify the additional non quantitative benefits

3. Identify the time savings per activity in various e-freight scenarios4. Calculate the overall time saving benefits per process & scenario5. Identify the additional non quantitative benefits

e-freight benefitse-freight benefits

4



Sort documents


Deliverto the

aircraft

Export process



Sort documents


Deliverto the

aircraft

Export process

Example of Constraints in paper environment

1 2 3 4 5

Two deliveries: cargo + documentsDrivers may queue up to an hour !May overlook some hidden dangerous goodsManual task that remain time consumingRisk of wrong data capture, etc.

Airline and Freight Forwarder reduced efficiencyPotential aircraft safety issuePotential incorrect billing to Freight ForwarderRisk of customs hold cargo and delay delivery to consignee

Two deliveries: cargo + documentsDrivers may queue up to an hour !May overlook some hidden dangerous goodsManual task that remain time consumingRisk of wrong data capture, etc.

Airline and Freight Forwarder reduced efficiencyPotential aircraft safety issuePotential incorrect billing to Freight ForwarderRisk of customs hold cargo and delay delivery to consignee

Main constraints & issuesMain constraints & issues

Main impactsMain impacts

2

3

5

Example of improvements in e-freight environment

The Cathay Pacific Export office reduced to the minimum!Many activities drastically simplified!

Data displayed on screen with functionalities developed to perform automated checksFacilitate human detailed checksTime savings and efficiency in controlIf verification not positive, send of message to forwarder specifying reasons to simplify investigationsAccess risk of dangerous goods being present

The quality control activity takes more time

The Cathay Pacific Export office reduced to the minimum!Many activities drastically simplified!

Data displayed on screen with functionalities developed to perform automated checksFacilitate human detailed checksTime savings and efficiency in controlIf verification not positive, send of message to forwarder specifying reasons to simplify investigationsAccess risk of dangerous goods being present

The quality control activity takes more time

Optimized processOptimized process

2

Closed desks Lastdesk

Closed desks Lastdesk

2

RemarkRemark

6

Extract of

the study

Workload Frequency

Retrieve and check the documents +++ +++ Partly Eliminated

Performs a quality check on electronic FWB and FHL data (no missing data and special documents…) + +++ More effort

Detaches the shipper copy of the Master Air waybill and gives it to the driver. Detaches the airline copy for filing and one copy for airline finance office for billing.

+ +++ Eliminated

Detaches another copy of the Master Air Waybill for the airline and one copy of House Manifest for customs report process + +++ Partly Eliminated

After acceptance, receive correction advise from the freight forwarder for data amendment (Charge Correction Advice CCA) +++ + Partly Eliminated

Deliver the Master Air waybill and the House Manifest to the team in charge of loading data + +++ Eliminated

Key in data in systems from the Master Air waybill and House Manifest into airline cargo system +++ +++ Partly Eliminated

Update the air waybill record in the warehouse systems (Inform the warehouse to provide the ok to start physical cargo build-up or flight manifest work)

+ +++ Eliminated

Sort rest of received documents + +++

Retrieve documents for preparing flight manifest + +++ Eliminated

Container build up instruction based on booking list and received air waybills + ++

Group all documents for the flight, to be ready for checks + ++

Paper environment 100% e-AWB + e-House Manifest

Perform incomingchecks for acceptance

Sort documents

Eliminated

More effort

Eliminated

Eliminated

Partly Eliminated

Eliminated

Partly Eliminated

Eliminated

Eliminated*

Eliminated

Eliminated*

100% e-AWB + e-House Manifest +

100% e-freight

Partly Eliminated

More effort

Eliminated

Partly Eliminated

Partly Eliminated

Eliminated

Partly Eliminated

Eliminated

Partly Eliminated

Eliminated

Partly Eliminated

100% e-AWB + e-House Manifest +

50% e-freight

Improvement in...e-freight environmentTask by task analysis

Remaining tasks

7

Global productivity gains for airlines & GHAsThis graphics highlights productivity gains for the overall document handling process, which includes airline and Ground Handler (GHA) activities.Productivity gains between airlines and GHAsdepends on how both roles are assigned to each other.

*Due to additional effort spent for somedestinations where two copies of AWB are still required (printed) by the consignee + be signed for confirmation of pick up the cargo.

SCENARIO 1100% e-AWB

+ 100% e-House Manifest





+ 50% without pouch



+ 50% without pouch



+ 100% without pouch




Import processImport process

Accounting processAccounting process

Archiving processArchiving process

Export processExport process 27% 38% 52%

-2%* 19% 53%

12% 12% 12%

50% 50% 50%

TOTALProductivity gainsTOTALProductivity gains 19% 30% 48%

In progress… In progress… Full paperless







+ 50% without pouch



+ 50% without pouch







Import processImport process

Accounting processAccounting process

Archiving processArchiving process

Export processExport process 27% 38% 52%

-2%* 19% 53%

12% 12% 12%

50% 50% 50%

TOTALProductivity gainsTOTALProductivity gains 19% 30% 48%

In progress… In progress… Full paperless

8

Scenarios description & status

Scenario 1Scenario 1



100% e-AWB and e-House Manifest + 50% shipments without pouchCorresponds to full e-freight implementation with business partners on current document scope. Should be achieve-able on current e-freight trade lanes

100% e-AWB and e-House Manifest + 50% shipments without pouchCorresponds to full e-freight implementation with business partners on current document scope. Should be achieve-able on current e-freight trade lanes

100% e-AWB + 100% e-House Manifest100% e-AWB + 100% e-House Manifest

100% e-AWB + 100% House Manifest + 100% without pouchFull paperless will be achieved when all documents can be electronic on all trade lanes

100% e-AWB + 100% House Manifest + 100% without pouchFull paperless will be achieved when all documents can be electronic on all trade lanes

Inprogress …

Inprogress …

In progressIn progress

Full paperless

Full paperless

30%30%

19%19%

48%48%

SavingsSavings

9

Additional benefits (1/2)

Reduce costsfurther

Reduce costsfurther

Improve customer service

Improve customer service

Provide an improved & efficient service to the freight forwarders by simplifying their paper handling work and reducing their downtimesPro-actively alert freight forwarder on document issues to let them adjust quickly and ensure loading of cargo as scheduledBetter visibility for freight forwarder and stakeholders by enhanced cargo track & trace solutionEliminate the management of discrepancies due to missing documents

Provide an improved & efficient service to the freight forwarders by simplifying their paper handling work and reducing their downtimesPro-actively alert freight forwarder on document issues to let them adjust quickly and ensure loading of cargo as scheduledBetter visibility for freight forwarder and stakeholders by enhanced cargo track & trace solutionEliminate the management of discrepancies due to missing documents

Reduce storage costs by eliminating paper documents and free up valuable office spaceEliminate costs of paper destruction and recycling in e-freight environmentReduce outsourcing cost at out stations by eliminating paper handling

Reduce storage costs by eliminating paper documents and free up valuable office spaceEliminate costs of paper destruction and recycling in e-freight environmentReduce outsourcing cost at out stations by eliminating paper handling

Sustain development

Sustain development

Be eco-friendly and boost company status in the community by being part of the Green RevolutionBe eco-friendly and boost company status in the community by being part of the Green Revolution

10

Additional benefits (2/2)

Increaselevel

of security

Increaselevel

of security

Respond faster to regulator

bodies

Respond faster to regulator

bodies

Increasequality of

information

Increasequality of

information

Secure the access of dangerous goods information and special handling requirements for the shipment Become flexible enough to be compliant with regulations needs byresponding properly and in a fast manner to customs demands

Secure the access of dangerous goods information and special handling requirements for the shipment Become flexible enough to be compliant with regulations needs byresponding properly and in a fast manner to customs demands

Reduce cycle timePerform pre-clearance to the customsSubmit data with better quality to customsContribute to the advanced reporting requirements by providing data in advance and be compliant with Governmental and security regulators

Reduce cycle timePerform pre-clearance to the customsSubmit data with better quality to customsContribute to the advanced reporting requirements by providing data in advance and be compliant with Governmental and security regulators

Reuse customer data in an automated wayImprove data accuracy, integrity, validity, consistency, criticality and information completenessUse of electronic data instead of paper that can be lost

Reuse customer data in an automated wayImprove data accuracy, integrity, validity, consistency, criticality and information completenessUse of electronic data instead of paper that can be lost

11

e-AWB accelerates overall e-freight growth

Cathay Pacificin Hong Kong

shows that e-AWB wasthe first stepto increase

e-freightvolumes

Cathay Pacificin Hong Kong

shows that e-AWB wasthe first stepto increase

e-freightvolumes

Cathay Pacific cutover 100% e-AWB in HKG on January 2011

12

What made this implementation possible?

Favorable environment

Favorable environment

Investment in

Technology

Investment in

Technology

Process optimization

Process optimization

Favorable environment with the local market, especially regulatory and governmental support (customs)Favorable environment with the local market, especially regulatory and governmental support (customs)

Investment in Technology (including portal for small forwarders with no EDI capability) and use of the latest versions of the Messaging Standards by Cathay and partners

Investment in Technology (including portal for small forwarders with no EDI capability) and use of the latest versions of the Messaging Standards by Cathay and partners

Adoption of a Single Process solution by Cathay Pacific for the freight forwarder (i.e. adopt a process that covers all trade lanes, including Warsaw trade lanes)

Adoption of a Single Process solution by Cathay Pacific for the freight forwarder (i.e. adopt a process that covers all trade lanes, including Warsaw trade lanes)

Stakeholder involvementStakeholder

involvementBest Practice project management approach including formalized project plan, involvement of all relevant stakeholders from the cargo community, and transparent communication

Best Practice project management approach including formalized project plan, involvement of all relevant stakeholders from the cargo community, and transparent communication

13

Project management and solution development life cycleInstallation of printer software on PCs at outstationsSystem enhancements based upon outstations requirementsSystem problems investigation and solvingTechnical support during the pilot run and transition phase

e-fr

eigh

t bus

ines

s

Management of Change & Network Rollout

Solution Integration

Business ProcessTransformation

IT Strategy & Governance

Ris

k M

anag

emen

t&

Sec

urity

Org

anis

atio

nStakeholder Management

Operational Management & maintenance

e-fr

eigh

t bus

ines

s

Management of Change & Network Rollout

Solution Integration

Business ProcessTransformation

IT Strategy & Governance

Ris

k M

anag

emen

t&

Sec

urity

Org

anis

atio

nStakeholder Management

Operational Management & maintenance

The main activities to consider during the integration of the solution are the updates of information system(s) & interface(s) and the management of all technical aspects such as:

e-freight implementation must be managed as a comprehensive business transformation

14

1Q 20121Q 2012

2Q 20122Q 2012

3Q 20123Q 2012

Singapore, Malaysia and Dubai Singapore, Malaysia and Dubai

Korea, Australia and CanadaKorea, Australia and Canada

Japan and TaiwanJapan and Taiwan

4Q 20124Q 2012 Europe and ThailandEurope and Thailand

Cathay Pacific e-AWB Rollout Planfor oversea stations where feasible(as of June 2012)

15

Key sharing from Cathay Pacific

Benefitsfor all if…Benefits

for all if…Obvious benefits to Shippers, Forwarders, Airlines and GroundHandlers to implement e-FreightObvious benefits to Shippers, Forwarders, Airlines and GroundHandlers to implement e-Freight

Benefits can only be gained by IT automation and internal process review and re-engineeringInitial investments are required by each member

Benefits can only be gained by IT automation and internal process review and re-engineeringInitial investments are required by each member

Airline to take lead to implement e-AWB with ForwarderForwarder to support airline for e-AWB rollout

Trust EDI Agreement from airlineOwn the responsibility to send FWB and FHL dataCutover according to airline set target date

Forwarder can take the lead to implement e-Freight with their Shipper and ConsigneeIATA take lead to promote e-freight adoption with Customs and Warsaw countries

Airline to take lead to implement e-AWB with ForwarderForwarder to support airline for e-AWB rollout

Trust EDI Agreement from airlineOwn the responsibility to send FWB and FHL dataCutover according to airline set target date

Forwarder can take the lead to implement e-Freight with their Shipper and ConsigneeIATA take lead to promote e-freight adoption with Customs and Warsaw countries

Stakeholders invest

Stakeholders invest

Stakeholders are fully

engaged and support

overall e-freight

Stakeholders are fully

engaged and support

overall e-freight

Documents

Cathay Pacific Case Study - Highlights e-freight The benefits of 100% e-AWB and e-freight implementation Cathay Pacific Case Study