CHAPTER 1.4 IATA e-Freight: Taking the Paper Out of Air Cargo

International trade is a key contributor to global eco-nomic growth. Open trade policies encourage trade, as does reliable, fast, and cost-effective transport. In fact, there is evidence to suggest that reductions in transport costs have an equal or greater positive effect on international trade than lower tariffs.1 Different types of transaction costs related to trade are captured in the Enabling Trade Index discussed in Chapter 1.1 of this Report.This chapter examines IATA e-freight, an initiative that improves the effectiveness and efficiency of international airfreight and the potential of e-freight to increase international trade in goods and services. IATA e-freight replaces paper documents accompa-nying airfreight shipments with electronic messages.This facilitates the movement of goods by air; saves billions of dollars for the supply chain; and offers a modern, more environmentally friendly alternative to traditional air cargo shipments. The air cargo industry almost exclusively relies on paper-based processes to support the movement of freight. These paper-based processes are not cost effective, nor do they serve the pressing needs for security and speed that are the key characteristics of air cargo. In December 2004, the International Air Transport Association (IATA) Board mandated IATA to lead an industry-wide project with the aim of taking paper out of the air cargo supply chain and creating the conditions needed to replace the existing processes with new ones that rely on the electronic exchange of information to facilitate the movement of freight.Thus an industry action group was established that included IATA, the World Customs Organization (WCO), airlines, and freight forwarders to lead the industry in migrating to a paper-free process. IATA established a project team to identify those locations that had the right regulatory and technical environments to work in an electronic environment while demonstrating the willingness to migrate from paper-based to an electronic process. Six pilot locations were identified as having met these criteria: Canada