More than words

The 7th Digital Cargo Conference by IATA was a good beginning for more to come.

More than words

First of all, we'd like to express our gratitude to IATA for the initiative and a great overall performance. Namely Henk Mulder deserves the honor for his excellent hosting. Thank you, Henk.

The conference itself laid the foundations for a promising restart of wholehearted community and collaboration. But this was only the beginning. Words must be followed by deeds. We are seriously willing to participate and contribute in the future. Also with deeds. But first, here are our words. The speech of Christian Riege at this year's conference:

Time for deeds. Let's do it. Together. Now.

Read the transcript

Slide 1 [00:00–01:13]

Good morning everyone.

Thank you Henk for the invitation for letting me speak again. I was here last year. Looking into the audience I see a lot of familiar faces. I see a lot of new faces also. It's a record attendance.

And Henk introduced me shortly. I am Christian Riege, Senior Vice President Software Development for Riege Software and we do operational software for freight forwarders.

For the people who are not in the room: as we saw yesterday, there are 6.000 freight forwarders and 5 are here. That's less than 1 per mill.

So okay, I have fifteen minutes and I will divided into three parts. First, I want to talk about what is covered on digital connect or cargo connect.

Then I want to give a brief overview of the following two talks which will be held by Tahir and Kunal who give an exemplary of what we've been working on.

And then I will give a brief example that everybody here is well aware of, I know, I talked to a lot of people yesterday. Everybody knew it.

What happens if you do not collaborate together if you do not network, if you hide behind your walls?

Slide 2 [01:13–01:58]

The Cargo Digital Connectivity Working Group, it's a reanimation actually of the CCS working group and the last time the CCS working group got together was at the end of the nineties.

Who was already in the industry at the end of the nineties here?  I see, maybe twenty percent.

So after twenty years Tahir had a great idea – let's start this again, let's get together, let's talk, let's create an industry forum for the participants to get together and simplify things.

Network to exchange data, to exchange messages, meaning to simplify the business strategy that IATA is deploying.

Slide 3 [01:58–02:51]

The group consists of different parties, there's airlines, IT providers like us, there's CCSs. All in all, it's a very inhomogeneous group.

For the development of standards, yet, we have to do something though it's very hard within the group to work together at all.

It can be successful, but if you see where everybody is standing, knowing we have to work together, we have to put our individual interests on the backside and focus on the common interests to get the community forward.

So one of the examples of the conflicts that we have were shown in Montreal.

We decided for a secretary, which is Tahir, but we did not succeed to agree upon the chairmen within the group because of commercial standpoints.

Slide 4 [02:51–04:39]

One of the big issues is, how do we include the forwarders?

Yesterday, Thorsten from Lufthansa Cargo said that the e-Air Waybill penetration is at fifty three point six percent – after the seven years.

That is not something to write home about. 

It's quite low.

How do we get the other forty seven percent, how do we reach them?

If you look at air cargo by volume, by its actual tonnage, the top ten forwarders have less than twenty percent of the market.

So eighty percent of the market is with the rest. With the five thousand nine hundred and ninety something that are still left.

What happens with those?

We as a full service provider for them we provide them with the full software set, they have nothing on the computer, we provide a software as a service from the cloud.

They do not have IT departments, they have micro IT departments, they have one guy who orders the computers who installs the operating system and then that's it.

There's no one you can talk to like to an airline and say ‘Give me your data.’ – They go like ‘What?’

You actually have to talk to us or your CCS providers to do that.

This is very, very important to consider if you want to get the others on board, because you're not really talking their language. They do freight forwarding, they are not IT companies.

We have a lot of clients who are like two, three people shops. They operate out of a basement with a phone and computer. And that's all of their forwarding logistics operations. They outsource everything.

These are the guys that you have to get on board, that have to be enabled to actually do that. And that process of onboarding is hard.

This is just a small overview of what we are doing, what we are working on.

Slide 5 [04:39–05:58]

The first issue that we tackled will be presented by Tahir in the next session which is called EPIC, an acronym, Tahir will explain later.

Afterwards Kunal from Qatar will give an explanation of the proof of concept that has been implemented and that we have overcome the challenges of working together despite the difficulties involved.

The status quo which we have today is, if I want to connect a forwarder to an airline I have to talk to the CCS. Or we as their software provider talk to the CCS.

The good thing is, the whole process is electronic. The bad news is, by electronic I mean excel sheets, PDF's and emails between humans.

Signing up a forwarder with an airline doesn't take four minutes, it doesn't take four hours, it doesn't take four days, it takes four to six weeks.

So a turnaround time of six days looks quite attractive, if it takes me four to six weeks to get somebody going just to get the e- Air Waybill, the communication going.

I mean, we live in the digital era and this should not be that complicated.

Slide 6 [05:58–06:48]

If you look at it, the technological approach is simple: the digital phone book in a single senators format compatibility to differing solutions across the industry. This is easy.

Hard is what Ryan from Airspace Technolgies presented yesterday, the routing, the thirty thousand routes that explode exponentially, that's hard.

The solution we talk about today is simple. From a technical perspective we talked about it in the group. This is over within a day or two. Everybody agrees we do it like this and that's easy.

The real difficult part is putting that into the business organization. The organizational changes like what are people going to do who are not going to answer the emails to coordinate all the data exchange.

Slide 7 [06:48–07:30]

How do we get different parties working together? Everybody sits there, has its own little territory with the guard dog so the competition stays out, and the customers stay in.

Or you have a nice little castle and you have a moat and a moat serves both, to keep the attackers out as well as keep the citizens in.

Don't let them see the other castles, they might be as nice as yours or they might even be nicer.

And that is very, very difficult to overcome, this castle moat thinking.

What happens if you build a large moat?

Slide 8 [07:30–09:04]

If you look at the telecom industries, the carriers, it was incredibly hard in the nineties and in the early two thousands to change from carrier A to carrier B.

They made it difficult because you could not take your phone number. If you got a new carrier, you got a new phone number.

It's a complete nightmare having to tell everybody in your phone book ‘Hey, I've got a new number.’

That process takes years because people would still have the old number. They will have forgotten the message. They can't contact you.

It's an absolute nightmare.

Then somebody came along, the regulation booth in the EU and they said:

‘This should be free. This should be a service that you provide, so we regulate you. You do this, or you don't get a license.’

Same with roaming fees that was a real revenue stream of the carriers, that was billions of euros.

Still the regulatory body said ‘Well we can't cut your revenue stream from a billion to zero in one year. But we'll do it gradually over five years.’

And today, I'm here in Switzerland, I can call everybody, it's my local tariff, I can use the internet at my local tariff.

People here from the U. S. of from Australia, they know how expensive it is with the roaming. I was in the US last week, and for fifty kilobyte of data they wanted fifty euro cents, for fifty kilobytes!

These days, that's not even an email.

Slide 9 [09:05–10:22]

Another example is the regulation of the banking industry. The banks also didn't like it.

But now, there's an interchange of data between different banks possible. Regulated by the EU. Banks have to implement it or they don't get a license.

Very simple rules.

That's what happens if you build a moat. Then some regulatory body comes along and regulates you.

Now, IATA can't do regulations. They can do recommended practices, but that's about it.

But maybe somebody else will come along, and the question is whether you keep that and wait for somebody to tear down your moat or drill a hole in your wall.

Or you actually look at your castle and say ‘Hey, people want to stay here because my side is greener, my grass is greener. I have the nicer flowers, I have the nicer apartments.’

You could also show them the other side where the grass is kind of shabby and the driveway is not that nice.

And this is much better.

So what actually is your unique selling proposition, your USP? That is your service. And it's not some commodity you provide.

Coming back to the beginning.

Slide 10 [10:22–10:50]

We have conflicting interests, it's a matter of perspective.

Some people say ‘I'm really afraid that what I have I will lose because there's competition and there's a free market. You can freely roam between different providers.’

And there's the second perspective which says well, it would be better if we enforce partnerships of this collaboration even if there is competition on the business level.

It's a matter of framing the problem. Because only the frame defines what is outside and what is inside.

Slide 11 [10:59–12:07]

Let's get to the real world example. The Chinese customs incident.

In November of twenty seventeen Chinese customs declared that from June first two thousand eighteen they require a business identifier the V. A. T. number or the local Chinese number on every address on the air waybill.

Who was affected by that?

(Hands raised in audience)

I thought so.

Who was happy about the whole situation?

(One hand raised in audience)

One.

(Laughs)

You're freight forwarder, why were you happy?

(Answer: “Opportunities”)

Opportunities. Interesting. For everybody else it was a nightmare.

For the airlines it was a nightmare for other freight forwarders it was a nightmare, for us as an IT service provider it was a nightmare, and I bet for all of the other IT service providers and all of the others CCSs it was a nightmare.

Let's look at what happend.

Slide 12 [12:07–15:10]

At the end of twenty seventeen that decree comes out. And it says, first of June this is going to go live. So everybody gets busy by, I think, beginning of May. As is usual because as long as there are still months to go so why should we start, maybe this is not coming, maybe something will change.

So by end of May IATA has a proposal of how to put the data fields into the e-Air Waybill and we adopted that twenty eighth of May and it becomes effective first of June. For us that meant we have to do the necessary changes in our software and roll that out to all of our customers within four days. People experienced in software rollouts know, this is quite a challenge.

And then. One thing that happened was that we had one airline who said we don't care about those specifications from IATA, we do our own. That was fun, because then we had to do two implementations, one for airline A and one for everybody else who was doing the IATA.

Well, we put that into effect and it was working quite okay and then on twenty first of June, three weeks later, we discover that two airlines just refuse the new codes that have been defined by IATA. So big surprise what do we have to do?

Well, luckily we know over a forwarder of ours who is in the room.

(One hand raises)

Yeah, thanks, Klaas.

We had a contact with them and we talked to them and they were like ‘Yeah, well you have to do this’, and then, okay, we did more programming with them. On fourteenth of July the IATA resolution becomes effective.

And again, fifteenth of July airline B still refuses them. So you were not able to transfer any electronic Air Waybills to them. They will just not accept the valid messages as defined by IATA.

And on the twentieth of August we finally we got a notification not from the airline but from the forwarder ‘Hey you can now really work with the airline, and you can you can remove your work around and they accept the official messages.

And airline C still refuses the new codes up to the state and for us, there's there's no real contact with them. They sent an informational letter to their forwarders which is from the sales department. When we call the sales department, they're like ‘Yeah well, we got this from or technical department. We have no clue. Do you have a contact?’ No! So no e-Air Waybill for this airline up on to the state because it's just impossible to do.

So everybody involved in this really got caught with their pants down. And you don't want to get caught with your pants down. Except maybe in a Skype call – sitting, working from home.

(Some late laughs)

Ah, now everybody knows.

Slide 13 [15:10–15:37]

So, just a simple call to action: Overcome the selfhood, don't think that your castle is the nicest or you have to pretend that it's the nicest. And I know that it's hard to go along this way, but it doesn't really help if you think that you have to isolate yourself to keep your business and we should all pull together, work together and not drift apart.

Slide 14 [15:37–16:04]

And I would like to close this with a quote from Henry Ford, we verified this a couple of times that it's really from him because the one with the faster horses is not. Is that:

  • Coming together is a beginning – this is a beginning, we all came together.
  • Staying together is progress – I'm seeing a few faces again that's good.
  • And Working together – then – is the success.

Slide 15 [16:04–16:14]

And with this I would like to close.
And thank you everybody.

Seeing is believing.

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