CgoXchange proposal for moving small air freight forwarders to e-freight.

1. Moving Small Air Freight Forwarders to e-Freight
A plan for substituting electronic communication and
documents for telephone calls and paper in one sub-section of
the air cargo industry
February 12, 2013
CgoXchange is a Division of Sirius Business Solutions, Inc.
Silicon Valley, CA USA

2. Summary
The air cargo industry has reached consensus that it should transfer its
reliance on telephones and paper to electronic communication and
documents. Doing so is an enormous task requiring varying strategies for
disparate market segments. Success requires an “all hands on deck”
approach.
Goal
The Global Air Cargo Advisory Group (GACAG) has set a goal of universal
eAWB usage by the end of 2015. CgoXchange proposes to serve as the
mechanism for fulfilling the GACAG goal for the small forwarder
subsection of the market.
Small forwarder reluctance and resistance to e-freight is not expected
to change. Logical paths for small forwarders migrating to paperless
air cargo documentation are:
1. Governments mandating electronic documentation
2. Airlines mandating electronic documentation as a
condition for carriage, or
3. Small forwarders are sufficiently incented to use e-
freight
Government mandate. Short of a United Nations proclamation, it is
unlikely that all governments will simultaneously mandate eAWBs.
Theoretically, each government could mandate eAWBs as it develops
processing capabilities and bilateral or multilateral political
agreements. But, is this likely?
Airline mandate. It is competitively risky for an airline to mandate
electronic documents unless many airlines do so. Through IATA,
airlines could establish a date for simultaneous migration to eAWBs. If
coordination is possible, the migration date will be when the last airline
is prepared for the migration.
CgoXchange’s coordinated plan incents the small forwarder by
providing ad hoc rates in exchange for booking and documenting ad
hoc shipments using the method of the carrier’s choosing. In the
CgoXchange plan, incentives to small forwarders cost carriers nothing.
©Copyright 2013, Sirius Business Solutions, Inc. 2

3. Industry Overview and Situation Analysis
Ten months of research with airlines, freight forwarders, associations,
trucking companies and shippers indicates that enthusiasm for moving to
e-freight is limited. Industry associations and leaders are keen to
transform to e-freight but the remainder of the industry is not.
Local airline staff (not seconded from their head offices) and small
forwarders find it difficult to imagine what waits on the other side of a
paradigm change. Given the enormity of the task, the industry would
benefit from making a united effort in promoting e-freight.
Nevertheless, the industry will probably not ascend e-freight steps in
unison. Using different methods and timetables, each airline has
developed and will continue developing e-freight capabilities. As the
industry morphs from analog to digital communication and documents,
forwarder/carrier data exchanges will be via various means.
Airline strategies for establishing electronic links with larger forwarders
will differ from strategies linking smaller forwarders. Arguably, linking
with small forwarders will be more challenging.
That the air cargo industry operates in a paper environment one day and
digital environment the next is improbable. More likely is a gradual and
steady migration from paper to electronic AWBs. Accomplishing this task
requires flexibility to address the disparate users and their different data
processing abilities.
Few small forwarders currently participate in e-freight and few others
desire to participate. The success of e-freight however, depends upon
universal participation.
The behavior of participants in other industries suggests the likelihood
that small forwarders will enter the electronic world modestly and then
expand their participation. They will try remedial e-freight functions
before becoming comfortable taking the next steps. With new
technologies, humans tend to “crawl” before “walking” then “running”.
So far, most forwarders are resisting crawling into e-freight.
With few exceptions, small forwarders have neither the ability nor the
desire to begin generating eAWBs. They perceive a relative advantage
from sustaining verbal communication and paper documents. Most small
forwarders believe e-freight represents shifting the air cargo data capture
workload to them from airlines.
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4. Small forwarders have not judged e-freight’s value proposition to be
sufficiently compelling.
Industry Consensus
The Global Air Cargo Advisory Group (GACAG) has four priorities and e-
Commerce is one of them. GACAG includes representatives from four
industry participant groups, The International Federation of Freight
Forwarders (FIATA), Global Shippers Forum (GSF), the International Air
Transport Association (IATA) and The International Air Cargo Association
(TIACA).
The GACAG e-commerce
committee spent two years
developing The GACAG e-freight
Roadmap which accurately
describes the industry’s current
position and desired e-freight
destination but does not identify
the journey’s path.
Nearly everyone participating in air cargo agrees moving to e-freight is
“the right thing to do” but, no consensus exists for how to accomplish the
task.
CgoXchange’s Plan for Small Freight Forwarders
CgoXchange offers a cooperative plan for the air cargo industry to
transition small forwarders to e-freight. CgoXchange will provide
dashboard access to air cargo applications the same way smart phones
provide dashboard access to applications that forwarders use in their
personal lives. CgoXchange’s App Store will function similarly to app
stores of Google and iPhone.
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5. CgoXchange created one application for the purpose of encouraging small
forwarders to move toward electronic booking and air waybills. The
criterion for creating this app’s function was its nearly universal
applicability for small forwarders and the likelihood that its adoption
would meet with least resistance. That function is ad hoc pricing.
The ad hoc pricing app transforms a function currently performed via
telephone to a digitally documented process. The ad hoc pricing app
provides value by exchanging discounted rates for electronic bookings
and documents.
Airlines have traditionally provided ad hoc pricing without asking anything
in return, other than shipments. CgoXchange’s plan calls for booking ad
hoc-rated shipments and/or documenting them in the manner of the
carrier’s choosing. In the beginning, carriers may require a telephone call
to book the shipment but as development progresses, airlines can begin
requiring electronic booking and documentation in order to receive ad hoc
rates.
Important Note and Disclaimer: CgoXchange facilitates the exchange
of pricing data between consenting air cargo buyers and sellers. No
pricing information is viewable without the secure username and
password of the appropriate buyer or seller. CgoXchange takes no part in
the rate determination. Anti-competitive practices are not condoned.
Key Success Factors
 Sufficient air carrier participation
 Sufficient willingness from small forwarders
CgoXchange Revenue Model
CgoXchange’s revenue will be generated through subscriptions and
advertising. Shippers, forwarders and trucking companies will pay
subscription fees to use the CgoXchange tool. Airlines however, will pay
no fees. Banner advertising will be offered around the border of
dashboard pages for additional revenue.
The Vision
Once all parties are participating meaningfully, the future of e-freight
looks bright. CgoXchange believes that adoption of e-freight by small
forwarders will be similar to the adoption of personal online banking.
Most will find e-freight indispensible once tried initially. As with online
©Copyright 2013, Sirius Business Solutions, Inc. 5

6. banking, basic services are typically tried first and, when they are found
acceptable, users try more complex functions.
It is generally believed that
once the industry has
universally adopted the use
of electronic air waybills, e-
commerce progress will
accelerate.
The creation of unlimited application programming interfaces (APIs) for
automatically exchanging data between systems of authorized parties is
made possible by the use of extensible markup language (XML). The
potential of e-freight will be realized as more APIs are developed to
seamlessly and securely exchange data, reducing time and human errors.
Moving Forward
CgoXchange’s plan moves
forward if and when a
sufficient number of carriers
choose to participate. All
levels and departments of
the air cargo industry need
to mobilize to accomplish this
task since small forwarders
are unlikely to move to e-
freight without adequate
incentive.
CgoXchange’s plan will be implemented first in select English speaking
markets. CgoXchange’s first app will be developed, launched and tested
in other languages and markets over a 24 month period. The digital air
cargo dashboards and app store will be developed throughout 2013 and
launched in early 2014.
©Copyright 2013, Sirius Business Solutions, Inc. 6

7. The first app, for ad hoc pricing, will be the mechanism for incenting
small forwarders to book and/or document air cargo shipments
electronically as their chosen carrier has reciprocal abilities. Airlines
should evaluate CgoXchange as a tool for moving small forwarders to e-
freight while considering the impacts to their current system for ad hoc
pricing. Moving to e-freight will have ripple effects on many business
processes. Airlines must weigh the promised benefits of e-freight vs. the
disruption to their business from change. Change does not occur without
disruption, even when everyone agrees change is necessary.
Local language versions will entice small forwarders worldwide. Local
language versions will be developed and launched with guidance from the
carriers operating in those markets. Besides English, probable language
versions will be:
Spanish Chinese Russian Japanese
Korean Hindi Arabic Portuguese
German Malay Vietnamese French
Turkish Italian Thai Dutch
Eventually, CgoXchange should be available in 17 languages. The
possible timeline for the world’s small forwarders to achieve the goal of a
paperless airport to airport air cargo environment by the end of 2015 is
shown below.
March 2013
Identify the carriers intending to participate. If critical mass is
achievable, the next steps will be taken. If critical mass is not
achievable, the plan is tabled.
If the plan moves forward, launch markets will be selected that reflect
guidance from carriers. Suggested inaugural markets are United States,
Canada, the United Kingdom and Ireland.
April 2013
Pre-launch efforts will commence in launch markets. These efforts
include educating local forwarders and airline managers via webinars,
demonstration videos, press releases, advertising and air cargo
association presentations, among others. The most efficient combination
of traditional and social media will be employed.
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8. Development will commence on a mechanism to build and maintain
CgoXchange’s digital dashboards and app store.
May 2013
Continue pre-launch efforts in launch markets.
June 2013
 Launch CgoXchange in select markets
 Determine with participating carriers the language to be used in the
next version to be developed
Important Note: CgoXchange will measure and share aggregate market
data to the extent each individual user’s privacy can be assured and data
is meaningful. Market data will be shared but competitive data will not be
shared.
July 2013
 Begin developing language version 2
 Begin pre-launch efforts in other English-speaking markets
August 2013
 Continue developing language 2 version
 Continue pre-launch efforts in other English-speaking markets
September 2013
 Launch CgoXchange in other English-speaking markets such as
India, Australia and New Zealand
 Begin testing language version 2
 Begin pre-launch efforts in language version 2 markets
October 2013
 Complete testing language 2 version of app
 Test digital dashboards in English and language 2
 Begin pre-launch efforts for digital dashboards in English and
language 2 markets
November 2013
 Launch language 2 version of app
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9.  Continue testing English and language 2 dashboards
 Continue pre-launch efforts for digital dashboards in English and
language 2 markets
 Determine with guidance from carriers the languages to be used in
versions 3, 4 and 5
December 2013
 Complete testing English and language 2 digital dashboards
 Begin developing language versions 3, 4 and 5
January 2014
 Launch English and language 2 digital dashboard versions (From
this time forward, digital dashboards will be launched inclusive of
CgoXchange’s first app in the local language)
 Continue developing language 3, 4 and 5 versions
February 2014
 Begin testing language versions 3, 4 and 6
 Begin pre-launch efforts in markets applicable to language versions
3, 4, and 5
 Determine with guidance from carriers the languages to be used for
app versions 6, 7 and 8
March 2014
 Continue testing language versions 3, 4 and 5
 Continue pre-launch efforts in markets applicable to language
versions 3, 4 and 5
 Begin developing language versions 6, 7 and 8.
April 2014
 Launch versions in languages 2, 4, and 5
 Continue developing language versions 6, 7 and 8
May 2014
 Begin testing language versions 6, 7 and 8
 Begin pre-launch efforts in markets applicable to language versions
6, 7 and 8
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10. June 2014
 Continue testing language versions 6, 7 and 8
 Continue pre-launch efforts in markets applicable to language
versions 6, 7 and 8
 Determine with carrier guidance language versions 9, 10 and 11
July 2014
 Launch app versions in languages 6, 7 and 8
 Begin development of apps for languages 9, 10 and 11
August 2014
 Continue working on language versions 9, 10 and 11
September 2014
 Begin testing language versions 9, 10 and 11
 Begin pre-launch efforts in markets applicable to language versions
9, 10 and 11
October 2014
 Continue testing language versions 9, 10 and 11
 Continue pre-launch efforts in markets applicable to language
versions 9, 10 and 11
 Determine with guidance from carriers the languages to be used in
app versions 12, 13 and 14
November 2014
 Launch language versions 9, 10 and 11
 Begin development of language versions 12, 13 and 14
December 2014
 Continue developing language versions 12, 13 and 14
January 2015
 Begin testing language versions 12, 13 and 14
 Begin pre-launch efforts in markets applicable to language versions
12, 13 and 14
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11. February 2015
 Continue testing language versions 12, 13 and 14
 Continue pre-launch efforts in markets applicable to language
versions 12, 13 and 14
 Determine with carrier guidance language versions 15, 16 and 17
March 2015
 Launch language versions 12, 13 and 14
 Begin developing app language versions 15, 16 and 17
April 2015
 Continue developing language versions 15, 16 and 17
May 2015
 Begin testing language versions 15, 16 and 17
 Begin pre-launch efforts in markets applicable to language versions
15, 16 and 17
June 2015
 Continue testing language versions 15, 16 and 17
 Continue pre-launch efforts in markets applicable to language
versions 15, 16 and 17
July 2015
 Launch language versions 15, 16 and 17
Conclusion
The industry has agreed to achieve a paperless document environment
for cargo movements between airports by the end of 2015. It is unlikely
governments and/or airlines will universally mandate compliance. Small
air freight forwarders resist e-freight because they have not found a
sufficiently compelling value proposition.
©Copyright 2013, Sirius Business Solutions, Inc. 11

12. With few exceptions, air cargo carriers
have struggled to convert small
forwarders to e-freight. Moving the air
cargo industry to digital from analog
communication and documents
represents a paradigm change.
Considering the enormity of the task, a
unified effort from all parts of the
industry is warranted. Converting
disparate market segments will require varying strategies. Converting
small forwarders to e-freight requires government mandates, airline
mandates or incentives.
Change in any industry does not occur on its own. Rather, leaders who
envision “a better way” bring about change. The scope of this change
requires participation from all parties.
Industry cooperation is required. A plan for change is essential and
CgoXchange’s is the only viable one being discussed at this time for the
small forwarder subsection of the market. CgoXchange’s plan is
positioned between mandating eAWBs and doing nothing. While no
airline or forwarder likes every aspect of the plan, CgoXchange represents
a realistic compromise that allows the achievement of a common goal.
Next Steps
Over the past 90 days, CgoXchange’s plan has been discussed with and
modified to reflect suggestions from 23 air cargo carriers, including 18 of
the top 25, measured by FTKs. The decision to move forward with the
plan or withdraw it will be made by March 1. The path to that March 1
decision is as follows:
February 12 - CgoXchange offers this plan for internal airline
discussions. Airlines evaluate the plan and compare it to alternatives for
moving small forwarders to e-freight by the end of 2015. Optimally,
discussions will involve every air cargo department with an interest in
converting communication and documents to digital formats.
February 20 – Preliminary confidential surveys determine whether air
carriers remain open to conditionally participate in CgoXchange’s plan.
There is no obligation to participate.
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13. February 25 - If critical mass appears achievable, aggregate survey
results are shared. No airline names will be identified.
If however, the survey results indicate insufficient interest, all parties are
notified and the plan is withdrawn.
February 26 – If critical mass appears achievable, airlines will again be
surveyed, serving as a double opt in for those intending to continue in the
CgoXchange discussion.
March 1 – Based on survey results, CgoXchange decides whether
sufficient airline participation is achievable. Notifications are issued and
formalized continuing steps, if appropriate, are offered to airlines
remaining in the discussion.
The question being asked today is whether the airline portion of the air
cargo industry is ready to get started moving to e-freight. We will all
know the answer very soon.
Thank you for your participation in the discussion to this point.
Helpful Links
Overview Video
Discussion Slides
First App Demo
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