Sita explores blockchain to reduce air cargo costs
March 24, 2020
The air cargo industry could save $400m a year using blockchain to track and record change of custody of airline cargo containers or unit load devices (ULDs) digitally across their journey, according to the Société Internationale de Télécommunications Aéronautiques, or Sita, and trade association ULD Care.
By eliminating inefficiency, embedding always-on tracking of ULDs and abandoning redundant paper systems, the use of blockchain is expected to save the industry $400m a year in improved efficiency, fewer losses and prevention of damage.
The proposed platform also offers a wide range of authentication and trust-based benefits, reducing the risk of tampering, cyber crime, trade-based money laundering, fraud and illicit trade.
“Air cargo represents only one per cent of all global trade in terms of volume but accounts for 35% of the total trade value, and the inefficiency is significant,” said Bob Rogers, vice president of ULD Care. “A container traveling from Shanghai to Long Beach could take up to 30 days to finish its journey, but the true travel time on sea or road is only around 15 days, with the remaining time spent on back-office and paperwork. The use of blockchain could revolutionise that process.”
Today, more than 800 million ULDs are in use by airlines yet the system used to track these ULDs has only been partial digitalised and relies on incomplete data sharing and record keeping.
The proposed blockchain system could improve efficiency by making use of all data points across the air cargo journey and provide a platform that aggregates and processes the ULD data in a trusted and secure way.
A proof of concept aims to extend and upgrade the current ULD interlining platform to include non-airline third parties such as ground handlers via open APIs and a new modern interface. The results could transform the industry by lifting the veil on a myriad of previously unknown factors such as damage reports.
Knowing the location of all ULDs and therefore cargo at all times means companies can accurately track where loss or damage occurs and recover the costs without dispute.
For any given shipment there can be up to 12 custodian companies monitoring and tracking the cargo, with many relying on paper documents making the process cumbersome and undermined by trust and transparency issues. Blockchain can address these industry pain points with huge time and cost-saving potential.
“We are looking at blockchain very closely and we’re excited to test the potential of the technology to transform the air cargo industry,” said Matthys Serfontein, president of air travel for Sita. “Beyond cargo and across the air transport industry, we see huge potential for blockchain to address common challenges. The biggest obstacles standing in the way of a seamless passenger journey and truly efficient air travel are the siloed processes across the many stakeholders, including airlines, airports, ground handlers and control authorities. They act as significant speed bumps at every step of the way.”
This project forms part of Sita’s Global Blockchain Alliance, which is exploring blockchain’s potential for the air transport industry. Sita’s role, as the air transport community’s IT provider, is to provide governance for the alliance, support the working groups, deliver all required blockchain technology components and ensure proper alignment and validation with regulators and international standardisation bodies.