Identifying Air Cargo Payments Pain Points

Identifying Air Cargo Payments Pain Points

Shanta Paratian
November 1, 2022

Shanta Paratian (Manager, London) moderated working groups focusing on identifying air cargo payments pain points at the Cargo Payments Summit 2022 in London on the 17th of October. The air cargo market is projected to grow as demand for reliable and efficient cargo services increase. During her session, Shanta identified that through Covid, air cargo provided an important source of revenue to airlines, more than doubling its 2019 value to be worth $204 billion in 2021. Evidently, airlines are more likely to be attracted to investing in this space to benefit from such growth.

However, payment pain points in air cargo are apparent and could impact airlines’ revenues and growth. During her session, Shanta highlighted three key categories of pain points: Cost of Payment/Collection, Payments Risk, and Internal Expenses & Payment Reconciliation.

A key pain point for each category that Shanta identified are as follows:

The misalignment of contract terms between freight forwarders, agents and IATA imposes a cost for freight forwarders/agents. IATA CASS/carriers can require payment to be made prior to freight forwarders/agents receiving payment for their services.  

Making a payment for air cargo services can be highly fragmented. Freight forwarders book cargo on a system and pay on a different one, which imposes the risk of human error if bookings and payments are not matched correctly.

Traditional payment methods (e.g., cheques) impose reconciliation inefficiencies for players such as IATA (e.g., matching IATA code description and amounts) as well as pose a payment risk if the cheque bounces.

Camille Cochrane (Consultant, Paris) provided support through the preparation phase of this working group to help define the air cargo payment flows and pain points.

The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).

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