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GFX develops online airfreight marketplace

Global Freight Exchange, founded in November 1998, is developing a Web-based wholesale market for buying and selling air cargo capacity. GFX is initially concentrating on developing an e-business solution for the airfreight sector and has been working with a number of airlines and freight forwarders to pilot test the programme in around May 2000. The initial model will involve only air cargo but plans are to extend the service to seafreight space as well at a future date.

"The current market for air cargo capacity usually involves the freight forwarder shopping for cargo space from the airlines or vice versa苛the airline approaching their preferred forwarders offering available space," said Roland Bischoff, Kuehne & Nagel's Asia Pacific airfreight director. K&N is one of seven forwarders on the pilot programme, along with Circle International Group, Emery Worldwide, Fritz Companies, MSAS Global Logistics, Panalpina, and Yusen Air and Sea.

The pilot airlines are American Airlines Cargo, British Airways World Cargo, Cargolux Airlines, Continental Airlines Cargo, DHL Aviation NV, Emirates SkyCargo, Japan Airlines Cargo, Korean Air Cargo, and Swisscargo.

GFX has a strategic relationship with IBM to develop the online system. It had recently announced that it has completed a second round of funding with a multimillion-dollar investment from Morgan Stanley Dean Witter and Kerry Packer's Consolidated Press Holdings.

According to GFX, the funds raised will be used to continue developing GFX's global e-commerce air cargo business苛a US$50bn industry苛as well as its expansion into e-commerce services for other transport and related services. GFX has offices in London, New York and opening one in Singapore.

When the GFX system "goes live" for transactions on May 1st, the offering will consist of a "neutral" wholesale e-market, which supports the broad range of transactions between forwarders and carriers, an internet-based cargo reservations system, and a database of transactional information.

The GFX market will also facilitate development of new kinds of risk management products, by linking the pricing of a booking with a variety of no-show penalties and flown-as-booked guarantees.

The global e-market will give carriers and forwarders a new forum for exchanging information on capacity and price requirements versus availability on given routes. Changes in price or capacity can be communicated to forwarders on a real-time basis and can be customised in a highly segmented manner. Reservations can be made and confirmed instantly, reducing reliance on paper processes. It will also enable forwarders to generate requests for quotes and will provide a work management tool to facilitate this "reverse market" process.

Market rules

GFX will establish a set of market rules and a governance council to help guide the GFX market. Subscribers will become members of an exchange such as stockbrokers in the New York or London bourses.

The Governance Council will represent the interest of carriers, forwarders and integrators. Its purpose is to establish the rules needed to ensure orderly conduct and efficient transactions; two is to promote deeper liquidity in the market.

Issues

In its website (www.gf-x.com/), GFX compares its focus on addressing transactional issues to that of Cargo 2000, that is, addressing operational inefficiencies. Examples of the transactional issues GFX said it will help freight forwarders, carriers (and integrators acting in those roles for non-package freight) address, are:
Multiple forwarders calling multiple airlines (and multiple offices within an airline), often with the same piece of cargo
• Numerous billing disputes due to the absence of an electronic record of the agreed price
• Inability for airline outstations to provide forwarders with confirmed transit bookings
• No up-to-date, online schedule, capacity or pricing information, resulting in numerous phone calls
• Forwarders inability to make "consignee" bookings, resulting in substantial delay and internal cost.