CargoAi builds a cargo payment solution

With the launch of CargoWALLET, CargoAi is the first to bridge a gap in the digital cargo marketplace. While making a real-time cargo reservation online has become much easier in recent years, paying for the space has always been a separate affair: bureaucratic, slow, and with various obstacles. CargoWALLET does away with this and “enables shipments to be booked and paid for without an IATA CASS Number, without an AWB stock, AND without any bank guarantee,” CargoAi underlines. CargoForwarder Global (CFG) spoke to Matt Petot (MP), CEO, CargoAi, about its pioneering fintech solution specifically tailored towards supporting small to medium-sized freight forwarders, as well as IATA CASS forwarders that perhaps do not have their own AWB stock, for example.

CFG: CargoWALLET began as a project two years ago. How was the idea developed - was it tried and tested with small and medium forwarders? How do their payment processes work currently, preCargoWALLET?

MP: This has always been on our product roadmap as our goal has been to address the pain points identified by freight forwarders, airlines and our TMS partners in air cargo procurement. We were aware that despite CargoMART serving as a digital conduit for procurement (and accelerating the search, quote, booking process), it would not overcome the barrier that exists where small freight forwarders are not able to book airlines directly because of the complexity of requiring an IATA CASS account or AWB stock.

Also, Air Cargo should be able to use supply chain financing options that already exist in other industries and be able to get long payment terms which is not the case with payment by CASS or directly with the airlines.

Currently for a booking to be made online or offline, the forwarder needs to have an account with the airline which also sometimes means having a bank guarantee on top of being a CASS member.

We started with our key partners, both on the airline and freight forwarder side, to develop the blueprint which has resulted in our successful launch today.

CFG: Which finance provider is in the back end? (PayPal/Stripe/or similar?)

MP: We are not using a sole finance provider. It took us 2 years to build the right banking connections with multiple providers to enable an end-to-end finance payment solution with the objective of ensuring that our solution remained at the same cost as bank transfers in more than 30 currencies. Using paypal or stripe would add around 3% to 5% on top of the air freight cost to our customers, which was not an option.

We also partner with financial providers to offer modern supply chain financing solutions that exist in other industries to facilitate the 30 or 60-day payment terms for our freight forwarders.

CFG: How happy are the airlines with the new payment process? Are there airlines who still prefer not to have bookings from non-IATA members?

MP: All the airlines are very receptive to the idea as it opens new doors for them, allowing them to also tap into different freight forwarders who don’t have an IATA CASS account. Airlines want to work with as many forwarders as possible, but they sometime don’t have the resources to work with the long tail of freight forwarders. With our guaranteed solution for the airlines, they only deal with us and can work with all forwarders digitally.

CFG: Do your competitors / WebCargo by Freightos have a comparable payment facility?

MP: Presently, WebCargo by Freightos and compete with us on our digital marketplace (CargoMART), and they do not have this kind of extensive payment solution integrated. Solution providers for financial services in air cargo are IATA through its CASS system, or Paycargo, which are ‘standalone’ solutions, not integrated with digital marketplaces, and focused on other business cases.

What we offer through CargoWALLET is unprecedented:

  • Up to 60 days payment terms to pay for Air Cargo
  • Ability for a forwarder to do export from another country by buying the air cargo directly with airline rates
  • Ability for smaller forwarders to work with all airlines instead of being restricted to the ones they have an account/bank guarantee or AWB stock

CFG: How are the AWB numbers allocated in the system? (Post-payment?)

MP: CargoAi works directly with the airlines to allocate AWB stock from the start, to CargoWALLET or to the forwarder via CargoWALLET. This is possible even if the forwarder uses the PayLater option, as we have partnered with a credit company to provide supply chain financing.

CFG: How is the CargoWALLET linked to the forwarder's account? Or is a certain amount paid into the Wallet that forwarder employees can book against?

MP: To answer the second question, yes. Here is a brief overview of that process.

  • Once there is a CargoMART account, the manager for that Office (i.e. a branch) will have the option to apply for activation, via a form completion. CargoAi will review the application which includes a KYC process. Review will take 2-5 working days.
  • Once activated, the user account that applied for CargoWALLET will receive an email notification. The email will explain that they need to top up the funds in their wallet to start their first booking with CargoWALLET.
  • The office level user will need to go to the CargoWALLET management page, click on Top Up and fill in the currency, payment method and amount. After confirmation on the details, an invoice will be automatically sent to their registered office finance email address with bank details for them to proceed with the payment.
  • Users can exchange money in their wallet to different currencies from the one that they transferred in, so that they can purchase shipments based on the eBooking/billing currency.

CFG: What were the challenges during development? And - aside from funding - how did CargoTech help?

MP: The challenge was that we needed to create a worldwide payment system to cover the 100 countries that our airlines and freight forwarders are in, without adding the huge cost that stripe or paypal are usually adding. It was necessary for us to establish our own payment infrastructure and network in order to present a competitive alternative to the market, while maintaining the same cost as a bank transfer.

Working with the CargoTech group of industry experts was extremely beneficial in terms of innovation and product development as a sounding board to develop our own payment infrastructure and deliver the best possible solution to the industry.

The combined power of industry expertise is also useful - having multiple eyes and ears to the ground on the changing market landscape.

CFG: Is CargoWALLET available for bookings on ALL CargoAi airlines?

MP: Yes, freight forwarders can utilise CargoWALLET for bookings on all airlines whether via CargoMART or CargoCONNECT (an API solution that integrates with our TMS partners).

CFG: Is CargoWALLET available for all forwarders globally? Or is a step-wise rollout planned?

MP: We had successful tests in a lot of pilot countries, and we are making CargoWALLET available in a step wise rollout as we need time to review all our forwarders registrations.

CFG: Do you expect that this new feature will attract new airlines/forwarders?

MP: Absolutely, we expect to see an increase in forwarder registrations on CargoMART as they will now be able to access the whole procurement process within one interface – this will gain them significant time savings and allow them to service their customers much quicker. Our airline partners are very receptive as we bring them a customer base of different freight forwarders who did not necessarily work with them thus increasing their overall distribution and business potential.

Our freight forwarder users are also excited by the longer payment terms and the capability to book air cargo directly with airlines from other countries.

Thank you, Matt Petot!