February 26, 2011 Risk Reduction Needn’t Disrupt Commerce

Volume 14 | Issue 1

With international concerns about terrorism, air cargo security has become increasingly important. The International Cargo Association (TIAC

Like many industry associations, The International Air Cargo Association (TIACA) needs to address a wide range of topics on behalf of its members, such as customs reforms, air industry liberalization, modernization of air traffic management systems, the environment, paperless trading, and quality standards.

They all raise their heads on a fairly frequent basis and we have firm views on each. The one, however, that sits on top of the daily agenda is air cargo security. That would be the case on any given day but as I am writing this after terrorists in Yemen were able to send explosive devices on both passenger and cargo aircraft, the focus has not been so intense since the days following 9/11.

Safety and security are paramount in the global air cargo industry. There is no complacency among any parties in the supply chain but every shipment presents its own test. We are proud of the air industry’s track record for safety over many decades but realistic enough to know that in today’s world we face very different challenges.

In November, TIACA joined forces with IATA, FIATA and the Global Shippers’ Forum (GSF) to create a new Global Air Cargo Advisory Group (GACAG) to ensure we have the strongest possible voice on regulatory affairs. We want to work with those considering ways to further improve aviation security, just as we did with the U.S. Transportation Security Administration with the introduction of 100-percent piece level screening of shipments moving on passenger aircraft within and from the United States.

We also want to ensure that any changes are viable and that they do effectively improve security. As importantly, any new requirements must not slow down the movement of air cargo or add unnecessary costs to an industry already struggling to address declining yields and rising costs.

GACAG’s view in air cargo security has been clearly communicated:

The air cargo industry has a good track record in this regard, but recent events have raised the importance of security protocols, especially risk assessment. GACAG recognizes the global challenge to an air cargo industry that operates at the heart of world trade and is a recognized driver of economic development in both the developed and developing world.

The group will focus its efforts to enhance the security of the air cargo supply chain, defined as all components of the transportation chain from shipper to consignee. But this must be done in a manner that results in the minimum possible disruption to the vital flow of commerce. This will require a global push by the air cargo industry and the relevant authorities to improve risk assessment, tighten standard air cargo supply chain processes, develop viable technology for the air cargo environment, and improve compliance. GACAG supports the following principles:

• A comprehensive Air Cargo Supply Chain Security solution should be built around a multi-layered set of actions guided by the “risk-based” concept;
• Consistent with ICAO Annex 17, member states should introduce supply chain security programs established on common principles and platforms, such as those contained within Regulated Agent and Known Consignor programs;
• To facilitate integrated supply chain transportation, member states should be encouraged to mutually recognize quality supply chain security programs introduced by partner member states;
• Enhanced data intelligence, leveraging standardized electronic advance cargo information and consistent with the WCO Safe Framework of Standards, should underpin secure supply chain solutions to target high-risk cargo;
• Cargo security should be viewed on a holistic basis incorporating general cargo, express cargo, mail and baggage shipped as cargo, encompassing both freighter and combination aircraft; and
• Because our members operate in all countries and territories around the world, we are acutely aware that global harmonization of air cargo security procedures is essential, and we urge that best practices be adopted as soon as possible.

GACAG members plan to expand engagement with relevant authorities as we address recent developments and seek to further our joint goals of security and facilitation. In doing so, we endorse the following recommendations, and will support actions that embody them:

• Government-industry cooperation should be a fundamental principle of cargo security decision-making and lines of communication must remain open at all times;
• Supply chain security should be at the heart of any regulatory approach;
• Governments should establish mechanisms to mutually recognize comparable supply chain security regimes by their trading partners;
• ICAO should be the global focal point for collaboration on cargo screening requirements and both governments and industry should be part of the ongoing dialogue;
• ICAO should set global definitions and standards for air cargo security, including the definition of what constitutes “higher risk cargo,” and must do so on an expedited basis;
• National and regional regulators should adopt ICAO definitions and standards on an urgent timetable;
• Protocols for transferred cargo should take into account screening that was performed prior to the original flight;
• Industry and government should follow the international standard set by the World Customs Organization on advance cargo information to facilitate risk-assessment; and
• Industry and government should jointly develop and endorse a standard electronic cargo security declaration process and its associated paper layout.

Harming the ability of the air cargo industry to perform its vital role in world trade would be a mistake. Air cargo is a US$50 billion a year business that transports 35 percent of the value of goods traded internationally. It is a critical part of the airline business which, as a whole, is the US$490 billion heart of a value chain that supports 32 million jobs and US$3.5 trillion of economic activity. It is an important industry that is critical to global business.

Every week, more than 78,000 passenger and all-cargo flights carry cargo, generating 4.3 million tons of capacity every seven days. Businesses and consumers rely on air cargo and a fast, secure and predictable supply chain based on the speed and reliability of air cargo is critical to the economic success of major businesses and employers globally in industry sectors such as hi-tech/consumer electronics, pharmaceuticals, automotive, oil and gas/energy, fashion/apparel and perishables.

In terms of moving our industry forward, we need to embrace modern day business practices such as paperless trading. Initiatives such as IATA e-freight are making a positive difference but still have to overcome skeptics in the freight forwarding industry. One area where we hope to make real progress is customs reform. In 2010, TIACA and the World Customs Organization (WCO) signed aMemorandum of Understanding to see how we can jointly work together on this and other initiatives.

A significant step forward is the WCO’s decision to work towards reducing the profuse paper-based documentation that accompanies international air cargo shipments.

The WCO’s key Permanent Technical Committee has not only accepted the facilitation case for reform but will also bring its own extensive professional skills to a phased long-term task of comprehensive revision and reform.

The official report of the WCO meeting records that it approved proposals to:

• undertake a survey within the WCO member administrations and partner organizations to list the top priority documents to be dematerialized;
• discuss measures to promote digital signatures as a means to maintain authenticity and integrity of documents;
• initiate discussions on the end-to-end management of electronic documents with other international organizations/assemblies e.g. CITES Convention, Trade and Transport federations etc.
• work on a WCO Recommendation based on the proposed Guidelines on Supporting Documents.
• This is a constructive response to a longstanding and substantial business difficulty. We work in a world where international air consignments, managed by global traders through fine-tuned automated business technologies and moving on modern aircraft controlled and tracked by state of the art communications systems are still subject to completely anachronistic paper-based checks on millions of import transactions annually.

Each air cargo shipment carries with it as many as 30 paper documents – enough to fill 80 Boeing 747 freighters every year. French Customs have just identified and listed some 45 different documents that may need to be carried with the goods and made available for inspection if demanded by Customs or other official agencies. The number of such documents required in any individual transaction will vary but the overall volume for regular carriers is still very substantial. The overall cost is not just funding this unnecessary carbon footprint but the extra and incalculable cumulative cost of all the delays inherent in preparing, presenting and processing these pieces of paper in a predominantly electronic business and administrative environment.

We want more shippers and forwarders to help us drive this and other initiatives forward. That’s why in 2010, TIACA launched free membership for shippers (recognized as a manufacturer, wholesaler/distributor, retailer, or the ultimate importer/original exporter) to enable them to more actively participate with the association. We are also working closely with shippers’ councils. Similarly, we have offered a heavily discounted membership fee to freight forwarders.

If one thing is certain about 2011, it is that we face uncertainty. It is therefore in all our best interests that we face it together as one strong group.

Daniel C. Fernandez is Secretary General of The International Air Cargo Association.

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