Wednesday, June 15, 2011

Freight Associations Aid UK Forwarders In Credibility Fight

IATA Decision Threatened Honest Brokers
Shipping News Feature

EUROPE – The global financial crisis produced a tightening up of procedures, not least in the world of shipping and a decision by the International Air Transport Association (IATA) to implement a hitherto dormant policy regarding the financial assessment of freight forwarders caused concern for both the UK and Europe wide trade bodies which represent airfreight agents.

The situation arose over the IATA-owned Cargo Accounts Settlement System (CASS) in Europe under which freight forwarders needed to undergo financial assessment which, if considered unsuitable by IATA, meant companies would need to produce bank guarantees, sometimes for extremely high sums.

Until the recent global financial crisis, the requirement for freight forwarders, when appropriate, to undergo a financial assessment by IATA had largely been dormant. However, the monetary situation sparked an about-turn by IATA, changing their stance on such assessments, and therefore their attitude to those European forwarders who had historically complied with all of the existing IATA Cargo Agency Resolutions appropriate for Europe when it was established, including the CASS airline billing and forwarder freight settlement programme.

The British International Freight Forwarding (BIFA) tell us one of their members faced the need to provide a £400,000 guarantee and, as members of the FIATA Airfreight Institute, an integral constituent of the European Air Cargo Programme (EACP), they felt it imperative to move against the proposals. Peter Quantrill, BIFA Director General, felt the blanket move against the Association’s members had to be challenged and at a meeting of the EACP Joint Council in February, a small working group was set up, consisting of forwarder representatives from BIFA, FIATA and IATA to consider changes to the financial criteria. BIFA’s Director - Trade Services, John O’Connell said:

“As part of this working party, we consistently articulated the fact that the forwarder is the customer of the airline. Our aim was to ensure that the need for forwarders, which complied with the terms of the CASS agreement, to provide expensive and cumbersome bank guarantees, was lifted.

“It was intolerable that forwarders were faced with the reinstatement of this requirement irrespective of the fact that the members in question had been hitherto wholly compliant to the prescriptive payment terms and conditions of the CASS before, during, and after the financial crisis.

“As a trade body, our paramount role is to work to further the interests of our Members. We value out membership of bodies such as the FIATA Airfreight Institute where we can speak for British forwarders which underpin our country’s international trading.”

As a result of the negotiations forwarders and airlines reached a landmark agreement on changes to the CASS program with the agreed changes coming into effect on the 1st July when the revised criteria for registration and retention for the European Air Cargo Programme, which includes the CASS settlement criteria for forwarders is implemented.