Wednesday, June 29, 2011

Joint Solution To Freight Forwarders CASS Concerns After IATA Fraud

Plan is Workable But Not Ideal Says FIATA
Shipping News Feature

WORLDWIDE – We wrote earlier this month about the concerns of British freight forwarders regarding the ever higher deposits to be required under the International Air Transport Association (IATA) owned Cargo Accounts Settlement System (CASS) and explained then the devastating effect this was having on honest brokers such as members of the British International Freight Association (BIFA). The International Federation of Freight Forwarders Associations (FIATA) became involved early in the dispute and after their initial efforts to overturn the situation a FIATA/IATA working group was formed with the remit to prepare a proposal to be submitted to the European Air Cargo Programme Joint Council (EACP- JC).

The problem arose because in September 2009 IATA became aware of a $15 million fraud in the settlement system and instantly applied zero tolerance taking any discretionary powers away from local IATA management. This was to result in what freight forwarders considered the unreasonable and unjust bonding requirements.

During the 2010 FIATA World Congress in Bangkok, FIATA’s Airfreight Institute (AFI) arranged a strategic meeting with Mr. Des Vertannes the then newly appointed IATA Head of Cargo. The parties agreed that there was an urgent need to review and revise the existing Criteria for Registration and Retention of the European Air Cargo Programme (EACP) considering that the strict application of CASS Financial criteria had resulted in a situation where perfectly compliant forwarders had been required to provide additional security bonds. From this the working group evolved in due course.

An initial draft of the working groups proposal was presented at the Joint Council meeting held in February 2011 and following the production of a final draft this was distributed to all airlines participating in the EACP prior to a special meeting of the Joint Council which took place last month. Now the Joint Council has unanimously accepted the final version of the new criteria which will become effective on July 1, 2011.

Under these new criteria there will be no more financial reviews of the intermediaries except in well-defined circumstances. The settlement limit of an intermediary which exceeds its established monthly settlement limit will be automatically increased. Finally, it has been agreed that any bank guarantees required of forwarders as a result of the previous established criteria would be released with immediate effect.

FIATA representatives to the working group considered the proposal a compromise document to bring immediate relief to an unreasonable and unjust situation. While the amended criteria still falls short of the ideal solution sought by FIATA, the new criteria will alleviate some of the presently existing inconsistencies.