Air cargo screening mandate underway
The Pittsburgh Steelers and Arizona Cardinals played a memorable championship game last weekend, but for the nation's air cargo industry Super Bowl Sunday marked the kickoff of a new security regime in which 50 percent of cargo aboard passenger aircraft must now be screened.
There have not been any reports of significant delays during the first three days, but airlines are adding fees to cover their inspection costs and freight intermediaries that arrange shipments with airlines for their customers are adjusting — not always happily — to the extra compliance burden they face.
The centerpiece of the Transportation Security Administration's strategy is a Certified Cargo Screening Program (CCSP) designed to relieve pressure on airlines by encouraging shippers, logistics providers, freight forwarders and other cargo handlers to screen cargo before it gets to the airport. Under the voluntary program, shippers who meet TSA criteria are approved to verify that each shipment at the piece level was securely packed and sealed. Forwarders have authority to deconsolidate large shipments and inspect each carton by physical or technical means before repacking the goods for secure transport to the airline ramp. The TSA must audit and certify that each facility seeking to participate in the program meets established security criteria.
The agency has also recruited 14 large freight forwarders to install and use scanning and explosive trace detection equipment to gather data on which technology systems are most efficient, accurate and reliable.
The TSA plans to meet the 50 percent screening requirement through a combination of those two initiatives plus a requirement that airlines screen 100 percent of cargo on narrow-body planes.
The CCSP is targeted at inspecting cargo that moves on large aircraft to domestic and international destinations. Under the interim requirement, at least half of the pieces in each shipment tendered to an airline must be checked.
The next goal line mandated by Congress is to screen all cargo on passenger planes by August 2010.
The 50 percent threshold was relatively easy to achieve because narrow-body flights, although representing 96 percent of all U.S.-launched flights, only account for a quarter of the cargo. Plus, much of the cargo is already covered under the scan-all requirement for narrow-body planes that began on Oct. 1.
Now comes the tough part, said Brandon Fried, executive director of the Airforwarders Association. The remaining 4 percent of widebody flights handle 75 percent of all domestic originating cargo.
'The challenges will increase exponentially by virtue of the lack of technology to screen pallets and containers,' Fried said. 'We've passed the first milestone but concerns definitely remain. Don't be fooled by the first 50 percent.'
The TSA has yet to certify a piece of machinery that can scan pallets or unit load devices, especially for consolidated shipments that are not uniform in contents or shape. Breaking shipments down to the piece level at much higher volumes could significantly slow down cargo handling, industry practitioners warn.
The TSA has certified more than 154 facilities so far representing 141 indirect air carriers and 10 independent cargo screening facilities, according to an agency source who spoke without attribution to sidestep certain personnel rules.
The independent cargo screening facilities, euphemistically referred to as 'car washes' for their dedicated function of quickly scrubbing shipments for security and pushing them out to a waiting truck, are available for companies that want to outsource their screening functions but don't want shipments to sit until airlines can do the job.
The TSA has also certified most of the four-dozen-plus facilities that forwarders are using for the technology pilot. Large firms such as BAX Global have agreed to deploy devices at warehouses serving 19 major airports. Sixty-five facilities originally were offered for the test program, but not all the facilities met TSA criteria and some companies decided to reduce their participation because of the difficult economic times, the official said.
Three shippers so far have also been admitted into the program, the source said. Approved shippers can screen their cargo as it is being packed and avoid any downstream screening by their logistics provider or airline.
Another 100 shipper applications on file should be completed in the next four to six weeks, the official added. They were held up while the agency completed regulatory guidance for the sector and a commitment letter authorizing TSA oversight of shipper activities — a needed step because its legal jurisdiction only extends to airlines and forwarders.
Shipper interest has been muted at the outset because companies need to review the contractual agreement, and because TSA focused first on certifying forwarders in the pilot.
The private-sector approach to screening has resulted in a wide range of airline fees and other policies associated with new screening and cargo handling requirements.
In addition to standard security surcharges, airlines have created fee structures for screened and unscreened cargo:
' On the high end, Lufthansa Cargo is charging $3 per piece for unscreened cargo with a minimum of $35 per shipment and a maximum of $150. The airline also reset its security surcharge at 17 cents per kilogram for all cargo, thereby equalizing the cost in the U.S. market with the rest of Lufthansa's regions.
' Delta Cargo is charging 1 cent per pound for all domestic unscreened shipments and 5 cents per kilogram for export shipments up to a maximum of $150 per air waybill. There is no charge for pre-screened cargo. (Delta also raised its regular cargo surcharges on Feb. 1.)
The Atlanta-based airline also said it is making special arrangements to expedite cargo from CCSP participants by designating certain dock doors for pre-screened freight at international gateways and offering priority processing at domestic locations.
' United Cargo informed customers last month that there are no changes in fees, drop times or labeling requirements for freight screened in advance at a certified facility.
Effective Feb. 14, United will charge 2 cents per pound on the domestic side for unscreened, loose boxes with a minimum charge of $5 per shipping document, and 3 cents per pound for unscreened shipments in containers or pallets, with no maximum.
International-bound shipments will be charged 6 cents per kilogram for bulk with a minimum fee of $15 per air waybill, and 8 cents per kilogram for shipments in an air container or pallet.
United will also increase the lockout times for receiving unscreened shipments by two hours and require them to be individually labeled.
The airline held out the possibility of further pricing and operational changes once it evaluates the new mandate in practice.
' American Airlines said it will charge 2 cents per pound domestic and 5 cents per kilogram international to screen cargo, up to a maximum of $150. Pre-screened cargo will not be charged and will actually receive a discount of 5 cents per kilogram or 2 cents per pound from the normal 15 cents per kilogram and 6 cents per pound security surcharge. The airline did not change its drop off times.
' Continental Airlines has not added any new fees or changed any of its cutoff times in response to the new requirements, but is banning shrink-wrapped, banded or consolidated pallets on narrow-body planes unless it arrives from a Certified Cargo Screening Facility. Lufthansa has similar policies.
Some freight forwarders, including ones joining CCSP, are still not convinced that pushing screening to air cargo companies is fair or effective.
'Congress is tagging the 3,000 freight forwarders in the United States, some of whom are very small, with a policing duty which is unclear, left up to many people's (read inspectors') interpretation and very costly to implement' in terms of recordkeeping, dedicated warehouse space, training and equipment, said the head of a mid-size forwarder who asked to remain anonymous so as not to attract extra enforcement attention from TSA.
'We're freight forwarders. We're not policemen,' he said, adding that carriers or the government should bear the inspection responsibility.
His company is spending $30,000 to $40,000 to put up fencing for secure areas to do screening in its warehouses and several hundred thousand dollars on trace detection machines at about $52,000 a pop.
'They're putting the burden on the small businessman who in this type of environment could force us to lay off people because we have to devote money to another purpose,' he said.
A big concern is that the scan-all rule does not apply to all-cargo carriers such as FedEx and UPS, creating what some indirect air carriers believe is an unfair playing field that might encourage customers to switch providers to avoid new security fees and potential cargo backups in the passenger airline system.
In fact, a FedEx sales executive tried to market to logistics providers the company's advantage over traditional forwarders in an e-mail flyer, obtained by American Shipper.com from the forwarder.
'This is a federal mandate and if forwarders are found not to be in compliance heavy fines will be levied. This will change the way forwarders operate and it just got more expensive to use a forwarder. You may be required to break down your pallets before tendering them to a forwarder!' the letter read.
It went on, 'You will more than likely be incurring additional 'handling/security' fees from your freight forwarder in the very near future and this means more handling of your goods.'
Fried allowed that back-selling by integrated carriers is a concern for his members, but when asked about the flyer said FedEx assured him the message was not authorized by management, that the flyer would be retracted and steps taken to make sure the action was not repeated.
FedEx, UPS and DHL, he acknowledged, don't get a free ride. They are also impacted by the rule because their forwarding units use a lot of commercial airlift and they have their own large aircraft security rules to follow.
Fried, however, dismissed the notion that the government should take over the cargo screening function.
The benefit of the CCSP is that it gives shippers and forwarders flexibility to choose a screening process that suits their needs for various types of cargo, whereas 'a federally run screening process would be more one-size fits all,' he said.
That might work fine at a small volume airport, but would create huge bottlenecks at large international gateways, he added.
'Who can screen better? The forwarders who are around cargo all the time and know its processes or the government that doesn't want to screen and may increase costs and reduce choices?
'The last thing we want to do is put screening in the hands of gross government inefficiency. If the government is providing us the ability to screen cargo we should take advantage of that option and create choices, reduce costs and create process efficiencies,' said Fried, who has lobbied for federal subsidies to help small and mid-size forwarders purchase screening equipment.
'It's the law of land, we have to comply. The way we comply is to make sure the CCSP gets more funding and more participation. In the end, the more CCSP participants there are the less freight will have to be screened at the airport and the faster access those (small) companies will have to the airline,' he added. ' Eric Kulisch
