Alliance wings screen pass
Forwarder coalition pushes to federalize air cargo screening.
By Eric Kulisch
A small group of air freight forwarders and their allies are still trying to get the federal government to conduct inspections of cargo on passenger planes, even as the Transportation Security Administration goes full speed to implement an approach that places such responsibility on the private sector.
The Air Cargo Security Alliance says small and medium-size forwarders do not have the resources to participate in TSA's new Certified Cargo Screening Program (CCSP), which recruits businesses and their logistics providers to self-inspect shipments booked on passenger planes.
The effort to push inspections up the supply chain is designed to meet an August 2010 deadline for 100 percent screening without the cargo backlogs that could result if airlines have to do the entire job themselves. The need to rely on airlines, or others, to screen their customers' cargo puts such forwarders at a competitive disadvantage, the group claims.
'We're trying to make sure it's a level playing field,' said David Wirsing, co-founder of the Air Cargo Security Alliance.
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| Wirsing |
Rep. Edward Markey, D-Mass., chief author of the 100 percent screening requirement and an early skeptic of outsourcing security, plans to introduce legislation developed by the alliance that would establish a federal screening program as a third option, according to Wirsing.
At a mid-March House hearing to review the program, Markey said there were 'serious, systematic problems' with the CCSP that TSA needed to quickly address.
When former Homeland Secretary Michael Chertoff first proposed a trusted shipper program in the fall of 2007, Markey remarked, 'You wouldn't trust a shipper to go onto the passenger section of the plane and check their bags. Why would you trust a shipper to put cargo on the very same plane?'
But his office was vague about any specific intervention.
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'Congressman Markey continues to monitor the program very closely. If it appears that the implementation, which started under the Bush administration, is not providing the level of security required by the law then Congressman Markey will explore other options, including legislation,' an aide said.
Rep. Sheila Jackson-Lee, chairwoman of the Homeland Security transportation security and infrastructure protection subcommittee, recently referred to the need for more TSA cargo screeners, but it is unclear whether she simply wants to increase the agency's oversight resources or fundamentally change its role.
Job for the Feds? The alliance is proposing a policy alternative that would maintain screening by airlines or air freight users, but require the TSA to set up a program for its own inspectors or contractors to screen cargo at airports, said Michael Whatley, who runs the organization along with Wirsing.
In the few instances where such screening is not practical, TSA could move security procedures to an off-site location.
'We're emphatically against one size fits all,' Whatley said in a phone interview.
The draft legislation posted on the alliance's Web site (www.secureaircargo.org/Library.html), said the program should 'provide a level of security commensurate with the level of security for the screening of passenger checked baggage' ' the same language Markey used in the 9/11 Commission Recommendations Act in 2007.
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| 'We have no problem with CCSP (Certified Cargo Screening Program) as a complement to a federal screening program. It just can't be a replacement for it.' | |
| Michael Whatley co-founder, Air Cargo Security Alliance |
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Under the alliance's plan, airlines or other third parties would be eligible to do the screening on TSA's behalf. Paying airlines to do the screening with equipment they already have in their warehouses would take the financial burden off airlines that are absorbing the cost of inspections or nervously passing it onto their customers.
'If the airlines want to do the screening, they can, and get reimbursed for it. And if they don't want to do the screening, they don't have to,' Whatley said.
Alliance officials claim that most airline cargo facilities have the space to do extra screening. But many airlines insist that without the CCSP program their warehouses would be overwhelmed with cargo waiting to be inspected.
The alliance proposes to fund the screening equipment and manpower with a 5-cent-per-pound fee that would go into a Department of Homeland Security trust fund, much like passenger screening is paid for with a $2.50 surcharge per ticket. The fact that the funding mechanism is revenue neutral and won't add to the federal deficit should help attract support on Capitol Hill, Whatley said.
Airlines would be forced to pay the difference between the money raised by the fee and operational costs, according to the draft legislation.
A report two years ago by the Center for American Progress estimated federal screening all air cargo would cost $600 million per year and require 4,000 additional personnel. It called for government-run checkpoints to inspect loose cargo at the 45 biggest airports, with the added flexibility of allowing companies that meet tough security standards to clear in advance cargo built-up on pallets, flat sheets or containers. The report envisioned a certified shipper program as an interim step until technology is developed that can inspect large shipments. It will take at least a decade before the detection systems and airport infrastructure are in place that can efficiently house and inspect all air cargo ' domestic, international inbound and consolidated shipments, the think tank added.
'Certification of cargo by a shipper, freight forwarder or air carrier does not provide a level of security comparable to cargo inspected by a government agent,' the report said.
P.J. Crowley, one of the authors, was a member of the Obama administration's transition team and served on President Clinton's National Security Council.
The primary benefit of the CCSP program is that shippers and cargo consolidators can certify shipments as secure so that other intermediaries or airlines do not have to rip open pallets or containers to check individual pieces, as required by law. Companies can opt to do physical searches or employ explosives detection systems, including X-ray and explosives residue sensors. Each facility must have security procedures in place before it can be approved to move cargo through the expedited security lane. For some companies that means paying for employee background checks, technology, maintenance, training and recordkeeping at multiple facilities.
The program's requirements are too onerous for small-size forwarders that follow a non-asset-based business model and don't have the necessary warehouse space to even house a screening program, Whatley said.
The Air Cargo Security Alliance was formed by three companies last July and has grown to more than 225 members in 45 states, including shippers, customs brokers, airlines and a handful of airport authorities. There are about 4,200 indirect air carriers in the United States and 90 percent of them are small to medium-size enterprises.
The typical member has offices in three to five cities and books cargo out of multiple airports, but few of them have their own warehouses or pickup and delivery trucks. They simply are logistics coordinators that use their expertise to find the most cost effective, or reliable, transportation options for their customers.
'So if you tell these guys you've got to have a warehouse in every city you operate in and hire manpower and buy screening equipment, that's not an option,' Whatley said.
The alliance also fears that the expense of screening will force some struggling airlines to discontinue cargo service altogether or pull out of secondary markets and concentrate on hub airports where they can justify the cost of screening systems, in the process hurting business for local airports, forwarders, trucking companies and raising trucking costs for shippers in those locations.
Since last fall, United Airlines has ditched cargo service in Anchorage, Alaska; Kansas City; Cancun, Mexico; West Palm Beach, Fla.; Colorado Springs, Colo.; Manchester, N.H.; and Guatemala because those locations were losing money. Some of the service cuts, however, were tied to discontinuation of passenger service for reasons having to do with lackluster travel demand.
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| Jack Boisen chairman, The International Air Cargo Association |
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| 'We do not believe that screening can be the sole responsibility of the airlines, nor do we support the efforts of some entities to federalize all air cargo screening, making it a TSA function and locating it solely on airport grounds.' | |
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'Putting an unfunded mandate on airlines is very detrimental to the air cargo industry as a whole and we don't want to put that burden on those guys,' Whatley said.
He compared the CCSP to the Clear registered traveler program under which passengers pay $199 for an annual membership and a biometric identity card that allows them to use an express lane to bypass the normal security line at the airport. Clear is operated by Verified Identity Pass Inc., a privately held company.
'We have no problem with CCSP as a complement to a federal screening program. It just can't be a replacement for it,' Whatley said.
High-tech companies and others with high-value or perishable shipments will likely take advantage of CCSP so that their shipments aren't opened and possibly damaged.
'We're trying to have a big tent approach that works for every company,' he added.
As part of its lobbying effort, the alliance says it is circulating the draft legislation on Capitol Hill. It met with staff of the Senate Commerce, Science and Transportation Committee, the House and Senate leadership offices and members of Obama's transition team, and plans to directly make its case to a new TSA administrator when someone is nominated by Obama.
It is also trying to drum up industry support by meeting with the Los Angeles Airport Air Cargo Association, the JFK Airport Customs Brokers Association, the Pacific Coast Council of Customs Brokers and Freight Forwarders Associations, the Express Logistics Association, the Coalition of New England Companies for Trade, pilots unions and other groups.
'We believe if the Obama administration decided to set up a screening program they have authority to do this under current law, then we wouldn't need legislation. But we want to make sure we're dual tracking this,' said Wirsing, a former head of the Airforwarders Association.
The alliance does not appear to be winning many industry allies so far.
The International Air Cargo Association, which represents all parts of the air cargo industry including airlines, stated it is against the idea of a federal screening requirement.
'We do not believe that screening can be the sole responsibility of the airlines, nor do we support the efforts of some entities to federalize all air cargo screening, making it a TSA function and locating it solely on airport grounds,' TIACA Chairman Jack Boisen said during the hearing.
'We believe federalization or airline-only screening would unduly crowd this function onto airport grounds, potentially creating significant bottlenecks, and would impose a one-size-fits-all approach to air cargo screening. While this approach might work in certain locales, it would likely produce commercial gridlock at many airports. The flexibility allowed under CCSP is a better fit with the diverse needs of the air cargo supply chain,' he said.
Brandon Fried, the current executive director of the Airforwarders Association, also expressed worry that consolidating cargo screening at the airport would lead to overcrowding and delays that 'will jeopardize the economic stability of the air transportation sector without providing greater assurance of cargo safety.
'We believe the strength of CCSP is that it provides for multiple options throughout the supply chain, including the use of centralized third-party screening centers, third-party logistics providers, shippers or exporters, and freight forwarder screening facilities, which will lead to robust competition and, ultimately, the reduction of screening costs,' he testified.
In an interview, he went further, suggesting that having a parallel TSA screening operation would undermine the CCSP.
'TSA screening is not just another option. It represents a distinctly different one-size-fits-all approach. It ignores the complexity of the screening process and it would lead to the diversion of personnel, resources and political will away from the CCSP. I think it would effectively cripple the CCSP program and render it unworkable,' Fried said.
'The TSA doesn't want the job and it's probably not going to do a good job of it if it's forced down its throat.'
He also criticized the idea of the government setting user fees and then making airlines cover any shortages at a time when the aviation industry is bleeding red ink.
'Who's to say that 5 cents is the optimal price to get screening done? Let the market determine not only the process but the pricing efficiency,' Fried said.
The Safe Commerce Coalition, headed by former Undersecretary for Border and Transportation Security at DHS Asa Hutchinson, is also fighting 100-percent inspection mandates in both the marine and air cargo environments. It argues that such efforts alienate foreign allies and make the United States less safe than the current risk-based approach towards selective cargo checks.
The National Customs Brokers and Forwarders Association of America said in an e-mail that it supports the CCSP.
Known Shipper. Once the 100 percent screening regime is in place, the TSA should get rid of the Known Shipper program because it would be redundant, Whatley said.
Markey fought for the 100-percent screening standard because he believed Known Shipper is a toothless paperwork check that still left planes vulnerable to terrorist attack.
The Known Shipper rule, originally designed as a substitute for physical screening, requires airlines and freight forwarders to only accept cargo for transport on passenger aircraft from shippers that they have verified as legitimate businesses with an established reputation of tendering air freight. Shipments from anonymous parties are not allowed.
Forwarders until recently have been responsible for vetting their customers and submitting them to a TSA database, with the agency conducting spot checks of shippers to make sure they are valid. Forwarders could verify shippers by showing an existing business relationship backed up by contracts or shipping records. They also had to conduct an inspection of the shipper's place of business.
Freight forwarders and airlines would check the community database to see if a new customer was known or unknown.
The TSA is in the process of taking over responsibility for the shipper background checks itself and deciding the status of shippers whose names have been provided by forwarders.
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| 'The TSA doesn't want the job and it's probably not going to do a good job of it if it's forced down its throat.' | |
| Brandon Fried executive director, Airforwarders Association |
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'If cargo is being screened and there is a chain of custody, then all the reporting requirements and processes would be superfluous,' Whatley said.
But the Known Shipper program is not going away because it is part of a layered security approach that 'still provides a measure of knowing who is tendering cargo into the system,' said Douglas J. Brittin, the TSA's air cargo manager, at a March 10 panel discussion during the International Trade Compliance Professionals Association's annual conference in Anaheim, Calif.
Brittin also questioned the merit of trying to force TSA to take on the responsibility of inspections.
'It's a little bit late in the game to be taking that approach. It would be a huge challenge to get the law changed, get funded, and to get facilities set up in time' for the August 2010 screening deadline, he told American Shipper. 'And it still doesn't solve all the challenges. Anybody who doesn't want their cargo opened is still going to need the certified program.'
The TSA has tried to address the affordability issue by allowing companies to set up independent screening facilities, or co-ops, to serve forwarders that can't afford their own equipment, Brittin said.
'It provides an outlet for small and medium-size freight forwarders to get their cargo screened efficiently and cost effectively,' he said.
Whatley dismissed the notion of using third-party facilities specifically set up to run cargo through an inspection process the way a car quickly gets scrubbed in a car wash.
Using an independent, for-profit security shop would require an extra drop off and pickup en route to the airport, adding time and expense to the process, he said.
The alliance, however, would be comfortable with arrangements whereby approved cargo handlers provide screening at a central airport location for airlines that do not want to take on extra security themselves, especially if the cargo is transported directly to the plane from that location, Wirsing added.
Alliance officials also cautioned that a forwarder operating an independent facility may put cargo from competitors at the back of the line if there is a backlog, or could use information gleaned from the shipping documents to back sell to the original customer in an effort to steal their business.
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| Keeling |
Not all small forwarders view the CCSP with trepidation. Los Angeles-based Consolidators International Inc. recently said it is in the process of qualifying for a $275,000 grant from the TSA to purchase a large aperture X-ray machine and an explosives trace detector as part of a technology demonstration program to help meet the air cargo security mandate. It said additional funding assistance is expected.
CII is the first smaller cargo organization to acquire new screening equipment. It spent two years working on its application to serve as an independent screening facility for other forwarders.
'Customer confidentiality will be observed and rigidly adhered to,' said Julian Keeling, chief executive officer, in a statement. 'We can save forwarders time and money when utilizing CII's screening equipment.'