The long and often fractious relationship between the International Air Transport Association (IATA) and the International Federation of Freight Forwarders Associations (FIATA) is set to turn over a new leaf after nearly three years of intensive discussions, although sticking points – like issues relating to CASS settlement system – remain.

These talks have revolved around the fundamental issue of the need to evolve and clarify what has been the historical role of freight forwarders in their relationship with air carriers. This process ultimately became formalised in 2013 as the Cargo Agency Modernisation Programme (Camp).

“Discussions with FIATA have been very very productive and quite lengthy, we’ve been talking now for probably about 2.5 years, but the good news is we’ve concluded what we feel is really the bulk of the valued discussions we’ve been having,” said Glyn Hughes, IATA’s global head of cargo.

“The good news with regards to Camp is that we are moving from the dialogue phase into the implementation phase,” he added. This will see ratification by the airline cargo committee in March next year, followed by a roll out of this new programme progressively from the second quarter of 2016.

He added that while both parties have come to an agreement on a number of significant changes in the relationship between the carriers and the forwarders as represented by the two associations, they haven’t agreed on everything – a reasonable outcome given the vast distance that separated the two parties early on.

“We do have different constituency groups that we are representing, but we do have more areas of common agreement and what is going to happen now is that there is now a period of time for both groups to reflect on areas don’t agree on and rather than wait to introduce those areas, IATA and FIATA have both agreed that IATA will move forward and implement some of the aspects that we have agreed on within the current conference-based programme.”

The ultimate goal however, is to move the relationship between the two away from the historical ‘conference’ structure which was based on the original relationship whereby freight forwarders were agents of the carriers, in contrast to today’s reality in which forwarders are customers of the airlines.

The idea is to have some form of new independent programme around which the new relationship will be based, but Hughes notes that this “is still a longer-term objective, but that will require IATA and FIATA to basically tie up loose ends – so rather than waiting for that time frame, we’ve both decided to implement some key aspects now.”

Among the key aspects that will be implemented are:

Role recognition – It is “very critical” for the freight forwarders and the airlines as well, to view the fact that forwarders are no longer acting as agents of the carriers (in reality they’re agents of the shippers) and really engage in a partnership relationship with the carriers as their customers. With this the term ‘agent’ will be dropped to be replaced by ‘freight forwarder’, with a new legal agreement to support that.

Clarifying responsibilities – The historic situation in which the freight forwarder was acting as an ‘agent of the carrier’, but also completing the air waybill as an ‘agent of the shipper’, meant that the relationship, responsibilities and accountabilities were somewhat confused, Hughes points out. By specifically clarifying the roles, it allows things such as liability and accountability by the carriers in providing the service they’ve committed to. And it will establish mutual benefits of the programme to be more responsive to customer needs going forward.

Cargo Account Settlement Systems (CASS) – The CASS will be maintained in its traditional form, Hughes said, because “it brings efficiency to the process of settling accounts between airlines and their customers – the freight forwarders.” This has been a key area of consternation amongst freight forwarders the world-over for a variety of reasons, in part because of the lack of uniformity with which CASS and its associated requirements are applied across different markets. FIATA maintains that the CASS system should be optional across the globe.

A spokesman for the Federation of Asia Pacific Aircargo Associations (FAPAA), which represents freight forwarders in 20 countries across the Asia Pacific region, noted that CASS works well for some within the region although there have recently been issues around matters relating to CASS such as the financial assessment of businesses for CASS credit purposes.

While the mechanism of CASS as a streamlined and cost-effective means of settling billing is practical and efficient, it is how various aspects of it are applied that often becomes problematic.

Some well-established IATA-accredited air freight forwarding agents having recently been re-assessed despite perfect payment history over a long period of time.

“In addition, the industry here in Australia has an exemplary record of there being no default of any kind by any business to IATA CASS in over five years. Yet we have seen evidence of what we believe are draconian over-protective requirements for a Bank Guarantee, or an equivalent Default Insurance Protection that is still required for certain businesses by IATA, on behalf of carriers.

“This is seen as an unnecessary and unjustified cost to business and IATA cannot reasonably justify these requirements on many occasions.  It appears that carriers, unlike most businesses, are not prepared to wear any element of risk,” the spokesman said.

AFIF Australia has made an official request to the International IATA cargo Agency Conference to consider these implications and specifically, to apply the same financial criteria that exists within the European Air Cargo Programme (EACP).

In another case the IATA regional office changed the provider of DIP insurance, but without prior consultation as required in their resolutions and this resulted in some forwarders being asked for Bank Guarantees when none were required previously.

In Hong Kong, Thailand, Singapore and Indonesia for example, there has been a constant call for a more equitable Annual Financial Review for air cargo agents and an ongoing battle of words continues to push for IATA to overhaul their financial review systems.

Some airlines for example do not just rely on the IATA accreditation system but also require an individual Bank Guarantee from the agent. So, in many Asia Pacific countries and regions, double Bank Guarantees (or equivalent default insurance) are commonplace.

Other problems highlighted by the FAPAA spokesman include situations where forwarders see monies deducted out of their accounts even if there is a billing dispute taking place at the time of collection. It is then up to the forwarder to prove the carrier is wrong before they can get their money back.

While not speaking directly to these comments from FAPAA, Hughes has had a frequent and open dialogue with the Asia Pacific forwarders over the years. In Geneva, Hughes said in a broader context: “We will enhance the dialogue process to make sure that any changes to the CASS system have been communicated and the whole industry has had an opportunity to interact and actually steer and influence those changes.”

Industry collaboration – Hughes strongly advocates a far greater degree of industry involvement in both the changes that are currently underway through the existing conference mechanism and also in the longer term objective of having this IATA, FIATA programme managed separately. “It’s critical for an industry that we be able to collaborate more,” he says.