Friday 28th Oct 2016 - Logistics Manager

Forwarders win air cargo cash guarantee battle

Changes to the terms of the IATA-owned Cargo Accounts Settlement System (CASS come into effect on 1st July following a campaign by forwarders to get rid of bank guarantees that they argued were expensive and cumbersome.

Until the recent global financial crisis, the requirement for forwarders, when appropriate, to undergo a financial assessment by IATA had largely been dormant. However, the crisis sparked an about-turn by IATA to such assessments resulting in compliant European forwarders having to undergo a financial assessment, and as a consequence, provide CASS with a bank guarantee.

According to the British International Freight Association, one member was faced with having to provide a £400,000 guarantee.

BIFA director general Peter Quantrill said this blanket move was one that had to be challenged, both for the sake of BIFA members and the wider freight forwarding community.

At a meeting of the European Air Cargo Programme (EACP) Joint Council in February, a small working group was set up, consisting of representatives from BIFA, FIATA and IATA to consider changes to the financial criteria.

The change means that forwarders which comply with the terms of the CASS agreement, will no longer be required to provide bank guarantees, nor provide additional sums after this date except if they default on the CASS payment terms in the future.

BIFA’s Director – Trade Services, John O’Connell, who led the trade association’s efforts on this initiative, adds: “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 is being put behind us.”