Iata backs down on Cass guarantee

The move by the
International Air Transport
Association (Iata) to slap
massive bank guarantees on
forwarders using its Cargo
Accounts Settlement System
(Cass) has been reversed
after urgent negotiations
between the airline and
forwarder representative
bodies.
And Fiata, the forwarders’
global association,
announced last week that,
from July 1, forwarders
would no longer be required
to provide expensive
and cumbersome bank
guarantees, nor provide
additional sums after this
date unless they defaulted
on the Cass payment terms
in the future.
And this, according
to David Logan, CEO
of the SA Association of
Freight Forwarders (Saaff),
who released the Fiata
announcement to FTW,
will be applicable to the SA
forwarding industry.
This followed a year
during which forwarders
had been receiving requests
to deposit higher security
bonds to insure payments
to Cass. And this was no
peanut money, with bank
guarantees as high as the
equivalent of R4.5 million
being reported.
Until the recent global
financial crisis, the
requirement for forwarders
to undergo a financial
assessment by Iata had
largely been dormant.
However, the crisis
sparked a u-turn by Iata,
with forwarders having
to undergo financial
assessment, and as a
consequence, provide Cass
with a bank guarantee.
This, said Fiata, followed
an Iata finding that had
been a US$15-m fraud
in the settlement system.
The reaction of the Iata
management, it added, was
to impose zero tolerance
and remove local discretion
from Cass managers. This
aggravated what forwarders
felt were unreasonable and
unjust bonding requirements
– where perfectly compliant
forwarders had been required
to provide additional hefty
security bonds.
But a strategic meeting
between Fiata and Iata saw
the parties agreeing that
there was an urgent need
to review and revise the
existing criteria. A joint
council of the European Air
Cargo Programme (EACP)
devised a new draft version,
which became effective from
July 1.
Under the new criteria,
there will be no more
financial reviews of the
intermediaries except
in “well-defined”
circumstances, said the Fiata
announcement.