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.