DC Velocity - August 2010

May 1, TSA announced that the industry had
met a key milestone by screening three-fourths
of all cargo transported on passenger aircraft.
That cargo, however, probably represents the
air-freight equivalent of “low-hanging fruit.”
The remaining 25 percent consists of multi-
ple pieces that are shrink-wrapped on pallets or
loaded into containers. Those are expected to
be difficult to inspect without disrupting flight
schedules and deliveries. The problem is that
cargo must be examined at the individual piece
level before it goes aboard a plane, and no gov-
ernment-approved technology exists to screen
goods in palletized or containerized form.
Unless the shipments have been screened
before they reach the airport, the carrier will
have to break down the pallet or container,
examine the cargo, and then rebuild the unit
load before moving it onto the aircraft.

In an effort to divide up the screening burden and avoid having mountains of unscreened cargo piling up at airports, the government created what it calls the Certified Cargo Screening Program (CCSP). Under this voluntary initiative, participants certified by the government— shippers, freight forwarders, airlines, and third-party facilities—would be authorized to screen cargo in their custody.

To date, there are 440 government-licensed forwarders enrolled in the program, as well as 60 independent screening facilities—informally known as “car wash-es”—that are certified to screen cargo but may not deliver the screened cargo to the airlines.

But shipper enrollment has fallen short of expectations. As of mid-June, the TSA said 237 shippers had registered for the program. That’s well below the thousands of shippers agency officials had hoped would be participating by that time.

The industry worries that a lack of significant shipper involvement will lead to chaos. Airlines fear they will be inundated with unscreened cargo that they will be obliged to examine. For their part, freight forwarders are concerned their shipper customers will dump the screening burden on them under the premise that it is part of the forwarders’ job description.

Those concerns appear to be justified. A recent survey conducted by the Airforwarders Association found that 70 percent of shippers believe that forwarders should assume the responsibility for screening or inspecting shipments. “It has become very clear that the task of screening is going to fall largely on us,” said Brandon Fried, the association’s executive director.

The Government Accountability Office (GAO) said at the June 30 congressional hearing that shippers’ participation

would need to increase sixteenfold by Aug. 1 to achieve TSA’s goal of having each group bear an equal share of the screening burden. The watchdog agency questioned whether the industry could meet the deadline without the flow of commerce being impeded.

Despite the concerns, the forwarder survey found most respondents “cautiously optimistic” that the industry would be able to manage effectively through the mandate.

Slow on the uptake

Why have shippers been so slow to sign up for CCSP? Some say it’s because they have no real inducements to participate. During the June 30 hearing, the GAO noted that shippers have neither regulatory incentives to join the program, which is voluntary, nor economic incentives to do so because the airlines have yet to impose significant screening costs.

Freight forwarder and airline executives call that flawed thinking. As they see it, a shipper’s ability to control the screening and inspection of a shipment—rather than having someone else do it for them and risk damaging a fragile, high-value product—should be enough of an economic incentive to enroll in the program.

Shippers would also benefit from prescreening their cargo themselves because it would reduce the risk of having their shipments held up at the airport. Shippers already pay a premium for the speed of air transportation, so they should examine the “opportunity costs” they would incur if their cargo should miss a scheduled flight because the airline couldn’t examine it in time, said Ken Konigsmark, senior manager, supply chain & aviation security compliance for the Boeing Co., a large air-freight shipper.

“To the supply chain professional, time is as important as cost,” he said.

Art Arway, who heads security for the Americas for Deutsche Post DHL, which owns the world’s biggest air forwarder, said shippers are taking a big chance by not joining CCSP and certifying their security processes. “The airlines have said they will accept certified cargo first and then [screen] as they are able,” he said. “Shippers will definitely run the risk of missing an airline’s cutoff” if their cargo reaches an airport unscreened, he added.

New fees, requirements

Although some shippers may have hesitated to join CCSP out of concerns about cost, forwarders say such fears are overblown. The cost of participating in the CCSP program varies widely by industry sector, they say, and while forwarders are likely to face significant expense, shippers are apt to get off relatively lightly.