News / IATA 'taking a sledgehammer to problem that needs a little tack hammer'

© Robert Hyrons

The forwarding industry has questioned IATA’s decision to require ‘potentially ruinous’ financial securities for some companies wishing to use CASS, its settlement system, as exclusively revealed by The Loadstar yesterday.

New offices, new company names, or new locations – even for established forwarders – could result in the need to give IATA 20% of air cargo sales turnover in deposits, or expensive bank guarantees.

IATA did not respond to The Loadstar’s question on how much money had been lost in the past through a lack of financial guarantees.

But Turgut Erkeskin, president of Fiata, told The Loadstar: “It’s worth noting that the current payment success rate of forwarders to carriers stands at an impressive 99.99%. Therefore, there’s another valid argument for relaxing guarantee rules in light of this exceptional track record.”

Bill Gottlieb, former Fiata and CIFFA president, added: “CASS came out of the passenger settlements system, which involves travel agents. On the travel agency side, there is a greater risk of fraud.

“In cargo, we are a very compliant, very disciplined industry in terms of payments. In general, IATA makes it worse. But we pay our truckers. We pay our steamship companies. Otherwise, how long are we going to be in business if we don’t pay? A week, a month, two months? You know you’re going to fade away if you don’t pay.

“So show us, where are the numbers? What are we talking about here? And if we’re talking about .00 decimal places, why do you need a sledgehammer to deal with something a little tack hammer can resolve?”

Mr Gottlieb said there were better ways.

“Maybe IATA should do some kind of credit verification – but it is saying it doesn’t want to. It just wants to get people to bond for all of its risk, not even a portion of its risk. And that’s wrong. And the cost to our industry – because it’s not as if IATA is going to pay the cost of this, it expects the forwarders to pay – is astronomical.”

The CASS system is unique, particularly in terms of how much power it offers IATA, he explained.

“No other industry has anything similar, where all the buyers must pay now, on time, in full, or you’re going to get cut off from all of your vendors and billing access, and be, basically, threatened, if not placed out of business, because of the power CASS has over you.

“All these guys are paying the annual fees, that goes right to IATA’s bottom line. Which, again, makes no sense. Where in this world do you pay your vendors to support a system where they’re billing and collecting their money?”

“And there isn’t the ability for the forwarders to effectively challenge it. Another forwarder told me, ‘Bill, I’m tired of fighting with these guys. I’m just going to do what they want, because my business is more important’.

“All he wants to do is business. And IATA drives you around the bend, there’s no way to deal with it.”

The disdain with which IATA is held could drive growth for alternative payments solutions.

“Fortunately, we’re also observing several innovative solutions emerging on the market that could help meet this challenge,” noted Mr Erkeskin.

More to follow…