Use Caution: Air Cargo Industry Experiences Increasing Compliance Regulations

2018/06/29

By: Ashleigh Foor

(Source: Bobsguide, 29 May 2018.)

Air cargo industry, be warned: regulations are ever-increasing in 2018, leading to more fines and penalties for those involved in illegal trade. A Maersk company recently violated international sanctions by carrying arms components with the potential for military use from North Korea to Egypt. This is just one example of what appears to be a lack of strong compliance procedures that diligently screen parties, goods, and destinations involved in a transport.

The use of air cargo continues to increase as it is the fastest means of transport for sending goods all over the world, but with many high profile sanctions breaches in the news many are left wondering if the industry can abide by these increasing regulations while still fulfilling the need for speedy exports. These new levels of regulation are due to the air cargo industry being used to launder money and fulfill terrorist objectives. Air cargo companies are currently required to check Airway Bills (AWBs) against sanctions and dual-use goods watch lists. Noncompliance can lead to hefty fines, loss of export/import privileges, along with reputational damage and even prison time.

The air cargo industry is in danger of losing its competitive advantage – speed – due to the burden of compliance regulations. The International Air Transport Association (IATA) believes that if these increased regulations are not dealt with and followed efficiently then costs will increase – slowing transit and hurting the industry’s unique selling point.

Currently, around 50% of AWBs globally are still processed on paper rather than electronically (e-AWBs). IATA is highly recommending a change from outdated paper-based processes to automated and digital screening solutions so that airway bills are verified with speed and accuracy. Companies that still rely on manual checks are at an immediate disadvantage.

One air cargo company leading the way in overhauling its compliance processes is Lufthansa Cargo. They have implemented a digital sanctions and dual-use goods screening engine that automatically checks cargo documentation to identify any irregularities that could pose a risk. The technology scans descriptions of goods to identify if they have the potential for military use as well as checks origin and destination locations to confirm the cargo is not moving to or from a sanctioned territory.

With all of the changes taking place and scandals in the headlines recently, automation and digitization of processes are not simply great goals to strive towards – they’re expected and necessary for staying compliant. Air cargo companies must evolve to meet higher regulatory requirements, and ultimately, to do their part in protecting global security.