After five years of preparation, the revised framework agreement between airline and forwarder is finally headed for implementation, following a pilot phase in Canada.
With the introduction of the IATA-FIATA Air Cargo Programme (IFACP), the relationship between airline and forwarder is finally brought in line with commercial reality.
The existing Cargo Agency Programme, in place since the 1960s, still defines forwarders as agents for the carriers, a commission-based role that fell by the wayside decades ago.
“Given that more than 80% of transactions are performed by freight forwarders acting as principals, IFACP better clarifies and validates the business through a buyer-seller relationship,” said Juan Antonio Rodriguez, IATA director FDS operations.“Simplifying the governance structure reduces the administrative requirement to manage the programme,” he added.
“The new agreement will be a lot more reflective of today’s industry and challenges,” said Bill Gottlieb, chairman of the airfreight committee of the Canadian International Freight Forwarders Association and a former president of FIATA, the global forwarder organisation.
“You are no longer an agent of the airline, you are a principal,” he added.
The new regime will be jointly governed by IATA and FIATA, which assign six representatives each to the board. According to Mr Gottlieb, they were chosen to represent the major geographical areas as well as a mix of large and smaller operators. On the forwarder side, there are representatives of smaller companies from Canada, Hong Kong, South Africa and India, plus executives from Panalpina and Kuehne + Nagel representing Europe and the larger forwarder contingent. The airline group is made up of delegates from Lufthansa, Emirates, American Airlines, FedEx, Cathay Pacific and EgyptAir.
With no stumbling blocks anticipated, after the pilot programme, expected to run until the end of October, IFACP will be rolled out globally – a process that should be complete by the end of next year, so the new agreement will be in place everywhere except in the US by 1 January 2019.
Like the IATA structure, which is represented in the US by Cargo Network Services, the world’s largest single airfreight market will not be covered by ICFAP in the foreseeable future, although Mr Gottlieb expressed hope that at some point the US could come on board as well.
Once the new regime is in place, the old agreement will disappear, so IATA agents have to decide if they want to sign up for IFACP, become CASS associates or seek bilateral arrangements with individual airlines.
They face a straightforward transition to the new regime, Mr Gottlieb said. They will be provided with a new agreement and automatically join IFACP while continuing their enrollment in CASS. New applicants will have to submit a form and meet financial and operational criteria.
Gottlieb said that for existing IATA forwarders, the changes in the agreement itself would be negligible.
“There won’t be any noticeable changes in your day-to-day operations. The air waybill won’t change any time soon,” he said.
He added that consultations with representatives of the insurance sector had indicated that there will be no fundamental change in terms and conditions, as current insurance practices are usually based on commercial reality and have moved beyond the carrier-agent relationship outlined in the outgoing Cargo Agency Programme.
IATA airlines will automatically transition to the new regime on the date IATA declares IFACP effective in any given region or country.
Keshav Tanna, incoming chairman of FIATA’s Air Freight Institute, described IFACP as a basis to move forward.
“We are optimistic that the IFACP will foster innovation to deal with the commercial challenges facing the air cargo industry,” he said