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					“Carrying the liability”


Cargo Claims & Loss Prevention
Conference
18th September ‘08, Bangkok, Thailand
                   Airlines
Governments
                                       Shippers?

                Liability –
               who carries
                   it?
                                 Manufacturers?
  Airport
authorities?


                 Security
               contractors?
                              Who has the deepest
                              pockets & is easiest to sue?
               2
 What‟s the Insurance Perspective?
 Cargo security varies from state to state

 Today’s terrorists target weak links

 Terrorism risk is rated on perceived threat

 State compliance with Annex 17 contributes to reduced risk

 Better security = reduced terrorist exposure & war related
  costs

 And reduces overall cargo related insurance costs

                         3
Terrorism                    Crime



                  Secure
                 Cargo Ops




     Legal                   Reputation

                 Why?

             4
             Security Assumptions
 Annex 17 will not change significantly in near future

 Threat levels will remain largely stable

 The need to address vulnerabilities (inc crime) will
  increase

 Cargo revenue is increasingly important to airlines

 Importance of air cargo to the global economy will grow


                         5
         Current Global Standards
 Global instruments

     ICAO Annex 17,

     WCO SAFE Framework of Standards

 Industry best practices

     IATA SeMS, IOSA & ISAGO

     TAPA, ISO, AIMSS, others?

     Wassenaar Arrangement (SALW)

                        6
                                Cargo Crime

        US Congressional Research Service Feb 2008

    "It is estimated that direct losses due to cargo theft across all transportation
    modes total between $10 and $30 billion annually in the United States. The
    large range in this estimate reflects the fact that cargo theft has not been a
    specific crime category and therefore reliable statistics are unavailable."
    Later it continues; "In addition to theft, smuggling is a problem for air cargo
    security. Smuggling operations are often linked to organized crime, and
    may provide support for terrorist activities".




7
                                 7
Site of crime
                        Poland
   United Kingdom
                        1 incident
   12 incidents

   Netherlands
   29 incidents
                        Italy
   France
                        2 incidents
   2 incidents

    Spain               Turkey
    7 incidents         1 incident




    8
                    8
   The status of State requirements
Survey of 32 States inc. large, medium & small cargo markets

 27 permit screening by air carrier, 18 by Regulated Agent

 23 have RA programs, 15 require their inspection

 22 have Known Shipper programs, 9 require inspection

 6 do not require inspection of RA or KS

 8 permit screening by RA although the RA is not inspected



                        9
   The status of State requirements
State survey continued

 21 permit use of “storage period” as a security control

 12 require set % random screening in range 0.5 – 10%

 24 permit use of canines

 27 permit use of metal detectors

 24 permit EDS & 23, ETD

 All permit or require X-ray, 30 permit hand search

                         10
                Why airlines worry!!

 Incident response – potential impact of a single major incident

 Survival – airlines can fold following security incidents

 Continuity – mass system disruption

 Responsibility by default – airlines must act where others do
  not

 Declining business – not uplifting insecure cargo




                            11
          The airline perspective (1)
 Air cargo security is the responsibility of all stakeholders

 We have a common enemy & share common objectives

 Variance in definitions / requirements facilitates failure

 Airlines should not be suffer from inaction by Contracting
  States or others

 There is no single source of expertise, or single solution


                          12
         The airline perspective (2)

 Airlines care about security – their existence depends on it

 The nature & magnitude of threat is different from pax & their
  baggage

 Solutions must be too

 Requirements must be proportionate, effective & sustainable

 Consistent global standards are achievable


                          13
            Non-compliant States -
            the commercial impact
 Uplift costs increase – & cannot necessarily be shared


 Complexity increases, speed & quality decrease


 Cargo transfers to other modes – e.g. ocean, road


 States & their carriers risk loosing competitiveness


                        14
               Managing Expectations

     The Commission of Inquiry into the Investigation of the
     Bombing of Air India Flt 182


     “There is an expectation that the industry will take ownership of
     its ownaviation security issues.”




15
                            15
            Secure Freight Programme

                   2020 Vision


  An air cargo industry comprised of certified
 secure operators on secure supply chains
operating to internationally recognised standards
within Contracting States that are compliant with
                ICAO Annex 17.



                  16
             Secure Freight Programme – Scope

 Relevant parts of Annex 17 acts of unlawful interference i.e.;

 Introduction on board an aircraft or at an airport of a weapon or
  hazardous device or material intended for criminal purposes:

 Communication of false information such as to jeopardise the safety of
  an aircraft in flight or on the ground, of passengers, crew, ground
  personnel or the general public, at an airport or on the premises of a
  civil aviation facility,

 Quality Control, and

 Cargo crime

                             17
                          SFP approach
 Long-term solution

 Team effort – success depends on proper participation by all

 Low technology, low cost

 Align with IOSA, ISAGO & e-freight were possible

 Embed requirements into daily operational activities

 Build programme & global standards for recognition of equivalence

 Start with baby steps & grow incrementally


                             18
   QUALITY ASSURANCE SYSTEM ~ STRATEGY & DEVELOPMENT

  It is intended that the SFP Quality Assurance System will contain dynamic
elements which, will be incrementally developed throughout its lifecycle. It will
                       initially be launched on a small scale.


                                   Certification, Registry &
                                         Data Platform


    Record Keeping &
    Document Control
                                                                       Audit Protocol
                                                                         & System


                                   Standards &
  Incident Reporting
    & Management
                                Standard Operating                  Training & Competency
                                    Procedures                           Development


          Technology

                                                               International & National
                                                                Programme Templates
              Elevated Threat
                 Measures        High Level & Detailed
                                Readiness Assessments
SFP: Secure operators, secure supply chains

                               Controlled access
                                 data platform

      3 core                                       Registry
                  Standards,           Audit
     streams                                       & record
                  procedures        framework
                                                   keeping

                         Quality assurance system
     3 common
    foundations     Training & competency development

                               Capacity building



                               20
   IATA Secure Freight Programme
2020 Vision:
  An air cargo industry comprised of certified secure
  operators on secure supply chains operating to
  internationally recognised standards within
  Contracting States that are compliant with ICAO
  Annex 17.

Mission:
 To work with Contracting States and the industry to
 secure international air cargo against terrorism and
 crime by 2020.

                    21
                                                                                          Smart
The Mission                                                                             sustainable
                                                                                         security
                                                         SFP QAS
                                                        operational
                                                         & mature
                            SFP gains
                           initial State                                                     Effective Annex 17 &
                           recognition                                                       efficient SFP, secure
                                                                                                 global network
 Vulnerable
  air cargo                                                  SFP widely recognised by
  network                                                      States. Large scale
                                                             implementation achieved


                                SFP commences
                              certification of secure
                                      operators
   ICAO Annex 17 –
  standards & quality
control too inconsistent

      2008                         2010                          2013                              2020
   IATA Secure Freight Programme
Goal 1 - Regulatory:
 To work with Contracting States to implement model
 ICAO Annex 17 cargo security programmes by 2013

Goal 2 – Operational:
 To establish secure operators in secure supply chains
 operating to internationally recognised standards by
 2013.




                   23
Goal 1 – Model Annex 17 Cargo Security Programmes
     2008/09           2010                 2011        2012                2013

 DevelopI.            Prove
                          II.               III.           IV.              V
                                        Scale-up        Build
 concept &            concept, pilot
                       Proof of                                          Complete
                                                                          Roll out
                                        delivery        capacity
 programmes
      Set-up          delivery
                      concept            Build-up       Transition       Go-Live

2008/09. Develop a concept for enabling Contracting States not compliant with ICAO Annex
17 to become so; develop model programmes and templates for all-cargo & combination
carriers & integrators; develop a marketing & funding policy

2010. Identify suitable States with whom to prove the concept & pilot delivery of model
programmes. Prioritise implementation in States of most importance to the industry

2011. Expand the number of States with whom we work on delivery & implementation

2012. Develop a plan to support ongoing State capacity building & deliver SFP 2020 Mission

2013. Complete current workstream for delivery & implementation of model programmes


                                       24
   IATA Secure Freight Programme
Goal 1 - Regulatory:
 To work with Contracting States to implement model
 ICAO Annex 17 cargo security programmes by 2013.

Goal 2 - Operational:
 To establish secure operators in secure supply chains
 operating to internationally recognised standards by
 2013.




                   25
Goal 2 – Secure Operators in Secure                                                                                                     Secure carrier
                                                                                                                                    •   Cargo SeMS
Supply Chains                                                                                         Departure Airport             •   Verify chain integrity
                                                   Freight                                        •   Security plant                •   Contractors to be SFC
                           Haulier                                              Haulier                                             •   Oversight & control
                                                  Forwarder                                       •   Secure warehouse
                   •   Secure receipt                                    •   Secure receipt                                         •   Review & develop
                                                                                                  •   Secure airside ops
                   •   Protect                                           •   Protect
                                            •   Secure receipt                                    •   Contractors to be SFC
                   •   Secure transport                                  •   Secure transport
                                            •   Verify chain integrity                            •   Screening competence
                   •   Secure handover                                   •   Secure handover
                                            •   Separate & protect
                   •   Incident reporting                                •   Incident reporting
                                            •   Secure handover
                                            •   Security message &
                                                record
      Shipper
•   Secure preparation
•   Secure packing
•   Tamper evidence
                                                                                                      Ground Handler
•   Secure handover
•   Security message                                                                                   •   Secure receipt                Transhipment Airport
    & record                                                                                           •   Verify chain integrity        • Secure receipt
                                     For Operators                                                     •   Separate & protect            • Secure airside ops
5 Point Plans:                       For SFP Development
                                                                                                       •
                                                                                                       •
                                                                                                           Secure handover
                                                                                                           Maintain records
                                                                                                                                         • Verify chain integrity
                                                                                                                                         • Secure warehouse
                                                                                                                                         • Secure handover
2008/9 Develop basic export quality assurance system (QAS), conduct pilots, prepare for go-live
2010      Go-live, develop export QAS to include wider range of operator types and import QAS
2011      Scale-up delivery and stakeholder management plan to ensure completion of Operational Goal by 2013
2012      Develop a plan to ensure capacity building and delivery of SFP Mission by 2020
2013      Complete current workstream for delivery and implementation of the Secure Freight Programme

                                                                 26
   Operational Roadmap: 2008 / 09 deliverables and timelines
SFP Vision and Strategy       Compelling vision
                                & road map

                                    Sep 08                                   Sep 09                              Dec 09

                                                                                  v.1.0                          Handover to
Secure Supply Chains:               v.0.1
                                                                    Quality Assurance System                       Operation
                           Quality Assurance System
Quality Assurance System
                                                    Mar 09

Secure Operators:                                             v.0.1                           v.1.0
                                                              Audit                           Audit
Audit Development

                                                                       Jun 09
Secure Operators:                                                                                     Phase 1    Handover to
                                            Operator                2 operators
                                                                                                      Audits       Operation
Audits                             Assessment and Selection           Audit Pilot



Secure Operators:                 High level                            Initial registry of                Registry up-grade
                                 need defined                          Secure Operators                          commences
Registration



Industry and Regulatory
Recognition
                               For Value    For Quality Assurance           For                            For
                              Proposition 27      System                   Audit                         Rollout
                                           High Level Country Assessment

                                                 ID significant security risk
                                           (civil disturbance, war, terrorism, etc. )
                                               OK
      ID significant crime
(corruption, bribery, theft, etc.)

                                                        Bad
          OK              Bad

                                                                    Stop




     Assess compliance culture
(safety, security, business rules, etc.)


             OK
                           Bad                                   Poor                   Note:
                                       Assess keenness                                  Definitions and or criteria for
                                         to participate                                 assessing „ok‟, ‟bad‟, „good‟, „poor‟,
                                                                Strong                  & „strong‟, & evidence required to
                                                                                        support decisions, are yet to be
                                                                                   Go   determined.

                                                        28
SFP consistent with APEC Transportation Working Group (Cargo Security Sub-
Group) June ’08 objective to “design a secure supply chain framework (shipper,
freight forwarder and air carrier program elements) evaluate technology and
screening standards”
•Their 4 phase plan includes;
        “Phase 1 - Review & Policy Analysis
        Phase 2 – Program Design
        Phase 3 – Operational Pilot Testing
        Phase 4 – Implementation (5 years)”
•Support statements: 6 Security Group Member Airlines & 2 Others
•Regulators – Transport Canada, TSA, Australia, EU, Malaysia
•GHA’s – 2 large handlers wish to be early adopters

                                29
     The Value Proposition



Will the insurance market recognise the
       Secure Freight Programme?




              30
Thank you… any questions?
Contact:   edwardsj@iata.org
Phone:     +41 79 433 9528

				
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