When it comes to compliance issues, international air cargo organizations operate in a dynamic, complex and tricky landscape. They have to deal with a complex international trade and transport compliance framework that is characterized by the involvement of several parties in multiple countries. Additionally, they face a multitude of regulations and government agencies that oversee and govern different aspects of the trade and transport process.
Not playing by the rules of international trade and transport compliance can be a costly affair. Non-compliant air cargo organizations risk reputational damage, heavy fines and, in some cases and countries, even potential jail time for employees. Luckily, you can avoid these problems and complications if you use the proper tools and install the right compliance frameworks. This article will discuss five best practices that allow air cargo organizations to improve their current issues with international transport and trade compliance.
The challenges that air cargo organizations face
Before we zoom in on the solutions to trade and transport compliance issues, we must first address the major challenges that air cargo companies face in this particular regard.
Regulations regarding international trade and transport are often complex and difficult to understand. You have to check air cargo against applicable lists and demonstrate that all appropriate approvals, licenses, or exemptions are in place. This is a knowledge-intensive process that requires a lot of specific compliance expertise.
Being non-compliant can ruin the reputation of an air cargo organization. Reputational damage seriously hurts the competitive position of a company, leading to loss of income. Besides that, failure to comply with transport and trade regulations can lead to civil and criminal penalties for airlines and their staff, but also to their removal from trusted trader programs.
Lack of integral and integrated solutions
Many air cargo organizations also don’t have integral solutions that vet an entire international transport movement. The lack of a central overview makes it difficult to see which content has to be reviewed for compliance. That’s a big problem because airlines are obliged to know the content of all shipments onboard and check the content and parties involved against the applicable legislation.
The lack of integral transport movement solutions also increases the threat that unknown supply chain risks pose to air cargo operations. Another problem is the absence of integrated solutions that automatically vet transaction issues, including audit trails.
The nature of modern international trade and transport has resulted in vast amounts of data being created from various distributions. This data is often dispersed across the supply chain. Many copies are made without storing vital compliance information in one centralized and easily accessible environment. There is no single source of truth to effectively tackle international trade and transport compliance issues. Looking up the right information takes a lot of time and effort. The result of these data management problems? Incorrect insights that have the potential to increase the level of risk.
5 ways to solve your trade and transport compliance issues
The good news? There are several ways to put the power of digital technology to good use and solve the aforementioned trade and transport compliance issues. Read on to find out how!
1. End-to-end compliance
To efficiently combine speed (air cargo’s number-one asset if you compare this mode of transport to road transport and shipping) and compliance, guaranteeing end-to-end compliance throughout the entire supply chain is an absolute must. A background, industry-specific solution like delivers on this promise by automatically vetting all transactions throughout the entire supply chain.
Perform thorough checks at multiple points and provide insights for holistic decision-making while automatically creating a complete audit trail of all transactions. ITTS allows you to screen sanctions, goods and people.
2. Real-time data scanning and refreshment
The airfreight industry is constantly evolving. Country-specific rules and regulations can change on the fly. We have seen several examples of this during the COVID-19 pandemic. Having continuous access to real-time data is essential to keep up with the latest sanctions, regulations and compliance information.
Specialized and industry-specific tools like ITTS allow air cargo organizations to check publicly available lists, regulations, and trade and transport compliance data every couple of minutes. Powerful algorithms produce solid results and minimize the false positives that often occur when companies conduct the same research in a manual fashion.
3. Automated compliance checks
The international handbook of trade and transport compliance is a bulky beast. Besides that, there are also a lot of country-specific rules and regulations. Manually digging through all of this information is an epic and error-prone task.
A dedicated compliance tool allows you to automate the process of checking air freights against international regulations and internal policies. The solution can take data from different sources and documents, such as airway bills, commercial invoices, customs declarations, and many more.
4. Creating a centralized data hub
A fragmented information landscape is the archenemy of a solid and comprehensive compliance strategy. Every air cargo carrier needs a central data hub. Such a centralized information environment gets rid of information silos (which hamper the free flow of information across an organization) and brings all of your data sources together.
A centralized data environment merges all information into a single, shareable source. This minimizes the time spent reconciling competing data sets and reduces the inefficiencies caused by inaccurate or incomplete compliance data. Centralized entity data increases the opportunities for collaboration and shared problem-solving across the organization because each division is equipped with a shared foundation of baseline knowledge.
5. Adhering to IATA message standards
IATA Cargo-XML messaging is rapidly emerging as the preferred standard for electronic communication between airlines and other air cargo stakeholders, such as shippers, freight forwarders, ground-handling agents and regulators. Customs and security agencies also use IATA messaging standards.
The IATA message standard aims to:
- Facilitate and streamline cargo business processes.
- Comply with important security regulations. The electronic Consignment Security Declaration (eCSD), which provides regulators with an electronically manageable audit trail of how, when and by whom cargo has been secured along the supply chain, is a good example of an important piece of air cargo legislation.
From the viewpoint of compliance, it is important to work with a solution that adheres to IATA electronic messaging standards. This provides you with a messaging standard that is used and accepted on a worldwide scale.
How Be Informed, GluoNNET and ITTS can help
Are you an air cargo organization that wants to solve its current issues with trade and transport compliance? Be Informed and GluoNNET are more than happy to help you. Our International Trade and Transport Compliance Solution (ITTS) enables organizations to automatically check international trade and transport transactions for potential compliance issues. It also supports your staff in resolving problematic transactions while automatically building an audit trail to evidence this to regulators.
ITTS focuses on the four important dimensions of international trade and transport compliance:
- What is being traded and transported (goods, people, quantities)?
- Who is involved in the transaction (consigner, consignee, agent, financer, insurer, carrier)?
- Where: from, to and via which country?
- Why: what is the intended purpose and end-use of the transaction?
Would you like to know more about our organizations and ITTS? Get in touch with our expert today!