Increasing regulation: A growing concern
For about 25 years, airfreight forwarders in the U.S. have been largely free of substantive federal regulations due to the demise of the Civil Aeronautics Board. Of course, forwarders had to make sure that hazardous materials were properly transported on planes, but for the most part, the domestic industry was largely burden-free.
Let us hope that the recent advent of increased U.S. federal regulations do not portend a return to the years before the 1978 dissolution of the CAB. Many of us old enough to
remember vinyl records and disco do not miss the CAB’s rigidity. Forwarders were forced to file tariffs whenever they wanted to change rates, a time-consuming and wasteful process, among other things. This changed with the Airline Deregulation Act, which
greatly reduced the U.S. government’s control of the industry.
Free from CAB oversight, forwarders were free to respond to market conditions immediately and were able to capture more business with their newfound flexible-pricing ability. The ensuing years were certainly tumultuous, with several new airlines entering and exiting the market. Unfortunately, other branches of government have begun to impose rules that harken back to the days when forwarders barely made a move without Washington oversight.
Until Sept. 11, the regulatory responsibilities and overall landscape for freight forwarders was relatively clear. Now, the regulatory burden on forwarders is constantly increasing, and industry insiders are beginning to worry about its cost. The government’s eager response to the 9/11 terrorist attacks — the passing of the Air Transportation Security
Act and the establishment of the Transportation Security Administration — was swift. The new agency tracked down more than 4,000 airfreight forwarders in the U.S. that had
flourished under a relatively regulation-free environment. An elaborate and utterly confusing air cargo security regime was imposed upon an industry long free of the CAB’s
The TSA’s increased security requirements also brought a new era of enforcement. Confusing regulations and frequent visits from government security inspectors became
commonplace. Security training, locked doors and safety cameras made the forwarder more of a policeman than a transportation expert. Those forwarders not taking
compliance requirements seriously began to pay the price through stiff fines and jail terms. Many companies not willing to comply have dropped out of the business or focused on other, less regulation-intensive modes.
Customs and Border Protection, an agency long seen as the collector of import taxes and duties, now has an increased security role through its involvement in the Air Cargo Advanced Screening program. The initiative analyzes house airbill shipment information before departure as a way to assess risk on shipments coming into the U.S. While the program is in a voluntary pilot stage, rest assured that a regulation or legislative requirement is coming soon. Forwarders are now working to figure out how to get the required information into the CBP’s hands without decreasing the amount of time to prepare shipments before departure.
And thanks to recently passed transportation legislation, there are new demands on forwarders arranging truck shipments. In an industry deregulated long ago, the federal
regulatory burden seems to be increasing. Of course, all of this is added on top of the ever-growing maze of regulations imposed by a number of different federal agencies
surrounding imports and exports.
All of us know that nature abhors a vacuum. The U.S. government sees a vacuum and appears to be filling the void with an increasing regulatory burden. However well intentioned, this may create another vacancy where a successful industry once thrived.
— Brandon Fried is the executive director of the U.S. Airforwarders Association