Air Safety Recommendations for Freight Forwarders

by | Apr 16, 2019 | Carriage by Air, Commercial Issues |

Air Safety Recommendations for Freight Forwarders

María Elena Sierra Díaz, AS Consultores, Mexico

The stages and processes involved in the handling of international air freight are as follows:

  1. Internal processes.
  2. Processes before the authorities.
  3. Processes with correspondents.

Internal processes

Separated by operational processes of services and internal processes of confidence checks.

1. Operational processes of services – Imports, Exports, Logistics.

In the internal processes, the companies require to be protected:

  • Against accidents or partial or total theft of merchandise.
  • To fully acknowledge the liability of their acts.
  • Against risks generated by their personnel.
  • To have a document control of their operations.

In general terms, it does not have:

  • The legend of electronic trading.
  • The integration policy of the customer’s file.
  • The legend of operational risks and assurance.
  • Legal certainty concerning the financing requested by the customer.
  • The policy of merchandise retention and liability.
  • Non-disclosure and non-competition agreement with carriers and service providers.

2. Policies for staff.

The implementation of the following recommendations is suggested. These must be shared with every customer, supplier, seller and account manager who hires and coordinates the air freight in the Freight Forwarding Agency.

2.1 Policies for the provision of air freight transportation services.

For the provision of air freight transportation services, the executive of the Freight Forwarder shall ensure the existence of the company by requesting the following information to integrate the corresponding file.

  1. Articles of incorporation of the company.
  2. Proof of tax registration
  3. Verified proof of address.
  4. Official identity card of the representative.

If the provision of services on credit is needed.

  1. Articles of incorporation of the company.
  2. Proof of tax registration
  3. Verified proof of address.
  4. Policies Form for the Public Transportation System (STC).
  5. Credit agreement signed by the legal representative.

2.2 Quotes

The quotes must be made in writing, either electronically or printed with a signature and must contain at least the following:

  1. Name of the customer.
  2. The contracted service.
  3. Origin and destination.
  4. Type of goods to be transported.
  5. Cost breakdown plus taxes. (If that is the case)
  6. Legend of insurance or merchandise risk.
  7. Quote’s validity
  8. The total amount of cargo per transportation unit.
  9. The specification of “not authorized if there is an incorrect packaging” under the legend.
  10. Change of the payment rates. (Subject to change without prior notice).
  11. Special conditions in the observations, in case of requiring an excess of dimensions, IMO transportation, refrigerated cargo, etc.
  12. Legend of acceptance of the electronic quote.
  13. To be subject to the Standard Trading Conditions (of the Freight Forwarding Agent for Mexico, issued by the Mexican Association of Freight Forwarders)

2.3 Freight Forwarders Contracting (airlines).

The account managers and the personnel of the Freight Forwarder who enter into a contract with carriers shall be subject to the following policies.

Every carrier’s contract shall be made depending on the verification of the documents, the facilities, and the transportation means.

  1. The file of the recruited carriers shall have at least:
    1. IATA registration.
    2. Articles of incorporation (if applies)
    3. Proof of tax registration
    4. Official identity card of the legal representative.
    5. Verified proof of address.
    6. The number of units and registration before the Public Transportation System (STC).
  2. Payment rate according to the destinations and the origins, with the estimated transit lead-time and validity.
  3. It is recommended to have the signature of a contract for the provision of services and a non-disclosure agreement for the information and protection of the group’s customers.

2.4 Contracting of services.

The account manager or the personnel of the Freight Forwarder shall send a letter of instruction which shall contain at least:

  1. Name of the shipper or sender.
  2. Information about the carrier or sender.
  3. Address for the cargo collection.
  4. Name and information of the freight forwarder.
  5. Description of goods to be transported.
  6. Name of the Consignee
  7. Destination address.
  8. Name of the person to be notified.
  9. Customs agent to be contacted. (If it is international transportation)

The letter of instruction shall be sent to the customer. This letter is required to have the following information.

  1. Name of the customer.
  2. Address, phone number, and email.
  3. Tax identification information.
  4. The full name of the legal representative, if any.
  5. Service requested in detail.
  6. The description of the merchandise: type, weight, size, packaging, etc.
  7. Special conditions for its handling.
  8. Insurance conditions: if there is an insurance or wishes to hire one, this shall have the following information:

2.1.  Internal processes of confidence checks.

Freight Forwarders may face internal problems that decrease the competitiveness of their companies due to the lack of order or control in three areas.

  1. Equipment, real and movable property.
  2. Confidentiality.
  3. Security.

To tackle these three topics:

2.1. Equipment:

If the Freight Forwarder has warehouses, storage, transportation equipment, among others, the optimal operation of the equipment must be verified and must ensure the following:

For warehouses and storage:

  • The lease agreement or public deed is in order.
  • The permits and operation licenses are in force. (Their validity shall be verified biannually)
  • The equipment is in optimal conditions: forklifts and racks.
  • The real property is working correctly: training, safety, and hygiene, civil protection regulations.

For vehicles.

  • Technical vehicle inspection.
  • Maintenance: tires, brakes, engine, etc.
  • Vehicle registration documents.
  • Conditions of its operators.

Office furniture.

  • Information backups.
  • Servers
  • Efficient communication means and Internet.
  • Technological systems.

2.2. Confidentiality.

The Freight Forwarders require schemes that guarantee that their competitiveness and distinction schemes in the market are reserved and controlled for avoiding unfair competition from ex-employees, contributors or partners, to the extent that the protection of different information and procedures is feasible, in accordance with the International and Mexican Legislation.

At this first stage, having a more precise diagnosis, there can be different agreements and contracts for its protection, by identifying who shall enter into non-disclosure, non-competition and/or exclusivity agreements,

Preventive measures.

The following items shall be carried out:

  • All the procedures shall be in writing, indicating the ones that are considered as trade secrets and which will only be accessed by the high management, or certain staff, after signing the specific non-disclosure agreements.
  • To implement stricter contracting processes that include:
    • Confidence checks.
    • Psychometric studies.
    • Full integration of files.
    • Analysis of competence’s salaries.
    • Growth platforms.
  • To suggest the document signature of contracts and agreements with:
    • – confidentiality and non-compete commitment.
    • – confidentiality, exclusivity and non-compete commitment.
    • – contracts for a definite time, under certain conditions that guarantee the investments made by the company and which protect the company’s interests.
  • Implementation of safety policies and processes of competence analysis, personnel, among others.

Revision measures.

It is recommended to carry out a biannual program that checks the implementation of the taken measures.

It is also recommended to include new businesses and procedures generated by the same company.

To analyze the decrease of incidences and risks generated by the leak of information and unethical competition.

3. Security

The Freight Forwarders need to have several insurances that guarantee protection even when the sinister or event that they have tried to prevent, occurs.

The safety general criteria for the Freight Forwarders can be applied for the air operation and consist of:

  • Liability insurance.
  • Vehicle insurance per transportation units.
  • Fidelity insurance or bonds.
  • Liability and merchandise insurance.

Recommendations.

  • To have an area, owned or outsourced, that measures and implements a plan of risks control for the company.
    • To verify secure routes.
    • To establish statistics on thefts in the zone.
    • To analyze the most convenient security strategies for the personnel and the cargo.
    • To know the most convenient options for insurances and coverages.
  • To verify the needs of insurances based on the previous activity.
  • To hire the insurances and verify their validity, to look for high coverages and verify the risks reduction.
  • To verify the generation of a document that includes the coverage of the safety conditions.

Processes before the authorities and correspondents.

The Freight Forwarder shall consider that there are obligations related to its activity and others derived from the safety risks which currently exist, due to the exchange of forbidden merchandise in a comprehensive manner.

1. Electronic transmission of Transportation Manifests.

Freight Forwarders, when acting as principal, shall have the obligation of transmitting information of their transportation document through a “Manifest”. It is important to verify that the origin Agent sends the information of the document in the most reliable way, creating the corresponding liability in the contracts in case the transmission was insufficient and as a result, generated fines to the Freight Forwarders for sending late and incorrect information.

Recommendations:

  • To monthly confirm that all the files are being duly communicated for avoiding fines.
  • To detect the errors which will allow implementing the corrective actions.
  • To verify in the error detection if these are because of typos made by the company or by the correspondents.
  • To sign with the correspondents an agreement where their liability is acknowledged.

If the forbidden merchandise is unintentionally transported by air freight, a criminal law expert shall provide the support to provide a possible defense and consider that in the case of exported goods the company has the possibility of checking and monitoring the merchandise; for imported goods the company can use the statement “IT IS SAID TO CONTAIN” specified in the merchandise guide.

It is recommended:

  • To confirm and monitor the exported goods.
  • For subcontracting, where verification is impossible (transportation or warehouse), it is of utmost importance to have the file along with the documents which prove that the delivery is carried out under the agreed conditions.
  • For merchandise that cannot be handled, the document that limits the liability from the beginning of the service shall be obtained from the customer.
  • If there is detention of the merchandise at risk, the legal advisors shall be notified to inform the way of proceeding.