Vol. 9  No. 80                                                     WE COVER THE WORLD                                     Thursday July 1, 2010

U.S. House Takes On
Air Cargo Screening

     Yesterday, Wednesday June 30, as America prepared to take a break to celebrate its annual rite of Summer—Independence Day, on July 4th—an important hearing held by the U.S. House of Representatives in Washington, D.C. titled “100% Air Cargo Screening: Remaining Steps to Secure Passenger Aircraft,” took place at 2:00 pm inside the Cannon House Office Building. Barely a month before TSA mandated 100 percent screening of all belly lift air cargo, the Subcommittee on Transportation Security and Infrastructure Protection is meeting with the Subcommittee on Emergency Communications, Preparedness, and Response to discuss these matters.
     The Hon. Sheila Jackson-Lee (D) Texas, Chairwoman of the Subcommittee on Transportation Security and Infrastructure Protection and other lawmakers heard presentations from invited witnesses, including the TSA’s John Sammon, U.S. GAO’s Stephen Lord, ATA’s CEO John Meenan and three air cargo industry executives, including Mike Middleton, EVP of Secure Global Logistics and Fernando Soler, CEO of S.O.S. Global Express.
But in a genuine first comes the remarkable appearance of Lufthansa German Airlines Head of Security and Environmental Management, Harald Zielinski, to speak as featured witness in front of these august members of the U.S. HOR.
     Herr Zielinski is the first foreign national to be invited by the U.S. Congress to testify about air cargo security.
     It also needs to be pointed out right away that Harald delivered the goods.
     It’s worth recalling that in 2007, Congress mandated that the Transportation Security Administration must screen 100 percent of all cargo carried by passenger planes by August 2010.
     With that deadline now looming just a month away —and the total-screening goal far from being achieved—U.S. lawmakers (to their credit) have expanded their search for answers by searching out the best and the brightest to try and get some solid forward movement.
     Bringing in Zielinski, the top security executive from an airline that is delivering 100 percent total screening to its USA air cargo product starting on July 1 (more than a month before the TSA mandate) therefore makes good sense.
     But what is right and sensible does not always happen, so score a major goal for air cargo this day in Washington, D.C.
     Mr. Zielinski, who came to his post as a former policeman from the streets of Frankfurt (just like his father before him), is, among other things, one tough cop. He is plain spoken and totally dedicated to getting things right, and doesn’t seem to take anything for granted.
     Right now, most experts agree that the reality of the 100 percent security screening mandate is still complicated by determining and certifying the right technologies and obtaining compliance from other nations.
     Faced with the fact that the U.S. Congress is highly unlikely to repeal the 100 percent mandate altogether, many feel that TSA must find a workable solution that meets the mandate in the near future.
     It is believed that TSA needs more flexibility so it can accommodate both security and supply chain realities.
     Mr. Zielinski took the bull by the horns and was thoroughly professional, driving home his points in this unique public forum situated at the highest levels of USA government.
     Here are his comments:
     “There are several key aspects of the 100 percent screening requirement and further identifying steps towards ‘smart security.’
     “Based on Lufthansa Cargo’s experience, TSA has done an outstanding job of developing and communicating about the CCSP and ensuring that air cargo stakeholders are aware of the pending August 1 deadline for 100 percent screening of U.S. origin cargo.
     “In some cases, the confidential security measures, as a result of this mandate, were not communicated with sufficient notice. We are unclear about how TSA will proceed with measures relating to foreign inbound cargo.
     “Finally, we believe more could be done to evaluate cargo screening technologies and to foster the development of applied training to support the effectiveness on use of the technologies.
     “Cargo security is an uncompromised priority and purposeful investment at Lufthansa Cargo.
     “All of our airport stations in the United States are equipped with self-owned security equipment consisting of explosive trace detection equipment and large aperture, advanced-technology x-ray systems at our gateway stations.
     “When Congress passed the Implementing Recommendations of the 9/11 Commission Act of 2007 into law, mandating 100 percent cargo screening onboard passenger aircraft in the United States, Lufthansa Cargo adopted a comprehensive strategy.
     “This was supported immediately by our executive board and senior leadership. For Lufthansa Cargo, the requirement to screen 100 percent did not simply apply to screening alone, but also required changes to our operations, resource allocation, productivity and processes.
     “We directed extensive funding to our United States operations for the investment in technology and the cost for increased resources.
     “As our business is in the service sector, it is reliant upon our customer base. Integral to this strategy was establishing an effective communication campaign to promote awareness of the mandate.

Need For Readiness
     “The key to this communication was to ensure an understanding by our customers on the need for readiness. Lufthansa Cargo initiated and hosted two security conferences in New York in 2008 and 2010, bringing together our industry partners and customers, academia and U.S. government representatives to address the increased regulatory framework in the United States. Additionally, we led two security conferences in Germany, which included representatives from TSA, in order to continue the outreach plan on the U.S. and EU regulatory frameworks and the need for harmonization of security measures.
     “A tremendous effort has been incorporated into our business plan to ensure the mandate is accomplished successfully.
     “It is important to highlight that these measures were adopted when the economic climate in 2009 was focused on business survival.
     “I am very proud to report to you that these extensive efforts by Lufthansa Cargo will allow us to achieve the screening mandate in the United States one month early, effective July 1st, 2010.
     “Albeit a massive challenge, considerable resources, money and time were allocated to adopt and carry out this strategy effectively and to ensure a robust business continuity plan.
     “We commend TSA on its robust communication effort within the United States to increase public awareness and understanding of the mandate.
     “This included various road-shows, public outreach seminars and webinars to address the dynamics of the regulation and the operational challenges to industry.
     “We also acknowledge TSA’s extensive efforts in developing and allowing industry to adopt a key tool for the success for this mandate within the United States, the Certified Cargo Screening Program (CCSP).
     "This program, although still in its infancy, is critical to ensure all partners share in the screening effort to maintain commercial flows, close-out times and to limit facility and airport congestion. We would encourage TSA to continue the outreach on the CCSP and invigorate the program beyond August 1st, 2010.
     "We further commend TSA in meeting with specialty shippers in the pharmaceutical and sensitive goods markets to encourage adopting a plan to ensure the flow of commerce within these markets is not impeded.
     "Although TSA has been effective in its communication plan regarding the 50 percent and 100 percent milestones, intermediary milestones for both U.S. and foreign origin cargo were mandated without industry consultation and without adequate notice effective May 1st, 2010.
     "Lufthansa Cargo had strategically aligned our budgets, resource scheduling and technology delivery schedules based on the initial mandates.
     "In the future, we would encourage TSA to engage industry as expeditiously and extensively as possible in order to fulfill any necessary incremental requirements.
     "While we recognize that TSA is responsible for developing the regulatory protocols, it is critical for industry to be well informed in order to best execute these regulations on multiple complex operational and management levels.
     "TSA has communicated openly regarding the concerns and necessary policy adaptations to properly address 100 percent screening of cargo onboard passenger aircraft inbound to the United States.
     "However, we are not certain of TSA’s timetable for implementing 100 percent foreign inbound screening, of any additional interim regulatory steps it may take, or of the process by which TSA is engaging other governments to assess and recognize their security programs and factor this into compliance for foreign inbound shipments.
     "Due to the complexities of the air cargo industry, we must look beyond a 'one-size fits all' approach to security.
     "It is critical that measures fulfilled under foreign programs that meet or exceed the measures anticipated by TSA be fully assessed and evaluated for mutual recognition.
     "We are a global company operating in a global industry, and duplication and redundancy in implementing multiple country specific cargo security efforts would impede the flow of commerce, create unnecessary costs and diminish efficiencies within supply chains.
     "In the air freight market, we need to deliver products today, not tomorrow.

Harmonization Of Policies
     "We commend TSA for recognizing the complexity of the international air freight market and the need to address the 100 percent inbound criteria with legitimate prudence to preserve trade and commerce among global partners, and we stand ready to engage in an active dialogue with TSA on this subject.
     "The security policy of Lufthansa Cargo is based on risk management. Furthermore, our implementation of the European Union framework and the German Aviation Security plan provides a robust regulated environment for air cargo that has and continues to develop.
     "The German Aviation Security Program and the newly released European Union Framework 300, Rule 185, is a comprehensive program that mirrors the basic fundamentals of the TSA regulatory programs for U.S. origin flights.
     "The basic fundamentals implemented thus far in the U.S. are currently mandated or underway for development within the European Union and each respective member state.
     "In some areas these programs exceed TSA’s requirements, such as in the areas of access control and employee screening prior to entering the secure area.
     "General EU requirements have adopted a structure with the regulated agent and certified consignor that is of similar content and requirements of the TSA recognized indirect air carrier and known shipper who conducts screening under the CCSP program.
     "Any entity in the EU issuing the security status of a shipment must be a regulated agent approved by the national competent authority.
     "A known consignor within the EU must apply and be subject to site-specific audits by the national competent authority.
     "Additionally, road feeder service providers must also have a regulated status with the authority or be contractually connected to the regulated agent or airline.
     "Although we understand and respect that within the regulations imposed by TSA the airline is the regulated entity, we are not in a position to directly address the international challenges and concerns which require a 'government to government' dialogue and engagement on the issues.
     "We strongly encourage this official communication to be expedited between TSA and each member state within the EU to discuss the existing security measures that are currently applied in the U.S. and respective member state.
     "TSA needs to adopt an international policy and program whereas protocols are developed and communication is strengthened.
     "As TSA has provided the tools necessary to complete the outbound-U.S. screening requirement and have further indicated that the
     "CCSP program is critical in meeting the 100 percent mandate in the U.S., such tools are imperative overseas in the area of mutual recognition in order to achieve the same level of success.
     "Lufthansa Cargo looks forward to work in continued collaboration with government and industry in the development of future security measures as they evolve or change with the continuous assessment of risks.
     "In the effective approach to define risk, we recognize government to assess the threats; whereas industry can elaborate when it comes to realizing vulnerabilities and business consequence modeling.
     "At Lufthansa Cargo we constantly review and evaluate the need for future security enhancements.
     "We look forward to the opportunity to address a robust, comprehensive security program based on the supply chain and not based on the type of aircraft flown.
     "As to technology for air cargo screening: We appreciate and recognize the requirements in the Implementing the 9/11 Recommendations Act of 2007 that cargo must be screened to ‘commensurate with checked baggage’, however, the fact remains that cargo does not have the same characteristics as checked baggage.
     "Cargo consists of bulk packaging, odd sizes, various commodities and sensitivities that require enhanced technology.
     "This would include the requirement to use larger aperture x-ray use beyond the current restrictions, expanded research on the use of trace detection applications and the further recognition of international canine teams.
     "Lufthansa Cargo believes that based on our experience in dealing with millions of kilograms and hundreds of flights weekly we urge TSA to evaluate the need for requiring complicated screening percentage evaluations and manually reported data.
     "'Smart security' depends upon the responsible allocation of justified resources to order to invoke the most efficient flow of operations while maintaining a balanced and reliable security environment.
     "Lufthansa Cargo has instituted best demonstrated practices for our security operation in the area of operational testing and training.
     "In working closely with manufacturers we are extensively evaluating and field testing new technologies in Europe and the United States.
     "Operational testing is critical to evaluate the real life challenges demanded of our industry and the complexity of cargo commodities and packaging.
     "When evaluated outside the laboratory environment, the expansion of use for the technologies can be effectively realized.
     "We urge TSA to bolster and expand field testing of large aperture screening technologies in order to address current restrictions.
     "Equally, training is critical in order to effectively operate equipment and carry out security requirements. Lufthansa Cargo is confident that our training programs surpass any previous industry benchmark and believes that effective training will demonstrate effective security.
     "Currently there is a tremendous disparity within the industry on how training and subsequent testing is developed and disseminated to the operational staff and representatives. We would welcome any opportunity to review these standards with TSA to develop a stronger framework for the industry.
     "Through our existing partnerships with TSA in exploring effective freighter screening technologies and the early evaluation stages for the CCSP program, we look forward to other areas of collaboration where we can find suitable solutions for the extremely complex environment that poses such significant challenges.”
     It is pretty clear that Herr Zielinski was more than capable of delivering the necessary information while also addressing strategies for the future. His thorough and exact commentary is just what is needed at this time in dealing with the complex matter of screening, especially in this heightened political climate. The honor of meeting with the U.S. House of Representatives, and of representing the cargo community, could not have fallen on a more deserving individual. We here at Air Cargo News FlyingTypers are confident that change is coming, and it is good.

Other Voices
     So with the Lufthansa Cargo position on 100 percent compliance to TSA mandates clear, including the questions directed back to the government panelists (mostly unanswered), the burning question of whether 100 percent belly lift screening will be met was addressed by other witnesses.

Stephen Lord
Director of Homeland Security and Justice Issues
U.S. Government Accountability Office

     Stephen Lord, Director of Homeland Security and Justice Issues for U.S. Government Accountability Office (GAO), noted:
     “To achieve TSA’s ideal mix of screening by August 2010, shipper and independent CCSF screening efforts would need to increase by over sixteenfold (from today, June 30).
     “The total percentage of reported screened cargo rose on average by less than a percentage point per month (from 59 to 68 percent) from February 2009 through March 2010.
     “At these rates, it is questionable whether TSA’s screening system will achieve 100 percent screening of domestic cargo by August 2010 without impeding the flow of commerce.
     “Effective May 1, 2010, TSA requires that 75 percent of air cargo transported on passenger aircraft be screened.
     “However, even if this requirement is met, an additional 25 percent of domestic air cargo would still need to be screened in the 3 months prior to the August 2010 deadline, including some of the most challenging types of cargo to screen, such as unit load device (ULD) pallets and containers.
     “TSA and industry officials reported that several factors, such as lack of economic and regulatory incentives, are contributing to low shipper participation levels.
     “TSA and the domestic passenger air carrier and freight forwarder industry association officials we interviewed stated that many shippers and freight forwarders are not incurring significant screening costs from air carriers.
     “This decreases the financial pressure on the entities to join the CCSP and invest resources into screening cargo, factors that are making TSA’s outreach efforts more challenging.”

John Meenan, Executive Vice President and Chief Operating Officer Air Transport Association of America
     John Meenan, Executive Vice President and Chief Operating Officer Air Transport Association of America, Inc., said:
     “The biggest challenge in meeting the August 2010 deadline continues to be the lack of certified screening technology to inspect large air-cargo pallets.
     “Most pieces of cargo transported on wide-body aircraft are consolidated into large shipments, and 75 percent of cargo is transported on wide-body aircraft.
     “That fact gives you an idea of the magnitude of the challenge that we face.
     “Shippers and freight forwarders typically create these pallet-size shipments before they are tendered to an airline.
     “The challenge has always been that screening is required at the individual carton level.
     “Existing technology cannot screen large consolidated shipments.
     “The nature of our business and available screening equipment continue to be badly mismatched.
     “We identified this challenge when we testified before this subcommittee last March, and the situation remains unchanged.
     “While the Certified Cargo Shipper Program (CCSP) is helping to address this problem, by implementing screening-protection upstream, a far more practical solution remains to be found with the eventual TSA certification of screening technology that is compatible with the cargo that we carry.
     “Breaking down consolidated shipments at an airport cargo facility is not practical.
     “Shipment size, time constraints and facility limitations are the main difficulties.
     “Dismantling an air-cargo pallet or unloading a container and screening each piece would result in the significant disruption of air commerce. “Airport cargo facilities and ramps were not designed to be high-volume disassembly and reassembly locations, and are not big enough to perform that role, especially at peak times.
     “A better alternative must be found.”

Mike Middleton, Executive Vice President, Secure Global Logistics
     Mike Middleton, Executive Vice President at Secure Global Logistics, a Texas based multi modal company, noted that his company was an early adopter of TSA’s screening program.
     “We were initially certified as a cargo screening facility prior to the February 2009 50 percent screening requirement.
     “We subsequently applied for and were accepted into TSA’s Pilot Program and received grants enabling us to procure AT X-Ray equipment and Trace Detection equipment.
     “We have been screening at the 100 percent level since February 2009, first using manual inspection techniques and later utilizing X-Ray and Trace technologies provided by TSA reimbursement.
     “Funding from TSA as a pilot program participant was the key for our company to bring technology to bear on the screening process.
     “Ours is a low margin industry and capital funding for non-revenue producing services like cargo screening would be prohibitive for companies like ours.
     “In fact, in our city (Houston, Texas) there are more than 1,000 companies similar to ours and yet less than 40 have become Certified Cargo Screening Facilities.
     “Of those, I would suspect that the majority are not purchasing technology, but only utilizing manual open and inspect procedures in order to avoid the substantial capital investment required to obtain screening equipment, inspection techniques and later utilizing X-Ray and Trace technologies provided by TSA reimbursement.
     “As we approach the impending August 3 mandate for 100 percent screening, facilities like ours are generally well suited to the challenge.
     “We have taken the time to become certified for manual inspection.
     “Through the Pilot Program, we have obtained both AT X-Ray and Trace Detection equipment.
     “And with a history of screening at the 100 percent level for a year and a half, we have already put into place the facility security requirements, conducted the required CCSF training with our staff and certified our employees on the original equipment from the manufacturers of the screening equipment.
     “In other words, companies that have taken this mandate seriously and who have embraced the program will be ready.
     “However, companies like ours are in the minority.
     “As mentioned previously, there are more than 1,000 companies like ours in Houston, Texas alone.
     “Yet in the entire USA there are less than 650 Certified Cargo Screening Facilities.
     “I cannot speak for all companies, but I do know that for a company like ours, the costs of program participation can be onerous.
     “Facility security measures alone cost us approximately $80,000.
     “Training for our staff in TSA CCSF procedures and training in the OEM equipment amounted to approximately $20,000.
     “X-Ray and Trace Detection Equipment used in our facility totaled approximately $300,000.
     “There are few companies in our industry that can afford almost a half a million dollars of capital investment for services that are non-revenue generating.
     “Had we not obtained a grant from TSA for the Pilot Program, we would be in the same position as many of our colleagues who have no plans to participate in the screening program, will only become certified in manual inspection, will outsource this service to a third party, or simply leave it to the airlines. “

John Sammon, Assistant Administrator Transportation Sector Network of TSA
     John Sammon, Assistant Administrator Transportation Sector Network of TSA, addressed the state of both domestic and international air cargo screening.
     “Both TSA and the air cargo industry are ready.
     “As of August 1, 2010, no unscreened cargo will be uploaded onto a passenger aircraft departing an airport in the United States.
     “Quite simply, if it isn’t screened, it won’t fly.
     “All segments of the air cargo community are prepared, and we expect that this will happen with little disruption.
     “International inbound air cargo on passenger aircraft is more secure than it has ever been, with 100 percent of currently identified high-risk cargo now being screened.
     “Although 100 percent screening of all inbound air cargo cannot reasonably be achieved by August 1, 2010, we are making substantial progress toward meeting the 100 percent mark in the next few years.
     “The centerpiece of the domestic cargo screening program continues to be the Certified Cargo Screening Program (CCSP), under which responsibility for the screening of cargo is distributed throughout the supply chain to improve security while minimizing the potential negative impact on the integrity and movement of commerce—precisely what would happen if we allowed a screening bottleneck to occur at the nation’s airports.
     “After piloting the concept, the CCSP was permanently established in 2009 through an Interim Final Rule.      “As of today, TSA has certified more than 760 entities as Certified Cargo Screening Facilities, which are currently contributing over 47 percent of the screened cargo volume (by weight) transported on passenger aircraft departing U.S. airports.
     “These entities have reported that they already have capacity to screen nearly the entire remaining unscreened volume as we approach the August 2010 deadline, if it becomes necessary.
     “With respect to movement of international air cargo, TSA has consistently indicated in many settings, including in prior testimony before this Subcommittee, the challenges presented by the international setting have made it unlikely that Congress’s ambitious schedule for 100 percent screening could be met with respect to inbound air cargo.
     “The genesis of the challenge is simple: an estimated 2.8 billion pounds of air cargo arrives on passenger aircraft from 94 different sovereign nations annually via a global air cargo supply chain with a vast number of participants.
     “Those 94 nations have unique air cargo security programs and regulatory requirements, many of which differ significantly from those required by TSA.
     “Accordingly, TSA’s approach to international inbound air cargo must necessarily be flexible and diplomatic.
     “We have been pursuing many options that have already significantly increased the security of inbound air cargo and are finalizing a strategy for achieving 100 percent screening.”

Fernando Soler, Owner, SOS Global Express
     Fernando Soler, Owner, SOS Global Express (New Bern, North Carolina) & founder of The Air Cargo Security Alliance:
     “The air cargo industry is as diverse as the shipping community it services.
     “The companies that make up this industry come in all sizes and offer ‘niche’ services as well as a full menu of offerings from managed global transportation to warehousing, distribution, trade compliance,
and even financial services.
     “The small- to mid-size forwarder with an entrepreneurial bent can provide equally competitive service offerings as multi-national companies given a level playing field.
     “However, TSA’s current cargo screening regime will take away that level playing field and force the small- to mid-size IACS to face insurmountable costs and logistical hurdles in order to remain
in the market-place.
     “For many, a 100 percent screening mandate without federal screening centers operating at all American airports is a threat to their very existence.
     “The Air Cargo Security Alliance calls upon Congress and the Obama Administration to fulfill the clear Congressional intent of the 9/11 Act and protect the air cargo industry by creating federal air cargo screening centers that will operate at all American airports.
     “As a nation committed to both homeland security and economic growth, we must allow IACs to continue to serve their clients and provide essential services that create hundreds of thousands of jobs, ensure the timely delivery of essential goods worldwide and bolster the American economy.”
     Watching this meeting was fascinating, both in the actions during testimonies and also during the breaks. It went on for about four hours, with breaks, as committee members went off to the US House of Represenatives to vote for various bills.
     There was the feeling of a genteel civility, as though the government officials and also the witnesses are all members (for some, if only for a day) of the same club.
     About the only action that could have been described as confrontational was supplied by Rep. Ed Markey (D-Mass), who is a frequent and vocal critic of TSA.
     Rep. Markey, who doesn’t even sit on the panel ,has made a career of hurling verbal fisticuffs at TSA, and this day he aimed at a determined (if somewhat hapless) John Sammom.
     Sammon did his best during the Markey diatribe to utilize the old boxer Mohammed Ali’s tactic of allowing his opponent to punch himself out—a move Ali called ‘ropa-dope.’
     Markey finally left after not laying a glove on John Sammon, and the discreet behaviour of the witnesses and government panel continued.
     What happens next?
     Stay tuned.

Air Cargo News FlyingTypers leads the way again as the world’s first air cargo publication to connect the industry to the broadly expanding and interactive base for social commentary—Twitter.
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June 29:   Delta adds Minneapolis/St. Paul daily to Mexico City December 18 a first for those city pairs.
Inland service builds as DL goes daily from the twin Cities to Paris CDG year round instead of just summer schedules.

June 29:   Lufthansa Cargo now goes MD-11F Tianjin to Frankfurt twice weekly, promises more flights if market shows a pulse.

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