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Family Aid 2020
   Vol. 20 No. 22
Friday June 11, 2021

Will CNS Finally Disappear

     The backroom whispers have always been there, even as legendary Tony Calabrese founded Cargo Network Services (CNS) thirty years ago as a landmark U.S. organization with the mission to create a middle ground between airlines and forwarders and shelter the partnership from anti-trust legislation in the U.S.
     “IATA doesn’t really like CNS.”
     Well, what goes around comes around in 2021, as the industry learned Thursday that Cargo Network Services (CNS) financial roadmap to tomorrow took an unexpected detour as new management at CNS dusted out PayCargo in a slash and cut job just days after a web-based CNS Advisory Board meeting made no recorded mention to that assemblage that the impending action was anticipated.
     In other words, IATA fired PayCargo without consulting the CNS Advisory Board, which apparently was given notice of the action after the fact.

Catch Me If You Can

     In the last few weeks, we have seen IATA, the parent company of Cargo Network Services Corporation (CNS), take over the organization completely.
     With the departure of the last three employees of CNS at the end of 2020, there has not been one employee of this shell company added to the roster.

Top CNS Boss Now A Part Time Job

Frederic Leger      Recently it was announced that the CNS President job would be held by the Geneva, Switzerland-based Frederic Leger.
     It was announced as well that the bottomline on the Leger is that he will also serve as acting SVP of Commercial for IATA, reporting to Director General Willie Walsh. It seems that the CNS President’s role, which for the past 30 years has been a position of respect and honor in air cargo leadership has been downgraded by IATA into a part-time job.

Outsourcing The Old CASS System

     We learned the CNS antiquated CASS settlement operation has now been outsourced to IATA.
     The CNS CASS operations is handled by the IATA financial offices in their shining tower in Madrid, Spain.
     Only one junior IATA person in Miami seems to oversee the daily operation.

Whose Got Your Number?

     To contact CNS is not easy. The phone numbers forward you to a recorded number that operates only for minimal hours during the week. Forget trying to reach anyone in the U.S., if you are lucky to talk to someone, they are usually on the other side of the Atlantic.

Has CNS Shot Itself Through The Foot?

     Frederic Leger was the point man for issuance of the letter this week to all the CNS CASS customers advising them that CNS had decided to terminate the deal with PayCargo, which has been in place for over 3 years. PayCargo had worked closely with previous management of CNS and for the most of those three years Michael White as President of CNS helped to promote PayCargo, which benefitted both airlines and forwarders alike, reducing acceptance time, improving accounting processes and expediting money transfer much faster than before.

Break With The Past

     The IATA action thwarts efforts by previous CNS Boards and management to offer some choice for cargo customers other than the aforementioned outdated, limited CASS settlement system.
     No doubt as you read this, many people in transportation have been left scratching their heads.
     One can only wonder what if anything, did Willie Walsh, the new IATA DG know about this action?
     One thing is very clear.
     PayCargo offered choice and a window to forwarders and other industry stakeholders to access a truly neutral convenient, reliable excellent way to pay.
     For their part, while certainly taken aback by all of this, PayCargo took the high road:
     “PayCargo is a strong supporter of IATA and its important role in the air cargo industry.
     “We are the main sponsor of the upcoming IATA Digital Cargo Conference and Hackathon, where we will be actively participating in the OneRecord payment focused track and will also serve as a member on the Hackathon judging panel,” the company said in a statement.
     “Lionel van der Walt, Global Chief Commercial Officer, PayCargo, will also be a keynote speaker at the event.”

CNS 2021 Is Mini Me

     As you read this story, CNS’ executive board has been reduced to two IATA staff.
     IATA SVP Nick Careen is now the new chairman of the board and Alicia Lines who oversees finance for IATA’s Americas region is the only other board member.
     Leger who is from France and resides in IATA’s Geneva Executive office, as mentioned, is part-timing as CNS President.
     These moves send a clear message that IATA views CNS to really be a European-based company, and no longer needs managing by any CNS-employed staff in the U.S.

What Might U.S. DOJ Think?

     Some may wonder if the U.S. Department of Justice might question if CNS is still a U.S. corporation, or if it is just being used as a shell company by IATA to bypass regulations.
     CNS was originally established as a result of U.S. airline deregulation in the 80’s and anti-trust concerns.

You’ve Got Mail

     As mentioned above we learned that the notification of the PayCargo agreement termination came in an e-mail from Frederic Leger.
     Many were surprised by Leger’s actions. In his letter he advised that a new CASS system will be ready in the second quarter of 2022.
     Will this be too little too late?
     Will it be a full upgrade of the system or just a new user interface with little to no functionality improvement?
     The CNS CASS system moved over to the IATA system a few years ago and IATA got rid of the highly touted customer service team of CNS employees and incorporated it into the overall IATA CASS system.

The White Paper

     Many were concerned at that time, but it seemed to work quite well under the watchful eye of Michael White and his small team in Miami.
     White, during his term, also worked hard representing the airline interest of air cargo with many of the government officials in Washington, D.C.
     Since Mike White’s departure, it seems there is no one representing the IATA member airlines in the corridors of the U.S. Government.
     It is difficult to understand the rationale of appointing someone as CNS President who is not acclimated to the U.S. market and its needs.
     What kind of message does this send to top air cargo executives?

Here Are Some Questions

     With the CNS conference coming up in August, will this be the time when IATA presents the U.S. market with a preview of their new One Record 2022 plan?
     Is someone considering PayCargo to become an alternative to IATA finance, starting from the ashes of a CNS kept on life support by the U.S. industry?
     Was the PayCargo agreement with FIATA the ignition point for a much faster repositioning on the air cargo moneys?
     How will CNS exist in future, perhaps by spearheading the decisions taken in Cornwall by the G7 regarding the new Consensus?
     Has IATA a real interest in air cargo in the U.S. or do they think of it an alternative monopoly, disconnected form airlines in the long run?
     Has IATA lost its way or is it coming to the fruition point of plans that have been in the making for a very long time?
     Is IATA shooting itself in the foot with regard to the dimension of the U.S. market?
     Right now as June 2021 marches on there are a lot of people wondering whether IATA really cares about cargo in the U.S. anymore, or whether the U.S. cargo market has become a smaller part of their empire, no longer so important.
     That IATA has hubris is an open question, but in our view their strategy is quite clear, and apparently winning.

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PayCargo Tip Of CNS Iceberg

CNS Conference Session
     We have been thinking about IATA as air cargo becomes more famous in the mainstream media in regards to COVID-19 PPE flight performance.
     In the face of all the attention, IATA has shuttered all its cargo expertise in Geneva and Montreal.
     What that might mean is that the voice of CNS, the expertise of CNS as a viable organization, will be gone.
     That would augur terrible things for air cargo. The CNS Partnership Conference held yearly in various locations in the U.S. is without a doubt the best customer conference ever devised by air cargo for doing bottom-line business. Not to mention the value of the daily activist work that CNS performs on behalf of the airlines and the forwarders.
     To be clear, CNS is still in business on paper and has a suit named Leger to sidestep the antitrust rule which brought CNS into formation 30 years ago in the first place.
     Right now you can really feel the pain of airlines everywhere, that according to IATA, “will recover to 43% of 2019 levels over the year. Although that is a 26% improvement on 2020, it is far from a recovery.”
     So, the attention to the plight of an industry organization like CNS takes a backseat to all the cargo in the passengers’ seats, as these airlines work furiously to save their failing businesses.
     But without some outcry even at the suggested possibility that CNS will disappear, odds are you might wake up one day to the news that gone is this jewel of a group born in America as the world’s first organization dedicated to bringing the airlines and their forwarder partners together.
     In these things IATA would be acting not unlike when, up until CNS President Tony Calabrese’s retirement, CNS had retained a distinct image and semi-independent agenda; IATA, then reined it in turning it into a regional office. In principal, IATA has every right to do as it sees fit, as CNS is an IATA company.

The Airline/The Forwarder

     Last fall we asked two industry stalwarts their views on CNS. This is what they said:

Jan Krems     “IATA and Cargo Network Services (CNS) must recognize that CNS needs to maintain a strong voice for the airline forwarder partnership,” said Jan Krems, President of United Airlines Cargo.
     “The CNS Partnership is and will remain a vital force for good as the industry works to get things back to normal.
     “We need our trusted organizations to bring us together and make sure that cooperation between all parties not only maintains a single standardized system in place, but also advances our offering through cooperation that touches every aspect of the logistics supply chain.
     “Air cargo cannot carry the airline business alone.
     “For all of us up and down the line in all aspects of our industry to be as good as we want to be, we need the unique opportunities for cooperation that the CNS advocacy offers working for the advancement and betterment of the entire logistics industry.”

Joachim Frigger      The late Joachim Frigger, Chairman of EMO Trans, which has been a continued advocate of CNS Partnership Conference for decades, said:
     “The formation of CNS always was and still is a great opportunity for meaningful dialogue between the airlines and freight forwarders.
     “We have always supported this goal and hope that going forward, a balanced view of all participants and their business interests can be maintained.
     “I do regret that CNS has only been created in the U.S. and that this model has not been expanded to other worldwide areas like Europe, Asia, Middle East, and Latin America.
     “The advantage of close cooperation between partners becomes more evident in today's global markets, as geopolitical developments create a great deal of division and uncertainty for all involved.”

Jack Lindsay, Tony Calabrese, Brian Barrow, Robert Crandall and Buz Whalen
Networking at the second CNS Partnership Conference in Dallas are (L to R) first CNS President Jack Lindsay, second CNS President Anthony (Tony Calabrese), and original CNS Board Members Brian Barrow and Buz Whalen, with American Airlines CEO Robert Crandall between the two.

Why CNS Matters

 Richard Malkin    In an era where everybody has a trade show or a webinar, it is good to share once more the words of the late Richard Malkin, (left) the dean of air cargo, who worked for the betterment of the industry and for CNS, and then at 104 years of age shared these words.
     “A quarter-century ago, I was invited by the sparkling new Cargo Network Service to contribute my experience to determine an answer to a vexing question:
     “Should CNS, or should it not, invest time, effort and money in mounting a truly first-class air cargo conference?
     “With the approval of CNS president Jack Lindsay, the invitation had been extended by Anthony P. Calabrese, then director of product development, who was aware of my intimacy with the industry’s growing number of cargo conferences. I agreed to cooperate.”

The Beginnings

     “The scheduled airlines’ long-delayed awakening of the shipper as an important source of revenue was enriched by their flair for promotional ideas and public relations.
     “Not much time passed before one of the carriers invited a section of the shipping public—forwarders, air cargo agents, industrial traffic managers and purchasing agents—to a luncheon meeting where they would be treated to a lesson in air cargo economics as well as to a tasty portion of roast beef.
     “Competitor airlines gradually followed with their own versions of satisfying appetites while getting across a hard sell.
     “It took a while, but as these meetings became longer, more detailed, and more sophisticated productions, I gradually became aware that something was amiss: In virtually every instance, the airline representatives in the audience seriously outnumbered the customer attendees.
     “I editorialized on the problem. Didn’t the lopsided audience division matter to the carriers? Were they delivering the right message from the platform? What confined the users’ response to disappointing limits? The few readers who bothered to answer failed to cast convincing light on the puzzle.
     “Tony Calabrese was one of my oldest and closest friends in the industry.
     “Typically, when we sat down with cups of coffee to discuss the unfairness of an IATA rule or recent breakpoints on electronic goods, it would wind up with criticism of a conductor’s use of his baton or on concert artists’ foibles. This time, with Jack Lindsay present at our meeting at CNS’ offices, Tony came right to the reason for the meeting without the usual preliminary formalities:
     “On the basis of my wide experience, what is my personal reaction to a proposal to sponsor an annual air cargo conference that would take it around the country?”

The Dreamer & Doer Wins Out

     “‘Oh, no,’ I groaned, and I proceeded to repeat my argument especially when travel expenses and hotel fees were involved. I predicted failure, and I foresaw myself saying to Tony, ‘I told you so.’
     “Tony was unfazed by my opposition, arguing that CNS’ built-in membership of several thousand agents represented a live pool of prospects. There existed an area of common interest and values. I cited the example of the Civil Aeronautics Board’s sponsorship of the one-day air cargo conferences scheduled in as many as six cities throughout the United States.
     “After the third meeting, appalled by the paucity of active interest on the customer side, the board cancelled the remaining shows.
     “In Chicago, with John C. Emery, Jr. as featured speaker, the meeting’s sponsor was forced to resort to an invitation to a local business school’s transportation and export students to fill vacant seats.
     “Tony was probably aware of these incidents. In his calm, evenly stated way, he bore down on his confidence in the CNS agents’ homegrown support.
     “This was basic.
     “There were, too, the forwarders and shippers.
     “In the end, Lindsay (after whose retirement a couple of years later Tony was to succeed as CNS president) went along with Tony, and the first of Partnership Conferences was born.”

The Great CNS Partnership Conference

     “Over the years the Partnership Conference, which sprang from Tony’s fertile mind, was recognized as one of the world industry’s best.
     “During the closing hours of the initial meeting, Tony and I were sitting next to each other at a dinner table. We chatted about the day’s highlights. He had an idea that he wanted to implement next year, and before he could get into the details, he was interrupted by an aide who handed him a sheet of paper. Tony glanced at it briefly, smiled, then the smile broadened into a grin.
     “Customer attendance 18% over airline attendance.”
     “Whereupon he leaned over to me and sweetly whispered in to my ear, ‘I told you so.’
Richard Malkin

CNS Partnership Conference attendees

In The Picture: The greatest air cargo people in the world. Hopeful that we will all be together again.

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Publisher-Geoffrey Arend • Managing Editor-Flossie Arend • Editor Emeritus-Richard Malkin
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend

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