Issue link: https://jocdigital.uberflip.com/i/335267
36 THE JOURNAL OF COMMERCE www.joc.com JUNE 23.2014 SPECIAL REPORT ASIA TRADE WITH A JULY 1 deadline near, the air cargo industry has little idea which carriers, air- ports and forwarders have met the European Union's tough new screening regulations. "The challenge that we have is from the EU. We have been trying to get informa- tion from them on who has been validated and who has failed so we can help, but that information is not available," said Rodrigo Reyes, Asia-Pacific regional manager of air- port, passenger, cargo and security for the International Air Transport Association. Reyes was responding to queries raised by delegates at the Federation of Asia-Pacific Air Cargo Associations executive council meeting in Hong Kong on June 13. At issue are EU regulations requiring car- riers flying cargo and mail into Europe to be designated as an "Air Cargo or Mail Carrier operating into the EU from a Third Country Airport," or ACC3. From July 1, the EU regula- tions state that ACC3s must be in possession of security verifications of their cargo and mail operations at the relevant non-EU airports. This verification activity must be undertaken by an independent validator, who must be cer- tified by an EU regulator. "As much as we would like to engage the carriers, they keep telling us, 'We are ready.' I guess they know the consequences of not being ready, but we are trying hard to get this across to all the stakeholders out there," Reyes said. The EU issued legislation to tighten air freight security rules in response to bombs hidden in printer cartridges shipped by air to the U.S. in 2010. It classifies all countries into green (with no ACC3 requirement), white (requiring ACC3 compliance) and red (requiring additional security measures). The information is confidential, although it's known to the airlines, but if cargo from a green country goes via a red country, the EU no longer regards that cargo as "clean," and it will be refused entry. Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics, agreed that no one knows who is compliant with ACC3. "No information on that is available from the EU," he said. As the July 1 deadline looms, however, there are signs the EU will take a softer stance on those airlines that haven't been validated as ACC3-compliant. The EU has agreed that airlines and airports with valid reasons for not obtaining validation would be given six months to comply, according to Tsui. "The EU appears to be flexible, but those companies that need to comply will have to put forward a detailed plan on how they plan to achieve compliance. The new arrangement is a road map to that," he said. Doug Brittin, secretary general of The International Air Cargo Association, said the air cargo industry is working hard to comply with ACC3, but there are signifi - cant challenges for all parties to meet the July 1 deadline. "We recognize the need for everyone to multiply their efforts, but we also welcome the growing acceptance by regulators that a proportionate and prag - matic approach may be required," he said. "The overall picture, while far from com- plete, continues to improve." Many forwarder associations, especially those that will need to use Asian airports to transit on the way to Europe, remain concerned about the ACC3 regulations. In Oceania, both Australia and New Zealand fall into that far-flung category. "Our concern is that our Australian cargo, and that from New Zealand, must generally go via an Asian airport," said Brian Lovell, CEO of the Australian Federation of International Forwarders. "Our options will become limited if any of the hubs in Asia fail to be accredited by July 1. If we ship our screened cargo via an airport that has not been accredited, we will have a problem. We will lose out, and so will any of those countries that don't have direct access to Europe." JOC Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler. By Greg Knowler SECURITY GUESSING GAME EU's tough air cargo screening rules leave carriers, airports and forwarders operating in a gray area ASIA GROWS FROM WITHIN Intra-Asia trade is one of the few bright spots for ocean carriers. Will it be the spark they've been looking for? IF IT WEREN'T for the intra-Asia trade, it isn't hard to see where ocean carriers that already are losing billions a year collec- tively would be: in an even deeper hole. The trade, driven by China, India, Vietnam and other countries that are among the world's fastest-growing emerg- ing markets, is g rowing more rapidly than any other regional shipping market, according to London-based research and advisory firm Drewry. Ocean carriers are seeing the benefits of cheaper ship charter rates and rising cargo volumes feed right to their bottom lines. In general, regional routes such as the intra-Asia trade yield much more operating profit than the east-west and north-south international trades, and some carriers are pouring more resources into those trades that give them the biggest return. Maersk Line, NYK Line, Hapag-Lloyd and Cosco have expanded intra-Asia services in the last year. "Seldom does a month pass without the announcement of at least one new regional service, some of which now deploy vessels over 4,000 TEUs," Drewry said in a recent report. "There is money to be made out of such services." According to Drewr y, Maersk a nd CMA CGM were the top performers in return on sales in the first quarter, with Maersk reporting a 6 percent return and CMA CGM posting a 4.8 percent return. Wan Hai and OOCL followed as the third and fourth carriers in terms of return on sales on those routes. Taiwan-based Wan Hai, which reported a 1.7 percent return, is By Corianne Egan