Lufthansa eyes future of cargo security

Concerns over transit cargo and how to ensure it is safe to continue on to its final destination, dominated Lufthansa Cargo’s Cargo Security Conference this week.

The Frankfurt event, attended mainly by German shippers and freight forwarders, raised important issues around the European Commission’s incoming ACC3 security regulation. However, long-haul attendees were less worried about the immediate cargo security situation than how they would get back home in light of Lufthansa’s imminent three-day strike.

The carrier canceled 3,800 flights on Wednesday because of a strike by pilots over pay and working conditions. Around 425,000 passengers have been affected by the stoppages, and freighter flights also face severe disruption in a dispute that will cost Lufthansa tens of millions of euros.

The ACC3 acronym stands for “air cargo or mail carrier operating into the E.U. from a third country airport.” Beginning July 1, a carrier will be able to fly cargo into Europe only if an independent validator, accredited by a member state, has confirmed that the carrier’s operations meet required security standards at the prior point of departure.

The new rules were drawn up following the two incidents in October 2010 when computer printer cartridges containing explosives, shipped from Yemen, arrived in Europe en route to the U.S. after traveling on both passenger aircraft and freighters without detection. Thanks to Saudi intelligence, the bombs were intercepted at stopovers in Dubai and at East Midlands Airport in the UK.

ACC3 requires that carriers will not accept cargo unless it is fully secured and they are aware of what the shipment is, where it originated and what has happened to it in transit.

Lufthansa Cargo launched a security drive in 2004, with an initial focus on theft rather than terrorism. Harald Zielinski, the carrier’s head of security and environmental management, says new regulatory demands were a “major expense” at a time when the security surcharge had not increased for five years. However, LC was seeing benefits in that it now suffered almost zero theft, and damage claims were well down.

There were technological challenges for the future, Zielinski says, with X-ray and explosives detection tools “reaching their physical limits.” A mockup suggesting how an x-ray of an entire airplane might look (pictured to the right) provided a graphic backdrop to the conference, but he says that even if such an idea ever became technically feasible, it would not provide all the answers on airfreight security.

Franz-Josef Hammerl, director at BMI, Germany’s federal police, says complete containers could now be checked for explosives traces. Solutions were available if taxpayers and the industry wanted to pay.

For Zielinski, an integrated approach was the way forward and he paid tribute to the joint work of the German Ministry of the Interior, the Federal Aviation Office (LBA) and the BMI.

As ACC3 started to take shape, he recalls predictions at LC’s previous security conference two years ago of the “complete collapse of the supply chain”. It was assumed that unless 40,000 cargo agents could achieve validation ahead of the EU deadline, there would be traffic jams from Frankfurt Airport “all the way back to the motorway” as shipments waited to be scanned.

In the event, Germany quickly certified 3,000 agents handling “the vast percentage of freight.”

“We had twice the cargo needing to be monitored, but set up new checkpoints and introduced new ideas. It worked very well,” Zielinski says.

Another fear had been that foreign governments would interpret audits of their airport cargo facilities by EU inspectors as a threat to national sovereignty, believing their national standards to be sufficient. In the event, he says only two countries were refusing to recognize ACC3.

LBA president Jörg Mendel says re-scanning transit cargo that had already flown into Europe was time consuming and if goods were held up too long, shippers may switch to rail or sea transportation.

Ingo Rahn, executive vice president global airfreight, DHL Global Forwarding, says, “It doesn’t make sense to do checking at transit hub for shipments that have been scanned before. We have to make sure our businesses run smoothly and the bottom line is positive. But everything we hear about security adds complexity and consumes resources.”

The threat of modal shift was genuine, Rahn adds. The shipping industry would scarcely notice 5,000 tonnes of new traffic, but airfreight would be hit hard by losing it.

He identified lack of a harmonized global security approach as the key issue.

“Even in the core countries of Europe, the rules are different and so is the interpretation of them. You have to configure your IT systems to cover the rules of every destination country. You’re up against a lot of complexity and the risk of delay,” he says.

But Hammerl responds, “We are not dreaming these things up to annoy the industry. If we don’t have a known consignor system reaching to third countries, no instruments to ascertain they’re effective, there has to be some checking of transit freight. We don’t care how it’s done.”

Peter Andres, head of corporate security for Lufthansa, sees cyber crime as the potential future threat.

“It might be interesting to criminals to try to confuse the logistics process and topple a whole economy rather than put a bomb on a plane,” he says.

The passenger industry was moving away from 100 percent checks toward trusted traveler schemes and other forms of threat differentiation, and the cargo sector similarly must adopt pinpointed, targeted measures, Andres says.

“Finding a needle in a haystack is not solved by increasing the size of the haystack,” he says.

Thilo Schäfer, vice president global handling management at Lufthansa Cargo, says the company made 2.4 million security declarations last year with an estimated 33.8 million touch points. Electronic cargo security declarations (e-CSDs) were an essential progression from e-air waybills.

Some 40 percent of shipments out of Munich, LC’s second German hub behind Frankfurt, were now accompanied by e-AWBs and this could be be followed in one to two years by digitization of security declarations, providing regulators with an audit trail of how, when and by whom cargo had been secured.

Schäfer says LC and its supply chain partners had established the proof of concept on a small scale, but he is concerned by the air cargo industry’s slow progress toward paperless transportation.

Transparency along the supply chain was an essential component of efficient and safe logistics, but shippers, forwarders, handlers, carriers, consignees and the authorities were constrained by silo thinking and thus reluctant to move away from physical documents.

Hence paper AWBs were still being used to provide security data, though all the relevant information was already available in digital form.

“The risk is that in two years, we’ll still be talking about e-AWBs,” Schäfer says.