Emphasizing their "can-do" attitude, airfreight forwarders say they can handle cargo security regulations as long as those rules aren't too onerous.

The federal government's air cargo security rules are expected to take effect in January, although the government originally had set an Oct. 1 deadline. Meanwhile, airfreight forwarders and their shipper customers are anxiously waiting to see how the security situation will shake out. "The devil is in the details," warns David Hamill, an international trade and transportation lawyer with Miller & Chevalier in Washington, D.C. "The hope in the trade community is that Customs will be reasonable in implementation as well as enforcement," he says.

Those hopes might well be fulfilled. So far, the government has shown some willingness to heed the industry's concerns by revising its original, unworkable proposals, says David Wirsing, executive director of the Airforwarders Association in Alexandria, Va. Still, forwarders expect to face more challenges as a host of new security requirements are put in place.

Currently, Customs requires cargo details only one hour before a flight arrives in the United States, which gives forwarders sufficient time to collect and submit that information. Under the proposed new rules, the agency wants exporters of U.S.-bound shipments from North American and Caribbean locations to file documentation no later than "wheels up," or the moment when an aircraft takes off. Forwarders will be required to use the Automated Manifest System to submit that information.

Customs also is expected to require data for shipments originating in other parts of the world no later than four hours before the aircraft lands in the United States. This early deadline could present problems for inbound shipments from Asia because much of that freight is cleared during an intermediate stop in Anchorage, Alaska, several hours before it arrives in the mainland United States.

Freight forwarders don't anticipate encountering similar problems for air exports because they generally get the required information when they schedule the pickup, notes Lou Cortese, senior vice president of operations for Pilot Air Freight of Lima, Pa.

Even more troubling to freight forwarders than the advance-notification rules are heightened security measures for domestic air shipments proposed by Rep. Edward Markey (D-Mass.). Markey, a senior member of the House Select Committee on Homeland Security, wants the federal government to screen all freight that's carried on passenger aircraft, including packages weighing less than 16 ounces, which now are exempt from security rules. Markey's bill also would exempt from such scrutiny mail that's tendered to the airlines by the U.S. Postal Service.

Prospects for passage of that bill had been looking dim but got a boost last month when a man hid inside a crate and shipped himself, undetected by either the freight forwarder or the airline, from New York to Dallas. (See "So much for security," Page 72.) The bill's passage would create problems for freight forwarders, who handle most of the cargo transported by passenger airlines. "It would kill us. It would slow down airfreight appreciably and necessitate a mode shift," Wirsing predicts.

If passed, the bill might indeed create incentives for shippers to switch modes of transportation. At the very least, it would push more cargo onto all-freighter aircraft. That prospect troubles many independent forwarders, such as Berklay Air Services Corp., a family-owned operation based at New York's John F. Kennedy International Airport. Berklay's executives are concerned because the rule would effectively limit the company's shipping options and its ability to provide the lowest-cost service, says Dennis Klainberg, chief operating officer and vice president, sales.

Freighter operators, in fact, already are benefiting from the decade-old "known shipper" program, which was expanded in November 2001. Under current Federal Aviation Administration rules, freight tendered to a forwarder by an "unknown," or irregular, shipper must be held by the forwarder for 24 hours and then flown only on a freighter aircraft in order to limit any potential terrorist-related damage. Conversely, freight tendered by a known shipper generally isn't subject to any extraordinary security checks and can be carried on either passenger or freighter aircraft.

To qualify as a known shipper, a business must be vetted by a freight forwarder or third-party agent, such as a local trucking company, to verify that it's legitimate. The shipper also must have made a minimum number of shipments over a moderate period, usually 24 shipments within two years, without triggering any security concerns.

Airfreight forwarders such as Berklay judiciously comply with the known shipper rule, but sometimes resent the extra work and expense, for which they aren't compensated. "As forwarders, why should we be put in the role of policemen?" Klainberg asks rhetorically.

Forwarders' customers also are adapting to the expanded rule. "As long as I understand the rules and can make allowances, we will be fine," says Charles Mormino, director of logistics and facilities for Zebra Technologies Corp., a manufacturer of bar-code printers in Vernon, Hills, Ill. Still, he points out, shippers occasionally get tripped up by the known shipper rule when using a consignee-designated forwarder.

Forwarders could side-step those hassles by adding the names of their known shippers into a common Homeland Security Department database. But some are reluctant to do so. That's because once pre-qualified shippers have been included in that database, they are free to shop around for the best deal among forwarders. Shippers that aren't included in that database, on the other hand, avoid switching providers since they would be classified as "unknown" by any forwarder they haven't been using all along.

The push for better air cargo security inevitably will change the way freight forwarders and their shipper customers conduct their day-to-day business. For one thing, should air importers react to new advance-notification requirements like their ocean cargo counterparts did, they'll add more safety stock and build longer lead times into their supply chains, says John Motley, chief executive officer of LOG-NET Inc. of Little Silver, N.J. LOG-NET collects, formats, and transmits shipment data to Customs.

The cost of that additional inventory would offset to some degree the savings shippers gain from fast-track air shipping and just-in-time initiatives. Federal officials estimate that compliance with new security rules for all modes will cost American industry about $100 million annually. Most of those costs will be incurred by shippers, forwarders, and carriers to provide the Bureau of Customs and Border Protection with automated advance-shipment notifications.

The new rules, moreover, will likely make paper documents a thing of the past. As a result, smaller forwarders will be forced to become completely automated or use third-party application service providers like LOG-NET to collect and transmit data, Motley says.

Another possible change: Should security rules become too onerous or freighter rates jump too high as a result of increased demand, airfreight forwarders probably will transfer more of their domestic, lower-priority shipments to expedited trucks, Klainberg predicts.

All forwarders, no matter how big or small, should be ready and able to adapt to the new era of enhanced cargo security, says Arthur Arway, director of security for international forwarder DHL-Danzas. "I think we have seen [the new rules] coming for a while," he says. "In the end, you just have to accommodate them." That won't be easy as they continue to face competing demands from shippers and the federal government. Airfreight forwarders' ability to juggle both sets of demands could well determine whether or not they prosper in the years ahead.

Ira Breskin is a freelance writer who specializes in domestic and international transportation developments.