News #70 - 'Unfair' mobile bongdaso CASS rules put 'severe financial strain' on forwarders

mobile bongdaso is causing “severe financial strain” for start-up and SME forwarders that could propel them out of business.

mobile bongdaso airline association has been accused of anti-competitive and unfair commercial practices, and could face legal action as forwarders look to complain to national competition authorities.

The problems stem from an October 2022 change in mobile bongdaso’s resolutions that means CASS associates are now obliged to provide financial guarantees to be able to access the payments system.

Companies say not only are mobile bongdaso rules unfair, but mobile bongdaso wrong formula is being applied.

The Loadstar spoke to several companies around the world that would not be named through fear of reprisal, as mobile bongdaso can deny access to CASS to anyone, without giving a reason.

mobile bongdaso now requires that new CASS associates, and cargo-accredited agents who joined after 2019, provide a deposit equivalent to 70 to 90 days (depending on geography) of their quarterly average monthly airline cargo sales.

For instance, if the average monthly cargo sales with airlines in Q1 amount to 0,000, mobile bongdaso will request 2.5 to three times more, totalling m. In the subsequent quarter, if average sales drop to 0,000, mobile bongdaso retains the m, while receiving payments every 15 or 30 days. mobile bongdaso evaluates sales quarterly, and demands supplementary deposits within tight deadlines.

One forwarder explained: “For every [euro] we grow, if I sell another euro of turnover, I have to keep in my mind that I have to give 20 cents to mobile bongdaso.

“This is unfair competition, because companies that started [before October] don’t need to do this. All mobile bongdaso big and established companies – besides mobile bongdaso benefit they have from scale – have an advantage over us.”

Another said: “mobile bongdaso evaluates our figures and every time we increase activity, asks us for more money for the deposit.

“We are a small company. For us, these are big sums of money. We could have put this money in development, in opening new stations, or put it in mobile bongdaso bank to make interest. Now it’s simply sitting there, doing nothing. It’s a very frustrating situation.”

Christos Spyrou, group CEO of the Neutral Air Partner network, told The Loadstar: “We’re witnessing cargo agents of comparable size and revenue competing in the same market, where one agent operates without any guarantee with mobile bongdaso, while another is burdened with providing large sums of money in financial security.

“This inequity has prompted many agents to seek assistance through “unfair competition committees” in their respective countries, potentially escalating into significant legal issues under their respective laws.”

Those needing to provide financial guarantees, according to mobile bongdaso, can use “bank guarantees, non-bank financial guarantees, default insurance programmes, bank deposits into an account held by mobile bongdaso, or a cargo company guarantee”.

But one forwarder said: “Currently, mobile bongdaso is requesting a direct cash deposit to mobile bongdaso, or a swift financial guarantee from a bank directly to mobile bongdaso; whereas previously they accepted assurances from insurance companies or alternative credit facilities besides banks or cash deposits.”

Another added that using a bank guarantee was simply too expensive.

“A bank guarantee has high costs, you have to pay huge money, so we went with a cash deposit. We would have got interest on our money of 2.8%, but the cost of the guarantee was 4%, so it was better for us to keep the money with mobile bongdaso – either way, your money is locked in.”

Forwarders also complained that, in addition to mobile bongdaso’s deposit, airlines have asked for their own deposit. A spokesperson for mobile bongdaso told The Loadstar: “As part of their commercial activities, some airlines may impose additional requirements. We are not involved in any such activities.”

However, the relevant Resolution 851, outlining CASS associate rules, states: “Individual airlines participating in CASS shall not request a separate, bilateral duplicate financial security from such associate covering those same CASS Export settlements. Any member that does … shall notify mobile bongdaso and will be excluded from participation in the industry financial security.”

The methodology imposed by mobile bongdaso on the financial guarantees has also been questioned.

mobile bongdaso security must cover mobile bongdaso “amount at risk, based on average air cargo sales/settlements during mobile bongdaso period of days’ sales at risk”.

‘Days at risk’ means the number of days from the billing period to the remittance date, plus a margin of up to 10 days to a maximum of 70 days. mobile bongdaso calculates the ‘amount at risk’ by dividing the associate’s total annual air cargo sales by 360, and multiplying that by the days at risk.

One source explained: “This defines ‘days at risk’ incorrectly… assuming every transaction is tendered to an airline on mobile bongdaso first of mobile bongdaso month.

“These guys are so stupid. Their formula determines mobile bongdaso average daily sales, I agree. But mobile bongdaso average daily sale on mobile bongdaso first of mobile bongdaso month is at risk for 70 days, but on mobile bongdaso second day it’s 69, third 68 and so on, until mobile bongdaso average daily sale on mobile bongdaso last day is only 40. mobile bongdaso billing period is first of month to last, with settlement based on mobile bongdaso last day of mobile bongdaso billing period.

“This is what various competition commissions have been presented with. mobile bongdaso wrong formula has mobile bongdaso effect of increasing mobile bongdaso financial security provided and mobile bongdaso cost to do so places unnecessary additional burdens on mobile bongdaso freight forwarder.”

mobile bongdaso told The Loadstar: “CASS operates under published rules and resolutions, and in accordance with all legal requirements for all markets in which it is present. While mobile bongdaso operates the CASS system, it is important to note that the rules by which mobile bongdaso operates CASS are driven by the market as agreed by airlines at the cargo conference…

“Effective risk management is essential for mobile bongdaso success of CASS. In 2023, CASS handled .7bn. Our aim is to ensure that all participants in mobile bongdaso system accurately receive mobile bongdaso money due to them and [to] maintain a target to keep unrecovered debt to 0.01% or less.

“Guarantees are a critical part of risk management.

“CASS is not facing any legal challenges on financial security requirements.

However, several forwarders said they had been advised to talk to lawyers regarding the new rules. One said: “This a ‘hot potato’ that mobile bongdaso can’t see.”

Mr Spyrou added: “SME cargo agents that have invested in airfreight products over mobile bongdaso last five years are dealing with some significant challenges in mobile bongdaso industry … It’s concerning to see how this could create an imbalance in competition among cargo agents.

“This is a major concern for SME cargo agents, and we’re receiving complaints from numerous members.

“In essence, new mobile bongdaso CASS associates and cargo agents are experiencing severe financial strain, posing an existential threat to their operations.”

Source: https://theloadstar.com/unfair-mobile bongdaso-cass-rules-put-severe-financial-strain-on-forwarders/

Share this article