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Policy risks EU ban, firm closures
A new policy on air safety may have a far-reaching and detrimental impact on exports as the shipment of cargo from Indonesia may be subject to delays or even be banned by the European Union (EU), and small and medium-scale logistics firms may be forced out of business
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new policy on air safety may have a far-reaching and detrimental impact on exports as the shipment of cargo from Indonesia may be subject to delays or even be banned by the European Union (EU), and small and medium-scale logistics firms may be forced out of business.
Transportation Minister Ignasius Jonan recently issued Ministerial Regulation No. 32/2015 on air cargo and supply chain safety, a copy of which has been obtained by The Jakarta Post, requiring an additional layer of cargo inspections at international airports.
According to the regulation, logistics companies are now required to have their cargoes screened by so-called regulated agents (RAs) in Line 2 (unrestricted) areas at airports before being moved to the secure Line 1 areas.
Since most RA firms lack screening expertise, logistics firms and airlines will have to screen the cargoes once again in Line 1 prior to shipment over concerns that security could be compromised during the move from Line 2 to Line 1.
'There are concerns over safety compromises in the new regulation,' Indonesian Logistics and Forwarders Association (ALFI) chairman Yukki Nugrahawan Hanafi said on Monday.
'From what I know, the EU will have to validate the new procedure, otherwise our freight cannot enter Europe,' he said.
In February, the Association of Asia Pacific Airlines (AAPA) wrote a letter to Jonan regarding their concerns over the planned closure of Line 1 cargo screening at Soekarno-Hatta International Airport (CGK).
The AAPA, whose members include Cathay Pacific Airways, Garuda Indonesia, Korean Air, Malaysia Airlines, All Nippon Airways, Asiana Airlines, Singapore Airlines and Thai Airways International, has sought clarification in regard to the quality of the RAs as their 'limited expertise and experience [puts into] question their ability to perform such an essential task in compliance with ICAO [International Civil Aviation Organization] standards.'
The EU's requirements on air cargo or mail carriers operating into the EU from a third country airport stipulated that air carriers and freight forwarders, uplifting cargo in countries identified by the EU must have their security programs validated by an independent EU validator, the AAPA warned.
'Consequently, the recent decision taken at CGK could potentially invalidate any air carrier and freight-forwarder approval and potentially seriously impact cargo operations at CGK,' it said.
The regulation was issued in 2011 requiring RAs to conduct security screening at airports on behalf of shippers, airlines and other cargo operators prior to export.
In January, Jonan revised the regulation, moving the screening process from Line 1 to Line 2. The Law and Human Rights Ministry is currently reviewing the regulation before it takes effect on May 31.
Aside from safety issues, the regulation revision could also disrupt supply chain as it could delay cargo arrivals. 'Customers choose air cargo because it's faster. By moving the inspection area, we may see delays of up to two days,' Yukki said.
Electronics and garment exporters are among the potentially hardest hit businesses because of their high volume of exports by air shipment.
The regulation will also threaten small and medium-scale logistics firms as they are now required to have a minimum capital of Rp 25 billion (US$1.93 million), up from Rp 200 million. 'Around 90 percent of them will not survive if the government insists on implementing it,' Yukki said.
Jonan, however, has dismissed the concerns, claiming that the new regulation is necessary to improve air cargo safety and security.
'The criticism has only come from certain business players,' Jonan said. 'There is not enough space if everyone is inspecting the cargo at Line 1. It could endanger the safety and security as well.'
The ministry's director general for air transportation, Suprasetyo, denied concerns about a EU ban following the new regulation.
'The EU only asked about the new inspection procedure following the closure of Line 1 and did not suggest a threat to ban cargoes from Indonesia.'
