BILLING PROCESS ALTERED

BILLING PROCESS ALTERED

Acomprehensive conversion process launched last October is dramatically altering the way freight forwarders pay airlines for international shipments.

Karen Hagen, manager of U.S. cargo sales accounting at Lufthansa, likened the old system to telling your credit card company each month how much you think you owe.The new Cargo Accounts Settlement System reverses that process, because the airline sends CASS the billing data directly. CASS then bills the appropriate forwarder the amount. The conversion puts the responsibility on the airline, rather than the forwarder, to say how much the forwarder owes it.

''It certainly has improved the process for the carrier and the agent. It's less administrative work from both sides. The agent no longer has to create a sales report (to submit to CASS),'' Ms. Hagen said.

It also removes the need for a paper copy of the air waybill, or electronic copy in some cases, to be submitted with billing data. The air waybill number is referred to as a reference number since both parties have copies.

The new billing system has far-reaching implications because of the great amount of cargo shipments involved. About 23 U.S.-based and foreign-based carriers now participate in CASS, but the total should reach 75 by October, said Howard Chaloner, manager of CASS-USA, based in Louisville, Ky.

CASS, established in the early 1980s, is operated by Cargo Network Services Corp., the U.S. cargo affiliate of the International Air Transport Association. The billing system covers nearly all international air freight shipments.

Mr. Chaloner will discuss the CASS conversion next week at the eighth annual CNS Partnership Conference, which will be held Sunday through Tuesday at the Rancho Bernardo Inn in San Diego.

About 300 people, primarily freight forwarders, are expected at the conference, according to Anthony Calabrese, president of CNS, which is based in Garden City, N.Y.

All 1,400 U.S.-based and foreign-based forwarders endorsed by CNS participate in the new system. This group controls the lion's share of the global air freight market, Mr. Chaloner said.

The old method required forwarders to report individual airline sales data to CASS, along with a copies of shipment air waybills. ''We'd process that and forward it on to the carriers,'' said Mr. Chaloner. The airline would come back to CASS, reporting any differences or corrections, and further adjustments or reconciliation were often necessary, bringing delays in payment and administrative hassles.

60 POUNDS OF WAYBILLS

Mr. Calabrese said CASS commonly received 60 pound boxes of air waybills from large forwarders for each twice-monthly billing cycle CASS processes. ''The agents say the billing is more accurate and they're able to reduce the time they spend on adjustments as a result of the new process,'' Mr. Calabrese said.

Automation levels of the participating airline and forwarder determine just how transactions are processed. Lufthansa, which is highly automated, sends all information electronically. Some forwarders that the airline bills through CASS are online and can receive bills electronically from CASS, while others are not.

MOVE TOWARD EDI

Most of the processing under the new system is still done with paper sent via the mail or other means, but the move is toward more electronic submission. Mr. Chaloner said only a minority of the forwarders currently use electronic data interchange to submit payment verification and transmittals to CASS, while most airlines that have converted to the new method use EDI.Other improvements include streamlining the billing function through such means as the computerized air waybill service offered by CNS. Instead of storing and using the blank hard copies of air waybills as doled out by airlines on a controlled basis, CNS-endorsed agents can receive authorized numbers to use in their own computer-generated creation of air waybills.

EARLY DAYS OF AIR FREIGHT

The origins of the old CASS method date back to the early days of air freight, when forwarders and agents had to prove to the airline which sales they had generated. Ironically, the U.S.-based CASS system was one of the first such payment-clearinghouse systems among some 30 airline CASS systems in the world, but it is the last to change over to the new way of billing, said Mr. Chaloner.

CNS was set up as the U.S. cargo arm nearly 15 years ago because of antitrust immunity issues. Mr. Calabrese said CNS is positioning itself away from the ''regulator'' role and toward one of a service provider.