1. Changes to Australia’s Air Cargo Security Arrangements
Information Session
August-September 2016

2. Agenda
Welcome and introductions
Background and context
Key changes to air cargo regulations
Discussion
Wrap up and next steps

3. What is happening
The Australian Government has released draft amendments to the Aviation Transport Security Regulations 2005 (the Regulations).
These changes are necessary to:
ensure Australian exports to the US continue without interruption;
ensure trade can continue with minimal disruption; and
strengthen and streamline air cargo security in Australia.
If you are an airline, airport, exporter or freight service provider, these changes will affect your business.
KEY POINTS:
Draft Regulations released for public consultation in mid-August. The Consultation period closes on 2 September 2016.
Draft Regulations follow recent amendments to the Aviation Transport Security Act 2004.
This is a stated priority for the Australian Government and industry views and feedback are welcome.
The Government is seeking to implement the new Regulations in late 2016.
These changes will secure Australian exports to the US after July 2017.
Changes seek to strengthen air cargo security in Australia while ensuring trade continues with minimal disruption.
All supply chain participants who play a role in shipping international air cargo overseas are likely to be affected.

4. Australia’s current air cargo security arrangements
Regulated Air Cargo Agents (RACAs) maintain regular customer lists and ‘clear’ cargo according to Annex A of their Transport Security Program.
Consolidated examination (screening) of export air cargo at Cargo Terminal Operator.
Piece-level examination now occurring in express freight sector.
RACAs and Aircraft Operators have measures and procedures in place to deal with ‘suspect cargo’.
OFF-AIRPORT RACAs, using their existing TSP – Annex A & Regular Customer arrangements – to clear international air cargo.
All RACAs, even those using their TSP, can currently issue a Security Declaration.
In addition, RACA Cargo Terminal Operators (CTOs) receive this cargo and then conduct a consolidated technological examination at the CTO under the terms of the Air Cargo Examination (ACE) Notice.
Note: Only RACA CTOs are eligible, under the terms of the Notice, to receive an ACE Notice. ACE Examination is not available at off-airport locations.
USA requires piece-level examination for all US-bound air cargo. In Australia, express freight sector already conducting piece-level examination on most export express freight.
RACAs and Aircraft Operators currently have measures and procedures in place to deal with ‘suspect cargo’.
AACAs are not able to examine or clear international air cargo for uplift on an aircraft.
AACAs play an important role in securely transporting air cargo.

5. Why we need to make a change
US Transportation Security Administration (TSA) re-evaluated Australia's air cargo security arrangements in 2015.
The TSA determined that current arrangements for US-bound air cargo do not meet US legislative requirements.
TSA requirement – From 1 July 2017, all US-bound air cargo must be examined at a ‘piece level’ or originate from a Known Consignor.
Piece level examination means screening each individual box, carton or other item in a shipment by technology or physical inspection.
USA regularly visits Australia to observe Australia’s aviation and air cargo security operations.
US domestic legislation requires all import air cargo to be examined at piece-level.
Piece-level examination means screening each individual box, carton or other item in a shipment by technology or physical inspection.
Prior to 2015, the US had recognised Australia’s arrangements as being commensurate with US requirements.
Following the re-evaluation, the requirement for Australia to examine 100 per cent of US-bound export air cargo was put in place.
This requirement will take effect from 1 July 2017.
Any air cargo that is not examined at piece-level after 1 July 2017, will not legally be able to be loaded onto an aircraft for uplift.
To assist industry with this change, at this stage the Government is only requiring US-bound air cargo to be examined at piece-level.
Other countries may also require piece-level examination on export air cargo in the future – i.e. Europe / United Kingdom.

6. What are the key changes?
The Australian Government has made the following regulation amendments:
creating a Known Consignor scheme;
streamlining clearance provisions;
reforming RACA and AACA security programs;
creating a framework for RACAs to transition to AACAs; and
new process for application and accreditation of industry businesses.
Key Changes:
Creation of Known Consignor Scheme
A Scheme for businesses who originate air cargo.
Known Consignors will need to implement security measures at their facilities to ensure cargo is packed/originated securely at the Known Consignor’s premises.
Known Consignor cargo is not examined further along the supply chain.
The integrity of a Known Consignor’s security arrangements at their facility and during transport is very important.
The Department may undertake a site validation of a Known Consignor’s facility prior to the Known Consignor joining the scheme.
Streamlining clearance provisions
Once the new Regulations come into force, cargo can only be examined and cleared by a RACA that has been issued with an ACE or Enhanced Air Cargo Examination (EACE) Notice. In addition, Known Consignors are able to clear their own cargo.
Once this is in place, only those businesses will be able to issue a Security Declaration.
Other businesses that currently only use Annex A of their TSP and Regular Customer arrangements will not be able clear air cargo in the future.
In addition, the requirement to issue a Chain of Custody Statement (ChOCS) will be removed from the Regulations. This does not prohibit businesses continuing to use ChOCS if they choose to.
Reforming RACA and AACA Security Programs
RACAs will no longer be required to maintain a TSP.
RACAs will be required to implement a new RACA Security Program. This Program will better focus on the RACA’s operations and provide for a more focused audit and compliance approach for RACAs
Existing AACAs and RACAs who transition to the AACA Scheme will, eventually, all be issued with a new model AACA Security Program. This will significantly reduce the administrative burden associated with maintaining a TSP.
Regular Customer and some Annex A requirements will continue to apply to both RACAs and AACAs. This will ensure that security is applied throughout the supply chain to air cargo, reduce the likelihood of unknown and unchecked cargo being presented to the CTO and not remove any current security features from Australia’s air cargo security arrangements.
Creating a framework for RACAs to transition to the AACA Scheme.
Practically, this change will not have a significant impact on the day to day operations of RACAs and AACAs.
Current RACAs with an ACE or EACE Notice will remain in the RACA Scheme.
Current RACAs who are not in possession of an ACE or EACE Notice will transition to the AACA Scheme.
Existing AACAs will remain in the AACA Scheme.
The Department will provide advice and guidance to all RACAs and AACAs before the new Regulations come into force in late 2016.

7. Key change 1 – creating a Known Consignor scheme
Known Consignors will be a new category of industry participant directly regulated by the Department.
Known Consignors will secure US-bound air cargo through approved security measures (outlined in a Security Program).
Security measures will be validated by an on-site visit.
US-bound air cargo originating from Known Consignors will not require further examination before uplift on an aircraft, provided it remains within a ‘secure supply chain’.
The Known Consignor scheme is a new initiative that has never operated in Australia before.
Basically, exporters that join the scheme will become regulated by the Department and be required to meet security outcomes that ensures their export facility is secure.
This means that the exporter will let the Department know what sort of security measures they have in place and then work with the Department to increase security in areas where it is required.
Once these security measures are in place, the exporter can make sure their goods are secure at the point of origin or manufacture and then make certain that the cargo stays secure throughout the supply chain all the way to the airport.
Air cargo that originates from a Known Consignor will not require any further examination by a freight forwarder or Cargo Terminal Operator – so long as the cargo has remained secure.
This scheme recognises that some forms of cargo sent by air can be difficult to examine using technology and so this provides another avenue for exporters to get their goods out of Australia and into the US.
Businesses that join the scheme will be validated by the Department, this may include a specific site-visit and this assures the Department that an exporter can comply with their security obligations.
We have started to conduct the first site visits of potential Known Consignors under a trial that is wrapping up shortly.
Exporters, who ship their goods via air cargo to the US, will either need to have their cargo examined at piece-level by a freight forwarder, or become a known consignor.
Exporters that are currently regulated by the Department of Agriculture or are participating in the Department of Immigration and Border Protection’s Trusted Trader Program may have business practices in place that will help them meet the known consignor requirements.
The Department has opened Expressions of Interest (EOI) for the Known Consignor Scheme (web page is at the end of this presentation).

8. Key change 2 – streamlining clearance provisions
From 1 November 2016, export air cargo can only be cleared:
by a RACA that has been issued with an ACE or EACE Notice; or
by a Known Consignor.
Once the new Regulations come into force, cargo can only be examined and cleared by a RACA that has been issued with an ACE or Enhanced Air Cargo Examination (EACE) Notice. In addition, Known Consignors are able to clear their own cargo.

9. Key change 2 – streamlining clearance provisions (continued)
International air cargo going to destinations other than the US will be cleared if:
if it has been examined at a piece level by a business holding an EACE Notice;
if it has been examined ‘as presented’ by a business holding an ACE Notice;
it originates from a Known Consignor;
AND
the cargo has been handled securely by regulated businesses up to loading on an aircraft.
The Air Cargo Examination (ACE) notice:
was introduced in 2008 and given to cargo terminal operators only;
sets out the methods, techniques and equipment requirements for examination of export air cargo; and
requires examination of freight ‘as presented’.
This means non US-bound export air cargo can continue to be examined at an ‘as presented’ level. That is, it can still be examined as a consolidated load.

10. New air cargo security arrangements (non-US bound)
Lane 1
Known Consignor
Regulated business (AACA)
CTO RACA
100% cleared cargo
SD issued
Lane 2
Unregulated entity
RACA
Regulated business (AACA)
CTO RACA
100% cleared cargo
SD issued
Enhanced
Examination (EACE)
CTO RACA
Lane 3
Unregulated entity
100% cleared cargo
Consolidated
Examination (ACE)
SD issued
Note: for non-US bound cargo, lane 1 and 2 are acceptable forms of clearing cargo.
However, most cargo would be cleared at Lane 3 via consolidated examination at CTO
uncleared cargo
cleared cargo

11. Key change 2 – streamlining clearance provisions (continued)
US-bound air cargo will only be cleared if:
if it has been examined at a piece level by a business holding an EACE Notice; or
it originates from a Known Consignor;
AND
the cargo has been handled securely by regulated businesses up to loading on an aircraft.
Under the new clearance arrangements, piece-level examination will be required for all US-bound air cargo that does not originate from a Known Consignor, and will be acceptable for cargo travelling to other destinations.
Cargo that is not travelling to the US may continue to be examined at the RACA CTO via consolidated examination.
The Enhanced Air Cargo Examination (EACE) is a notice to examine air cargo at their facility.
A significant amount of paperwork and double-handling will be removed as off-airport RACAs will be able to examine the air cargo to piece-level standards at their facility and then transport the cargo directly to the Airport where it will not need any further examination.
The express freight sector has already commenced piece-level examination.
We see a lot of express freight linked to things like E-bay and Amazon and so piece-level examination provides a streamlined and practical solution for express freight.

12. New air cargo security arrangements (US- bound)
Lane 1
Known Consignor
Regulated business (AACA)
CTO RACA
100% cleared cargo
SD issued
Lane 2
Unregulated entity
RACA
Regulated business (AACA)
CTO RACA
100% cleared cargo
SD issued
Enhanced
examination
at piece level (EACE)
Lane 3
Enhanced
examination
at piece level
(EACE)
CTO RACA
Unregulated entity
100% cleared cargo
SD issued
Regulated Business- includes RACA and Accredited Air Cargo Agents
uncleared cargo
cleared cargo
RACA- regulated air cargo agent
CTO- cargo terminal operator

13. Enhanced Air Cargo Examination (EACE) Notice
Sets out the approved examination methods, techniques and equipment to be used to examine cargo at a ‘piece level’.
From 1 July 2017, all US-bound air cargo will have to be EACE’d or originate from a Known Consignor.
A number of regulated businesses have already been issued with an EACE notice and are operating as Accredited Examination Facilities (AEFs).
Businesses interested in becoming an Accredited Examination Facility and conducting piece level examination can apply to the Department.
They will need to complete an application form and undergo a site validation.

14. Key change 2 – streamlining clearance provisions (continued)
Security Declarations will operate as evidence of the cleared status of cargo.
A Chain of Custody Statement (ChOCS) will no longer be required.
The information required in Security Declarations will be consistent with IATA requirements for CSDs and eCSDs.
Under the current regulations, once a RACA clears the cargo, they generate paperwork known as the Security Declaration and Chain of Custody Statement.
Once the new Regulations are in force, the Security Declaration will only be issued once, by the RACA who has examined and cleared the cargo with an ACE or EACE Notice, or a Known Consignor.
AACAs are not legally able to issue Security Declarations.
Chain of Custody Statements will no longer be required under the Regulations, but may be issued by a business if they so choose.
It will be an offence for AACAs to issue a Security Declaration. It is not an offence for businesses to continue issuing Chain of Custody Statements.

15. Key change 3 – reforming RACA and AACA security programs
RACAs will no longer hold Transport Security Programs (TSPs).
Regulations on security programs are uniform across RACAs, AACAs and Known Consignors.
RACAs, AACAs and Known Consignors will have security programs that are underpinned by the six pillars of air cargo security.
Security programs will not expire. However, designation as a RACA, AACA or Known Consignor will last 1-5 years (length will be determined by risk).
As part of the new arrangements, the Government will remove the requirement for RACAs to hold a TSP.
As there are specific requirements under the Aviation Transport Security Act 2004 that determine the content and management of a TSP, this change will effectively remove a number of those additional requirements and reduce some administrative burden for RACAs.
The Regulations will introduce new requirements for RACAs, AACAs and Known Consignors to hold a Security Program instead of a TSP.
The Security Programs will be more outcomes-focused, providing businesses with greater flexibility in how they meet their security obligations, while reducing administrative overheads.
All Programs will be based on ICAO’s six pillars of supply chain security:
Facility Security
Personnel Security
Training
Clearance of cargo
Chain of Custody
Oversight and compliance
As you may be aware, currently TSPs have an expiry date – usually five years. Once the new Regulations come into force, the new Security Programs will not expire – however – a businesses designation as a RACA, accreditation as an AACA or approval as a Known Consignor will be allocated with an expiry date. Expiry dates will be issued by the Department and will be based on the type of business and the associated risk. I.e. Large RACAs or AACAs who store, transport and handle cargo may expire before other businesses that only transport etc.
Expected length of designation expiry – between 1 – 5 years. To be determined by the Department.
To be communicated to RACAs and AACAs before the new Regulations come into force.
To be communicated to Known Consignors once they join the Scheme.

16. Key change 3 – reforming RACA and AACA security programs (continued)
The six pillars of air cargo security are:
facility security;
personnel security;
training;
clearance of cargo;
chain of custody; and
oversight and compliance.
Facility Security
Facility security refers to procedures and measures that detect and prevent unauthorised entry to facilities where export air cargo is handled or originated.
These might include things like:
physical access controls;
procedures to identify, record and deal with unauthorised persons (e.g. sign-in registers);
information security controls; and
mechanisms for secure handling, storage and transport of goods and information on international air cargo.
Personnel Security Personnel security requirements are designed to address the risk of a trusted insider using their access rights to place an unauthorised explosive in cargo.
The risks posed by trusted insiders can be mitigated through the implementation of well thought out personnel security measures.
Personnel security is best described as a system of policies and procedures which seek to manage the risk of an employee exploiting their legitimate access for illicit gain, or to cause harm.
A key part of personnel security is background checking.
Training Security awareness training is required so that all employees with access to cargo of are aware of possible security threats and are alert to security issues in the workplace.
This includes awareness training to assist in the identification of a trusted insider.
Employees with security-specific roles may need to undertake additional training in line with their role (e.g. operations manager, security officer, driver).
Clearance of cargo Examining cargo for transport by air will be conducted using approved technologies or physical search procedures.
Refer ACE Examination – on-airport only – consolidated examination
Refer EACE Examination – on-airport and off-airport – piece-level examination
Known Consignor – approved security measures at facility to originate cleared cargo.
Chain of Custody
Chain of custody measures are procedures and practices put in place to maintain the integrity of secure
cargo as it moves through a supply chain from the point at which security controls are applied. Chain of
custody provisions apply to measures for cargo acceptance, the storage of secure cargo, the ground
transport and handling of secure cargo, and the transfer and transit of secure cargo.
Oversight and Compliance
Legislation enables the Department to conduct oversight and quality control, and include inspections and tests of personnel, measures,
procedures, programmes, facilities and equipment as part of the RACA, AACA and Known Consignor Schemes.
The legislation makes provision for the enforcement of the Government’s aviation security regulations and for
the issuance of penalties for non-compliance.
Each RACA, AACA and Known Consignor should also implement internal reviews and audits periodically.

17. Key change 4 – creating a RACA to AACA transition framework
RACAs that have been issued with an ACE or EACE Notice will remain in the RACA scheme.
RACAs that do not hold an ACE or EACE Notice will transition to the AACA scheme.
AACA security requirements will be increased to ensure a robust security outcome (no downgrade for transitioning RACAs).
The TSP of a transitioning RACA will form the basis for their new security program, minus Annex A until a new security program is provided.
Both RACAs and AACAs will have Regular Customer arrangements.
Currently, RACAs are businesses that handle or make arrangements for the transport of air cargo, and examine and clear cargo to be carried on a prescribed air service.
Existing RACAs who have been issued with an Air Cargo Examination (ACE) Notice or an Enhanced Air Cargo Examination (EACE) Notice will remain in the RACA scheme.
Note: ACE Notices are only available to on-airport RACAs – normally CTO RACAs.
However, existing RACAs who do not hold one of these notices will transition to the AACA scheme. Transitioning to the AACA scheme does not reduce the level of security which must be maintained or security outcomes for the handling of cargo.
Your business will remain in the RACA scheme if, from 1 November 2016:
Your business is already a regulated business in the RACA scheme; and
Your business has been issued with an Air Cargo Examination (ACE) Notice or an Enhanced Air Cargo Examination (EACE) Notice by the Department.
If you remain in the RACA scheme you will not experience any major changes in your business practices and should continue to comply with all relevant legislative and regulatory requirements.
If you are currently in the RACA scheme, but do not hold an ACE or EACE Notice, from 1 November 2016, your business will automatically transition into the AACA scheme.
AACAs are regulated businesses, just like RACAs. The main difference is that AACAs are not able to examine or clear air cargo. RACAs who transition to the AACA scheme will still be required to maintain their existing security arrangements and continue to handle cargo in a secure way.
If you do not hold an ACE or EACE Notice, on 1 November 2016, your existing RACA TSP will become an AACA Security Program (SP) with some minor changes. The Department will provide new AACAs with guidance on how to meet the requirements of their AACA SP. Eventually, all AACAs will be issued with a new AACA SP which must be complied with. This new process will significantly reduce the work needed to maintain a security program.
You will receive instructions on how to vary your SP, as well as advice and guidance from the Department before 1 November 2016.
AACAs are not able to examine cargo or issue Security Declarations. From 1 November 2016, the only regulated business that may issue a Security Declaration is a RACA who holds an ACE or EACE Notice or a Known Consignor. AACAs will still be required to apply security measures to the cargo they handle. These include facility security; personnel security; security awareness training; secure handling of cleared cargo; and regular customer arrangements.
Requirements for security documentation accompanying international air cargo are being streamlined in line with international standards. A Chain of Custody Statement (ChoCS) will no longer be required. AACAs may continue to issue a ChoCS if they choose, however this will no longer be a regulatory requirement.
From 1 November 2016, RACAs who transition to the AACA scheme cannot issue Security Declarations.
When the changes begin, it will be an offence under the Regulations for an AACA to issue, re-issue or modify a Security Declaration. This is a function which can only be performed once cargo is cleared by RACAs who hold an ACE or EACE Notice or Known Consignors.

18. Key change 5 – new application and accreditation process1
Application form filled out by new entrant 2
Validation for KC and RACAs (optional for AACAs) 3
Approval and issuance of security program 4
Accreditation lasts from 1 to 5 years 5
Renewal required to continue operating as industry participant

19. High Risk Cargo
The new Regulations will include a reference to High Risk Cargo.
This minor change to terminology replaces the current term ‘suspect cargo’.
‘High risk cargo’ aligns Australia’s regulatory arrangements with ICAO Standards.
Cargo presented by an unknown entity or showing signs of tampering shall be considered high risk if, in addition, it meets one of the following criteria:
specific intelligence indicates that the cargo poses a threat to civil aviation; or
the cargo shows anomalies that give rise to suspicion; or
the nature of the cargo is such that baseline security measures alone are unlikely to detect prohibited items that could endanger the aircraft.
Regardless of whether the cargo comes from a known or unknown entity, a State’s specific intelligence about a consignment may render it as high risk.
What do the changes mean for aircraft operators?
Aircraft operators will be responsible for determining the measures and procedures they will use to handle and treat high risk cargo and detailing these measures and procedures in their TSP.
Under the amendments, a transition period has been provided which means that aircraft operators do not have to update their TSP by 1 November Instead, aircraft operators will be required to incorporate their measures and procedures that handle and treat high risk cargo either when they next revise their TSP or when it expires.
What do the changes mean for RACAs, AACAs and Known Consignors?
Measures required to deal with high risk cargo will be included in RACA, AACA and Known Consignor security programs.

20. Where we are up to The planned commencement date is 1 November 2016.
The Minister has approved release of the exposure draft of the regulation amendments for public consultation.
The public consultation period will last from 15 August to 2 September 2016.
To meet 1 November date, we need the Minister’s approval on final regulations by the end of September.

21. Feedback on draft regulation amendments
We invite your comments on the draft regulation amendments. Responses are due by 2 September 2016, COB.
Draft regulations are on the Department website:

22. Known Consignor expression of interest
For exporters who are interested in becoming Known Consignors:
Known Consignor Expression of Interest is on the Department website:

23. To contact the Department
Phone:
Thank you!