In the cargo sector, better compliance isn’t only about protecting your business; it’s also about improved competitive advantage for carriers.
Protecting the reputation of your business brand and employees – that is the prime reason you comply with sanction regulations and ensure financial crime compliance, right? Yes, but it’s by no means the whole picture, according to our snapshot survey of air cargo carriers and freight forwarders.
As you’d expect, reputation is the number one reason the cargo sector would seek to improve their trade sanctions and export control compliance program – followed closely by the nightmare threat of fines or jail time for employees.
But as our 2019 survey of 80 cargo industry decision-makers suggests, there’s also a positive benefit to improving compliance: competitive advantage.
Below are some of the key findings around how compliance can drive competitive advantage in the cargo industry.
Competitive advantage 1: go where rivals can’t
What is the benefit of building a sophisticated compliance program that works reliably when delivering goods worldwide? One answer is that you can fly to places competitors with a less sophisticated compliance solution can’t.
In our survey, 34% of respondents point to “profitable business in higher-risk countries” as a driver for improving a trade sanctions and export risk compliance program.
In this light, investing in AML compliance isn’t only about protecting your wider business reputation, vital as this is – it’s also about holding on to business in higher-risk territories, which can help to differentiate you from your competition in a compliance-driven world.
Our survey interviewed people not just in compliance/legal and technology roles, but also in areas such as cargo sales, cargo operations and the C-suite. This could explain some of our respondents’ focus on competitive advantage – and on the profitable business lines that might otherwise be lost.
Competitive advantage 2: speedier checks
A second advantage of better sanctions compliance is speed, an area cargo carriers and freight forwarders know they face tough challenges.
Our survey indicates that carriers operate in a world of complexity, where regulatory paradigms are changing and checks can be repeated manually. Yet nearly three-quarters of respondents say their organisations have at least some paper-based component in their airway bill (AWB) or house airway bill (HAWB) system. Additionally, some checks require dedicated time to investigate further and make a well-informed decision before processing.
Given this environment, carriers are looking for a solution that can speed up and simplify the compliance process.
And that’s why our respondents’ two highest priorities in a screening solution are automation (cited by 78% of respondents) and customisable screening protocols (70%).
Competitive advantage 3: reduced operational risk
Finally, of course we need to talk about reduced risk – a benefit that is linked to your wider reputation.
Our survey shows that two specific drivers of a better sanctions screening program are the retention of import/export licenses and landing rights (62%) and concern about insurance cover and premiums (38%).
These are factors that could have a direct impact on your ability to deliver cargo services – or, in the case of insurance premiums, to price them competitively.
Our respondents, it seems, recognise that improved compliance could mean changing the business environment in which they operate – for the better.
How can Accuity help?
We’d like to help you build a compliance program that gives you the competitive advantages you seek – speeding up and streamlining your screening, while helping reduce risk.
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