BwNodecCIAAquJ4Kenya Defense Forces have destroyed a ship laden with heroin worth $11.3 million off the coast of Mombasa. The act is a message that the Port of Mombasa will no longer be a passage for the importation of illicit drugs, says the Head of State.

A reported 370 kilograms of heroin were blown up together with the stateless Al Noor ship on Friday in an operation witnessed by President Uhuru Kenyatta from a military helicopter overflying the Indian Ocean.

The vessel was mounted with explosives which were detonated some 16 nautical miles south of the coastal town of Mombasa, where it then sunk to the seabed.

A Mombasa High Court judge had earlier issued an order stopping the destruction of ship. A local lawyer had made a submission to stop the ship’s obliteration on behalf of his client, who was not named in court. However, presidential orders seemed to trump the court order.

Additionally, nine foreigners have been charged with trafficking the heroin at the Mombasa High Court. The drugs were seized from the 1,800 liters of the ship’s diesel reservoir on July 15 where they were concealed when it was intercepted off the Kenyan coast in Lamu by Kenya navy officers. Source: The Star (Kenya)

Related article

product_tsaprecheck_hero_750x200The U.S. Department of Homeland Security recently achieved two major milestones for its trusted traveler programs. The Transportation Security Administration Pre✓ application program, which began in December 2013, has now enrolled more than half a million travelers.

Additionally, U.S. Customs and Border Protection (CBP) has enrolled more than three million users in their trusted traveler programs: Global Entry, NEXUS and SENTRI. Together, all of these DHS trusted traveler programs provide an improved passenger experience, while enhancing security and increasing system-wide efficiencies.

TSA Pre✓ allows low-risk travelers to experience faster, more efficient screening at 118 U.S. airports nationwide currently. TSA Pre✓ is an expedited screening program that allows pre-approved airline travelers to leave on their shoes, light outerwear and belt, keep their laptop in its case and their 3-1-1 compliant liquids/gels bag in a carry-on in select screening lanes.

The TSA Pre✓ application program allows U.S. citizens and lawful permanent residents to directly enroll in TSA Pre✓. Once approved, travelers will receive a “Known Traveler Number” and will have the opportunity to utilize TSA Pre✓ lanes at select security checkpoints when flying on a participating carrier: Air Canada, Alaska Airlines, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Sun Country Airlines, United Airlines, US Airways and Virgin America.

Upon arrival in the United States from abroad, Global Entry members are able to bypass the traditional CBP inspection lines and use an automated kiosk. With more than 70,000 new applicants each month, travelers enrolled in this program can scan their passport and fingerprints, answer the customs declaration questions using the kiosk’s touch screen and proceed with a receipt — the whole process only takes about one minute. Launched in 2008, as a pilot program, Global Entry is now a permanent program and has 51 locations in the U.S. and at CBP Preclearance stations in Canada. These locations serve 99 percent of incoming travelers to the United States. Source: dhs.gov

EYIn one of the most important customs cases in years (Skechers USA Canada Inc. v The President of the Canada Border Services Agency (2013), AP-2012-073 (CITT), referred to in this article as Skechers Canada), the Canadian International Trade Tribunal (CITT) confirmed an aggressive interpretation by the Canada Border Services Agency (CBSA).

The case concerned additions to the transaction value for intercompany payments made outside of the invoice amount or transfer price that relate to design and development costs allocated to the importer.

As part of a recent enforcement trend of the CBSA toward assessing customs duty on intercompany management or other fees not included in the transfer price, the CBSA determined that the total research and development (R&D) intercompany fees paid by the Canadian company were part of the value for duty allocated over the goods actually imported.

In a potentially far-reaching decision, the CITT endorsed this decision for cases where the importer cannot demonstrate that the payments are unrelated to the goods.

The Skechers Canada case

The taxpayer in Canada purchased footwear from its US affiliate and established a transfer price for goods based on the US affiliate’s factory cost from the offshore manufacturer plus transportation, warehousing and an amount for profit.

This price included the cost of “assists” relating to the molds and samples that the US affiliates provided to the manufacturers for the successful models subsequently imported. It did not include, however, the value of the design work performed in respect of the development of unsuccessful prototypes or models (approximately 45,000 of the 50,000 models under development never made it to the final stage), nor the costs for the general R&D expenses of the US affiliate (salaries and overhead). Therefore, the taxpayer also made payments for these costs to the US affiliate under a cost-sharing agreement (CSA).

The fees paid by the taxpayer under this agreement were a function of the volume of import purchases. They were calculated based on operating profit of the taxpayer pursuant to the terms of the CSA and thus varied with volumes of imports and sales.

As noted, of the approximately 50,000 models under development, only 5,000 made it to the final cut, and of this only approximately 1,700 were imported to Canada. Accordingly, most of the payments for research and design and development under the CSA were not included in the transfer price.

The decision

Both parties to the dispute agreed that the Tribunal should use the “transaction value” customs valuation methodology (the adjusted transfer price). The issue concerned whether the payments for R&D under the CSA were “in respect of” the goods and therefore part of the “price paid or payable” pursuant to Subsections 45(1) and 48(4) of the act.

A basic provision of customs valuation is that the transaction value must include all payments made “in respect of” the goods. The taxpayer contended that the payments were for intangibles and not in respect of the goods as they were for developing the brand.

In a precedent-setting decision, the Tribunal held that all payments under the CSA relating to research, development and design were dutiable because they were, in the Tribunal’s words, “clearly in respect of the goods” given that the evidence disclosed that “the R&D payments most directly concern the footwear products themselves.”

There was one continuous process by which the research, design and development process flowed through the season to develop the footwear. Therefore, the activities and associated costs covered by the R&D payments can all be located somewhere along the continuum of that lengthy and interrelated process and the research and design efforts and associated fees were “directly aimed” at developing the models available for purchase each season by the taxpayer.

Thus, the Tribunal found that the costs were directly related to developing and designing the particular footwear that was imported. The payments and the imported goods were directly linked as the fees were calculated based on the taxpayer’s Canadian operating profit and, hence, if imports increased, so would the payments.

What does the Skechers Canada decision mean?

As a result of the decision, in Canada, at least for now, payments made by the Canadian purchaser to the overseas vendor for “research, design and development” costs, whether they result in actual production of the purchased models or are allocable to other non-imported models or aborted designs, are part of the value of the goods for customs purposes where the Canadian importer pays amounts that vary with sales and imports, to an affiliate under a CSA.

Impact on supply chain planning

The case is a wake-up call for many multinationals to consider customs planning rather than just income tax or logistics planning. Further, it highlights the need to be aware of, or to seek advice from advisors experienced with, the latest case law or CBSA policy. Customs compliance and leading practices for planning need to be considered along with any other savings to achieve the best overall efficiency for the supply chain.

Lessons learned?

First and foremost, a supply chain structure must be considered very carefully when importing goods into Canada, particularly through a supply chain involving affiliated parties. Often a direct sale from the manufacturer to the importer may have customs planning advantages.

Where there are purchases from a related party who sources the goods abroad, it is important to ensure that the transfer price is acceptable for customs valuation purposes and to confirm whether any adjustments are required for other payments, such as R&D costs and royalties. In a direct sale, “assists” must also be considered.

The onus is on the importer to prove that any payments made are not in respect of the goods under the act. This point is often overlooked. In this case, it was crucial as the Tribunal made its finding on the basis that the taxpayer did not discharge this onus. It is important to keep the importer’s onus of proof in mind when undertaking any customs duty planning and also when deciding to make any appeal against a determination.

This article was first published in EY´s Indirect Tax Briefing: July 2014

Triple-E-full-loaded

MV Mary Maersk departed Algeciras, Spain fully laden [Gcaptain.com]

On July 21, 2014, the MV Mary Maersk departed Algeciras, Spain with a world record 17,603 twenty-foot equivalent units (TEU), the most TEU’s ever loaded onto a single vessel.

MV Mary Mearsk is the third vessel in Maersk Line’s Triple-E class, which have nominal capacity of 18,270 TEU, although port restrictions have prevented the vessels from reaching full capacity.

“Algeciras has been preparing for full utilisation of the Triple-E for more than a year,” says Carlos Arias, head of the South Europe Liner Operations Cluster. “This included the upgrading of four existing cranes and the arrival of four new Triple-E cranes.”

After departing Algeciras, the vessel was bound for Tanjung Pelepas, Malaysia, which included a trip through the Suez Canal. Arias added that similar upgrades needed to be made at the port of Tanjung Pelepas, and this was the first occasion where both ends were ready. Source: Gcaptain.com

SAAFFAs the winner of the Region Africa Middle East phase of the Young Freight Forwarder of the Year competition, Fortunate Mboweni of Bidvest Panalpina Logistics is now off to compete on a global platform.

Fortunate’s prize is to attend and participate in the FIATA World Congress in Istanbul in October this year. At this Congress Fortunate and the three other regional winners representing the Americas, Asia Pacific and Europe will compete to become the global winner.

The global winner will receive a total of five weeks training in New York and London, as well as at one of the IATA major centres, with all expenses paid by competition sponsors, the Transit Trade Club and International Air Transport Association. The competition was developed to encourage training in the freight forwarding industry and to further develop the professionalism of young people.

Winners were chosen from dissertations on how they handle all aspects of the international movement of goods that are not the usual run of the mill cargo. Fortunate’s dissertation was called ‘Multimodal transport operations in practice: radio actives and abnormals from and to South Africa.’

Fortunate is a channel controller at BPL and she is currently studying for the Generic Management NQF level 5 qualification. Source: http://www.transportworldafrica.com

mobile-passport-control-app-by-cbpU.S. Customs and Border Protection (CBP) today announced the launch of the first authorized app to expedite a traveler’s entry process into the United States. Mobile Passport Control (MPC) will allow eligible travelers to submit their passport information and customs declaration form via a smartphone or tablet prior to CBP inspection. This first-of-its-kind app was developed by Airside Mobile and Airports Council International-North America (ACI-NA) in partnership with CBP as part of a pilot program at the Hartsfield-Jackson Atlanta International Airport. IPhone and iPad users can download the app for free from Apple’s App Store.

Eligible travelers arriving at Hartsfield-Jackson Atlanta International Airport will be able to use the app beginning Aug. 13. MPC is expected to expand to more airports later this year and to Android smartphone users in the future.

“CBP continues to transform the international arrivals experience for travelers by offering new and innovative ways to expedite entry into the United States, while maintaining the highest standards of security” said CBP Commissioner R. Gil Kerlikowske. “By offering this app to passengers, we hope to build upon the success we have already experienced with Automated Passport Control, which has resulted in decreases in wait times as much as 25-40 percent, even with continued growth in international arrivals.”

MPC currently offers U.S. citizens and Canadian visitors a more efficient and secure in-person inspection between the CBP officer and the traveler upon arrival in the United States. Much like Automated Passport Control, the app does not require pre-approval, is free-to-use and does not collect any new information on travelers. As a result, travelers will experience shorter wait times, less congestion and faster processing.

“Mobile Passport exemplifies the forward-thinking commitment CBP and airports have to improving the passenger experience when entering the United States,” said ACI-NA President and CEO Kevin M. Burke. “This partnership between CBP and ACI-NA also represents an outstanding example of industry and government working together to find smart, cost-effective solutions. We look forward to continuing our collaboration with CBP as Mobile Passport begins its roll-out at U.S. airports later this year.”

There are five easy steps to MPC:

  • Download the Mobile Passport Control App from the Apple App Store prior to arriving
  • Create a profile with your passport information
  • Complete the “New Trip” section upon arrival in the United States
  • Submit your customs declaration form through the app to receive an electronic receipt with an Encrypted Quick Response (QR) code. This receipt will expire four hours after being issued
  • Bring your passport and smartphone or tablet with your digital bar-coded receipt to a CBP officer

ACI-NA contracted with Airside Mobile in MPC’s technical development. Information about Mobile Passport, including how to download, user eligibility and other frequently asked questions, is available on the Travel section of the CBP.gov website and the Airside Mobile website.

MPC is just one part of CBP’s resource optimization strategy which is transforming the way CBP does business in land, air and sea environments. As part of its commitment to innovation, CBP last year rolled out Automated Passport Control, which is now available in 22 locations, and automated the I-94 form. CBP has also enrolled more than two million travelers in trusted traveler programs such as Global Entry, NEXUS and SENTRI. These programs allow CBP officers to process travelers safely and efficiently while enhancing security and reducing operational costs. Source: USCBP

Capesize bulk carrier at Suez Canal Bridge [www.maritemexecutive.com]

Capesize bulk carrier at Suez Canal Bridge [www.maritimexecutive.com]

Egypt has plans to build a new Suez Canal alongside the existing 145-year-old historic waterway in a multi-billion dollar project to expand trade along the fastest shipping route between Europe and Asia.

The project, to be run by the army, is a major step by new President Abdel Fattah al-Sisi to stimulate Egypt’s struggling economy and recalled some of the grand national programs of one of Sisi’s predecessors, army strongman Gamal Abdel Nasser.

The Suez Canal earns Egypt about $5 billion a year, a vital source of hard currency for a country that has suffered a slump in tourism and foreign investment since the 2011 uprising that preceded Mursi’s presidency.

An official in the Suez Canal Authority told Reuters the new canal was set to boost annual revenues to $13.5 billion by 2023. The new channel, part of a larger project to expand port and shipping facilities around the canal, aims to raise Egypt’s international profile and establish it as a major trade hub.

“This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 72 kilometers (44.74 miles),” Mohab Mamish, authority chairman, told a conference in Ismailia, a port city on the canal.

He said the total estimated cost of drilling the new channel would be about $4 billion and be completed in five years, though Sisi said he hoped it would be finished within a more ambitious one-year deadline.

The original canal, linking the Mediterranean and Red Seas, took 10 years of brutal, poorly paid work by Egyptians, drafted at the rate of 20,000 every 10 months from “the peasantry”.

It slashed weeks if not months off journeys between Europe and Asia that otherwise necessitated a trip round Africa. Up to 20 Egyptian firms could be involved but would work under military supervision, he said.

Egypt has planned for years to develop 76,000 sq km (29,000 sq miles) around the canal into an international industrial and logistics hub to attract more ships and generate income.

Neil Davidson, senior adviser for ports and terminals at London-based Drewry Maritime Research, said the new canal would not necessarily generate greater trade but the development of a hub around it could prove lucrative.

“The strategic location of Egypt and the canal is a key advantage… being a key point where cargo can be distributed or worked on. This hubbing concept is extremely valuable,” he said.

Mamish, the chairman, said the project would involve 35 kilometers (22 miles) of “dry digging” and 37 kilometers (23 miles) would be “expansion and deepening”, indicating the current Suez Canal, which is 163 km (101 miles) long, could be widened as part of the project.

The Panama Canal linking the Atlantic and Pacific Oceans in Central America, is also being expanded with a third set of locks being built to allow bigger ships to pass through the waterway. That project is due to open in 2016.Among the bidders for the Suez project, according to Egypt’s Al Mal newspaper, was a group including state-run Arab Contractors and consultancy firm James Cubitt and Partners. Another included McKinsey & Co management consulting firm. Source: Reuters

Kenya Heroin Seizure [www.maritime-executive.com]

Kenya Heroin Seizure [www.maritime-executive.com]

Nine foreign nationals were charged in a Kenyan court with trafficking the biggest ever single seizure of drugs at the Indian Ocean port of Mombasa.

There has been a surge in the volume of heroin trafficked through east Africa in recent years, the U.N. Office on Drugs and Crime says, with east Africa’s biggest port of Mombasa cited as a transit point for narcotics and other contraband.

The suspects, who included six Pakistanis, two Indians and an Iranian, denied trafficking the heroin and were detained until November when their trial will begin.

Prosecutors told the court on Thursday that the 377.2 kg drug haul had a market value of 1.1 billion shillings ($12.54 million). Police also found 33,200 liters of liquid heroin whose value is yet to be established.

If convicted, the suspects face life imprisonment or a fine worth three times the value of the heroin, or both, a Mombasa-based lawyer told Reuters. The drug is typically transported from Pakistan and Iran to east Africa, known for its porous borders and weak maritime surveillance, and onwards to Europe.

They accused were arrested in Kenyan territorial waters in early July on board MV Bushehr Amin Darya, a stateless vessel, which was towed into the port of Mombasa, and police found the heroin hidden in the ship’s diesel tank.

Kenyan police said they were communicating with India, Pakistan and Iran to find the owners of the vessel, which they said was headed for Mombasa at the time it was intercepted.

An Australian warship seized a dhow in Kenyan waters with more than a tonne of heroin worth $268 million in April. Source: Reuters

Detector Dog Rajax demonstrates his cash-sniffing abilities during training at a NZ Customs facility

Detector Dog Rajax demonstrates his cash-sniffing abilities during training at a NZ Customs facility

Customs Minister Nicky Wagner today welcomed a new partnership between New Zealand, Hong Kong and Chinese Customs to develop cash detector dog capabilities in the region.

Officials from Hong Kong Customs and the General Administration of China Customs’ Anti-Smuggling Bureau have been in Auckland to learn how drug dogs are trained to detect cash, so they can progress similar programmes in their own Customs administrations.

“It’s fantastic we’re able to assist Hong Kong and China to build this special capability, as detecting undeclared or hidden cash is an increasing priority for many Customs authorities as evidence shows following the money trail can lead to cracking serious organised crime such as drug smuggling.

“Having Hong Kong and China Customs detector dogs sniff both drugs and cash will disrupt drug smuggling and money laundering by transnational syndicates, with flow-on benefits for us in New Zealand,” Ms Wagner says

New Zealand shares formal agreements and a close customs-customs operational relationships with both Hong Kong and China, with the agencies working together to target the illicit drug trade through cross-border efforts.

Officials spent a week getting an overview from Customs’ Source: NZ Government (contributed by M Reddy)

kenya-usa-flagThe U.S. signed a Customs Mutual Assistance Agreement (CMAA) with Kenya marking a significant milestone in collaboration on security and trade facilitation between the two countries. U.S. Customs and Border Protection (CBP) Deputy Commissioner (Acting) Kevin McAleenan signed the agreement on behalf of CBP and U.S. Immigration and Customs Enforcement (ICE) and Minister of the Treasury Henry Rotich signed the agreement on behalf of Kenya.

“Customs Mutual Assistance Agreements are valuable tools in the enforcement of our laws as they facilitate information sharing between international partners,” said Deputy Commissioner (Acting) Kevin McAleenan. “This agreement will expand our efforts to combat illicit cross-border activities and will enable us to continue our work to prevent, detect and investigate customs offenses.”

“Today’s signing represents the United States and Republic of Kenya’s joint commitment to elevate cooperation to safeguard our borders through the exchange of information and mutual assistance to combat customs law violations,” said ICE Principal Deputy Assistant Director Thomas S. Winkowski. “U.S. Immigration and Customs Enforcement, together with our partners at CBP, looks forward to future cooperative enforcement efforts with the Kenya Revenue Authority.”

The U.S. has now signed 71 CMAAs with other customs administrations across the world. CMAAs are bilateral agreements between countries and enforced by their respective customs administrations. They provide the legal framework for the exchange of information and evidence to assist countries in the enforcement of customs laws, including duty evasion, trafficking, proliferation, money laundering, and terrorism-related activities. CMAAs also serve as foundational documents for subsequent information sharing arrangements, including mutual recognition arrangements on authorized economic operator programs.

The U.S. – Kenya CMAA was signed at CBP headquarters as part of the U.S. – Africa Leadership Summit in Washington, D.C. The Summit included meetings between President Obama and 51 African heads of state. Source: GSN Magazine

maputo_corridorSouth African authorities implemented legislation requiring all travellers from Mozambique to prove they hold enough funds to cover their visit, either by showing R3000 minimum or by providing a credit card with a bank statement, the Maputo Corridor Logistics Initiative (MCLI) said in a statement today. This led to considerable delays for freight, tourists, business and informal traders, which was worsened when a riot and blockade broke out at the Lebombo/Ressano Garcia border post.

Following the blockade the requirements were withdrawn, allowing traffic to pass through the border.

In their statement the MCLI declared they will directly contact the Minister of Home Affairs to settle the issue. “This requirement takes us back to the pre 2005 era where similar requirements were implemented”, the statement says, “and [it] is in direct conflict with the regional integration policy of SADC which expressly seeks to promote the ease of movement of people and goods through our borders.”

The statement calls the implementation for this legislation discriminatory towards informal traders who move through the border on a daily basis, and warns the long term impact on the region’s economy could be “dire”. Source: Club of Mozambique

Cargo Screening [www.aircargonews.net]

Cargo Screening [www.aircargonews.net]

Both the European Union (EU) as well as the United States’ Transport Security Administration (TSA) have approved South African air cargo security systems.

Poppy Khoza , The South African Civil Aviation Authority (SACAA) director, says, “The two affirmations place South Africa in a unique position, making the country the only one on the continent with such recognition and agreements in place.”

“This essentially means that, following audits by the European Union and the United States, South Africa is acknowledged as one of the countries where the level of aviation security is regarded as robust and reliable. This will benefit air carriers operating between South Africa and the two regions.”

In the case of the US, the TSA carries out yearly assessments of South Africa’s aviation security regime with the last audit conducted in June 2014.

The results of the audit indicate that South Africa did not attract any findings or observation and in some instances, the standards were found to be higher than in previous years.

“The TSA audit comes after almost a year since the SACAA and the TSA concluded a recognition agreement on air cargo security programmes, thus acknowledging that South African systems are on par with the stringent requirements of the USA.”

“This agreement also enhances air cargo security measures and initiatives between the two countries. Most significantly, the agreement enables quicker facilitation of goods between the two countries, and helps eradicate duplicative or redundant measures while still ensuring the highest levels of security that both the TSA and the SACAA require.”

The EU recognition means that South Africa has been included in the list of third countries where air carriers are exempted from the application of the ACC3 (Air cargo and mail carrier operation into the EU from a third country airport) regime of which the requirements are viewed as stringent to operators from countries outside the EU.

In terms of the ACC3 process, carriers wishing to carry cargo into the EU have to request an ACC3 status, and this process requires rigorous screening of air cargo or the existence of a properly functioning and secure air cargo system.

As from July this year, cargo operators flying to the EU destinations must therefore either hold a valid EU validation report, proving that they have adequate security measures in place, or in the absence of such assurance, cargo operators will have to use the services of EU validators to pronounce their cargo as secured.

“The services of EU validators are not free and come at a cost to air carriers, but it does acknowledge that security measures applied in South Africa and the EU are equivalent.”

“This recognition by the EU is a significant milestone for the country and South African carriers, as this means that they can now benefit from an exemption from the ACC3 regime, provided that the level of risk remains similarly low, commensurate with a robust oversight system being in place.”

Source: SAnews.gov.za

The United States has the world’s longest railway network, followed by China and Russia. Railway-technology.com profiles the 10 largest railway networks in the world based on total operating length. For full details of this analysis visit – www.rail-technology.com

I found the following book review on AllAboutShipping.co.uk and I’m sure the featured book will appeal to many of you associated with shipping, containers and trade in general.Around the World in Freighty Ways

A unique first-hand account of the inner workings of globalisation from the heady days of manic growth in the noughties, Around the World in Freighty Ways is a personal travelogue with a difference. Covering over 50,000 miles with not a flight in sight, Gavin van Marle’s anthology puts into perspective the unsung heroes of world trade, the simple shipping container and the freight people who move them throughout the world.

The urge to travel is irresistible for those who have it in their genes. For Gavin and his equally restless wife Alex, what better way to slake their thirst to explore the wide horizons than to take a three-year honeymoon around the globe. If more justification for such a noble quest was required, they would report on the wondrous and rapid developments in freight transport that were occurring between 2002 and 2005.

The result is this compilation of articles, columns and thoughtful opinions entitled Around the World in Freighty Ways, which is published today by Right River Press Ltd., of London.

Both Gavin and Alex are professional journalists and have extensive experience in the freight industry. Their travels brought much insight into the varied and often ingenious ways the freight industry coped with, and indeed facilitated, the remarkable expansion of trade and economic growth between 2002 and 2005. As Gavin comments, “The humble container has done for globalisation what Alexander Graham Bell did for the internet – made it possible.”

The couple’s adventures however encompass not just freight experiences but also a variety of tales and a breadth of encounters that enable an astute, insightful and sometimes irreverent view on bureaucratic incompetence and political ineptitude. Many are laced with passionate descriptions of social inequality and gallant struggles for survival.

However, it is the similarity of basic human characteristics that shine through time and again as the episodes unfurl. As Gavin points out, it may in fact be the good fortune of people whose business it is to move freight around the world to recognise that, “Regardless of nationality, the vast majority of people share the same ambitions, hopes and fears, and that for most, joy and contentment comes simply from being nice to each other.”