East African tax authorities have launched an online system to share customs cargo information in the region. The system, RADDEx 2.0 (Revenue Authorities Digital Data Exchange), will enable the tax authorities to instantly know what is in transit in the region. Uganda Revenue Authority says RADDEx 2.0 is web-based, has more “functionality and better performance” and will be used by clearing agents. If cargo destined to Uganda poses any risk, notifications will be sent via e-mail so that authorities can plan action prior to arrival of the cargo. All data on cargo will be sent to a central server at the East African Community headquarters in Arusha, Tanzania. Any East Africa partner state that needs data about expected cargo will interrogate the system, which will automatically provide feedback. The system was developed by IT and customs expert staff from Uganda, Kenya, Tanzania, Rwanda and Burundi and sponsored by USAID/COMPETE (Competitiveness and Trade Expansion Programme). Source: The New Vision, Uganda
Archives For Automated Cargo Management
South African Customs law provides for a seal integrity regime. This consists in provisions for the sealing of containerised sea cargo as well as sealable vehicles and trailers. These requirements have, however, not been formally introduced into operation due to the non-availability (until recently) of internal systems and cross-functional procedures that would link seal integrity to known entities. To explain this in more layman’s terms, it is little use implementing an onerous cargo sealing program without systems to perform risk assessment, validation of trader profiles and information exchange. It’s like implementing non-intrusive inspection (X-ray scanning) equipment without backward integration into the Customs Risk Management and Inspection environment and systems. It has often been stated that a customs or border security programme is a layered approach based on risk mitigation. None of the individual elements will necessarily address risk, and automation alone will likewise not accomplish the objective for safe and secure supply chains. Moreover, neither will measures adopted by Customs or the Border Agency succeed without due and necessary compliance on the part of entities operating the supply chain. It therefore requires a holistic strategy of people, policy, process and technology.
In the African context, it is surmised that the business rationale will be best accomplished with a dual approach on IT connectivity and information exchange. Under the political speak there are active attempts within SACU, SADC, COMESA and the EAC to establish electronic networks to facilitate and safeguard transit goods. Several African states are landlocked and are not readily accessible, some requiring multiple transit trips through countries from international discharge in the continent to place of final destination. National laws of each individual country in most instances provide obstacles to carriers achieving cost effective means in delivering cargoes. Over and above the laws, there exists (regrettably) the need to ‘grease palms’ without which safe passage in some instances will not be granted. Notwithstanding the existence of customs unions and free trade areas, internal borders remain the biggest obstacle to facilitation.
Several African logistics operators already implement track and trace technology in the vehicle and long-haul fleets. This has the dual purpose of safeguarding their assets as well as the cargoes of their clients which they convey. Since 9/11, a few customs administrations have formally adopted ISO PAS 17712 within their legislation to regulate the use of high security seals amongst cargo handlers and carriers. In most cases this mandates the use of high security ‘mechanical’ bolt seals. However, evidence suggests there is a growing trend to adopt electronic seals. Taiwan Customs for one has gone a significant way in this regard. Through technological advances and increased commercial adoption of Radio Frequency Identification (RFID) technology the costs are reducing significantly to warrant serious consideration as both a viable and cost-effective customs ‘control’ measure.
Supply chain custody using RFID as an identifier and physical security audit component – as provided for in ISO 17712 – is characterized by the following:
- it uniquely identifies seals and associates them with the trader.
- the seal’s unique identity and memory space can be used to write a digital signature, unique to a trader on the seal, and associating that seal with a customs declaration.
- using customs trader registration/licensing information, together with infrastructure to read seal information at specified intervals along a route to create a ‘bread-crumb’ audit trail of the integrity of the cargo and conveyance.
- using existing fleet management units installed in trucks to monitor seal integrity along the high risk legs of a cargo’s transit.
- record the seal’s destruction at point of destination.
Looking forward to the future, it is not implausible for customs and border authorities to consider the use of RFID:
- as a common token between autonomous customs systems.
- to verify and audit that non-intrusion inspections have taken place en-route, and write that occurrence to the seal’s memory with the use of an updated digital signature issued to the customs inspection facility.
- to create a date and time stamp of the cargo’s transit for compliance and profile classification – to confirm that transit goods have actually left the country as well as confirm arrival at destination (to prevent round tripping).
- Lastly to archive a history of carrier’s activities for forensic and/or trend analysis.
Related articles
- Where Does the Chain of Custody Begin? (mpoverello.com)
- Adoption of container tracking will accelerate in the coming years (mpoverello.com)
- RFID – its application at the Customs border (mpoverello.com)
- Importance of Seal Integrity for Customs (mpoverello.com)
- Customs seal reporting requirements (Andre Landman – SARS)
The Korea Customs Service (KCS) will introduce an Advance Manifest System in accordance with WCO standards as well as fulfill its own responsibilities as a governmental agency of duties for collection and border protection. This follows other major trading partners such as the U.S., Canada, EU and China who have already already adopted the Advance Manifest reporting. Known as KAMS, the new system will be implemented by KCS from 1st December, 2011. For more information click the hyperlink to download Korea Customs Advance Manifest System guideline.
FTW published an article recently in regard to ‘empty container depots’ and their apparent negative impact on cost and response to industry needs. It was duly noted that while so much focus was accorded to Port delays, little is said about the additional costs caused by empty container depots. Many of these in fact hold, clean and distribute empty containers on behalf of shipping lines some of whom are not equipped to service the industry due to ill-equipped facilities.
Shipping lines complain about the turnaround of their vessels at the port, but take little interest in ensuring a quick turnaround of vehicles at their appointed container depots. The report continues: “Transporters are delayed for hours at major depots while waiting for containers to be turned in, cleaned and then released for export cargo. Most of these depots do not work 24 hours in line with the port and transporters, which further limits the ability of transporters and industry to perform”. I think this deserves some further thought and consideration, and for this I’ll provide a customs-slanted view.
Firstly, in other parts of the world, the same mentality prevails whenever a port or customs system is replaced or upgraded – an avalanche of vitriolic sentiment, followed by line operators threatening to institute port delay surcharges and the like. To place matters into true perspective – yes, the port and customs services are there for the benefit and support of the supply chain, and should run and be maintained to offer efficient operation even in the event of catastrophe or a burgeoning logistics market demanding increased capacity and responsiveness. 9/11 provided a catalyst for Customs Inc. to initiate an unheard of demand on trade to increase its internal security mechanisms and even provide information in advance of the lading of a vessel at a foreign port. The US lines were the first to climb on the band wagon in support of heightened security and quickly acted to ensure that their regional offices were able to assist foreign shippers in supplying the required ‘advanced information’ at a nominal charge – varying between $25 and $60 per bill of lading. Sure, this was the cost necessary to ensure lines met their new stringent reporting requirements to the US Homeland Security to obviate possible penalties of $5,000 and up. Nonetheless, the same lines, when asked to provide the local authorities the same courtesy, recoil and look for all sorts of excuses to avoid the subject. Sure, it is understood that only the US has the right to make such demands, not any anyone else. I have followed most other advance cargo reporting requirements with similar amusement.
You see, lines were prepared to make suitable arrangements for US-bound containers such as pre-booking empty containers. Now when the requirement is extended to other parts of the world there is an immediate issue. Simply, and as the article correctly deduces, supply chain security implies that everyone changes – even the empty container depots.
As the local port authorities and your customs service are spending millions in upgrades to meet the demands of the future, so too is the same required of trade. Unlike commercial entities, your customs service remains one of the few who in the world that has not instituted a customs service fee. Certain traders and intermediaries in the industry might complain that recent developments at SARS have seen their costs increase due to new transactional requirements, for example the electronic supporting document issue. This I will discuss on its own in a separate post. The bottom line is that the FTW article is an important cue for those container depots concerned to get their act together. The heat will undoubtedly be turned up on them once SARS introduces its new export clearance and cargo reporting requirements. South Africa needs smaller to medium enterprises offering dedicated services. Perhaps it’s time for the lines (those who operate such facilities) to consider outsourcing these activities to more dedicated enterprises. Read the FTW article here!
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- Cargo Dwell Time in Durban (mpoverello.wordpress.com)
- Mandatory reporting of Cargo Carrier Code (mpoverello.wordpress.com)
Besides rugby, the Kiwis also do Customs pretty well. It is clear that Customs administrations outside of a revenue authority model can place more time and emphasis on the things that are meaningful. Perhaps South Africa will soon attain this level of performance reporting. Before this however, the ability of the impacted parties to report both spontaneously and reliably is a given.
The trading community are directly impacted by the response times. Not only does it affect whether or not storage and demurrage might occur, it also (more importantly) affects their local and international reputation as suppliers of choice. One of the methods used for the review of clearance procedures is to measure the average time taken between the arrival of the goods and their release. This facilitates Customs to identify both the problem areas and potential corrective actions to increase their efficiency. The use of automation and other sophisticated selectivity methods allow Customs to improve compliance and at the same time improve facilitation for the majority of low risk goods.
The time required to release goods is also increasingly becoming the measure by which the international trading community assesses the effectiveness of a Customs administration. The WCO Time Release Study provides guidance for a Customs administration on the best way to apply this method of internal review.
Recently SARS issued a communication signalling its intention to penalise non-conforming cargo reporters as of 1 July 2011, if they fail to report their cargo manifests electronically to SARS. Following international practice, all parties who engage in the contract of carriage of goods internationally are obliged to report the details of such cargoes. While customs has traditionally placed more emphasis on the correctness of the goods declaration alone – due to it being the sole means of duty and tax assessment and collection of revenue, the introduction of measures to safeguard the supply chain and combat other forms of nefarious activities, implies that all supply chain operators are ‘known’ and share in the responsibility for their actions and activities.
Perhaps seen in this guise, the whole matter of supply chain security encompassing the universal adoption of the Authorised Economic Operator (AEO) concept seems less appealing than it did a few years ago. Yes, Customs wants to know more and more about your business and who you do business with. Freight forwarders / Clearing Brokers have borne much of the brunt from customs over the years, it’s now time for parties involved in the conveyance of cargoes to come forward and be counted.
Because international shipping by its very nature transcends borders, it has always been difficult for national authorities to apply effective controls over information and parties who in all honesty are representatives/agents for those supplying the ‘original’ shipping documents. What the law now says is that those acting on behalf of foreign principles, liable for the import leg of imported goods are obligated to submit the ‘manifest information’ of those goods (electronically) to SARS.
For those customs brokers who operate as freight forwarders, this is in essence a further requirement which SARS places on your organisation. In essence a freight forwarder has a dual requirement with SARS - declaring the manifested contents of a consignment, as well as making due clearance for regulatory compliance and payment of duties. Another party with a similar dilemma are certain ‘ground handlers’, specifically those who are contractually responsible for the inbound operations of foreign air carriers, as well as the deconsolidation of aircargo upon arrival in their transit shed. They too must report the aircargo manifests electronically to SARS, and secondly to report the outturn of such goods, once unpacked for temporary storage and customs clearance and release.
The NVOCC or Vessel’s Agent must also report all cargo - for which they are contractually responsible – for the inbound leg into the Republic. These parties represent the foreign carrier and must consequentially report the carrier’s manifest (electronically) to SARS.
SARS is for now focussing principally on the reporting of master and house (sea and air)cargo manifests in this phase. Other reports are to follow.
Details for the registration for reporting electronically to SARS’ Automated Cargo Management (ACM) system have been widely distributed, and for sake of convenience are available for download here.
Consequences for non-compliance post 1 July 2011
SARS has put into place mechanisms to identify non-reporters. In such instances customs officers will call for administrative penalties to the extent of R1000,00 for each ‘manifest’ not reported. Moreover, should SARS take measures to ensure that these penalties are not ‘passed on’ to the importer – this would surely defeat the object of SARS’ intentions? Shortly, we’ll discuss the future matching of electronic cargo reports and goods declarations, but first lets endeavour to accomplish the first milestone.
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- Addressing Apathetic Compliance Mentality – Part 2 (mpoverello.wordpress.com)
- Addressing Apathetic Compliance Mentality – Part 3 (mpoverello.wordpress.com)
- Addressing Apathetic Compliance Mentality – Part 1 (mpoverello.wordpress.com)
- Automated Cargo Management – Whipping up Industry Awareness (mpoverello.wordpress.com)
