The following article suggests the need for greater consultation and collaboration between all supply chain parties. While the associated costs relating to supply chain movements is not the purview of SARS, these should be considered as part of the overall impact assessment in the lead up to such an implementation. For all intents and purposes this is an unintended consequence. Stakeholders should also note that the SA government has not imposed any fee for the scanning of cargoes to re-coup costs. Non-intrusive inspection (NII) capability is a tenet of international customs control intended to mitigate security threats and incidents of cargo misdeclaration, even legitimate cargo that can be used to mask harmful products stowed in vehicles/containers. The issue of increased cost of compliance has unfortunately been a trait of many international customs developments ever since the advent of ‘heightened security’ – post 9/11 and seems destined to remain a ‘challenge’ as we supposedly move into an era of increased trade facilitation.Joint collaboration between all parties not only assists in better understanding of the broader supply chain landscape but can also contribute to positive measures on the ‘ease of doing business’.
Freight & Trade Weekly (issue no. 2158, 10 July 2015) reports that Industry has called on customs to look into processes around its cargo scanners which they say are currently driving up costs.
Two state-of-the art scanners are currently operational at the Port of Durban and Cape Town and are part of South African Revenue Service’s (Sars) countrywide approach to risk management that aims for less intrusive inspections at ports and border entries.
The scanners were introduced in order to improve efficiency, with stopped containers being released more speedily than has been the case to date.
“It has however in some cases increased costs because it has resulted in double handling of containers,” said Dave Watts, a maritime consultant for the SA Association of Freight Forwarders (Saaff).
Before the introduction of the scanners all stopped containers were moved by shipping lines to licensed depots for examination by Sars. Once the inspection was concluded and the container released the importer or his agent could collect it using their own transport.
The new process however sees the stopped container transported by the shipping line to the scanner where it is either released or has to be moved for a physical inspection to a depot.
If released at the scanner the container is however still on the shipping line’s appointed truck and not that of the importer or its agent’s nominated haulier.
There are no facilities to move it from one truck to the other at the scanners which means carrier haulage moves it to a depot anyway.
“The extra cost comes in simply because of the double handling,” explained Watts.
In Durban, where the new technology scanner was introduced just over a year ago, several importers maintain it is cheaper to just have their stopped containers taken to the depot for unpacks rather than going through the scanner and not unpacking.
According to Mike Walwyn, chairman of the Port Liaison Forum, the issue of carrier choice also comes into play as the importer now has to use carrier haulage for delivery as opposed to his or her own transport.
Whilst the Cape Town scanner has only been operational for a week, some very real challenges are foreseen and increased cost is one of them.
“The issue is not necessarily around the scanner,” says Watts, “but the rules and regulations around the customs act that stipulates all containers remain the liability of the shipping line until released by customs. In other words it has to be taken to the scanner by the carrier.”
It has been suggested that instead of doubling the handling of containers the carrier should just make the final delivery of the container, but it is generally accepted that carrier cartage rates are much higher than contracted cartage rates. In some cases the cost is said to be four times higher.” Source: FTW
Great synopsis of the challenge, what is the solution? and who is doing anything about it?
Importers often select a service provider based on the cheapest estimate. The cheapest estimate does not often result in the lowest cost.
These additional costs can be negotiated.
It is not about the scanner. It is the process around the scanner. Proper training and proper protocols make this an extremely viable option. It cannot be used as a stand alone system. It must be integrated with proper intelligence and risk analysis. That is the only way to make this effective.
A complete Customs clearance process re-engineering is required prior to the introduction of cargo scanners. Anything short of this only results into repetition of Customs and cargo handling activities with its associated costs as SARS is experiencing. Scanners are supposed to facilitate trade and not to impede. Just create a strategic fit between the Clearance process and NII and enjoy the benefits
Hi Ernst, thanks for your comment. I’m not so sure a ‘re-engineering’ of the clearance process is required though. As I understand the reality of the issue here concerns more the associated cargo handling arrangements which are not factored into customs legislation, i.e. those relating to carrier and merchant haulage. There, however, is also an element regarding Customs ‘targeting’ of cargoes which needs to be re-considered/reviewed to ensure that cargo does not have to be removed from a depot to the scanner or from the scanner to the depot which effectively defeats the point of NII.