The following article featured in the 1st Issue of the WCO Newsletter 2023. It is authored by Anthony Buckley, Chair of Customs Knowledge Institute. The article argues that a formal plan for building and managing Customs knowledge is necessary for a Customs brokerage to operate effectively. The components of such a plan are discussed, as well as the determinants that may affect the choices made. The discussion refers also to general issues of Customs knowledge acquisition, management and updating. The considerations apply to all Customs practitioners and trading businesses.
The number of possible games of chess is greater than the number of atoms in the observable universe according to Claude Shannon. In Customs, there are many more variables than the 32 pieces on a chessboard. In any transaction, we have the interested parties, the type of transaction, the goods involved, the route being followed, the intended procedure, the non-tariff controls, the rates of duty and the liability for payment, each of them with many possible variations, combinations, and types of supporting evidence. On that basis, it seems that every single movement of goods across a Customs border is unique, at least in some minor way. How does a Customs broker meet the expectation of a client, who expects the broker to be familiar with every possible variation?
As if the challenge of complexity is not enough, the broker is also expected to maintain records of all transactions and retrieve them in various formats as required by customers and Customs administrations.
In practice, of course, we find ways of doing things that are theoretically impossible. Most Customs movements fall into certain categories and are handled accordingly, by operators familiar with one or a few of the categories. High value complex transactions are handled by teams with a mix of expertise, at considerable expense. Low value consignments use simplified procedures and reduced checking. Significantly, evidence suggests that many transactions proceed despite errors, sometimes of significant effect. Thus, when considering “Customs knowledge”, we must distinguish between what is necessary for all, and what is essential only for certain functions.
All economic operators must have a general understanding of what Customs is, how it controls trade, what its legal structure is, what rights, entitlements and obligations attach to the operator and to the Customs authorities, the importance of compliance with legal requirements, and the costs of non-compliance. For many who buy and sell internationally, their knowledge does not proceed far beyond this general understanding, except perhaps for some detail concerning the particular goods they trade.
For a Customs broker, this level of knowledge is only the beginning.
The introduction of the new generation digital FIATA Bill of Lading (FBL) has been confirmed and will be launched by the South African Association of Freight Forwarders (SAAFF) as a new standard to members and exporters for use across the Supply Chain in South Africa.
This development will positively impact supply chain efficiencies and South Africa’s competitive position as a provider of world class logistics services, says Dr Juanita Maree, Chief Executive Officer of SAAFF.
South Africa hosted the Annual Rotational Presidency meeting of the International Federation of Freight Forwarders (FIATA) in Cape Town earlier this month. The FIATA delegation, led by President Ivan Petrov had the opportunity to delve deeper into the South African supply chain logistics sector during their visit, in consultation with industry leaders. Terry Gale, representing Exporters Western Cape and the Fresh Produce Exporters Forum (FPEF) welcomed the imminent introduction of the digital FBL.
Industry recognises the digital FBL and its proven tracking service as a strong solution that will add capacity and increase security of cargo movement through the entire logistics process – a valuable development in a challenging trading environment.
In global terms, the Bill of Lading is recognised as the most important document used in the transportation of goods, FIATA’s Multimodal Transport Bill of Lading is seen as the benchmark; long-standing but in constant evolution and acknowledged by the International Chamber of Commerce (ICC) as a document fully aligned to the UNCTAD/ICC Rules for Multimodal Transport.
This new generation secured digital FBL and tracking solution allows FIATA to protect against fraudulent manipulation and to promote a digital ecosystem of trust for transport and trade documents. It supports transparency and security across the supply chain and will help member companies accelerate their digitalisation efforts. The digital FBL data model is fully aligned with the UN/CEFACT MMT Reference data model to ensure its interoperability with other standards and all trade parties.
Verifiable at any time by legitimate stakeholders interacting with the document, which dramatically reduces fraud risk, the digital FBL can be issued in digital and paper format and cannot be tampered with, with each document also being recorded on an immutable ledger. Stakeholders will be able to access the document audit trail through a unique QR code or on FIATA’s verification portal to certify the validity of the document, the integrity of its issuer and the integrity of its content.
The tracking solution used by FIATA for the digital FBL is already implemented and used by banks, corporates, warehouses, and inspection companies to protect other documents. Software providers worldwide make the secured digital FBL accessible in 17 territories so far through FIATA Association members. Forwarders can implement the digital FBL solution on their own in-house system or use a free digital FBL generator tool.
FIATA is proud to bring its members a pragmatic solution to move from paper documents to paperless FIATA BLs, which can be issued directly through their everyday tools. The FIATA solution improves the level of security of the FIATA BL in comparison to the paper version, making use of blockchain technology to authenticate the documents and provide an audit trail. Conscious of the various challenges which remain to be overcome to achieve worldwide adoption and legal recognition of electronic exchange of data, the paperless FBL is an answer to the needs of the industry for improved access and exchange of trade documents. The document issuer can decide in which format (s)he wishes to share the original unaltered document with its stakeholders: in paper form or as a PDF. Based on its eFBL data standard, FIATA has developed an API service, available free of charge to all software providers, allowing them to connect with FIATA to create secured paperless FBLs.
As of today, seven software providers have already signed an agreement with the Federation to implement the solution: AKANEA, Cargowise, CargoX, edoxOnline (Global Share), InfoSysTech-IST, Nabu and Usyncro. We are very pleased to announce that the paperless FBLs can start to be issued as of today with edoxOnline, InfoSysTech-IST and Usyncro who have already finalised the implementation.
FIATA encourages all TMS’s, eBL providers and other software providers to join them and implement their solution to offer this new service to their customers. All technical specifications are available on FIATA’s GitHub repository.
The solution, developed by FIATA partner Komgo, will help to reduce fraud risks, as each document is recorded on an immutable ledger and will be verifiable at any time by all stakeholders interacting with the document. Stakeholders will be able to either scan the QR code at the top right of the document, or directly upload the PDF on FIATA’s verification page to access the document audit trail which will
certify the validity of the document,
the identity of its issuer, and
the integrity of its content.
Souleïma Baddi, CEO of Komgo, when asked to comment on the paperless FBL launch said: ‘Documents are the bedrock of international trade, but they don’t operate like we need them to and they’re susceptible to fraud and forgery, that happens quite often.
Trakk is the digital ecosystem of trust for trade documents. I am thrilled to see FIATA joining all companies, financial institutions, warehouses and others who are using Trakk to protect their documents against fraud.’
‘WiseTech Global congratulates FIATA on the launch of their electronic bill of lading.’ The company continued: ‘This initiative will support transparency and security across the supply chain and will help companies to accelerate their digitalisation efforts. It was a pleasure to work with FIATA on this initiative. CargoWise customers will be able to request a connection to FIATA’s eFBL from June 2022.’
‘FIATA is very excited to embark on this important milestone of its digital journey which paved the way for great opportunities for the future of freight forwarders’, said FIATA Director General Stéphane Graber.
Last year, the ports and the private sector moved a historic amount of goods with record holiday sales and delivery times below pre-pandemic levels. Currently, real retail inventories excluding autos are six percent higher than at the end of 2019 and products at grocery and drug stores are 90 percent in stock, just 1 percentage point below pre-pandemic levels.
The US government is also focused on addressing the longer-term weaknesses in our nation’s supply chains, the result of decades of underinvestment, outsourcing, and offshoring instead of investment in long-term security, sustainability, and resilience. The Bipartisan Infrastructure Law (BIL) is now making a generational investment in our ports, highways, and other parts of our physical infrastructure, which will help speed up the movement of goods and lower costs. But we can further strengthen our goods movement supply chains by making a similarly bold improvement in a digital infrastructure to connect the supply chain.
To take the first step toward addressing this challenge, the US government is announcing the launch of Freight Logistics Optimization Works (FLOW), an information sharing initiative to pilot key freight information exchange between parts of the goods movement supply chain.FLOW includes eighteen initial participants that represent diverse perspectives across the supply chain, including private businesses, warehousing, and logistics companies, ports, and more. These key stakeholders will work together with the Administration to develop a proof-of-concept information exchange to ease supply chain congestion, speed up the movement of goods, and ultimately cut costs for American consumers. DOT will lead this effort, playing the role of an honest broker and convener to bring supply chain stakeholders together to problem solve and overcome coordination challenges. This initial phase aims to produce a proof-of-concept freight information exchange by the end of the summer.
Recent supply chain disruptions have raised national awareness of the need for improved information exchange. Supply chain stakeholders deserve reliable, predictable, and accurate information about goods movement and FLOW will test the idea that cooperation on foundational freight digital infrastructure is in the interest of both public and private parties. FLOW is designed to support businesses throughout the supply chain and improve accuracy of information from end-to-end for a more resilient supply chain.
Resiliency—the ability to recover from an unexpected shock—requires visibility, agility, and redundancy. The lack of digital infrastructure and transparency makes our supply chains brittle and unable to adapt when faced with a shock. The goods movement chain is almost entirely privately operated and spans shipping lines, ports, terminal operators, truckers, railroads, warehouses, and cargo owners such as retailers. These different actors have made great strides in digitizing their own internal operations, but they do not always exchange information with each other. This lack of information exchange can cause delays as cargo moves from one part of the supply chain to another, driving up costs and increasing goods movement fragility.
Abu Dhabi Customs hosted a workshop recently with key Importers and Exporters discussing how TradeLens and digitized transportation documentation has the ability to streamline processes in customs declaration processes.
“Abu Dhabi Customs is excited to work with a group of importers and exporters to explore the benefits that collaboration using blockchain can offer to all those involved. This joint approach is critical to create time savings in the process and to improve access to international trade to all entities that trade with Abu Dhabi. We really believe TradeLens will be bringing a lot of benefits to our ecosystem here in Abu Dhabi”. – Yanal Qasim Mohammad Alkhasoneh, Division Director – Information Technology, Information Technology Division
“The collaboration across public and private entities towards a single shared goal was immensely encouraging. The gathering of industry leaders, authorities, and ocean carriers to jointly and openly address international transportation documentation highlights the desire to improve existing processes using innovative digital tools like TradeLens”. – Thomas Sproat, Global Head of Network TradeLens
For years, Amazon has been quietly chartering private cargo ships, making its own containers, and leasing planes to better control the complicated shipping journey of an online order. Now, as many retailers panic over supply chain chaos, Amazon’s costly early moves are helping it avoid the long wait times for available dock space and workers at the country’s busiest ports of Long Beach and Los Angeles.
“Los Angeles, there’s 79 vessels sitting out there up to 45 days waiting to come into the harbor,” ocean freight analyst Steve Ferreira told CNBC in November. “Amazon’s latest venture that I’ve been tracking in the last two days, it waited two days in the harbor.”
By chartering private cargo vessels to carry its goods, Amazon can control where its goods go, avoiding the most congested ports.
“Who else would think of putting something going into an obscure port in Washington, and then trucking it down to L.A.? Most people are thinking, well, just bring the ship into L.A. But then you’re experiencing those two-week and three-weeks delay. So Amazon’s really taken advantage of some of the niche strategies I believe that the market needs to employ,” Ferreira said.
Still, Amazon has seen a 14% rise in out-of-stock items and an average price increase of 25% since January 2021, according to e-commerce management platform CommerceIQ.
“The consumer has been feeling price increases in everything that they’re purchasing,” said Margaret Kidd, Supply Chain & Logistics Technology program director at the University of Houston. “Ultimately, when there’s an increase in the cost of transportation, it gets passed down to the consumer.”
It’s even taking control at the first step of the shipping journey by making its own 53-foot cargo containers in China. Containers are in short supply, with long wait times and prices surging from less than $2,000 before the pandemic to $20,000 today.
“Amazon has produced probably 5,000 to 10,000 of these containers over the last two years I’ve been tracking it,” Ferreira said. “When they bring these containers onto U.S. soil, once they unload them, guess what? They get to be used in the domestic system and the rail system. They don’t have to return them to Asia like everyone else does.”
A cargo vessel called the Star Lygra called at the Port of Houston on October 5, 2021, filled with Amazon containers.
“By creating their own containers, they are essentially guaranteeing that equipment is going to be available for them,” said Lauren Beagen, maritime lawyer and founder of Squall Strategies. She was working at the Federal Maritime Commission when Amazon first registered with the agency in 2015, the first indication it was exploring its own ocean freight business.
Then in 2017, Amazon started quietly operating as a global freight forwarder through a Chinese subsidiary, helping move goods across the ocean for its Chinese sellers who pay to be part of the Fulfilled by Amazon program. Internally, Amazon dubbed this project “Dragon Boat.”
“They are doing over 10,000 containers per month of the small- and medium-sized Chinese exporters. Amazon’s volume as an ocean vendor — that’s right, you heard me correct, they’re considered an ocean vendor — would rank them in the top five transportation companies in the Trans Pacific,” Ferreira said.
“The real purpose of these vessels when they were built was not containers. It was really lumber, chemicals, grain, agricultural products. But because of the ingenuity and creativity and lack of space, Amazon and many other smart people have quickly figured out how to convert some of these multipurpose vessels to container,” Ferreira said.
For some of the highest-margin goods, Amazon is avoiding ports altogether by reportedly leasing at least ten long-haul planes that can get smaller amounts of cargo directly from China to the U.S. much faster. One of the converted Boeing 777 planes can carry 220,000 pounds of cargo. According to capacity estimates from Ocean Audit, the small 1,000-container freighters being chartered by Amazon and others can hold 180 times that, with the biggest cargo ships carrying more than 3,600 times what the planes can hold.
Another strain on the supply chain is manpower.
“We’ve been hearing a lot about the great resignation, with a lot of jobs going open and unfilled. So I think companies are looking to get very creative in attracting labor. It might be signing bonuses, higher pay,” said Judy Whipple, supply chain management professor at Michigan State University.
To fight the worker shortage — and a reputation for relentless workload and breakneck speed — Amazon says it’s offering sign-on bonuses of up to $3,000 to all the 150,000 seasonal workers it’s hiring this year. Last year, it hired 100,000 seasonal workers.
“That 50,000 increase in employees this year over last year is probably people to do the unloads. They’ve got these containers coming in at the last second, man, they want to unload those goods and get them on the shelves in the fulfillment centers as quickly as possible,” said John Esborn, who used to run logistics operations for Wayfair and is now the head of international transportation for Amazon aggregator Perch.
The seasonal workers are unloading and loading, picking and packing at more than 250 new facilities Amazon says it’s opened in the U.S. just in 2021 — a clear indication that it planned far ahead for the final bottleneck in the supply chain backlog: warehouse capacity.
Watch the video to learn more about all the bold and costly ways Amazon is avoiding the worst of the supply chain crisis this holiday season.
As of 18 November 2021, the online version of the 2022 edition of the Harmonized System Nomenclature is available through the WCO Website to all HS users. The HS 2022 edition, as the world’s global standard for classifying goods in international trade, will enter into force on 1 January 2022.
Used by over 200 countries and economic or Customs unions as the basis for their Customs tariffs and for trade statistics, as well as by international organizations such as the United Nations Statistical Division (UNSD) and the World Trade Organization (WTO), the Harmonized System (HS) Convention currently has 160 Contracting Parties, making it the WCO’s most successful instrument to date.
The 2022 edition of the HS Nomenclature includes significant changes with 351 sets of amendments (including some complementary amendments): 77 relating to the agricultural sector; 58 to the chemical sector; 31 to the wood sector; 21 to the textile sector; 27 to the base metal sector; 63 to the machinery sector; 22 to the transport sector and an additional 52 that apply to a variety of other sectors, comprising a total of 1,228 headings identified by a 4-digit code, and 5,612 subheadings identified by a 6-digit code.
These amendments have been made to update the Harmonized System Nomenclature, taking into consideration public health and safety, protection of society and fight against terrorism, goods especially controlled under various conventions, food security and environment protection, technological progress, trade patterns, and clarification of the HS texts.
The digital version of the HS 2022 edition is also available for free on WCO Trade Tools, which is the WCO’s new online database platform that encompasses the last five editions of the HS and functionalities to support all those involved in international trade. The WCO Trade Tools encompasses various free and subscription only tools relating to the classification and valuation of goods, origin determination and the application of preferential rules of origin.
The paper version of the HS 2022 edition can be purchased on WCO’s Bookshop.
The following articlewas published in Supply Lines, Bloomberg
As if the foot soldiers of global trade needed more complications this holiday season, many logistics managers and customs brokers are starting to brace for a mini Y2K moment come Jan. 1.
That’s when changes will take effect to the official nomenclature for hundreds of product groups used to classify imports and exports. So-called Harmonized System numbers — known as HS codes — exist on more than 5,000 product categories developed by the World Customs Organization, an intergovernmental group in Brussels that updates them every five years or so.
In 2022, the biggest changes are coming for electrical machinery and parts, wood, textiles, fish and organic chemicals.
More than 350 global HS codes are getting updated, and some 1,500 harmonized U.S. tariff codes are subject to revisions, according to a recent webinar from Flexport. The categories are important, if a little wonky, because most items of international commerce fall into one and they can determine tariff levels.
Some codes are disappearing. After a respectable run through the 1970s and ‘80s, answering machines are about to lose their HS code. Made obsolete by voicemail, they rank 5,296th among 5,832 U.S. imports this year, according to Flexport data.
Globes — those spinning spheres that taught geography to schoolkids of the 1970s — will have their number (4905.10) retired, too.
“The trade in globes is not quite what it used to be,” Marcus Eeman, a global customs manager with Flexport, lamented about the U.S.’s 4,025th-biggest import.
Some new HS codes will appear, like one for pomace oil, a lower-grade form of olive oil.
Among the more intriguing additions, Flexport says there’ll be a “new code created for petroleum resins and other organic chemical compounds used in the manufacture of chemical weapons.” That should make it easier for authorities to track which countries are importing it and potentially using them illegally.
Other categories are getting renamed. Lamps will no longer fall under “lamps,” they’ll be classified as “luminaires.” There will be new subheadings for popular gadgets like smart phones, high-speed digital cameras and flat panel displays.
Economies preparing for the changes include the U.S., China, the European Union, Canada and Australia. The U.K., meanwhile, is still “finding their footing with Brexit and we expect them to get their act together by the end of the year,” Eeman said.
For all the changes to take effect on Jan. 1 in the U.S., there will need to be a presidential proclamation published in the Federal Register with the required 30 days of advanced notice.
So it’s worth looking out for that in coming days.
“My fear is that Dec. 1 will come and the presidential proclamation will be published and that’s when people will start to scramble,” said Tom Gould, Flexport’s vice president of global customs. “Then Jan. 1 will hit and you’ll have a bunch of people that have products that they need to import but they don’t know the classification, because the code that they’ve used in the past is no longer a valid code.’’
Source: Bloomberg, authored by Brendan Murray, 24 November 2021
MSC Mediterranean Shipping Company, a global leader in container shipping and logistics, is officially introducing the electronic bill of lading (eBL) for its customers around the world, following a successful pilot phase, using a solution on an independent blockchain platform WAVE BL. The eBL enables shippers and other key supply chain stakeholders to receive and transmit the bill of lading document electronically, without any change or disruption to day-to-day business operations.
WAVE BL is a blockchain-based system that uses distributed ledger technology to ensure that all parties involved in a cargo shipment booking can issue, transfer, endorse and manage documents through a secure, decentralised network. Users can issue all originals, negotiable or non-negotiable, and exchange them via a direct, encrypted, peer-to-peer transmission. It’s also possible for users to amend documents. WAVE BL’s communication protocol is approved by the International Group of Protection & Indemnity Clubs, and meets the highest industry standards for security and privacy.
“MSC has chosen WAVE BL because it is the only solution that mirrors the traditional paper-based process that the shipping and cargo transportation industry is used to,” says André Simha, Global Chief Digital & Information Officer at MSC. “It provides a digital alternative to all the possibilities available with traditional print documents, just much faster and more secure.”
The WAVE BL platform can be used free of charge throughout 2021 for exporters, importers and traders. Users only pay for issuing the original documents, and they do not need to invest in any IT infrastructure or make operational changes in order to use the service. They can simply sign up via MSC’s website: www.msc.com/eBL.
UN COVID-19 project to support data exchange for international supply chain processes
The emergence of COVID-19 has shown an increased demand for coordination, efficient planning, modelling and risk control in many areas. The United Nations Economic Commission for Europe (UNECE) and its trade related United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) are strongly supporting multilateral engagement for interoperable cross-border standards, such as UN/CEFACT Data exchange Standards.
Multi-Model Transport Reference Data Model Ready for use
Many current regulations, standards, instructions and business capacity-building measures are available already. The comprehensive Multi-modal Transport Reference Data Model (MMT RDM) covers the requirements of international forwarding and transport, including related trade, insurance, customs and other regulatory documentary requirements based on the integration of trade facilitation best practices, developed by UN/CEFACT.
COVID-19 Project lead by GEFEG: Development of a standardised data set for the Transport sector
On behalf of the UN, GEFEG provides the project lead for the COVID 19 project. The project concentrates on ensuring the flow of goods and the transport across the various transport modes. Its overall objective is to set up a multi-modal harmonized set of mainly transport documents as a profile of the UN/CEFACT Multi-modal Transport Reference Data Model (MMT RDM).
The data sets developed include seven electronic exchange messages such as Booking Instruction, Shipping Instruction, Waybill, Bill of Lading, Packing List, Status Messages, Rapid Alert Security Food and Feed (RASFF) and their Business Requirement Specifications (BRSs). It has been checked that every data element with the same name also has the same semantic meaning.
The new profile of the MMT RDM will build a bridge to the already existing electronic exchange formats and allow a better use of state-of-the-art technologies such as block chain and APIs regarding the different transport modes.
Focusing on the different transport modes in the next phase
Additional information will be collected in the next phase, with a stronger focus on the different modes of transport. Results will be reported back to the Multi-modal Transport RDM and change processes initiated regarding relevant yet missing information in the MMT RDM. And last but not least, profiles of the MMT for the different modes of transport, such as air, rail, road, and maritime will be published.
Michael Dill, CEO of GEFEG is looking forward to welcome further participants in the project: “It will be important to get advice and hints on any missing data requirements across the various modes of transport! I would like to encourage colleagues involved in transport processes to join the next phase of the project. Your valuable input and expert knowledge would be very much appreciated.”
Interested parties wishing to participate in the project should contact email@example.com with subject detail: New Participant in COVID-19 project.
The British government has started to conduct research on its new post-Brexit customs IT system, with four months left before the service is due to go live.
Her Majesty’s Revenue & Customs, which is in charge of handling the new customs paperwork that will apply to UK-EU trade from 2021, has invited hauliers to participate in rounds of remote-user testing in the coming months for its Goods Vehicle Movement Service (GVMS), according to a memo to the freight forwarding industry.
The GVMS – which is set to be used to police cross-Irish Sea trade from Jan 1 2021, and then all UK-EU goods flows from July – will give freight companies a unique reference number that proves that they have filed the necessary post-Brexit paperwork, such as customs declarations.
Without a reference from the GVMS, trucks will not be allowed to cross between the UK and EU.
The fact that the GVMS is still in the research and design phase less than 90 working days before it is due to be introduced is a cause for concern in the logistics industry: one freight forwarder, who spoke under condition of anonymity, said they are worried the service won’t be completed and functional on time.
The new system will be required even if Britain and the EU sign a free-trade agreement.
And while consultation with the industry is welcome, it would have been preferable to do such research during the system design process, said Anna Jerzewska, founder of Trade and Borders, a customs and trade consultancy.
“The Government has made it clear that GVMS is unlikely to be ready for January 1 and as far as we understand there will be back-up procedures in place,” she said.
“It will be crucial to ensure that such alternatives are available in places where traffic management will be important,” she said, citing Kent and the Irish Sea.
In the memo, HMRC says it wants to start the first round of testing “ASAP” due to the shortage of time.
The tests will involve hour-long video calls where hauliers try prototypes and give feedback.
“When designing a system that the industry will be using, it is important we work in partnership with them to make sure it suits their and our needs,” HMRC said by email.
“We will continue to develop our systems in readiness for the end of the transition period and when full border controls are implemented from July 2021.”
Source: Bloomberg, article authored by Joe Mayes, 28 August 2020
To further assist small and medium sized businesses with the complexity of managing their supply chains, Maersk is launching Maersk Flow – a digital platform which provides customers and their partners with everything they need to take control of their supply chain, from factory to market.
The solution enables transparency in critical supply chain processes and ensures that the flow of goods and documents is executed as planned. It also reduces manual work and costly mistakes, while empowering logistics professionals with all the current and historical data they need to sustainably improve their supply chain.
The daily life of small and medium sized businesses is increasingly global, complex and fast-paced. Every day thousands of products are moving through the supply chain, on multiple carriers, coming from and reaching many supply chain partners and customers. And for many of these companies this complexity is managed fully manually via spreadsheets, emails and phone calls, which despite lots of hard work is leading to reduced visibility and control – and ultimately higher costs or lost sales. With Maersk Flow these companies will be able to take control of their supply chains.
Maersk Flow further extends Maersk’s customer reach and strengthens the company’s position as an industry leader in digital solutions.
Maersk Flow facilitates the uninterrupted flow of information, cargo, and documentation to empower you and your partners to take the right action at the right time. Its unique features give you convenience and bring coherence to your everyday operations, so that you can optimise your supply chain logistics and refocus your resources on delivering value to your customers. The tool will assist with –
A.P. Moller – Maersk will acquire Sweden-based KGH Customs Services for 2.6 billion Swedish crowns ($281 million), the company announced Monday.
KGH specializes in trade and customs management services in Europe across multiple freight modes. The deal adds to Maersk’s service offerings as the carrier looks to expand beyond ocean shipping and position itself as a full-service supply chain solutions provider.
“There are no end-to-end solutions without customs clearance,” Vincent Clerc, CEO of ocean and logistics at A.P. Moller – Maersk, said in a statement. “With KGH, we will not only be able to strengthen our capabilities within customs services and related consultancy, but also reach more of our customers in Europe through a larger geographical footprint and digital solutions that will enhance our ability to meet our customers´ end-to-end supply chain needs.”
Maersk has been open about its ambitions to expand its business into other parts of the supply chain, positing its logistics sector growth as a main business objective.
“Focus remains on developing our end-to-end offering through an even stronger Ocean product while expanding and scaling our logistics and services portfolio,” Maersk wrote in its latest annual report.
Maersk began outlining its end-to-end ambitions in 2016 and has taken multiple steps toward realizing its goal in the form of deals and reorganization. Last year, Maersk closed a deal to acquire the New Jersey-based customs broker Vandegrift. And in 2018, it announced plans to merge its operations with Damco.
Maersk sees its ocean business as the “strong foundation” for the rest of its logistics offerings, and new products will be important in adding to its end-to-end logistics offerings, the company explained in its latest annual report.
“The next phase in the strategy is about growing the business by innovating existing products combined with selling landside logistics products to our existing customers – as well as growth in our Terminals & Towage business,” the annual report reads.
Maersk has specifically said M&A would be one tool it would use to achieve its end-to-end initiative, highlighting landside logistics as one space where deals could happen in its annual report. And when the company brought on a new CFO, Patrick Jany, earlier this year, it specifically highlighted his experience with M&A.
Last year, Maersk became the first ocean carrier to offer digital ocean customs clearance, according to a press release. The offering allows shippers to upload declaration paperwork and the carrier can send a notification when the shipment clears customs, according to a video explaining the offering.
The U.K. risks failing to recruit the 50,000 customs agents the logistics industry says are needed before Britain’s final parting with the European Union, spelling potential chaos at the country’s busiest border.
The coronavirus has hampered efforts to train staff to handle the extra paperwork firms will need to complete after the U.K. exits the EU’s customs union at the year-end, according to industry bodies involved with the process. One lobby group says its offer to help plug the shortage of recruits has met with silence from Whitehall.
Without enough agents, goods traveling to and from the EU, the U.K.’s single biggest trading partner, risk being delayed at ports, disrupting supply chains and heaping more pain on companies reeling from coronavirus. Even if the two sides strike a trade deal by December, agents will still be needed to process an additional 200 million customs declarations, according to estimates by Her Majesty’s Revenue and Customs.
“This is all blown out the water by the virus,” said Robert Keen, director-general of the British International Freight Association, which is helping to train workers to process the new paperwork with funding from a 34 million-pound ($43 million) government program. “Everybody is fighting to keep their businesses going.”
Keen’s industry group has postponed its classroom training until at least June. The number of monthly registrations for its online learning course has dropped by 80% since February.
Asked by lawmakers on April 27 how many agents have been recruited so far, Cabinet Office Minister Michael Gove said he didn’t know.
He told members of Parliament the government had been in talks with the logistics industry about creating a training school. Such an initiative already exists — the U.K. Customs Academy was started in September with the Institute of Export. 876 courses have been initiated or completed since the academy opened, according to KGH Customs, which helps run the program.
“There is a significantly long way to go,” said Marco Forgione, director-general of the Institute for Export. According to him, the 50,000 figure is almost certainly a conservative estimate of how many agents will be needed. He is calling on the government to encourage people who have lost their jobs because of the virus to re-train as customs officials.
In a sign of how the virus has sapped attention away from Brexit in Whitehall, the Freight Transport Association submitted a proposal to the Treasury on March 17 about how to set up a mass education program to train up agents. More than a month later, the lobby group hasn’t received a reply.
“My impression is it has come to a full stop,” said Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association. He expressed surprised he hadn’t seen any job ads for customs agents.
Talks to seal a trade deal between Britain and the EU have been disrupted by the virus. The U.K. is seeking a Canada-style accord which would eliminate tariffs on goods but create new non-tariff barriers like customs declarations and rules-of-origin paperwork. Without a deal, the U.K. would trade with the EU on terms set by the World Trade Organization, meaning steep duties on products from cars to beef.
Need to Prepare
The two sides have until the end of June to extend the standstill period Britain entered after Brexit on Jan. 31 – but the government has repeatedly ruled out seeking a delay. Business groups such as BIFA and the FTA have called for an extension, arguing firms shouldn’t have to face the double whammy of higher trade costs while still recovering from the negative effects of coronavirus.
A government spokesman said thousands of agents, freight forwarders and parcel operators had used the 34 million-pound fund to improve their IT hardware and train staff.
“The U.K. has a well-established industry of customs intermediaries who serve British businesses trading outside the EU,” the spokesman added.
Even if firms are able to divert resources into training later in the year, by when the virus might have abated, companies will still need time to prepare, said Arne Mielken, founder of Customs Manager, an advisory firm for importers and exporters.
“You can’t hammer in customs knowledge overnight,” he said. “We urge companies not to neglect the fact that Brexit is still happening.”
Source: Article by Joe Mayes, Bloomberg, 4 May 2020
Here are seven ICC digital initiatives that will prepare business for the future of global trade:
1). TradeTrust facilitating ICC TradeFlow
During the World Economic Forum Annual Meeting in Davos, ICC joined the Singapore Government and major firms from key industries to launch TradeTrust, a public-private partnership that uses blockchain technology to digitalize global trade. The TradeTrust framework allows for interoperability across different trade platforms for the exchange of trade documents on a public blockchain.
ICC TradeFlow, a blockchain platform developed by ICC and Perlin to simplify the trade documentation process for all, was the first project built on the TradeTrust network. The platform, launched by ICC, DBS Bank, Trafigura, Infocomm Media Development Authority (IMDA), Enterprise Singapore, and Perlin, enables businesses to visually map out trade flows, issue instructions to partners, and analyse trade actions in real time.
2). Digital Trade Standards Initiative
The ICC Banking Commission has announced the creation of the Digital Trade Standards Initiative (DSI) to establish open technology standards that will promote interoperability among existing blockchain and technology platforms.
3). Digitalisation in Trade Finance Working Group
ICC’s Digitalisation in Trade Finance Working Group coordinates the ICC Banking Commission’s work related to the digitalisation of global trade, including the Internet of Things (IoT), artificial intelligence, and blockchain.
Formed in 2017, the Working Group evaluated all existing ICC rules for electronic compatibility, leading to the release of the eUCP version 2.0 and eURC version 1.0. In addition, the Working Group conducted a legal survey to understand the rights of third parties under e-Bills of Landing and developed a Digital Trade Roadmap, a communication tool for policymakers engaged in digital trade work.
4). Partnership with Perlin
In May 2019, ICC Secretary General John W.H. Denton AO announced the formation of a technology partnership between ICC and Perlin, a Singapore-based blockchain technology company. As part of this partnership, ICC and Perlin will work in close association to develop innovative blockchain products that will simplify and transform global trade for all.
AirCarbon, Perlin, and ICC at COP25
In recognition of the significant environmental impact of commercial air traffic, ICC, Perlin, and AirCarbon, formed a partnership on the side-lines of COP25 to facilitate carbon credit schemes to reduce worldwide aviation emissions. ICC will work with its global network to pursue adoption of the AirCarbon Exchange, the world’s first blockchain backed trading network for CORSIA compliant carbon credits. CORSIA, International Civil Aviation Organization’s Carbon Offset and Reduction Scheme for International Aviation, was signed in Montreal in 2016 by 191 countries.
Chambers Climate Coalition
The Chambers Climate Coalition is an initiative launched by ICC to mobilise chambers of commerce to take climate action, aligned with limiting global temperature rise to 1.5°C above pre-industrial levels and reaching net-zero emissions by no later than 2050. The Coalition, which was recognised as part of the landmark Climate Ambition Alliance at COP25, aims to reduce the greenhouse footprint from chamber service activities without delay.
Chambers of commerce can use Perlin’s blockchain technology to trace their value chains and implement a more sustainable model for their services to local businesses.
ICC Centre of Future Trade
ICC, Perlin, and Enterprise Singapore, established the ICC Centre for Future Trade in Singapore, an innovation hub for the creation and development of blockchain solutions for business. From the Centre for Future Trade, ICC and Perlin will work together to accelerate the commercial adoption of blockchain technologies for business.
International E-Registry of Ships (IERS)
In collaboration with Perlin and the Singapore Shipping Association, ICC has announced the creation of the International E-Registry of Ships, the world’s first blockchain-backed digital ship registration system. IERS will standardise the international shipping registration and renewal system through the use of digital technology.
ICC’s partnership with Perlin enables ICC’s global membership network with access to Perlin Clarify, a blockchain solution that enables businesses to trace their value chains. Perlin Clarify allows businesses to track their compliance with government regulations, environmental standards, and other industry indicators.
The Incoterms® rules and smart contacts
ICC with support from Perlin is piloting customisable, self-executing digital sales agreements, that incorporate the latest edition of the Incoterms® rules into contracts. The creation of these blockchain-backed Incoterms® rules with smart contracts will help facilitate trade by reducing costs faced by importers and exporters worldwide.
On the side-lines of the World Economic Forum Annual Meeting in Davos, Mr Denton joined Pavan Sukhdev, CEO of GIST and President of the World Wildlife Foundation, to launch two digital platforms that track the environmental impact of business operations for companies of all sizes. The platforms, I360X and SME360X, utilise analytics and global databases to measure the environmental impacts of market goods and services.
With the analytical information provided by these platforms, companies can transition their operations toward a more sustainable model for the future.
6). eATA Carnet
In November 2019, ICC successfully piloted the first ever digital ATA Carnet, a customs document allowing duty- and tax-free movement of goods for up to one year. The project, known as the Mercury II pilot, was initially launched by ICC in 2018 as part of the organisation’s commitment to using digital technology to simplify the trade documentation process.
7). Digital platforms with the World Trade Organization (WTO)
Global Dialogue on Trade
In October 2018, Mr Denton and World Trade Organization Director-General Roberto Azevedo launched the Global Dialogue on Trade digital platform to gather input from policymakers, business leaders, and academia on the future of global trade.
The first series of debates, which concluded in March 2019, resulted in a set of concrete policy recommendations to provide guidance to stakeholders for strengthening multilateral trade.
At the request of the WTO and B20, ICC is responsible for hosting Trade Dialogues, a digital platform connecting stakeholders from around the world to spark discussions among WTO members on critical business issues.
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