Archives For Freight Forwarders

Uber-Freight-Truck

Global transportation network company Uber has launched Uber Freight – an online booking application “which aims to empower truck drivers and small trucking companies to run and grow their business”, according to a blog on the new Uber Freight site launched last week.

Uber Freight has its own app, of course, which is available on iOS and Android. There’s a sign-up page for drivers, who will be vetted before they’re allowed to use the Uber Freight. The service “takes guesswork out of finding and booking freight, which is often the most stressful part of a driver’s day,” according to Uber, which says it’s dismantling a process that typically takes “several hours and multiple phone calls.”The blog explains that vetted users download the app, search for a load, and simply tap to book it.

“We send a rate confirmation within seconds, eliminating a common anxiety in trucking about whether or not the load is really confirmed,” said an Uber Freight spokesperson.

Another advantage of the new booking service is Uber Freight is committed to paying within a few days, fee-free, for every single load.

Drivers can browse for nearby available loads, see destination info, distance required and payment upfront and then tap to book.

The idea is to streamline something that used to take hours of back and forth negotiation via phone or other communication, putting it in a simple workflow with confirmation of job acceptance and rates paid within a few seconds.

Uber’s not the only company trying to change the trucking industry. Amazon is working on a similar service that would pair drivers with companies that need goods delivered. Manufacturers big and small are also working on bringing semi-or fully-autonomous technology to long haul trucks.

Uber Freight is currently only available in the United States.

American Shipper

This year’s American Shipper’s benchmark report examines the extent to which freight buyers rely on the art of negotiation versus the technological tools to refine the procurement process. It also looks at the background dynamics confronting procurement professionals to show why investment in technology is so important. Visit AmericanShipper.com – requires registration to download!

It’s not an option for shippers and 3PLs to ignore the data that’s washing over the logistics industry anymore. And respondents to American Shipper’s most recent Transportation Procurement Benchmark Study, The Art and Science of Buying Freight, recognize that as much as anyone.

Only one quarter of freight buyers feel their organizations are above average when it comes to procurement technology. Nearly half admit they are still using predominantly spreadsheets and email to conduct procurement across modes and regions. Two-thirds are still reliant on EDI. Source: americanshipper.com

International trading involves many participants all around the globe. These participants may not necessarily have the needed trust of all parties, especially at the initial stages, when newcomers join the trade. Blockchain can provide the needed trust to capture key transaction activities as immutable records, as well as storing and sharing encrypted legal and financial documents.

Visibility of transaction records and documents are tightly controlled by blockchain, permitting sharing only among entrusted and allowed parties. In this demo, IBM demonstrates how blockchain may support such an application.

The blockchain solution being built by the two companies is expected to be made available to the ocean shipping industry later this year, according to a joint statement from International Business Machines Corp and the container unit of A.P. Moller-Maersk. It would help manage and track the paper trail of tens of millions of shipping containers globally by digitizing the supply chain process from end to end.

This will enhance transparency and make the sharing of information among trading partners more secure.

When adopted at scale, the solution based on the Linux Foundation’s open source Hyperledger platform has the potential to save the industry billions of dollars, the companies said.

“Working closely with Maersk for years, we’ve long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to provide massive savings when used broadly across the ocean shipping industry ecosystem,” said Bridget van Kralingen, senior vice president, industry platforms, at IBM.

IBM and Maersk intend to work with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities to build the new global trade digitization product, the companies said.

The product is also designed to help reduce or eliminate fraud and errors and minimize the time products spend in the transit and shipping process.

For instance, Maersk found that in 2014, just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different communications among them.

The new blockchain solution would enable the real-time exchange of original supply chain transactions and documents through a digital infrastructure that connects the participants within the network, according to IBM and Maersk. Source: Reuters

containeryard

The U.S. National Retail Federation (NRF) and a coalition representing retailers, manufacturers, truckers, transportation intermediaries and other business groups has asked the Federal Maritime Commission to set new policy preventing terminal operators and ocean carriers from charging unfair fees when uncontrollable incidents such as storms and strikes keep cargo from being picked up from ports on time.

“Recent events involving port congestion, labor strife, an ocean carrier bankruptcy, inclement weather and other disruption events have had crippling effects on U.S. ports and the stakeholders who rely on the efficient movement of goods,” the 25-member Coalition for Fair Port Practices said in a petition filed with the commission. During the incidents, storage and use charges have continued “even though shippers, consignees and drayage providers had no control over the events that caused the ports to be inaccessible and prevented them from retrieving their cargo or returning equipment.”

Cargo owners and trucking companies are normally given a certain number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. After that, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the cargo containers and chassis used to haul them are not returned within a specified time.

That system was thrown into disarray this fall when the bankruptcy of South Korea’s Hanjin Shipping left cargo owners unable to pick up containers on time and later prevented them from returning containers and chassis, says the NRF.

Delays have also occurred during other port disruptions cited in the petition, including the 2014-2015 labor slowdown at West Coast ports and Hurricane Sandy on the East Coast in 2012.

The coalition said millions of dollars in fees have been charged during such incidents:

  • A retailer was charged $80,000 because it took up to nine days to retrieve containers when only four free days were allowed.
  • A trucking company was charged $1.2 million after long lines at New York and New Jersey ports kept it from returning containers on time.
  • A transportation company was charged $1.25 million after containers it tried to return were turned away at West Coast ports. The amount was eventually reduced to $250,000 but only a year after the company was forced to pay the fees upfront.

“Shippers, consignees and drayage providers do not create and cannot avoid these events,” the group said. “They cannot control the weather. They do not choose the terminals that carriers use. They are not parties to port labor collective bargaining agreements.”

The federal Shipping Act requires that the fees and related practices be “just and reasonable.” The petition asks the FMC to adopt a policy that would require free days to be extended during times of port congestion, weather-related events, port disruptions or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared “unreasonable.” In some cases, “compensatory” fees could be charged provided that they did not exceed actual storage or equipment use costs. The proposed policy would apply to ocean carriers and marine terminal operators. Source: Maritime Executive

bascap

Leaders from global shipping firms, freight forwarders, brand owners whose products are counterfeited and industry organizations representing both industries signed a joint Declaration of Intent to Prevent the Maritime Transport of Counterfeit Goods in Brussels last week.

The event marked the first time the global shipping industry and brand owners have made a public commitment to work together to stop the transport of counterfeit goods on shipping vessels.

Initial signatories include the leading global shipping firms and freight forwarders and ten major multinational brand manufacturers, along with the International Federation of Freight Forwarders Associations (FIATA), and the International Chamber of Commerce’s (ICC) Business Action to Stop Counterfeiting and Piracy (BASCAP) and Commercial Crime Service (CCS).

More transporters, brand owners and their industry associations are expected to join the voluntary initiative as awareness grows.

According to the United Nations Office on Drugs and Crime, about 90 percent of all international trade is moved around the world in more than 500 million containers on 89,000 maritime vessels. While this represents approximately 90 percent of all international trade, UNODC says that less than two percent of these containers are inspected to verify their contents. This results in enormous opportunities for criminal networks to abuse this critical supply chain channel to transport huge volumes of counterfeit products affecting virtually every product sector.

According to a recent OECD/EUIPO report, $461 billion in counterfeit goods moved through international trade in 2013, with almost 10 percent being shipped on maritime vessels.

Maersk Line and CMA CGM Group, two of the largest global transport companies with approximately half of all global shipping, and Kuehne and Nagel and Expeditors, two of the leading freight forwarding and logistics companies with total revenues of more than $27 billion, were the first in their industries to sign the Declaration.

The non-binding Declaration acknowledges the “destructive impact” of counterfeits on international trade. It calls on the maritime transport industry to address it “through continuous proactive measures, and corporate social responsibility principles.” The Declaration includes a zero tolerance policy on counterfeiting, strict supply chain controls and other due diligence checks to stop business cooperation with those suspected of dealing in the counterfeit trade.

This commitment paves the way for new voluntary collaboration programs between intermediaries and brand owners to stop abuse of the global supply chain by counterfeiters.

“We are proud to be among the first in our industry to sign this historic Declaration,” said Michael Jul Hansen, Customs and Trade Compliance Lead for Maersk Line. “Maersk has been a leader in taking steps to prevent the use of our vessels for the shipment of counterfeit and other illicit goods, and this Declaration is a reaffirmation of our intent to do everything we can to ensure our ships are counterfeit free.”

The Declaration is a direct reaction to the concerns of brand owners that vessels transporting their legitimate products were also being exploited by criminal networks to transport fake versions. This phenomenon was summarized in a landmark report on the Role and Responsibilities of Intermediaries: Fighting Counterfeiting and Piracy in the Supply Chain, published in 2015 by BASCAP. Following publication of the report, BASCAP organized a working group of its members to initiate a cross-sector dialogue with the transport industry to discuss ways to work together to find voluntary solutions. Source: Maritime Executive 

wco-news

This edition of WCO News features a special dossier on the 2016 Council Sessions, in particular the latest developments in the core WCO areas of work: tariff and trade affairs, trade facilitation, enforcement, and capacity building.

It also puts a spotlight, in its focus section, on the Customs brokers profession, including the practices adopted by some Customs administrations related to licensing and regulatory regimes.

Other highlights include articles covering the quantification and taxation of carbon emissions, the protection of cultural heritage through enhanced cooperation between Customs officers and museum professionals, and much more.

The magazine is published and distributed free of charge three times a year, in February, June and October, and is available online or in paper format.

If you do not want to miss future issues of WCO News, the WCO  invites you to fill out the online subscription form – click here!

Source: WCO

trusted-trader-transparent

A new customs program aimed at bringing Australia into line with other major trading nations could substantially cut costs when exporting to Asia.

The Department of Immigration and Border Protection (DIPB) believes that the benefits to the Australian economy of this streamlined export process could be worth up to $1.5 billion for every one per cent increase in efficiency of transport and logistics supply chains.

The pilot for the Australian Trusted Trader (ATT) program launched this month will eventually allow accredited export businesses to gain streamlined customs and security clearance in countries that have a mutual recognition agreement with Australia.

Similar programs have already been adopted by more than 58 international jurisdictions – including China, India, Japan, Singapore, Taiwan and South Korea – since being introduced by the World Customs Organisation (WCO) in 2005.

Known generally as Authorised Economic Operator (AEO) schemes, they provide a framework of standards for trading partners in recognising each other’s customs and security regimes.

According to the Centre for Customs and Excise Studies (CCES) at Charles Stuart University, the goods of exporters who are accredited to the New Zealand AEO scheme are 3.5 times less likely to be inspected or held up on arrival in the US.

Professor David Widdowson, head of school at CCES, and a leading advocate and advisor on the introduction of the ATT, says that accreditation to an AEO is often an imperative for many international supply chains.

“When exporters send goods overseas and they get held up, there’s basically two ways that countries are dealing with them,” he said. “There those that come from a known secure supply chain – such those where a mutual AEO agreement is in place – and they’re treated as low-risk; and then there’s the rest, which are treated as high-risk.

“Without being part of an AEO or trusted trader agreement, Australian exporters are more often likely to fall into the latter category.

“In some jurisdictions it can be very difficult to be accepted onto an AEO scheme as an importer, so big multinationals often actively look for partners and suppliers who are already accredited to a scheme in their own country – and won’t deal with anyone who isn’t. They don’t want to run the risk of their non-accredited parts of their supply chain compromising their status on the scheme.

“So we can see how AEOs are actually now being used by commerce as a key indicator of the standard that business is looking for in terms of protecting their international supply chain.”

The aims of the ATT include expedited border clearance, reduced or priority inspections and priority access to trade services. The DIPB will also explore the possibilities for duty deferral and streamlined reporting arrangements.

Accredited trusted traders are to be assigned an account manager within the DIPB, as a single point of contact to assist with customs and export issues across all federal departments.

To apply to enter the program, Australian exporters and supply-chain businesses – including freight-forwarders, brokers and logistics firms – first need to obtain a self-assessment questionnaire from DIPB.

The information submitted by the business is then audited by the DIPB to ensure that the necessary security systems and procedures are in place, before accreditation can be given. There is no licence or application fee for the program, and Prof Widdowson expects the process to take “a few weeks if it’s a major company or it could be a few days if it’s a medium-sized company”.

The pilot phase will be completed in this current financial year, and only four companies will be taking part initially: Boeing Aerostructures Australia, Devondale Murray Goulburn, Mondelez Australia and Techwool Trading.

Teresa Conolan, assistant secretary of the Trusted Trader and Industry Branch at the DIPB, said more companies would be included in the pilot as it progresses.

“We’re hoping to have around 40 companies over the 12 months in the pilot, across a range of business sectors, so we can actually test the processes and make sure they are not too burdensome,” she said.

“Over four years we’re expecting around 1500 companies to join the scheme – so it’s certainly not going to cover all business.”

Conolan added that preliminary discussions with some countries were already underway, though negotiations on agreements were unlikely to begin until the ATT was fully launched next July.

She said Australia’s key trading partners would be the priority, but expected the negotiations and implementation of agreements with some of them to take a further year.

The rollout of the pilot program follows years of pressure from the Australian business community to embrace AEO, after initial reluctance by the Australian Customs and Border Protection Service (ACBPS).

Following an article by The Australian Financial Review on March 20, 2013, which flagged Australia’s non-participation, business leaders sponsored a research study, undertaken by the CCES, which found that the scheme could be highly beneficial. Business groups began to lobby the federal government, by which time the ACBPS had reversed its attitude and agreed to consider implementing an Australian scheme.

For more information on the Australian Trusted Trader scheme, visit – trustedtraders@borders.gov.au

Also read:

containersThe following was penned by a long-time customs acquaintance Aires Nunes da Costa, who has kindly permitted me to post his article titled “Why unpack containers in Durban if you can have containers at your door step in Gauteng within 24 hours?” which first appeared on LinkedIN.

The Tambo Springs initiative involves creating a significantly improved intermodal capability for the movement of freight to and from Gauteng. This is to be achieved by the operational twinning of the inland port with other seaport, inland and cross border locations. The connectivity i.r.o. these twinned locations is achieved via sea, rail, road and air linkages, ideally involving seamless movement of freight between modes.

The Tambo Springs development incorporates a next generation inland port with a state of the art rail terminal facility designed to be developed in phases, with an ultimate capacity of 1 m TEU’S p.a., as well as, a sprinter freight land bridge.

The key elements are as follows:-

Direct Traditional Rail Link to Durban Harbour

The Tambo Springs Terminal will be linked to the Durban Container Terminal which currently handles the bulk of all container freight moving in and out of Gauteng, via an efficient rail service. The fixed rail infrastructure for this link already exists to the Tambo Springs site. This state of the art Terminal facility is designed to significantly increase the rail capacity for container freight to/from Gauteng, while simultaneously reducing real costs and significantly improving levels of service via:

  • a new technology “greenfields” terminal being more efficient;
  • a reduction of congestion issues in and out of the new inland port due to its location;
    improved efficiency of port operations;
  • having the facility serviced by improved rolling stock commissioned by Transnet;
    Sprinter Freight Rail Link to Ngqura Harbour In the Coega IDZ (Port Elizabeth)

In addition to the direct rail link with Durban harbour, the initial phase of this programme involves the twinning of the Coega IDZ and its adjoining Deep Water Container Terminal at the Port of Ngqura with Tambo Springs. This is to be undertaken by means of a Public Private Partnership type structure which utilizes the Transnet capability between the two locations as well as the participation of SARS.

The service level to be achieved for the movement of the freight via this land bridge has a goal of “24 hours” as opposed to the current 3 to 5 days service level achieved at City Deep. This is to be achieved by capitalizing on the creation of high efficiency intermodal activities integrated with the port functions and feeder network.

Truck Freight Movement

The Tambo Springs Inland Port will function as a multimodal logistics gateway serving the Gauteng Catchment area. It therefore provides ease of movement between individual transportation modes in addition to facilitating manufacturing, warehousing and distribution activities.

The operational plan is therefore designed to accommodate long distance (FTL) truck traffic in addition to regional (LTL) freight movement.

The principle truck markets the inland port will attract include:

  • FTL long distance movement of time sensitive freight from other ports or metropolitan areas. This includes both cross docking and stuffing/de-stuffing facilities within the inland port;
  • Rail/truck (intermodal) movement where product utilizing the rail links is transferred to truck in order to each its final destination;
  • LTL truck and Van short distance movement of freight, including a regional metropolitan distribution function.

The next generation inland port therefore capitalizes both on rail and road transportation modes with a focus on increased movement of long distance freight by sprinter rail.

Intermodal Movement

In order to achieve seamless intermodal movement of freight between sea, rail, road and air transport, it is essential to link Tambo Springs with other inland port and hub locations. The creation of such a twinned Inland Port Network provides a means to effectively participate in the Global Supply Chain in a manner which optimizes both existing and new facilities to enhance capacity. Hence, for example, Tambo Springs would be linked to City Deep via rail and road linkages and to other hub locations in Gauteng and elsewhere.

A principle element of this approach is to create an efficient transportation service between all the individual entry/exit ports providing an improved level of service over and above that provided by a traditional network. The key to this is to rethink existing processes with a focus on efficiency savings in terms of the inbound and outbound process flow at Tambo Springs. This has been incorporated into the operational concept and addresses both operational and customs and regulatory efficiency issues as part of the supply chain. Source: Aires Nunes da Costa (Customs & Excise Specialist)

accourt-risk-fraud-managementSenior Claims Executive at the TT Club in Sydney, Kate Hollis, sheds some light on the risks faced by licenced customs brokers and mitigation steps to take:

“As the international trade regulatory landscape continues to change and the commercial environment becomes increasingly competitive, the balancing act for forwarders and customs brokers between providing services to clients and complying with obligations to customs becomes more complicated.

“Customs brokers assume responsibility for acting correctly between cargo interests and customs. As a result, there is the potential to provide advice to customers or carry out actions that result in the cargo interest suffering financial loss, for which you can be alleged to have been negligent. Closely related to the liability exposure of your customer is the potential for customs to levy fines or penalties through infringement notices.

“Identity fraud is perhaps a less obvious area of risk. In some cases authorities find that brokers have committed an offence where checks on the identity of clients have not been performed and that simple verification of the identity would have alerted the broker to the fraud. Consistent with previous advice, we recommend dealing with your clients directly (rather than through an intermediary) and always perform your own background checks, both in regard to the entity itself as well as the statements being made to customs.

“One recent incident saw rice wine being imported into Australia from Korea, but it was declared as apple cider vinegar. This directly resulted in extra costs for handling the container and for storage costs under the customs bond. Following the inspection, duty was charged at the rate for rice wine – not cider – which the freight forwarder pre-paid on behalf of the importer. It proved impossible to reclaim the duty and additional costs because it transpired that the consignee company no longer existed. There have also been cases of people fabricating an identity in an attempt to import goods without paying the full amount of duty. When the companies were not successful, they simply disappeared.

“Customs brokers also need to be aware of the risk of identity theft. While the variety of scams is broad, TT Club has identified three areas that require particular attention for Customs Brokers:

  1. Piggybacking – where an unscrupulous entity uses the identifying details of a legitimate entity on a Cargo Report or Import Declaration, generally with the aim of importing consignments containing illicit substances or smuggled goods.
  2. User access security – the nature of access to customs entry systems and digital certificates means that individual login details need to be carefully guarded to avoid misuse and illegal activity.
  3. Mandate fraud – where fraudulent diversion of payments occurs. It is primarily the responsibility of the party making a payment to ensure that the bank details are correct.

“Customs Brokers should be aware that their licence might be at risk in a situation where the authorities consider that the broker has intentionally or recklessly facilitated a fraud. Such situations can also lead to fines being imposed on the Customs Broker as an individual, as well as actions against the forwarding business as a company.

“Mitigation of these risks is possible. In the first instance, it is important to review your own internal processes and systems. Recognise that the risk exposures are business critical and implement robust technology systems and standard operating procedures accordingly, particularly considering access rights and controls.

“Secondly, ensure that well drafted standard trading conditions are properly incorporated into your interactions with all clients. Many national trade associations provide ideal models You should seek legal advice to ensure that contracts are appropriate for your specific business. A third obvious mitigation is to purchase adequate and appropriate insurance. You should discuss this with your broker to ensure that your specific needs are properly covered.” Source: TT Club

AEO-LogoHere follows an appreciation of AEO within the context of the EU. According to KGH customs consultancy services, being an Authorised Economic Operator (AEO) already entails advantages for companies that have invested in doing the work to gain the AEO certification. With the new Union Customs Code (UCC), companies with an AEO permit will be able to gain additional advantages leading to more predictable and efficient logistics flows as well as an increased competitive edge.

Centralised clearance (being able to clear all customs declarations from one central location in the EU) and self-assessment (self-declaration of custom fees, similar to VAT reporting) are two new possibilities under UCC that will be implemented towards the end of the initial UCC implementation period from 1 May 2016 to 31 December 2020. To take advantage of these, AEO will be a prerequisite. AEO-ready businesses will therefore be well positioned to take advantage of these new possibilities when they become available.

Direct AEO benefits, including fewer physical and document-based controls, pre-notification in case of controls, easier access to customs simplifications and other customs authorisations, as well as access to mutual recognition with third countries, will continue to apply under UCC. The same is true of the soft benefits, such as better cross-functional communication and cooperation, improved customs knowledge and better risk management, which often outweigh the direct benefits as detailed by customs authorities.

With the UCC, AEO becomes a permit (authorisation) and all AEO certifications will have to be reviewed in line with the new UCC guidelines. Much is recognisable from before, but there is an additional competency requirement that is realised through either experience and/or professional qualifications. There is also likely to be more focus on ensuring that AEO applicants have robust routines that reflect their business, and that those routines are known in the business and used on a day-to-day basis.

Ever since the Authorised Economic Operator (AEO) certification was launched in 2008, many companies have been trying to evaluate whether to go for AEO or not. What are the benefits? How long does it take to become certified? Can we do it ourselves or do we need some help? What do we really gain by being AEO? This has sometimes stopped companies taking active steps to get ready for AEO.

Furthermore, some AEO-certified companies have felt that they have been exposed to more controls after AEO certification than before. In other instances the initial certification was fairly easy to achieve, but it then proved much harder to retain at a subsequent audit because routines were not being kept up to date or there had been insufficient internal controls and reviews performed in the business.

Our experience shows that companies that did a thorough job at the time of certification and that also afterwards had a genuine focus on maintaining knowledge, following routines and updating documentation as and when appropriate, have been able to benefit from improved customs management to a greater extent than they first envisaged.

KGH opines there are six situations where being AEO could be beneficial for a company:

  • Freight forwarder serving customers with logistics flows to and from the EU.
  • Strong business links with countries where the EU either has mutual recognition or is likely to have it in the not too distant future.
  • Businesses with many permits that will be reconsidered as part of the transition to UCC, where being AEO may facilitate the reconsideration process for other customs permits.
  • Large customs guarantee, which may be able to be reduced as a result of being an AEO.
  • Interested in centralised clearance and self-assessment that will be introduced towards the end of the UCC implementation period.
  • Interested in raising customs knowledge in a business, in order to better manage risks and be able to take advantage of business opportunities connected with international trade.

Here AEO can also be seen as a seal of quality. Source: kghcustoms.com

WCO Study Report on Customs BrokersThe WCO has just published a newly developed Study Report on Customs Brokers. The Study Report provides a general background and overview of Customs Brokers’ role in the international supply chain together with some suggested policy and organisational considerations on Customs Brokers regime and a model checklist for licensing/regulating brokers.

Additionally, the Report provides a range of cooperation opportunities between Customs and Brokers including the joint capacity building.

Customs administrations, Brokers, and Brokers Associations are encouraged to make maximum use of the Study Report as a reference/guideline, where needed, in establishing and/or maintaining/adjusting Brokers regime, keeping in view their national circumstances and specificities.

The Study Report on Customs Brokers is available via the following link: Click here

Source: WCO

MCA LogoThe UK Maritime and Coastguard Agency has dropped the tolerances it was considering for weighing equipment used to weigh a container for the new SOLAS VGM requirement.

One of the issues that has been holding some terminals back from investing in equipment to weigh containers is the lack of any clarity over the accuracy standards that equipment must meet. SOLAS says only that equipment must “meet the applicable accuracy standards and requirements of the State in which the equipment is being used”.

The UK Maritime and Coastguard Agency (MCA) had been consulting on a proposal for two weighing tolerances for equipment used to generate a Verified Gross Mass (VGM) using method 1 (weighing the container):

  • +/- 400kg up to 20T then +/- 2%
  • +/- 300kg up to 15T then +/- 2%

Sources involved in the process say some port operators and weighing equipment suppliers had expressed concerns these tolerances were unreasonable. MCA has this week issued new guidance on the VGM requirement, including a procedure for applying for approval to use Method 2 (weighing cargo items and calculating the total weight of a container).

The MCA has dropped any requirement for a specific accuracy level, opting instead to set an enforcement level. It stated: “The verified gross mass should be as accurate as reasonably practical taking into account methodology and operational variances. The MCA has set an enforcement tolerance of ±5% or ±500kg, whichever is the greater value to avoid disruption within the supply chain, however this value is for enforcer’s guidance only and it is the shipper’s responsibility to be as accurate as possible”.

Method 1 equipment includes “weighbridges, or lifting equipment fitted with load cells, or other approved weighing equipment to determine a loaded container’s Verified Gross Mass (VGM)”. Unlike other jurisdictions the MCA has not stated that it requires two 20ft containers on a trailer to be weighed separately, or said anything about how the weight of the truck and trailer is to be obtained. It stated only that “Calculations may be used as part of the method 1 process”, so these items do not in fact need to be weighed as part of the VGM process.

With regard to certification and enforcement, the MCA states: “ Method 1 users are required, on request by the MCA or other body, to provide both of the following:

  • Evidence that the weighing equipment has been supplied/maintained for the purpose of determining the VGM of a loaded container and is capable of producing a ticket (electronic record). Each ticket must include the container number, the VGM of the container, and the procedures for, and records of, any calculations which have been made. If this information is produced as an electronic record, it is essential that it is able to be produced without delay as a paper document.
  • Records kept of maintenance and verification (calibration) procedures, including any corrective / remedial actions taken.

The full guidance and other documentation can be found at this link. Source: WorldCargoNews

World Cargo News reports  – While the Coast Guard maintains the US will be compliant with the SOLAS amendment on container weighing, US Shippers are interpreting guidance from US Coast Guard Rear Admiral Paul Thomas as confirmation they can continue with existing practice to declare the weight of their goods rather than weigh containers.

Following to the fallout over his comments at the Trans Pacific Maritime conference in Long Beach this month, Rear Admiral’s Thomas issued further guidance on the SOLAS amendment that requires containers to have a Verified Gross Mass before they are loaded on a vessel from 1 July.

The US Coast Guard (USCG) has since confirmed that SOLAS is binding on US shippers, but stated that how shippers work with carriers to obtain and report a VGM is a commercial matter for those parties to determine.

Some US shippers, including the US Agriculture Transport Coalition (ATC), have made it known it is not practical for them to supply, and be responsible for anything other than the weight of the cargo, as they do today. The Coast Guard appears to be facilitating this approach, and the ATC last month told its members it “received confirmation” from USCG that shippers can continue to verify the weight of the goods they own, while lines remain responsible for the weight of the container.

On March 14 some 49 groups and associations representing US primary producers, manufacturers, importers and shipper groups wrote to Coast Guard Commandant Paul Zukunft saying they support its “interpretation” of the SOLAS amendment, as presented by Rear Admiral Tomas in his blog.

“Specifically, we support the Admiral’s view that if the shipper provides the cargo mass weight, to which the carrier adds the weight of the container, then the intent of SOLAS is achieved. In fact, several ocean carrier executives have advised that such a process would be practical.”

Some carriers, however, have rightly pointed out that this does not meet the SOLAS requirement, as the letter then notes: “The reason for our concern, and appreciation of Admiral Thomas’ guidance, is that some ocean carriers, citing this SOLAS amendment, are demanding that the shipper certify both the cargo and the carrier’s container. This is contrary to the practical realities of our US export maritime commerce and fundamentally flawed conceptually. (It would be similar to demanding that a soybean shipper certify to the railroad the weight of the railcar itself.)”

The groups maintain that they “fully understand our responsibility to accurately disclose the weights of cargo tendered to the ocean carriers. In fact, advance submission of accurate gross cargo weight is a well-established practice mandated by US Customs and Border Protection, by numerous intermodal (trucking and rail) weight requirements, and presently found in Shipper’s Instructions to carriers to meet so-called “no doc, no load” cargo cutoffs for entry into marine terminals. In addition, an Occupational Safety and Health Administration (OSHA) Rule, in place since 1983, assures that the accurate weight of combined cargo and container be known to the carrier prior to loading.”

Despite SOLAS, the shipper groups do not see a need to weigh individual containers and suggest other solutions can be found: “for instance, shippers are willing to provide to their carriers an annual written confirmation in the service contract (or other mutually-agreed document) that our cargo weights are accurate”.

One of the major concerns is liability, in particular the requirement that someone now sign a VGM document. Shippers say carrier demands for this are being rejected. Many US Corporations will not allow their employee to certify the weight of and assume liability for equipment that the corporation does not own, manage, control and in fact may not even see.”

The Coast Guard, for its part, does not appear to be pushing the issue of current practice not meeting the new SOLAS requirements.

In his testimony at the US House Committee on Transport and Infrastructure’s hearing for the Coast Guard’s 2017 Budget request Admiral Paul F. Zukunft, Commandant, USG made the following statement: “Foreign carriers are pretty much all in compliance today. When I was at the container terminal in Long Beach a month and half ago all the containers that come on to that yard are already weighed before they go in. So I am not seeing a sky is falling panacea playing out around us, but we need to make sure that there aren’t unintended consequences. That is why we are continuing to reach out with the many exporters…that container shows up on a manifest before it is loaded on a ship. What is needed is that final weight, but by and large most of these manifests already have that weight filled in in that column.”

The US, it appears, intends to continue to follow current practice where the shipper provides a declared weight of the cargo, leaving it to the carrier to determine the final weight of the container. Source: World Cargo News

Amazon-BoxMarket forces, competition and the desire to be ahead of the competition demonstrate how dynamic the international supply chain is being maneuvered. Amazon’s latest move is not only innovative but demonstrates just how adaptable international trade and Customs Inc. need to be in order to accommodate nuances to traditional accepted norms in global trade. For Customs, it needs to intimately understand the nature of business of its registered or licensed traders so as to properly apply risk and facilitation regimes appropriately. Recent developments in mutual recognition likewise play an important role in awarding real benefits to companies and their supply chains who undertake such global innovations.

According to the U.S. Federal Maritime Commission, Amazon.com Inc’s China arm has registered as an ocean freight forwarder, a move that will give it more control over shipping products from Chinese factories to U.S. shoppers.

The registration is the latest indication that Amazon plans to expand its logistics reach to cut costs for its retail business and potentially provide third-party logistics services to other industries.

It’s new status as a freight forwarder, or “non-vessel operating common carrier,” gives Amazon, the world’s largest online retailer, a foothold in the $350 billion a year ocean freight business. It will not operate ships but subcontract that work.

Amazon is already negotiating a deal to lease 20 jets to start an air-delivery service in the United States, the Seattle Times reported last year. The retailer bought truck trailers to add shipping capacity and started a program last year that uses a fleet of on-demand drivers to deliver packages.

“It has more and more control over the supply chain of their business and it gives them the ability to squeeze (costs) even further,” said Satish Jindel, a logistics consultant and president of SJ Consulting Group.

He added the move gives Amazon an even bigger edge against traditional U.S. retailers in negotiating lower prices for goods.

The Federal Maritime Commission, a U.S. government agency that regulates the U.S.-international ocean transportation system, said on Thursday a business named Beijing Century Joyo Courier Service Co Ltd, with the trade names Amazon China, Amazon.CN and Amazon Global Logistics China, was registered in its database to provide ocean freight services.

Amazon China submitted its registration request on Nov. 9, the commission said Thursday, and it was reviewed and registered on Nov. 13. It is the entity’s first registration.

“Amazon’s ocean freight services will be far more attractive to Chinese sellers than to American buyers. Chinese suppliers would love direct access to Amazon’s vast American customer base,” wrote Ryan Petersen, chief executive officer of Flexport, a San Francisco-based freight forwarder who first wrote about Amazon’s registration on his company blog on Thursday.

Petersen added that Amazon’s third-party merchants were unlikely to use its shipping service because it would expose key data like wholesale pricing and supplier names to a rival. Source: Reuters

BIMCO E-Bill of LadingPaper bills of lading have been used throughout the world to document and effect international trade for centuries. Yet whilst the world has become increasingly digitalised the paper bill of lading has, on the whole, remained a constant feature of global trade. Its continued use is mainly due to its combination of three legal characteristics that it has developed over time: (i) it is a receipt of the goods carried; (ii) it provides evidence of the terms of the contract of carriage; and (iii) it is a document of title to the goods. It is these characteristics that have, until relatively recently, foiled attempts to replace the paper bill of lading with an electronic equivalent. However, with the inclusion of an electronic bills of lading clause in BIMCO’s NYPE 2015 time charter form, as well as the International Group of P&I Clubs’ approval of the coverage of three electronic trading systems, the dominance of the paper bill of lading may well be coming to an end.

Reed Smith LLP Ship Law blog posts an interesting article in regard to change in law and the impact of e-commerce on bills of lading.

Issues with the paper system
Whilst the paper bill of lading has been used for centuries it is not without its faults, the principal problems being that:

  • Carriers are obliged to discharge the goods carried on production of an original bill of lading: this is particularly problematic today given both the speed of transport and the fact that the cargo may be sold multiple times during carriage. As a result of this the bill of lading is often not delivered to the consignee in time, and the carrier is often required to accept a letter of indemnity. This indemnity does not, however, remove the carriers’ liability under the bill of lading and creates an additional administrative burden and cost to the trade.
  • The paper system is hugely expensive (such cost is estimated to be between 5 – 10% of the value of the goods carried each year).
  • A paper bill of lading may be forged with relative ease and carriers are liable for misdelivery against a forged bill of lading.

Benefits of an electric bill
The electronic bill of lading or e-bill, in theory, addresses many of the flaws of the paper system, bringing with it a number of advantages:

  • It can be sent around the world instantaneously, hugely lowering the administrative burden of trade (especially where cargo is subject to multiple transfers of ownership during carriage).
  • Any amendments or corrections required can be made far more efficiently and cost effectively.
  • Electronic payment systems, and related advances in security, make an electronic system considerably more secure than its paper equivalent. This is obviously subject to cyber issues.

These benefits will cut the administrative costs of trade significantly and reduce, if not eradicate, situations where carriers discharge their cargo against letters of indemnity.

So why so slow on the uptake?
One of the main reasons the widespread use of the e-bill has been slow to proliferate stems from the fact that it is not treated in the same manner, legally, as its paper equivalent. Significantly:

  • A paper bill of lading is a document of title, enabling it to be negotiated and transferred as possession of the bill is evidence of title to the goods. This is not automatically the case at law with an e-bill.
  • The Hague Rules / Hague Visby Rules (HR / HVR) apply to a contract of carriage by reference to the bill of lading, or similar document of title, and it has been less clear whether they would apply to any electronic trading system used. The solution developed to these legal obstacles is essentially a multiparty contract. This takes the form of a set of rules to which users of an electronic trading system are all required to subscribe to use that system. Such rules then set out the specific form of electronic trading documentation to be used and that the consequences of using such documentation shall mirror the position at law as if they were paper bills of lading.

This, however, means that electronic trading systems such as BOLERO, which has been in existence since the 1990s, are only able to function between their members (i.e. those that have agreed to the uniform set of rules and systems that will govern their transactions). Where a member of an electronic trading system enters into a transaction with a non-member, the electronic system cannot be utilised and a paper bill of lading is issued. This feature has limited their growth, as electronic trading systems are only really effective once they have a large number of members, but are not cost-effective for traders to join until they have a large number of members.

The present situation
The benefits of electronic trading systems are particularly tangible to container carriers (as there is often a separate bill of lading for each container carried) and as such have been utilised by liner companies before wider adoption in the industry. However, the efficiencies of electronic trading systems are not confined to the container industry alone and with members of the largest trading companies, trade finance banks, mining companies and oil majors using such systems, it is clear that they are becoming increasingly prevalent in the shipping industry as a whole.

The growth of the use of electronic trading systems in the wider shipping industry is something that BIMCO, by including an e-bills clause in its latest iteration of the NYPE form, has also recognised. In sum the new clause provides that:

  • use of an electronic trading system is at charterers’ option;
  • owners shall subscribe to the system elected by charterers, provided such a system is approved by the International Group of P&I Clubs;
  • charterers shall pay any fees incurred by owners in subscribing to such elected system; and
  • charterers shall indemnify owners for any liabilities incurred arising from the use of the elected system, so long as such liability does not arise from owners’ negligence.

The International Group of P&I Clubs have now ‘approved’ three electronic trading systems (BOLERO, essDOCS and E-title). An ‘approved’ system is one that is found to replicate the legal characteristics of a paper bill (namely (i) as a receipt; (ii) a document of title; and (iii) a contract of carriage which incorporates the HR / HVR). This means that the International Group of P&I Clubs will provide cover for any liabilities arising under carriage covered by these three electronic trading systems (or any such other subsequently ‘approved’ system), provided that such liability would also have arisen under a paper bill. However, members should be advised that risks connected with the use of a non-approved electronic trading system will not be covered.

The use of an electronic trading system does, however, lead to other risks from things such as hacking, systems collapse, e-theft and viruses, none of which are traditionally covered by P&I clubs and would need to be insured separately. In this regard, essDOCS (which is now used throughout 71 countries by over 3,300 companies) has insurance cover of up to USD $20 million per electronic bill of lading for “eRisks” resulting from an electronic crime or electronic system failure.

With the rise in usage of electronic trading systems, the recent judgment in Glencore v MSC (albeit currently under appeal) provides a timely reminder that the release of cargo should only be made in accordance with the contract evidenced by the bill of lading, even where an electronic release system for cargo is being operated. In this instance cargo was released on presentation of a PIN, despite no provisions for this in the bill of lading, two of the released consignments of cargo were misappropriated and the carrier was held liable.

The future?
With the International Group of P&I Clubs’ approval of three electronic systems, the inclusion of an electronic bills of lading clause in BIMCO’s latest NYPE form and the proliferation of the use of electronic trading systems throughout the wider shipping industry, it is clear that the use of electronic trading systems is increasing. Whilst there is no doubt that we can expect teething problems as the industry continues to adapt to such electronic trading systems, and the cyber risks they may bring, it seems that the efficiencies are too great to be ignore. Source: Ship Law log / ReedSmith