Automating global logistics starts with digital documents

Like with most business ecosystems, the functioning of global trade relies on efficient exchanges of information, especially of documents. While industries and ecosystems around the world are now digitizing associated processes and automating the bottlenecks, the business ecosystem of global shipping has been slower to realize innovation and digitization.

Supply chain processes require close coordination among many parties and a major choke point in this process is the requesting and finalizing of bills of lading with ocean carriers. There are many situations which cause even the most straight-forward flows to be disrupted and require multiple versions of documents to be created, reviewed and exchanged until final approval and the final bill of lading submission.

TradeLens Workflows utilize blockchain smart contracts to automate and digitize multi-party interactions — this helps drive efficiencies across supply chains. Let’s take a look at each major element to understand what digitizing document workflows looks like for the shipping industry.

Blockchain as the foundation

The foundation of TradeLens Workflows is a permissioned blockchain which guarantees the immutability and traceability of shipping documents and their processes on the platform. This is a very important building block in providing the trust needed to scale.

The permissioned blockchain transforms some of the basic concepts around business networks — contracts, ledgers, transactions, the flow of assets and identity of participants — and introduces the following:

  • Consensus. Transactions in a blockchain network are first proposed, then consented to by the group, and only then committed to the ledger.
  • Shared ledger. Trust anchors have an exact copy of the ledger.
  • Immutability. When a block is committed it is cryptographically secured with previous blocks in the ledger forming an audit log that becomes the foundation of trust.
  • Accountability: All participants are digitally identifiable, and each blockchain transaction is signed with a permissioned user digital certificate.

Document sharing

TradeLens Document sharing provides a framework for organizing and sharing trade documents related to a host of information such as shipments, consignments and transport equipment. This is all done through permissioned access according to the role of different players and includes security, version control and privacy provisions.

Each trade document is stored on a single stack within the blockchain network, under the control of the operator and accessible only to permissioned parties within a channel. Users can upload, download, view and edit documents as allowed by their permissions and access control on that specific type of document for the trade object in question.

It is important to note, only the hash of a given document is stored on the ledger. The document itself is stored securely where access is granted according to the TradeLens Data Sharing Specification. Each time a document is edited or uploaded, a new version is created and added to the document store. Every version can be verified against a hash of its original submitted content in the ledger.

Blockchain ensures the immutability and auditability of all these documents, promoting trust and alignment across trading partners.

Beyond document sharing

The TradeLens Workflow feature takes thedocument sharing capability one step further. It provides a way to interpret structured documents and take actions on them according to well-defined workflows. In other words, by understanding the purpose and contents of documents we can automate certain actions and notifications in the shipment flow.

As documents are submitted through the TradeLens API or UI, they are interpreted by looking at specific attributes that determine which trade object the document is applicable to, and which actions to perform. The actions are checked against defined rules and only specific actions by specific actors are accepted.

When all requirements are fulfilled, the document is saved and the appropriate action gets recorded as a transaction on the blockchain. Smart contracts ensure the state and progression of a TradeLens Workflow — what can be done at each step, and by which organization or actor.

Our workflows also update generated events to help notify subscribers (members of the supply chain) of the actions and results.

An example of TradeLens Workflow: SI-BL Flow 

Let’s talk about a specific TradeLens Workflow — the SI-BL. This variation simplifies the process of sending a shipping instruction (SI) to the ocean carrier and receiving back a verified bill of lading (BL). The TradeLens SI-BL Workflow removes the need to manually edit, amend and transfer these critical documents, accelerating end-to-end flow to achieve a final bill of lading.

When a shipper (or their representative) submits a SI to the TradeLens Platform, it is analyzed by its attributes to determine which consignment it’s related to and which ocean carrier should be notified. Once the carrier has it, a draft BL is submitted back to the platform, the shipper can review and make amendments and share back to the carrier and so on, until a final BL is agreed upon. Because this is an automated process between systems at the shipper and carrier, manual tasks are eliminated along with their inherent delays.

There are many other variations of this flow, but the benefits come from the visibility and increased speed in processing these transactions. Also helpful for shippers, this offers a single mechanism and process for interacting with different ocean carriers with an immutable, shared audit trail for all draft BL revisions and approvals — all recorded on the blockchain ledger.

A digital ecosystem to meet old and new challenges

TradeLens Workflows help connect your ecosystem, drive information sharing and foster collaboration and trust by enabling the digitization and automation of how you work with others.

Source: Article by Ana Biazetti, TradeLens, May 22, 2020

Blockchain – introducing Customs to the Global Supply Chain, earlier

Picture: Dadiani Fine Art

Customs authorities are age-old institutions whose missions have been subject to numerous changes over time. Historically, the main role was to levy customs duties, which, in other words meant collecting resources for the benefit of local authorities. Today, customs performs many other functions, from securing national borders, recording import and export trade and prevention of fraud and illegal trade activity.

From the customs authority’s perspective, there is a constant focus on finding innovative technology and new methods and techniques to become more effective on risk assessment and inspection of the goods circulating across their borders. At the same time, customs authorities must examine the consequences these changes will have on trade, avoiding the creation of additional burden and obstacles for industries and entities involved in the exchange. Adopting flexible technology is often key for meaningful strategic transformations.

More quality data with accuracy and speed

Each country has its own policies for operating border control when goods arrive or depart from their territory. Most of these policies work from systems built off a central repository, powered by data collected from different sources. Time and effort are often spent in sorting and cleansing data from these various sources but disconsonant data can still create confusing outcomes when analyzed.

While globalization gives an incentive to operate in an open market, the increased amount of trade activity also conceals illicit activities that must be supervised by customs authorities, such as tax evasion, drug traffic or smuggling. It is in the best interest of the entire industry to cooperate, allowing data sharing to flag the early recognition of risky trade transactions.

Receiving data related to the supply chain activities prior to and during the transportation process can assist authorities, supporting them to pinpoint risky elements on international trade. Data validation across various trade and transportation documents allows authorities to manage detailed risk assessment processes and is enhanced with access to earlier and more granular information.

Providing government authorities with access to upstream transport data is one of the features of TradeLens. On the platform, customs authorities have access to data related to their countries from the moment a booking is placed with a carrier. Updates on documents from different data sources and transportation milestones are shared in near real-time.

Additional data is not only a way to make sure that accurate risk assessments are being made, but it can also help decrease the burden placed by the bureaucracy related to importing or exporting goods. Increasing the accuracy of the inspection of goods, can enable authorities to focus their resources on the most important targets and improve trade documentation processing for reliable shippers, truckers and carriers. Enhancing global trade and the upstream exchange of information can drive growth and prosperity for the entire ecosystem.

Doing more with less

While many technologies and platforms exist in the marketplace, organizations are often constrained by limited public resources that must be utilized wisely. TradeLens does not aim at replacing existing systems but enhancing them with additional data from the supply chain. The TradeLens Platform provides a forum for authorities to run pilots and test innovative solutions in a true end-to-end shipment lifecycle.

In order to contribute to the logistics operations of the entire ecosystem, customs authorities can send notifications related to their inspection and release activities to TradeLens. This information will be made available in near real-time to all the players involved in the shipment and permissioned to see the data.

Several countries have already started using TradeLens to improve their access to valuable information that will in turn support their mission goals:Indonesia, Ukraine, Saudi Arabia, Thailand, Jordan and Azerbaijan.

Source: TradeLens, 28 May 2020

China Shanghai Pudong Airport log jammed – Medical Supplies for export

Freight gridlock at Shanghai Pudong International Airport is so bad that some cargo planes are being forced to leave nearly empty and logistics companies are recommending ocean transportation as a faster option. 

Airfreight professionals describe an operational meltdown, with trucks stuck in queues for two to three days to drop off shipments and boxes piling up in warehouses unable to get put on aircraft because Chinese customs officials and ground handlers are overwhelmed by the surge in export demand for face masks and other medical supplies.

The volume of hospital gear, resumption of e-commerce and other trade following China’s coronavirus quarantine and new export restrictions are blamed for the massive backlog, which was compounded by factories rushing out extra shipments before closing for the May Day holiday.

“In my 20 years, I have never experienced this level of congestion at any airport. And there are no signs of this alleviating in the next week to 10 days,” especially with factories reopening again, Neel Jones Shah, the global head of airfreight at San Francisco-based Flexport, said in an interview.

An avalanche of personal protective equipment, test kits and disinfectant is descending on Chinese airports because the rest of the world desperately needs it to minimize exposure to the COVID-19 virus and air is the fastest delivery method. China is the world’s largest source for respirator masks, surgical masks, medical goggles and protective garments, accounting for 50% of global exports in 2018, according to Chad Bown of the Peterson Institute for International Economics.

But the onslaught of goods is running into a bureaucratic wall and piling up. Last month, Chinese authorities placed export controls on 11 types of medical supplies, including infrared thermometers, after complaints in Europe and the U.S. about low-quality purchases. Chinese-made N95 respirators failed in several tests to meet filtering standards for small particles, while non-medical masks are also being sold as medical-grade ones. In addition to special certification, all the shipments must be individually inspected and verified by customs authorities to make sure they are not defective or fraudulent.

The risk-control office that certifies the medical equipment was closed for Chinese Labor Day and customs worked reduced hours during the holiday, adding to the bottleneck.

The process of opening boxes and going through the contents with a fine-tooth comb is very manual and adds at least three days to transit times, said Brian Bourke, chief growth officer at Chicago-based SEKO Logistics.

China’s new policy has forced freight forwarders to cancel many bookings because export shipments are regularly failing customs inspections. Most of them are demanding customers have cargo ready at least four days before a flight. It now takes five to six days for shipments to get from the manufacturer’s dock onto a plane, according to logistics companies in the area. 

Meanwhile, forwarders and consolidators are requiring all freight charges for protective garments be paid up front, 72 hours before departure, because the cost of chartering a dedicated plane at the eye-popping one-way rate of $1.5 million or more, is prohibitively expensive. Pre-payment is also desired because shipments may miss the flight’s cutoff time and result in the forwarder otherwise having to eat the loss.    

Delayed or rejected loads have a knock-on effect, too, because they need to be rebooked on later flights.

The most-affected transfer station is PACTL, a joint venture between Shanghai Airport Group and Lufthansa Cargo that controls three of the seven cargo terminals at Pudong Airport, according to a SEKO client advisory. Since May 3, Eastern Air Logistics’ western cargo terminal is temporarily not accepting any new charter flights in an attempt to clear the backlog.

Chinese social media sites show massive traffic jams of trucks, with no space to unload, on the entrance road to Pudong Airport. The wait is so long, Bourke said, that trucking companies have to rotate fatigued drivers via motorcycle.

Even after shipments are cleared, they can sit in a warehouse because ground handling companies often don’t have enough labor to consolidate shipments for aircraft loading, he added.

Light loading

Jones Shah, a former head of cargo at Delta Air Lines, Inc. (NYSE: DAL), and others who do business at Pudong airport say the increased tender times have forced multiple carriers on several occasions to depart only 10% or 20% loaded because of schedule commitments, or fears that pilots will violate duty-hour limits by waiting.

Under normal circumstances, cargo airlines typically change crews in China. Instead, flights are originating in Tokyo or Seoul. Upon arrival, crews stay on the planes to avoid being tested or quarantined by Chinese authorities keen on preventing outsiders from reinfecting the local population. If freighters stay too long in Shanghai, crews will time out their duty clock and violate anti-fatigue rules before reaching a refueling stop in Anchorage, Alaska, or U.S. destinations.  

“It’s a disaster right now.  . . . There is personal protective equipment that could have been coming to the U.S. just wasn’t able to because of this backlog,” Bourke said.

Contacted by FreightWaves, North American passenger airlines that now operate so-called “ghost” charters — planes without passengers flying dedicated cargo routes — downplayed the congestion’s impact on load factors.

“PVG [airport code for Shanghai] has some challenges as a result of a huge increase in volume and flights, but American Airlines Group Inc. (NASDAQ: AAL) has been able to fill nearly all flights to-date. Demand remains very strong and our handling partners have been able to process freight in time to meet our outbound flights,” Sandy Scott, managing director of cargo operations – Europe & Asia Pacific, said in a statement. “Limiting export deliveries to 48 hours prior to flight departure helps with smoothing the flows through the cargo terminal. American is in constant contact with all global account customers, local customers, and handling partners to ensure flights leave on time and with full loads.”

A Delta spokesperson said, “Delta Cargo is working with our ground handlers and contracted warehouse providers in Shanghai to improve the situation in light of congestion affecting all airlines. Delta is committed to continuing our cargo-only flights between Shanghai and the U.S.”

Air Canada has not had aircraft leave empty because of good planning that enables it to swap out shipments that are not ready for ones that are, said Tim Wong, director of cargo sales and services for Asia-Pacific.

Airfreight workarounds

Freight forwarders are employing a number of tactics to bypass the bottlenecks and say customers need to be open to quick course corrections.

Flexport works with airline partners to delay flights upline, “before they leave for Shanghai because then the crews can continue to rest and not start their duty day. And that gives us a little more time to have freight tendered and built,” Jones Shah said. “But it can get tricky. Flights have to get to their destination because they have another flight after that. So, you’re operating within the confines of a very intricate schedule. This is a 24/7 job right now managing the complexity.”

Other Chinese airports face similar problems, to a lesser degree. SEKO is trying to avoid Shanghai at all costs for now, instead sending most airfreight to Zhengzhou airport, a 10-hour drive west of Shanghai. Time:matters, the logistics arm of Lufthansa Cargo, and its Chinese agent, Shanghai International Freight Forwarding, are also arranging cargo-only passenger charters from airports in Xiamen, Malaysia, and Nanjing, China, spokeswoman Katja Sondey said.

Making matters worse is that Chinese regulations don’t allow personal protective equipment to be exported or transshipped through Hong Kong.

“That has created lots of backlogs and capacity issues in Guangzhou and Shenzhen as many airlines do not have landing rights in mainland China and is one of the reasons why rates are sky high,” said Christos Spyrou, the CEO and founder of logistics cooperative Neutral Air Partner, via email from Hong Kong.

Fast-boat services, like those offered by Matson, Inc. (NYSE: MATX) and APL, offer another relief valve for shippers. Matson, for example, sails direct from Shanghai to Long Beach, California, in 10 days.

“We’re telling people that sometimes it’s more of a sure thing to move via expedited ocean services. And that’s an education,” Bourke said. “When your airfreight guys are selling ocean, that’s when you know that the market is working in a crazy way.”

Jones Shah said shippers — especially those who are moving a lot of volume — need a diversified strategy when it comes to moving medical supplies.

“If you’re just moving one shipment of 500,000 masks, airfreight is the way to go. If you’re moving multiple shipments of 40 million to 50 million masks over the duration of a project, there is absolutely a hybrid, modal strategy that is going to get you there.

“It’s not just air or ocean that’s going to let you be successful. You need a combination of the two,” he said.

Europe doesn’t have an express-ocean option, so some logistics companies are increasing use of transcontinental rail from China to move urgently needed protective suits and related supplies. Imperial Logistics International said it took 20 days for the first batch of 45 containers with medical gear for health care workers to arrive in Germany by train.

Source: Benzinga, featured on Yahoo.com, 8 May 2020

Indonesia, 12 cross-region countries agree to keep supply chains open

Top diplomats from 13 countries of a cross-regional network, including Indonesia, Singapore and Canada, have agreed on key principles of keeping transportation links and supply chains open to cushion the impacts of COVID-19 on global trade and economy.

Facilitated by Canada, the informal network called the International Coordination Group on COVID-19 (ICGC) consists primarily of half of the G20 countries — Brazil, France, Germany, Italy, Mexico, South Korea, Turkey and the United Kingdom — with the addition of Morocco, Peru and Singapore. It was recently established to look for a shared commitment to “promote and protect free trade” and other selected measures to tackle COVID-19.

The fresh declaration was made by foreign ministries of ICGC in a Friday evening teleconference, after it was deliberated at a recent senior officials meeting.

Going forward, Indonesian Foreign Minister Retno LP Marsudi said, any future cooperation “must be action-oriented” which would bring tangible benefits to the general public worldwide.

The declaration, despite its nature as a non-legally binding political declaration, aims at bolstering international norms and actions in handling the COVID-19 pandemic and to manage its social economic impacts. It identified a number of areas for concrete collaborative actions, outlining commitments to maintain an open flow of trade and investment, facilitate repatriation of stranded travelers, and to look for efforts to restore the post-pandemic global economy.

“We will continue to promote and protect free trade,”  the ministers said in the declaration, as quoted from a press statement on Saturday. “[…] and we agree that emergency measures designed to tackle COVID-19, if deemed necessary, must be targeted, proportionate, transparent and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO [World Trade Organization] rules.”

Singapore’s Foreign Minister Vivian Balakrishnan said on Facebook on Saturday that the ICGC ministers had reiterated the importance of maintaining global connectivity, “such as transport and supply chain links, which will help all our economies recover more quickly when the pandemic eventually subsides”.

The WTO had sounded the alarm on Wednesday that global trade could plummet by a third this year due to the coronavirus pandemic, warning the deepest recession “of our lifetimes” could be on the horizon.

North America and Asia would be hardest-hit and could see their exports plunge by 40 and 36 percent respectively, while Europe and South America could see declines of more than 30 percent, the WTO said. Keeping markets open to international trade and investment would help economies recover more quickly, we will see a much faster recovery than if each country goes it alone.

Following the declaration, the ICGC would now strongly advocate for other countries to take similar steps, with South Korea leading a conversation on best practices for emerging from the COVID-19 crisis.

“The COVID-19 pandemic is a global challenge. Maintaining strong coordination with our international partners is critical to mitigate the repercussions of the ongoing challenges we face,” Canada’s Foreign Minister François-Philippe Champagne said in a statement. “Keeping people, goods and services moving is key in both addressing these issues and ensuring the transition to a strong recovery.”

Source: Article by Dian Septiari, The Jakarta Post, 19 April 2020

What is a bill of lading and why isn’t a digital format industry standard?

The bill of lading is believed to be the most important transport document in international trade: a mainstay of the global supply chain that’s present from origin to destination and critical to customs clearancefinancing and ownership of cargo.

But for as much as shipping has changed over the decades, not much about the bill of lading (BL) has. Today, it’s pretty much the same often-paper, always-time-consuming document it ever was.

That’s why driving an eBill standard is largely considered the Holy Grail of global trade. Succeed in that, and partners up and down the supply chain would benefit from the days and weeks that paper BLs add to the process as they are printed, pouched, messengered, lost, found and waited upon.

It’s ironic because there isn’t a single aspect of the BL that couldn’t be done better digitally. To demonstrate, let’s dive into the essence of these documents and the challenges that remain to making them digital.

How does an original paper bill of lading work?

Once the vessel departs, an original BL can be issued by the ocean carrier. After the shipper endorses the original bill, it is couriered to the buyer who then needs to surrender it back to the carrier at destination as part of the cargo release process.

It sounds simple enough, but along the way the BL impacts many other processes and actions. Even before issuance, the time-consuming process from a shipping instruction to the issuance of a verified BL, many iterations and changes can occur to get the BL into an approved state.  

The BL, and its critical data fields are required for customs clearance, letter of credit, change of title and other processes. One delay in any of these can result in costly extra charges.  

The functions of a bill of lading were made to be done electronically

In oftentimes convoluted international shipments, the BL is the legal go-to document that facilitates negotiation, lending and risk reduction by performing three key functions:

1. It is evidence of a contract of carriage

2. It confirms receipt of goods

3. It serves as the title to the goods

So, can eBill perform these functions while maintaining the integrity and legality that’s required? The P&I Clubs think so. Today’s top eBill solutions meet these challenges through rule frameworks and advanced security measures — all while providing significant cost and time savings.

eBills can play a pivotal role — and a digital role

Carriers issue the BL, but they rely on information from shippers which may change multiple times during the booking and shipper’s instruction processes. Electronic features like structured documents make creation, approval, distribution, tracking — everything — easier than paper.

This benefits not only the shippers but the carriers, buyers, sellers and banks without having the need to continue to print out paper — which defeats the purpose

Digital does the different types of bill of lading better

There are many types of BL, reflecting the complexities of international trade. Eliminating paper is only the beginning of the ways eBills can help streamline processes related to the two main categories of BL:

Sea Waybills are sometimes referred to as “Express Release.” They have a named consignee on them but are issued without any original documents that have to be presented for the release of the cargo. Non-negotiable and non-transferable, they are usually used in three cases:

  1. Intra-company shipments between divisions located in different countries
  2. Shipments when no negotiations take place between the seller and the consignee
  3. Instances when the shipper doesn’t have to submit an original BL to any party in order to secure their payment

Original BLs have different forms that all hinge on the issuance of original BL documents in some way.

· Order BLs are the most common type of BL. They enable delivery of the cargo to be made “To Order” to the bonafide holder of the BL. These types of BL are negotiable and often linked to letter of credit transactions. Often banks must verify and endorse the original BL before the cargo can be released to the buyer.

  • Straight BLs stipulate that the cargo may only be released to the specified consignee and only upon the surrender of an original BL.
  • Open BLs are negotiable and transferable. The name of the consignee can be changed with the consignee’s signature and transferred — often multiple times.

Going Digital assists in filling out the bill of lading

With shippers providing the majority of the information for a BL, completeness and correctness is crucial. eBills help guide the way. If shippers can provide bill of lading information digitally, there’s less risk of keying errors. Form fields and autofill features all speed the process and lead to time savings.

One of the challenges of going paperless with BLs from the very beginning is standards. Adhering to set data standards makes information useful for different parties within organizations and multiple supply chain partners and it enables seamless workflows from automation. Unfortunately, standards are far from being standard today.

Digital makes the information included in a BL more useful

Users look to the bill of lading as an infallible source of essential and comprehensive information like names and addresses, purchase orders or reference numbers, special delivery instructions, pickup date, description of items, packaging type, NMFC freight class and DOT hazmat designations.

eBills of lading can make this information highly transparent to supply chain partners who can use it. But like many of the benefits of eBills, this transparency hinges on adoption — if all the participants of the supply chain are rowing together digitally, it works. If not, it just makes for another manual process that may end up being even more work than paper.

With its centrality to supply chains and essentiality to digitizing global trade, it’s easy to understand why the industry has its sights set on digitizing this important document. But acceptance of the eBill remains both the goal and the greatest challenge today. That’s why getting the eBill to catch on will require successfully digitizing the entire process for eBills, too.

TradeLens, with its relationships with the world’s largest ocean carriers, is in a unique position to explore the digitization of this process at an unprecedented scale. Within an ecosystem where there’s already widespread acceptance, the potential of the eBill could finally be revealed. 

Source: Original article authored by Jeffrey Ivinski, 13 April 2020

COVID-19 Reference page for Customs and Trade users

A dedicated COVID-19 page has been added to this blog to provide Customs and Trade users a reference and insight into a variety of international and South African weblinks and documents concerning guidelines under COVID-19. This page will be updated regularly to include additional links and updates to any relevant document or website referenced. Please bookmark this page to be kept abreast of updates.

CargoSmart – Pilots Innovative Cargo Release Application in Shanghai

CargoSmart Limited, a leading shipment management technology solutions provider, announced that it conducted a pilot project with COSCO SHIPPING LINES (COSCO), Shanghai International Port Group (SIPG), and Tesla, Inc. (Tesla) for a new application to transform the cargo release process. It is among the first pilot projects with an ocean carrier conducting a real-time exchange of shipment data with a terminal operator through blockchain. The pilot not only demonstrated the benefits of having a single, trusted source of truth in cargo documentation, but also the efficiency gains for industry participants. Such an application will undoubtedly accelerate the digitalization of shipping industry processes and the further optimization of currently stressed global supply chains. The application will be further developed for participants of the Global Shipping Business Network (GSBN) blockchain consortium, once it is officially established. 

The pilot project was designed to minimize consignee and shipping agent verification steps with their ocean carriers in order to speed up the release of sea waybills. As a result, truckers are able to pick up their cargo at the terminal faster, helping shippers meet delivery windows and ensure that service quality and customer commitments are met. 

During the pilot in December 2019, COSCO and SIPG streamlined the cargo release process by enabling Tesla to accelerate its cargo pick up procedures on a trusted and secure platform (related post on COSCO’s official WeChat account). The pilot also allowed SIPG to view a single, trusted source of COSCO’s sea waybill data, enabling faster preparation of delivery orders for consignees and their shipping agents. In late March 2020, CargoSmart further enhanced the application to display laden gate out, appointment date, and terminal release, enabling shippers to have better visibility of their cargoes. 

Henry Huang, Executive DGM of Operation & Business Department of SIPG, said, “The pilot is a key component of our journey towards paperless, trusted, and seamless trade processes at the Port of Shanghai, and it demonstrates the benefits for supply chain stakeholders around the world. We look forward to extending the collaboration with more supply chain stakeholders to render extraordinary service to our community.”  

Wu Yu, General Manager of Business Process & System Division of COSCO said, “The pilot with SIPG and CargoSmart showcased significant efficiency gains not only in the cargo release process, but also for downstream supply chain planning by presenting a single source of truth for documentation for all involved parties. We look forward to more blockchain-based applications that can create value for customers and the industry alike.”  

Expanding Value to More Carriers and Terminals 

The successful pilot has proven that the unique collaboration model between ocean carriers and terminal operators is able to create benefits for stakeholders along the global supply chain. Leveraging this successful experience, the cargo release application is expected to further promote carrier-terminal data exchange and streamline operations. It is envisaged that this application will unleash the full potential of the proposed GSBN platform once it is established, subject to the requisite regulatory approvals. 

As preparations continue for the future formation of the GSBN, contingent upon securing required regulatory approvals, CargoSmart will conduct similar pilots with Xiamen Ocean Gate Container Terminal Co., Ltd. (XOCT) and other terminal operators such as those at the Port of Qingdao in China and the Port of Laem Chabang in Thailand.  The objective is to broaden the scope of the pilot by involving more carriers and terminals, and eventually extending the pilot to other industry participants in the near future. To further enhance the value of the pilot application, CargoSmart will enable APIs to explore and test ways to extend visibility to shippers for greater efficiencies throughout the cargo release process. 

Source: CargoSmart.ai, 7 April 2020

Unpacking ICC's Digital Initiatives for global trade

ICC is partnering with government, business and other stakeholders to create digital solutions that will advance economic prosperity for all.

In line with ICC’s Declaration for the Next Century of Global Business, we are committed to maximising the benefits of the digital economy through establishing key partnerships to unify, simplify, and transform trade processes for all.

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.

Perlin Clarify

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.

The project was announced by Mr Denton, Dorjee Sun, CEO and co-founder of Perlin, and Satvinder Singh, Assistant CEO for Enterprise Singapore at an event in Singapore in August 2019.

5). Partnership with GIST Advisory

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.

Over the next six months, the project will enter a testing phase with six participating pilot countries, including Belgium, China, Russia, Switzerland, the United Kingdom and the United States. The European Union Directorate-General for Taxation and Customs Union actively supports the implementation of the eAta Carnet.

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.

Trade Dialogues

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.

Source: ICC Website, February 2020

Guide: Goods and Conveyance Reporting in South Africa

A companion guide in support of increased compliance in the reporting of goods and conveyances (RCG) to Customs, South Africa.

Necessary information for – Air, Sea and Road carriers, vessel’s agents, NVOCCs, freight forwarders, Air and Sea terminal operators, container depot operators, transit shed operators and de-grouping depots. Also, all private software service providers to the trade.

The guide offers easy navigation through –

  • registration and electronic trading with SARS Customs
  • the various electronic messages mandated by law, covering import and export movements, across all modes of permissible international transportation
  • message types for each transaction type
  • scenarios to facilitate easier understanding across operators in the supply chain on how the various electronic reports are sequenced, ensuring that Customs formulates a comprehensive end-2-end view of a international trade transaction
  • reference webpages, official notifications, Customs rules and other pertinent information concerning cargo reporting.

All information is hyperlinked to SARS documentation, found on the official SARS website www.sars.gov.za

You may download the Guide below (File size: 3MB)

Illicit Cigarettes – Hong Kong customs intercepts four shipping containers

Photo: Winson Wong

Hong Kong customs has uncovered HK$85 million worth of smuggled cigarettes in the largest seizure of its kind in two decades, after authorities acted on intelligence indicating a syndicate was shipping the haul into the city in four containers.

Some 31 million cigarettes were stashed in the containers from Yokohama in Japan. They were then shipped through different ports in South Korea, Vietnam and mainland China, according to Lee Hoi-man, deputy head of the Revenue and General Investigation Bureau under customs.

He said the circuitous route was used by smugglers to avoid detection.

“The containers were shipped into three to four different ports before they came to Hong Kong,” Lee said adding that the contents listed on import documents were changed to throw off law enforcement in various jurisdictions.

Four men – one mainlander and three Hongkongers – aged between 24 and 41 were arrested in the operation on Monday. They were still being held for questioning on Tuesday evening.

Information on the containers was shared to a global database operated jointly by customs from different countries, under an anti-smuggling campaign code-named “Project Crocodile”.

A law enforcement source said the containers were left idle at another port since December, but were then suddenly moved across different countries before arriving in Hong Kong, one at a time since last Friday.

Lee said: “It is possible smugglers believed our frontline officers were tied up in dealing with the coronavirus outbreak.” He added that some of the contraband items were believed to be destined for countries in eastern Europe as some cigarette brands seized in the operation were popular there.

Hong Kong customs began investigating the syndicate in mid-December before identifying the four containers.

On Monday afternoon, officers from the Revenue and General Investigation Bureau swooped into action and seized 22 million sticks of cigarettes stashed in three containers at yards in Yuen Long, Sheung Shui and Man Kam To, arresting the four men.

At the Sheung Shui site, officers also seized 3,500 bottles of duty-not-paid liquor worth HK$2.5 million.

On Tuesday, the fourth container which had arrived from Shenzhen a day before was selected for inspection. Nine million cigarettes were found in it.

Lee said the combined haul had an estimated street value of HK$85 million, and was the biggest seizure of its kind in two decades in a single operation.

He said his team was working with overseas counterparts to determine the exact origin of the shipment and track down the ring leader and core syndicate members.

In Hong Kong, importing or exporting unmanifested cargo carries a maximum penalty of seven years in jail and a HK$2 million fine.

Source: Article by Clifford Lo, South Morning Post, 18 February 2020

Port of Gauteng development

Kenya – Single Window costs to impact on traders

Importers and exporters will have to pay to use the Single Window System, Kenya Trade Network Agency(KenTrade) has said.

The agency dismissed concerns that it will increase the cost of doing business.

This comes as it moves to upgrade its system which provides the sole trading platform for lodging entries and accessing trade approvals, mainly by government agencies.

Companies will now have to pay Sh5,000 [ZAR722] annually as registration to the Single Window System. Application for Unique Consignment Reference (UCR) number in the system costs Sh750 [ZAR108] per UCR.

Arrival notification for any the impending arrival notice of a consignment will cost Sh7,500 [ZAR1,080] per ship. 

The charges have been approved by the National Treasury and Planning, following a legal notice issued on December 24 which became effective this month.

This is to support the cash-strapped government agency’s operations after Treasury cut its budget by more than a half.

KenTrade CEO Amos Wangora said the  charge are informed by low funding by the exchequer,which is threatening sustainability of the Single Window Services.

“The agency has over the years relied on the exchequer for funding to run its operations as well as maintain the system, this funding has not been sufficient and has been declining over the years,” Wangora said.

The Single Window System was rolled out in 2013, providing a single platform to process import and export cargo documentation.

It currently serves 12,000 users and processes close to 800,000 transactions annually.

The system brings together 35 permits, licenses and certificates from various government issuing agencies whose cargo clearance documentations have been interfaced with the  KenTrade system.

It is also linked to financial institutions (banks, mobile payment solutions) through Kenya Revenue Authority (KRA) iTax System and the governments eCitizen platforms.

Source: article published in The Star, Kenya, 24 January 2020

ICD 2020 – #MakeTradeWork

Picture courtesy of the WCO

To mark International Customs Day 2020 – focusing on the theme of ‘fostering Sustainability for People, Prosperity and the Planet’, the following article from the Spring 2018 edition of World Trade Matters by Jan Hoffmann, the Chief of the Trade Logistics Branch, Division on Technology and Logistics at UNCTAD, is relevant. The article discusses global trade facilitation reforms, the digitalisation of trade and measures towards ensuring long-term sustainability in the maritime industry. 

Confronted with growing populism and a surge in protectionist measures recorded by the WTO, policy makers and enterprises are struggling to avoid a backlash in international trade. At UNCTAD’s Trade Logistics Branch, we support these endeavours by helping to make trade work better. Through trade facilitation reforms, the promotion of digitalisation, and ensuring the long-term sustainability of international transport, we aim at ensuring that the international movement of goods is not confronted with unnecessary obstacles and costs. 

A multilateral agreement to facilitate international trade

Under the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), developing countries commit to implement a number of very practical measures that make trade easier and more transparent. Countries are obliged to publish duties and procedures on the web, traders can transmit their declarations prior to the arrival of the goods, payments can be made electronically, and fees and charges must not become hidden taxes to generate income for the government. These are but some of the 37 concrete measures grouped into 12 Articles of the TFA. They are all useful and help make trade more efficient. 

However, many of these measures involve an initial investment or reforms that require human and financial resources to start with, which developing countries many not have. The good news is that the TFA also includes a novel mechanism – the so called “Special and Differential Treatment” – that helps developing countries plan and acquire the necessary capacity prior to being fully committed to comply with all 12 Articles. Concretely, the mechanism puts the developing countries in the position – and obligation – to analyse and notify their own implementation capacity. At UNCTAD, we are working closely with the developing countries to enable them to do so. Our main counterpart in this endeavour are the National Trade Facilitation Committees (NTFCs) that each country must set up under the TFA. UNCTAD’s Empowerment Programme for NTFCs includes training and knowledge development for the members of the NTFC, combined with advisory services and the development of a Roadmap of TFA implementation. 

By the same token, UNCTAD also supports developing countries in setting up Trade Information Portals. Under the TFA, members of the WTO are obliged to make relevant information on tariffs and trade procedures available on-line. UNCTAD’s Trade Information Portals not only help countries become compliant with this obligation, but in the process of analysing and publishing applicable trade procedures, a Trade Information Portal effectively helps countries identify the potential for the further simplification of procedures. Thanks to these new insights, NTFCs can then develop programmes and reforms that subsequently ensure the further simplification of procedures. 

Technological progress will never be as slow as today

My favourite provision of the TFA is Article 10.1., as it provides for a dynamic dimension of the Agreement. According to this article, countries need to minimize “the incidence and complexity of import, export, and transit formalities”, continuously “review” requirements, keep “reducing the time and cost of compliance for traders and operators”, and always choose “the least trade restrictive measure”. As such, even if a country is compliant with all TFA provisions today, countries will need to continue monitoring if existing procedures are still appropriate in view of technological or regulatory developments. 

As trade becomes increasingly digitalised, and new technologies which do not yet exist will be developed, it will be important that governments continuously revise and review the applicable rules and regulations. 

Digitalisation comes in stages. First, we optimize existing procedures, making use of cargo tracking, the Internet of Things, blockchain et al. Second, new businesses are developed which could not exist without the new technologies; new platforms come into being and we see more “uberisation”. Finally, there is transformation and science fiction; still in our lifetime Artificial Intelligence will overtake human capabilities to manage international trade and its logistics. 

But let us take one step at a time. At UNCTAD, we support developing countries through eTrade readiness assessments, the development and upgrade of technological solutions in Customs automation and Single Windows, and by providing a Forum for our members to analyse and discuss the challenges that come with digitalisation. We encourage the development of global standards that allow for interoperability among new systems. The challenge for policy makers it to encourage private sector investments in new technologies and solutions, while ensuring that no new monopolies emerge that might exclude smaller players.  

And it has to be sustainable

While we aim at ensuring continued growth in international trade, there is a catch. The transport of this trade encompasses increasing externalities, such as pollution, green-house-gas emissions, and congestion. 

Ports need to minimise social and environmental externalities. Many port cities are among the most polluted places to live, as ships burn heavy oil, and delivering trucks produce noise and cause traffic congestions. In addition, ports need to be resilient in the face of disruptions and damages caused by natural disasters and climate change impacts. 

International transport, including shipping, needs to play a larger role in addressing global warming and contribute to mitigating the carbon emissions that are causing climate change. Shipping emits less carbon dioxide (CO2) per ton-mile than other modes of transport, but then due to its sheer volume it also produces many ton-miles. Would it be possible that the industry could be charged by its main regulatory body not per ship tonnage (as is currently the case), but per tonne of CO2 emission? 

Currently, the International Maritime Organization is funded proportional to the tonnage registered under the members’ flags. Like this, Panama, Marshall Islands and Liberia pay for the largest share of the IMO budget – and in the end, this is passed on to the ship-owner, who in turn passes this on to the shipper, who will charge the consumer. This is a good established mechanism that could be expanded to also internalize the external costs of CO2 emissions. 

Being the most globalized of all businesses, maritime transport should consider adopting a global regime that helps further internalize its environmental externalities – to ensure prosperity for all.  

It is all about efficiency

Investing in trade facilitation reforms, making intelligent use of the latest technologies, and ensuring that externalities are internalized are all several sides of the same coin. Trade efficiency is necessary to promote an open international trading system. It requires a continuous effort by policy makers to continuously review current procedures, apply the most appropriate technological solutions, and support an efficient allocation of scarce resources. 

Source: Jan Hoffman, UNCTAD – originally published in World Trade Matters, Spring Edition, 2018

Grasping the size of Container Traffic

The following infographic is shared courtesy of Visual Capitalist

Size-of-Shipping

Massive Rhino Horn bust in Malaysia

Malaysia Rhino Horn Bust

Malaysia has made a record seizure of 50 rhino horns worth an estimated $12 million at Kuala Lumpur airport as they were being flown to Vietnam, authorities said Monday.

Customs officials found the parts in cardboard boxes on August 13 in the cargo terminal of the capital’s airport, said Abdul Kadir Abu Hashim, head of Malaysia’s wildlife department.

The 50 rhino horns weighed 116 kilogrammes (256 pounds) and are worth about 50 million ringgit ($12 million), he told AFP, adding that the seizure was “the biggest ever in (Malaysia’s) history in terms of the number of horns and value”.

Vietnam is a hot market for rhino horn, which is believed to have medicinal properties and is in high demand among the communist nation’s growing middle class.

Trade in rhino horn was banned globally in 1977 by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), but illegal hunters have decimated rhino populations to sate rampant demand in East Asia.

A single kilo of rhino horn can fetch tens of thousands of dollars in the region, where many falsely believe it can cure cancer.

All rhino species are under threat of extinction, according to the International Union for Conservation of Nature (IUCN).

Abdul Kadir said authorities were unable to identify the origin of the animal parts. Rhino horn sent to Asia typically comes from Africa.

Officials also found a huge stash of animal bones—believed to be from tigers and leopards—in the same shipment, with an estimated value of 500,000 ringgit.

Authorities have not made any arrests over the seizures.

Elizabeth John, from wildlife trade watchdog Traffic, described the rhino horn seizure as “staggering” and urged authorities to track down the people behind the smuggling attempt.

Kuala Lumpur is a hub for cheap flights around Southeast Asia, and has become a key transit point in the smuggling of rare animal parts.

Source: AFP, 20 August 2018