Category / International Shipping

by Mike Poverello

Maiden Voyage for 16,000 TEU French Giant

CMA CGM Marco Polo 16,000 TEU container ship

The world’s largest containership sailed on her maiden voyage with a first load of freight from Ningbo, China. The Marco Polo is at 16,000 TEU currently the biggest box carrier and is the first of a series of three similar dimension vessels that will all be named after great explorers. The delivery of the two next vessels is expected in 2013. This first voyage, w will be used partly to test the ship, the largest in service until Maersk’s 18,000teu Triple-E vessels start to be deployed next year.

Owned by French liner group CMA CGM she will be operated on the company’s French Asia Line service’s FAL 1 rotation where all the group’s largest vessels operate on a fixed-day, weekly connection between Central and South China, the main exporting zones of the country, and Northern Europe. The direct service to Southampton and to Hamburg offers European importers the fastest transit times of the market.

FAL1 is part of a global network of 8 CMA CGM services connecting Asia to Europe Atlantic, which the company claims to be the most thorough offer on the market, and which is based on 29 vessels of 11,400 to 16,000 TEUs. Nicolas Sartini, CMA CGM Group Senior Vice President Asia-Europe Lines, said of the latest offering:

“It is with great pride that the CMA CGM Group launches this new vessel, which is the largest in the world. It shows the expertise of the Group’s teams, who are able to handle not only the very technical piloting of the ship but also its commercial operations. Our entire network of 400 agencies all around the world is active to ensure the successful launching of this ship.

“The CMA CGM Marco Polo is going to join the FAL service, the backbone of the Group’s network of lines. This launching reinforces the Group’s strategy, which began 20 years ago, with the opening of its own offices in China, and continues today with 34 services going from China to Europe, to North and South America, to Australia and Africa, i.e. one departure every 5 hours. To this must also be added the 20 weekly services of our subsidiary Cheng Lie Navigation, the Intra-Asia specialist.”

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by Mike Poverello

Singapore – megaport to double its TEU capacity

Singapore is relocating its transshipment port operations to Tuas in 10 years, a move that will add 65 million TEU in annual capacity, nearly doubling today’s capacity at local PSA terminals, announced Transport Minister Lui Tuck Yew. Consolidating transshipment operations at Tuas will bolster efficiency, economies of scale, eliminate inter-terminal transfers and result in cost savings and increased productivity.

Located close to the island’s industrial centre, Tuas is a new port development that can handle up to 65 million TEU annually, nearly double Singapore’s present capacity at PSA terminals. The first phase of Tuas is scheduled to open in 10 years, ahead of the 2027 expiration of the leases of Singapore city terminals at Tanjong Pagar, Keppel, and Pulau Brani, noted Dredging Today.

The recently completed Terminals 1 and 2 of Pasir Panjang will be merged in Tuas as well. But PSA Singapore will proceed with Phases 3 and 4, which will cover 250 hectares and add 15 new berths with a six kilometre quay.

The Pasir Panjang expansion, which is estimated to cost about US$3.5 billion, will increase PSA Singapore’s maximum draft from 16 to 18 metres to accommodate fully laden 18,000 TEUers now on order. By 2020, both phases will add an annual capacity of 15 million TEU, bringing the port total to 50 million TEU, but is still less than the additional Tuas planned capacity, which alone is estimated to handle 15 million TEU on completion. Source: www.seanews.com

by Mike Poverello

The Case for Screening-as-a-Service

In an interview with The Maritime Executive, Peter Kant, executive vice president for Rapiscan Systems informed that the primary business of a port is serving as a hub for water-borne commerce and all of the logistics that entails, with each port competing for the business of shippers and container operators. Every investment made by a port authority, from a crane to a dredge to a security checkpoint, must be based on how this activity will not only position the port to current customers, but how it will affect the attraction of future customers.

Increasingly, however, these investments are including more and more security needs, from container scanning equipment to operator training to security architectures. Security, and in particular security screening, is not the core business of a ports authority, but compliance with national and international guidelines demands that certain security standards be met, or losing customers will be the last of a port authority’s worries.

But even though security screening is an absolute necessity, many ports are looking to get out of the security game altogether. But will the departure from security make ports less secure…or could it actually enhance cargo scanning operations?

The Heavy Burden of Screening
As mentioned earlier, port authorities are not experts when it comes to security, especially a task as granular as cargo screening. It’s not just about a “mean guard and a magnet” when it comes to screening anymore, and this especially holds true to the world of maritime cargo. First, the right technology must be installed, a solution that can effectively analyze cargo for potential contraband or threats, both conventional and radioactive. Then, a port authority must determine the best location for the screening checkpoint, and oversee the construction of the location, both in terms of port impact and traffic optimization.

Next come the installation and calibration of the scanning technology, as well as the hiring and training of security operators. The authority must also establish a workflow for what happens when a container is flagged – what requires a manual inspection? Who approves such an operation? What remediation must take place after the fact?

The fact of the matter is, cargo scanning isn’t just about putting containers through an X-ray machine. It’s much, much more than that, and consumes enough time that establishing and running a checkpoint can adversely affect port business.

But there is an easier way to run cargo screening operations. Port authorities are experts in maritime commerce, so why shouldn’t they turn to experts in security screening to run cargo scanning operations?

Cargo Scanning-as-a-Service
Rather than trying to become cargo screening experts overnight, port authorities can take advantage of a major trend in the overall security world: security-screening-as-a-service. Essentially, port operators form a partnership with an experienced security screening solutions provider, tasking the provider, not the port, with the onus of establishing and running a cargo scanning checkpoint.

Other than the obvious benefit of freeing the port authority from the security logistics headache, why turn to cargo screening as a service? For one, 100 percent screening in the United States has not gone away…at least not yet. But even if the requirements on cargo entering the USA are loosened, port screening for contraband is not going to decrease – in this economic climate, governments want to ensure that everything that can be taxed is taxed. This is a nightmare scenario for port authorities to deal with, but one with which screening solutions provider are comfortable. With their experience in the field, these providers can find the right equipment and checkpoint set-up to be as thorough and detailed as needed when it comes to cargo scanning, ensuring that not only are potential threats detected, but any contraband can be swiftly dealt with by the appropriate authorities.

Going with an experienced screening partner can also add radiation detection capabilities, a growing problem in the world of maritime commerce. Radioactive materials, either improperly labeled or being shipped as contraband, can shut ports down for days and are impossible to detect via conventional cargo screening technologies. By utilizing screening-as-a-service, however, port authorities can place this additional burden on the solutions provider, which has the experience and the right capabilities to detect radiation alongside conventional contraband and threats.

Training of security operators is another headache that cargo scanning as a service eliminates for the port. The difference between a major international incident and millions of dollars in fines can hinge entirely on the competency of a security screening operator. Do port authorities really want to be responsible for the skills of these professionals, especially when it’s in a field far outside of their comfort zones?

With cargo scanning as a service, training falls into the lap of the solutions provider, a task with which they are well familiar. Because they have built, installed and maintained the security technologies selected, these organizations best understand how to train professionals on the ins-and-outs of analyzing scanned images and detecting potential threats and contraband.

The service also gives ports a major competitive advantage, as a well-designed, specially-staff cargo scanning checkpoint makes the entire security process far easier for customers to deal with. Throughput is often increased, meaning that cargo makes it to its end destination more quickly and with fewer roadblocks, a paramount concern for shippers everywhere. Even a few hours delay can be costly, especially when perishable goods like imported produce are involved.

The Real World
Perhaps most importantly, cargo-scanning-as-a-service is not a pipe dream or some theoretical solution for ports. It’s already in practice and being used by some of the largest customs and port operations in the world.

The Ports Authority of Puerto Rico, for example, utilizes cargo-screening-as-a-service from a customs perspective, ensuring that no contraband is entering the island through its major ports. By enlisting an outside, specialized security solutions provider, the Port has increased throughput without sacrificing the integrity of its customs or security operations.

The Mexican Customs Authority has also turned to a wide-ranging cargo-screening-as-a-service solution for their operations, both land-locked and maritime. The major project has just recently been undertaken, but ultimately the vast majority of Mexican ports will soon be turning to screening-as-a-service when it comes to cargo, freeing the ports to focus on the business, not contraband detection.

Detecting threats and contraband via maritime cargo is not going to get any easier. If anything, smugglers, criminals and terrorist organizations are becoming more and more clever when it comes to getting illicit goods, weapons and hazardous materials across national borders. Port authorities trying to stay one step ahead of these issues are in for a struggle, as other aspects of the port business suffer.

Keep the port operator’s attention where it belongs (on the port) and let specialized experts handle the cargo scanning burden. It’s proven, it works, and it’s the best way forward to maritime prosperity and safety. Source: The Maritime Executive

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by Mike Poverello

Cargo Crime – Security and Theft Prevention

A must read for Supply Chain practitioners. Cargo crime—including theft, fraud, and the passage of contraband through commercial shipping lanes—poses an enormous threat to security and the economy.

By understanding the current methods and operations of those who attack the supply chain, industry professionals can design effective security plans and law enforcement can properly investigate these crimes.

Cargo Crime: Security and Theft Prevention is drawn from the author’s (John J. Coughlin) personal experiences as a law enforcement detective and supervisor and as a regional security manager for a large multi-modal transportation and logistics company.

The book reviews emerging trends, identifies criminal tactics, discusses law enforcement response to cargo theft, and presents best practices to help businesses avoid victimization by cargo thieves. Topics include:

  • The various modes of freight transportation and the differences in cargo crime activity in each mode.
  • Methods of operation used by organized crime syndicates and narcotic smugglers.
  • The effective use of public and private information-sharing partnerships to thwart criminal activities.
  • Known profiles consistent in over 90 percent of contraband shipments.

The book features the following key aspects:

  • Identifies current methods of operation being used by organized and opportunistic criminals who target the supply chain.
  • Discusses current law enforcement efforts and response to cargo theft.
  • Examines the various modes of freight transportation and the differences in cargo crime activity in each mode.
  • Outlines best practices for industry practitioners to prevent being victimized by cargo thieves.
  • Addresses industry and law enforcement public/private partnerships for sharing information, educating law enforcement, and circumventing the cargo theft issue.

Cargo crime is a critical concern of freight transportation operators, manufacturers, shippers, insurers, law enforcement, and consumers. This book arms professionals charged with protecting the supply chain with essential information that can help them investigate and uncover criminal activity and develop a first class cargo security program. Available for purchase from http://www.crcpress.com.

by Mike Poverello

Private sector finally welcome in Africa?

The acceptance of private sector participation in ports in Africa is gaining traction, and not before time. At least that’s what a meeting of port minds in Nigeria would have us believe. The Port Management Association of West and Central Africa at its 35th Council Meeting and 11th Round Table Conference held recently in Lagos, Nigeria, came out firmly in favour of increased private sector participation in ports as a means of achieving cost efficiency improvements.

The Council meeting, held under the theme ‘Impact of Port Concession on the Socio-Economic Development of Our Countries’ ended with the resolution that, “member countries should put in place robust legal frameworks that will sustain the growth of Public Private Partnerships in port management systems”. Words that are encouraging to hear and that generally reflect a much changed position from a decade ago when there was still a strong belief in the public versus private system of port operation.

Successful privatisation programmes such as the major one that has been implemented in Nigeria have, however, brought some insight into what the private sector can do better than the public sector and hence a changed perception, although the learning curve is by no means over in this respect. What would also help facilitate this however is improved process to the goal – what can perhaps be termed Step 2. In particular, concession processes that are not weighed exclusively by cash received considerations but place greater emphasis on technical considerations in the broadest sense of the word.

A better balance between the two elements can lead to the selection of a more appropriate long term strategic partner and potentially to all-round greater economic benefit. The trouble is of course that such systems are not high on the agenda of African nations where cash considerations are usually to the fore especially in today’s troubled economic times. A system of this ilk is more likely to be found deployed in a mature economy than an emerging one. It remains a laudable goal, however, as a longer term objective and as part of efforts by the IMF, World Bank and aid agencies to develop Africa’s infrastructure, particularly in Sub-Saharan Africa. Source: Port Strategy

by Mike Poverello

Grindrod – coastwise feeder expansion to extend services between Durban and Angola

South African logistics and shipping firm Grindrod has continued its expansion programme, with the purchase of Safmarine’s 51% stake in Ocean Africa Container Lines. Grinrdod gave no details of the price paid for Safmarine’s stake in Ocean Africa Container Lines (OACL), but Grindrod now fully owns the company, which operates a feeder service with four vessels between Durban and Angola, calling at several ports in between, including in Namibia and Angola.

OACL’s former COO, Mahmood Simjee, has now been appointed CEO. Grindrod hopes that OACL can continue to benefit from close ties with Safmarine and the latter’s parent company, Maersk. OACL could take advantage of Ngqura’s growing role as a transhipment port, particularly with Angolan ports. The shipping line previously operated between Durban and Mozambican ports and could again resume this role.

Röhlig-Grindrod, a joint venture between Grindrod Limited and Röhlig International, has also acquired Sturrock Group’s clearing and freight forwarding division in exchange for a 15% stake in Röhlig-Grindrod, leaving the founding partners with 42.5% equity each in the venture. The inclusion of black empowerment partners in Sturrock Group helps Röhlig-Grindrod to fulfil its empowerment requirements.

Hylton Gray, the CEO of Grindrod Logistics, said: “We are very pleased with the merger of the businesses and the introduction of the empowerment partners. Calulo, a partner in the Sturrock Group, already has a stake in Grindrod’s South African operations and has contributed significantly by way of existing relationships and experience in niche markets.” Source: worldcargonews.com

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by Mike Poverello

Port of Maputo – charting a course to successful development

To understand where to the Port of Maputo is heading in the future, one has to know its past. In 1972, the Port of Maputo was a busy hub, handling near 17 million tonnes per year. Durban’s port, a little further south, was handling only 3 million tonnes more rhan that and Richard’s Bay Port didn’t even exist.

Then the long civil war came. In 1988, the Port of Maputo barely reached 1 million tonnes; infrastructure deteriorated, shipping companies moved their business elsewhere and ports like Richard’s Bay were born and prospered. It was only in 2003, when the Port of Maputo was transformed into a Private Public Partnership and concessioned to Maputo Port Development Company (MPDC), that things started changing. In only nine years, the Mozambique’s capital port grew from 4.5 million tonnes to 14 million tonnes (this expected year’s throughput).

This growth is the result of a massive investment – $291 million by the port’s concessionaires – in the rehabilitation of roads, rail, quays, general infrastructure and acquisition of equipment. However, the most beneficial change was the channel dredging to -11 meters, with a sailing draft above 11 meters. This allowed the port to receive bigger ships and, after the dredging, the Port of Maputo had an impressive growth of 35 percent.

Port of Maputo Masterplan

The dredging of the access channel to the port was the first of the many actions included in the Port of Maputo’s Masterplan; an ambitious and dynamic tool, which charts the port’s successful development. According to the updated Masterplan, the Port of Maputo foresees that, by 2020, it will be handling almost 50 million tonnes, with an investment of US $1.7 billion in the coal, container and bulk terminals. The port will also receive channel dredging to -14 meters, berths rehabilitation and also rail, road and warehousing improvements. The coal terminal, for example, is planned to grow from the current 6 million tonnes capacity to 30 million tonnes (20 million of coal and 10 million of Magnetite), and the container terminal will increase from the present 150,000 containers to 400,000 containers (phase one).

Much of the grand design to secure a vibrant future is presently visible only as images, which reflect the foresight of those who have launched this mammoth 20 year project. But to turn all this into reality, the Port is now working in what the eye can’t see.

Building foundations, facing challenges

In order to make a sustainable investment, the Port of Maputo has been taking time to build its foundations. 2011 and 2012 have seen an unprecedented alignment between all stakeholders, including the Mozambican Ports and Rails Company, Caminhos-de-Ferro de Moçambique (CFM), the National Customs Authority and the National Institute of Hydrography and Navigation (INAHINA). These stakeholders, amongst many other tasks, control all navigational aids in the access channel to the Port of Maputo, and all play a fundamental role in the achievement of the Masterplan’s
strategic objectives.

The Port of Maputo has a geostrategic location, relative to key markets – the main mining regions of South Africa, Swaziland and part of Zimbabwe. This gives the port a strategic, competitive advantage in comparison to neighboring ports, who are struggling with congestion. Most of the mineral cargos are transported to the port by road, even though they are more rail oriented. This poses numerous issues, such as road congestion, road maintenance and environmental problems. Today, there are about 1,200 trucks moving in and out the port every day. Very soon, with raising demand, this number will double, if cargo is not moved by rail. Read the full PDF article here! Source: Porttechnology.org.

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by Mike Poverello

Role of the Chief Supply Chain Officer – an interesting podcast

Globalization of the Supply Chain: Here’s one for the warehousing, logistics, and distribution folks. Aberdeen Group’s survey of 191 companies explores how new investments in internal and external collaborations across the global supply chain are now the highest priority for the Chief Supply Chain Officer (CSCO’s). This podcast looks closely at these initiatives as well as:

  • Specific trends and highlights of the research.
  • Strategies and best practices utilized by CSCO’s.
  • Increased globalization/complexity balanced by the need to drive down supply chain costs.

 Click the HERE, to visit Aberdeen Group’s website and download the podcast now.

by Mike Poverello

Namibian Ministry of Finance angers clearing agents

Below is a situation which might have been avoided if trader registration/licensing was properly addressed by the Namibian Authorities. With the likes of SADC and COMESA encouraging the implementation of regional transit guarantees, trade operators need to clearly address their obligations and liabilities. Moreover, any suggestion of authorised economic operator (AEO) programme in the Southern African region needs to fully align its requirements with the standards being applied by other countries across the globe. It is therefore clear that no preferred trader scheme can be implemented across the Trans-Kalahari Corridor or across SACU if such disparities of knowledge and practice exist. While one might have compassion for possible job redundancies and the pleas expressed by certain clearing agents, they evidently do not understand the game they are playing in and will drastically need to redress their understanding of the role they play in the supply chain. International clearing and forwarding is not a game for sissies, or people who want to try their hand at a quick buck. A bold stance by the Ministry of Finance.

The Namibian Ministry of Finance’s decision to ban clearing agents from using guarantees and bonds from third parties as security to move goods has caused an uproar among clearing agents. The Deputy Minister of Finance, Calle Schlettwein, explained that the decision that became effective on July 26 was taken to protect the taxpayer. Clearing agents aren’t closed down, and neither are they stopped from using their own security to move these goods, he said. As from July 26, the agents are simply not allowed to use a bond or guarantee issued to another clearing agent as security for their goods in transit, the ministry said.

Before the clampdown, clearing agent A used to ‘borrow’ guarantees or bonds, backed by financial or other institutions from clearing agent B to clear any goods coming through Namport and destined for landlocked countries such as Botswana, Zambia and Zimbabwe. However, should a problem develop with agent A’s consignment, the guarantee or bond would be worthless to Government, as the financial institution agreed to back only agent B’s guarantee or bond. “We don’t know how or when the practice started, but it is illegal,” a ministry spokesperson said.,

Schlettwein said Government stood to lose out on duties and customs through the practice, and the taxpayers would have ended up having to pick up the tab. The ministry’s announcement was met with considerable protest from the smaller clearing agencies, claiming that they didn’t have the money or financial backing to secure the necessary bonds or guarantees. Nampa reported that 76 small and medium enterprises (SMEs) operating as clearing agencies at the coast have been affected. At the Oshikango border post and at Helao Nafidi in the North, 30 agencies with more than 100 employees are affected.

Regina Amupolo of Pride Clearing and Forwarding Agent has called on the ministry to urgently look into this matter, because many trucks with goods and containers are stuck at the Oshikango border post, Walvis Bay harbour or at other border posts. Their customers have already complained that they are losing business because of this, Amupolo said. Amupolo said most SMEs don’t have the money to obtain bonds or guarantees. She said ministry officials said anyone who wants a bond must have collateral of N$1,6 million. “We are small business people, trying to employ ourselves and some of our fellow men and women in our societies, but now the Government, the Ministry of Finance, is making things difficult for us. How are we going to make a living if the ministry is cutting off our jobs in this way?” she asked.

In a letter written to all clearing agents at Oshikango, the controller customs and excise officer, Festus Shidute, said the practice of using third-party bonds or guarantees posed a serious challenge to customs administration and control of guarantees in the event of liabilities by third parties. Amupolo and Rejoice Nangolo from Flora Clearing Agent said they have already paid N$20 000 to obtain a clearing licence, while they have to pay Namport another N$20 000. She said they are losing thousands of dollars as a result of this unexpected prohibition by the ministry and are demanding an extension to allow them to take the matter up with the ministry.

Nangolo said her business has branches at other border posts like Omahenene, Katwitwi, Ngoma, Wenela, Trans-Kalahari, Ariamsvlei, Noordoewer, Walvis Bay, Hosea Kutako International Airport and Oshikango. Her Angolan customers have threatened to stop moving their goods through Namibia and only to use their own ports, she said. At Oshikango there are only two big companies, Piramund and CRN, that can guarantee bonds and assist them as SMEs clearing their work effectively. According to Amupolo and Nangolo, they started with their clearing business in Oshikango in 2000 and were doing well until the ministry imposed the ban.

Speaking to Nampa, Lunomukumo Taanyanda of Oluvanda Clearing and Forwarding Close Corporation (OCFCC) said his company has been operational for two years and deals mostly with car consignments from countries such as the United Kingdom (UK) and Dubai.Before clearing the consignments, OCFCC has to declare the consignment at the Namport customs desk. However, before they can fill in a customs declaration form to clear the transit goods, the goods need to be secured and this is where the company (OCFCC) requires the assistance of third parties such as Wesbank Transport, Transworld Cargo and Woker Freight Services.

These smaller companies acquire assistance from bigger companies (the third parties) as they experience problems when trying to obtain their own bonds and guarantees. According to Taanyanda, it is a very costly and time-consuming process. “We agents do not have enough collateral for bonds, which start at N$350 000, and now the ministry has stopped us from borrowing bonds from third parties,” he said. Source: The Namibian

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http://www.namibian.com.na/news/marketplace/full-story/archive/2012/august/article/clearing-agents-want-answers-today/

by Mike Poverello

The African transhipment race

Have you noticed the debate in the on-line Global Ports Forum about who will become the main container terminals in East and West Africa? Portstrategy.com has taken it upon themselves to score some of the suggestions.

Nigeria is strongly identified as a hub for the west coast of Africa – we score that 7 out of 10. It has the potential but will new port development be delivered in time? Will the off-take infrastructure development be implemented in concert with port development at places like Lekki? Will Lekki’s hub function be undermined by other deepwater facilities being delivered first on the African coast?

Generally, they agree with the view expressed by one wise head in the Forum that the race for hub status on the West African coast is now a fierce one. However, we don’t agree with the contention that Angola will have a serious say in becoming a major hub for West Africa. It will struggle for some time yet to meet its own port capacity needs let alone fulfil a regional function. We score this suggestion 2 out of 10; go to the bottom of the class!

South Africa as a hub for East and West Africa? Well to a limited extent it does already fulfil this role but when South Africa booms its priority has to be gateway cargo and it is limited in terms of its economic and geographical reach. It is also not ideal because of position; we won’t score the suggestion down but conversely we also won’t score it up because it is a fair point. We do, however, see as a negative the continuing emphasis on the public operation of this country’s ports – it spells very high cost comparatively speaking and coupled with this, ironically, not the best service.

Doraleh Container Terminal, Djibouti? Yes we would agree that this has a role to play in container transhipment for East Africa and particularly with its phase two expansion now underway. The price is right for transhipment here but the cost of cargo movement to the main transit destination of Ethiopia is coming in for increasing criticism. It also has a limited reach along the East Coast. Another score of 7.

Mombasa? Yes huge potential for the East Coast of Africa but as history shows no political will to deliver new port capacity in line with demand. Nine in theory but five in practice.

The new port of Lamu? Designed to act as an export gateway for South Sudan, construction has begun on the $23bn (£14.5bn) port project and oil refinery in south-east Kenya’s coastal Lamu region near war-torn Somalia’s border. With a planned multi-purpose port function, because it is a ‘clean slate’ it could take on the hub function. Another 7.

So what is Port Strategy’s view?

In West Africa, we note that new purpose-built, deep draft container port capacity has either recently been installed or is about to be installed in West Africa in six or seven locations. In Lome in Togo and Pointe Noire in the Congo, for example, new facilities are set to come on-stream by end 2014 at the latest which will be able to handle vessels of up to 7,000 teu. We therefore suggest that there will be a split of hubbing activity between all these locations but with the first two or three terminals on-line grabbing the main part of transhipment activity. We also see a continuing role in the short-term at least for hubs such as Algeciras that ‘face’ Africa.

In East Africa we cannot escape the logic of Mombasa and Dar es Salaam but will they pick up the pace quick enough to seize the opportunity? Sadly, not so far. Lamu, therefore, may have a big role to play. Source: Portstrategy.com

by Mike Poverello

Revisiting the national transit procedure – Part 2

You will recall a recent challenge by trade to SARS’ proposed implementation of mandatory clearance of national transit goods inland from port of initial discharge – refer to Revisiting the national transit procedure – Part 1.

First, some background

Now lets take a step back to look at the situation since the inception of containerisation in South Africa – some 30 years ago. Customs stance has always been that containerised goods manifested for onward delivery to a designated inland container terminal by rail would not require clearance upon discharge at initial port of entry. Containers were allowed to move ‘against the manifest’ (a ‘Through Bill’) to its named place of destination. This arrangement was designed to expedite the movement of containers from the port of discharge onto block trains operated by Transnet Freight Rail, formerly the South African Railways and Harbours (SAR&H) to the inland container terminal at City Deep. Since SAR&H operated both the national railway and the coastal and inland ports, the possibility of diversion was considered of little import to warrant any form of security over the movement of containers by rail. Moreover, container terminals were designed to allow the staging of trains with custom gantry cranes to load inland manifested containers within a ‘secure’ port precinct.

Over the years, rail freight lost market share to the emergence of cross-country road hauliers due to inefficiencies. The opening up of more inland terminals and supporting container unpack facilities, required Customs to review the matter. It was decided that road-hauled containers moved ‘in bond’ by road would lodge a customs clearance (backed with suitable surety) for purposes of national transit. Upon arrival of the bonded freight at destination, a formal home use declaration would be lodged with Customs. Notwithstanding the surety lodged to safeguard revenue, this has the effect of deferring payment of duties and taxes.

Diversification of container brokering, stuffing and multi-modal transport added to the complexity, with many customs administrations failing to maintain both control and understanding of the changing business model. Equally mystifying was the emergence of a new breed of ‘players’ in the shipping game. Initially there were so-called ‘approved container operators’ these being ocean carriers who at the same time leased containers. Then there were so-called non-approved container operators who brokered containers on behalf of the ocean carrier. These are more commonly known as non-vessel operating common carriers or NVOCCs. In the early days of containerisation there were basically two types of container stuffing – full container load (FCL) and less container load (LCL). The NVOCCs began ‘chartering’ space of their containers to other NVOCCs and shippers – this also helped in knocking down freight costs. This practice became known as ‘groupage’ and because such containers were filled to capacity the term FCL Groupage became a phenomenon. It is not uncommon nowadays for a single FCL Groupage container to have multiple co-loaders.

All of the above radically maximised the efficiency and distribution of cost of the cellular container, but at the same time complicated Customs ‘control’ in that it was not able to readily assess the ‘content’ and ownership of the goods conveyed in a multi-level groupage box. It also became a phenomenon for ‘customs brokers/clearing agents’ to enter this niche of the market. Customs traditionally licensed brokers for the tendering of goods declarations only. Nowadays, most brokers are also NVOCCs.  The law on the other hand provided for the hand-off of liability for container movements between the ocean carrier, container terminal operator and container depot operator. Nowhere was an NVOCC/Freight Forwarder held liable in any of this. A further phenomenon known as ‘carrier’ or ‘merchant’ haulage likewise added to the complexity and cause for concern over the uncontrolled inland movements of bonded cargoes. No doubt a disconnect in terms of Customs’ liability and the terms and conditions of international conveyance for the goods also helped create much of the confusion. Lets not even go down the INCOTERM route.

Internationally, customs administrations – under the global voice of the WCO – have conceded that the worlds administrations need to keep pace and work ‘smarter’ to address new innovations and dynamics in the international supply chain. One would need to look no further than the text of the Revised Kyoto Convention (RKC) to observe the governing body’s view on harmonisation and simplification. However, lets now consider SARS’ response in this matter.

SARS response to the Chamber of Business

Right of reply was subsequently afforded by FTW Online to SARS.

Concerns over Customs’ determination to have all goods cleared at the coast – expressed by Pat Corbin, past president of the Johannesburg Chamber of Commerce and Industry in last week’s FTW – have been addressed by SA Revenue Service.  “One of the main objectives of the Control Bill is the control of the movement of goods across South Africa’s borders to protect our citizens against health and safety risks and to protect the fiscus. “In order to effectively determine risk, SARS has to know the tariff classification, the value and the origin of imported goods. This information is not reflected on a manifest, which is why there is a requirement that all goods must be cleared at the first port of entry into the Republic.“It appears that Mr Corbin is under the impression that the requirement of clearance at the first port of entry has the effect that all goods have to be consigned to that first port of entry or as he puts it “to terminate vessel manifests at the coastal ports in all cases”. This is incorrect. “The statutory requirement to clear goods at the first port of entry and the contract of carriage have nothing to do with one another. Goods may still be consigned to, for example, City Deep or Zambia (being a landlocked country), but they will not be released to move in transit to City Deep or Zambia unless a declaration to clear the goods, containing the relevant information, is submitted and release is granted by Customs for the goods to move. The release of the goods to move will be based on the risk the consignment poses to the country.“It is definitely not the intention to clog up the ports but rather to facilitate the seamless movement of legitimate trade. If the required information is provided and the goods do not pose any risk, they will be released.”

So, where to from here?

The issue at hand concerns the issue of the ‘means’ of customs treatment of goods under national transit. In Part 3 we’ll consider a rational outcome. Complex logistics have and always will challenge ‘customs control’ and procedures. Despite the best of intentions for law not to ‘clog up the port’, one needs to consider precisely what controls the movement of physical cargo – a goods declaration or a cargo report? How influential are the guidelines, standards and recommendations of the WCO, or are they mere studies in intellectual theories?

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by Mike Poverello

TPT to operationalise new Post Panamax cranes at Ngqura

Transnet Port Terminals has successfully completed testing of two Liebherr Super Post Panamax cranes at Ngqura Container Terminal, just north of Port Elizabeth. The Ship-to-Shore cranes (STS), which were delivered in January bringing the terminal’s fleet of STS cranes to eight, represent an investment of R150 million by the port operator.

The cranes will improve productivity by increasing Ship Working Hour (SWH) – the number of containers moved by the number of cranes working a vessel in one hour. A total of 78 additional operators have been trained and are ready to operate the equipment. Transnet’s newly formulated Market Demand Strategy will see Transnet SOC Limited invest R300 billion on freight infrastructure over the next seven years. Of this, TPT will invest R33 billion to boost port operations.

The portion allocated for the 600,000 m2 Ngqura Container Terminal includes just under R1.1 billion for its Phase 2 A expansion, which will increase container handling capacity from the current 800,000 TEU to 1.5 million TEU by 2013/14. A further R 808 million will be spent between 2015 and 2019 on the terminal’s Phase 2 B expansion to increase the terminal’s capacity to two million TEU. Source: Porttechnology.org

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by Mike Poverello

Revisiting the national transit procedure – Part 1

FTW Online last week ran an interesting article in response to a proposed change in Customs’ policy concerning the national transit movement of containers from coastal ports to inland container terminals and depots. In February 2011, I ran an article Customs Bill – Poser for Cargo Carriers, Handlers and Reporters alluding to some of the challenges posed by this approach. The following article goes a step further, providing a trade reaction which prompts a valid question concerning the practicality and viability of the proposed change given logistical concerns. I believe that there is sufficient merit in the issues being raised which must prompt closer collaboration between the South African Revenue Service and trade entities. For now it is sufficient to present the context of the argument – for which purpose the full text of the FTW article is presented below. In Part 2, I will follow-up with SARS’ response (published in this week’s edition of the FTW) and elaborate on both view points; as well as consider the matter  on ‘raw’ analysis of the ‘cargo’ and ‘goods declaration’ elements which influence this matter. Furthermore, one needs to consider in more detail what the Revised Kyoto Convention has to say on the matter, as well as how other global agencies are dealing and treating the matter of ‘security versus facilitation’.

Customs’ determination to have all goods cleared at the coast does not bode well for the South African trade environment, Pat Corbin, past president of the Johannesburg Chamber of Commerce and Industry (JCCI), said. Speaking at the Transport forum in Johannesburg Corbin said the Customs Bills have been on the cards for several years now and while consensus had been reached on most issues in the Nedlac process, the determination of Customs to not allow for any clearing to take place at inland ports will only add more pressure to the already overburdened ports in the country. “Customs maintains that despite the changes they propose it will be business as usual. We disagree. We have severe reservations about their intention to terminate vessel manifests at the coastal ports in all cases and have called for further research to be undertaken in this regard,” said Corbin. “By terminating the manifest at the coast it has severe ramifications for moving goods from road to rail. International experience has shown when you have an inland port and you have an adequate rail service where the vessel manifest only terminates at the inland port, up to 80% of the boxes for inland regions are put on rail while only 12% land on rail if the manifest terminates at the coastal port.” Corbin said the congestion at both the port and on the road would continue and have an adverse impact on quick trade flows. “It also raises issues around the levels of custom security and control at inland ports and then the general implications on the modernisation project.” According to Corbin, government’s continued response has been that no provision exists for inland ports and that goods must be cleared at the first port of entry. “They maintain that it is about controlling goods moving across our borders and thus the requirement that all goods must be cleared at the first port of entry. The security of the supply chain plays an important role to avoid diversion or smuggling of goods,” said Corbin. “Government says that the policy change will not clog up the ports or prohibit the seamless movement of trade. Labour organizations and unions seem to agree with them.” But, Corbin said, the Johannesburg Chamber of Commerce differs and is worried about the ramifications of this dramatic change to the 35-year-old option of clearing goods at an inland port or terminal. “With this policy change all containers will have to be reconsigned after not only Customs clearance on copy documents but also critically, completion of shipping lines’ requirements ie, payment of freight, original bill of lading presentation and receiving delivery instructions prior to their issuing a delivery order.” Corbin said the issue had been addressed directly with Transnet CEO Brian Molefe on two occasions, but that he had said he accepted Customs’ assurance that nothing would change and the boxes would still be able to move seamlessly once cleared. “It is not understood that the manifest will terminate at the coast where all boxes will dwell until they can be reconsigned,” said Corbin. Source: FTW Online – “New Customs Bill ruling will put pressure on port efficiency.”
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by Mike Poverello

Durban awaiting arrival of 11, 660 TEU container ship

Ports.co.za reports that  the largest ever container ship to enter a South African port on 1 July 2012 to work cargo will arrive in the Port of Durban, vindicating the recent widening and deepening of the harbour entrance.

The ship is the MSC SOLA (131,771-gt, built 2008) which is arriving from Port Louis and the Far East. Although she will not be fully laden the arrival of the 364 metre long ship becomes another justification for the recent harbour entrance channel project, which saw it widened by an additional 100m to a minimum width of 222m and deepened to a working draught of -16.5m. Once work on deepening at least one of the container terminal berths on Pier 2 has been completed ships of this size will be able to arrive or sail fully laden.

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by Mike Poverello

Dumb, dumber’er, or just plain downright stubborn?

A US statutory requirement to scan all incoming containers at foreign ports will take effect at the beginning of July, a date thrown into sharp relief as the House of Representatives homeland security committee approved a revamped bill that retains the clause.

The draft bill gave the industry minor cause for cheer for unrelated reasons, as it will postpone the requirement for workers to renew their transportation worker identification cards in the absence of Department of Homeland Security regulations on biometric card readers. But the 100% scanning requirement has proved its resilience yet again.

Since 2006 shippers, spearheaded by associations that include the National Retail Federation, have been campaigning to get the requirement eliminated on grounds that it is impractical and costly and could trigger foreign government retaliation against cargoes originating from the US. US homeland security secretary Janet Napolitano has pointed out the impracticality of the law and proposed a two-year postponement.

These calls went unheeded in the house, as the homeland security committee on Wednesday approved the Securing Maritime Activities through Risk-based Targeting for Port Security Act, known as the Smart Port Security Act. The Smart Port Security Act reauthorises the Security and Accountability for Every Port Act, known as the Safe Port Act, which became law in 2007.

The Safe Port Act implements the 9/11 Commission’s recommendations, including the contentious provision that all US-bound containers will be scanned at origin from July 2012. A fig leaf in the Safe Port Act allows the homeland security secretary to grant waivers to individual ports, under conditions that are somewhat vague. Last year, a Safe port reauthorisation draft in the Senate proposed a broad waiver of the 100% scanning requirement.

With the clock now ticking to July 1, shippers were particularly anxious to get the house bill to remove the 100% scanning clause permanently.

The homeland security committee passed a version that allows DHS to recognise other countries’ trusted shipper programmes and allows the US Coast Guard to recognise other governments’ port security threat assessments, but stops short of jettisoning the 100% scanning clause.

Republican congresswoman Candice Miller, chair of the subcommittee on border and maritime security, hailed the new bill, saying: “Securing our waterways is an essential component of a layered approach to security.

“This bill enhances risk-based security measures overseas before the threat reaches our shores, emphasising a stronger collaborative environment between customs and border protection and the US Coast Guard in sharing port security duties and leveraging the maritime security work of our trusted allies.”

Comment: Huh!, to whom does this refer? Such a statement flies in the face of its own C-TPAT program and bilateral overtures with foreign ports (supposedly based on risk). Perhaps its time for the ‘trusted allies’ to deport CSI teams who have not necessarily endeared themselves to their respective host nations.

Source: Lloydslist.com

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