Category / International Shipping

by Mike Poverello

Multimodal inland hubs to add to Gauteng’s container capacity

Engineering News reports that Gauteng will require additional container terminal capacity by 2016, when City Deep, in Johannesburg, will reach its full capacity. Container movements to the province was projected to grow to over three-million twenty-foot equivalent units (TEUs) a year by 2020, she said in her Budget Vote address at the Gauteng Provincial Legislature. Gauteng’s intermodal capacity currently stood at 650 000 TEUs a year and comprised the Pretcon, Vaalcon, Kascon and City Deep hubs.

Gauteng MEC for Economic Development, Qedani Mahlangu said the next generation of inland hubs would create an integrated multimodal logistics capability connecting air, road, rail and sea. Tambo Springs and Sentrarand, in Ekurhuleni, were identified to be developed into the new improved hubs.

By 2018, Tambo Springs would handle 500 000 TEUs and will focus on economic development and job creation, among others. “Tambo Springs will serve as an incubator to stimulate the establishment and growth of new ventures, create opportunities for small, medium-sized and micro enterprises and create 150 000 new jobs,” Mahlangu said.

She added that the department was working towards reaching an agreement with State-owned Transnet in September so that funding could be committed to start implementation by June 2013, for the first phase, which would comprise the railway arrival and departure terminal, to be completed by March 2014.

As per the Gauteng Employment, Growth and Development Strategy, freight and logistics were key drivers in stimulating sustainable growth in the province and the country. “Logistics efficiency will have positive spin-offs to the country‘s ability to export and import goods. In terms of freight, the intention is to move to rail… thereby reducing congestion on roads, air pollution and the impact on the surface of roads. The overall objective is to optimise Gauteng as the gateway to the emerging African market,” Mahlangu said. Source: Engineeringnews.co.za

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by Mike Poverello

What westerners don’t understand about modern economy

Why is the Chinese economy thriving while that of the West is in crisis? The answer is of great relevance to Africans who have for decades embraced development models created in the boardrooms of Western capitals. Source: AllAfrica.com

Social dumping, unfair competition, undervaluation of the Chinese currency, the Yuan … these is some of the blame that most Western economists and politicians are laying on China. What about if this small beautiful world was off-target?

The growth of China and its strategic position as the first world emerging power have caused unprecedented disarray among the former powerful nations and a consistent visual navigation among Western economists and politicians who were undeniably a few years ago a reference for the success of their economic model which seemed to be irreplaceable. There was a state of complete disarray over 10 years in developed countries struggling to find a compass to better guide their ideas and understand where the position of the East is over the 21st century.

WHAT WOULD HAPPEN IF COMPETITIVENESS TOOK A NEW FACE?

It is disconcerting to see Western economists take childish considerations to explain their lack of competitiveness with China and saying that a huge industrial desert seems to have comfortably established itself in the West and arguing that employees are low wage-earners in China. It is not true. This assertion is wrong because wages are twice lower in Africa and South America than in China, although these two regions of the world do not attract the same amount of investments. The real reasons lie elsewhere.

1. There is a strong state in China exercising influence in almost all the economic process with clear and visible objectives to help millions of Chinese out of poverty.

2. In the make-up of product cost, labour accounts for about 2 to 4 percent or 10 percent at most. It is absurd that in the West, people use the issue of alleged high wages as an excuse to justify non-competitiveness of businesses. If an Italian producer put an item in the market for 100 Euros, whereas his/her Chinese rival is able to sell the same item for 25 Euros, the 200 percent difference cannot be justified as 10 percent of labour cost.

Even if wage cost was granted for free to Europeans producers, there will always be a 190 percent gap to be filled. Focusing on the value, the West will possibly find an initial solution to its current economic crisis which is, unfortunately, at its beginning; a solution to the costs of industrial architecture in the country, purchase of raw materials, the quality of vocational training and logistics to capture the customers who are at the other side of the world. We will review this issue below.

3. State purchased raw materials: Each manufacturer in the West has to find inputs on his own throughout the world, but China is using other methods through state giants to combine all purchases and, therefore enabling the country to be more successful and enjoy the best purchase conditions than a private Western individual waging a humanitarian war.

4 State semi-finished products: A car manufacturing company, for example, in the West has to get supplies from sub-contractors, but in China the government provides necessary stuff and bike manufacturers, for instance, will buy state-provided parts.

It is the same case for air-conditioner manufacturers and other key economic sectors; where an Italian manufacturer has to ensure alone the whole production, his Chinese counterpart, with whom he will be competing in the market, will only deal with a part of the production process, very often, when it comes to assembling and selling items. The parts that Chinese assemble in their factories are donated by their government in need of more revenues by creating more jobs with a view of revitalizing the national economy.

5. Energy is not sold in the opinion of the Chinese. In terms of stock exchange capitalisation, according to the news article published in the magazine Fortune Global for 2010, among the seven largest companies in the world, six of them are dealing with energy: American, British and Dutch companies and the three others are Chinese.

But the most interesting thing is the gap between Western and Chinese companies regarding the profits made by the former; they are higher than for the latter. For example, oil company Shell with 97,000 employees makes $20.116 billion in profits; Exxon Mobile with 103,000 employees generated a net profit of $30.40 billion. The Chinese company Sinopec seems to lag behind; with its 640,000 employees it made only $7.63 billion while its counterpart China National Petroleum, employing 1.5 million people, made just a profit of $14.37 billion.

According to conventional assessments in the West, Shell and Exxon are to be praised for their good job. However, in the pragmatic view of the Chinese, high profits are an indicator of impediment to nation to remain competitive. Chinese authorities consider that business competitiveness begins with energy cost. Companies operating in the energy sector should make profits to conduct their own market research and to explore potential customers, whereas in the West, generating huge profits will delight shareholders, because their names will be on the list of richest individuals in the world.

This different view on the economy was even more acute in 2008 during the crisis marked by a rapid rise in crude oil prices in the markets enabling all Western oil companies to make historically high profits. Exxon Mobile, for example, says there has been an 11 percent increase in its profits last year, $45 billion compared with 2007’s figures in France.

During the same year, the French company Total said that its profits were $22 billion (17 billion Euros), but its Chinese rival, Petrochina, a leader in terms of quantity of petroleum products, lost money because, I think, a very smart political decision made by Beijing government on freezing fuel prices led to a drastic drop of 22 percent in the net income in order to allow Chinese companies to remain always the most competitive in the world.

It is obvious that many petroleum products, such as plastic toys, car accessories, and packaging materials are made in China. Labour costs are not cheaper in the country, but the government expects real benefits at the end of the production line in terms of job creation, accumulating foreign currencies and trade surplus. China is not speculating foolishly in everything that moves, because it can cause a hard blow to the economy following the current situation of the West. China has set a clear objective to distribute generated wealth, to contribute to help millions of people out of poverty, and not to praise the glory of people whose names are on the annual list of the world billionaires in Forbes news.

In terms of petroleum products in Europe, it seems that those in power want to have their cake and eat it at the same time. We want business competitiveness, but at the same time put a 77 percent tax on energy products, accounting for nearly 40 percent in the make-up of the cost of finished products to be transported to the shop and delivered; even the travelling cost incurred by the buyer can also be taken into consideration.

The rise in oil prices is similar to this, but it is even worse in the electricity sector in China, which is almost free of charge. In 2010, power company State Grid Beijing Corporation, the top in the world, with its 1,564,000 employees and hundreds of millions of subscribers, made only $4.56 billion in profits, that is to say less than $5 billion generated by EDF, the French Power company, in 2009 (before it plummeted to 74 percent in 2010 due to setbacks suffered in foreign markets). This company has 158,000 employees, 10 times less people working for its Chinese rival and the number of its subscribers as well is 20 times fewer. The truth is that EDF, a state-owned company’s subscribers are like pigeons that need to be plucked with increases at the beginning of each year by using various pretexts, such as approval is to be obtained for a change in the oil price when it rises.

LOGISTICS AS A GEOSTRATEGIC TOOL FOR POWER

China has got sea behemoths that determine very often political prices. It is not dumping, but operators are just charged at cost price. For example, China Ocean Shipping Company (COSCO), owner of 201 container ships equivalent of 900,000 20-feet average size of a container, allowing freight forwarders to charge 20-40 feet containers from China for delivery in any port in Europe at incredibly low prices, in line with the goals the Chinese government wants to achieve in terms of export. It means that COSCO, a state-owned company, is not looking for profits for itself but looking for benefits of the whole Chinese nation. It is a very powerful geostrategic instrument contributing to the achievement of objectives, winning potential markets in order to bring the Chinese coasts closer to the rest of the world. So, the paradoxical thing is that the cost of land transport within Europe is often four times more expensive than a 30-day maritime transport from China to Europe. We know that 75 percent of trades in Europe are done between European countries and it is easy to guess that this represents an opportunity for China in the coming years if nothing is done by European economists to find a long-term solution to the current economic situation.

On 7 June, 2010, Cosco purchased parcels of land for 1.90 billion Yuan sold by Shanghai local authorities, meaning that this area will become in 10 years the first financial centre in the world. The real estate business is still under the Chinese government control. In fact, out of 11 parcels of land offered for sale, nine were purchased at auction by state-owned companies and only two were purchased by Chinese private companies.

The image of Cosco reflects the versatility of Chinese state-owned giant companies controlling almost everything in the industrial sector, ranging from port management ($ 3.4 billion to handle containers in the port of Piraeus in Greece in 2008) to real estate through the construction of ships and manufacture of containers.

This type of business provides the company with great advantages relating to competitiveness of Chinese businesses while their rivals have to go through a wide range of specializations, let’s say, to make as much profit as possible, according to the capitalist development model. For example, the French branch of COSCO, headquartered in Paris, has been operating in all the French port cities, primarily as a shipping company in the field of consignment, ship repair and air freight in order to achieve the same objective as a new product out of a Chinese factory and it should reach every destination without suffering any penalties regarding transportation or logistics.

In June 2011, 52 Airbus A320 were built in a new plant in Tianjin, China. Once again COSCO acted as a major contractor to execute programmes of Tianjin Airbus Company and was responsible for shipping heavy pieces from Europe to Tianjin, especially barge, inland and maritime transportation of containers, including domestic air transport to the unit in Tianjin.

Once again, the choice of a Chinese state-owned company is not made by chance, but it is the result of a geostrategic decision carefully thought out. In fact, COSCO has been chosen to conduct the same operation, but in the opposite direction, from China to Africa, for assembling an aircraft called XIAN MA-60, with which China pledged to replace the bad habits of Africans who buy only old airplanes from the West. This type of airplanes have been proved as real flying coffins over Africa and are paradoxically more expensive than the new ones built in China. The Chinese company, Xia MA-60, has already been providing equipment to Zimbabwe, Burkina, Burundi and South African airlines.

The Chinese People Daily newspaper of May 25, 2011 said that British Caledonian and Laos Airline and Sri Lankan Air-Force are serving about a hundred destinations and several companies in Asia, Africa and South America. Some indiscreet sources in Beijing report that COSCO will shortly transport aircraft pieces from Chinese coasts to Africa, in the port city of Kribi in Cameroon, where a deep water port is being built to dock large boats.

When the European Aeronautic and Defence Space (EADS) was installed in China, the Chinese government required this company to purchase a large number of its aircraft, but the country is planning to build airplanes for Africa to be used on African soil. Chinese economists and strategists are showing that they understand what Western economists are still struggling to understand about modern economy. The West cannot persist to be successful alone while everything goes perfectly. It’s the right time to help them build new partnerships with other countries to help them when tough times come, because you can provide them with means and opportunity to find a way out.

DEMOCRATIC WEAKNESS

If the democracy of universal suffrage was something so wonderful, there’s no doubt that the West would prefer to keep it or even hide it as a military secret with a view of using its advantage over the rest of the world. If democracy of universal suffrage could allow the development of a nation, it is obvious that the West would not commit itself to back ad hoc opposition groups in such countries to help them become redoubtable rivals in terms of industrial and intellectual production. The truth is quite different and much bitterer. The West understands that one reason for its decline is universal suffrage democracy which brought to power the most mediocre personalities, provided that they are supported by rich people who rarely serve public interest.

The mediocrity of politicians was accompanied by economists trapped over the alleged unwavering superiority of ultra-liberalism. We saw famous economists in Spain, Greece, Portugal, France and Italy arguing that Germany should provide financial assistance to European countries in crisis, because they believe that Germany has been generating huge revenues from the sale of large saloon cars in those countries.

This kind of reasoning betrays the state of collapse of the economists who are unable to understand that Germany cannot afford to save itself and the beginning of its economic crisis is a matter of time; all Western countries seem to be unaffected by this situation because they are governed by the same economic models. The worst is that, the same nations are planning to compete with China. How can they achieve if they refuse to do the easiest exercise in order to share profits generated by Germany, and they have to wonder if they can manage to sell their items in Germany, the first marketplace in the European Union?

The truth is that these economists have already surrendered themselves and given up fighting for lack of ideas. They are moving on to the secondary plan saying that the West would become a tourist destination for people coming from developing countries. President Barack Obama revealed on January 18, 2012 at a tourist park in Florida that he wants to make the United States the first tourist destination in the world in order to boost employment. Mr. Obama does not know that tourism has never helped a country to develop.

He is challenging France as the first tourist destination in the world with 77 million visitors in 2010 (against 59 million in the United States, the second), but the country would not have faced the current financial crisis if tourism was a magic wand. Western economists who believe they have found a miraculous plan to end the crisis by predisposing infrastructure to house rich people from China, India and Brazil, will ask themselves why the French Riviera, the prestigious place for tourist attraction in Paca region where the number of poor people is paradoxically the highest than in the rest of the country.

No country will be able to fight poverty if some people refuse to be in the production trade. Even the richest tourist in the world is not going to consume alone food for five people and if he has to import it to meet his needs, he will return to the starting point, regardless of the difficulty he will encounter to become a specialist on rich people. As some Western paedophiles visited Thailand, the Mauritius government fearing the spread of sex tourism in the country decided to promote luxury tourism.

Unfortunately, 30 years later, drugs are being smuggled into the capital Port Louis by luxury yachts and private jet aircraft, which are not controlled by the authorities who do not want to offend the rich. Nevertheless, we wonder if the current crisis in the West can transform institutional racism because only white people could enter the United States without a visa. The keen interest of the American president in tourism will be a progress for the world, primarily Taiwan, a long-standing US ally, will be the first country to benefit from it. The truth is that the North in crisis is no longer attracting many people, even the poor from the South.

INTELLECTUAL COMPETITION

According to an article by Christine Murris published in Valeurs Actuelles, a French magazine, dated 19 January 2012, in France only 14,700 students enrolled at engineering schools out of 16,800 seats available in 2011. The worst thing happened to graduate engineers in 2010: only 42 percent of them have been able to create wealth. The others have been hired by job speculators in the financial sector. Before students’ graduation, several insurance companies and banking institutions are interested in their mathematical skills to make them earn more money without making any efforts.

At the same time, nine universities out of 11 in Tianjin, the third largest city in China, provide engineering education. In the West, political power is held by people who studied law or literature, whereas in Chine political power is in the hands of engineers. So, we can now understand why Chinese and Western young people are keenly interested in a wealth creating profession. However, both parties are competing with each other. It is surprising to see that all measures taken against industrial desertification in the West will not affect the true values of the whole society.

Today, there is a real intellectual competition among nations. A nation will develop if it has the ability to be ahead of the competition by making sure that sufficient numbers of people are trained and are available to work for factories where they can imagine and create things.

The West believed for over two centuries that intelligence was related to the DNA of so-called white Caucasians. The West is unable to take up a huge challenge represented by the East; that is to say engineers’ competition. A computer and a phone get old after three months of use, that’s the challenge. Symbols are not going to change things.

NATIONALLY COMMUNIST AND INTERNATIONALLY CAPITALIST

In the 2011-2012 report of the forum of 1600 European companies operating in China, it is said that China is a communist country on the national level and capitalistic abroad. This severe report says that ‘it must be particularly good for China to practice the most unbridled export-oriented economic liberalism policy while building up fundamentals of state-controlled economic system in the domestic market following the examples of the Soviet.’ This 338-page report signed by the chairman of European Union Chamber of Commerce, Davide Cucino, and his general secretary, Dirk Moens, reflects the frustration of all Western entrepreneurs operating in China in the hope of getting a billion Chinese consumers. They have no choice other than exporting from China to their native countries.

We are all concerned by this and we need to review thoroughly any economic theories of the two previous centuries taking no consideration of a country’s possibility to play two roles simultaneously: A communist system practiced within the country and unbridled capitalism abroad. Without this rewriting, there is no solution to competitiveness of Western businesses. It may even reduce to nothing the labour cost in the West and will not change significantly the path of the race towards the wall when the issue is vitiated by an uncontrolled variable, such as the role played by the state in modern economy.

WHAT LESSONS FOR AFRICA?

Mandatory privatisation urged by the International Monetary Fund and the World Bank are monumental blunders not be made. For example, the privatisation of the state-owned power company, SONEL, in Cameroon taken over by AES, a US private company, was a strategic mistake of great importance because not only electricity cuts continued but also in a country that intends to develop from its industries, the energy price, especially for electricity, should be determined in comprehensive policy measures to ensure that businesses remain competitive and are better prepared to operate and increase their shares in the international market.

The recipe that Western-educated Africans applied providing that tax should be levied on everything that moves is another strategic mistake that leads straight to failure.

The urgency for Africa is to produce wealth and the government should make sure that production is effective on a large-scale and distributing it will be easier if there is something to share. Africa must export its finished products in order to get foreign currencies necessary to the welfare of its people. The strategic energy prices (gas, diesel, electricity) are more important than the low cost of labour. Taxing people trading at the edge of paved roads may give the illusion of alleviating the state financial burden in Africa. This is a wrong revenue economic system in the West that impedes African competitiveness.

The issue Westerners are faced with is the morality of their system. African economists must endeavour to draft their own economic theories that take into consideration the African interests and realities, instead of being in a permanent standby in order to occupy a subordinate position in Western institutions .In my opinion, what is needed is the courage and independence of African economists to distance themselves from the formulas developed by bureaucrats in Washington to find their own way through new African variables. These variables modified in the context of the 21st century would do a great honour to intellectuals who have the ambition to be creators of a new Africa.

So, an international institution acting against the interest of Africa but dedicated to defend the interest of the West will be created. Africans must ask themselves why the European Union failed to prevent China from investing in Africa. Why the US administration, as well, failed to slow Chinese investment in Africa. Regardless of this, everybody wants to work in the future for Western institutions. How is it that Africa will be out of poverty with Chinese investment than the International Monetary Fund (IMF) turning everything upside down by taking a stand?

In early August 2011 in Nouakchott, Mauritania, the African Caucus was held, a meeting of African countries and their creditors, led by the IMF director. What can be remembered from the meeting is the excitement about a thousand billion dollars that China had drawn from its reserves to inject into the African economy (as a comparison, the famous Marshall Plan worth of $100 billion, is 10 times lower than the former).

There was astounding news from Burundian authorities, very happy for signing contracts with China, they feared reprisals from the IMF. On December 21, 2010 in virtue of a decree, the US President Barak Obama excluded the Democratic Republic of Congo from the list of African countries eligible for the AGOA project and no duty-free export to the United States from the country was possible, because of massive Chinese investments in DR Congo, even if the official reasons for this were the decline of democracy in the country.

Paradoxically, while taking advantage of AGOA and exporting finished products to the United States, authorities in Congo really needed someone to invest in their country to set up processing plants. How can we blame them for accepting Chinese funds?

African municipalities must compete in a smart way to create wealth and therefore create jobs for their own people. Ninety percent of the Bibles used by many religious groups in the United States are printed in China. Most of those printers are owned by local governments deriving income from this business to pave new roads and create more jobs. Municipalities are able to create resources that can ensure the emergence of a strong state in a position to resist and stop the selfish and individualist force. Otherwise, it is not excluded that the continent will free itself from the yoke of the West and to see an internal yoke of a few clans who cheerfully install a revenue economy, exactly the same model that is leading the West into a wall.

Jean-Paul Pougala, a Cameroonian, is director of the Institute of Geostrategic Studies in Geneva, Switzerland.

by Mike Poverello

Importers and Exporters may see doubled freight rates by 2015

Get ready for a crazy roller coaster ride…As is already well known, the current situation in the shipping world is that there is a large lack of demand against the current overall supply of container space. Today, the current fleet capacity is around 15.5 million TEUs. Since 2005, the total capacity has roughly doubled – literally.

Because of the imbalance of supply/demand, carriers are losing blood and even declaring a negative balance sheet for end of 2012. This situation pushes them to the dilemma of getting bigger or getting smaller. Getting bigger means buying new, larger ships. These ships allow carriers to improve their cost effectiveness, work with smaller crews and lower their capital costs. On the other hand, some carriers are getting smaller; serving more niche markets where larger vessels will not call since that will reduce the efficiency of the vessel. You can imagine that a 15,000 TEU ship will not make 3 ports in the same country – if that country is not China.

These are the things we see and hear everyday. However a more important game is being played behind the scenes which has a crucial effect on the whole industry. According to Bloomberg; DNB ASA, the world’s largest arranger of shipping loans, expects the shipping industry to have a funding gap of $100 billion by 2015, as European banks are reducing their support to maritime transport. Even if US and Asian banks have an increased interest on maritime loans; EU banks account for 90% of the global ship lending. Considering net shipping loan losses at Nordea Bank AB (NDA), the world’s No. 4 shipping lender, tripled to 135 million euros ($179 million) last year because of “weak market conditions” and “a general decline in vessel values”, everyone will be thinking twice before granting a loan. In addition to that, since there will be less vessel orders with reduced prices, it will be forcing some yards to close in the following 12 to 18 months.

How is this going to affect exporters/importers? That’s our major question of course. Considering several factors; the EU Crisis, US getting out of recession, Arab spring is over; it will take another couple of years to get on track for sure. According to HSBC Global Connections, despite the current climate, the overall trend for international trade is positive with growth acceleration sooner than expected from 2014, than 2015. Over the next 5 years an annualized growth rate of %3.78 is forecasted for international trade. The main countries that will be carrying the growth are China and India, and China is expected to have an annualized growth of 6.60% in imports and 6.61% on exports; while India is expected to have 6.81% growth in imports and 7.60% in their exports from 2012 to 2016.

Now, according to 2010 stats, worldwide container traffic reached 560 million TEUs – an all-time high. China & Hong Kong Ports handle close to 169 milllion TEUs, 18% of this traffic. We need to keep in mind though, this is not only China exports/imports but also transshipped cargo that goes via those ports to other Asian nations.

With that in mind, if we take the growth rate with an average 6% for that region and multiply this with 169 million, we come up with a possible increase of 30 million TEUs annually and 500,000 TEUs weekly basis increase only in the region that handles %18 of global trade.Now, lets go back to the supply side. The major banks will be reducing loans, there will be less ship orders and there will be less ship yards to build new ships. How is this going to affect the years 2014-15 and later?

Can Fidan believes very tough years will come for exporters/importers in the sense of shipping costs and finding available space. Prepare to see more of the complaints from exporters not being able to find space and getting asked to pay very high freight charges like we were seeing in 2010. However, this time the difference will be, there won’t be any idle vessels sitting in Singapore or any new ordered vessels to come in and let everyone breath. Considering today, this sounds improbable… Well? the facts are out there and they show that the roller coaster ride we are on will just get crazier. Source: Can Fidan, MTS Logistics

by Mike Poverello

Zimbabwe: Dependence on SA Imports ‘Risky’

ZIMBABWE’S export trade promotion body, ZimTrade, has warned against over-reliance on South African imports, stressing that Harare could plunge into a serious economic crisis should its southern neighbour experience unexpected production and supply challenges. South African producers of basic commodities, automobile services, chemicals, agricultural inputs and farm produce have taken advantage of a significant weakness in Zimbabwean firms’ capacity to service the domestic market, which has triggered widespread shortages of locally manufactured goods.

South Africa and Zimbabwe have intensified trade relations, but the balance of trade has always been in favour of South Africa, Africa’s largest economy. In March, South Africa’s Deputy Minister of the Trade and Industry, Elizabeth Thabethe, flew into Zimbabwe with a delegation of 45 businesspeople to intensify the hunt for new markets for her country’s companies north of the Limpopo. The business delegation comprised companies in the infrastructure (rail, telecommunication and energy), manufacturing, agriculture and agro-processing, mining and mining capital equipment, as well as information and communication technology.

Zimbabwe labour unions are reportedly facing tremendous pressure from workers to campaign against an overflow of South African products into Zimbabwe to allow for the resuscitation of local industries to create jobs, have said Harare had “turned into a supermarket” for South African products. (Huh? strange since so many of the eligible working Zimbabweans have gainful employment in South Africa. Sounds more like labour union politicking)

If South Africa, for example, is to experience a supply hitch, this will be transmitted directly into Zimbabwe’s production and consumption patterns. The appreciation of the rand in the second quarter of 2011, for instance, resulted in price increases on the domestic market.In other words, heavy dependency on imports will leave an economy susceptible to world economic shocks, according to ZimTrade.

Statistics provided by the Department of Trade and Industry (dti) of South Africa in March, indicated that exports to Zimbabwe increased to R15,5 billion in 2011, from R15,1 billion in 2010, while Zimbabwe’s exports to that country increased to R2,9 billion in 2011, from R1,3 billion in 2010. The statistics indicate that South Africa imported US$1 billion worth of goods and services from the Southern African Development Community trade bloc, with 37 percent of the imports coming from Zimbabwe. The dti said imports from South Africa represented 45 percent of Zimbabwe’s total imports. Therefore, according to ZimTrade, “A growing trade deficit could increase the country’s risk of imported inflation and a direct transmission of shocks into the economy.

South Africa has also been Zimbabwe’s major source market for industrial inputs. The United States, Kuwait, China, Botswana and Zambia were Zimbabwe’s other major trading partners in 2011.However, the dti statistics indicated that Harare had narrowed its trade deficit with Africa’s largest economy in 2011 to R12,6 billion, from R13,7 billion in 2010. This translates to about US$12 million and US$13 million respectively

The dti deputy minister, Thabethe acknowledges that “South Africa and Zimbabwe are not only geographical neighbours. The two countries share historical and cultural linkages. Furthermore, South Africa’s economy is inextricably linked to Zimbabwe’s economy due to its geographical proximity to Zimbabwe whose political and economic welfare has a direct impact on South Africa”. Source: The Herald (Zimbabwe)

by Mike Poverello

African countries top tobacco exports

African countries have taken up a combined 43 percent of tobacco exports with South Africa topping the list, the Tobacco Industry and Marketing Board has said. This is an increase from the same period last year when African countries consumed only 18 percent of the total exports. Latest statistics from TIMB show that current seasonal tobacco exports to the Far East rose by 4 percent from last season’s 26 percent.

The increase in exports has been attributed to improved exports in China. The Middle East, which used to take more than 15 percent of total tobacco exports, made a huge slump to 2 percent in March this year.According to TIMB, this is a result of an 81 percent decrease in exports to the region. United Arab Emirates is the major player in the region with current monthly imports pegged at 133 000kgs.The UAE consumes cutrag tobacco, which has firmed up both in volume and price over the past two years.

Exports to the European Union have decreased from 36 percent to 18 percent. As at April 13, South Africa had imported 2,4 million kg of tobacco worth US$7,5 million from Zimbabwe at an average price of US$3,16 per kg followed by China which bought 2,3million kg at US$US$6,35 per kg and Belgium 1,6million kg at US$1,43 per kg.

Hong Kong was offering the highest price buying 415 800 kg of tobacco at US$6,70 per kg.Countries also offering high prices were Poland US$6,62 per kg, and Azerbaijan which bought 19 800kg at US$6 per kg. Zimbabwe exports tobacco to African countries which include Mozambique, Angola, Kenya, Congo, Malawi, Tanzania and Lesotho.

Tobacco stocks on hand are expected to go up as a result of increased stocks from the current crop.Flue cured tobacco imports remained stagnant at 515 152kg at an average price of US$2,70 per kg.

However, seasonal import permits issued increased to almost 12 million kgs as a result of authorisation granted to import 11 million kgs of tobacco. Tobacco production has been on the increase due to the favourable prices being offered on the market. The land reform programme has also contributed towards the increase in production with more than 80 percent of tobacco producers coming from the A1 and small-scale sectors. Source: The Herald (Zimbabwe).

For related information visit: All you need to know about Tobacco

by Mike Poverello

Royal Malaysian Customs implements Smartag Solution

Smartag Solutions, a homegrown total radio frequency identification (RFID) solutions provider, will handle 1.3 million containers at all Royal Malaysian Customs (JDKM) checkpoints in Malaysia starting June.The company has entered into a two-year agreement with the government to implement and operate the Container Security and Trade Facilitation System using its RFID solutions at the JDKM checkpoints.

This is the first electronic and electrical Entry Point Project, under the 12 National Key Economic Areas to monitor containers and facilitate clearance within domestic ports and selected high volume routes. The enhancement of container security using the RFID track and trace system reduces the risk of terrorism, dangerous chemicals and contraband from reaching borders while increasing the efficiency of container movement through Customs checkpoints.

The system allows users to use the RFID seal to secure their containers when entering, leaving and moving within the country. Smartag Solutions is expected to handle 50 per cent of the total transactions at the Customs approved by JDKM, or 500,000 containers. Source: BTimes.com

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by Mike Poverello

Tolls ‘slush fund’ a threat to US trucking

US TruckingThe American Trucking Association slammed the “irresponsible behaviour of some tolling authorities which, along with complicit state officials, seemingly view toll revenue as a slush fund for investment in all manner of projects, programmes and activities which have nothing to do with maintaining their highways, bridges and tunnels”.

The Chief Financial Officer of National Freight Incorporated (NFI), told last week’s hearing of the US Senate Commerce, Science and Transportation Committee’s Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security that New Jersey-based NFI had paid $14 million in tolls last year. He said that as a result of this his company has been forced to re-route their trucks to less efficient secondary roads, which raises costs and increases congestion and safety concerns.

Further increases planned for tolls on the six interstate bridges and tunnels between New York and New Jersey, operated by the Port Authority of New York and New Jersey (PANYNJ), would by 2015 raise the charges by 163%, to a total of $105 per truck – nearly three times higher than any other toll in the country. By 2015, a trip from Baltimore to New York City will cost a five-axle truck more than $209 in tolls.

He said the authority had refused to reveal where the extra revenue would be spent, but it was clear that billions would be diverted to major PANYNJ projects like raising the Bayonne Bridge to accomodate bigger ships at the port. He added: “The most egregious use of toll revenue is the approximately $11 billion dedicated to the completion of the World Trade Center office buildings. It is unclear why trucking companies and commuters are being forced to foot the bill for a real estate project.”

He told the hearing: “The process and the outcome points to an authority with unchecked power that shows little regard for the impacts of its decisions on the community which it purports to serve.”

The tolls distorted the market by penalising vehicles that use toll roads and rewarding those diverting to local routes. No doubt this article strikes a ‘tender nerve’ for truckers and commuters in South Africa around this time – SANRAL vs Public. Source: www.ifw-net.com

by Mike Poverello

Economic sanctions and international trade

Despite global automation and harmonisation of trade, customs operations and procedures, the following article exemplifies the continued need and importance of knowledgeable trade practitioners and customs specialists. Human intellect and ‘expertise’ will forever play a critical role in the interpretation international trade law and national customs procedure.

Long used by governments to punish rogue countries, regimes, entities and individuals, trade and economic sanctions impact an ever-widening range of goods, technology and services. Recent developments in Iran, Syria and Libya, for example, resulted in far-reaching sanctions by Australia, Canada, the European Union and its 27 Member States, the United Nations, the United States and others. The complexity of sanctions and the speed with which governments implement them to address rapidly changing political situations create serious compliance challenges.

Companies are therefore well advised to implement compliance from management through all levels of sales, logistics and finance. The stakes are extremely high because compliance failures—even unintentional ones—can result in the imposition of substantial fines, debarment from government contracts, damage to public reputation and even imprisonment. Recent penalties illustrate the risks and the high governmental enforcement priority for trade sanctions. These include fines of up to US$536 million imposed by US and UK regulators against financial institutions and major businesses. Individuals may also be subject to prison sentences of up to 10 years in the United States and the United Kingdom.

Anyone involved in cross-border transactions therefore needs to determine if their conduct and that of persons acting on their behalf is regulated by trade sanctions. At a minimum, businesses must understand: which countries, regimes and individuals are targeted by trade sanctions; who is obliged to comply; which transactions are prohibited or restricted; and which authorisations may be available or required for any restricted action.

Businesses should also consider the long reach of US and EU sanctions. US sanctions generally apply to “US persons” wherever they are located in the world and to anyone located in the United States. Similarly, EU sanctions apply to “EU persons” wherever they are located in the world and to anyone located in the European Union. Adding to the breadth of coverage, US rules prohibit “facilitation”, which means neither persons nor companies subject to the rules may support a transaction undertaken by another party, including a foreign affiliate, from which a US person would be prohibited from engaging in directly. EU rules likewise prohibit covered persons from infringing sanctions rules indirectly – so much for economic freedom!

Law firm McDermott Will & Emery recommends that companies should take appropriate steps to minimise the risk of infringing trade sanctions by introducing the following safeguards:

  • Require due diligence in connection with all transactions. This should involve at least the screening of all counterparties against the ever-changing sanctions lists that identify the countries, regimes, entities and persons blacklisted. Trade sanctions can apply to goods, technology licensing and the provision of technical assistance, and to ancillary services such as financing, insurance and transport.
  • Establish internal procedures to ensure prompt legal review in the event a transaction with a sanctioned party is identified.
  • Check that the due diligence checklist for merger or acquisition transactions includes an assessment for compliance with trade sanctions.

Source: McDermott Will & Emery 

by Mike Poverello

New Durban dug-out Port – tenders released

State-owned freight logistics group Transnet has followed up its recent R1.8-billion purchase of the old Durban International Airport site, in KwaZulu-Natal, with the release of a number of separate tenders in support of its proposal to develop, in phases, a new dig-out port on the property.

The first phase, which was currently scheduled for completion in 2019, was expected to require an initial investment of R50-billion, with the balance of the project to be completed by 2037.

The first request for proposals (RFP) relates to the appointment of a transaction adviser for the project. The adviser will provide technical assistance relating to the establishment of a business model for the development of the harbour.

Transnet currently envisages a phased development of a facility comprising 16 container berths, five automotive berths and four liquid bulk berths. Its high-level infrastructure plan indicated that the container terminals would have the collective capacity to handle 9.6-million twenty-foot equivalent units, or TEUs, once all four phases were completed. That, the group argued, would be sufficient to address South Africa’s container capacity requirements to 2040.

The transaction adviser would be expected to complement and supplement the work, resources and expertise that Transnet had dedicated to the project internally. The consultant was expected to cover the legal, financial, environmental, economic and technical aspects of the proposed development. In order to facilitate the opportunity for financial planning and policy engagement, it is necessary to complete the assignment within an 18-month period.

The second RFP invites consultants to conduct conceptual and prefeasibility studies for the development . Transnet will employ a four-stage project lifecycle process for its capital expansion projects, with the two front-end loading (FEL) studies making up the first two stages. FEL implies upfront planning and engineering in order to reduce, as much as possible, the risk of scope creep and to ensure financial accuracy for the project. The FEL-1, or conceptual study, is scheduled to be completed by the end of March 2013, while the FEL-2 study should be finalised by the end of March 2014. Source: Creamer Media

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by Mike Poverello

Dry Ports – their growing role in international trade

Transnet Freight Rail

With rapid regional development of African port infrastructure and regional road corridors, the importance of inland multi-modal hubs is gaining traction. Increasing inter-African port competitiveness, with some countries happy to liberalize their economic trade engagements for increased foreign direct investment will put pressure on traditional emerging economies. In recent weeks there have been several public utterances concerning South Africa’s perceived demise as the ‘gateway to Africa’.

“If a gateway is supposed to be a transmission belt between global and regional markets and production facilities, the question should be whether South Africa can use its physical and material infrastructure to fulfil a connecting function between Africa and the rest of the world”, says Peter Draper senior fellow at the South African Institute for International Affairs. 

Global player General Electric recently chose Nairobi as its sub-Saharan hub – following companies like Coca Cola, Nestle and Heineken – and it based its decision partly, say trade academics, on South Africa’s unpredictable policy environment. With the rehabilitation of the East and West Coasts of Africa, some of it by resource companies needing to find more convenient export routes, trade patterns are starting to change in the region. In time, it is likely that Durban will be just one more port handling regional trade, rather than the main one.

A dry port is generally a rail terminal situated in an inland location with rail connections to one or more container seaports. Container freight trains run excursions between the seaports and the dry port, on a service timetable that is integrated with the schedules of the container ships arriving at the seaport.

Seaports have grown larger as world trade has increased, and they now lack space to expand and are restricted by congestion on the various routes into the port. While the access to the port from the sea may be highly efficient, with radar-guided systems for tracking the ships and sophisticated ship-to-shore facilities for speedy loading and unloading, land routes out of the seaport can be slow and congested.

The road and rail links are often too congested and inadequate to deal with the traffic from the port. This problem can be eased by a dry port consisting of rail and multi-modal terminals situated inland from the seaport.

In many instances, particularly in South Africa, port facilities are in close proximity to the center of the city, because historically the city grew up around the port. This means that road traffic both to and from the port has to make a circuit through the city along congested motorways or smaller roads. This problem can partially be overcome by the more efficient use of existing rail links to move the freight from the quayside to an inland dry port. The last two decades saw a decline in the ability of the rail service to meet increasing dry port to seaport needs. Over utilization of road transport not only deteriorates the roads but causes significant bottlenecks at sea port terminals.

The infrastructure available at the dry port is similar to that of a seaport in terms of the logistics and the facilities for importers and exporters. The dry port is equipped to handle cargo and transfer freight to warehouses or open storage.

Development of dry ports has become possible owing to the increase in multi-modal transit of goods utilising road, rail and sea. This in turn has become increasingly common due to the spread of containerisation which has facilitated the quick transfer of freight from sea to rail or from rail to road. Dry ports can therefore play an important part in ensuring the efficient transit of goods from a factory in their country of origin to a retail distribution point in the country of destination. Source: AllAfrica.com

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by Mike Poverello

Moving goods efficiently to inland cities – a case for inland container depots

Port of Agapa, NigeriaNearly one in three African countries is landlocked, accounting for 26% of the continent’s landmass, and 25% of the population, or more than 200 million people, indicating that current population growth trends, including the development of population megacities distant from coastal locations will become powerful drivers of inland markets.

At the 3rd Annual Africa Ports, Logistics & Supply Chain Conference, APM Terminals’ Director of Business Development and Infrastructure Investments for the Africa-Middle East Region, Reik Mueller stated that “Ports will compete to become preferred gateways to move goods efficiently to inland cities and landlocked countries” Mr. Meuller added that “The future prosperity of these nations depends on access to the global economy and new markets; high-growth markets need inland infrastructure and logistics capabilities along development corridors. The ports that can provide the best and most efficient connectivity to those Inland markets will be the winners”.

Citing the recent success in reducing port congestion through Inland Container Depots (ICDs) now in operation outside of the APM Terminals operated port of Luanda, Angola, the Meridian Port Services joint venture in Tema, Ghana, and the ICD which was opened four km from APM Terminals Apapa, the busiest container terminal in Nigeria and all of West Africa, Mr. Mueller made the case for integrated transportation solutions, “Importers are not going to wait for improved infrastructure; the cargo will simply move to other ports” said Mr. Mueller.

Mueller described a new model for transportation planning and development in West Africa in which port and terminal operations shift focus from “container lifts” toward “integrated container transport solutions. Dry ports and inland markets are the untapped, overlooked opportunity markets of the future in Africa”. Now ain’t this a contrast to views on the southern tip of the continent – the continent’s biggest port without efficient inland corridors and networks must jeopardize investor confidence not to mention export profitability.   Sources: DredgingToday.com, PortStrategy.com and Greenport.com.

by Mike Poverello

Who Will Be Africa’s Brazil?

Will there ever be an “African Brazil”? Who will that be? Angola? Congo? Ethiopia? Nigeria? South Africa? Flip that question: what will it take for an African country to become a new Brazil? A lot. First, it will take governments that do not spend or borrow too much, and independent central banks that keep inflation low. That is, the first order of business is a stable “macroeconomic framework.” Brazil managed to do that, but only after decades of rampant inflation and financial crises. Many African countries are making progress in that direction, but none is quite there. Read this objective review by Marcelo Giugale, World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa. Source: The Huffington Post

by Mike Poverello

Where Does the Chain of Custody Begin?

Here follows an article, published by Dr. James Giermanski, an internationally renowned expert in container and supply chain security, international transportation and trade issues. It deals with a crucial but mostly forgotten/unknown aspect of international supply chains – who packed the cargo?

Tracking, tracing, and custody are all generally accepted concepts involving the control of movement. All these concepts have in their fundamental cognitive structure the idea of path, corridor, multiple parts, flow, and coordination.

However, what is often omitted or overlooked is the fundamental sine qua non core principle of “beginning”. What is the beginning of a chain of custody? This article focuses on this core concept and the role it plays as the beginning of the connective custody and control process. Specifically, it addresses the significance of cargo stuffing, the concept of authorized or trusted agent, the means of connectivity, the legal role of the authorized agent, and the consequences of a connected and visible supply chain.

Cargo stuffing

Establishing and maintaining cargo integrity begins with stuffing the container at origin. A chain of custody – chronological documentation or paper trail – involves “the movement and location of physical evidence from the time it is obtained until the time it is presented in court.” As in a criminal case comparison, a supply chain “chain of custody” needs three types of essential assertions:

  1. That the cargo is what it purports to be and in the quantity stated;
  2. That the cargo was in the continuous possession or control by the carrier who took charge of the cargo from the time it was loaded in the container at origin until the time it is delivered at final destination; and
  3. That there is evidence of the identify of each person or entity who had access to it during its movement, and that the cargo remained in the same condition from the moment it was sealed in the container for transfer to the carrier that controlled possession until the moment it released the cargo into the receipted custody of another.
Trusted partner

It is imperative that the initial point of a connectivity process begins at the beginning! Loading cannot take place without a human agent. The agent could be the company’s forklift driver, the dispatcher, the loading dock supervisor, or even an authorizing manager who has a specific duty to verify the cargo and its quantity. It could even be a third party hired by the shipper, for instance, companies that currently provide inspection services around the world.

Various Customs programs discuss, in one way or the other, the concept that supply chain security begins at “stuffing”: the Secure Export Scheme Program (New Zealand); the Partners in Protection Program (Canada); the Golden List Program (Jordan); the Authorized Economic Operator Program (Japan); the Authorized Economic Operator Program (Korea); the Secure Trade Partnership Plus Program (Singapore); and the Authorized Economic Operator.

Establishing ‘connectivity’

Maintaining connectivity depends on the security program, software and hardware utilized. While no system is 100% effective, and one cannot depend on technology alone, there are ‘off-the-shelf’ container security devices (CSDs) that provide connectivity through a sophisticated, comprehensive chain of custody system that begins with loading the container at origin, monitoring it, and reporting on its integrity at the end of the global supply chain path, i.e. at final destination.

CSDs can include the identity of the trusted agent verifying the cargo at loading and the agent’s counterpart at destination. Both parties are electronically connected by a unique identifier to the smart container system along with bill of lading or booking information, or data needed by Customs authorities. Therefore, when the CSD is activated, the accountable party becomes the initiating element in the smart container security system.

Consequences of chain of custody – standards, laws and litigation

If a smart container is opened at destination by an equally accountable person and cargo is missing, and there were no breaches detected, recorded or reported, the accountable person at origin can face either disciplinary, or worse, criminal action by appropriate authorities.

This ESI becomes a source of evidence, should legal action follow. The concept of custody and control from origin to destination also supports Incoterms 2010, a publication of the International Chamber of Commerce (ICC) which provides the playbook of international rules involving international sales of goods. These new terms now contain security requirements for the shipper, making a chain of custody system essential for compliance. There are also changes coming for shippers, consignees, and vessel carriers with respect to carriage of goods by sea: the new Rotterdam Rules.

According to the UN General Assembly, the Rotterdam Rules are a “…uniform and modern global legal regime governing the rights and obligations of stakeholders in the maritime transport industry under a single contract for door-to-door carriage” (cf. American Shipper). The new door-to-door liability places the vessel carrier directly in a chain of custody. Instead of the vessel carrier filing what the shipper said is in the container, the vessel carrier will be automatically and really responsible for knowing what is in the container.

What are the benefits?

The shipper, the consignee, the carrier, and control and regulatory authorities all benefit from a chain of custody system that begins with the loading of the container at origin. CSDs incorporating the identity of the trusted agent at stuffing would assist law enforcement officials to comply with international security and trade standards, solve transhipment problems, impair illegal access to the cargo conveyance, improve supply chain efficiencies, aid in securing hazardous materials and other dangerous cargo movement, reduce counterfeiting, eliminate the in-bond problem of unauthorized container access, and improve bottom line revenue generation for the firms using them. Source: Supply Chain Digest.

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by Mike Poverello

SAD Story – Part 2

What is clear in regard to modern day business is the fact that ‘harmonisation’ in the international supply chain is essentially built around ‘data’. E-commerce has been around for decades, plagued by incompatibilities in messaging standards, and computer software, network and hardware architecture. However, one of the key inhibitors has been organisations and administrations having to adhere to domestic ‘dated’ legislation and so-called standard operating procedures – seemingly difficult to change, and worst of all suggesting that law has to adapt!

A lot has had to do with the means of information presentation (format) and conveyance (physical versus electronic) rather than the actual information itself. Standards such as the UN Layout key sought to standardise or align international trade and customs documentation with the view to simplifying cross-border trade and regulatory requirements. In other words, each international trade document being a logical ‘copy and augmentation’ of a preceding document.  This argument is still indeed valid. The generally accepted principle of Customs Administrations is to maximise its leverage of latent information in the supply chain and augment this with national (domestic) regulatory requirements – within a structured format.

The Single Administrative Document (SAD) was itself borne out of this need. The layout found acceptance with UNCTAD’s ASYCUDA which used it as a marketing tool (in the 1990’s) in promoting ‘What-You-See-Is-What-You-Get’ (WYSIWYG). It certainly provided a compelling argument for under-developed countries seeking first-time customs automation. Yet, the promise of compatibility with other systems and neighbouring customs administrations has not lived up to this promise.

Simultaneous to document harmonisation, we find development of the Customs data model, initially the work of the Group of 7 (G7) nations at the United Nations. Its mandate was to simplify and standardize Customs procedures Customs procedures. In 2002, the WCO took over this responsibility and after further refinement the G7 version became version 1 of the WCO Customs Data Model. Once more a logical progression lead to the inclusion of security and other government regulatory requirements. This has culminated in the recent release of WCO Data Model 3. Take note the word “Customs” is missing from the title, indicating that Version 3 gives effect to its culminating EDI message standard – Government Cross Border Regulatory (GOVCBR) message – an all inclusive message standard which proposes to accommodate ALL government regulatory reporting requirements.

Big deal! So what does this mean? The WCO’s intent behind GOVCBR is as follows –

  • Promoting safe and secure borders by establishing a common platform for regulatory data exchange enabling early sharing of information.
  • Helping co-operating export and import Customs to offer authorized traders end end-to to- end premium procedures and simple integrated treatment of the total transaction.
  • Contributing to rapid release.
  • Elimination redundant and repetitive data submitted by the carrier and the importer.
  • Reducing the amount of data required to be presented at time of release.
  • Reducing compliance costs.
  • Promoting greater Customs Co-operation.

Undertaking such development is no simple matter, although a decision in this direction is a no brainer! Over a decade’s work in the EDI space in South Africa is certainly not lost. Most of the trade’s electronic goods declaration and cargo reporting requirements remain intact, all be they require re-alignment to meet Data Model 3 standard. Over and above this, the matter of government regulatory requirements (permits, certificates, prohibitions and restrictions, letters of authority, etc.) will require more ‘political will’ to ensure that all authorities administering regulations over the importation and exportation of goods are brought into the ‘electronic space’. Some traction is already evident here largely thanks to ITAC and SA Reserve Bank willingness and capability to collaborate. In time all remaining authorities will be brought on board to ensure a true ‘paperless’ clearance process.

So, I digress somewhat from the discussion on the SAD. However, the bottom line for all customs and border authorities, traders and intermediaries is that ‘harmonisation’ of the supply chain operation follows the principal and secondary data required to administer ALL controls via a process of risk assessment, to facilitate release including any intervention required to ensure the compliance of import and export goods. As such even legislative requirements need to enable ‘harmonisation’ to occur otherwise we end up with a non-tariff barrier, uncertainty in decision-making, and a business community unable to capitalise on regional and international market opportunities. Positively, the draft SA Customs Control Bill makes abundant reference to reporting – of the electronic kind.

In Part 3, I will discuss regional ‘integration’ and the desire for end-to-end transit clearance harmonisation.

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by Mike Poverello

Adoption of container tracking will accelerate in the coming years

According to a new research report from Berg Insight, the number of active remote container tracking units deployed on inter-modal shipping containers was 77,000 in Q4-2011. Growing at a compound annual growth rate (CAGR) of 66.9 percent, this number is expected to reach 1.0 million by 2016. The penetration rate of remote tracking systems in the total population of containers is estimated to increase from 0.4 percent in 2011 to 3.6 percent in 2016. Berg Insight’s definition of a real-time container tracking solution is a system that incorporates data logging, satellite positioning and data communication to a back-office application.

The market for container tracking solutions is still in its early stage. Aftermarket solutions mounted on high value cargo and refrigerated containers will be the first use cases to adopt container tracking. Orbcomm has after recent acquisitions of Startrak and PAR LMS emerged as the largest vendor of wireless container tracking devices with solutions targeting refrigerated containers. Qualcomm, ID Systems and Telular are prominent vendors focusing on inland transportation in North America, which is so far the most mature market for container tracking solutions. PearTrack Systems, Honeywell Global Tracking, EPSa and Kirsen Global Security are examples of companies offering dedicated solutions targeting the global end-to-end container transport chain.

Ever since the events of 9/11, there have been a lot of activities to bring container tracking solutions to the market according to the report. Only now technology advancement, declining hardware prices and market awareness are starting to come together to make remote container tracking solutions attractive. Container telematics can help supply chain operators to comply with regulations and meet the high demands on security, information visibility and transportation efficiency that comes with global supply chains. Source: Berg Insight