UN COVID-19 project to support data exchange for international supply chain processes
The emergence of COVID-19 has shown an increased demand for coordination, efficient planning, modelling and risk control in many areas. The United Nations Economic Commission for Europe (UNECE) and its trade related United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) are strongly supporting multilateral engagement for interoperable cross-border standards, such as UN/CEFACT Data exchange Standards.
Multi-Model Transport Reference Data Model Ready for use
Many current regulations, standards, instructions and business capacity-building measures are available already. The comprehensive Multi-modal Transport Reference Data Model (MMT RDM) covers the requirements of international forwarding and transport, including related trade, insurance, customs and other regulatory documentary requirements based on the integration of trade facilitation best practices, developed by UN/CEFACT.
COVID-19 Project lead by GEFEG: Development of a standardised data set for the Transport sector
On behalf of the UN, GEFEG provides the project lead for the COVID 19 project. The project concentrates on ensuring the flow of goods and the transport across the various transport modes. Its overall objective is to set up a multi-modal harmonized set of mainly transport documents as a profile of the UN/CEFACT Multi-modal Transport Reference Data Model (MMT RDM).
The data sets developed include seven electronic exchange messages such as Booking Instruction, Shipping Instruction, Waybill, Bill of Lading, Packing List, Status Messages, Rapid Alert Security Food and Feed (RASFF) and their Business Requirement Specifications (BRSs). It has been checked that every data element with the same name also has the same semantic meaning.
The new profile of the MMT RDM will build a bridge to the already existing electronic exchange formats and allow a better use of state-of-the-art technologies such as block chain and APIs regarding the different transport modes.
Focusing on the different transport modes in the next phase
Additional information will be collected in the next phase, with a stronger focus on the different modes of transport. Results will be reported back to the Multi-modal Transport RDM and change processes initiated regarding relevant yet missing information in the MMT RDM. And last but not least, profiles of the MMT for the different modes of transport, such as air, rail, road, and maritime will be published.
Michael Dill, CEO of GEFEG is looking forward to welcome further participants in the project: “It will be important to get advice and hints on any missing data requirements across the various modes of transport! I would like to encourage colleagues involved in transport processes to join the next phase of the project. Your valuable input and expert knowledge would be very much appreciated.”
Interested parties wishing to participate in the project should contact firstname.lastname@example.org with subject detail: New Participant in COVID-19 project.
The new container terminal at the Namibian Port of Walvis Bay is now fully operational, according to a report by the African Development Bank (ADB).
In a statement, the ADB said the terminal was built on constructed on 40 hectares of land reclaimed from the ocean by China Harbor Engineering Company Ltd (CHEC) as part of a project worth $300 million.
It will, according the the bank, turn Walvis Bay into becoming a logistics hub for southern Africa to meet the growing regional demand for freight and provide maritime access for landlocked countries of the Southern Africa Development Community (SADC).
The African Development Bank provided a ZAR 2,982 million ($178 million) loan representing over 70% of the project funding.
The works included the dredging over 3.9 million cubic metres of sand, used partly for the reclamation, construction of a 600-metre quay wall, the laying of 304,000 square metres of paved surface and the construction of a workshop and administrative buildings.
It also entailed the installation of four ship-to-shore (STS) cranes, the construction of a one-kilometre road, the laying of 2.3 km of rail lines, and the installation of service networks. The facility’s electricity supply was also successfully upgraded, the report noted.
“Overall, the project has fully achieved its goals,” the report said, increasing the terminal’s capacity from 355,000 TEUs (20-foot equivalent unit) to 750,000 TEUs yearly. It has also reduced vessel waiting time to less than 8 hours and cut container transit time from 14.5 days to 9.5 days.
Expanded activities required the training of seven pilots and 26 ship-to-shore crane operators, including one woman.
The demand for services from the port of Walvis Bay has increased by about 8% following the commissioning of the new terminal, the report notes. Cargo volumes, revenues and income from other services (maritime, port, berth and light dues, and other storage and handling fees) are expected to increase by at least 8% in 2020 and 2021. After that, growth should reach 5% yearly the report projects.
The project completion reporting team was led by Richard Malinga, Bank Principal Transport Engineer and Task Manager for the project.
The Walvis Bay expansion aligns with the Bank’s High-5 strategic priorities, including promoting the integration of Africa.
The Department of Trade, Industry and Competition (the dtic) launched the Export Barriers Monitoring Mechanism (EBMM) that will put South Africa in a strong position to provide the type of consistent, ongoing support that is needed to continuously improve the country’s export environment. The Department’s e Deputy Director-General of Export Development, Promotion and Outward Investments, Ms Lerato Mataboge said the fundamental aim of EBMM is to make the government’s support to exporters facing barriers more effective, more flexible, and more accessible.
By creating a systematic approach to monitoring these barriers, the government can develop a long-term agenda to target the most important export barriers. By addressing each individual barrier, government can begin to manage each problem with the level of nuance and detail needed for these complex challenges.
During an initial pilot project, 28 key export barriers were processed by the EBMM and during the initial phase of the national lockdown, the EBMM methodology was used to process 76 barriers related to COVID-19. From today, the EBMM is open to any firm that encounters an export barrier of any kind, whether locally or in any foreign market.
In 2018, South African exporters faced an estimated 154,571 unique customs requirements worldwide. Over the last ten years, 23,795 new or amended technical barriers to trade have been registered with the World Trade Organisation; while over the same period 13,364 sanitary and phytosanitary barriers were registered or amended.
DTIC’s priority is to work progressively to smooth these barriers, the experience of the last decade of trade has demonstrated that we need to be prepared to manage this growing complexity. Increasingly, a key component of global competitiveness will be how we manage a constantly changing global trading environment. Managing this environment will only be possible through a close working partnership between the government and the private sector.
Speaking at the same launch, the Executive Director of the South African Electrotechnical Export Council, Ms Chiboni Evans, highlighted the importance of maximising content and projects in the African continent, and the important role played by export barriers in reducing competitiveness in the region.
Persistent logistics barriers meant that transporting goods by road took longer from all our major cities to mines in the Southern African Development Community (SADC) region. It was then easy for these countries to import goods from Asia, Americas and Europe rather than waiting on South Africa.
Highlighting previous experiences of partnering with the dtic to resolve export barriers, Ms Evans noted that a lot of the barriers to export can only be resolved by the private sector working together with government. She added that this new mechanism will assist greatly in opening up government support to a much broader spectrum of private sector individuals.
The British government has started to conduct research on its new post-Brexit customs IT system, with four months left before the service is due to go live.
Her Majesty’s Revenue & Customs, which is in charge of handling the new customs paperwork that will apply to UK-EU trade from 2021, has invited hauliers to participate in rounds of remote-user testing in the coming months for its Goods Vehicle Movement Service (GVMS), according to a memo to the freight forwarding industry.
The GVMS – which is set to be used to police cross-Irish Sea trade from Jan 1 2021, and then all UK-EU goods flows from July – will give freight companies a unique reference number that proves that they have filed the necessary post-Brexit paperwork, such as customs declarations.
Without a reference from the GVMS, trucks will not be allowed to cross between the UK and EU.
The fact that the GVMS is still in the research and design phase less than 90 working days before it is due to be introduced is a cause for concern in the logistics industry: one freight forwarder, who spoke under condition of anonymity, said they are worried the service won’t be completed and functional on time.
The new system will be required even if Britain and the EU sign a free-trade agreement.
And while consultation with the industry is welcome, it would have been preferable to do such research during the system design process, said Anna Jerzewska, founder of Trade and Borders, a customs and trade consultancy.
“The Government has made it clear that GVMS is unlikely to be ready for January 1 and as far as we understand there will be back-up procedures in place,” she said.
“It will be crucial to ensure that such alternatives are available in places where traffic management will be important,” she said, citing Kent and the Irish Sea.
In the memo, HMRC says it wants to start the first round of testing “ASAP” due to the shortage of time.
The tests will involve hour-long video calls where hauliers try prototypes and give feedback.
“When designing a system that the industry will be using, it is important we work in partnership with them to make sure it suits their and our needs,” HMRC said by email.
“We will continue to develop our systems in readiness for the end of the transition period and when full border controls are implemented from July 2021.”
Source: Bloomberg, article authored by Joe Mayes, 28 August 2020
A new information note published by the WTO Secretariat highlights how trade in goods and services has been affected by temporary border closures and travel restrictions linked to the COVID-19 pandemic.
It describes how the cross-border mobility of individuals plays an important role in both the cross-border provision and consumption of services and in manufacturing value chains.
The paper notes that sweeping travel barriers introduced in the early stages of the pandemic have given way to more fine-tuned policies aimed at allowing through “essential” foreign workers, or creating quarantine-free “travel bubbles” among partners. Nevertheless, mobility barriers have had a particularly heavy impact on tourism and education services, as well as on trade in goods, due to their effect on transport services and on information and transaction costs.
The paper notes that international cooperation has a potentially important role to play in minimizing the economic impact of mobility restrictions. For instance, exchanging information on lessons learnt about mobility restrictions and trade could help WTO members foster greater resilience in the face of future crises. Such an exercise could help with identifying options to implement travel measures that meet public health protection objectives while minimizing the negative effects on trade.
International trade and investment have always relied on the cross-border mobility of individuals.
To contain the spread of COVID-19, many WTO members imposed temporary border closures and travel restrictions. The severe restrictions on cross-border movement are not motivated by trade considerations but by public health reasons. Nevertheless, they have had a significant impact on trade. In several members, initial sweeping travel barriers have been replaced by more fine-tuned policies, aimed at allowing the movement of “essential” foreign workers, or creating “travel bubbles” permitting quarantine-free mobility among partners.
A significant amount of services trade requires physical proximity between producers and consumers. International mobility to consume or provide services abroad is one way to attain this proximity. Mobility is also important to the operations of services providers who establish a commercial presence in other countries, as well as to those who ordinarily provide services remotely across international borders.
Border measures and travel restrictions have had a particularly heavy impact on sectors such as tourism and education services. COVID-19 has triggered an unprecedented crisis for the tourism sector. In terms of travellers and revenue, international tourism in 2020 is expected to register its worst performance since 1950. In higher education, some institutions are facing a potential drop in international student enrolment of 50 to 75 per cent.
Mobility barriers also significantly affect trade in goods, through their impact on transport services and on information and transaction costs.
Restarting international mobility is unlikely to proceed in a linear fashion. Given the crossborder spill-overs resulting from measures affecting transnational mobility, a case can be made for supplementing domestic action with international cooperative efforts. WTO members may eventually wish to look into building greater preparedness and resilience for future crises, for example starting with information exchange about lessons learnt about mobility restrictions and trade. The exercise could help with identifying ways to implement travel measures that meet public health protection objectives while producing the least trade distortive effects.
To further assist small and medium sized businesses with the complexity of managing their supply chains, Maersk is launching Maersk Flow – a digital platform which provides customers and their partners with everything they need to take control of their supply chain, from factory to market.
The solution enables transparency in critical supply chain processes and ensures that the flow of goods and documents is executed as planned. It also reduces manual work and costly mistakes, while empowering logistics professionals with all the current and historical data they need to sustainably improve their supply chain.
The daily life of small and medium sized businesses is increasingly global, complex and fast-paced. Every day thousands of products are moving through the supply chain, on multiple carriers, coming from and reaching many supply chain partners and customers. And for many of these companies this complexity is managed fully manually via spreadsheets, emails and phone calls, which despite lots of hard work is leading to reduced visibility and control – and ultimately higher costs or lost sales. With Maersk Flow these companies will be able to take control of their supply chains.
Maersk Flow further extends Maersk’s customer reach and strengthens the company’s position as an industry leader in digital solutions.
Maersk Flow facilitates the uninterrupted flow of information, cargo, and documentation to empower you and your partners to take the right action at the right time. Its unique features give you convenience and bring coherence to your everyday operations, so that you can optimise your supply chain logistics and refocus your resources on delivering value to your customers. The tool will assist with –
Discussions between Southern African Customs Union (SACU) [South Africa, Namibia, Botswana, Lesotho, Eswatini] and India to achieve a Preferential Trade Agreement (PTA) have been revived with the two sides holding a virtual meeting last week to discuss various aspects of the PTA.
The Indian side at the dialogue was led by Srikar Reddy, Joint Secretary, Department of Commerce while SACU was led by Amb. Steve Katjiuanjo, Executive Director, Ministry of Industrialization,Trade and SME Development of Namibia.
Reddy underlined India’s historically close ties with Southern Africa and its steadfast commitment to deepen economic engagement with this region. He informed that in 2019-20, trade between India and Africa as a whole stood at $ 66.7 billion, of which the India-SACU trade was $ 10.9 billion with an immense potential to expand further.
Amb Katjiuanjo called India as a strategic partner for SACU. Trade is currently in SACU’s favour, thus showing that the region is benefiting from access to the vast Indian market.
Prashant Agrawal, High Commissioner of India to Namibia, said on the occasion that in these unprecedented times of Covid-19 pandemic and its economic challenges, economies of the region, including of Namibia, could vastly benefit by enhanced trade and commercial links with India’s $ 2.9 trillion economy.
India stood fully committed and ready to support manufacturing and industry in Namibia in areas such as agriculture, irrigation, renewables, ICT, pharma and medical supplies. Both sides reviewed the progress made and discussed steps to quickly move forward on the PTA.
India-Namibia bilateral trade during 2018-19 was $ 135.92 million with India’s exports valued at $ 82.37 million, while India’s imports stood at $ 53.55 million. Mining sector is an area of mutual interest. Namibia is rich in uranium, diamonds, copper, phosphates and other minerals. Indian technological prowess in IT, engineering, pharmaceuticals, railways and SMEs is of interest to Namibia. Bilateral cooperation in the energy and agricultural sectors also has good prospects.
Meanwhile exports from India to South Africa include vehicles and components thereof, transport equipment, drugs and pharmaceuticals, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice, gems and jewellery, etc. Imports from South Africa to India include gold, steam coal, copper ores & concentrates, phosphoric acid, manganese ore, aluminium ingots & other minerals. India-S Africa bilateral trade was $ 10,584.5 million during 2018-19.
A.P. Moller – Maersk will acquire Sweden-based KGH Customs Services for 2.6 billion Swedish crowns ($281 million), the company announced Monday.
KGH specializes in trade and customs management services in Europe across multiple freight modes. The deal adds to Maersk’s service offerings as the carrier looks to expand beyond ocean shipping and position itself as a full-service supply chain solutions provider.
“There are no end-to-end solutions without customs clearance,” Vincent Clerc, CEO of ocean and logistics at A.P. Moller – Maersk, said in a statement. “With KGH, we will not only be able to strengthen our capabilities within customs services and related consultancy, but also reach more of our customers in Europe through a larger geographical footprint and digital solutions that will enhance our ability to meet our customers´ end-to-end supply chain needs.”
Maersk has been open about its ambitions to expand its business into other parts of the supply chain, positing its logistics sector growth as a main business objective.
“Focus remains on developing our end-to-end offering through an even stronger Ocean product while expanding and scaling our logistics and services portfolio,” Maersk wrote in its latest annual report.
Maersk began outlining its end-to-end ambitions in 2016 and has taken multiple steps toward realizing its goal in the form of deals and reorganization. Last year, Maersk closed a deal to acquire the New Jersey-based customs broker Vandegrift. And in 2018, it announced plans to merge its operations with Damco.
Maersk sees its ocean business as the “strong foundation” for the rest of its logistics offerings, and new products will be important in adding to its end-to-end logistics offerings, the company explained in its latest annual report.
“The next phase in the strategy is about growing the business by innovating existing products combined with selling landside logistics products to our existing customers – as well as growth in our Terminals & Towage business,” the annual report reads.
Maersk has specifically said M&A would be one tool it would use to achieve its end-to-end initiative, highlighting landside logistics as one space where deals could happen in its annual report. And when the company brought on a new CFO, Patrick Jany, earlier this year, it specifically highlighted his experience with M&A.
Last year, Maersk became the first ocean carrier to offer digital ocean customs clearance, according to a press release. The offering allows shippers to upload declaration paperwork and the carrier can send a notification when the shipment clears customs, according to a video explaining the offering.
Like with most businessecosystems, the functioning of global trade relies on efficient exchanges of information, especially of documents. While industries and ecosystems around the world are now digitizing associated processes and automating the bottlenecks, the business ecosystem of global shipping has been slower to realize innovation and digitization.
Supply chain processes require close coordination among many parties and a major choke point in this process is the requesting and finalizing of bills of lading with ocean carriers. There are many situations which cause even the most straight-forward flows to be disrupted and require multiple versions of documents to be created, reviewed and exchanged until final approval and the final bill of lading submission.
TradeLens Workflows utilize blockchain smart contracts to automate and digitize multi-party interactions — this helps drive efficiencies across supply chains. Let’s take a look at each major element to understand what digitizing document workflows looks like for the shipping industry.
Blockchain as the foundation
The foundation of TradeLens Workflows is a permissioned blockchain which guarantees the immutability and traceability of shipping documents and their processes on the platform. This is a very important building block in providing the trust needed to scale.
The permissioned blockchain transforms some of the basic concepts around business networks — contracts, ledgers, transactions, the flow of assets and identity of participants — and introduces the following:
Consensus. Transactions in a blockchain network are first proposed, then consented to by the group, and only then committed to the ledger.
Shared ledger. Trust anchors have an exact copy of the ledger.
Immutability. When a block is committed it is cryptographically secured with previous blocks in the ledger forming an audit log that becomes the foundation of trust.
Accountability: All participants are digitally identifiable, and each blockchain transaction is signed with a permissioned user digital certificate.
TradeLens Document sharing provides a framework for organizing and sharing trade documents related to a host of information such as shipments, consignments and transport equipment. This is all done through permissioned access according to the role of different players and includes security, version control and privacy provisions.
Each trade document is stored on a single stack within the blockchain network, under the control of the operator and accessible only to permissioned parties within a channel. Users can upload, download, view and edit documents as allowed by their permissions and access control on that specific type of document for the trade object in question.
It is important to note, only the hash of a given document is stored on the ledger. The document itself is stored securely where access is granted according to the TradeLens Data Sharing Specification. Each time a document is edited or uploaded, a new version is created and added to the document store. Every version can be verified against a hash of its original submitted content in the ledger.
Blockchain ensures the immutability and auditability of all these documents, promoting trust and alignment across trading partners.
Beyond document sharing
The TradeLens Workflow feature takes thedocument sharing capability one step further. It provides a way to interpret structured documents and take actions on them according to well-defined workflows. In other words, by understanding the purpose and contents of documents we can automate certain actions and notifications in the shipment flow.
As documents are submitted through the TradeLens API or UI, they are interpreted by looking at specific attributes that determine which trade object the document is applicable to, and which actions to perform. The actions are checked against defined rules and only specific actions by specific actors are accepted.
When all requirements are fulfilled, the document is saved and the appropriate action gets recorded as a transaction on the blockchain. Smart contracts ensure the state and progression of a TradeLens Workflow — what can be done at each step, and by which organization or actor.
Our workflows also update generated events to help notify subscribers (members of the supply chain) of the actions and results.
An example of TradeLens Workflow: SI-BL Flow
Let’s talk about a specific TradeLens Workflow — the SI-BL. This variation simplifies the process of sending a shipping instruction (SI) to the ocean carrier and receiving back a verified bill of lading (BL). The TradeLens SI-BL Workflow removes the need to manually edit, amend and transfer these critical documents, accelerating end-to-end flow to achieve a final bill of lading.
When a shipper (or their representative) submits a SI to the TradeLens Platform, it is analyzed by its attributes to determine which consignment it’s related to and which ocean carrier should be notified. Once the carrier has it, a draft BL is submitted back to the platform, the shipper can review and make amendments and share back to the carrier and so on, until a final BL is agreed upon. Because this is an automated process between systems at the shipper and carrier, manual tasks are eliminated along with their inherent delays.
There are many other variations of this flow, but the benefits come from the visibility and increased speed in processing these transactions. Also helpful for shippers, this offers a single mechanism and process for interacting with different ocean carriers with an immutable, shared audit trail for all draft BL revisions and approvals — all recorded on the blockchain ledger.
A digital ecosystem to meet old and new challenges
TradeLens Workflows help connect your ecosystem, drive information sharing and foster collaboration and trust by enabling the digitization and automation of how you work with others.
As the title suggests, the latest edition of WCO Newscontains a variety of articles concerning Customs approach to COVID-19 and even one article relating to Customs Brokers on COVID-19. Other features include C-2-C cooperation and information exchange, Risk Management and the future invisible supply chain and Secure Border . Of interest for Customs Policy are articles on improvements to simplification and harmonisation of components to the Revised Kyoto Convention; WCO’s development of draft “Practical Guidance on Free Zones” as well as Internet domain name ownership data – understanding changes and useful suggestions for Customs. All in all another great read!
It is often difficult to navigate and assimilate the myriad of documentation and annexes associated with significant initiatives such as WCO’s ‘framework of standards’. True, the documentation is detailed and technical. There are, however, online training courses available on the WCO website for users wishing to attain a level of proficiency on a particular subject. Furthermore, member states can request technical assistance from WCO in the establishment of capacity for the implementation of specific Customs initiatives.
However, sometimes one requires a synopsis or insight as to what a particular initiative aims to achieve. This is important so as to establish the nature and extent of change and capacity required in one’s own domestic situation. In my area of operation, MS PowerPointTM plays an important role in uniformly conveying key information to a multitude of people across different disciplines in the organisation. Im happy to share a ‘guide’ which consolidates most of the ‘official’ WCO documentation that comprise the Framework of Standards on E-Commerce. When viewed as a PowerPoint Show, all hyperlinks to the official WCO E-Commerce documentation are available for download or display. Below are versions for both standard PowerPoint or PowerPoint Show. I hope it will serve some useful purpose.
Customs authorities are age-old institutions whose missions have been subject to numerous changes over time. Historically, the main role was to levy customs duties, which, in other words meant collecting resources for the benefit of local authorities. Today, customs performs many other functions, from securing national borders, recording import and export trade and prevention of fraud and illegal trade activity.
From the customs authority’s perspective, there is a constant focus on finding innovative technology and new methods and techniques to become more effective on risk assessment and inspection of the goods circulating across their borders. At the same time, customs authorities must examine the consequences these changes will have on trade, avoiding the creation of additional burden and obstacles for industries and entities involved in the exchange. Adopting flexible technology is often key for meaningful strategic transformations.
More quality data with accuracy and speed
Each country has its own policies for operating border control when goods arrive or depart from their territory. Most of these policies work from systems built off a central repository, powered by data collected from different sources. Time and effort are often spent in sorting and cleansing data from these various sources but disconsonant data can still create confusing outcomes when analyzed.
While globalization gives an incentive to operate in an open market, the increased amount of trade activity also conceals illicit activities that must be supervised by customs authorities, such as tax evasion, drug traffic or smuggling. It is in the best interest of the entire industry to cooperate, allowing data sharing to flag the early recognition of risky trade transactions.
Receiving data related to the supply chain activities prior to and during the transportation process can assist authorities, supporting them to pinpoint risky elements on international trade. Data validation across various trade and transportation documents allows authorities to manage detailed risk assessment processes and is enhanced with access to earlier and more granular information.
Providing government authorities with access to upstream transport data is one of the features of TradeLens. On the platform, customs authorities have access to data related to their countries from the moment a booking is placed with a carrier. Updates on documents from different data sources and transportation milestones are shared in near real-time.
Additional data is not only a way to make sure that accurate risk assessments are being made, but it can also help decrease the burden placed by the bureaucracy related to importing or exporting goods. Increasing the accuracy of the inspection of goods, can enable authorities to focus their resources on the most important targets and improve trade documentation processing for reliable shippers, truckers and carriers. Enhancing global trade and the upstream exchange of information can drive growth and prosperity for the entire ecosystem.
Doing more with less
While many technologies and platforms exist in the marketplace, organizations are often constrained by limited public resources that must be utilized wisely. TradeLens does not aim at replacing existing systems but enhancing them with additional data from the supply chain. The TradeLens Platform provides a forum for authorities to run pilots and test innovative solutions in a true end-to-end shipment lifecycle.
In order to contribute to the logistics operations of the entire ecosystem, customs authorities can send notifications related to their inspection and release activities to TradeLens. This information will be made available in near real-time to all the players involved in the shipment and permissioned to see the data.
The World Trade Organization’s Director General, Roberto Azevêdo announced his resignation effective 31 August of this year. His tenure will end three years into his second four year term which was otherwise due to expire in 2021.
Azevêdo’s departure annouoncement comes in a week where a bill to withdraw the United States from the organization was introduced in the US House of Representatives by the Democratic Chairs of the Transportation & Infrastructure, and Energy and Commerce Committees. This following the introduction of a Joint Resolution to the same effect in the US Senate by Republican Senator Josh Hawley of Missouri.
It comes as the organisation finds its dispute resolution function paralyzed by a US Appellate Body blockade, a potentially existential budget battle looms, its scheduled ministerial conference cancelled and even supportive members eyeing unilateral trade action in contravention of its principles.
At perhaps the most perilous time in its 25-year history, the WTO will be without a formally appointed leader, and the forthcoming selection process for his replacement hands the US yet another opportunity to exercise an effective veto over the organization’s future.
While not likely to be the straw that breaks its back, this unfortunately timed resignation is still a hefty new weight for an exhausted WTO camel whose knees were already trembling. As the kids would say, “It’s not great.”
While opinions on the Roberto Azevêdo’s performance vary, his departure couldn’t come at a worse time, and the process to replace him is both very long and just as susceptible to being held hostage by an ornery member as everything else in the organisation.
As a global champion of rules based trade, the WTO’s ‘DG’ has an important role to play in making the full throated case against the rising tide of export restrictions, protectionism and unilateralism unleashed by the US-China trade tensions and exacerbated by Covid-19. Now is no time for the system to be without its Knight in Shiny Armani.
As the head of the WTO secretariat, the director general was poised to play a key role in steering the organisation through what now seems a near inevitable battle over its budget at the end of the year. If the US once again blocked adoption of the WTO’s budget, it would have been up to him to try and forge a compromise, or make the difficult and controversial decisions required to keep the lights on, staff paid and fondue pot glowing in the face of an unapproved budget.
As the chair of the trade negotiations committee, the director general offers convening power, good offices, and a consensus building voice. With critical negotiations around fisheries subsidies, e-commerce, investment, and WTO reform all hanging in the balance, the absence of a Director-General only further decreases the likelihood of progress (perhaps from Hail Mary Pass to Igloo in Hell).
What happens now – Interim Director-General?
Upon Mr Azevêdo’s departure at the end of August, The rules now require the WTO General Council – a meeting of all WTO Members which serves as its highest decision making-body outside of a ministerial conference to appoint one of the four Deputy-Directors General as an interim director.
This presents a potential hurdle, as the WTO General Council makes decisions by consensus. Therefore, even a single member’s objection could prevent the appointment of an interim leader for the organisation.
The current deputies are Yonov Frederick Agah of Nigeria, Karl Brauner of Germany, Alan Wolff of the United States and Yi Xiaozhun of China. For obvious reasons, neither the US nor the Chinese DDGs are likely candidates for unanimous approval, and it is not impossible to envisage objections to Agah and Brauner as well – either personally or on general principle to sabotage the organisation further.
What happens next – A new Director-General?
Whether an interim DG is appointed or not, the WTO members will need to begin the process of selecting a new Director-General.
The procedure is lengthy and would ordinarily begin nine months before a DG’s term is set to expire. Once the process begins, WTO members have one month to nominate candidates, which must be their own nationals.
After this month is over, the candidates are expected to come to Geneva and meet with the WTO missions. The next seven months are to be spent weening the applicants down to a single final consensus candidate.
Is there politics?
Oh my god yes. While the Director-General has no legal authority to make or enforce the rules, WTO members are still intensely jealous of the position and allergic to any candidate they feel might impede their interests.
Arriving at a single consensus candidate requires a raft of compromises, trades and deals even at the best of times, which of course the current situation is not.
What happens if no consensus candidate can be found?
Theoretically, the rules do allow for a vote by the membership to select a Director-General. However, this procedure is both a measure of last-resort and intended primarily for a situation where the membership is split between two or more valid candidates and agrees by consensus on a vote to break the deadlock.
Were the US or some other member to block all candidates as a matter of principle, they would also likely oppose a vote. Even if a vote could then be forced regardless, it would only fuel the fires of those who argue the WTO has gone rogue.
So what does it all mean?
On its own, this resignation does not fundamentally change the state of play. The WTO is severely weakened, partially paralysed and increasingly in the crosshairs of the US, where concerns about it extend beyond the Trump administration and across party lines.
It does however rob the WTO of an experienced, consensus-approved leader at a time when both the organisation and the cause of rules-based trade desperately need one.
Still, though slim, there is hope the DG selection process might serve to revitalise the organisation. Long rumored candidacies like that of Kenya’s formidable Amina Mohamed, who chaired the 10th WTO Ministerial Conference to a successful conclusion and would be the organization’s first female and first African Director-General, offer a path to a more globally representative future.
Freight gridlock at Shanghai Pudong International Airport is so bad that some cargo planes are being forced to leave nearly empty and logistics companies are recommending ocean transportation as a faster option.
Airfreight professionals describe an operational meltdown, with trucks stuck in queues for two to three days to drop off shipments and boxes piling up in warehouses unable to get put on aircraft because Chinese customs officials and ground handlers are overwhelmed by the surge in export demand for face masks and other medical supplies.
The volume of hospital gear, resumption of e-commerce and other trade following China’s coronavirus quarantine and new export restrictions are blamed for the massive backlog, which was compounded by factories rushing out extra shipments before closing for the May Day holiday.
“In my 20 years, I have never experienced this level of congestion at any airport. And there are no signs of this alleviating in the next week to 10 days,” especially with factories reopening again, Neel Jones Shah, the global head of airfreight at San Francisco-based Flexport, said in an interview.
An avalanche of personal protective equipment, test kits and disinfectant is descending on Chinese airports because the rest of the world desperately needs it to minimize exposure to the COVID-19 virus and air is the fastest delivery method. China is the world’s largest source for respirator masks, surgical masks, medical goggles and protective garments, accounting for 50% of global exports in 2018, according to Chad Bown of the Peterson Institute for International Economics.
But the onslaught of goods is running into a bureaucratic wall and piling up. Last month, Chinese authorities placed export controls on 11 types of medical supplies, including infrared thermometers, after complaints in Europe and the U.S. about low-quality purchases. Chinese-made N95 respirators failed in several tests to meet filtering standards for small particles, while non-medical masks are also being sold as medical-grade ones. In addition to special certification, all the shipments must be individually inspected and verified by customs authorities to make sure they are not defective or fraudulent.
The risk-control office that certifies the medical equipment was closed for Chinese Labor Day and customs worked reduced hours during the holiday, adding to the bottleneck.
The process of opening boxes and going through the contents with a fine-tooth comb is very manual and adds at least three days to transit times, said Brian Bourke, chief growth officer at Chicago-based SEKO Logistics.
China’s new policy has forced freight forwarders to cancel many bookings because export shipments are regularly failing customs inspections. Most of them are demanding customers have cargo ready at least four days before a flight. It now takes five to six days for shipments to get from the manufacturer’s dock onto a plane, according to logistics companies in the area.
Meanwhile, forwarders and consolidators are requiring all freight charges for protective garments be paid up front, 72 hours before departure, because the cost of chartering a dedicated plane at the eye-popping one-way rate of $1.5 million or more, is prohibitively expensive. Pre-payment is also desired because shipments may miss the flight’s cutoff time and result in the forwarder otherwise having to eat the loss.
Delayed or rejected loads have a knock-on effect, too, because they need to be rebooked on later flights.
The most-affected transfer station is PACTL, a joint venture between Shanghai Airport Group and Lufthansa Cargo that controls three of the seven cargo terminals at Pudong Airport, according to a SEKO client advisory. Since May 3, Eastern Air Logistics’ western cargo terminal is temporarily not accepting any new charter flights in an attempt to clear the backlog.
Even after shipments are cleared, they can sit in a warehouse because ground handling companies often don’t have enough labor to consolidate shipments for aircraft loading, he added.
Jones Shah, a former head of cargo at Delta Air Lines, Inc. (NYSE: DAL), and others who do business at Pudong airport say the increased tender times have forced multiple carriers on several occasions to depart only 10% or 20% loaded because of schedule commitments, or fears that pilots will violate duty-hour limits by waiting.
Under normal circumstances, cargo airlines typically change crews in China. Instead, flights are originating in Tokyo or Seoul. Upon arrival, crews stay on the planes to avoid being tested or quarantined by Chinese authorities keen on preventing outsiders from reinfecting the local population. If freighters stay too long in Shanghai, crews will time out their duty clock and violate anti-fatigue rules before reaching a refueling stop in Anchorage, Alaska, or U.S. destinations.
“It’s a disaster right now. . . . There is personal protective equipment that could have been coming to the U.S. just wasn’t able to because of this backlog,” Bourke said.
Contacted by FreightWaves, North American passenger airlines that now operate so-called “ghost” charters — planes without passengers flying dedicated cargo routes — downplayed the congestion’s impact on load factors.
“PVG [airport code for Shanghai] has some challenges as a result of a huge increase in volume and flights, but American Airlines Group Inc. (NASDAQ: AAL) has been able to fill nearly all flights to-date. Demand remains very strong and our handling partners have been able to process freight in time to meet our outbound flights,” Sandy Scott, managing director of cargo operations – Europe & Asia Pacific, said in a statement. “Limiting export deliveries to 48 hours prior to flight departure helps with smoothing the flows through the cargo terminal. American is in constant contact with all global account customers, local customers, and handling partners to ensure flights leave on time and with full loads.”
A Delta spokesperson said, “Delta Cargo is working with our ground handlers and contracted warehouse providers in Shanghai to improve the situation in light of congestion affecting all airlines. Delta is committed to continuing our cargo-only flights between Shanghai and the U.S.”
Air Canada has not had aircraft leave empty because of good planning that enables it to swap out shipments that are not ready for ones that are, said Tim Wong, director of cargo sales and services for Asia-Pacific.
Freight forwarders are employing a number of tactics to bypass the bottlenecks and say customers need to be open to quick course corrections.
Flexport works with airline partners to delay flights upline, “before they leave for Shanghai because then the crews can continue to rest and not start their duty day. And that gives us a little more time to have freight tendered and built,” Jones Shah said. “But it can get tricky. Flights have to get to their destination because they have another flight after that. So, you’re operating within the confines of a very intricate schedule. This is a 24/7 job right now managing the complexity.”
Other Chinese airports face similar problems, to a lesser degree. SEKO is trying to avoid Shanghai at all costs for now, instead sending most airfreight to Zhengzhou airport, a 10-hour drive west of Shanghai. Time:matters, the logistics arm of Lufthansa Cargo, and its Chinese agent, Shanghai International Freight Forwarding, are also arranging cargo-only passenger charters from airports in Xiamen, Malaysia, and Nanjing, China, spokeswoman Katja Sondey said.
Making matters worse is that Chinese regulations don’t allow personal protective equipment to be exported or transshipped through Hong Kong.
“That has created lots of backlogs and capacity issues in Guangzhou and Shenzhen as many airlines do not have landing rights in mainland China and is one of the reasons why rates are sky high,” said Christos Spyrou, the CEO and founder of logistics cooperative Neutral Air Partner, via email from Hong Kong.
Fast-boat services, like those offered by Matson, Inc. (NYSE: MATX) and APL, offer another relief valve for shippers. Matson, for example, sails direct from Shanghai to Long Beach, California, in 10 days.
“We’re telling people that sometimes it’s more of a sure thing to move via expedited ocean services. And that’s an education,” Bourke said. “When your airfreight guys are selling ocean, that’s when you know that the market is working in a crazy way.”
Jones Shah said shippers — especially those who are moving a lot of volume — need a diversified strategy when it comes to moving medical supplies.
“If you’re just moving one shipment of 500,000 masks, airfreight is the way to go. If you’re moving multiple shipments of 40 million to 50 million masks over the duration of a project, there is absolutely a hybrid, modal strategy that is going to get you there.
“It’s not just air or ocean that’s going to let you be successful. You need a combination of the two,” he said.
Europe doesn’t have an express-ocean option, so some logistics companies are increasing use of transcontinental rail from China to move urgently needed protective suits and related supplies. Imperial Logistics International said it took 20 days for the first batch of 45 containers with medical gear for health care workers to arrive in Germany by train.
Source: Benzinga, featured on Yahoo.com, 8 May 2020
The U.K. risks failing to recruit the 50,000 customs agents the logistics industry says are needed before Britain’s final parting with the European Union, spelling potential chaos at the country’s busiest border.
The coronavirus has hampered efforts to train staff to handle the extra paperwork firms will need to complete after the U.K. exits the EU’s customs union at the year-end, according to industry bodies involved with the process. One lobby group says its offer to help plug the shortage of recruits has met with silence from Whitehall.
Without enough agents, goods traveling to and from the EU, the U.K.’s single biggest trading partner, risk being delayed at ports, disrupting supply chains and heaping more pain on companies reeling from coronavirus. Even if the two sides strike a trade deal by December, agents will still be needed to process an additional 200 million customs declarations, according to estimates by Her Majesty’s Revenue and Customs.
“This is all blown out the water by the virus,” said Robert Keen, director-general of the British International Freight Association, which is helping to train workers to process the new paperwork with funding from a 34 million-pound ($43 million) government program. “Everybody is fighting to keep their businesses going.”
Keen’s industry group has postponed its classroom training until at least June. The number of monthly registrations for its online learning course has dropped by 80% since February.
Asked by lawmakers on April 27 how many agents have been recruited so far, Cabinet Office Minister Michael Gove said he didn’t know.
He told members of Parliament the government had been in talks with the logistics industry about creating a training school. Such an initiative already exists — the U.K. Customs Academy was started in September with the Institute of Export. 876 courses have been initiated or completed since the academy opened, according to KGH Customs, which helps run the program.
“There is a significantly long way to go,” said Marco Forgione, director-general of the Institute for Export. According to him, the 50,000 figure is almost certainly a conservative estimate of how many agents will be needed. He is calling on the government to encourage people who have lost their jobs because of the virus to re-train as customs officials.
In a sign of how the virus has sapped attention away from Brexit in Whitehall, the Freight Transport Association submitted a proposal to the Treasury on March 17 about how to set up a mass education program to train up agents. More than a month later, the lobby group hasn’t received a reply.
“My impression is it has come to a full stop,” said Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association. He expressed surprised he hadn’t seen any job ads for customs agents.
Talks to seal a trade deal between Britain and the EU have been disrupted by the virus. The U.K. is seeking a Canada-style accord which would eliminate tariffs on goods but create new non-tariff barriers like customs declarations and rules-of-origin paperwork. Without a deal, the U.K. would trade with the EU on terms set by the World Trade Organization, meaning steep duties on products from cars to beef.
Need to Prepare
The two sides have until the end of June to extend the standstill period Britain entered after Brexit on Jan. 31 – but the government has repeatedly ruled out seeking a delay. Business groups such as BIFA and the FTA have called for an extension, arguing firms shouldn’t have to face the double whammy of higher trade costs while still recovering from the negative effects of coronavirus.
A government spokesman said thousands of agents, freight forwarders and parcel operators had used the 34 million-pound fund to improve their IT hardware and train staff.
“The U.K. has a well-established industry of customs intermediaries who serve British businesses trading outside the EU,” the spokesman added.
Even if firms are able to divert resources into training later in the year, by when the virus might have abated, companies will still need time to prepare, said Arne Mielken, founder of Customs Manager, an advisory firm for importers and exporters.
“You can’t hammer in customs knowledge overnight,” he said. “We urge companies not to neglect the fact that Brexit is still happening.”
Source: Article by Joe Mayes, Bloomberg, 4 May 2020