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.
Mediterranean Shipping Company (MSC) has announced it will accelerate efforts to promote an electronic Bill of Lading (e-B/L) across the maritime industry in response to the crisis brought on by COVID-19.
In a statement, the carrier said it has been running a pilot scheme alongside its third-party blockchain platform WAVE to introduce the e-BL in India since late-2019.
MSC’s customers continued to ship goods by using what it called the “reliable and secure digital platform for the fast transfer of trade-related documents”, even through throughout the pandemic, the company said.
The pandemic caused a drop in TEU volume across the world but as China has resumed exports, congestion has hurt port operations, particularly in India.
The problem has been exacerbated by lockdown measures forcing people to work remotely which has led to vital documents such as the Bill of Lading (BL) being incomplete.
To mitigate this problem, MSC has said it will offer the WAVE e-BL solution to streamline affected operations and ensure continuity of service.
In the pre-COVID, paper-based process, it would take days for the BL to travel from origin to destination, physically changing hands several times along the way.
“We have had situations where couriers were unable to deliver documents between ports, trade offices and banks due to quarantine measures,” relates Capt. Deepak Tewari, Managing Director at MSC India.
“WAVE mirrors the paper-based process that the shipping and cargo transportation industry is used to, only without physical couriers.
“Thus, it’s an ideal solution to implement at a time when our customers need to rapidly adjust their processes, as the learning curve is quite low.” he adds.
Captain Deepak Tewari, MSC, also commented: “We have been working with WAVE on introducing and piloting an e-BL solution since 2019. We ran successful pilot projects with some of our customers last year, where we saw first-hand the benefits which arise from digitalising this part of the process.
“When the COVID-19 pandemic hit, we decided to accelerate our roll-out and offer the e-B/L solution to our broader base of customers.”
Gadi Ruschin, CEO at WAVE, comments: “Our mission since founding WAVE has been to transform the efficiency and security of international trade documentation through our robust digitisation protocol.
“We now see ourselves as ‘mission critical’ to ensuring trade can continue as physical movement of people and the paper they carry has been shuttered across the world. It couldn’t come at a more critical time as countries rely on trade to fight COVID-19 and save their economies.
“We launched this unique onboarding effort to help MSC swiftly onboard stakeholders and navigate the challenges while preparing the carrier to flourish once conditions normalise.”
MSC claimed its e-BL solution can cut BL transit time from days to minutes, without the need for physical contact. The e-B/L is sent using WAVE’s blockchain-based system, which uses distributed ledger technology to ensure that all parties can issue, transfer, endorse and manage trade-related documents through a secure, decentralised network.
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.
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.
Transit cargo destined for Uganda, Rwanda and South Sudan will be transported by Standard Gauge Railway (SGR) to Naivasha then to Tororo Kampala from June 1st, the government has said.
Transport Cabinet Secretary James Macharia said the move was arrived at during a meeting with his counterparts from the three countries as a key measure to curb cross border transmissions of COVID-19.
“All transit cargo/containers transported on SGR will be armed only at the Inland Container Depot (ICD) AT Naivasha to be tracked through the Regional Electronic Cargo Tracking System,” a part of the statement read.
Macharia further pointed out that all cargo railed to the Inland Container Depot at Naivasha will be collected by trucks to the partner states via Busia or Malaba.
He however, pointed out that fuel products will be transported by pipeline to Kisumu and thereafter through Lake Victoria to Port Bell or Jinja in Uganda.
Cases of coronavirus among truck drivers who transport cargo across East African member states have tested positive with high numbers prompting Kenya to close its borders with Somalia and Tanzania.
Kenya has subsequently banned any truck driver who turn positive at the border from corssing into the country, with Tanzania having adopted a similar approach lately.
Health Cabinet Secretary Mutahi Kagwe said the development explained why President Uhuru Kenyatta ordered the mandatory screening of truck drivers at border posts before clearance into the country.
Kenya also closed its borders with Somalia, following increased coronavirus cases in Wajir which borders Somalia.
Since the border closure, Tanzanian government officials in Arusha and other border towns have publicly protested, accusing Kenya of discriminating their truck drivers.
Martin Shigella, the Tanga Regional Commissioner was blunt last week, declaring that no Kenyan truck driver will be allowed to cross into Tanzania, accusing them of exporting COVID-19 to the country which is largely seen as the weak link in managing coronavirus in the region, and the world. He also warned Tanzanians against buying goods in Kenya.
But on Wednesday, President John Pombe Magufuli announced on a tour to Singinda region, that “COVID-19 pandemic will not threaten our association with Kenya.”
He said he had held talks with his Kenyan counterpart Kenyatta, and agreed to have their ministers resolve the matter.
“Our economies need each other, our onions are sold in Kenya and Kenya exports milk and other items here,” he said, rooting for a diplomatic solution to the crisis.
The National COVID-19 Taskforce has agreed that all trucks entering Uganda will have only one person on board for the next four weeks in a move to control the movement and exposure of Ugandans to foreign truck drivers.
The meeting which was convened yesterday decided that drivers will have to implement the relay system-where a designated driver drives to the Ugandan border and from there on, another from Uganda who has tested negative for COVID-19 continues with the rest of the journey.
For the last two weeks, truck drivers have undergone mandatory testing at the borders but have been allowed to continue with their journeys before the release of their results. In the process, the drivers who have tested positive have come into contact with several Ugandans. As of today, 18 drivers have tested positive and over 300 contacts are being monitored and traced.
With the new measures, new truck parks or stops have been designated. Drivers who have been tested for COVID-19 and are waiting for their results will stop under the surveillance of security officers to wait for their results. Once results are released, drivers who test positive will be picked up by health ministry officials while those who test negative will be allowed to continue with their journey.
Different routes will have three stops. Route one will cover drivers from Kenya. These drivers will be able to stop at either Namboole, Lukaya, Ntungamo/Ishaka and the border. Route two also from Kenya will have drivers stop in Soroti or Kamdin corner. Trucks from Tanzania travelling to Kampala will cover route three and stop in Karuma and Packwatch. Route four will cover trucks from DRC. The trucks will travel from Fortportal to Mubende and then Namboole.
All other stop points that were previously used by the trucks such as; Tororo, Mbale, Lira, Kamdin, Mbikko, Naluwerere, Lyantonde, Namawojolo, Sanga, Ruti, Migyera, Luwero have been closed. No truck is allowed to make stops there.
The new measures come following an outcry from Ugandans after several truck drivers carrying cargo from Kenya and Tanzania tested positive for COVID-19. Many had called for the closure of all border entry points.
Dr Monica Musenero, an epidemiologist and also a member of the task force says that the new measures are going to be implemented starting next week. She says that all the measures that have been set up are geared towards protecting Ugandans.
The task force also decided on reducing the number of fuel trucks that cross the border. According to Dr Musenero, railway services are going to be used to transport fuel.
“ We want to reduce the number of trucks entering the country. The railway freight services are going to be brought on board so that some things like fuel can be transported using the railway,” Dr Musenero adds.
Other measures that were discussed and passed include; the mandatory use of personal protective equipment like masks by all drivers. Also, domestic trucks should have only two people. In addition to this, freight forwarders will have to pay for testing kits to be used to test drivers.
CargoSmart Limited, a leading shipment management technology solutions provider, announced that it conducted a pilot project with COSCO SHIPPING LINES (COSCO), Shanghai International Port Group (SIPG), and Tesla, Inc. (Tesla) for a new application to transform the cargo release process. It is among the first pilot projects with an ocean carrier conducting a real-time exchange of shipment data with a terminal operator through blockchain. The pilot not only demonstrated the benefits of having a single, trusted source of truth in cargo documentation, but also the efficiency gains for industry participants. Such an application will undoubtedly accelerate the digitalization of shipping industry processes and the further optimization of currently stressed global supply chains. The application will be further developed for participants of the Global Shipping Business Network (GSBN) blockchain consortium, once it is officially established.
The pilot project was designed to minimize consignee and shipping agent verification steps with their ocean carriers in order to speed up the release of sea waybills. As a result, truckers are able to pick up their cargo at the terminal faster, helping shippers meet delivery windows and ensure that service quality and customer commitments are met.
During the pilot in December 2019, COSCO and SIPG streamlined the cargo release process by enabling Tesla to accelerate its cargo pick up procedures on a trusted and secure platform (related post on COSCO’s official WeChat account). The pilot also allowed SIPG to view a single, trusted source of COSCO’s sea waybill data, enabling faster preparation of delivery orders for consignees and their shipping agents. In late March 2020, CargoSmart further enhanced the application to display laden gate out, appointment date, and terminal release, enabling shippers to have better visibility of their cargoes.
Henry Huang, Executive DGM of Operation & Business Department of SIPG, said, “The pilot is a key component of our journey towards paperless, trusted, and seamless trade processes at the Port of Shanghai, and it demonstrates the benefits for supply chain stakeholders around the world. We look forward to extending the collaboration with more supply chain stakeholders to render extraordinary service to our community.”
Wu Yu, General Manager of Business Process & System Division of COSCO said, “The pilot with SIPG and CargoSmart showcased significant efficiency gains not only in the cargo release process, but also for downstream supply chain planning by presenting a single source of truth for documentation for all involved parties. We look forward to more blockchain-based applications that can create value for customers and the industry alike.”
Expanding Value to More Carriers and Terminals
The successful pilot has proven that the unique collaboration model between ocean carriers and terminal operators is able to create benefits for stakeholders along the global supply chain. Leveraging this successful experience, the cargo release application is expected to further promote carrier-terminal data exchange and streamline operations. It is envisaged that this application will unleash the full potential of the proposed GSBN platform once it is established, subject to the requisite regulatory approvals.
As preparations continue for the future formation of the GSBN, contingent upon securing required regulatory approvals, CargoSmart will conduct similar pilots with Xiamen Ocean Gate Container Terminal Co., Ltd. (XOCT) and other terminal operators such as those at the Port of Qingdao in China and the Port of Laem Chabang in Thailand. The objective is to broaden the scope of the pilot by involving more carriers and terminals, and eventually extending the pilot to other industry participants in the near future. To further enhance the value of the pilot application, CargoSmart will enable APIs to explore and test ways to extend visibility to shippers for greater efficiencies throughout the cargo release process.
ICC has launched the Digital Trade Standards Initiative (DSI) – a collaborative cross-industry effort to enable the standardisation of digital trade.
The ICC Digital Trade Standards Initiative (DSI) will build on work done by various likeminded initiatives, many of which aim to digitise trade, notably through the development of open trade and technology standards to promote interoperability.
The ICC DSI will promote greater economic inclusion through the development of open trade standards. This will facilitate technical interoperability among the variety of blockchain-based networks and technology platforms that have entered the trade space over the past two years.
“Universal standards will connect existing digital islands and enable market forces to improve customer experience,” said ICC Secretary General John W.H. Denton AO. “As a leading and neutral voice in the industry, it made sense to bring this project under the umbrella of ICC. This will allow the ICC DSI to lead and coordinate efforts in developing standards and protocols to digitise trade.”
The ICC DSI is unique among trade digitisation initiatives due to its collective nature. Too often, digitisation is enacted through bilateral agreements between institutions that require members to run on the same platform. This has resulted in siloed data and bespoke trade and trade finance processes.
“The ICC DSI seeks to coordinate all parties in the standardisation of data formats and processes, rather than duplicate existing efforts. In turn, membership will be open to all organisations across industries and geographies supporting the project’s core mandate, including existing industry associations and initiatives,” explained Steven Beck, Head of Trade Finance at the Asian Development Bank.
The ICC DSI will be supported by seed-funding committed by the Asian Development Bank and the Government of Singapore, in addition to ICC’s support. The ICC DSI will be run as an independent entity out of the recently-established ICC Centre for Future Trade.
“We have seen the tremendous impact of technology in growing businesses and facilitating international trade,” said Gina Lim, Director of Financing Ecosystem Development at Enterprise Singapore. “The ICC DSI will promote greater adoption of technology within the trade ecosystem and facilitate greater inclusiveness for small businesses. We are excited for the establishment of the ICC DSI office in Singapore and look forward to working with our global partners across geographies and sectors.”
ICC anticipates the implementation of a full-time management team, and a global and diverse steering committee to provide guidance and set priorities for the project’s development.
ICC has opened the recruitment process to hire a managing director to lead operations within the ICC DSI, with an official launch event to follow once this first process completed.
The following article was published by Bloomberg and sketches the day-to-day hardship for cross border trucking through Africa. In a sense it asks the very questions and challenges which the average African asks in regard to the highly anticipated free trade area. While rules of origin and tariffs form the basis of trade across borders, together with freedom of movement of people, these will mean nothing if African people receive no benefit. As globalisation appears to falter across Europe and the West, it begs the question whether this is in fact is the solution for Africa; particularly for the reason that many believe globalisation itself is an extension of capitalism which some of the African states are at loggerheads with. Moreover, how many of these countries can forego the much need Customs revenue to sustain their economies, let alone losing political autonomy – only time will tell.
Nyoni Nsukuzimbi drives his 40-ton Freightliner for just over half a day from Johannesburg to the Beitbridge border post with Zimbabwe. At the frontier town—little more than a gas station and a KFC—he sits in a line for two to three days, in temperatures reaching 104F, waiting for his documents to be processed.
That’s only the start of a journey Nsukuzimbi makes maybe twice a month. Driving 550 miles farther north gets him to the Chirundu border post on the Zambian frontier. There, starting at a bridge across the Zambezi River, trucks snake back miles into the bush. “There’s no water, there’s no toilets, there are lions,” says the 40-year-old Zimbabwean. He leans out of the Freightliner’s cab over the hot asphalt, wearing a white T-shirt and a weary expression. “It’s terrible.”
By the time he gets his load of tiny plastic beads—the kind used in many manufacturing processes—to a factory on the outskirts of Zambia’s capital, Lusaka, he’s been on the road for as many as 10 days to traverse just 1,000 miles. Nsukuzimbi’s trials are typical of truck drivers across Africa, where border bureaucracy, corrupt officials seeking bribes, and a myriad of regulations that vary from country to country have stymied attempts to boost intra-African trade.
The continent’s leaders say they’re acting to change all that. Fifty-three of its 54 nations have signed up to join only Eritrea, which rivals North Korea in its isolation from the outside world, hasn’t. The African Union-led agreement is designed to establish the world’s biggest free-trade zone by area, encompassing a combined economy of $2.5 trillion and a market of 1.2 billion people. Agreed in May 2019, the pact is meant to take effect in July and be fully operational by 2030. “The AfCFTA,” South African President Cyril Ramaphosa said in his Oct. 7 weekly letter to the nation, “will be a game-changer, both for South Africa and the rest of the continent.”
It has to be if African economies are ever going to achieve their potential. Africa lags behind other regions in terms of internal trade, with intracontinental commerce accounting for only 15% of total trade, compared with 58% in Asia and more than 70% in Europe. As a result, supermarket shelves in cities such as Luanda, Angola, and Abidjan, Ivory Coast, are lined with goods imported from the countries that once colonized them, Portugal and France.
By lowering or eliminating cross-border tariffs on 90% of African-produced goods, the new regulations are supposed to facilitate the movement of capital and people and create a liberalized market for services. “We haven’t seen as much institutional will for a large African Union project before,” says Kobi Annan, an analyst at Songhai Advisory in Ghana. “The time frame is a little ambitious, but we will get there.”
President Nana Akufo-Addo of Ghana and other heads of state joined Ramaphosa in hailing the agreement, but a number of the businesspeople who are supposed to benefit from it are skeptical. “Many of these governments depend on that duty income. I don’t see how that’s ever going to disappear,” says Tertius Carstens, the chief executive officer of Pioneer Foods Group Ltd., a South African maker of fruit juices and cereal that’s being acquired by PepsiCo Inc. for about $1.7 billion. “Politically it sounds good; practically it’s going to be a nightmare to implement, and I expect resistance.”
Under the rules, small countries such as Malawi, whose central government gets 7.7% of its revenue from taxes on international trade and transactions, will forgo much-needed income, at least initially. By contrast, relatively industrialized nations like Egypt, Kenya, and South Africa will benefit from the outset. “AfCFTA will require huge trade-offs from political leaders,” says Ronak Gopaldas, a London-based director at Signal Risk, which advises companies in Africa. “They will need to think beyond short-term election cycles and sovereignty in policymaking.”
Taking those disparities into account, the AfCFTA may allow poorer countries such as Ethiopia 15 years to comply with the trade regime, whereas South Africa and other more developed nations must do so within five. To further soften the effects on weaker economies, Africa could follow the lead of the European Union, says Axel Pougin de La Maissoneuve, deputy head of the trade and private sector unit in the European Commission’s Directorate General for Development and International Cooperation. The EU adopted a redistribution model to offset potential losses by Greece, Portugal, and other countries.
There may be structural impediments to the AfCFTA’s ambitions. Iron ore, oil, and other raw materials headed for markets such as China make up about half of the continent’s exports. “African countries don’t produce the goods that are demanded by consumers and businesses in other African countries,” says Trudi Hartzenberg, executive director of the Tralac Trade Law Center in Stellenbosch, South Africa.
Trust and tension over illicit activity are also obstacles. Beginning in August, Nigeria shut its land borders to halt a surge in the smuggling of rice and other foodstuffs. In September, South Africa drew continentwide opprobrium after a recurrence of the anti-immigrant riots that have periodically rocked the nation. This could hinder the AfCFTA’s provisions for the free movement of people.
Considering all of these roadblocks, a skeptic would be forgiven for giving the AfCFTA little chance of success. And yet there are already at least eight trade communities up and running on the continent. While these are mostly regional groupings, some countries belong to more than one bloc, creating overlap. The AfCFTA won’t immediately replace these regional blocs; rather, it’s designed to harmonize standards and rules, easing trade between them, and to eventually consolidate the smaller associations under the continentwide agreement.
The benefits of the comprehensive agreement are plain to see. It could, for example, limit the sort of unilateral stumbling blocks Pioneer Foods’ Carstens had to deal with in 2019: Zimbabwe insisted that all duties be paid in U.S. dollars; Ghana and Kenya demanded that shippers purchase special stickers from government officials to affix to all packaging to prevent smuggling.
The African Export-Import Bank estimates intra-African trade could increase by 52% during the first year after the pact is implemented and more than double during the first decade. The AfCFTA represents a “new pan-Africanism” and is “a pragmatic realization” that African countries need to unite to achieve better deals with trading partners, says Carlos Lopes, the former executive secretary of the United Nations Economic Commission for Africa and one of the architects of the agreement.
From his closer-to-the-ground vantage point, Olisaemeka Anieze also sees possible benefits. He’s relocating from South Africa, where he sold secondhand clothes, to his home country of Nigeria, where he wants to farm fish and possibly export them to neighboring countries. “God willing,” he says, “if the free-trade agreement comes through, Africa can hold its own.”
In the meantime, there are those roads. About 80% of African trade travels over them, according to Tralac. The World Bank estimates the poor state of highways and other infrastructure cuts productivity by as much as 40%.
If the AfCFTA can trim the red tape, at least driving the roads will be more bearable, says David Myende, 38, a South African trucker resting after crossing the border post into South Africa on the way back from delivering a load to the Zambian mining town of Ndola. “The trip is short, the borders are long,” he says. “They’re really long when you’re laden, and customs officers can keep you waiting up to four or five days to clear your goods.”
Source: article by Anthony Sguazzin, Prinesha Naidoo and Brian Latham, Bloomberg, 30 January 2020
A companion guide in support of increased compliance in the reporting of goods and conveyances (RCG) to Customs, South Africa.
Necessary information for – Air, Sea and Road carriers, vessel’s agents, NVOCCs, freight forwarders, Air and Sea terminal operators, container depot operators, transit shed operators and de-grouping depots. Also, all private software service providers to the trade.
The guide offers easy navigation through –
registration and electronic trading with SARS Customs
the various electronic messages mandated by law, covering import and export movements, across all modes of permissible international transportation
message types for each transaction type
scenarios to facilitate easier understanding across operators in the supply chain on how the various electronic reports are sequenced, ensuring that Customs formulates a comprehensive end-2-end view of a international trade transaction
reference webpages, official notifications, Customs rules and other pertinent information concerning cargo reporting.
All information is hyperlinked to SARS documentation, found on the official SARS website www.sars.gov.za
The following article provides insight into prevailing problems concerning rail transport between Durban and Johannesburg, in particular containerised and bulk rail cargo. Again, private enterprise is ahead of the game, but must wait for the availability of reliable rail services to permit uninterrupted movement of goods. The bottom line – an under-performing and unreliable railway network to South Africa’s hinterland means the country’s road networks will remain under stress; and, will themselves fall into a state of disrepair. This contributes to the country’s lack of competitiveness. The article puts into perspective the announcement of the Distribution Junxion, Port of Gauteng which will be situated south of Ekurhuleni, where it borders conveniently on the Durban-Johannesburg railway line.
Customs and Border Protection (CBP) has expanded its pilot of a new, voluntary scheme to try to improve the security of low-value shipments entering US borders.
The Section 321 Data Pilot is focused in particular on e-commerce, and aims to improve data-sharing between online marketplaces, carriers, technology firms and logistics provider to help protect American consumers from illicit goods arriving by air, ocean, truck, or rail.
That includes, “illicit narcotics, unregulated prescription drugs, brand counterfeits, and unsafe food and beauty products”, according to the CBP, which plans to run the pilot until August 2021.
Nine companies have been selected to participate in the pilot, including e-commerce giants Amazon and eBay, carriers Zulily, FedEx, DHL and UPS, as well as technology firm PreClear and logistics providers XB Fulfillment and BoxC Logistics.
CBP has said that it plans to expand access to all interested and qualified participants “in early 2020.”
The participants will provide cargo origin, content, tracking, recipient and other information to CBP upfront, in addition to the information that is currently legally required for Section 321 shipments – in other words one shipment per day for eligible importers, individuals or companies with a value of $800 or less.
CBP says it wants to see whether having that additional information will enable it to perform “more effective and efficient targeted screening” of these low-value shipments.
Research published in 2018 has suggested that two-thirds of counterfeit goods intercepted by customs around the world are discovered in small parcels sent through postal or courier services.
In part because they are harder for customs officials to track and seize, and also because in many jurisdictions they have not required detailed manifests for their contents. The US stepped up the manifest requirements for Section 321 shipments from January 1, 2019.
CBP broadened the scope of the 321 Data Pilot last month, shortly after the pilot was launched in August, to include ocean shipments and international mail which weren’t included in the original plan.
“Combined with the exponential growth of the online shopping market in the US over the past five years, CBP has seen a significant increase in small, low-value packages,” said the agency in a statement.
“Today, CBP processes more than 600 million express consignment and international mail shipments a year – approximately 1.8m a day. The unprecedented growth in volume of these low-value shipments requires creative solutions to interdict illicit and dangerous products to enter the US.”
Source: article by Phil Taylor, Securityindustry.com, 20 January 2020
Visual Capitalist – Costing between $4-8 trillion and affecting 65 countries, China’s ambitious One Belt, One Road (OBOR) initiative is the granddaddy of all megaprojects.
By the time of it’s estimated completion in 2049, OBOR will stretch from the edge of East Asia all the way to East Africa and Central Europe, and it will impact a lengthy list of countries that account for 62% of the world’s population and 40% of its economic output.
Today’s infographic from Raconteur helps visualize the initiative’s tremendous size, scale, and potential impact on Asian infrastructure.
The tangible concept behind OBOR is to build an extensive network of infrastructure – including railways, roads, pipelines, and utility grids – that help link China to the rest of Asia, as well as Africa and Europe.
This multi-trillion dollar project will fill the infrastructure gap that currently inhibits economic growth potential on the world’s largest continent, but it has other important objectives as well. By connecting all of these economies together, China is hoping to become the gatekeeper for a new platform international trade cooperation and integration.
But that’s not all: if China’s economic corridor does what it’s supposed to, the countries in it will see more social and cultural links, financial cooperation, and a merger of policy goals and objectives to accomplish.
Naturally, this will expand the clout and influence of China, and it may even create the eventual scaffolding for the renminbi to flourish as a trade currency, and eventually a reserve currency.
One Road or Roadblock?
When billions of dollars are at play, the stakes become higher. Although some countries agree with the OBOR initiative in principle – how it plays out in reality is a different story.
Most of the funding for massive deep-water ports, lengthy railroads, and power plants will be coming from the purse strings of Chinese companies. Some will be grants, but many are taking the form of loans, and when countries default there can be consequences.
In Pakistan, for example, a deep-water port in Gwadar is being funded by loans from Chinese banks to the tune of $16 billion. The only problem? The interest rate is over 13%, and if Pakistan defaults, China could end up taking all sorts of collateral as compensation – from coal mines to oil pipelines.
Meanwhile, Sri Lanka was unable to pay its $8 billion loan for the Hambantota Port. In the middle of 2017, the country gave up the controlling interest in the port to a state-owned company in China in exchange for writing off the debt. China now has a 99-year lease on the asset – quite useful, since it happens to be right in the middle of one of China’s most important shipping lanes to Africa, the Middle East, and Europe.
While most economies in Asia are willing to accept some level of risk to develop OBOR, there is one country that is simply not a fan of the megaproject.
India, a very natural rival to China, has a few major qualms:
The China-Pakistan Economic Corridor (CPEC) goes right through Kashmir, a disputed territory
Chinese investment in maritime trade routes through the Indian Ocean could displace India’s traditional regional dominance
India sees the OBOR megaproject as lacking transparency
Meanwhile, with neighboring states such as Sri Lanka and Pakistan getting billions of dollars of investment from Chinese state-run companies, it likely creates one more issue that Indian Prime Minister Modi is not necessarily happy about, either.
Source: Original article by Jeff Desjardins, Visual Capitalist, published on 15 March 2018