Best SA Exporters is an online based business, created in order to promote export-ready Southern African goods and services to the international marketplace. In essence, Best SA Exporters role is to assist in growing your international trade, resulting in foreign direct investment and national job creation. Clients are advertised and promoted through a highly visible Best SA Exporters website, as well as through popular social networking presence on Facebook, Twitter and LinkedIn. Adding on to these services, Best SA Exporters now offers an international trade related company the opportunity to promote its goods / services to the Best SA Exporters database of approximately 8000 online subscribers. Trade leads received for each campaign will then be collated and supplied exclusively to you as an advertiser. Something worthwhile for exporters to look into?
Tag / Business
Export tax mooted on iron ore and steel
The South African cabinet has endorsed the final report on the work of the Intra-Departmental Task Team (IDTT) on iron ore and steel, says Minister in the Presidency responsible for Performance Monitoring, Evaluation and Administration, Collins Chabane.
Briefing reporters following Cabinet’s last meeting of year on Thursday, Chabane said in keeping with prior decisions to enhance the competitiveness of the steel value chain, Cabinet endorsed the final report on the work of the IDTT and the recommendations contained in the report for urgent implementation.
He said there had been a lot of debate and interaction between the Departments of Trade and Industry, Economic Development and steel producers and mining houses with regards to the pricing of steel.
In August 2010, the dti announced the formation of a task team to make recommendations into the viability of local steel production. This as it had expressed concern about the high price of steel in the South African economy.
“Within the context of the beneficiation programme where the government is emphasising and wanting to expand the beneficiation of South African mineral products as it is one of the critical aspects,” said Chabane.
Among the recommendations of the task team are the amendments to the Competition Act and the introduction of export taxes on iron ore and steel where appropriate. The recommendations also include the promotion of new steel investments and prioritisation of electricity available and connections to such investments.
“Government would want, among other things, to expand the number of participants in terms of those who are producing steel as part of the reason to introduce new competition. Secondly [we] also want to take measures which are going to contain the expansion of prices of steel countrywide in order to stimulate the domestic production of various products which need to be processed in the country.
“The government is going to take several steps with regards to that in order to lower the price for domestic consumption and to redirect the steel products to provide for the South African economy,” explained Chabane.
He further added that the Industrial Development Corporation (IDC) will have to play a greater role in the industrialisation of the country through being involved in manufacturing as well as beneficiation. Source: SAnews.gov.za
A review of South Africa’s road and rail infrastructure
Creamer Media have published 2012 Road and Rail – a comprehensive review and insight into South Africa’s road and rail transport infrastructure and network. This should be a must read for any serious investor and comes at a price just shy of R 2000,00.
For the much of the six-and-a-half decades from 1910, South Africa’s rail sector was carefully nurtured and handsomely resourced by successive administrations. Growing competition from road was kept at bay by tough regulatory practices that ensured rail freight of a virtual monopoly.
From the mid-1970s, however, rail’s pre-eminent position in South Africa began to come under scrutiny. A series of National Transport Policy Studies reviewed worldwide trends in transport deregulation. The findings reinforced a growing belief that an overprotected rail industry and an over-regulated road-freight sector were detrimental to the overall South African economy. This was undoubtedly true – but as often happens in these matters, in the following decades, and indeed, right up to the recent present, the stick was then bent excessively in the opposite direction.
The net result is that, on the freight side, rail has massively lost market share to road over the past 20 to 25 years. Road transport has been allowed to grow, but without the implementation of an effective road transport quality system. This imbalance in the modal split has been a key contributing factor to high direct logistics costs in the economy. The disproportionate shift of freight to road has had many other perverse and costly impacts – the road freight industry (unlike Transnet Freight Rail) does not directly carry the cost of building and maintaining the public infrastructure it uses and this has resulted in an increase in road construction and maintenance costs, deteriorating road conditions, congestion problems and road collisions.
This report investigates South Africa’s road and rail infrastructure, including the country’s road and rail networks, maintenance and the challenges facing the sector, among others. For details as to the content of the report please click here! Source: Creamer Media
Customs Modernisation – some benefits in the offing
Its been a while since I penned some comment on the customs modernisation programme in South Africa. Amongst the anxiety and confusion there are a few genuine ‘nuggets’ which I would hope will not go unnoticed by the business community. With stakes high in the area of business opportunity and competitiveness, such ‘nuggets’ must be adopted and utilised to their fullest extent. Lets consider two such facilities.
The widespread implementation and adoption of electronic customs clearance has allowed brokers to file declarations for any customs port from the comfort of their desks. Brokers can now consider centralised operations especially for customs clearance purposes. Likewise the withdrawal of the annoying goodwill bond should also come as a welcome decision. Hopefully this may translate into cost-savings over time.
As of 11 August 2012, the business community will also be glad to learn that imported goods which do not fully meet all national regulatory requirements can be entered into bond on a warehouse for export (WE) basis. While this may not sound like anything new, the provisions which come into effect, will accord the identical treatment of such goods as if they were being entered for warehousing. In short the new provisions will allow more flexibility with the ability to re-warehouse WE goods; the ability to change ownership on WE goods; and the ability to declare WE goods for another customs procedure.These provisions can be considered a relaxing of the original approach which mandated compulsory exportation. All government regulatory requirements (i.e. permits, certificates, etc.) will however be strictly enforced upon clearance of WE goods for home use or another customs procedure. The apparent relaxation forms part of ongoing alignment of customs procedures with the Customs Control Bills, which are in the process of finalisation.
For those who have enquired about the followup to the national transit procedure, I have not forgotten about it. The ‘touchy’ nature of the subject requires a mature and fair response. Please bear with me.
- Revisiting the national transit procedure – Part 2 (mpoverello.com)
- Revisiting the national transit procedure – Part 1 (mpoverello.com)
The meaning of a Customs Broker
The following article comes from the 22 June 2011 issue of the American Shipper. It was written by the president of The National Customs Brokers & Forwarders Association of America (NCBFAA). I do believe that it is poignant for African’s to better understand what makes trade tick. It is particularly relevant in the South African context where certain service providers and consultants believe it is they that ‘turn the wheels of trade’ and that the ‘real’ end users are merely a consequence to push the ‘enter button’. While the ‘brokering industry’ has been tainted by criminal activities (in many cases ex-customs officials) there is a legitimacy to the continued existence for the trusted customs broker. The importance is even more pronounced today where South African importers and exporters will soon face the brunt of the new Customs’ law – the need for skilled and experienced brokers should be an imperative within our local industry. So lets put ignorance aside and consider the article, below.
As a third generation customs broker, I know what it takes to enter goods into the commerce of the United States. As president of the National Customs Brokers and Forwarders Association of America, I know that the customs brokerage industry consists of thousands of individuals who work for small and large, old and new, struggling and successful companies for fees that do not reflect the true value of the service they provide.
It is unfortunate that some would say we “stubbornly stand in the way of progress.” The fact is that without the leadership of the brokerage industry and the NCBFAA, importers would still be taking their commercial invoices and bills of lading to the Customs House only to wait weeks for release and it would be impractical to conduct international business.
If you have never cleared goods entering the United States, I encourage you to try. It is naive to believe that all a broker does is push a couple of buttons and magically goods are released and delivered to your door.
To start, let’s look at the new Importer Security Filing (ISF). Pre-arrival shipment information that was considered unavailable three years ago is now given to U.S. Customs and Border Protection prior to loading for more than 90 percent of the goods heading by vessel to the United States. Customs brokers or freight forwarders receive and process practically all that information before transmitting it to CBP. What if you didn’t have access to the broker’s Automated Broker Interface system or the forwarder’s Automated Manifest System connection to transmit this data? How would you send the ISF? How would CBP receive it? Would every importer have to establish and maintain a CBP-compatible computer system? At what cost?
CBP Commissioner Alan Bersin has said that other agencies generate two of three import exams. In addition to myriad CBP regulations, there are numerous other regulations you must know to import successfully. Do you know the Food and Drug Administration rules? What about the Bio-Terrorism Act — did you research it yourself or hire another industry expert to figure out how this was going to impact your company? Then there are FDA product registrations and Prior Notice requirements and now the new Food Safety Act. Of course your broker can help with that. The U.S. Department of Agriculture, Environmental Protection Agency, Federal Communications Commission, Transportation Department — more than 20 agencies with requirements that must be met every time a shipment is presented for entry. Anti-dumping, free trade agreements, quota, denied parties, State Department, International Traffic in Arms Regulations, Office of Foreign Assets Control, etc. Can you imagine what would happen if your broker didn’t know about those things? How would your goods get cleared? Would your goods be detained or seized? What if multiple shipments were en route when the problem was identified? It is a good thing that you have somebody in your corner paying attention to this stuff.
I hear over and over how CBP wants to reduce the cost of importing. Let’s review the costs associated with importing: Freight ocean/air, duty and customs fees, broker fee and delivery fee. Freight we can’t control, duty is a given, Merchandise Processing Fees and other government fees we cannot control. There are exam fees, Vehicle and Cargo Inspection Systems exam fees, storage fees caused by exams, VACIS handling charges by some carriers and port facilities, trucking fees to get containers positioned for exams, and so on. A great number of these costs are a result of government security efforts. The broker fee averages about 0.1 percent of the cost of the imported goods, and then there is the truck fee plus a clean truck fee to pickup and deliver the goods. Hmm … what should be reduced?
“It is a good thing that you have somebody in your corner paying attention to this stuff.”
During the CBP Trade Symposium, the Consumer Product Safety Commission (CPSC) described a tip about two containers that might contain non-compliant goods so they worked with CBP to perform an intensive exam. Luckily the tip did not pan out and the goods were found to be compliant. “Disaster avoided!” What CPSC didn’t say or didn’t know was that the storage and handling costs associated with having two containers held for two weeks exceeded $4,000. There was also no mention about whether the goods were time sensitive. At most ports in the nation, if a government agency puts a hold on a shipment, the expenses do not go on hold. Demurrage and per diem costs accumulate daily. Who creates those extra costs? I suggest that those who want to reduce the cost of importing consider where the real costs are being accrued — it is not in the brokerage industry, which works very hard to help reduce the cost of importing.
That leads to the discussion of using brokers as a “multiplier” to reach small and medium-size importers. That is, in fact, what brokers do for the thousands of importers who know their product but have limited knowledge of the importing process. We get the importer’s goods cleared through the maze of government regulation and delivered to them within days of arrival into the United States. Talk about a multiplier. The fact is that we do that for businesses of all sizes, from the biggest multinational corporations with multiple import divisions and thousands of different products to the start-up business with a single product. Moreover, we do it every day … routinely.
Let’s talk about the Automated Commercial Environment. Do you know why few brokers use ACE? The system doesn’t always work and you can’t use it to release a shipment into the commerce of the United States. While you can use ACE for certain entry related functions, to the extent that brokers do utilize ACE, they must maintain two operating systems and train their personnel to perform limited tasks in both systems. What a nightmare! Talk about inefficiency and the bloated cost of importing!
We would love to have ACE working as promised. For more than 10 years the brokerage industry has gone to Congress and asked for money for ACE development. Three billion dollars later, the system is a fraction of what was promised and we have been told it will have reduced functionality in many of the areas that are crucial to our businesses. Would you change to a new system if it was worse than the one you currently use? The answer is “no” and neither will we.
Two years ago, the NCBFAA gave CBP a white paper that outlined the minimum system requirements needed before we would encourage our members to make the switch. Once ACE development has met those minimum requirements, we will encourage our membership to transition to the new system. CBP understands exactly where we are on this and we continue to vigorously support ACE development. We are excited about the progress that Cindy Allen has made in her limited time as the ACE project leader. That gives us hope that this endless project will have value and will be completed before we all retire.
The brokerage industry is comprised of highly regulated, dedicated professionals who must pass a rigorous examination to become a licensed customs broker. Did you know the annual pass rate for this examination is less than 10 percent? That is a lower pass rate than the CPA exam, the attorney’s bar exam, doctor medical boards, or the insurance broker exam. Talk about tough. Five years ago, the NCBFAA developed a six-month certification program called the Certified Customs Specialist (CCS). At the outset of the program, licensed brokers who wanted to participate were grandfathered into the CCS program, but had to earn 20 units of continuing education annually. Interested parties who were not licensed customs brokers, brokers who missed the grandfathering, and anyone who simply wanted to learn more about the import process, could enroll in the CCS program. We encourage anyone with a desire to learn more about the importing process to take the CCS course. In our role as professionals we know that we must keep current with the regulatory changes and in an industry where change occurs daily, annual continuing education is important.
We appreciate the recognition that the brokers are the most knowledgeable and trade savvy individuals to effect positive change on their industry. We are the biggest supporters of ACE, ISF, Customs-Trade Partnership Against Terrorism and other government programs that are reasonable and improve trade facilitation. We make the highly complex, tightly regulated and difficult process of importing into the United States so easy that not only the biggest corporations can do it but also the smallest ones can do it just as well.
We welcome positive change but, yes, we are stubborn when promises made to us are not kept and the costs associated with short-sighted, ill-conceived programs are dumped on our industry and the trade.
There’s a lot more to customs brokerage than pushing a button. Licensed customs brokers handle more than 95 percent of the entries filed with CBP with the single goal of getting our customer’s goods entered into the commerce of the United States legally, quickly and as efficiently as possible. And we do it proudly, professionally and humbly.
Is this situation any different elsewhere worldwide?
- Financial pinch affects CBP’s modernisation and developmental capacity (mpoverello.com)
- Selecting a Customs Broker Agent (athingforcars.com)
- How Can a Customs Brokerage Service Help in Shipping? (athingforcars.com)
- The Task of Customs Clearance Agents (athingforcars.com)
ZIMRA, Business to form Customs Forum
The Zimbabwe Revenue Authority (ZIMRA) is working in partnership with organised businesses associations in crafting a Memorandum of Understanding, creating the Zimbabwe Customs to Business Forum, an official has said. ZIMRA’s commissioner for customs and excise Mr Happias Kuzvinzwa said last week that the forum was a platform for his organisation and business to collaborate on issues of compliance, policy, capacity building, integrity and technical engagements. He was addressing delegates at the Shipping and Forwarding Agents’ Association of Zimbabwe 8th annual conference held in Beitbridge last week. Mr Kuzvinzwa said the interim steering committee was finalising the draft MoU and terms of reference.
“The forum is a prelude to the implementation of the authorised economic operator scheme. Membership of this forum is open to the businesses affiliated to recognised associations and shall be governed through a steering committee which is a higher committee, and standing committees which are lower committees chaired and constituted by both ZIMRA and business.
“The standing committees are organised in clusters for easy management of programmes. We expect all the concerned parties to sign the MoU soon upon its finalisation” he said.
Mr Kuzvinzwa added that in line with the SAFE framework of standards, ZIMRA would soon be plotting the authorised economic operators. He said the scheme sought to reward all compliant operators in the supply chain who meet the set criteria. He added that groundwork had been done and teams will be conducting stakeholder consultations and awareness workshops next month. “I would also want to urge the freight industry to embrace as a culture and operation ethos integrity, voluntary compliance, relevant competencies, and information technology.
“Missing these industry risks is being packed into the dustbin of history as you become irrelevant and classified as non-tariff barriers.” he said. Mr Kuzvinzwa added that ZIMRA was also in the process of putting in place a border agency single window through ASYCUDAworld. He said all border agencies would be connected to the workflow process through ASYCUDAworld to ensure that respective mandates are coordinated and streamlined.
“Discussions are at an advanced stage with other border agencies on the implementation of the single window and Beitbridge has been selected to pilot the programme with ZIMRA providing computer workstations at their respective offices,” he said.
Source: The Herald (Zimbabwe)
- Now you can tweet your ZIMRA questions & complaints (techzim.co.zw)
SAD Story – Part 2
What is clear in regard to modern day business is the fact that ‘harmonisation’ in the international supply chain is essentially built around ‘data’. E-commerce has been around for decades, plagued by incompatibilities in messaging standards, and computer software, network and hardware architecture. However, one of the key inhibitors has been organisations and administrations having to adhere to domestic ‘dated’ legislation and so-called standard operating procedures – seemingly difficult to change, and worst of all suggesting that law has to adapt!
A lot has had to do with the means of information presentation (format) and conveyance (physical versus electronic) rather than the actual information itself. Standards such as the UN Layout key sought to standardise or align international trade and customs documentation with the view to simplifying cross-border trade and regulatory requirements. In other words, each international trade document being a logical ‘copy and augmentation’ of a preceding document. This argument is still indeed valid. The generally accepted principle of Customs Administrations is to maximise its leverage of latent information in the supply chain and augment this with national (domestic) regulatory requirements – within a structured format.
The Single Administrative Document (SAD) was itself borne out of this need. The layout found acceptance with UNCTAD’s ASYCUDA which used it as a marketing tool (in the 1990’s) in promoting ‘What-You-See-Is-What-You-Get’ (WYSIWYG). It certainly provided a compelling argument for under-developed countries seeking first-time customs automation. Yet, the promise of compatibility with other systems and neighbouring customs administrations has not lived up to this promise.
Simultaneous to document harmonisation, we find development of the Customs data model, initially the work of the Group of 7 (G7) nations at the United Nations. Its mandate was to simplify and standardize Customs procedures Customs procedures. In 2002, the WCO took over this responsibility and after further refinement the G7 version became version 1 of the WCO Customs Data Model. Once more a logical progression lead to the inclusion of security and other government regulatory requirements. This has culminated in the recent release of WCO Data Model 3. Take note the word “Customs” is missing from the title, indicating that Version 3 gives effect to its culminating EDI message standard – Government Cross Border Regulatory (GOVCBR) message – an all inclusive message standard which proposes to accommodate ALL government regulatory reporting requirements.
Big deal! So what does this mean? The WCO’s intent behind GOVCBR is as follows –
- Promoting safe and secure borders by establishing a common platform for regulatory data exchange enabling early sharing of information.
- Helping co-operating export and import Customs to offer authorized traders end end-to to- end premium procedures and simple integrated treatment of the total transaction.
- Contributing to rapid release.
- Elimination redundant and repetitive data submitted by the carrier and the importer.
- Reducing the amount of data required to be presented at time of release.
- Reducing compliance costs.
- Promoting greater Customs Co-operation.
Undertaking such development is no simple matter, although a decision in this direction is a no brainer! Over a decade’s work in the EDI space in South Africa is certainly not lost. Most of the trade’s electronic goods declaration and cargo reporting requirements remain intact, all be they require re-alignment to meet Data Model 3 standard. Over and above this, the matter of government regulatory requirements (permits, certificates, prohibitions and restrictions, letters of authority, etc.) will require more ‘political will’ to ensure that all authorities administering regulations over the importation and exportation of goods are brought into the ‘electronic space’. Some traction is already evident here largely thanks to ITAC and SA Reserve Bank willingness and capability to collaborate. In time all remaining authorities will be brought on board to ensure a true ‘paperless’ clearance process.
So, I digress somewhat from the discussion on the SAD. However, the bottom line for all customs and border authorities, traders and intermediaries is that ‘harmonisation’ of the supply chain operation follows the principal and secondary data required to administer ALL controls via a process of risk assessment, to facilitate release including any intervention required to ensure the compliance of import and export goods. As such even legislative requirements need to enable ‘harmonisation’ to occur otherwise we end up with a non-tariff barrier, uncertainty in decision-making, and a business community unable to capitalise on regional and international market opportunities. Positively, the draft SA Customs Control Bill makes abundant reference to reporting – of the electronic kind.
In Part 3, I will discuss regional ‘integration’ and the desire for end-to-end transit clearance harmonisation.
- Insight behind the WCO Data Model (mpoverello.wordpress.com)
- WCO – 2012 is the year of Connectivity (mpoverello.wordpress.com)
- New Zealand releases trade implementation guidelines for GOVCBR (mpoverello.com)
Aircargoshop – a revelation for shippers
The following piece suggests that the realisation of AEO obligations on shippers is real and will be augmented by support systems that may marginalise the highly competitive freight forwarding industry. While there is a suggestion of cost savings due to non-reliance of shippers on traditional forwarding agents, I believe this is a short-sited view as the ‘real challenge’ lies in whether or not shippers are up to the task in meeting these obligations given their unfamiliarity with customs and transport requirements. I see many shippers having to recruit experienced customs and forwarding experts to maximise their compliance given the burgeoning obligations materializing in international shipping!
In October 2011, Aircargoshop an online booking portal provided shippers the possibility to book their own airfreight without involvement of the traditional shipping agent via the online portal Aircargoshop. This is a development that might have important consequences for the closed airfreight industry. As a consequence the online booking portal offers a lower-priced, more efficient and more transparent process for aircargo booking.
Founder Paul Parramore of Rhenus Logistics suggests that this system will bring down the cost of airfreight by as much as 50%. The Dutch Shipping Council EVO, gave the system the thumbs up and said that it will revolutionise the manner in which the freight business is currently being conducted.
Joost van Doesburg, a consultant with EVO said that in the long run restructuring of the industry is necessary in order to meet the challenges of the 21st century. Many of the forwarders will lose out, but the system is geared towards cost effectiveness and being competitive. He also added that if the forwarder is to add value to the supply chain, then he has to comply to adapting to the system rather than working against it.
On the home front, a recent article featured on the website Freight into Africa reports that the South African Cross Border Transporters Association (SACBTA) will be introducing a similar system which is currently under development for the cross border road freight industry. It will be called “ROAFEonline” or shortened form of Road Freight online which will allow the customer to book directly his freight with accredited SACBTA members hence cutting out the middleman and brokers.
All payments can and will be done online and this system will integrate with SARS EDI (Would like to hear more on this!). The consignor will only have to ensure that his goods are loaded onto the truck, the rest will be done by the system. The cost per transaction to the customer will be a paltry R100.00 in relation to a few thousand Rands normally swallowed up by the middlemen.
Based on our estimations a regular consignor can save up to R3-5 million Rands per annum which hopefully will be passed onto the consumer. With the looming integration of the SADC countries towards one stop clearing, it makes sense to further integrate the system. So whether you are in Dar es Salaam or Lubumbashi, you can now book your freight from Cape Town without having to go through a string of brokers. You also have the assurance that your cargo will be loaded by an accredited SACBTA transporter who complies to the standards set out by SACBTA. It will facilitate consolidations as any accredited transporter will at any given time be able to see what cargo is available. If Transporter A has only 20 tons, he can check which other transporter on the system has another 8 tons to Dar es Salaam for example. The transporters can then consolidate a load on the system which will happen in a shorter period of time than say for instance waiting a month to fill a tri axle.
This system will have many other functionalities that have been incorporated like online tracking, bar coding, which will give the consignor and consignee piece of mind knowing at any given time where their cargo is. It will also be accessible to border agents and customs officials who will be in a position to extract vital information on any consignment long before it actually gets to a border.
The system will go into testing around March of this year and if all goes well should be ready for implementation by the latter part of 2012 or early 2013. We hope that this will go a long way towards restructuring the industry for the better. It has long been the desire of SACBTA to allow industry players to come on board to create a better industry. However, there has been very little interest shown in transforming the industry and we feel this system will by virtue of its nature, transform the industry whether industry players are willing participants or not. Source: Freight into Africa and various own sources.
Cargo Dwell Time in Durban
An acquaintance in the forwarding industry brought this working paper to my attention. Titled “Cargo Dwell Time in Durban“, it is very useful reading for logistics operators, Customs and government agencies, and policy makers. The object of the working paper attempts to identify the main reasons why cargo dwell time in Durban port has dramatically reduced in the past decade to a current average of between 3 and 4 days. A major customs reform; changes in port storage tariffs coupled with strict enforcement; massive investments in infrastructure and equipment; and changing customer behavior through contractualization between the port operator and shipping lines or between customs, importers, and brokers have all played a major role. The main lesson for Sub-Saharan Africa that can be drawn from Durban is that cargo dwell time is mainly a function of the characteristics of the private sector, but it is the onus of public sector players, such as customs and the port authority, to put pressure on the private sector to make more efficient use of the port and reduce cargo dwell time. The Working Paper is the product of the World Bank’s Africa Region, Transport Unit, being part of a larger effort to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org.
- Who pays what charges for a shipment..?? (theshippingandfreightblog.wordpress.com)
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