Tag / freight forwarders

by Mike Poverello

Guide to the WCO E-Commerce Framework of Standards

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.

Guide – WCO Framework of Standards on E-Commerce [PPTX, 3MB]

Guide – WCO Framework of Standards on E-Commerce [PPSX, 3MB]

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by Mike Poverello

ZIMRA – ASYCUDA failure set to cost in excess of $20M in lost revenue

ZIMRAaaaaaaaZimbabwe’s Deputy Finance and Economic Planning Minister Terrence Mukupe has estimated that the country has lost an estimated $20 million in revenue receipts since ZIMRA’s automated Customs processing system (ASYCUDA World) collapsed in the wake of server failure on 18 December 2017.

During a site visit of Beit Bridge border post earlier this week, it was revealed that ZIMRA collects an estimated $30million per month in Customs duties at its busy land borders. The Revenue Authority has since instituted manual procedures.  Clearing agents are submitting their customs documents accompanied by an undertaking that they will honour their duties within 48 hours. That is, when the ASYCUDA system is finally resuscitated and this is totally unacceptable.

Furthermore, Zimbabwe lies at the heart of the North-South Corridor which handles a substantial volume of transit traffic. The threat of diversion due to lack of proper Customs control and opportunism will also create both a fiscal and security headache. The deputy minister stated that the government was considering abandoning the Ascyuda World Plus system to enhance efficiency and the ease of doing business. “We need to benchmark it with what our neighbours in the region are using”.

It has also been suggested that the ZIMRA board have been complacent in their oversight of the affair. While it is a simple matter to blame systems failure, the lack of management involvement in taking proactive steps to ensuring redundancy of the country’s most crucial revenue collection system has been found wanting.

This calamity undoubtedly signals a huge concern for several other African countries who are likewise supported by UNCTAD’s ASYCUDA software. Many question post implementation support from UNCTAD, leaving countries with the dilemma of having to secure third party vendor and, in some cases, foreign donor support to maintain these systems. The global donor agencies must themselves consider the continued viability of software systems which they sponsor. Scenarios such is this only serve to plunge developing countries into a bigger mess than that from which they came. This is indeed sad for Zimbabwe which was the pioneer of ASYCUDA in sub-Saharan Africa.

This development must surely be a concern not only for governments, but also the regional supply chain industry as a whole. While governments selfishly focus on lost revenue, little thought is given to the dire consequence of lost business and jobs which result in a more permanent outcome than the mere replacement of two computer servers.

Under such conditions, the WCOs slogan for 2018 “A secure business environment for economic development” will not resonate too well for Zimbabwean and other regional traders tomorrow (International Customs Day) affected by the current circumstances. Nonetheless, let this situation serve as a reminder to other administrations that management oversight and budgetary provisioning are paramount to maintaing automated systems – they underpin the supply chain as well as government’s fiscal policy.

by Mike Poverello

Port of Antwerp tests Blockchain Software System

Blockchain

T-Mining is currently working on a pilot project that will make container handling in the port of Antwerp more efficient and secure. Using blockchain technology, processes that involve several parties – carriers, terminals, forwarders, hauliers, drivers, shippers etc. – are securely digitised without any central middleman being involved.

Just getting a container from point A to point B frequently involves more than 30 different parties, with an average of 200 interactions between them. Given that many of these interactions are carried out by e-mail, phone and even (still, nowadays) by fax, paperwork accounts for up to half of the cost of container transport.

“We aim to do something about this,” says Nico Wauters, CEO of T-Mining. This Antwerp start-up has developed a solution for a recognised problem in the port. When a container arrives in the port it is collected from the terminal by a truck driver or shipper. To ensure that the right person picks up the right container a PIN code is used. However, the PIN code is transmitted via a number of parties, which of course is not without risk. Somebody with bad intentions can simply copy the PIN code, which naturally can cause great problems.

“We have developed a very secure solution for this,” explains Nico Wauters. “Currently, when we want to transfer a valuable object we generally make use of a trusted intermediary to carry out the transfer. For instance, when you want to sell a house the notary not only carries out all the paperwork but also ensures that the money lands safely in your bank account while the buyer receives full title to the property, without any unpleasant surprises for either party. But this intermediary naturally does not work for free, and furthermore the additional step causes extra delay.”

The blockchain solution overcomes these issues, permitting safer and faster transfer of valuable objects, fully digitally and without a middleman. “With our blockchain platform the right truck driver is given clearance to collect a particular container, without any possibility of the process being intercepted. Furthermore our blockchain platform uses a distributed network, so that the transaction can go ahead only if there is consensus among all participating parties, thus excluding any attempts at fraud or undesired manipulations.”

A pilot project is currently running in the port of Antwerp with a limited number of parties. “We want to test whether it all works smoothly in practice,” says Nico Wauters. “Together with PSA, MSC, a forwarder and a transporter, we ensure secure handling of the first containers on our blockchain platform. Thanks to the City of Antwerp we even have an office in Singapore where we are working hard to introduce our solution there too. Our ambition is to serve the first paying customers by the end of this year,” Nico Wauters concludes. Source: Port of Antwerp

by Mike Poverello

Mozambique – Single Road Cargo Manifest Phase II

Mozambique flagThe Maputo Corridor Logistics Initiative (MCLI) recently published a communication informing it’s stakeholders about the Single Road Cargo Manifest as received from the Mozambican Revenue Authority (MRA).

The MRA has informed MCLI that the 2nd phase of the Single Road Cargo Manifest process will come into effect from the 16th of June 2017, when all international road carriers transporting goods to Mozambique through the Ressano Garcia border post will be required to submit the Road Cargo Manifest on the Single Electronic Window platform in compliance with national and international legislation. MRA Service Order Nr 17/AT/DGA/2017, in both Portuguese and English, is attached for your consideration.

For information and full compliance by all members of staff of this service, both (National and Foreign) International Cargo Carriers, Clearing Agents, Business Community, Intertek and other relevant stakeholders, within the framework of the ongoing measures with a view to adequate procedures related to the submission of the road cargo manifest, for goods imported through the Ressano Garcia Border Post, in strict compliance to both the national and international legislations, it is hereby announced that, the pilot process for transfer of competencies in preparation and submission of the road cargo manifest to Customs from the importer represented by his respective Clearing Agent to the Carrier is in operation since December 2016.

Indeed, the massification process will take place from 15th of April 2017 to 15th of June 2017, a period during which all international carriers (national and foreign) who use the Ressano Garcia Border, are by this means notified to register themselves for the aforementioned purposes following the procedures attached herewith to the present Service Order.

As of 16th of June 2017, the submission of the road cargo manifest into the Single Electronic Window (SEW) for the import regime, at Ressano Garcia Border, shall be compulsory and must be done by the carrier himself.

International road carriers must therefore register for a NUIT number with the Mozambican Revenue Authority between the 15th of April and the 15th of June 2017 and the necessary application form is included. Road carriers are urged to do so as soon as possible to enable the continued smooth flow of goods through the border post.

Specific details can be found here! 

Source: MCLI

by Mike Poverello

Maersk and IBM in joint “blockchain” venture – future of the shipping industry?

International trading involves many participants all around the globe. These participants may not necessarily have the needed trust of all parties, especially at the initial stages, when newcomers join the trade. Blockchain can provide the needed trust to capture key transaction activities as immutable records, as well as storing and sharing encrypted legal and financial documents.

Visibility of transaction records and documents are tightly controlled by blockchain, permitting sharing only among entrusted and allowed parties. In this demo, IBM demonstrates how blockchain may support such an application.

The blockchain solution being built by the two companies is expected to be made available to the ocean shipping industry later this year, according to a joint statement from International Business Machines Corp and the container unit of A.P. Moller-Maersk. It would help manage and track the paper trail of tens of millions of shipping containers globally by digitizing the supply chain process from end to end.

This will enhance transparency and make the sharing of information among trading partners more secure.

When adopted at scale, the solution based on the Linux Foundation’s open source Hyperledger platform has the potential to save the industry billions of dollars, the companies said.

“Working closely with Maersk for years, we’ve long understood the challenges facing the supply chain and logistics industry and quickly recognized the opportunity for blockchain to provide massive savings when used broadly across the ocean shipping industry ecosystem,” said Bridget van Kralingen, senior vice president, industry platforms, at IBM.

IBM and Maersk intend to work with a network of shippers, freight forwarders, ocean carriers, ports and customs authorities to build the new global trade digitization product, the companies said.

The product is also designed to help reduce or eliminate fraud and errors and minimize the time products spend in the transit and shipping process.

For instance, Maersk found that in 2014, just a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different communications among them.

The new blockchain solution would enable the real-time exchange of original supply chain transactions and documents through a digital infrastructure that connects the participants within the network, according to IBM and Maersk. Source: Reuters

by Mike Poverello

Fraud Issues Faced by Customs Brokers

accourt-risk-fraud-managementSenior Claims Executive at the TT Club in Sydney, Kate Hollis, sheds some light on the risks faced by licenced customs brokers and mitigation steps to take:

“As the international trade regulatory landscape continues to change and the commercial environment becomes increasingly competitive, the balancing act for forwarders and customs brokers between providing services to clients and complying with obligations to customs becomes more complicated.

“Customs brokers assume responsibility for acting correctly between cargo interests and customs. As a result, there is the potential to provide advice to customers or carry out actions that result in the cargo interest suffering financial loss, for which you can be alleged to have been negligent. Closely related to the liability exposure of your customer is the potential for customs to levy fines or penalties through infringement notices.

“Identity fraud is perhaps a less obvious area of risk. In some cases authorities find that brokers have committed an offence where checks on the identity of clients have not been performed and that simple verification of the identity would have alerted the broker to the fraud. Consistent with previous advice, we recommend dealing with your clients directly (rather than through an intermediary) and always perform your own background checks, both in regard to the entity itself as well as the statements being made to customs.

“One recent incident saw rice wine being imported into Australia from Korea, but it was declared as apple cider vinegar. This directly resulted in extra costs for handling the container and for storage costs under the customs bond. Following the inspection, duty was charged at the rate for rice wine – not cider – which the freight forwarder pre-paid on behalf of the importer. It proved impossible to reclaim the duty and additional costs because it transpired that the consignee company no longer existed. There have also been cases of people fabricating an identity in an attempt to import goods without paying the full amount of duty. When the companies were not successful, they simply disappeared.

“Customs brokers also need to be aware of the risk of identity theft. While the variety of scams is broad, TT Club has identified three areas that require particular attention for Customs Brokers:

  1. Piggybacking – where an unscrupulous entity uses the identifying details of a legitimate entity on a Cargo Report or Import Declaration, generally with the aim of importing consignments containing illicit substances or smuggled goods.
  2. User access security – the nature of access to customs entry systems and digital certificates means that individual login details need to be carefully guarded to avoid misuse and illegal activity.
  3. Mandate fraud – where fraudulent diversion of payments occurs. It is primarily the responsibility of the party making a payment to ensure that the bank details are correct.

“Customs Brokers should be aware that their licence might be at risk in a situation where the authorities consider that the broker has intentionally or recklessly facilitated a fraud. Such situations can also lead to fines being imposed on the Customs Broker as an individual, as well as actions against the forwarding business as a company.

“Mitigation of these risks is possible. In the first instance, it is important to review your own internal processes and systems. Recognise that the risk exposures are business critical and implement robust technology systems and standard operating procedures accordingly, particularly considering access rights and controls.

“Secondly, ensure that well drafted standard trading conditions are properly incorporated into your interactions with all clients. Many national trade associations provide ideal models You should seek legal advice to ensure that contracts are appropriate for your specific business. A third obvious mitigation is to purchase adequate and appropriate insurance. You should discuss this with your broker to ensure that your specific needs are properly covered.” Source: TT Club

by Mike Poverello

VGM – less than 15% of IMO Member States have issued guidelines to enforce container weighing

VGMWith under one month to go until the SOLAS verified gross mass (VGM) regulation enters in force, less than 15% of International Maritime Organization (IMO) Member States have issued guidelines on how they plan to enforce the amendment, according to the International Cargo Handling Co-ordination Association (ICHCA).

The amendment, which will enter into force on July 1, 2016, will require shippers to obtain and declare the VGM for each packed container before it can be loaded onto a ship.

Captain Richard Brough, technical advisor to ICHCA International, said: “As July 1 approaches we see an increasing number of terminal operators announcing the service options they will offer to shippers to facilitate determining the VGM of export containers.”

Despite the efforts of lifting equipment suppliers, carriers and forwarders to engage positively and identify the most appropriate way to comply, Mr Brough said that sadly, where compliance is a shared responsibility, communication between all the different parties has too often been “acrimonious rather than collaborative”.

As a result, contingency planning is now crucial for all stakeholders to avoid a potentially disastrous impact on the container supply chain, he added.

It was suggested at a recent ICHCA seminar that the key to successful implementation of the VGM requirements is close communication and co-operation between governments and all industry stakeholders.

Mike Yarwood, claims expert at TT Club, said: “Behavioural change through all aspects of the supply chain is required. Weight is a relatively small element of broader initiatives to engender safety and improve operational performance.” Source: Port Strategy

by Mike Poverello

New WCO Study Report on Customs Brokers

WCO Study Report on Customs BrokersThe WCO has just published a newly developed Study Report on Customs Brokers. The Study Report provides a general background and overview of Customs Brokers’ role in the international supply chain together with some suggested policy and organisational considerations on Customs Brokers regime and a model checklist for licensing/regulating brokers.

Additionally, the Report provides a range of cooperation opportunities between Customs and Brokers including the joint capacity building.

Customs administrations, Brokers, and Brokers Associations are encouraged to make maximum use of the Study Report as a reference/guideline, where needed, in establishing and/or maintaining/adjusting Brokers regime, keeping in view their national circumstances and specificities.

The Study Report on Customs Brokers is available via the following link: Click here

Source: WCO

by Mike Poverello

US goes its own way on container weighing

World Cargo News reports  – While the Coast Guard maintains the US will be compliant with the SOLAS amendment on container weighing, US Shippers are interpreting guidance from US Coast Guard Rear Admiral Paul Thomas as confirmation they can continue with existing practice to declare the weight of their goods rather than weigh containers.

Following to the fallout over his comments at the Trans Pacific Maritime conference in Long Beach this month, Rear Admiral’s Thomas issued further guidance on the SOLAS amendment that requires containers to have a Verified Gross Mass before they are loaded on a vessel from 1 July.

The US Coast Guard (USCG) has since confirmed that SOLAS is binding on US shippers, but stated that how shippers work with carriers to obtain and report a VGM is a commercial matter for those parties to determine.

Some US shippers, including the US Agriculture Transport Coalition (ATC), have made it known it is not practical for them to supply, and be responsible for anything other than the weight of the cargo, as they do today. The Coast Guard appears to be facilitating this approach, and the ATC last month told its members it “received confirmation” from USCG that shippers can continue to verify the weight of the goods they own, while lines remain responsible for the weight of the container.

On March 14 some 49 groups and associations representing US primary producers, manufacturers, importers and shipper groups wrote to Coast Guard Commandant Paul Zukunft saying they support its “interpretation” of the SOLAS amendment, as presented by Rear Admiral Tomas in his blog.

“Specifically, we support the Admiral’s view that if the shipper provides the cargo mass weight, to which the carrier adds the weight of the container, then the intent of SOLAS is achieved. In fact, several ocean carrier executives have advised that such a process would be practical.”

Some carriers, however, have rightly pointed out that this does not meet the SOLAS requirement, as the letter then notes: “The reason for our concern, and appreciation of Admiral Thomas’ guidance, is that some ocean carriers, citing this SOLAS amendment, are demanding that the shipper certify both the cargo and the carrier’s container. This is contrary to the practical realities of our US export maritime commerce and fundamentally flawed conceptually. (It would be similar to demanding that a soybean shipper certify to the railroad the weight of the railcar itself.)”

The groups maintain that they “fully understand our responsibility to accurately disclose the weights of cargo tendered to the ocean carriers. In fact, advance submission of accurate gross cargo weight is a well-established practice mandated by US Customs and Border Protection, by numerous intermodal (trucking and rail) weight requirements, and presently found in Shipper’s Instructions to carriers to meet so-called “no doc, no load” cargo cutoffs for entry into marine terminals. In addition, an Occupational Safety and Health Administration (OSHA) Rule, in place since 1983, assures that the accurate weight of combined cargo and container be known to the carrier prior to loading.”

Despite SOLAS, the shipper groups do not see a need to weigh individual containers and suggest other solutions can be found: “for instance, shippers are willing to provide to their carriers an annual written confirmation in the service contract (or other mutually-agreed document) that our cargo weights are accurate”.

One of the major concerns is liability, in particular the requirement that someone now sign a VGM document. Shippers say carrier demands for this are being rejected. Many US Corporations will not allow their employee to certify the weight of and assume liability for equipment that the corporation does not own, manage, control and in fact may not even see.”

The Coast Guard, for its part, does not appear to be pushing the issue of current practice not meeting the new SOLAS requirements.

In his testimony at the US House Committee on Transport and Infrastructure’s hearing for the Coast Guard’s 2017 Budget request Admiral Paul F. Zukunft, Commandant, USG made the following statement: “Foreign carriers are pretty much all in compliance today. When I was at the container terminal in Long Beach a month and half ago all the containers that come on to that yard are already weighed before they go in. So I am not seeing a sky is falling panacea playing out around us, but we need to make sure that there aren’t unintended consequences. That is why we are continuing to reach out with the many exporters…that container shows up on a manifest before it is loaded on a ship. What is needed is that final weight, but by and large most of these manifests already have that weight filled in in that column.”

The US, it appears, intends to continue to follow current practice where the shipper provides a declared weight of the cargo, leaving it to the carrier to determine the final weight of the container. Source: World Cargo News

by Mike Poverello

SA – Hub for computerised Regional Integration?

AfricaFrom time to time it is nice to reflect on a good news story within the local customs and logistics industry. Freight & Trade Weekly’s (2015.11.06, page 4) article – “SA will be base for development of single customs platform” provides such a basis for reflection. The article reports on the recent merger of freight industry IT service providers Compu-Clearing and Core Freight and their plans to establish a robust and agile IT solution for trade on the African sub-continent.

In recent years local software development companies have facilitated most of the IT changes emerging from the Customs Modernisation Programme. Service Providers also known as computer bureaus have been in existence as far back as the early 1980’s when Customs introduced its first automated system ‘CAPE’. They have followed and influenced Customs developments that have resulted in the modern computerised and electronic communication platforms we have today. For those who do not know there are today at least 20 such service providers bringing a variety of software solutions to the market. Several of these provide a whole lot more than just customs software, offering solutions for warehousing, logistics and more. As the FTW article suggests, ongoing demands by trade customers and the ever-evolving technology space means that these software solutions will offer even greater customization, functionality, integration and ease of use for customers.

What is also clear is that these companies are no longer pure software development houses. While compliance with Customs law applies to specific parties required to registered and/or licensed for Customs purposes, the terrain on which the software company plays has become vital to enable these licensees or registrants the ‘ability to comply’ within the modern digital environment. This means that Service Providers need to have more than just IT skills, most importantly a better understanding of the laws affecting their customers – the importers, exporters, Customs brokers, freight forwarders, warehouse operators, etc.

Under the new Customs Control Act, for instance, the sheer level of compliance – subject to punitive measures in the fullness of time – will compel Service Providers to have a keen understanding of both the ‘letter of the law’ as well as the ability to translate this into user-friendly solutions that will provide comfort to their customers. Comfort to the extent that Customs registrants and licensees will have confidence that their preferred software solutions not only provide the tools for trading, but also the means for compliance of the law. Then, there is also the matter of scalability of these solutions to keep pace with ongoing local, regional and global supply chain demands.

The recent Customs Modernisation Programme realised significant technological advances with associated benefits for both SARS and trade alike. For the customs and shipping industry quantification of these benefits probably lies more in ‘improved convenience’ and ‘speed’ of the customer’s interaction with SARS than cost-savings itself. My next installment on this subject will consider the question of cross-border trade and how modern customs systems can influence and lead to increased regional trade.

by Mike Poverello

Freight Forwarders and 3PL’s to bear the burden of IMO Box Weighing Rules

Container weighingThe responsibility for verifying the gross weight of loaded containers under next year’s new box-weighing rules will in many cases rest with freight forwarders, logistics operators or NVOCCs, according to freight transport insurance specialist TT Club.

Welcoming the initiative of the World Shipping Council (WSC) in its recent publication of guidelines to the industry in relation to implementing the SOLAS requirements that become mandatory on 1 July 2016, TT Club noted that unlike the CTU Code, which forensically seeks to identify the chain of responsibility for everyone involved in the movement of freight, the amendment to the Safety of Life at Sea Convention (SOLAS) mandating the verification of gross mass of container overtly only names the ‘shipper’, the ‘master’ and the ‘terminal representative’, and – by implication – the competent authorities.

TT Club said the complex nature of logistics means that the term ‘shipper’ may encompass a range of people involved in the contracting, packing and transporting of cargo. However, as stated in the WSC guidance, it said the key commercial relationship in question is with the person whose name is placed on the ocean carrier’s bill of lading.

“Thus, in many cases, the responsibility for actual ‘verified’ declaration will rest with a freight forwarder, logistics operator or NVOC. This means that often reliance will have to be placed on others to have adequate certified methods to provide verified gross mass – particularly for consolidation business,” TT Club said.

It noted that of course many suppliers of homogenous shipments will already have advanced systems, which merely require some form of national certification, adding: “Apart from having a sustainable method by which the gross mass is verified, the shipper also needs to communicate it (‘signed’ meaning that there is an accountable person) in advance of the vessel’s stow plan being prepared.

“The information will be sent by the shipper to the carrier, but with joint service arrangements there may be a number of carriers involved, with one taking responsibility to consolidate the manifest information, in addition to communication with the terminal.”
It said the ‘master’ comprises a number of functions within the carrier’s organisation.

“Implicit in the SOLAS amendment is that the carrier sets in place processes that ensure that verified gross mass is available and used in planning the ship stow,” TT Club said. “Arguably, each carrier will need to amend systems and processes to capture ‘verified’ information.

“However, the simplest might be to amend the booking process, so that the gross mass information is left blank in the system until ‘verified’ data are available. This will be effective if it is clearly understood by all partner lines and terminals with whom the line communicates.”

TT Club said the explicit obligation of the master was simply that he shall not load a container for which a verified gross mass is not available. “This does not mean that one with a verified gross mass is guaranteed to be loaded, since that would derogate from the traditional rights of a master,” the insurance specialist added.

Recognising the pivotal nature of the port interface, it noted that the ‘terminal representative’ has been drawn into the new regulation as a key recipient of information for ship stow planning “and, critically, in a joint and several responsibility not to load on board a ship if a verified gross mass is not available”.

It added: “There has been considerable debate as to whether terminals need to position themselves to be able to weigh containers, not least because of the cost of creating appropriate infrastructure, and amending systems and procedures, with uncertain return on investment. In addition there are commonly incidences of containers packed at the port, in which case the terminal activities could include assisting the shipper in producing the verified gross mass.

“The SOLAS amendment places responsibility on national administrations to implement appropriate standards for calibration and ways of certifying. The overtly named parties rely on this to work smoothly and, preferably, consistently on a global basis.”
TT Club said clarity of such processes needed to be matched by consistency in enforcement. “Talk of ‘tolerances’ is disingenuous,” it said. “SOLAS calls for accuracy. Everyone appreciates that some cargo and packing material may be hygroscopic, thereby potentially increasing mass during the journey, but that need not mask fraudulent activity, nor entice over-zealous enforcement.”

It said the UK Marine Guidance Note may be instructive here, stating that enforcement action will only be volunteered where the difference between documented and actual weight exceeds a threshold. TT Club concluded: “It is suggested that key measures of success of the revised SOLAS regulation will include not only safety of containerised movements, but also free movement of boxes through all modes of surface transport, and a shift in behaviour and culture throughout the unit load industry.”

by Mike Poverello

FIATA urges Forwarders to challenge ‘unjustified’ shipping line surcharges

international%20shipping%20surcharges-resized-600The international trade association that represents the world’s freight forwarders and logistics service providers, FIATA, has called on container shipping lines to provide greater clarity on the ever increasing variety of surcharges that they apply.

Robert Keen, chairman of FIATA’s Multimodal Transport Institute, said in a statement that forwarders were accustomed to currency and fuel surcharges, but needed more transparency for many of the other surcharges, “often with questionable names and purposes”, that are levied on freight forwarders.

“In the past, we have seen administration fees, peak season surcharges, or ISPS-add on surcharges,” Keen said. “Of late, we have had examples of container cleaning fees and container sealing fees, without any evidence of the expense actually being incurred.”

It is a recurring complaint among forwarders and shippers that have long accused the carriers of using surcharges as revenue streams rather than the cost recovery mechanisms for which they are purportedly imposed.

“It is time for freight forwarders to stop accepting at face value opaque and unjustified surcharges,” said Keen, who is also director general of the British International Freight Association (BIFA).

Keen highlighted the congestion that is currently plaguing many ports around the world.

“There have also been recent examples of port congestion surcharges caused by labour unrest; and haulage surcharges resulting from HGV driver shortages, which is difficult to understand as there is no explanation and little justification for an additional charge for a service that the container line is finding difficult to provide,” he said.

The Hong Kong Shippers’ Council has also taken a dim view of the surcharges being levied on shippers using the Kwai Chung container terminals. Willy Lin, chairman of the council, said the port congestion surcharge introduced by shipping lines in the intra-Asia trade on October 19 was “unacceptable and unjustifiable.” Sources: Lloyds and JOC

by Mike Poverello

Forwarders – losing out on new business due to out-dated back-end systems

Losing-Business-On-Social-MediaOn March 13th, 2014, Sean Day, a Chicago-based wholesaler, called up the Italian branch of a leading global freight forwarder and requested a price quote for a door-to-door air freight shipment from a Rome-based apparel supplier, to his own warehouse in Chicago, IL. Within 37 minutes, he received pricing for two out of the three legs – from the Rome address to Rome’s airport, and from there to Chicago’s O’Hare airport. If that doesn’t impress you, consider that prompt price quotes for international freight shipments, are rather like four-leaf clovers. A spot quote in 37 minutes seemed too good to be true.

It was. Sean only received the final quote, including delivery to his Chicago address, four days later, on May 17th. Yes, four days.

Bear in mind that this was an air freight quote. Sean was willing to pay a substantial premium to fly his precious cargo by air, because he needed it urgently. What’s the point of splashing out on air freight, you might wonder, if you wait four days just for the price quote? Sean wondered the same thing.

At least he would have wondered, if he actually existed. In fact, our company, Freightos, created Sean, a fictional employee working at an imaginary company, as well as multiple whimsical competitors, in order to collect data on the sales process, and customer experience, of procuring international freight forwarding services. Over the course of two months, we requested dozens of air, ocean and ground quotes from five of the top fifteen freight forwarders in the world (after, of course, receiving permission from the companies). Each time, we identified ourselves as a new customer with potential for repeat business in the future.

Sean’s quoting experience was no exception. Due primarily to the archaic back-end systems so prevalent in the industry, and the lack of data sharing between fiefdoms, the average quote time was approximately 62 hours, with some quotes taking as long as a week. The quoting process was rife with other problems, ranging from vague quotations to blatant inaccuracies. In some freight forwarders, each office, or even individual sales staff, used their own price quote templates. Many forwarders had inactive contact numbers on their website. Worst of all, a staggering 43% of quote requests were simply ignored. Some way to capture new customers!

If these quotes were frustrating for the customers, they were also expensive for the vendors. We estimate a person-hour went into each. In developed countries that’s about $40. And forwarders often do five quotes for every secured order. That’s $200 wasted. For a smallish spot order, $200 is the entire profit! Click here to continue reading the full article… Source: LloydsLoading.com

by Mike Poverello

Latest US container 100% scanning postponement predictable

Rapiscan_m60UK freight forwarders have welcomed but are not surprised by the latest US postponement by two years of the implementation of new rules requiring all cargo containers entering the US to be security scanned prior to departure from overseas ports, with national association BIFA reiterating calls for the initiative to be abandoned.

Peter Quantrill, Director General of the British International Freight Association (BIFA), said it was “hardly surprising” to hear the recent news that the US had delayed the introduction of the new rules “amid questions over whether this is the best way to protect US ports”, calling the move “a healthy dose of common sense”.

Mr Quantrill commented: “As BIFA has said repeatedly, the Department of Homeland Security (DHS) has consistently underestimated the enormity of the task in hand relative to the costs both to the US government and foreign governments – as well as, importantly, the limited ability of contemporary screening technology to penetrate dense cargo, or large quantities of cargo in shipping containers.”

The deadline for implementation of 100% scanning of all inbound containers has already been delayed from 2012 to 1 July, 2014, and US Secretary for Homeland Security Jeh Johnson, who took over the role just six months ago, has now reportedly decided on another 24-month postponement.

BIFA’s comments follow the recent news of a letter from Thomas Carper, chairman of the US Senate Committee on Homeland Security and Governmental Affairs, which suggested that the use of systems available to scan containers would have a negative impact on trade capacity and the flow of cargo.

Quantrill adds: “Media reports suggest that the US Government now doubts whether it would be able to implement the mandate of 100% scanning, even in the long term, and it would appear that it now shares BIFA’s long-standing opinion that it is not the best use of taxpayer resources to meet the USA’s port security and homeland security needs.

“We have always said that expanding screening with available technology would slow the flow of commerce and drive up costs to consumers without bringing significant security benefits.”

He continued: “Whilst the latest news of a two-year delay appears to be a healthy dose of common sense at the US Department of Homeland Security, BIFA still believes that the US Government ought to take an even bolder step and repeal the original legislation.

“That would be the most appropriate way to address this flawed provision and allow the Department and the industry to continue to focus on real solutions, including strengthened risk-based management systems to address any security gaps that remain in global supply chains.”  Source: Lloyds Loading List

by Mike Poverello

Singapore accuses 11 freight forwarding firms of price-fixing

ccsThe Competition Commission of Singapore (CCS) has issued a Proposed Infringement Decision (PID) against 11 freight forwarding companies and their Singapore subsidiaries / affiliates. CCS provisionally finds that the Parties have infringed section 34 of the Competition Act by collectively fixing certain fees and surcharges, and exchanging price and customer information in relation to the provision of air freight forwarding services for shipments from Japan to Singapore.

CCS commenced investigations after receiving an application for immunity under CCS’s Leniency Programme from one of the Parties involved in the alleged cartel. In CCS’s provisional view, information received during the course of the investigation evidences that the Parties were competitors and attended meetings in Japan where they exchanged information, discussed and agreed on certain fees and surcharges in relation to air freight forwarding services for shipments from Japan to other countries, including Singapore. The PID is limited to anti-competitive agreements and/or concerted practices involving the Japan to Singapore route.

The PID is a written notice setting out the facts on which CCS makes its assessment of the Conduct and its reasons for arriving at the proposed decision. It is issued to give the parties concerned an opportunity to respond to the PID and provide any other information to CCS by way of representations. CCS will consider all representations made before deciding whether to issue an infringement decision.

In this regard, all the Parties have 35 working days from the receipt of the PID to make their representations. All the information and evidence put forward by the Parties will be taken into consideration by the CCS should it issue a final decision in relation to the Conduct.

The case is the latest in a long line of investigations into the freight transport sector by competition authorities around the world over the past decade, a process that began with air freight carriers before spreading to freight forwarders, container shipping lines and rail freight operators.

The competition authorities in the US and the EU have issued penalties totaling more than US$2 billion, with the US imprisoning several senior executives judged to have participated in cartel activity. Singapore’s PID is limited to anti-competitive agreements or practices involving the Japan to Singapore route. Source: Competition Commission of Singapore