Archives For Trade

Trade Community System - Brisbane - DashboardA new Trade Community System (TCS) that will function as a free to access portal bringing together existing data on container shipments is the result of a collaboration between PwC Australia, the Australian Chamber of Commerce and Industry, and the Port of Brisbane.

The goal of the TCS is to link existing supply chain information in disparate systems through blockchain technology, and in the process “revolutionise international trade by removing complexity”.

The developers of TCS noted that one shipment to or from Australia today generates as many as 190 documents and 7,5000 data fields, much of which is duplicating data for different systems, and there is no ability currently to track containers on end to end journeys.

TCS aims to address this with a “National platform that links rather than replaces existing systems, provides end to end visibility and foresight of impediments such as delays and incorrect information, and is permissioned”. All documents, approvals and other requirements would be linked to a single shipment or container number as hashes on a blockchain that supports the TCS system, or stored in an off-chain graph database.

TCS - Brisbane

The developers stressed that TCS “augments, not replaces the systems that are already part of Australia’s supply chains”. Users would access the TCS directly through a web portal or indirectly through their existing systems, and at no upfront cost. “Users are not charged to use the platform or access data about the goods they are managing. Revenue comes from the productivity and service innovations that the data unleashes,” the developers stated.

Speaking at the launch of a proof of concept Trade Community System digital application in Brisbane, Port of Brisbane CEO, Roy Cummins said: “To drive new efficiency gains, industry leaders need to develop mechanisms which facilitate the integration and interoperability of commercial operators across the supply chain and logistics sector”.

This is the goal of the TCS. “The Trade Community System proof of concept is the first stage in building an innovative end-to-end supply chain that will digitise the flow of trading information, improve connectivity for supply chain participants, reduce friction for business and reduce supply chain costs, providing unprecedented productivity gains for Australia’s international businesses,” PwC Partner, Ben Lannan added.

For the Chamber of Commerce and Industry, TCS is an important step in reducing the cost of doing business. “As a trading nation, Australia relies on efficient and effective international supply chains to drive its economic engine room,” said Australian Chamber Director of Trade and International Affairs, Bryan Clark. “At present the current inefficiency across Australian supply chains has added to the cost of doing business, creating up to $450 in excess costs per container. This doesn’t just represent in excess of $1bn in value lost, but goes to the heart of Australian commodity trade viability when it gets priced out of the competitive global market”.

Check out the video – https://vimeo.com/262332930

Source: WorldCargoNews, Editorial, 30 May 2018

 

 

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contractLaw firm Shepstone and Wylie cautions traders to be well aware of the legal considerations to be taken into account when negotiating an international trade transaction.

When importing or exporting goods, a trader is inclined to conclude a transaction on terms that place the least possible obligations on the trader concerned.

There are a number of separate (albeit related) agreements which form part of an international trade transaction e.g.:

  • Agreement of sale
  • Agreement of carriage
  • Insurance contract
  • Letter of credit or some payment agreement

Under the contract of sale, the main obligations are the effecting of payment on the part of the importer, and delivery of the agreed thing on the part of the exporter. The manner of delivery, passing of risk, obligation of insurance and carriage depend on the terms to which the parties have agreed.

Sale agreements usually deal with the rights and obligations of the parties by reference to Incoterms. Devised and published by the International Chamber of Commerce, Incoterms are at the heart of world trade. Incoterms are standard trade definitions most commonly used in international sales contracts.

The “E” & “F” terms are most onerous for the buyer. Such terms, however, allow the buyer to control the carriage and insurance and should reflect in a lower purchase price for the goods.

The “C” and “D” terms are less onerous for the buyer, but result in a higher purchase price and the seller arranges the carriage, and in most instances, the insurance.

While it is tempting to look for the least onerous incoterm, it may not always be a wise choice if it leaves the party exposed either under the other agreements, or due to consequence that were not considered.

A few commercial benefits to concluding a sale agreement based on Incoterms that obligate a party to bear the cost of insurance and carriage are:

  • An ability to negotiate a lower price or higher purchase price for the goods, depending on whether the party is a seller or a buyer; and
  • If the party has a good relationship with or a preference for a certain service provider, the party is able to obtain insurance or carriage services on terms and conditions more acceptable to it.

A vital consideration when negotiating an international trade transaction access to legal redress if things go wrong (and they often do in trade).

It is important to ensure that a party has a proper understanding of the agreed terms, including both the legal and commercial considerations. A party’s risk must also be considered against the full suit of contractual obligations in order to ensure:

  • The rights and obligations under the different agreements are compatible; and
  • Obvious benefits under one agreement do not pose risks under another.

Legal advice is always desirable in circumstances where a trader feels he does not have a full appreciation of the legal implications of the international trade transactions he is seeking to enter in to. Source: Shepstone & Wylie Attorneys – Quintus van der Merwe

EAC CompliantThirteen compliant companies across East Africa were awarded Regional Authorized Economic Operator (AEO) certificates jointly by Partner States Commissioners of Customs and Director Customs, EAC at a ceremony held at Serena Kampala, Uganda on 24th July 2015.

The Commissioner Customs, URA Mr. Dickson Kateshumbwa who represented the URA Commissioner General was the chief guest during the award ceremony. The Chief Guest observed that with the award of Regional AEO certificate, the project had now come of age and indeed puts EAC on the global map of being the first region to implement a regional AEO programme. The Director Customs, Mr. Kenneth Bagamuhunda congratulated the thirteen companies and remarked that the AEO programme will go a long way in supporting the SCT implementation and eventually spur the growth of intra and extra trade. The SCT Coordinators recited each company profile before all the commissioners and Director Customs awarded the Regional AEO certificate to each of the awardees.

The companies were selected after meeting the set admissibility as set out in the AEO selection criteria. The awarded companies participated in the project pilot phase of the project but have continued to demonstrate and maintain high compliance to the set standards. The companies, from different sectors have continued to move consignments under the AEO scheme and in return have been offered benefits that are now currently under review to ensure they are not only tangible but are attractive enough to draw interest from other traders. Source: WCO

chinas-second-continent-howard-frenchFormer US Diplomat Brooks Spector takes a look at this important book (Daily Maverick) that should be on every economic policy maker’s reading list. Howard French’s China’s Second Continent, offers a very different – and provocative – perspective on China’s economic future, with special attention on Africa. Building on years of experience in both China and Africa, and following months of personal inquiry across the continent to search for answers to the questions of what China really wants in Africa, and how it is going to get there, French has effectively turned these questions on their head.

Instead of writing about China’s international economic policies in the language of the think tanks, of Wall Street and The City, or government councils in Whitehall or Washington, French has focused instead on what a million individual Chinese have done – or are now doing – throughout Africa, almost without regard to what the Chinese government may have planned or been thinking. In tackling the topic through this optic, French has given this vast Chinese movement into and across Africa crucial human dimensions. For the full review please visit this hyperlink. China’s Second Continent is available in hardcopy and electronic publication from online book stores. Source: Daily Maverick

digital-ownershipIn the past, nations with the best ships and ports were able to establish global trade leadership and the growth that came along with it. Today, global trade has gone digital.

In the digital economy software-enabled products and services such as cloud computing and data analytics are the key drivers of growth and competitiveness. In fact, the world now invests more than $3.7 trillion (R40 trillion) on information and communications technologies a year.

In South Africa, we spend $26 billion a year and the total for the Middle East/Africa region is $228bn. However, to maximise our return on that investment, it is important for policymakers to eliminate barriers that could inhibit the continued expansion of digital trade.

It is clear that software-driven technology is transforming every sector of the global economy. For example, thanks to unprecedented processing power and vast data storage capabilities, banks can detect and prevent fraud by analyzing large numbers of transactions; doctors are now able to study historical trends in medical records to find more effective treatments; and manufacturers can pinpoint the sources of delays in global supply chains.

Against the backdrop of this kind of innovation, any country that wants to compete in today’s international marketplace must have a comprehensive digital agenda at the core of its growth and development strategy. In addition to domestic initiatives such as investment in education and skills training, or development of information technology infrastructure, policymakers can succeed in laying the groundwork for broad-based growth in the digital age if they focus on three big priorities.

First, any bilateral or multilateral trade agreement needs to facilitate the growth of innovative services such as cloud computing. As part of this, there should be clear rules that allow information to move securely across borders and prevent governments from mandating where servers must be located except in very specific situations.

Second, to promote innovation and foreign investment, continued intellectual property protection is vital and the use of voluntary, market-led technology standards – instead of country-specific criteria that force firms to jump through different technical hoops every time they enter a new local market – should be encouraged.

Third, all governments should ensure there are level playing fields for all competitors so customers have access to the best products and services the world has to offer.

At the same time, disclosures about government surveillance programmes in the US and other countries have sparked a renewed focus on data protection and personal privacy. Those concerns are worthy of debate and careful reform. But it is critically important not to conflate separate issues: We can’t let national security concerns derail digital trade.

There is precedent for navigating periods of change such as this in the global trade arena. Policymakers stood at a similar inflection point in the 1980s when they recognised the keys to growth in the coming decades would be intellectual property, services and foreign direct investment.

With foresight and hard work, they updated trade rules in the Uruguay Round of multilateral negotiations to ensure commitments were in place to provide a check against protectionist impulses. Now, as governments pursue robust growth agendas for the digital economy, it is critical we modernise trade rules again. Source: The Software Alliance (South Africa).

Headquarters of the Rwanda Revenue Authority

Headquarters of the Rwanda Revenue Authority

Thirteen companies, three of them Rwandan, last week signed a Memorandum of understanding with Rwanda Revenue Authority to be accorded preferential treatment when clearing their goods at customs. The Authorized Economic Operator (AEO) is a regional trade facilitation program recommended by the world customs organization to ease trade and customs clearance for tax compliant and prominent importers and exporters.

Delay in clearing goods at customs is one of the major impediments to smooth trading within the East African Community (EAC). It also contributes to making the EAC region one of the most expensive places to do business despite being the second most growing economy in the world. The AEO creates some kind of obstacle-free zone where traders in the import or export business, known to be complaint with customs requirements, are accorded special treatment to ease the process of clearing their goods while in transit.

The pilot project will see how the system works in reality and the beneficiaries have all been informed of their rights and which ports or borders to claim them from. Rwanda customs officials issue special identifiers to the beneficiaries to help them identify the benefiting traders once their goods appear at any of the designated custom points. These identifiers will be recognizable everywhere in the five partner states of the EAC where the beneficiaries will pass and claim their privileges as AEO.

The growth of global trade and increasing security threats to the international movement of goods have forced customs administrations to shift their focus more and more to securing the international trade flow and away from the traditional task of collecting customs duties.

Recognizing these developments, the World Customs Organization (WCO) drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE). In the framework, several standards are included that can assist customs administrations in meeting these new challenges and developing an Authorized Economic Operator programme is a core part of SAFE. Source: AllAfrica.com

fair-trade-virtues-of-free-trade-image2A  new database developed jointly by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the World Bank has revealed that trade costs fall disproportionately on developing countries. This is despite the fact that the international economy has integrated considerably in recent decades.

Disclosing this in a statement issued yesterday, the World Bank  said the study noted that “although developing countries were becoming more integrated into the world trading system in an absolute sense, they are starting from a higher baseline and their relative position is deteriorating because the rest of the world is moving more quickly.”

The bank explained that the new Trade Costs database uses an innovative method to estimate trade costs in agriculture and manufactured goods, opening new analytical possibilities for policymakers and researchers interested in trade integration.

“According to the research, trade costs are influenced to varying degrees by distance and transport costs, tariff and non-tariff measures, and logistics. The new data, which cover the time period 1995-2010, stress the importance of supply chains and connectivity constraints in explaining the higher costs and lower levels of trade integration observed in developing countries.

“One of the key findings triggered by the database is that two areas amenable to policy interventions—maritime transport connectivity and logistics performance—are very important determinants of bilateral trade costs, with an effect comparable to that of geographical distance.”

Ravi Ratnayake, Director of ESCAP’s Trade and Investment Division, which partnered with the World Bank on the project, said, “Technological factors are responsible for a significant share of the differences in trade costs around the world. From a policy perspective, reforms in areas such as infrastructure, core trade-related services sectors, and private sector development can thus have significant benefits for countries in terms of lowering trade costs.”

The global database shows the pattern of trade costs across countries and through time by offering a comparison of pairs of countries, and an identification of those trade costs that are high. As such, the data set can be used to examine the policy factors and “natural” factors that contribute to the levels of trade costs observed around the world. One telling trend: for upper middle income countries, it is easier to trade with high income countries than among themselves. Source: Leadership (Nigeria)

AGOA_W1The Africa Growth and Opportunity Act intends to support African exports to US markets. It is helping savvy Chinese companies too. US-Africa trade received a boost with the signing of the African Growth and Opportunity Act (AGOA) back in May 2000, which enabled African countries to export over 4,000 products, including apparel, quota-free and duty-free to the US.

Geared to support the integration of African countries into global markets, AGOA has enjoyed broad cross-party support in a usually fraught US legislature – especially on issues of foreign trade – and has been renewed several times. Helping Africa, it seems, is something everyone can agree on.

But they might, unwittingly, have been helping China too. Research by Lorenzo Rotunno and colleagues at the Centre for the Study of African Economies, Oxford University, suggests that savvy Chinese companies have set up shop in Africa as a route to get their products into the US with all the AGOA benefits.

The entrepreneurs’ logic is impeccable. Not only could an Africa platform get them duty free access to US markets, they could also avoid heavy quotas on China’s exports to the US, imposed through previous protectionist measures by the rich world, such as the Multi-Fiber Agreement.

Because AGOA did not contain ‘rules of origin’ provisions, the door is wide open for such creative thinking. “Restrictive quotas on Chinese apparel exports in the US and preferential treatment for African exports resulted in quota-hopping transhipment from China to the US via AGOA countries” the researchers say.

Chinese and Taiwanese producers are now said to comprise the bulk of a textile “diaspora” in Lesotho, Madagascar and Kenya. In one Kenyan processing zone, 80% of the 34 garment plants had Asian owners. While some outfits doubtless have in-country assembly – and therefore generate jobs and incomes for Africans – a number are little more than transporting docks for foreign-sourced, fully assembled goods ready to go to their final destination, tax free.

Chinese entrepreneurs made no bones about it. In one survey, they gave ‘taking advantage of international trade agreements’ in their top five list of motives for investing and operating in Africa. Source: AllAfrica.com 

UNECE-Trade Facilitation Implementation GuideHaving spent the better part of the last fortnight amongst customs authorities and implementors of Single Window, I’m compelled to share with you a site (if you have not already been there) which attempts in a simple but comprehensive way to articulate the concept and principles of Trade Facilitation and its relationship and connotation with Single Window. The UNECE Trade Facilitation Implementation Guide should come as a welcomed resource, if not a companion, to trade facilitation practitioners and more specifically Customs Authorities wishing to embark on a trade facilitation approach. Of course it is a very useful reference for the many avid scholars on customs and trade matters across the global village. Of particular interest are the case studies – two of which feature African countries (Mozambique and Senegal) – providing a welcomed introduction of trade facilitation and Single Window on our continent. It is good to note that Single Window has less to do with technology and more to do with inter-governmental and trade relationships and an understanding of how these are meant to co-exist and support one another  – Enjoy!

Trade facilitation is emerging as an important factor for international trade and the economic development of countries. This is due to its impact on competitiveness and market integration and its increasing importance in attracting direct foreign investments. Over the last decade, it has gained prominence in the international political agenda as part of the ongoing WTO multilateral trade negotiations as well as of wide international technical assistance programs for developing and transition economies.

The primary goal of trade facilitation is to help make trade across borders faster and cheaper, whilst ensuring its safety and security. In terms of focus, it is about formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain. For UNECE and its UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), trade facilitation is “the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment”. Such a definition implies that not only the physical movement of goods is important in a supply chain, but also the associated information flows. It also encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods. This is in line with discussions on trade facilitation currently ongoing at the WTO. Source: UNECE

In recent days there’s been mutterings amongst several business commentators concerning the state of the South African manufacturing sector and its inability to compete in the local economy in the face of ‘so-called’ cheap imports. For once I heard some common sense instead of the usual WTO/economist waffle which normally just confuses people instead of shedding light on the inherent problems. What the Business Times article below suggests is that our prevailing job plight is self-induced and should not be blamed entirely on rogue elements alone. Under valuation and mis-declaration have and always will pose a challenge to any country. The blame has been placed on Customs not doing its job; yet, the problem appears to lie at the feet of policy makers who have made foolish decisions for which the country as whole now pays the price. 

The trouble began soon after 1994, when then Trade and Industry Minister, anxious to prove to the then rich and powerful, and sceptical, West what lovers of democracy and free markets they were, removed tariff protection on cheap imports against a considerable body of expert advice. And 12 years before we needed to, because the World Trade Organisation‘s predecessor, GATT, had given South Africa 12 years to modernise its manufacturing, improve its skills and prepare itself before lowering import tariffs.

At the time, Trade and Industry Minister and the government thought South Africa did not need a grace period. Leslie Boyd, then head of the Anglo-American industrial division, warned of the devastating consequences but to no avail. “They thought if they took the crutches away we’d become a free market economy and we’d be competitive,” says Stewart Jennings, chairman of the Manufacturing Circle which represents thousands of manufacturers in SA. “It was the most ridiculous thing you could ever imagine. Those of us in business know there is no free market in the world. Every country protects itself. We don’t. Here’s an economy without skills that just throws open the tariffs. We’re the country that’s whiter than white in terms of the WTO. Everybody else just abuses us.”

Business consultant Moeletsi Mbeki opines “[government] is too ideologically orientated, it operates from ideology rather than from practical expertise. This motivates our relationship with China. The Chinese can do no wrong.”

One of the worst mistakes they made, he believes, was to sign an agreement that gave the Chinese market economy status which it did not and does not deserve. The talk was that SA agreed to do this as compensation for imposing a three-year quota on Chinese textile imports. The effect on SA’s manufacturing sector has been devastating. “As a consequence of that agreement it is virtually impossible for us to get countervailing duties into China through ITAC [the International Trade Administration Commission which used to fall under the Department of Trade and Industry but is now under Ebrahim Patel‘s Department of Economic Development],” says Stewart Jennings. “We’ve battled to get dumping duties or safeguards against China. Most of the applications that have gone to ITAC have been kicked into touch.”

First, China starts with a currency that is 30% undervalued. It manipulates it, so any goods it exports to SA are 30% cheaper than they should be. On top of that there are all sorts of incentives for Chinese exporters. And then, as Jennings says, attempts by local manufacturers to defend themselves by applying for countervailing duties more often than not go nowhere.

Iraj Abedian of Pan African Investment and Research says the short answer to the question is yes, we are being screwed. “Not because the Chinese have been smart but because we’ve been snoozing and naïve.”

SA was so flattered to be asked to join the BRIC (Brazil, Russia, India, China) club of developing economies that it did not drive a hard enough bargain. “We were romanticising our relationship with China and celebrating the fact that China was inviting us to join BRIC. We took it as a form of political honeymoon without recognising its effect on manufacturing, without assessing our counter-strategy for safeguarding national interests in the form of jobs and tax revenue.” China needed SA to join BRIC at least as much as SA itself wanted to join, but SA failed to capitalise on this.

Executive director of the Manufacturing Circle, Coenraad Bezuidenhout, who has observed the effect at close quarters, thinks part of it is that “our guys find the prospect of dealing with China daunting. They feel we need China as a market for our raw materials more than China needs us.” He thinks this attitude reflects a worrying lack of professionalism on the part of those who are paid to battle for SA’s interests. “We should be leveraging our position with regard to our minerals and our access to African markets far more than we do when we deal with China.”  Source: Business Times

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

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

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

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

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

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

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

Source: McDermott Will & Emery 

Recently, an organisation called Global Inspection Group (GIG) has advocated PSI – an import verification system – as a solution to counteract South Africa’s trade deficit. The article Import verification would outlaw customs fraud’ alludes to the apparent success of these mechanisms in other African states to support quality and import standards in those countries, respectively. Because South Africa has no verification of imports system ‘it is easy to systematically under-declare goods’, the article states. Furthermore, it mentions that a Finance ministry would benefit from such a system ensuring the collection of the correct duties. [Really? how naive].

South Africa is a free country, and it follows that organisations will go to extremes to secure a business foothold in the country. The question is – to what length and to what end? If any ministry of finance were to rely on a PSI company, it would first disband its customs department, because there is evidently no trust in its frontline and post clearance capability.  Most governments (if not all) are pretty much aware of the broader international customs developments championed by the WCO. In recent years, the WCO has developed several diagnostic studies and programmes – with the option of donor funding if required. There would therefore be no sense or credibility in a government that would persist in pursuance of PSI services for fiscal assurance.

Any trade practitioner and supply chain operator in South Africa will readily confirm the hectic ‘change’ programme which is being pursued under Customs Modernisation. These changes and their associated systematic innovations and efficiencies are by no means the result of government capitulating in the face of illegitimate trade. No, it’s a conscious decision to take responsibility for the problem, and together with the allied trade to improve the situation.

It is therefore high time that such organisations which front themselves with the ‘be-all and end-all’ systems in Customs’ tariff and valuation appraisal rather seek a more practical and benefit-delivering model than one which not only scams governments for service and inspection fees, but also offers no benefit to trade. Included are those BOT vehicles offering governments ‘free’ cargo scanning equipment in exchange for a lucrative inspection fee. None of this is based on risk management and is purely profit focussed. The concept forgoes most if not all, the modern customs principles and standards promoted by the WCO. The buzz word is ‘Capacity Building!’

The reality in all of this should be clear. No private sector entity can replace Customs. Outsourcing in any event would require government to set up a vehicle of its own to ‘ensure’ that the outsourcer is doing his job. If there is a dearth in knowledge and skills, then it is up to government to rectify the situation.  Source: FTW Print version.

Customs and logistics users will in particular find the featured survey of interest, if not important. International Logistics encompasses an array of essential activities — from transport, warehousing, cargo consolidation, and border clearance to in country distribution and payment systems, involving a variety of public and private agents. The Logistics Logistics Performance IndexPerformance Index (LPI) and its indicators are a joint venture of the World Bank, logistics providers, and academic partners.The  LPI is a comprehensive index created to help countries identify the challenges and opportunities they face in trade logistics performance. 

The 2010 LPI points to modest but positive trends in key areas such as customs, use of information technologies for trade, and investment in private services. The LPI is a multidimensional assessment of logistics performance, rated on a scale from one (worst) to five (best). It uses more than 5,000 individual country assessments made by nearly 1,000 international freight forwarders to compare the trade logistics profiles of 155 countries. Germany and Singapore receive the highest ratings in the 2010 LPI with scores over 4.08. South Africa ranks 28th on the list with a score of 3.46, one position behind China (3.49), but 11 and 18 places better than Brazil (3.20) and India (3.12), respectively.

The LPI covers the performance of countries in six areas that capture the most important aspects of the current logistics environment:

  • Efficiency of the customs clearance process.
  • Quality of trade and transport-related infrastructure.
  • Ease of arranging competitively priced shipments.
  • Competence and quality of logistics services.
  • Frequency with which shipments reach the consignee within the scheduled or expected time.

One of the features of the LPI includes indicators of border procedures is the time taken to complete trade transactions.  Although this  is a relatively small fraction of total import time, such time increases significantly when goods are physically inspected. Core customs procedures converge strongly across all performance groups, but physical inspection—and even multiple inspections of the same shipment by different agencies—are much more common in low performance countries. The report moreover suggests that border agencies other than Customs tend to constrain the clearance process and ultimately the costs imposed on the private sector.