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BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

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Archives, Global Logistics, Global Trade Daily

BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

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This is the third in a three-part series by Christine McDaniel for TradeVistas on how blockchain technologies will play an increasing role in international trade.

What’s Even Better Than No Tariffs?

Smoother and faster customs procedures could boost global trade volumes and economic output even more than if governments were to eliminate the remaining tariffs throughout the world – up to six times according to an estimate by the World Bank.

Blockchain is a promising technology that, if widely adopted by shippers and customs agencies, could reduce the current mounds of paperwork and costs associated with import and export licenses, cargo and shipping documents, and customs declarations.

Below the Snazzy Surface of Trade Policy

Trade agreements work when the people who want to buy and sell across borders can use them. Engaging in international trade transactions requires diving into the rules and regulations of international customs processes. Businesses either have someone in-house to handle this or they hire companies whose business it is to manage these processes.

Moving goods through the customs process means preparing the relevant paperwork for import or export at each step in the process. The paperwork at each step must be confirmed and verified, sometimes separately by different people. These procedures — in rich and poor countries alike — can be complex, opaque and laden with inefficiencies that raise costs and cause delays at best. At worst, less automated processes can leave the door open to corruption and security breaches.

paperwork in shipping

Trade policymakers have increasingly focused on simplifying and modernizing customs procedures — a policy approach commonly known as “trade facilitation.” Nearly all modern free trade agreements have a trade facilitation chapter and the World Trade Organization has an entire Trade Facilitation Agreement devoted to eliminating red tape at national borders to streamline the global movement of goods.

Too Much Paperwork

The international shipping industry carries 90 percent of the world’s trade in goods but is surprisingly dependent on paper documentation. In a New York Times article, Danish shipping company Maersk commented that tracking containers is straightforward. It’s the “mountains of paperwork that go with each container” that slow down the process.

A shipping container can spend significant time just waiting for someone to cross the t’s and dot the i’s on the paperwork. Delays pose real costs to traders and represent a deadweight loss of resources that could have been spent elsewhere in a more productive manner. The cost of handling documentation is so high that it can be even more expensive than the cost of transporting the actual shipping containers.

Beginning in 2014, Maersk began tracking specific goods such as avocados and cut flowers to determine the true weight of compliance costs and intermediation. The company discovered that a single container moving from Africa to Europe required nearly 200 communications and the verification and approval of more than 30 organizations involved in customs, tax and health-related matters. Maersk’s office in Kenya has storage rooms filled from floor to ceiling with paper records dating back to 2014.

single container paperwork v2

Lost Opportunities

Inefficiencies in customs processes create chain reactions, extending the costs and inefficiencies throughout the transportation industry and all the way to the consumer. In just one example, as many as 1,500 trucks might be lined up on a given day on both sides of the critical border crossing between Bangladesh and India. Many trucks wait up to five days before crossing. Examples like this are not hard to find in developing countries.

Delays for perishable items are painfully costly for traders, but also for consumers. Economist Lan Liu and economist and horticultural scientist Chengyan Yue examinedlettuce and apple imports in 183 countries. They determined that reducing delays from two days to one would increase lettuce imports in those countries by around 35 percent, or an additional 504,714 tons of lettuce, increasing in world consumer welfare by $2.1 billion. The same improvement would increase apple imports by 15 percent, enabling shipment of an additional 731,937 tons and increasing consumer welfare by around $1.1 billion.

Complexity Makes Corruption Easier

Fraud constitutes a major threat to the customs process. Fraudulent behavior can involve the forgery of bills of lading and other export documentation such as certifications of origin. A fraudulent shipper could claim “lost” goods, underreport the cargo, and steal the difference. Or a shipper could misrepresent the amount or quality of shipped goods and pay less than the required amount for their imports.

Fraud can be perpetrated by a shipper, by the receiver of goods, a customs official, or an interloping third party. The greater the complexity of customs procedures and the more discretion granted to customs officials, the more likely corruption will be present at the border, creating both risk and costs for companies working to avoid corruption.

Indeed, corruption acts as a “hidden tariff” for companies and reduces legitimate customs revenue for governments. The World Customs Organization estimates the loss of revenue caused by customs-related corruption to be at least $2 billion.

Blockchain Makes Corruption Harder

Blockchain is a digital distributed ledger that is secure by design. Each transaction in the shipping process is uploaded to the chain if (and only if) it is agreed upon by the other users. It is nearly impossible to make a fraudulent claim or edit past transactions without the approval of the other users in the network.

Blockchain could discourage corruption by simplifying procedures and reducing the number of government offices and officials involved in each transaction. Each transaction can also be audited in real time, allowing users to see exactly when and where disputes arise and exactly what the discrepancies are.

This level of transparency enables participants in the network to hold each other accountable for mistakes or purposeful deception. Though blockchain does not prevent false information from being entered into the system, it does reduce opportunities for the original information to be corrupted by intermediaries involved in the shipping process. Rather than parties relying on the good faith of shippers and customs agents, blockchain greater assurance of the integrity of each transactional record.

Blockchain technology in customs and border-crossing procedures could also be used to prevent circumvention and transshipment—that is, when shippers send goods to a neighboring country before the destination country in an attempt to avoid tariffs on goods from the real country of origin. The importer ends up liable for duties and penalties. (For example, some exporters from China are now sending finished products through Vietnam to avoid new U.S. tariffs on goods from China.)

All In on Blockchain?

The use of blockchain in customs processing is still nascent. An advisory group for U.S. Customs and Border Protection is broadly exploring the role of emerging technologies like blockchain.

IBM and Maersk have partnered to demonstrate how blockchain can simplify shipping. Their plan would allow all parties involved in a container’s shipment to observe and track the container from inception to endpoint. For example, after a customs agent verifies the contents of a container, they can immediately upload information to the blockchain with a unique digital fingerprint that visible to all other users. The ease of access to information throughout the blockchain system reduces time-consuming correspondence among the parties.

For all this to work, customs agencies, shippers and suppliers will have to cooperate to integrate blockchain technology along the supply chain and across borders. By reducing time and cost, blockchain could be a boon to the majority of honest global shippers. By providing greater accuracy and transparency, blockchain would be a bust for dishonest brokers who manipulate the current inefficiencies in customs procedures to commit fraud or gain from corruption.

ChristineMcDaniel

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

 

This article originally appeared on TradeVistas.org. Republished with permission.

Archives, Global Trade Daily, Software

Global Customs Platform “RIISE” Showcased in Uzbekistan & Romania

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Disruptive global customs platform RIISE was announced and released this week by PCFC subsidiary, Customs World. The in-house customs project was presented to Uzbekistani officials and received positive feedback for its automation capabilities and elimination of traditional, time consuming trade bottlenecks.

“This disruptive technical and functional CMS (Customs Management System) and the trade enabling platform takes the lessons and builds on the learnings and 100 years of distinctive experience and practices of Dubai Customs” Nadya Abdullah Al Kamali, CEO of Customs World said. “The system recognizes the threats and challenges of today and provides the levels of border integrity that governments and their communities expect in such a way that sets world benchmarks for cross border trade.”

The plug-and-play solution is equipped to meet specific needs of customers and utilizes technology such as AI and machine learning to simplify and streamline decision-making and operations. Additionally, the open-source system eliminates the need for third party license and is predicted to improve rankings on the global indexes, increase revenues, facilitate trade, secure borders and the supply chain for countries that utilize the platform.

“RIISE is built with a vision to be the number 1 partner of choice for
governments to protect their borders and facilitate trade following the standards and requirements of the World Trade Organization, SAFE and Kyoto. It is a disruptive option to a stale market currently monopolized by companies with a 1990’s mentality dumping old technology and re-branding old processes.”

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Archives, Global Trade Daily, International Trade

Realign Your Trade Compliance Program with a Midyear Review

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The complexities of importing and exporting goods in the United States means it’s easy to overlook process changes and forget to make updates in a timely manner. However, if not caught quickly, outdated information or imprecise processes can add unnecessary fees and penalties. If left to accrue over the course of a full year, these costs can be staggering.

That’s why I recommend a midyear customs review. If something is off base with your customs compliance program you can rapidly realign as needed. Use C.H. Robinson’s comprehensive checklist to guide your own midyear customs process review.

Midyear customs clearance checklist

1. Review customs broker powers of attorney

Revisit powers of attorney (POAs) and revoke any from U.S. customs brokers with whom you no longer wish to work. Remember, any POA you extend should have an expiration period, providing a natural time to review. If you aren’t sure of existing POAs, you can see all U.S. customs brokers transacting business on your behalf by requesting your Importer Trade Activity (ITRAC) data (see #11)

2. Update names and addresses on file with U.S. Customs

U.S. Customs and Border Protection (CBP) uses contact information from CBP Form 5106 to communicate with Importers of Record. If you have recently moved, or have not reviewed the information listed on CBP Form 5106 in a while, re-validate the information you have on file so you will receive all pertinent and time-sensitive correspondences the CBP sends.

3. Ensure bond amount is sufficient

If your import activity has changed, or you anticipate a large increase in activity during the remaining half of the year, your bond may need updating. CBP can determine your bond is insufficient and may require you to increase your bond amount. A midyear review and update is a proactive move.

4. Consider changing listing multiple principals on the same bond

Having multiple entities on one bond can bring cost savings. But be sure to decide if the risks are worth the reward. When sharing a bond, each entity shares liability if CBP issues a demand against the bond. In addition, if any entities terminate the bond, this can disrupt the other entities within the bond.

5. Check customs broker instructions

Review and document any customs broker instructions you send to U.S. customs brokers regularly—from Harmonized Tariff Schedule (HTS) classification rules and related party verification instructions to anti-dumping/countervailing duty instructions—to ensure your customs broker declares entities to the CBP according to your wishes.

6. Request updated certificates of origin

Be proactive with foreign suppliers and obtain updated annual blanket certificates of origin (COO) for any program in which you’d like to claim preference. And provide any updated COOs to your U.S. customs broker. Not obtaining COOs in a timely fashion may lead to unnecessary annual duty costs.

7. Update free trade agreement instructions

Revise any instructions pertaining to free trade agreements (FTAs) so your U.S. customs broker has proper direction about how you would like to file entries that may be eligible for FTAs.

8. Obtain your manufacturer’s affidavits

If you utilize a U.S. goods return program, found under Heading 9801, be sure you have obtained your manufacturer’s affidavits for the rest of the year. Share these affidavits with your U.S. customs broker and record them within any customs broker instructions.

9. Review anti-dumping/countervailing duties products

The CBP can investigate any potential anti-dumping/countervailing duties (AD/CVD) evasion allegations. Accurate case numbers, rates, etc. are critical for reporting upon entry. Even if you are disclaiming AD/CVD, document your product details internally, explaining why your product does not fall within the scope of the order.

10. Provide reconciliation flagging instructions to U.S. customs broker

If you are a reconciliation participant, approved by CBP, flagging of entries is the responsibility of the importer. Now is the time to send your U.S. customs broker written direction with any flagging instructions you would like established or changed.

11. Request import activity records from CBP

ITRAC provides a wealth of information you can use to create or improve your import compliance program. Likely, you’ll need tools, like C.H. Robinson’s Global Trade Reports®, to transform the raw ITRAC data into user-friendly dashboards and reports.

12. Sign up for the ACE Portal

The ACE Secure Data Portal is a powerful way to manage trade compliance programs. This powerful tool enables you to receive paperless notifications from CBP, monitor your brokers, audit entries in real time, and much more.

13. Request export activity data

Similar to ITRAC data for import activity, request your Electronic Export Information (EEI) from the Census Bureau, Foreign Trade Division. If you are the filer in the Automated Export System (AES) using the ACE Export Portal, you can review your EEI on a regular basis.

14. Check U.S. Import HTS Classification and Export Classification

Review and communicate any updates to your HTS Classification Database and your Export Schedule B Number to proper stakeholders—both internally and externally.

15. Reduce liability with marine cargo insurance

Steamship lines and air cargo providers have limited legal and financial responsibility for international cargo. Marine cargo insurance plans can reduce your company’s financial exposure and bring new efficiencies.

16. Protect trademark and trade names

Make sure the CBP has any and all of your trademarks and trade names protected and recorded. This allows CBP to help you combat potential counterfeit products or infringement.

17. Request manifest confidential treatment

You can request confidential treatment of inward and outward manifest information. However, note that there are mandatory biannual renewal requirements. In addition, account for all possible variations of names within your request.

18. Review your denied party screening program

Look at which parties you are screening, and how often. This can ensure your program is appropriate for your current business model and bring potential risks to your attention.

19. Perform internal and external training

Regularly schedule time to ensure adequate training is happening with appropriate stakeholders. This keeps all parties, especially new employees, up to date with changes.

20. Address priority trade issues

Be sure that your compliance program addresses each one of the CBP’s initiatives to mitigate the risks of priority trade issues.

Smooth customs clearance doesn’t just happen

Careful planning and regular reviews of your customs processes are critical components to a strong trade compliance program.

If a midyear review seems unfeasible or this list seems daunting to conduct all at once, consider bringing in an outside expert like C.H. Robinson to guide you through the process. The most important part is to ensure you review, update, and communicate any changes to these areas of your compliance program on a consistent basis.

Archives, Global Trade Daily, Imports/Exports

In an Unclear International Trade Environment, Tariff Forecasting Provides Answers

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If there’s one thing we can say with a fair amount of certainty amid the rapidly shifting priorities of the U.S. government’s current administration, it’s that tariffs appear to be their preferred international trade tactic. Though customs duties have always been a part of any worldwide shipping equation, their renewed prominence has the potential to create serious (and expensive) headaches for companies that are not proactively assessing their supply chains and goods classifications.

To combat this, cut through the confusion, and stay ahead of changing customs regulations, perceptive businesses are turning to a new data-driven analysis method offered by some logistics providers: tariff forecasting.

How tariff forecasting works

As the U.S. government announces lists of new tariffs or changes to existing tariffs, the delay between announcement and implementation offers a window of opportunity for immediate action. Beyond merely issuing client advisories detailing the impending impacts, savvy providers use historical shipment data to predict what their customers’ actual cost ramifications will be once the new or altered tariffs come into force.

Essentially, providers will analyze what shippers imported in the past six, twelve, or eighteen months to calculate what the total duty would have been on that historical cargo, had the approaching tariffs been in place during those times. Then, using information about upcoming shipments and business intelligence about a company’s importing patterns and cadences, providers can automatically project the additional costs that newly announced tariff changes will impose on importers.

Understanding future customs impacts today

When customs brokerage and trade compliance services originate from the same company that also offers global air and ocean freight logistics services—like with C.H. Robinson—customers benefit from their provider’s ability to synthesize that information and provide innovative insights.

As a result, importers gain true visibility to their incremental costs, eliminating the manual guesswork and uncertainty that changing tariffs can create. With concrete data on how changed tariffs would affect their bottom line, shippers are in a better position to reallocate resources or shift strategies before they experience impacts. Rather than merely react, businesses that use tariff forecasting open new possibilities and solutions for taking charge of the international trade situation, mitigating consequences, and preserving their margins.

But more than just easily highlighting anticipated duties on a shipper’s impending imports, forecasting offers new opportunities for businesses to rethink their broad importing strategy.

A chance to reconsider customs importing strategies

Because tariffs apply to particular countries, classes, and commodities, seeing duties’ specific impacts can spur new conversations about the best ways to declare imports. This often involves revisiting the basics of customs enforcement and asking holistic questions that may have previously slipped under the radar: Do our goods have the right tariff number/classification, or are they misclassified? Are our imports’ countries of origin correct? Are we properly declaring value?

With the rise in tariffs bringing renewed scrutiny to these compliance considerations, revisiting the customs process may suggest fresh ways for companies to keep their costs down. Here, providers’ modeling can also offer perspective on what would be the current or future impacts of changing strategies, helping importers project and evaluate the consequences of different courses of action to adapt to tariff volatility.

Additional opportunities around exclusions

Providers’ access to importers’ shipment information also allows them to provide valuable services surrounding tariff exclusions.

When the U.S. government announces that currently active tariffs will be reduced or suspended, providers can “invert” their tariff forecasting, using their customers’ historical information to quickly locate past shipments that were charged duties but—under upcoming cancellations—would not have been had they shipped later. With this data, providers’ local experts can approach U.S. Customs on their customers’ behalf to request refunds, saving importers time and money.

That means whether tariffs are coming or going, good logistics providers, like C.H. Robinson, proactively combine their experience and scale with the vast amounts of customs data they submit for their customers to create an information advantage that helps deliver better outcomes.

Staying prepared in a volatile trade environment

With all the politics and personality that surrounds U.S. tariffs and economic policy, seeing through the rhetoric and determining concrete impacts can be a real challenge. But doing so is essential for companies to remain in compliance and avoid unexpected, unpleasant increases in costs. Tariff forecasting is a proactive and automatic way some providers leverage their routine business with customers to provide additional insights and value-added services that keep companies ahead of changes, putting importers in better positions to make crucial decisions.

In an unclear global trade environment, it’s a powerful tool that can provide shippers some much-needed, tangible reliability.

Archives, Global Trade Daily, Special Reports

GTKonnect Sets the Bar Higher with Global Trade Management Platform

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“Sometime last week, I was chatting with a long-term customer about our recent rebranding. She asked me why we had the tagline, “Our goal is to drive your Global Trade success?” And this was my explanation, “We have all been observing the constant changes that have been happening with global trade in recent times. Brexit, US-China tariffs on each other, the US pulling out of the Trans-Pacific Partnership (TPP) trade deal, NAFTA renegotiations and more. More and more businesses now have a global footprint and such economic and political decisions have a major impact on global trade. Compliance rules and trade regulations are changing rapidly, and businesses cannot afford to adapt a reactive stance to Global Trade Management (GTM) any longer. They need to be armed with information and keep pace with the changing trade environment to stay ahead of the pack. Protection and polarization are becoming more relevant in the existing political and economic conditions and trade partnerships are being altered more often.”

“Businesses constantly need to keep watching baseline outcomes and be prepared with content relevant to changing compliance rules. For instance, vehicle manufacturing companies might require some percentage of the components to be made locally and due to a broken partnership, businesses might not fall under the same compliance rules as before. While adherence might appear to be a stumbling block, free trade zones could be an option to address the concern and optimize costs at the same time. Irrespective of the compliance regulation, and the possible solutions, businesses can stay ahead and reach out for success only if they lead with content. In the current changing GTM environment, additionally, businesses need to be proactive and collaborative. GTKonnect offers solutions to bridge these gaps and empowers businesses to achieve GTM success. And that explains the reason for our new tagline.”

“Let me now give you a wider perspective that places the current GTM trends in context. Global trade professionals have stayed in the background for very many years, only making sure the business met compliance regulations, and not influencing business decisions for the most part. The tide is turning now and due to the changing political and economic global climate, company CEOs are now consulting global trade professionals on new regulations and trade policies. On the one hand, countries are approaching trade with a very protective and conservative outlook and drawing up new regulations based on this approach. These are reflecting in terms of control rates, tariff rates, retaliation and other stringent limitations. On the other hand, they are also aiming at expanding their global trading presence, looking to formulate agreements and seeking new marketing opportunities.”

“Businesses are now compelled to keep an eye on the wider global trade scenario along with the impact on their costs and efficiency. However, many companies have not yet adapted this two-pronged approach and are lacking the information and tools to be successful in GTM. Data has to be proactive and global trade professionals need to be aware of the changes and stay in step with the top management’s needs. In order to do this, they must be equipped with the latest information, stay connected with industry experts who can offer advice on the latest developments and take advantage of the cost savings and opportunities that are available. A mix of the right tools, content to power the tools and the ability to collaborate can help the business remain competitive and lead to the right decisions in GTM. Let’s also not forget that any information on global trade, and access to expert advice tend to be expensive.”

“Businesses vary in their capabilities vastly, some being technologically well-equipped and others not so much, but all of them require the right content and information that is readily available on demand, at a reasonable cost. GTKonnect has been listening to customers and having observed these needs in the context of global trends in GTM, came up with the iKonnect+ feature to connect the dots. Harmonized Tariff Schedule (HTS), dumping case details, import/export procedures and customs office locations are a few factors for which content is difficult to find. iKonnect+ is a single content platform that helps source all the information in one place, without added costs. The first social platform of its kind in the GTM space, the tool helps global trade professionals connect with a community that can offer expert advice and help develop contacts in the global trade arena.”

“No matter what rules and trade partnerships change, a business’ preparedness to adapt to global trade changes and trends makes it efficient and successful. And GTKonnect is here to help businesses achieve success in GTM.”

Find out how we can help you achieve GTM success.

Anand Raghavendran is GTKonnect’s President & CEO.

Archives, Global Trade Daily, International Trade

What to Consider when Planning for the Post-Brexit Period

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The past weeks have seen a flurry of parliamentary activity in London, none of which has yielded any more clarity regarding the status of the UK’s membership in or relationship with the European Union. At time of writing, British lawmakers have twice voted down a proposed Brexit deal that EU officials have said is non-negotiable, and subsequently voted against leaving the EU without a deal.

Even in the likely event the EU agrees to delay the Brexit deadline, the future of Brexit remains very much in question, as Britain’s divided Parliament won’t be any more likely in the coming months to reach consensus than European officials are likely to re-open negotiations.

The innocent bystanders, of course, are the countless businesses on both sides of the English Channel, which have hitherto relied on seamless trade between the two entities, and which are increasingly reconsidering their relationships with suppliers and vendors across what has the potential to become a hard border.

Unprepared for Brexit

While the impending Brexit deadline has generated expected urgency in Britain’s parliament, the inevitability of Brexit has been known for nearly three years. Yet, as it stands today, many businesses are unprepared for the very real possibility of a hard Brexit. In fact, a recent report in the Wall Street Journal, citing a study by the Chartered Institute of Procurement & Supply (CIPS), notes only 40 percent of British businesses would be prepared to comply with a new customs compliance regime.

That’s a daunting number and serves as a call to action for those who have yet to prepare for Brexit’s rapid approach. Should a hard Brexit occur, it will serve as much more than a milestone; it will turn Britain’s customs regime on its head, sowing confusion and uncertainty that will inevitably result in disruption to supply chains, administrative headaches and unexpected costs. Industries heavily integrated with European supply chains, such as aerospace, pharma, food manufacturing and autos will face acute disruption.

Increasing Landed Costs

Perhaps the most urgent consideration for those who engage in trade will be the spike in associated landed costs. In the event of a hard Brexit, the current European customs regime will cease to apply to imports. The immediate effect will be the application of tariffs and Value-Added Taxes (VATs). Those tariffs will be based on Most Favored Nation (MFN) rates, which will vary by product and could be quite substantial. While the British government has already stated that, in the event of a hard Brexit, it plans to waive seven percent more tariffs than which  currently exist, VATs will still apply as will tariffs on virtually all imports from non-EU origins. That includes countries with which the EU currently maintains free trade deals, such as the Comprehensive and Economic Trade Agreement (CETA) recently signed between the EU and Canada.

Compliance (New customs regime)

While tariffs for EU imports may be reduced for the most part, customs declarations will still be required. This is a critical development. Given that approximately half of the UK’s imports come from the EU, and the EU has several trade agreements with key trading partners, there’s been little need for customs declarations in the UK to this point. However, after Brexit, the number of customs declarations is estimated to increase almost 400 percent (from 55 million to 205 million) at a cost of approximately £6.5billion or USD $9.1 billion to businesses. In addition, there will be 180,000 British business who will be filing a customs declaration for the first time, while those who have already been filing declarations will need to adjust to a new regime of customs classification.

The importance of correctly classifying these cross border movements cannot be overstated. In a best-case scenario, such as declarations with missing information, importers will face delays at UK border crossings, which are already anticipated to be backlogged. In a worst-case scenario in which goods are misclassified, importers may face retroactive payments on top of financial penalties and – in extreme cases – lose their authorizations to import.

Border Delays

According to CIPS, 10 percent of UK businesses could lose EU business if there are delays at the border, and about 20 percent will see their EU buyers demand discounts for delays of more than a day.

The organization notes 38 percent of EU businesses have already changed suppliers because of Brexit and up to 60 percent of EU businesses would look to switch suppliers if border delays were to extend to two weeks or more.

Delays are almost inevitable given the more robust customs administration requirements. Today, tractor trailers pass through the UK-EU border without stopping. At the Port of Dover, the UK’s busiest and closest port to mainland Europe, some 17,000 tractor trailers pass through on a daily basis with only about two percent being stopped. After Brexit, almost all of them are likely to be stopped. Even if that stop is only for a few minutes, it’s going to result in a significant backlog of transports.

In short, importers into the UK and exporters out of the UK will need to factor in additional time in transit and set expectations with their trade partners on the other side of the English Channel.

Preparation is Key

Given the shrinking time window for preparation, businesses that haven’t done so already should be working with their trade services partners – carriers, freight forwarders, trade lawyers and consultants and customs brokers – to ensure they’re able to minimize the negative impact of Brexit on their trade activity.

The UK’s official leave from the EU may very well be imminent, or potentially months or even more than a year away, but given the consequences of inaction, getting prepared late is still better than not being prepared at all.

Mike Wilder is vice president of Managed Services at trade services firm Livingston International. He has 30 years of experience in trade compliance. He can be reached at mwilder@livingstonintl.com.

David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at dmerritt@livingstonintl.com.

 

 

Archives, Global Trade Daily, News

SOURCING THE BEST CARRIER/AIRPORT CONNECTIONS

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Sourcing the best airport connection can be tough when big-name companies such as Amazon Air continue to announce expansions to create and delegate more space for operations. As a prime example, Amazon Air is aggressively taking over regions in the Midwest and South through increased fulfillment centers and expanding air cargo capabilities.

Back in December, Amazon Air confirmed the expansion investment of the Chicago Rockford Airport region by 120,000 square feet to make room for an additional eight-plus planes. The quickly growing logistics network Amazon prides itself in is provided with all the tools needed to continue leveraging growth momentum. Additionally, the company is not afraid to call out the need for the potential threat the expansion poses to competitors UPS and FedEx by adding that such competitive disruption is necessary.

Additionally, Amazon announced plans to expand its network in the Lone Star State at the Lonestar Dallas Air Hub, projecting “to handle multiple flights daily” that “will be tailored specifically to Amazon Air’s larger-scale regional needs.” A Morgan Stanley report estimates that “Amazon’s volumes moving onto Amazon Air are costing UPS/FDX Air roughly 200-300 bps of volume growth.”

Consider the substantial air-cargo growth reported for Budapest Airport. Most recently, the Central European hub confirmed record rates of double-digit growth for three years straight. It seems every time Budapest Airport makes the news, it’s to report on higher growth rates from before.

“These latest figures are exciting as they represent three years of uninterrupted double-digit growth at the airport,” says René Droese, Budapest Airport’s director of Property and Cargo. “We are focusing all our efforts to make good use of the ideal conditions in Budapest and turn Liszt Ferenc International Airport into a major cargo logistics hub for the Central-Eastern European region. For this, we are establishing appropriate technical, security and traffic conditions; the relevant projects entered the phase of implementation last year, and we can successfully complete them this year. As a first step we handed over a 16,000 m2 new cargo warehouse and office capacity for our integrator partners in 2017; their traffic has been constantly developing for years.”

To continue these significant growth rates for 2019, the airport is preparing a new cargo apron to house and simultaneously operate two Boeing B-747-8F freighters.

“The combined value of this development effort in 2019 reaches EUR46 million and is financed by Budapest Airport itself,” Droese notes. “Our goal is to deliver, by the end of this year, an ideal cargo infrastructure for all segments of our well-balanced customer portfolio, for full freighters, belly cargo, integrators and roader feeder trucking, too.”

The common denominator is proactive efforts to leverage and increase the momentum before it’s too late. Key considerations include regional advantages, current and potential partnerships, operational efficiencies and even integrating technology solutions that streamline communications and transports.

“Rising demand is illustrated by the fact that last year a number of widebody and jumbo freighters were being loaded at the airport each day, including Boeing B-747s operated by Cargolux, AirBridgeCargo and Silk Way West, and Airbus A300s, A310s, A330s used by Turkish Cargo and Qatar Airways Cargo,” Droese says.

Many might recall the June 2018 Air Cargo Advance Screening Program mandating foreign shipments to be subject to providing a laundry list of pre-arrival cargo data when the U.S. is the final destination, per measures from the Department of Homeland Security. Strict screenings such as these have been implemented globally, as recently reported for Dubai Customs, which prides itself on significant progress in performance due to the advanced infrastructure as well as supportive government policies assisting in facilitating global trade efforts. The success is also paired with a proactive approach involving careful evaluation and research of trade trends.

Director of Dubai Customs, Ahmed Mahboob Musabih, explains: “We have an integrated strategy in place to develop the external trade performance further following the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, vice president, prime minister and ruler of Dubai, and along with the guidelines of Dubai Plan 2021 and the UAE Centennial 2071. We are watching closely the changes taking place in the international trade and we will turn challenges into opportunities by entering new markets and expanding our existing ones.”

More recently, however, Dubai Customs reported several cases where significant smuggling attempts were stopped because of the diligence and seamless communication strategies in place. One report identified 922 successfully prevented smuggling attempts, of which 38.5 percent were drug contrabands. Even more interesting is the time-frame the attempts occurred: between January and September of 2018.

“Thanks to our inspectors’ vigilance, we are closely in full control of all checkpoints,” explains Ibrahim Al Kamali, Dubai Customs’ director of Passenger Operations. “Our inspection officers receive the best training on body language and different types of drugs, and how to distinguish fake brands from genuine ones.”

“There are challenges facing customs authorities in countries that have strategic locations,” Musabih points out. “Dubai is not an exception. It’s strategically located between East and West, and it has spent billions of dirhams to develop its infrastructure, ports and airports.

“The Emirate has also provided an unprecedented host of services and products, including the iDeclare application which significantly reduces passengers’ time needed to declare different belongings. These advanced services will facilitate passengers’ entry into the country.”

From security and trust to reliability and competition, sourcing the best carrier and airport connection needs to align with customer needs, the types of products being transported, and compliance efforts for the region. Just because an airline is associated with a big brand does not guarantee a seamless transport of goods.

Conduct necessary research and review updated reports to learn and identify an airline’s strengths and areas of improvement. No two carriers are the same, and the options available depend on the amount of knowledge you have going in and what fits your long-term and short-term needs. Consider the partnerships involved with the airline of your choice and how these partnerships create competitive advantage. If you can’t identify what makes a carrier or airline significant, it might be time to reconsider market options.

Archives, Global Trade Daily, News

New Customs Platform Utilizes Disruptive Technology

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RIISE, a brand new platform based on recorded trends seen with Dubai Customs, is the latest and greatest customs management platform that not only increases transparency, but also fosters a cost-effective and reliable customs environment. The platform, built by Customs World, confirmed RIISE was created to provide automation and technology features including Artificial Intelligence (AI), Prediction, Natural Language Processing (NLP) and blockchain.
“This disruptive technical and functional CMS (Customs Management System) and the trade enabling platform takes the lessons and builds on the learnings and 100 years of distinctive experience and practices of Dubai Customs.” Nadya Kamali, CEO of Customs World said. “To further solidify our commitment to make this world a safer place, the system recognizes the threats and increasing challenges of today and provides the levels of border integrity that governments and their communities expect in such a way that sets world benchmarks for cross border trade”.
“RIISE is built with a vision to be the number 1 partner of choice for governments to protect their borders and facilitate trade following the standards and requirements of the World Trade Organization, SAFE and Kyoto.  It is a disruptive option to a stale market currently monopolized by companies with a 1990’s mentality dumping legacy technology and rebranding old processes.”
The platform is predicted to launch during the second quarter of 2019. Once launched, Customs World will offer assistance with training, demos, and consultations.
Source: Dubai Customs

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Dubai Customs Boasts Exemplary Customs Strategies

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Many might recall the June 2018 Air Cargo Advance Screening Program mandating foreign shipments to be subject to providing a laundry list of pre-arrival cargo data when the U.S. is the final destination, per measures from the Department of Homeland Security. Strict screenings such as these have been implemented globally, as recently reported for Dubai Customs, which prides itself on significant progress in performance due to the advanced infrastructure as well as supportive government policies assisting in facilitating global trade efforts. The success is also paired with a proactive approach involving careful evaluation and research of trade trends.
Director of Dubai Customs, Ahmed Mahboob Musabih, explains: “We have an integrated strategy in place to develop the external trade performance further following the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, vice president, prime minister and ruler of Dubai, and along with the guidelines of Dubai Plan 2021 and the UAE Centennial 2071. We are watching closely the changes taking place in the international trade and we will turn challenges into opportunities by entering new markets and expanding our existing ones.”
More recently, however, Dubai Customs reported several cases where significant smuggling attempts were stopped because of the diligence and seamless communication strategies in place. One report identified 922 successfully prevented smuggling attempts, of which 38.5 percent were drug contrabands. Even more interesting is the time frame the attempts occurred: between January and September of 2018.
“Thanks to our inspectors’ vigilance, we are closely in full control of all checkpoints,” explains Ibrahim Al Kamali, Dubai Customs’ director of Passenger Operations. “Our inspection officers receive the best training on body language and different types of drugs, and how to distinguish fake brands from genuine ones.”
“There are challenges facing customs authorities in countries that have strategic locations,” Musabih points out. “Dubai is not an exception. It’s strategically located between East and West, and it has spent billions of dirhams to develop its infrastructure, ports and airports.”
“The Emirate has also provided an unprecedented host of services and products, including the iDeclare application which significantly reduces passengers’ time needed to declare different belongings. These advanced services will facilitate passengers’ entry into the country.”
From security and trust to reliability and competition, sourcing the best carrier and airport connection needs to align with customer needs, the types of products being transported, and compliance efforts for the region. Just because an airline is associated with a big brand does not guarantee a seamless transport of goods.
Conduct necessary research and review updated reports to learn and identify an airline’s strengths and areas of improvement. No two carriers are the same, and the options available depend on the amount of knowledge you have going in and what fits your long-term and short-term needs. Consider the partnerships involved with the airline of your choice and how these partnerships create competitive advantage. If you can’t identify what makes a carrier or airline significant, it might be time to reconsider market options.

Archives, Global Trade Daily, News

Dubai Customs Thwarts Attempt to Smuggle 5m Captagon Pills

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Cooperation between different customs departments and good planning have led to thwarting an attempt to smuggle large number of Captagon pills at Jebel Ali & Tecom Customs Center, just a few days before 2019 unfolds.

The illegal shipment was tracked by customs intelligence personnel who shared the information and images of the shipment through the Regional Intelligence Liaison Office (RILO).

The Regional Intelligence Liaison Office (RILO) is a regional centre for collecting and analyzing data, which also disseminates information throughout the global customs network. As a fundamental pillar of the World Customs Organization (WCO)’s Enforcement Strategy, Intelligence and Information Exchange is facilitated through eleven (11) RILOs covering the six (6) regions of the WCO.

The RILO informed of a drug shipment in a nearby country, and by analyzing and comparing the data, the team at Jebel Ali & TECOM Customs Center decided to track similar shipment coming into Dubai in a container that had vehicle spare parts from a country that doesn’t normally trade with spare parts. The container was tracked through the smart Vessel Tracking System, developed by Dubai Customs.

The container was scanned, and with the help of the customs K-9 Dog unit, 5 million Captagon pills that weighed 500 kg were seized. This raises the number of Captagon pills seized since January 2018 to 15 million pills.

Jebel Ali & TECOM Customs Center has made 19 seizures between 2016 and 2019. These included 225 million narcotic pills and 51 kg of other drugs.

Commenting on the seizure, Director of Dubai Customs Ahmed Mahboob Musabih pointed out all customs departments work and coordinate together to combat illegitimate trade and thwart any narcotic drugs smuggling attempt.

“We are vigilant and well prepared to all attempts of bringing these illegal contrabands into the UAE through Dubai entry points. The high sophisticated level that Dubai Customs reached in terms of infrastructure, equipment and the skills of their customs officers have led to more control over the emirate’s entry points and borders following the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai” says Musabih.

Shuaib Al Suwaidi, Customs Intelligence Director at Dubai Customs revealed they track shipments on their way to Dubai’s entry points based on numerous data and intelligence resources.

Captagon was first manufactured in 1961. It stimulates the central nervous system, increases alertness, boosts concentration and physical performance, and provides a feeling of well-being. It was earlier prescribed to treat narcolepsy and depression, but the medical community determined that Captagon’s addictive properties outweighed its clinical benefits in 1980.

It was then banned in several countries, particularly after it was found, as is the case with long-term amphetamine users, to lead to extreme depression, malnutrition, heart and blood vessel toxicity, and sleep deprivation.