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Africa is Ready for Growth with Support from Trans-Ocean Transportation

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Africa is Ready for Growth with Support from Trans-Ocean Transportation

RTM Lines is a trans-ocean transportation company headquartered in Norwalk, Connecticut, with over 39 years of experience in the global ocean carrier business. As a respected ocean transportation provider, we are continually equipping clients with valuable information and insight related to the ocean transportation industry.  Recently, RTM Lines has invested time and research to better understand the growth of African infrastructure and resources; and how those factors affect opportunities for growth and development in the breakbulk and project cargo markets. Research shows Africa resources and opportunities in key locations such as the Democratic Republic of Congo, Ethiopia, and Northern Mozambique. 

“Right now, the Democratic Republic of Congo (DRC) is sitting on the world’s largest cobalt resource, however the ongoing political turmoil, makes it very difficult to access the cobalt,” said Richard Tiebel, RTM’s Executive Vice President. He states, “Africa is showing more exponential growth than any other continent. Right now, markets like Ethiopia have shown 8% GDP growth, per annum. Analyzation shows there are a number of factors within urbanization, ICT (Telecommunications), and the Extractives Industry (Oil, Gas, and Mining) driving this growth.” 

With an array of potential possibilities for growth in Africa in the coming years, RTM Lines recommends directing attention to trades and the international markets in Africa, specifically in the shipping and trading processes. The growth and opportunities available in the African market, have great potential for clients that develop and understand the Africa market. 

“In the next 4-5 years, city populations in Africa will double, which means the infrastructure will need development. This development will motivate the community to build infrastructure that supply power, water, sanitation, housing developments, and support to serve the new population in the area. Most governments couldn’t support fixed-line infrastructures, but Africa is going through an information, communication, and technological revolution. The private sector is supporting this revolution and allowing Africans to pursue business opportunities. Companies like Microsoft have been investing in some African tech sectors, to develop talent and to take Africa forward,” said Tiebel.

As the International Maritime Organization (IMO) 2020 regulation will soon go into effect, Tiebel shared his perspective on how Africa’s natural resources can positively influence the trans-ocean transportation industry. 

Mr. Tiebel states, “the gas in Northern Mozambique is the world’s 12th largest natural gas resource. A lot of infrastructure will be needed in order to get this gas because the town itself is very small and scarcely has roads to support it, no port, no airport, or even power and electricity. The town of Palma will literally be built up in order to access this gas resource offshore.” He continues, “the cost of the IMO regulatory change on the shipping industry is unknown, and though we know the IMO’s decision will impact refiners, producers, bunker suppliers, and more, Africa offers a variety of natural resources to emerge as a major beneficiary of this regulation. This supply of natural resources has the potential to help the trans-ocean transportation industry control the anticipated spike in fuel costs in 2020.” 

RTM Lines is committed to providing customers the information necessary to ship ocean cargo with confidence. Understanding the changes and regulations in these expanding and shifting markets is key to providing smooth transit for infrastructure, mining, and oil & gas project cargo. RTM Lines is both knowledgeable and competent in global operations. Port to port, RTM Lines strives to improve the global trade market and the quality of the ocean transportation industry.

blockchain

BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

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.

DHL Supply Chain Recognized by Top Employers Institute

Contract logistics market leader DHL Supply Chain received multi-faceted recognition from the Top Employers Institute including praise for their outstanding human resources policy and taking the spot for Top Employer on the international stage in Spain, Portugal, the Netherlands, UK, Canada, USA, Brazil and China.

“We are delighted to be awarded as a Top Employer for the third year in a row. This certification demonstrates that our efforts to create a sustainable HR strategy at DHL Supply Chain are paying off,” said Rob Rosenberg, Global Head of Human Resources at DHL Supply Chain. “Especially in the field of contract logistics, a motivated and well-trained workforce is key to offering customers optimal solutions. Which is why we take a proactive and multi-layered approach to both attracting and retaining employees. And this approach is proving successful, as shown by this renewed certification from the Top Employers Institute.”

This year’s Top Employer certification established the third year in a row the company has been recognized. Additionally, the company received high recognition for Leadership Development, Career & Succession Management and Learning & Development.

“Talent is the most critical piece in meeting our customers’ ever-changing needs and exceeding their expectations,” said Tim Sprosty, Senior Vice President of Human Resources at DHL Supply Chain North America. “That is why we place such a strong emphasis on creating a quality work environment that enables our employees’ success and promotes operational excellence. It is central to our culture, and we’re proud to accept this recognition for our continued efforts.”

Source: DHL

UPS Supply Chain rescues a UPS still struggling with costs

Supply Chain and Freight came to the rescue for UPS in the third quarter, with a strong performance in road freight and forwarding counter-balancing profitability problems elsewhere.

For the whole company consolidated revenue increased by 7.9% year-on-year, whilst stripping-out currency fluctuations, it was up 8.4% at $17.444bn. Net Income was up 19.8% at $1.508bn, a number slightly flattered by lower income tax costs. Operating profit was only 0.7% higher.

The core US Domestic Package revenue was good at $10.437bn, an 8.1% rise. Here the underlying picture was of strong demand from internet retailing in particular enabling a better pricing environment. However operating profit fell in the third quarter possibly influenced by higher transport subcontractor costs, which for the whole group climbed by 13.6% compared to the same period last year.

International Express was not quite as strong in revenue terms, up 3% at $3.47bn. Volumes fell slightly over the quarter by 0.2% but this was balanced by higher average revenue per package. However, fuel costs and currency effects conspired to drive down operating profits by 11% to $536m.

A much better performance was recorded by the Supply Chain and Freight business. It saw profits sharply higher at $242m, a 24.1% increase on revenue up 12%. In UPS Forwarding and UPS Freight a virtuous circle of higher volumes and better utilization improved margins as did better quality products. Presumably this must have been in the face of higher underlying transport costs.

This quarter’s numbers were roughly aligned with the trends seen through the rest of the year, that of good revenue growth but difficulties with the cost base. This is especially the case in the Domestic Express segment, for the first nine months revenue is up 7.2% but operating profit is down 17.8%.

The pre-Christmas period will be key to UPS in terms of whether it can match capacity to demand in both in terms of volume and cost effectiveness. UPS needs get on top of the problem of a cost base that is increasing faster than the market. A company with the resources of UPS ought to be able to achieve this.

Source:  ti-insight.com