In the global economy most supply chains involve multi-national links. This requires a network of logistics operators to move goods overland in each country and across oceans. The links between these modes of transport are often customs and ports, and it is here where extended bottlenecks can occur, putting the brakes on commerce and profitability.
“Transport systems involving multiple carriers require a vast number of documents that have to be produced at customs every time goods leave or enter a country. Customs check the documents and inspect the goods – especially if they think there is something wrong with the documentation,” says Dr Oliver Peltzer, (Partner and Head Practice Group Transport, Aviation, Logistics, at Arnecke Sibeth Dabelstein and speaker at the FIATA (the International Federation of Freight Forwarders’ Association) World Congress.
“While all carriers involved in the logistics chain might be very organised, it happens that customs procedures in lead to delays present a risk to supply chain.”
This system, he says, can be improved when information about required documentation at a specific port (it varies significantly from country to country) can be digitally forwarded and prepared in advance. “If the documentation can be digitised, the cargo can be cleared immediately.”
However, with these upgrades, there’s a tremendous amount of work to be done to get multiple ports on various levels of digital sophistication around the world working with a common IT infrastructure to facilitate trade.
“If you have a proper working trade facilitation system in customs, the procedure of passing goods through a port can be reduced considerably that results in a considerable reduction in lead times,” says Dr Peltzer.
One element of such a system is known as the “single window” – meaning a single point of contact for the carrier, rather than the older procedures (still in place around the world today) in which bringing goods into a country requires exposure to ten or 15 authorities, requesting different documents and data.
“Many countries have reduced the process to a single window – all data is collected by one authority and forwarded internally to other authorities involved. If, as a carrier, you are in a position to forward your information to a customs authority, say, five days before arrival at the border, the goods can be cleared beforehand.”
Unfortunately, the commitment to adopt this level of digitisation lies entirely with the governments of the nations in which the ports are found, and there’s not much that suppliers or forwarders can do to encourage the process.
Dr Peltzer says that logistics companies would be only too delighted to engage in any process that speeds up their passage through ports as it would maximise profitability for both themselves and their customers.
“In less developed nations, these systems are not always available and aside from the required investment in technology, these countries are often very dependent on customs duties. So before these countries start replacing a job-producing and income-generating system with wonderful IT infrastructure, they will be very cautious.”
What this essentially means is that while customs digitisation is extremely desirable for carriers and their customers, it is not necessarily so for the countries in which goods are passing through. Ports are used by virtue of their location on trade routes around the globe, so competition isn’t likely to motivate their progress in terms of efficiency.
Given that this is the status quo of the customs network around the world, what can a carrier or forwarder do to minimise the risks of delay? “Nothing much,” says Dr Peltzer, “other than doing their best to be as aware as possible of the required documentation and processed for getting goods approved by customs around the world, and preparing as much as they can in advance.”
Dr Peltzer is speaking on ‘Sustainable freight transport through connectivity in customs and trade’ at the annual FIATA World Congress at the Cape Town International Convention Centre from 1-5 October 2019.
The event is organised in conjunction with The South African Association of Freight Forwarders (SAAFF) and will serve as an international platform for industry leaders to discuss sustainable solutions within the freight forwarding and transport sector in Africa.