AUSTRALIA’s December 19 widening of its ban on air cargo from - or trans-shipped via - specific strife-torn countries is not political.
It’s simply a realistic response to a heightened possibility of civil or military unrest spilling into Australia - and builds on an existing protocol that has caused little or no angst.
That protocol covered the carriage of air cargo from Yemen and Somalia to Australia.
Now those countries have been joined by Syria, Egypt and Bangladesh.
The move was not triggered by any specific threat. The Federal Government has stressed the bans are preventive measures.
The ban covers cargo carried aboard both passenger aircraft and freighters. It does not affect maritime, rail or road shipment.
Egypt and Bangladesh have some limited exceptions. Items normally exempt from screening under Australian border regulations – such as diplomatic bags, letter products and very small items of cargo – are exempt and can be sent as air cargo.
For Syria, Yemen and Somalia there are no exemptions at all. Official definition of a letter product is an item of cargo which has ALL these characteristics: It weighs 500g or less, contains only flexible items, longest dimension of 360mm or less, second longest dimension is 260mm or less and shortest dimension is 20mm or less.
This means that some business documents, for example, could not be dispatched by air cargo from Egypt and Bangladesh by commercial companies or individuals.
A small item of air cargo is defined as weighing 250g or less and with a shortest dimension of 5mm or less.
The expanded bans were implemented through legislative ‘prohibited cargo’ instruments made by Warren Truss at ministerial level. They are authorised under Section 65B(2)(b) of the Aviation Transport Security Act 2014.
They will stay in place until revoked, again at ministerial level.
Such instruments do not require parliamentary approval but normally are discussed in cabinet prior to making or revoking, drawing on appropriate advice and documentation from the Department of Infrastructure and Regional Development’s Office of Transport Security (OTS).
Among its designated duties, OTS is required to monitor aviation security developments in association with international partners. It can draw on a variety of intelligence sources, including other government agencies.
Interestingly, multi-modal supply chains can continue. OTS, answering a hypothetical question involving Bangladesh-produced garments being sent to Australia (a substantial trade), notes they could potentially be sent as sea freight to Singapore or by road to India, then on to Australia by air.
Extending the hypothetical questioning, OTS posits the situation of an Australian company’s staff member returning home from Bangladesh with samples. No problem: There are no prohibitions on passengers’ checked or carry-on baggage.
And then there’s the shipper who says: “My air cargo is sent from Bangladesh to Australia via Hong Kong – will that be permitted?”
The answer: “If the air cargo is transferred between flights at the airport (also known as a tail to tail transfer) it is considered as originating from Bangladesh and will not be allowed. If the cargo clears Customs in Hong Kong, and is subsequently sent to Australia, it is considered to be air cargo originating from Hong Kong and will not be subject to the prohibition.”
OK, last question: “My international freight forwarder security screens all cargo – can we receive an exemption?”
Nope: “The prohibitions are a legal requirement of the government implemented under specific provisions made by the parliament. It is not possible for the department to grant an exemption under the legislation.”
Real (as opposed to hypothetical) shippers, brokers and forwarders can do further Q&A by emailing OTS: This email address is being protected from spambots. You need JavaScript enabled to view it.
BRITAIN’s financial markets got off to their worst start in 16 years after shares nosedived in China, the world’s second-biggest economy.
But in what is increasingly being seen as another tough year ahead, Britain’s forwarders face further challenges in 2016.
The British International Freight Association (BIFA), the trade association for UK freight forwarders, says members continue to face challenges as a consequence of legislative changes and government policies rather than economic issues.
Director general Robert Keen said: “From a legislative perspective, two major impacts on the freight forwarding landscape in 2016 will result from the implementation of the Union Customs Code and the amendment to SOLAS, requiring the verification of gross mass of containers prior to loading.
“There is still significant confusion about the implications of both legislative changes and BIFA will continue to hold events to brief members and others to help them manage the change in processes.”
Last year (2015) was dominated by dreadful events at the Channel Tunnel, which had a significant impact on freight forwarders that use the crossing for their European overland haulage operations.
With the situation looking likely to continue, Keen added: “BIFA has repeatedly called for government action to address the problems being caused by the would-be illegal immigrants attempting to stow away on trucks.
“We will continue to press the authorities in France and the UK to step up their protection of the routes across the Channel and to fulfil their obligations to let trade move unhindered on this strategic freight route.
“In 2015, BIFA said it saw evidence that the UK government was listening to advice from the UK’s logistics sector and we welcomed the freeze in fuel duty and planned investment in the UK’s road infrastructure as being positive signs.
“However, we have expressed our dismay at the ongoing delay in a decision on the expansion of airport capacity in the south east and sincerely hope that the government will not let party political issues continue to stop progress on this crucial issue this year.”
Another important issue for BIFA members in 2016 will be education and training.
“BIFA will continue its work to make more comprehensive educational material available to BIFA members on line. We have wrestled with this topic for the past few years and have an emerging strategy which will become clear as 2016 goes on,” said Keen.
CHINA may have experienced a sharp correction as it battles to restructure its economy, but India looks ready to step up a notch or two.
With the current optimistic market outlook for India’s technology sector, India is poised to become the world’s next technology powerhouse.
According to global tech research and consultancy company Gartner, the market for electronic devices in India is expected to grow by 5.7 per cent until 2019, with mobile phones topping the list at 8.1 per cent, thus increasing the installed base of phones by 20 per cent to about 775 million.
Investments in data centre systems will reach US$2.9 billion in 2016.
Consultancy firm EY meanwhile expects white goods and televisions in India to show steady growth at 17 per cent annually, which, given the sub-par market penetration levels, presents an attractive opportunity to manufacturers in this space.
An industry conference ‘Preparing for Tomorrow’, jointly organised by the Confederation of Indian Industry and DHL, regional industry leaders, logistics experts and senior government officials recently gathered to discuss growth in India’s technology sector and critical issues required to support its growth, such as business readiness for GST and the adoption of new technologies in the supply chain to help tech companies capitalise on the upward industry trend. Rob Siegers, DHL’s president of technology said: “The strong momentum in India will make the crucial difference to business development going forward. The government’s constructive initiatives on GST and ‘Make in India’, together with the increasing consumer demand for electronics, will provide attractive growth opportunities for technology companies.”
“It is now critical to get the supply chains prepared for this growth and at DHL, we are poised to support tech customers with supply chain consultancy and also new technologies, such as Augmented Reality glasses currently being tested in warehouse plus investment in innovation solutions, specifically in India to support e-commerce,” he added.
Implementation of GST and the need for inter-state co-operation was discussed in depth at a lively panel discussion.
Smita Bhandari, executive director – Tax and Regulatory Services, Ernst and Young, further emphasised the importance for companies to start planning well in advance, saying it would take between eight and 10 months for them to prepare and become GST ready.
The recent Diwali shopping period has highlighted the exponential growth of e-commerce in India, especially for the technology sector.
Nitin Kochar, associate vice president, ShopClues and Ashish Chitravanshi, senior vice president – supply chain, Snap Deal, shared their insights on what is needed from logistics firms to support this sharp growth, highlighting the need for greater flexibility to align with industry dynamics.
Additionally, delivery to Tier Three and rural areas, localisation, payment solutions, elimination of fraud and faster returns with improved tracking options were stressed as key.
Blue Dart, the domestic express and e-commerce subsidiary of Deutsche Post DHL Group in India is part of DHL eCommerce and has made significant investments in this sector, including automatic sorting, mobile payment options and the recently-launched ground-breaking Parcel locker systems. “We collaborate very closely with the e-tailing industry and are constantly innovating new solutions for our customers to help them keep up with market dynamics,” said Sukhwinder Singh, senior vice president and regional head north, Blue Dart Express.
Rajeev Chaudhari, director – operations, ASUS, said he was confident of the opportunities the ‘Make in India’ campaign bring for the technology sector. “Logistics infrastructure and operations play an important role in this model,” he said. “We need to have the right attitude of collaboration and trust between brands and logistics partners to achieve the goals of time to market, geographical reach and a delightful customer experience,” he added.
“New technologies such as big data, the internet of things and augmented reality will create greater opportunities to improve logistics for the technology sector supply chain. These are the focus areas of the recently-opened DHL Innovation Centre in Singapore, where the team is leveraging these technologies to develop customer solutions.”
Emirates SkyCargo has been fortunate in its senior governance team. Or maybe that’s looking at the situation from the wrong end of the telescope: Emirates has attracted, fostered, empowered – and subsequently benefited from – quite a number of talented people, writes Kelvin King.
A few have taken on the international status of Sir Tim Clark, the Aruba-born executive who became president of Emirates in 2003, helping bring the Dubai government’s vision for the airline to reality as a building block in the emirate’s drive to establish itself firmly as a global logistics hub institutes.
Clark was pleasingly to the fore with forceful comments during November’s air show at Dubai South/Al Maktoum International, a venue that became something of a showcase for Emirates and its new SkyCentral cargo complex.
Another figure of prime status was with him during both the air show and the opening of SkyCentral: Nabil Sultan, divisional senior vice president cargo.
Sultan’s professional and personal standing was evident in the mutual respect shown by him and HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of both EK as an airline and of the greater Emirates group, during the low key, almost-understated opening of SkyCentral.
The rather classy avoidance of blowing trumpets is an Emirates hallmark and Sultan is very much in line with this ethos, getting on with the job rather than talking about it.
But he does talk with the industry – enthusiastically and credibly.
When AirCargo Asia-Pacific met up with him in Sydney in November he’d just spent a few days catching up with shippers, customs brokers and forwarders, including hosting some at the Emirates Melbourne Cup.
Having a good time, perhaps, we asked? Certainly, he agreed but it was also very good business. “It was an opportunity to meet customers in a relaxed mood, to get a better understanding of their needs and what we could do better.
“I found it very useful last year and it has been the same this year.”
Australia continued to be “a key market” for Emirates SkyCargo, Sultan stressed, pointing to the committing of a further freighter on Australian routes and the healthy belly-hold traffic both inbound and out.
“We have a wide range of options here and we’re putting them to good effect.”
Not just to Dubai, of course, he added.
“We’ve got a freighter going to Hong Kong, doing well. We’ll watch the horizons and respond to them as appropriate.”
And a lot of freight in both directions from Australasia is hubbing in Dubai to other points on the carrier’s network, through both Dubai International and Dubai South.
Qatar Airways’ decision to boost services into Australian ports and the up-gauging of Etihad operations through Brisbane were just market factors to be kept in in mind, said Sultan. Emirates did not see them as eroding its own operations.
“Competition is always there but it usually increases demand. It’s easy to paint a gloomy picture of the future but we prefer to look for new opportunities.”
As an example of such opportunities he points to Hanoi where it became evident there was an opening for prawns and fish to be hauled to world markets. Emirates has obliged with a freighter.
Emirates SkyCargo is also undertaking a fair bit of charter work in Australasia, he noted, with horses into and out of both Australia and NZ a good source of ongoing business.
NZ is seen as having good potential not only for horses but also perishables such as meat, high-end fish and other commodities, heading for China, the Middle East and beyond. Powdered milk is also doing well out of NZ and fresh milk is evolving steadily.
“The demand out of NZ seems to be picking up.”
Free trade agreements in the region can only drive more cargo, Sultan commented. “As tariffs and regulations change we’re seeing a lot more scope.” It required careful monitoring in tandem with shippers and others in the supply chain.
That is particularly so with TPP, again with an eye to opportunities.
Other openings, too, such as Iran restrictions easing. “We used to transport meat from Australia and NZ to Iran. We’re monitoring the situation and will be ready to move when Iran opens up.
“There’s a big void to fill.”
Talking with Nabil Sultan – whether in Australia in (very) smart casual gear, in Dubai wearing an executive dishdasha and keffiyeh or Europe in a chic suit – one gets a rather odd sense of inspiration…not only does he know what he’s talking about but he believes in it and wants you to as well.
Emirates SkyCargo will continue its freighter emphasis on the B777 family but the two leased (in EK livery) B744-ERFs are proving very useful on certain routes and for non-standard freight charter, reported Sultan. Both are noseloaders.
Sultan sees Emirates’ path forwards as one of steady growth. This was evident at the opening of SkyCentral, Dubai South when he explained the facility was designed specifically to be extended. Its cargo capacity is currently 2.3 million tonnes and expansion is assured by the allocation of a large land area.
“We’re already working on the next phase,” he said. “We will gradually grow the infrastructure.”
• In our February issue we’ll be looking at the unique bonded virtual corridor – a customs-free zone with multiple innovative aspects – created by Emirates SkyCargo and partners between Dubai International Airport and the new freighter hub at Dubai South. And watch for updates on Emirates SkyCentral in our daily e-news. We’ll have further comments from Nabil Sultan in our February issue, too, dealing with topics such as pharma, wildlife and lithium ion batteries.
KGH Border Services, the Swedish-based specialist consultancy on border control and trade facilitation, reckons the Authorized Economic Operator (AEO) is “clearly on the way to take off and become one of the single most important components for trade facilitation” in 2016. As outlined in earlier reports the KGH Group - which also includes KGH Border Services - has been helping Australia with Customs and border protection systems.
President Lars Karlsson says the emerging number of AEO mutual recognition agreements around the world - and the increased quality of these agreements (MRAs) – is creating a whole new platform for Customs co-operation.
“The two very exciting trends in the AEO area that we now see are first that countries are asking for holistic programs again, not only covering security but also compliance, which naturally is the key to trade facilitation and really interesting benefit programs,” said Karlsson.
The second trend is that countries are starting to look at co-ordinated border management (CBM). CBM is, KGH believes, gradually becoming integrated border management through a combination of AEO and single window (SW) solutions. “We estimate the benefits generated from a single government AEO status, for example with agencies like agriculture and food and health, to be considerably better benefit for import and export companies than mutual recognition agreements,” notes a KGH commentary.
“We are talking about streamlined processes generating both predictability and speed way beyond what we have ever seen in the past. This is exciting and it is great to be a part of these developments. We expect to have real measureable results on the ground from these pilot projects during the second half of 2016.”
KGH Border Services has won six major international contracts in the field of AEO and AEO MRA in the past 24 months.
Dubai Customs has started the core implementation project of the first AEO program in the United Arab Emirates. It is a holistic program involving both compliance and security, procedures and stakeholders involved in the global supply chain. The program developed with support from KGH Border Services will be based on experiences from best practices and international standards.
“The Authorized Economic Operator (AEO) will grant us a bundle of benefits, including higher predictability for the global supply chain, which aids in better planning and management of the chain logistics,” said Sultan Ahmed bin Sulayem, chairman of DP World and of Dubai’s Ports, Customs & Free Zone Corporation.
“It will also reduce physical and documentary controls, ultimately leading to the simplification of procedures and smooth trading.”
The project was launched in September and the pilot phase will begin in March 2016. The full launch of Dubai’s AEO program is scheduled for September 2016. The program will also establish MRAs with other AEO programs, expanding the benefits to a global arena.
KGH is also the international consultant working with the Brazilian Federation of Industry and Alliança PROCOMEX supporting the Brazilian Federal Revenue Agency (Receita Federal) in the design, development and implementation of AEO Brazil.
The first phase of the program, AEO Security, was developed and piloted during 2014 and went operational in March 2015. The second phase, AEO Compliance was launched on December 11. Some 20 pilot companies have gone through the validation and received their AEO Compliance certifications.
AEO Compliance will have two tiers and a range of new facilities offered for all stakeholders of the supply chain.
“The AEO Brazil benefit package is one of the best in the world so far,” claimed Karlsson.
“Compared with the present process this will have a huge impact on the import and export for AEO companies and for Brazilian trade. This is a very big positive change for Brazil and is timely, taking into account the challenges for the Brazilian economy right now.”
In 2016 the AEO Brazil project will continue with a third phase, merging with a SW program. There will also be a pilot for a specific AEO SME track to ease the way for more small and medium-sized companies to join the AEO program. A new innovative SME AEO solution is planned to be introduced, making Brazil one of the first countries in the world to do so.
NEW Zealand is small in size and population but is disproportionately important to Australia as a trading partner with almost no barriers - including in trade, transport, logistics and border processing.
So while the mainstream media for the most part ignored a November Mutual Recognition Agreement (MRA) signing in Canberra by NZ Customs and the Australian Border Force, it was a lot more than merely ceremonial.
The document was a statement of intent to deliver a MRA covering Australia’s Trusted Trader program and NZ’s Secure Export Scheme and it will (by July 2016, if all goes well) have the effect of each country recognising the other’s supply chain security program.
Wielding the pens were Australian Border Force commissioner (and comptroller-general of Customs) Roman Quaedvlieg and NZ Customs comptroller Carolyn Tremain.
The MRA will be Australia’s first, while NZ already has such joint recognition deals with the US, Japan and the Republic of Korea.
It’s all part of the far-reaching efforts on both sides of the Tasman to overhaul Customs and biosecurity processing, focused on the increasingly sophisticated use of IT to make things simpler for everyone in the loop.
So it was a real worry as 2015 wound down towards the summer break that mutterings became louder in NZ that the country’s Joint Border Management System (JBMS) was in trouble as costs escalated and deadlines were pushed back.
JBMS merged NZ Customs and Ministry for Primary Industries IT systems, working towards integration of Customs and biosecurity systems.
The mutterings went public at a parliamentary select committee hearing when David Shearer, the NZ Labour Party’s foreign affairs spokesman and once a short-lived leader of the opposition, grilled Tremain on the over-runs and delays.
He claimed that the old system - CusMod – was running alongside the new because the government was terrified of another Novopay disaster.
Novopay was designed to sort out the Ministry of Education’s complicated payroll system but went berserk at a huge cost in both dollar and political terms, as well as aggrieved education sector workers.
Tremain, who is regarded very positively in the industry as a good operator who pays attention to industry input and has been transparent with JBMS, responded politely but very firmly, saying that just wasn’t so.
“This is a system that has over 2.7 million transactions through it. It has been operating for two years. It doesn’t have the hallmarks of a failing system.”
She pointed out that it had been decided in June 2012 – as we reported at the time – to split the first stage of JBMS into multiple steps because of the risk of problems if too much was transferred at once.
Tremain later confirmed that she was satisfied with the roll-out (“I think we have significantly de-risked it,” she said), IBM as vendor and the extra cost, noting that funding had been sourced from with the two agencies’ existing capital investment baselines.
Countering allegations that the JBMS governance structure changes – it now has an independent chair – indicated unhappiness within the commissioning partners, Tremain said there was no tension or problems.
“Originally the chair of the governance arrangements was a Customs person. Obviously we are balancing issues between Customs, MPI and what
IBM wants to do as our vendor, and sometimes having somebody who is neutral is a good thing.” The Labour Party was having none of that. Customs spokesman Rino Tirikatene claimed JBMS was costing the taxpayer tens of millions of dollars. “The delays and debacle are so bad that the old import-export system continues to be used in many circumstances. This week Treasury labelled the Customs project ‘high risk’ and potentially ‘unachievable’ while behind the scenes MPI is suggesting the new system may not be needed after all, with more than millions already spent.”
MPI – which is headed by former Customs chief, diplomat (he was NZ high commissioner to Australia) and senior army officer Martyn Dunne - wisely kept out of the fray but industry support for JBMS does not appear have been dented.
The Customs Brokers and Freight Forwarders Federation (CBAFF) was quick to come to the defence of NZ Customs. JBMS delays were not having any adverse effect on the industry, said executive director Rosemarie Dawson.
“Customs keep us fully updated regarding progress of the JBMS.
“While introduction of the second phase has been slower than expected, we have not heard of any adverse impacts on our member businesses or any outages in the supply chain.”
As rumoured and reported, the China – Australia Free Trade Agreement (ChAFTA) came into effect on 20 December 2015 with the first tranche of liberalisation starting from that date. That also marked 2015 as ‘year 1’ for tariff reductions under ChAFTA commencing on 20 December 2015 and also locked in 1 January 2016 as the start of ‘year 2’ for the next round of tariff reductions, writes Andrew Hudson.
The commencement was welcome after an extended gestation period of negotiations and implementation work.
As is often the case, the period since release of the text of ChAFTA included pleading from industry for as much detail as possible on practical issues associated with claiming preference such as the form of Certificates of Origin (CoO), the identity of the bodies approved to issue the CoO, the process for seeking advance rulings required for Declarations of Origin (DoO) and how to deal with the consignment of goods through HK both into China and into Australia. These were all important questions to enable parties to secure the preferential tariff treatment as early as possible while reducing exposure to possible penalties that could be imposed if there had been an incorrect claim of preference.
A number of Federal Government agencies associated with the border issues worked with industry to provide the required information with varied degrees of success. Industry provided its own resources to those affected. I was involved in developing and delivering a webinar on ChAFTA issues for the CBFCA in conjunction with DFAT and the DIBP which took place on 17 December 2015. It was well attended and has been replayed a number of times by CBFCA members for their employees and is being used in conjunction with the three earlier sessions on ChAFTA I delivered for the CBFCA. Further, in conjunction with the CBFCA I responded to dozens of questions on ChAFTA in the days before it commenced. All of which emphasises that with the next suite of FTAs to come on board, there should be a greater emphasis on the co – ordinated provision of information at the earliest stage possible.
For now, the following sources will prove useful for those in industry
• DFAT also provides its “FTA portal” at https://ftaportal.dfat.gov.au which is another excellent resource enabling access to information on ChAFTA (and the other North Asia FTAs in KAFTA and JAEPA).
• The Export Council of Australia (ECA) has its own “FTA Tool” at http://ftatool.com.au/ which provides another means to secure information on ChAFTA and has another version under development. For those with interest in the operation and use of the Shanghai Free Trade Zone (SFTZ) the ECA recently released a comprehensive report on the SFTZ along with an associated app at http://www.export.org.au/products/shanghai-free-trade-zone-and-australia-full-research-report At this stage, parties wishing to use ChAFTA need to exercise caution on a number of issues Some of these issues include:
• Problems with the claim of “Wholly Originating” status for Chinese imported goods
• Ensuring that the correct seals from the Chinese authorities are on Chinese CoO
• Different treatment on consignment of “originating goods” through HK as between Australian and Chinese authorities
• The availability of “retrospective” CoO from Chinese authorities to allow a claim preference and secure a refund after goods have been imported into Australia
Answers on these issues can be found through the DFAT, DIBP and HK Customs sources identified above. It really is important to review these sources carefully as the DIBP has not signalled an intent to allow any leniency in the issue of penalties or infringement notices in claiming ChAFTA preference. This is surprising, given the provisions of ChAFTA which appear to dictate such an approach for inadvertent breaches. Still as we say, ask first and seek a ruling if there are any issues in doubt.
We now wait to see which of the proposed FTA comes “on line” next. The TPP is complete but the implementation in so many countries may take some time. From comments by the minister for Trade and Investment and DFAT late in 2015, the completion of the FTA with India is close along with the Regional Comprehensive Economic Partnership Agreement and “PACER Plus”. This will require implementation work to be undertaken urgently, in some detail and in a collaborative fashion between Government agencies and industry. I would hope that early in 2016 DFAT and the DIBP would convene a meeting with industry to map out a process so that the terms of FTAs and the necessary implementation information are co – developed and released at the earliest opportunity and well before the FTAs come into effect
AUSTRALIA’s December 19 widening of its ban on air cargo from - or trans-shipped via - specific strife-torn countries is not political.
It’s simply a realistic response to a heightened possibility of civil or military unrest spilling into Australia - and builds on an existing protocol that has caused little or no angst.
That protocol covered the carriage of air cargo from Yemen and Somalia to Australia.
Now those countries have been joined by Syria, Egypt and Bangladesh.
The move was not triggered by any specific threat. The Federal Government has stressed the bans are preventive measures.
The ban covers cargo carried aboard both passenger aircraft and freighters. It does not affect maritime, rail or road shipment.
Egypt and Bangladesh have some limited exceptions. Items normally exempt from screening under Australian border regulations – such as diplomatic bags, letter products and very small items of cargo – are exempt and can be sent as air cargo.
For Syria, Yemen and Somalia there are no exemptions at all. Official definition of a letter product is an item of cargo which has ALL these characteristics: It weighs 500g or less, contains only flexible items, longest dimension of 360mm or less, second longest dimension is 260mm or less and shortest dimension is 20mm or less.
This means that some business documents, for example, could not be dispatched by air cargo from Egypt and Bangladesh by commercial companies or individuals.
A small item of air cargo is defined as weighing 250g or less and with a shortest dimension of 5mm or less.
The expanded bans were implemented through legislative ‘prohibited cargo’ instruments made by Warren Truss at ministerial level. They are authorised under Section 65B(2)(b) of the Aviation Transport Security Act 2014.
They will stay in place until revoked, again at ministerial level.
Such instruments do not require parliamentary approval but normally are discussed in cabinet prior to making or revoking, drawing on appropriate advice and documentation from the Department of Infrastructure and Regional Development’s Office of Transport Security (OTS).
Among its designated duties, OTS is required to monitor aviation security developments in association with international partners. It can draw on a variety of intelligence sources, including other government agencies.
Interestingly, multi-modal supply chains can continue. OTS, answering a hypothetical question involving Bangladesh-produced garments being sent to Australia (a substantial trade), notes they could potentially be sent as sea freight to Singapore or by road to India, then on to Australia by air.
Extending the hypothetical questioning, OTS posits the situation of an Australian company’s staff member returning home from Bangladesh with samples. No problem: There are no prohibitions on passengers’ checked or carry-on baggage.
And then there’s the shipper who says: “My air cargo is sent from Bangladesh to Australia via Hong Kong – will that be permitted?”
The answer: “If the air cargo is transferred between flights at the airport (also known as a tail to tail transfer) it is considered as originating from Bangladesh and will not be allowed. If the cargo clears Customs in Hong Kong, and is subsequently sent to Australia, it is considered to be air cargo originating from Hong Kong and will not be subject to the prohibition.”
OK, last question: “My international freight forwarder security screens all cargo – can we receive an exemption?”
Nope: “The prohibitions are a legal requirement of the government implemented under specific provisions made by the parliament. It is not possible for the department to grant an exemption under the legislation.”
Real (as opposed to hypothetical) shippers, brokers and forwarders can do further Q&A by emailing OTS: This email address is being protected from spambots. You need JavaScript enabled to view it.
BRITAIN’s financial markets got off to their worst start in 16 years after shares nosedived in China, the world’s second-biggest economy.
But in what is increasingly being seen as another tough year ahead, Britain’s forwarders face further challenges in 2016.
The British International Freight Association (BIFA), the trade association for UK freight forwarders, says members continue to face challenges as a consequence of legislative changes and government policies rather than economic issues.
Director general Robert Keen said: “From a legislative perspective, two major impacts on the freight forwarding landscape in 2016 will result from the implementation of the Union Customs Code and the amendment to SOLAS, requiring the verification of gross mass of containers prior to loading.
“There is still significant confusion about the implications of both legislative changes and BIFA will continue to hold events to brief members and others to help them manage the change in processes.”
Last year (2015) was dominated by dreadful events at the Channel Tunnel, which had a significant impact on freight forwarders that use the crossing for their European overland haulage operations.
With the situation looking likely to continue, Keen added: “BIFA has repeatedly called for government action to address the problems being caused by the would-be illegal immigrants attempting to stow away on trucks.
“We will continue to press the authorities in France and the UK to step up their protection of the routes across the Channel and to fulfil their obligations to let trade move unhindered on this strategic freight route.
“In 2015, BIFA said it saw evidence that the UK government was listening to advice from the UK’s logistics sector and we welcomed the freeze in fuel duty and planned investment in the UK’s road infrastructure as being positive signs.
“However, we have expressed our dismay at the ongoing delay in a decision on the expansion of airport capacity in the south east and sincerely hope that the government will not let party political issues continue to stop progress on this crucial issue this year.”
Another important issue for BIFA members in 2016 will be education and training.
“BIFA will continue its work to make more comprehensive educational material available to BIFA members on line. We have wrestled with this topic for the past few years and have an emerging strategy which will become clear as 2016 goes on,” said Keen.
CHINA may have experienced a sharp correction as it battles to restructure its economy, but India looks ready to step up a notch or two.
With the current optimistic market outlook for India’s technology sector, India is poised to become the world’s next technology powerhouse.
According to global tech research and consultancy company Gartner, the market for electronic devices in India is expected to grow by 5.7 per cent until 2019, with mobile phones topping the list at 8.1 per cent, thus increasing the installed base of phones by 20 per cent to about 775 million.
Investments in data centre systems will reach US$2.9 billion in 2016.
Consultancy firm EY meanwhile expects white goods and televisions in India to show steady growth at 17 per cent annually, which, given the sub-par market penetration levels, presents an attractive opportunity to manufacturers in this space.
An industry conference ‘Preparing for Tomorrow’, jointly organised by the Confederation of Indian Industry and DHL, regional industry leaders, logistics experts and senior government officials recently gathered to discuss growth in India’s technology sector and critical issues required to support its growth, such as business readiness for GST and the adoption of new technologies in the supply chain to help tech companies capitalise on the upward industry trend. Rob Siegers, DHL’s president of technology said: “The strong momentum in India will make the crucial difference to business development going forward. The government’s constructive initiatives on GST and ‘Make in India’, together with the increasing consumer demand for electronics, will provide attractive growth opportunities for technology companies.”
“It is now critical to get the supply chains prepared for this growth and at DHL, we are poised to support tech customers with supply chain consultancy and also new technologies, such as Augmented Reality glasses currently being tested in warehouse plus investment in innovation solutions, specifically in India to support e-commerce,” he added.
Implementation of GST and the need for inter-state co-operation was discussed in depth at a lively panel discussion.
Smita Bhandari, executive director – Tax and Regulatory Services, Ernst and Young, further emphasised the importance for companies to start planning well in advance, saying it would take between eight and 10 months for them to prepare and become GST ready.
The recent Diwali shopping period has highlighted the exponential growth of e-commerce in India, especially for the technology sector.
Nitin Kochar, associate vice president, ShopClues and Ashish Chitravanshi, senior vice president – supply chain, Snap Deal, shared their insights on what is needed from logistics firms to support this sharp growth, highlighting the need for greater flexibility to align with industry dynamics.
Additionally, delivery to Tier Three and rural areas, localisation, payment solutions, elimination of fraud and faster returns with improved tracking options were stressed as key.
Blue Dart, the domestic express and e-commerce subsidiary of Deutsche Post DHL Group in India is part of DHL eCommerce and has made significant investments in this sector, including automatic sorting, mobile payment options and the recently-launched ground-breaking Parcel locker systems. “We collaborate very closely with the e-tailing industry and are constantly innovating new solutions for our customers to help them keep up with market dynamics,” said Sukhwinder Singh, senior vice president and regional head north, Blue Dart Express.
Rajeev Chaudhari, director – operations, ASUS, said he was confident of the opportunities the ‘Make in India’ campaign bring for the technology sector. “Logistics infrastructure and operations play an important role in this model,” he said. “We need to have the right attitude of collaboration and trust between brands and logistics partners to achieve the goals of time to market, geographical reach and a delightful customer experience,” he added.
“New technologies such as big data, the internet of things and augmented reality will create greater opportunities to improve logistics for the technology sector supply chain. These are the focus areas of the recently-opened DHL Innovation Centre in Singapore, where the team is leveraging these technologies to develop customer solutions.”
Emirates SkyCargo has been fortunate in its senior governance team. Or maybe that’s looking at the situation from the wrong end of the telescope: Emirates has attracted, fostered, empowered – and subsequently benefited from – quite a number of talented people, writes Kelvin King.
A few have taken on the international status of Sir Tim Clark, the Aruba-born executive who became president of Emirates in 2003, helping bring the Dubai government’s vision for the airline to reality as a building block in the emirate’s drive to establish itself firmly as a global logistics hub institutes.
Clark was pleasingly to the fore with forceful comments during November’s air show at Dubai South/Al Maktoum International, a venue that became something of a showcase for Emirates and its new SkyCentral cargo complex.
Another figure of prime status was with him during both the air show and the opening of SkyCentral: Nabil Sultan, divisional senior vice president cargo.
Sultan’s professional and personal standing was evident in the mutual respect shown by him and HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of both EK as an airline and of the greater Emirates group, during the low key, almost-understated opening of SkyCentral.
The rather classy avoidance of blowing trumpets is an Emirates hallmark and Sultan is very much in line with this ethos, getting on with the job rather than talking about it.
But he does talk with the industry – enthusiastically and credibly.
When AirCargo Asia-Pacific met up with him in Sydney in November he’d just spent a few days catching up with shippers, customs brokers and forwarders, including hosting some at the Emirates Melbourne Cup.
Having a good time, perhaps, we asked? Certainly, he agreed but it was also very good business. “It was an opportunity to meet customers in a relaxed mood, to get a better understanding of their needs and what we could do better.
“I found it very useful last year and it has been the same this year.”
Australia continued to be “a key market” for Emirates SkyCargo, Sultan stressed, pointing to the committing of a further freighter on Australian routes and the healthy belly-hold traffic both inbound and out.
“We have a wide range of options here and we’re putting them to good effect.”
Not just to Dubai, of course, he added.
“We’ve got a freighter going to Hong Kong, doing well. We’ll watch the horizons and respond to them as appropriate.”
And a lot of freight in both directions from Australasia is hubbing in Dubai to other points on the carrier’s network, through both Dubai International and Dubai South.
Qatar Airways’ decision to boost services into Australian ports and the up-gauging of Etihad operations through Brisbane were just market factors to be kept in in mind, said Sultan. Emirates did not see them as eroding its own operations.
“Competition is always there but it usually increases demand. It’s easy to paint a gloomy picture of the future but we prefer to look for new opportunities.”
As an example of such opportunities he points to Hanoi where it became evident there was an opening for prawns and fish to be hauled to world markets. Emirates has obliged with a freighter.
Emirates SkyCargo is also undertaking a fair bit of charter work in Australasia, he noted, with horses into and out of both Australia and NZ a good source of ongoing business.
NZ is seen as having good potential not only for horses but also perishables such as meat, high-end fish and other commodities, heading for China, the Middle East and beyond. Powdered milk is also doing well out of NZ and fresh milk is evolving steadily.
“The demand out of NZ seems to be picking up.”
Free trade agreements in the region can only drive more cargo, Sultan commented. “As tariffs and regulations change we’re seeing a lot more scope.” It required careful monitoring in tandem with shippers and others in the supply chain.
That is particularly so with TPP, again with an eye to opportunities.
Other openings, too, such as Iran restrictions easing. “We used to transport meat from Australia and NZ to Iran. We’re monitoring the situation and will be ready to move when Iran opens up.
“There’s a big void to fill.”
Talking with Nabil Sultan – whether in Australia in (very) smart casual gear, in Dubai wearing an executive dishdasha and keffiyeh or Europe in a chic suit – one gets a rather odd sense of inspiration…not only does he know what he’s talking about but he believes in it and wants you to as well.
Emirates SkyCargo will continue its freighter emphasis on the B777 family but the two leased (in EK livery) B744-ERFs are proving very useful on certain routes and for non-standard freight charter, reported Sultan. Both are noseloaders.
Sultan sees Emirates’ path forwards as one of steady growth. This was evident at the opening of SkyCentral, Dubai South when he explained the facility was designed specifically to be extended. Its cargo capacity is currently 2.3 million tonnes and expansion is assured by the allocation of a large land area.
“We’re already working on the next phase,” he said. “We will gradually grow the infrastructure.”
• In our February issue we’ll be looking at the unique bonded virtual corridor – a customs-free zone with multiple innovative aspects – created by Emirates SkyCargo and partners between Dubai International Airport and the new freighter hub at Dubai South. And watch for updates on Emirates SkyCentral in our daily e-news. We’ll have further comments from Nabil Sultan in our February issue, too, dealing with topics such as pharma, wildlife and lithium ion batteries.
KGH Border Services, the Swedish-based specialist consultancy on border control and trade facilitation, reckons the Authorized Economic Operator (AEO) is “clearly on the way to take off and become one of the single most important components for trade facilitation” in 2016. As outlined in earlier reports the KGH Group - which also includes KGH Border Services - has been helping Australia with Customs and border protection systems.
President Lars Karlsson says the emerging number of AEO mutual recognition agreements around the world - and the increased quality of these agreements (MRAs) – is creating a whole new platform for Customs co-operation.
“The two very exciting trends in the AEO area that we now see are first that countries are asking for holistic programs again, not only covering security but also compliance, which naturally is the key to trade facilitation and really interesting benefit programs,” said Karlsson.
The second trend is that countries are starting to look at co-ordinated border management (CBM). CBM is, KGH believes, gradually becoming integrated border management through a combination of AEO and single window (SW) solutions. “We estimate the benefits generated from a single government AEO status, for example with agencies like agriculture and food and health, to be considerably better benefit for import and export companies than mutual recognition agreements,” notes a KGH commentary.
“We are talking about streamlined processes generating both predictability and speed way beyond what we have ever seen in the past. This is exciting and it is great to be a part of these developments. We expect to have real measureable results on the ground from these pilot projects during the second half of 2016.”
KGH Border Services has won six major international contracts in the field of AEO and AEO MRA in the past 24 months.
Dubai Customs has started the core implementation project of the first AEO program in the United Arab Emirates. It is a holistic program involving both compliance and security, procedures and stakeholders involved in the global supply chain. The program developed with support from KGH Border Services will be based on experiences from best practices and international standards.
“The Authorized Economic Operator (AEO) will grant us a bundle of benefits, including higher predictability for the global supply chain, which aids in better planning and management of the chain logistics,” said Sultan Ahmed bin Sulayem, chairman of DP World and of Dubai’s Ports, Customs & Free Zone Corporation.
“It will also reduce physical and documentary controls, ultimately leading to the simplification of procedures and smooth trading.”
The project was launched in September and the pilot phase will begin in March 2016. The full launch of Dubai’s AEO program is scheduled for September 2016. The program will also establish MRAs with other AEO programs, expanding the benefits to a global arena.
KGH is also the international consultant working with the Brazilian Federation of Industry and Alliança PROCOMEX supporting the Brazilian Federal Revenue Agency (Receita Federal) in the design, development and implementation of AEO Brazil.
The first phase of the program, AEO Security, was developed and piloted during 2014 and went operational in March 2015. The second phase, AEO Compliance was launched on December 11. Some 20 pilot companies have gone through the validation and received their AEO Compliance certifications.
AEO Compliance will have two tiers and a range of new facilities offered for all stakeholders of the supply chain.
“The AEO Brazil benefit package is one of the best in the world so far,” claimed Karlsson.
“Compared with the present process this will have a huge impact on the import and export for AEO companies and for Brazilian trade. This is a very big positive change for Brazil and is timely, taking into account the challenges for the Brazilian economy right now.”
In 2016 the AEO Brazil project will continue with a third phase, merging with a SW program. There will also be a pilot for a specific AEO SME track to ease the way for more small and medium-sized companies to join the AEO program. A new innovative SME AEO solution is planned to be introduced, making Brazil one of the first countries in the world to do so.
NEW Zealand is small in size and population but is disproportionately important to Australia as a trading partner with almost no barriers - including in trade, transport, logistics and border processing.
So while the mainstream media for the most part ignored a November Mutual Recognition Agreement (MRA) signing in Canberra by NZ Customs and the Australian Border Force, it was a lot more than merely ceremonial.
The document was a statement of intent to deliver a MRA covering Australia’s Trusted Trader program and NZ’s Secure Export Scheme and it will (by July 2016, if all goes well) have the effect of each country recognising the other’s supply chain security program.
Wielding the pens were Australian Border Force commissioner (and comptroller-general of Customs) Roman Quaedvlieg and NZ Customs comptroller Carolyn Tremain.
The MRA will be Australia’s first, while NZ already has such joint recognition deals with the US, Japan and the Republic of Korea.
It’s all part of the far-reaching efforts on both sides of the Tasman to overhaul Customs and biosecurity processing, focused on the increasingly sophisticated use of IT to make things simpler for everyone in the loop.
So it was a real worry as 2015 wound down towards the summer break that mutterings became louder in NZ that the country’s Joint Border Management System (JBMS) was in trouble as costs escalated and deadlines were pushed back.
JBMS merged NZ Customs and Ministry for Primary Industries IT systems, working towards integration of Customs and biosecurity systems.
The mutterings went public at a parliamentary select committee hearing when David Shearer, the NZ Labour Party’s foreign affairs spokesman and once a short-lived leader of the opposition, grilled Tremain on the over-runs and delays.
He claimed that the old system - CusMod – was running alongside the new because the government was terrified of another Novopay disaster.
Novopay was designed to sort out the Ministry of Education’s complicated payroll system but went berserk at a huge cost in both dollar and political terms, as well as aggrieved education sector workers.
Tremain, who is regarded very positively in the industry as a good operator who pays attention to industry input and has been transparent with JBMS, responded politely but very firmly, saying that just wasn’t so.
“This is a system that has over 2.7 million transactions through it. It has been operating for two years. It doesn’t have the hallmarks of a failing system.”
She pointed out that it had been decided in June 2012 – as we reported at the time – to split the first stage of JBMS into multiple steps because of the risk of problems if too much was transferred at once.
Tremain later confirmed that she was satisfied with the roll-out (“I think we have significantly de-risked it,” she said), IBM as vendor and the extra cost, noting that funding had been sourced from with the two agencies’ existing capital investment baselines.
Countering allegations that the JBMS governance structure changes – it now has an independent chair – indicated unhappiness within the commissioning partners, Tremain said there was no tension or problems.
“Originally the chair of the governance arrangements was a Customs person. Obviously we are balancing issues between Customs, MPI and what
IBM wants to do as our vendor, and sometimes having somebody who is neutral is a good thing.” The Labour Party was having none of that. Customs spokesman Rino Tirikatene claimed JBMS was costing the taxpayer tens of millions of dollars. “The delays and debacle are so bad that the old import-export system continues to be used in many circumstances. This week Treasury labelled the Customs project ‘high risk’ and potentially ‘unachievable’ while behind the scenes MPI is suggesting the new system may not be needed after all, with more than millions already spent.”
MPI – which is headed by former Customs chief, diplomat (he was NZ high commissioner to Australia) and senior army officer Martyn Dunne - wisely kept out of the fray but industry support for JBMS does not appear have been dented.
The Customs Brokers and Freight Forwarders Federation (CBAFF) was quick to come to the defence of NZ Customs. JBMS delays were not having any adverse effect on the industry, said executive director Rosemarie Dawson.
“Customs keep us fully updated regarding progress of the JBMS.
“While introduction of the second phase has been slower than expected, we have not heard of any adverse impacts on our member businesses or any outages in the supply chain.”
As rumoured and reported, the China – Australia Free Trade Agreement (ChAFTA) came into effect on 20 December 2015 with the first tranche of liberalisation starting from that date. That also marked 2015 as ‘year 1’ for tariff reductions under ChAFTA commencing on 20 December 2015 and also locked in 1 January 2016 as the start of ‘year 2’ for the next round of tariff reductions, writes Andrew Hudson.
The commencement was welcome after an extended gestation period of negotiations and implementation work.
As is often the case, the period since release of the text of ChAFTA included pleading from industry for as much detail as possible on practical issues associated with claiming preference such as the form of Certificates of Origin (CoO), the identity of the bodies approved to issue the CoO, the process for seeking advance rulings required for Declarations of Origin (DoO) and how to deal with the consignment of goods through HK both into China and into Australia. These were all important questions to enable parties to secure the preferential tariff treatment as early as possible while reducing exposure to possible penalties that could be imposed if there had been an incorrect claim of preference.
A number of Federal Government agencies associated with the border issues worked with industry to provide the required information with varied degrees of success. Industry provided its own resources to those affected. I was involved in developing and delivering a webinar on ChAFTA issues for the CBFCA in conjunction with DFAT and the DIBP which took place on 17 December 2015. It was well attended and has been replayed a number of times by CBFCA members for their employees and is being used in conjunction with the three earlier sessions on ChAFTA I delivered for the CBFCA. Further, in conjunction with the CBFCA I responded to dozens of questions on ChAFTA in the days before it commenced. All of which emphasises that with the next suite of FTAs to come on board, there should be a greater emphasis on the co – ordinated provision of information at the earliest stage possible.
For now, the following sources will prove useful for those in industry
• DFAT also provides its “FTA portal” at https://ftaportal.dfat.gov.au which is another excellent resource enabling access to information on ChAFTA (and the other North Asia FTAs in KAFTA and JAEPA).
• The Export Council of Australia (ECA) has its own “FTA Tool” at http://ftatool.com.au/ which provides another means to secure information on ChAFTA and has another version under development. For those with interest in the operation and use of the Shanghai Free Trade Zone (SFTZ) the ECA recently released a comprehensive report on the SFTZ along with an associated app at http://www.export.org.au/products/shanghai-free-trade-zone-and-australia-full-research-report At this stage, parties wishing to use ChAFTA need to exercise caution on a number of issues Some of these issues include:
• Problems with the claim of “Wholly Originating” status for Chinese imported goods
• Ensuring that the correct seals from the Chinese authorities are on Chinese CoO
• Different treatment on consignment of “originating goods” through HK as between Australian and Chinese authorities
• The availability of “retrospective” CoO from Chinese authorities to allow a claim preference and secure a refund after goods have been imported into Australia
Answers on these issues can be found through the DFAT, DIBP and HK Customs sources identified above. It really is important to review these sources carefully as the DIBP has not signalled an intent to allow any leniency in the issue of penalties or infringement notices in claiming ChAFTA preference. This is surprising, given the provisions of ChAFTA which appear to dictate such an approach for inadvertent breaches. Still as we say, ask first and seek a ruling if there are any issues in doubt.
We now wait to see which of the proposed FTA comes “on line” next. The TPP is complete but the implementation in so many countries may take some time. From comments by the minister for Trade and Investment and DFAT late in 2015, the completion of the FTA with India is close along with the Regional Comprehensive Economic Partnership Agreement and “PACER Plus”. This will require implementation work to be undertaken urgently, in some detail and in a collaborative fashion between Government agencies and industry. I would hope that early in 2016 DFAT and the DIBP would convene a meeting with industry to map out a process so that the terms of FTAs and the necessary implementation information are co – developed and released at the earliest opportunity and well before the FTAs come into effect
AUSTRALIA’s December 19 widening of its ban on air cargo from - or trans-shipped via - specific strife-torn countries is not political. 
Last year (2015) was dominated by dreadful events at the Channel Tunnel, which had a significant impact on freight forwarders that use the crossing for their European overland haulage operations.
Consultancy firm EY meanwhile expects white goods and televisions in India to show steady growth at 17 per cent annually, which, given the sub-par market penetration levels, presents an attractive opportunity to manufacturers in this space.
That is particularly so with TPP, again with an eye to opportunities.
Wielding the pens were Australian Border Force commissioner (and comptroller-general of Customs) Roman Quaedvlieg and NZ Customs comptroller Carolyn Tremain.
A number of Federal Government agencies associated with the border issues worked with industry to provide the required information with varied degrees of success. Industry provided its own resources to those affected. I was involved in developing and delivering a webinar on ChAFTA issues for the CBFCA in conjunction with DFAT and the DIBP which took place on 17 December 2015. It was well attended and has been replayed a number of times by CBFCA members for their employees and is being used in conjunction with the three earlier sessions on ChAFTA I delivered for the CBFCA. Further, in conjunction with the CBFCA I responded to dozens of questions on ChAFTA in the days before it commenced. All of which emphasises that with the next suite of FTAs to come on board, there should be a greater emphasis on the co – ordinated provision of information at the earliest stage possible. 
