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NEWS


Red tape is key to emerging market growth, says DHL chief


Emerging markets must take care that high customs costs do not choke off promising growth potential, says a senior logistics industry leader. Rob Siegers, chief operating officer at DHL Global Customer Solutions, said customs red tape, along with too-slow market liberalisation and underdeveloped distribution channels were among the chief hurdles that needed to be overcome. In an interview with FBJ, he said


that the highest cost of customs was not the duty itself, but the customs processes themselves. Clearance times of several


days were not uncommon in many emerging countries, he said. In contrast, “in the developed world clearance is more automated and there has been investment in IT.” Richard Owens, CEO, DHL


Global Customer Solutions, Asia Pacific, added: “In Asia Pacific, almost 15% of supply chain costs are still related to customs and regulations procedures, compared to just 3% in Europe.” Siegers pointed out that


DHL could though do much to advise customers on trade and regulations in emerging markets. It has about 9,000 customs experts worldwide who can help customers deal with such


issues throughout the world. This was not only an indication of the company’s commitment to customer service, but also to the complexities of dealing with customs issues both in the developed and developing world. While the World Trade


Organisation has been exhorting nations across the world to reduce so-called ‘non-tariff barriers’ to trade, there has so far been little sign of the paperwork mountain reducing in many parts of the globe, say the DHL experts. Siegers cited the 12 emerging ‘hotspots’ - Mexico, Turkey, Russia, China, Korea, Taiwan, Thailand, India, the UAE, Saudi Arabia, South Africa and Brazil - identified in the IMF World Economic Outlook released earlier this year as having a greater growth potential than the main economies of the developed world combined. Hotspot economies are expected to achieve an average GDP growth of 7.2% in 2015, compared to the projected 2.1 per cent of the G-7 nations. “While this is something to


cheer about, a closer look at supply chain logistics is vital to ensure that these economies can deliver on their growth promises in the short and long-term,” Siegers explained. But DHL


Rob Siegers


has a strong presence in these markets and will further invest and enhance its presence and infrastructure, he said. Some countries have successfully


grappled with the issue. Perhaps one of the more spectacular successes has been Dubai, where at DHL’s Centre of Excellence “we can clear and facilitate easy, multi- modal transfer throughout the entire Middle East, saving several days in the process,” says Siegers. More free trade zones could be the answer for many countries, he added. Others also need to look at


their internal ‘borders’ he added. There are many countries within which different state governments impose varying levels of local taxes, leading to even greater cost and complexity for international and domestic traders.


The paperwork issue is also particularly acute for trade between some emerging countries, as there may be a double dose of delays and bureaucracy from both sides. Speaking in Tokyo ahead of the APEC CEO Summit 2010, Hermann Ude, chief executive officer of DHL Global Forwarding, said that emerging countries on average requiring twice as many export/import documents versus Singapore or Germany. Of the 60 days it currently takes from order to delivery in a typical ocean freight shipment from India to Mexico, goods were on the move for less than half of that time - with over 32 days spent on export and import documentation and customs. Siegers added that if only the problems with paperwork can be overcome, the growth potential between emerging countries is even greater than between the emerging markets and Europe or North America. “We see growth on intra-Asia of some 25% and on Asia/Middle East/Africa of some 15%.” While quite a lot is being done to improve infrastructure - many ports and airports have come on by leaps and bounds, for example - a concerted effort is also needed to demolish the paperwork mountain.


Customs to get rid of paperwork - eventually


TIACA has welcomed a World Customs Organization’s (WCO) pledge to reduce the amount of paperwork in international air transport. The WCO’s key Permanent Technical


Committee said that it would carry out a survey and list the top priority documents to be “dematerialised” and would also discuss measures to promote digital signatures. It would also start discussions on the end- to-end management of electronic documents with other international organisations and produce guidelines on supporting documents. TIACA secretary general, Daniel Fernandez, said: “We work in a world where international air consignments, moving on modern aircraft controlled and tracked by state of the art communications systems are still subject to completely anachronistic paper-based checks on millions of import transactions annually.” He cited French customs, which


has listed 45 different documents that may need to be carried with the goods and made available for inspection if demanded by official agencies. One global express operator has


calculated that two all-cargo 747s would be needed to move all such paper demanded every year of his own company. Fernandez added: “The overall cost is not just funding this unnecessary carbon footprint but the extra and incalculable cumulative cost of all the delays inherent in preparing, presenting and processing these pieces of paper in a predominantly electronic business and administrative environment.” He continued: “Clearly this process


will take some time but the WCO’s acceptance of the need for reform is extremely welcome.” While the WCO cannot directly affect the addiction to paper of other agencies such as food, veterinary or environmental authorities they can exert influence on them.


ISSUE 4 2010 ROUND-UP: GLOBAL TRADE


Leaders of the G20 countries, meeting in Seoul on 12 November, pledged to finalise the long-running Doha trade negotiations in 2011. The talks first got underway in the Qatari capital in 2001. The leaders said that there was “a narrow window of opportunity” to at last complete the Round following a “broader and more substantive” engagement in the past four months.


The European Union unveiled a new trade strategy adopted on 9 November, which promised “harsh measures” against unfair practices in other countries. This would include retaliatory measures against countries that restricted market access unreasonably to foreign companies, “proper enforcement” of international law and “retaliation” for infringements.


The World Customs Organization (WCO) and the World Bank have launched a $3.1 million capacity building initiative in Africa. The three- year project for Sub-Saharan Africa aims to extend the World Bank’s financial resources and the WCO’s member network and technical competence to Customs officials throughout the region. It is hoped the project will commence in January 2011.


A World Trade Organisation committee said that new pest control standards for international freight in containers could be agreed in up to three years, but warned that the programme that funds the work could fall victim to spending cuts. The WTO’s International Plant Protection Convention (IPPC) told a committee meeting on 20 October that work is underway on new standards for minimising pest movement by sea containers and other conveyances and is at an earlier stage for airfreight containers and aircraft. Australia, the EU and US are supporting an IPPC call for extra funding to help it deal with a projected budget deficit of $1.2m in 2011. A report described the financial situation as “extremely drastic” and said the IPPC would have to cut its work to “an absolute minimum” in 2011.


FORWARDING & LOGISTICS


NYK Logistics and forwarder Yusen Air and Sea Service are to integrate their global operations into Yusen Logistics. In Europe, the process is due to begin on 1 April 2011 and be completed by the end of March 2012. This will allow enough time to cater for the different regulations and taxation systems in individual European countries.


Independent European forwarding and logistics group Maurice Ward has bought a majority stake in Bulgarian-based forwarder Dex Logistics. Maurice Ward, established 1968 in Dublin, now operates 22 forwarding stations in 15 European countries. Joint group managing director John Ward said: “This acquisition will deepen our footprint in Europe, allow us access to a new geographical market and will further advance our drive to become a strong independent European supply chain organisation. The Dex management team is young and creative and will work well within the Maurice Ward Group.”


Drinks logistics specialist JF Hillebrand has acquired Lagena Distribution, the leading distributor of alcoholic beverages in Sweden. Formed in 1994, Lagena Distribution is currently a wholly owned subsidiary of the Swedish Alcohol Retail Monopoly, Systembolaget. In April 2010, Systembolaget’s board decided to sell Lagena Distribution to focus on core operations. Earlier, JF Hillebrand acquired another specialist forwarder, Australian-based John Crack Freight Services (JCFS). Located at the port of Adelaide, JCFS provides forwarding services to a number of wineries and operates an 8,000 square metre warehousing and container packing depot. JCFS will retain its own identity and existing structure, and all customer contacts will remain unchanged but it will be able to draw on the networking opportunities provided by the Hillebrand Group. Hillebrand has also completed the integration of bulk liquid logistics, operator Trans Ocean. It said the move would give customers an enhanced service and wider global network and gives Trans Ocean access to a global network of over 45 offices.


European based logistics and freight specialist DSV Air & Sea Holding has set up a subsidiary in South Africa through the acquisition of the business activities of its agent, Transmedit Forwarding. The merger, which is expected to be completed by 1 December, will give DSV a presence of about 30 employees with offices in Johannesburg and Cape Town.


Air and ocean freight and logistics provider Logwin has opened a new office in Perth, Western Australia. Local man Stephen Aylmore has been appointed branch manager.


Panalpina has acquired its partner, Apollo Forwarding in Adelaide, South Australia. Apollo has acted as Panalpina’s agent for ten years.


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