UNECE 3rd Executive Forum on Trade Facilitation Paperless Trade in International Supply Chains Geneva, June 20th 2005

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UNECE3rd Executive Forum on Trade Facilitation
Paperless Trade in International Supply Chains
Geneva, June 20th 2005 Private Sector
Experiences on new Information Requirements for
Secure and Efficient Supply Chains
Dermot J. Leeper
speaking for
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Introduction to FFI

• Freight Forward Europe (FFE) created in 1994 -
  Freight Forward International (FFI) since
  1/1/2004
• Interest group of nine of the leading global
  freight forwarders logistics providers
• Employ more than 210,000 people
• Transport more than 5 million tons air and 5
  million teu ocean
• Turnover of more than 37.7 billion Euro
• 30 of the Forwarding market worldwide

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contents

• Our experiences with air ocean transportation
• What we have learnt
• The benefits
• The risks
• Recommendations

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customs clearance

• NOTES
• Within GeoLogistics, data transfer is standard.
• Customs in every country is different, but
  sorted out at destination.
• Some Customs are paperless which speeds the
  transaction, but requires EDI Commercial Invoices.

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Security pre-alerts

• NOTES
• Information now has to flow from the origin to
  destination customs.
• Different customs requirements makes this model
  impossible.
• E.g. AMS, ACI and EU details differ.

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Security pre-alerts

• NOTES
• So we create quality departments at destination.
  These have to operate 24/7.
• So while AMS ACI are paperless, they are very
  labour intensive.
• Note being compulsory, they were implemented in
  very short time.

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EDI with Carriers

• NOTES
• EDI supplements paper, it does not replace it.
• So audit trails are not rigorous and poor data
  integrity is tolerated.
• The benefits are uneven, and not strong enough to
  drive rapid deployment.

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EDI with Shippers

• NOTES
• EDI between shippers and their forwarders is
  happening. But the development is very slow.
• Until this becomes commonplace, we do not have
  true paperless trade in the international supply
  chain.

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Security considerations

• Fraud through forged and incorrect documentation
  harms consignees, government revenues,
  forwarders, and the public
• Estimated Euro 3 - 8 Billion Fraud in EU Transit
  Movements in mid 1990s due to forged documents
  in old paper Old Transit System. (Evidence is
  that EU New Computerised Transit System has
  largely eradicated this particular Fraud.)
• Unquantified global fraud through forged paper
  Certificates of Origin should also be eradicated
  through paperless trading.
• But with Electronic Trade there is a Security
  and Fraud risk from
• Hackers accessing electronic systems or portals
  within the supply chain.
• Unauthorised diversion of sensitive data.
• Physical Security is improved by good track
  trace (knowing where the goods are and where they
  are meant to be). This benefits
• The owners of the goods.
• Governmental security.

Source - EU Parliament Committee of Enquiry
Report
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Benefits of Paperless Trade in International
Supply Chains

• Speedier Data Availability and Transmission
• Improved Accuracy through less re-keying of data
• Improved D2D Transit Time
• Enhanced Customer Service e.g Track and Trace
• Reduced Fraud / Security Risk
• Reduced Costs
• Labour
• Stationery
• Postage Courier Fees
• Filing Space
• Insurance
• Less Adverse Environmental Impact

but only if it is done right !
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examples of not done right

• AMS ACI are different creating additional work
  and cost.
• EDI with airlines is supplementary to paper, so
  more work cost.
• Customs clearance in many countries is only
  finalised when paper copies are delivered.
• Carriers refuse to sign Non-disclosure Agreements
  and do not act to protect data, thus increasing
  security fraud risks.
• Forwarders are too slow to develop paperless
  processes with shippers. Re-keying leads to more
  work and data integrity problems downstream.

• Result the benefits of paperless trade are only
  partially gained
• The supply chain is less efficient and less
  secure than it should be.
• Costs are shuffled along the chain, not
  eliminated.

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What have we learned?

• Governments have the power to make things happen
  much more quickly.
• Governments can make the supply chain less
  efficient by failing to co-ordinate on a
  multinational basis or between national agencies.
• Making one transaction paperless does not improve
  the whole supply chain it merely moves the
  bottleneck (and costs) along the chain.
• Commercially driven developments have not shown
  sufficient benefits for all parties to allow
  speedy development.
• Data integrity and audit trails are essential at
  every stage.
• There are new risks for forwarders
• Potential liability for Customs debt, and
  possible criminal proceedings, for submitting
  Electronic Data as Agents on behalf of the real
  Principles.
• Hackers into any system within the supply chain.
• Disclosure of commercially sensitive data.

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How can Governments facilitate Paperless Trade?

• Less competition between Governmental Agencies
  on security issues for political purposes.
  Instead, greater co-ordination between Customs
  and OGAs to align data requirements and
  standards to WCO recommendations
• Internationally
• Between National Governmental Agencies
• More partnership with legitimate trade experts
  to achieve synergistic benefits for both Trade
  and Governmental Agencies
• E.g. the EU Commissions Trade Contact Group
• Greater involvement of relevant Governmental
  Agencies in Electronic Trade initiatives proposed
  by Trade bodies
• E.g. the IATA e-Freight Initiative
• Possible financial support for portals that
  standardise and facilitate information flow.
• Recognition of C-TPAT (Customs Trade Partnership
  Against Terrorism) status in the US towards
  Authorised Economic Operator status in the EU,
  and vice versa.
• Eventual pooling of security data between aligned
  Customs Administrations and OGAs for optimised
  Security Risk analysis.

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Freight Forwarding International Vision

• FFI is uniquely placed, ready, and eager to work
  in global partnership with all parties to provide
  an International Supply Chain that has the
  optimum efficiency and security for all.
• This will only happen with closer co-operation
  between global Customs Administrations, OGAs and
  legitimate trade experts.
• FFI is actively participating in the EU Trade
  Contact Group and is in regular contact with US
  CBP and WCO, advocating the items on the previous
  slide.

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Thank you
Dermot J. Leeper
speaking for