Delegates attending a European ShortSea Congress held in Dublin, Ireland (24-25 June) were told that shippers were forcing short-sea operators into a crisis. A representative from a European short-sea carrier said "We have been giving shippers what they want, faster transit times and at the same rates as previous years, but they just want more." He implied that shippers had forgotten what he called "the concept of partnership" and asked whether they were aware of "their own responsibility" to drive down costs and transit times.

I have had many conversations with shippers who have practically screamed out for co-operation and collaboration with carriers, forwarders and ports to work together to improve efficiencies and find cost savings in their freight transport and logistics chains; indeed they often say just how good the European short-sea sector is in delivering reliable services with good levels of customer care.

So why is it that this view expressed by Mr Connolly and his DFDS colleagues, and a view which met with considerable support from others attending the conference, is held?
The accusations are:
- shippers were not loading freight correctly and damages were occurring in transit - resulting in heated arguments as to who was to blame and who should compensate who;
- weight declarations were often greatly over- or under-stated giving rise to safety issues, affecting ships' and vehicles' trim and operating efficiency, and also putting road freight drivers at risk from fines if their vehicles were found to be contravening weight limits on the highways.
- New technology for improved communications and data transfer were being introduced in order to gain further efficiencies, and yet shippers still insisted on using the telephone for all their queries, day and night.
- Shippers refused to consider changing pick-up or delivery times that would help improve reliability, reduce delays, improve efficiency, reduce transit times and reduce costs – all the things shippers asked for but were not actually sharing the responsibility to deliver.

With operating margins (profit) at meagre levels (approximately 2 per cent was the figure quoted by a number of carriers), costs rising, especially fuel costs, and an economic slowdown, shippers had to take more responsibility for finding the efficiencies and cost reductions with the ports and carriers to avoid a crisis. This was a widely held view by speakers and delegates alike.

For a short-sea service (excluding deep-sea liner feeder services) to be viable, it is held that there needs to be in the order of half a million tonnes of traffic flowing between two regions. There are not many routes around Europe with that sort of traffic volume.

Short sea operators, ports and shippers need to co-ordinate their activities and co-operate to consolidate freight volumes in order to provide sustainable economically viable short sea services. But with margins apparently so low any way, with carriers being cheesed-off with shippers who seem unwilling to take responsibility for making this logistics and distribution option work, is there any point in trying to consolidate freight traffic flows?

Labels: shippers, short-sea shipping

Documentary errors cause delays, cost time and money to resolve. Some shippers and even shipping lines suggest that as many as 50 percent of all documents require amending to get them right. This is an extraordinary state of affairs: no wonder shippers in particular have been complaining.

So what can be done about it? The European Shippers' Council believes it has the basis for a solution. In conjunction with representatives of the liner shipping industry (ELAA) and European freight forwarders (CLECAT), a framework has been developed which identifies key performance indicators and best practices that, if implemented and followed, would go a long way to removing the causes of inaccurate transport documentation and invoices.

All that is required is for people to work out how to implement it.

You would think that, given the scale of the problem (find me a shipper who does not think this issue represents a considerable strain on their time and resources) and the costs of continually dealing with re-drafting documents, challenging incorrect invoices and trying to get a speedy resolution, that people would be snapping up the 'guide to best practices and KPIs'. Seemingly, however, since the release of the work on the 28th March this year for wider consultation within the freight industry, there has been very little in the way of media interest and barely a trickle of people picking up the documents and commenting on them.

One carrier has suggested that establishing an industry-wide standard approach to the issue, in itself might represent a restriction of competition.

Freight Forward International (the organisation that represents some of the larger third party logistics companies, formerly known as Freight Forward Europe) somewhat disappointingly declined to take part in the project, suggesting a lack of interest.

In my view, these people are wrong. This is a significant issue. If you cannot get the paperwork right what hope is there for getting the service right?

Things that create the errors include wrong use of terminology used in the process from quotation through to invoicing: it is often inconsistent, confusing and sometimes incorrectly used. Some may refer, for example, to a bill of lading when in fact they mean a sea waybill or vice versa. Customs officials don't help matters much either: they often require different procedures, documents, information because of a local interpretation of the rules; in some places they accept electronic documents, in others they don't. Banks often require information included on letters of credit, for example, that may seem completely irrelevant to the carrier and either overlooked or not entered in the manner or detail required.

The appropriate or inappropriate use of standard shipping terms and INCOTERMS in the production of transport documents is another area which causes confusion and misunderstandings; and it remains a hot debate as to who should be billed for different charges and surcharges, depending on the terms of sale agreed between the buyer and seller of the goods being shipped.

Personnel can be to blame: it has to be recognised that it is sometimes the inexperience of staff employed by shippers and carriers that cause problems: customer service should not be left to new employees or those assigned to this role without the necessary training and supervision, but that is what does happen in many cases. Shippers must have the requisite knowledge to know the shipping business, and customs requirements in order to know what information is required. Seemingly innocuous inaccuracies in the data or information provided at the early stages of the information process chain can create big problems later on; failing to review or update information in good time likewise causes major issues and errors in documents. Sailing schedules and itineraries are often out of date: a shipper quoted in the Shippers' Voice Digest (Spring 2008, see www.shippersvoice.com for details) said, "We have become very reliant on the lines NOT sticking to their schedules! They aren't worth the paper they are printed on… Vessels are switched around at short notice which gives us great problems with documentation that requires the vessel details." Another shipper quoted, simply said, "We look at the schedules, but we never trust them."

Everyone agrees that the more one can migrate the process to a fully electronic process the better. This would remove errors caused by re-keying data; it would provide greater scope for automating the responses and error reporting (on an exception basis), speeding up the whole process. But not everyone operates the same systems or 'open standards'. Shippers systems may be incompatible with that of carriers or even the portals that offer services in this area. Carriers may be reluctant to alter their systems and shippers unwilling to pay the costs: as one shipper I spoke to on this subject put it, "this would be like paying for the privilege to be told your freight is delayed."

The KPIs and best practices are available to download from The Shippers’ Voice website at http://www.shippersvoice.com/index2-11.html?id=130 or else from ESC’s website at http://www.europeanshippers.com/docs/press/080328pr.jsp.

Clear, accurate, timely and consistent information will reduce the errors. Monitor and act on findings and the errors, the causes of errors and the time and money wasted on errors could be a thing of the past!

To me, the key to the success of this initiative is to accept that everyone has a responsibility to work together and play their part. As one shipper involved in the project put it "Any obligation on a carrier to deliver must be counterbalanced by a commitment from the shipper to supply the necessary information, accurately and in good time in order for the service to be given."

What has been provided is a framework to help. It may not yet be perfect, but it is a start.

Labels: customer service, documentation, KPIs, liner shipping, sea freight, shippers

The following is a list of concerns over the US '10+2' Proposal for Advance Trade Data Elements.

1. Giving a reduced data set as an AEO, for example, is of very limited appeal when we have to give the same data, or worse subtly different data sets, several times.

We would much prefer to give a single common set of data, to the US, the EU or anywhere else but just once. This could be achieved by using a web portal or similar. Is there any possibility that such a system could be made worldwide? Would the various trading blocs - especially the EU - be able to buy into this idea politically or are we going to see the usual ‘lines in the sand’ drawn by the respective trading blocs?

The whole basis of trade is set up to deal with a single data set moving, with the goods, from country to country. This seems to have escaped the notice of the authorities.

Since all signatories to WCO SAFE should be using a common data set the apparent disagreements are baffling. It’s not that we don’t want to give the data...just make it easy for us.

2. Who has the data? As usual, everything appears tuned to the freight forwarding community but shippers are better positioned to kick off the data collection activity. Key issues here are:

2.1. A single identifier to 'tag' a shipment so that the respective parties can add in data. The Global UCR has been bandied about for some years. Why do we need yet another unique reference number? Ordinary commercial practise already offers a unique ID (a de facto UCR?) in the form of the MAWB/HAWB or MBL/HBL combinations. Accepting that some work would be needed, why are we continually re-inventing the wheel?

2.2. Some shippers will be unable to provide the necessary data for a variety of reasons; inexperience and lack of resource being two of them. They will have to rely on the offices of their forwarder. This is fine but the option needs to be available for those shippers able to perform the activity to do so.

2.3. This is my best fit for the 12 US data elements and how the respective parties could furnish data. This pre-supposes an experienced shipper and is based on UK practises.

o Manufacturer name & address
o Seller name & address
o Buyer name & address
o Ship to name & address
o Country of origin for the goods
o Commodity HS number (6 digit level)

All these are readily available to the exporter prior to export, or should be. They are best provided by them or via an intermediary such as an agent.

o Importer of record number
o Consignee number
These may be available to the exporter, certainly to the agent in the transaction. Either party could provide the data, the agent is probably best. The contract between exporter and consignee/importer can cover the need for this information. It could be a requirement to be shown on export paperwork, for example.

o Container stuffing location
o Consolidator name & address
These are more readily available to the agent. They are best provided by them. Exporters who fully understand and control their agents activities should be able to verify this data if needed. Indeed, to have proper safe and secure control of their supply chain, exporters must know who consolidates their goods and where. Again a contract between the parties could require this information to be made available.

o Vessel stow plan
o Container status messages
These are realistically only available to the agent and/or vessel operator. They are best provided by them.

3. Also at this stage, ownership of the compliance responsibility needs to be rammed home.

In the UK at least, an importer or exporter of record may outsource all their logistical activities to agent. They may not outsource their compliance obligation however. This is poorly understood by business in general, outside the immediate area anyway. The implications of having an agent perform all activity, well or otherwise, without ultimate responsibility are also not always understood.

4. I have already alluded to the importance of forwarders in this data collection. Whilst there are many good forwarders there are as many poor ones, and the ability of good ones suffers when up against time constraints. This is, of course, the norm in the industry.

We also have to consider what data they get from consignors who really do not understand or appreciate the data requirement (i.e. many of them). How can a forwarder cover that gap?

Data is always prone to adaptation to what is available at the time, especially on airfreight. Do we honestly expect an agent to either delay a flight or risk losing a major customer because, for whatever reason, one of these data elements is unavailable? Experience shows that an agent will, often in good faith, make their best guess as to such data. This may be wholly accurate or wholly inaccurate.

5. Suppliers who do not have English as first language exacerbate these issues and may cause problems.

6. With the best will in the world an importer will sometimes use a different classification from the exporter. How is that discrepancy to be dealt with? What are the implications for security of such a 'misclassification'?

Highly technical products especially give rise to problems in this area.

How far back down the supply chain do CBP require manufacturer data? CBP appear to have stepped back by requiring just the name and address of the entity that last manufactures, assembles, produces or grows the imported commodity. However, without definitive confirmation of the requirement it remains a concern. CBP may still want to know the ultimate manufacturer of every component of every product imported into the US. This will present huge problems and difficulties for importers and exporters to acquire.

7. Finally there is the issue of delays arising from providing data, or whilst obtaining data, or even whilst CBP work out what the data is telling them.

The manufacturer, the exporter, the importer has most to lose. They are the ones whose goods are examined, refused, unloaded of just plain delayed. The commercial impact of 10+2 is great if it is unfocused in application. Costs, of overhead, inventory buffer stock, premium freight lanes, will all increase. Competitiveness, especially against in-country competitors, will be damaged. Credibility with customers and with the authorities may suffer. The list could go on but the thrust of the argument is clear.


Above all market forces will determine whether the costs and inconvenience of dealing with US companies is worthwhile. In general, the answer would still be yes but it impacts on the cost of doing business with the US and other markets may prove easier to deal with. The US will be extremely sensitive to this aspect of the impact of their controls. Whether they choose to do anything about it is another matter.

This post was produced by Mark Corby, Customs & Trade Compliance Manager for a leading multinational company, based in the United Kingdom.

Labels: freight forwarders, outsourcing, security, shippers