Who knew avocados could cause so much trouble? Did you also know that one shipment of avocados from Mombasa to Rotterdam can involve 30 parties, 100 people and 200 information exchanges? That was what Maersk Line found when it tracked and analysed such a shipment.
Product manager Henrik Hvid Jensen told delegates at the IPCSA annual conference in Brussels: “Of those 200 information exchanges, some were electronic, others on paper, some were hand-written delivery notes and some were almost post-it notes.”
Border-related trade costs could be more than double the physical transport costs of a shipment, he said. “So we ship goods halfway around the world – but then we have all the processes at the border.”
Jensen was talking at the International Port Community Systems Association’s ‘Globally Connected Logistics’ conference, which focused on digitalisation, trade facilitation and effective border management.
The agenda was a balanced blend of frustration over the bureaucratic paperchase that can surround trade, and optimism about the way new regulations and new technology could make a massive difference in terms of trade costs and efficiency.
The World Trade Organization’s Trade Facilitation Agreement, ratified earlier this year, is a real milestone, said the WTO’s Alejandro Gamboa-Alder. It is expected to make international business cheaper, faster and easier and could help cut trade costs globally by an average 14.3%. “The impact will be greater than the elimination of all tariffs existing in the world today,” he said. “This is a major opportunity for shippers and the cargo community in general.”
The TFA sets out a path towards harmonisation, standardisation and improved information gathering, and its impact will be to reduce the time to import goods by 47% and the time to export goods by as much as 91%, said Gamboa-Alder.
Much of the discussion in subsequent sessions was around data pipeline concepts, blockchains, the interoperability of IT systems and ‘Single Windows’ and, of course, the Internet of Things.
Speakers spoke about gathering, sharing, streamlining and analysing data – but it wasn’t all quantity over quality. “It isn’t news that the quality of data in the logistics sector has always been a problem,” said Ziv Baida, government, trade & emerging tech leader at Dun & Bradstreet. “Data quality is the Achilles heel of the international supply chain. It can be incorrect or incomplete or provided inconsistently. Let’s assume we can sort out the problems around data standardisation – but if the actual content is bad, then it’s garbage in, garbage out, as we say.”
Blockchain will be a key technology that really changes the industry, he said: “By its nature it is meant to facilitate solutions that require trust among parties that don’t trust each other. And blockchain provides immutability of data, meaning I can’t falsify data.”
But then again – Gadi Ben-Moshe, CIO at Israel Ports Company, said: “You can ask two persons what a blockchain is, and you receive eight answers. There is a lack of specialists in this area.”
There will be a lot of blockchains and they will need to talk to each other, he said. “The challenge is, you need to know when to use blockchain. We like to play with new technologies but we have to bring actual solutions and not implement them just because it is a beautiful word that can mean excellent PR. It is too easy to find blockchain being used where there are no advantages and it could even have been done easier and quicker without blockchain.”
Which brings us back to communication. Maersk’s Jensen pointed out: “The problem we see all around the world is the way we communicate in the industry is one-to-one. No one has an overview, but is just talking to the next in line. That means there are blind spots and it is complex and cumbersome.”
One example of systems actually talking to each other is the Network of Trusted Networks (NoTN) developed by IPCSA – a collaborative system within which Port Community Systems can connect and share information via a specially created common shared global standard. It is, said Javier Gallardo, IPCSA vice-chairman, very visible, easy and simple to use.
Trade facilitation often centres around ‘one version of the truth’ and David Roff, IT director at the Warrant Group, neatly summed up why that one version is so valuable.
“We had a customer with 12 containers on the same vessel,” he said. “They received 12 different ETAs from their providers.”