Trading on trust
You'd be forgiven for thinking that the documents accompanying shipping containers are always accurate. But you would be wrong - discrepancies are frequent. EU-funded research suggests that a system of trusted trade lanes could address this problem and the associated business and security concerns.
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The Cassandra project set out to reduce the uncertainty caused by unreliable information about shipped goods. Its answer to the problem involves a system of trusted trade lanes. These secure supply corridors, which are based on cooperation and transparency throughout the entire chain, are backed by sophisticated IT platforms referred to as global data pipelines.
This approach would ensure that all the actors involved have easy access to accurate information, and it could help businesses to save vast amounts of money. “New trade facilitation measures such as these could generate several hundred billion euros worth of benefits annually worldwide,” says Gerwin Zomer of TNO in the Netherlands, the project’s technical coordinator.
The concept was demonstrated in three Living Labs, which respectively focused on imports from Africa, imports from Asia and exports to the US.
No more suprises
The word ‘risk’ means different things to different people, the Cassandra team notes. For businesses, the prospect of losing money is a key concern. Border control focuses primarily on the security aspects.
And uncertainty translates into added risk. Discrepancies make it harder for buyers to manage their stock, and they set alarm bells ringing for those in charge of keeping us safe — an understandable reaction that can, however, stall delivery while containers are checked.
Delays can have financial implications, particularly for perishable goods. Inefficiencies throughout the supply chain are thought to account for 30% of the food that is lost or wasted between harvest and consumption.
Containing the risks
It would be unfair to suggest that shipping containers are some kind of intermodal jack in the box. Nonetheless, there is room for improvement, says Zomer.
“Importers often don’t know what, exactly, is in a container until they open it,” Zomer notes, citing the example of a British supermarket chain that receives frequent shipments from China. “In 30% of the cases,” he reports, “the packing list was incorrect.”
Such surprises are not just a logistical headache. “The list is the basis for the security declaration submitted to customs,” Zomer notes. “And this declaration is the information on which EU customs base their risk analysis. So these analyses are frequently based on incorrect information.” However, there are many business control measures that can help to reduce commercial and security risks simultaneously, allowing customs declarations to ‘piggyback’ on commercial data.
The British company, which participated in one of the Living Labs, solved its problem by hiring a tallyman to check the packing lists at source. Inaccuracies were practically eliminated and, as an added bonus, containers can now be sent directly to individual locations in the UK, rather than to a central warehouse from which goods are later dispatched.
So there are huge advantages to be gained by transparency. And data pipelines can be set up to generate further savings, notably by reducing the time required to produce the extensive paperwork linked to the container and its content.
Case studies such as these provided the inspiration for the concept of trusted trade lanes ensuring end-to-end supply chain control. This approach expands on the current system of trusted traders — also known as Authorised Economic Operators — who benefit from simplified EU customs procedures.
It’s a compelling idea, says Zomer, who adds that the business case is sufficiently enticing for companies to adopt it voluntarily. It has also met with great interest among policy- and decision-makers at EU and international level.
Cassandra ended in August 2014, having delivered a proof-of-concept to demonstrate the system’s feasibility. A new project — CORE — is now taking the trusted trade lane vision forward with an even wider variety of partners around the world.