Progress in combating cigarette smuggling: controlling the supply chain (CORE1203)

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Summary: The paper presents cases how government agencies have reduced illicit tobacco trade by making the industry liable for controlling their supply chains. Tobacco companies were required to monitor the movement of lawfully manufactured tobacco products in their supply chains, and even retrospectively track the route taken when products were seized due to suspected excise fraud. According the paper illicit trade was substantially reduced, if manufacturers stopped delivering lawfully manufactured tobacco products in amounts that exceeded the tobacco market in the countries with lower excise duties. The criminal market dried out due to unavailability of illicit tobacco products that had been smuggled to the countries of higher excise duties by organized criminal groups. The document can be viewed at: http://tobaccocontrol.bmj.com.

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Full review: The paper focuses on excise fraud and organized smuggling of originally legally produced tobacco products to the United Kingdom, Spain and Italy. Based on internal company documents and court judgments the authors summarize evidence how the tobacco industry was involved directly and indirectly in the large-scale excise fraud. First, the companies delivered intentionally large quantities of tobacco products to the countries of low excise tax rates and uncontrolled distribution network. Then organized criminal groups shipped the purchased tobacco products illegally through their smuggling networks into the countries of higher excise duties.

The cutting off the tobacco supply to the illicit market is the key to intervene in large-scale organized tobacco smuggling. According the article by means of legislative and punitive interventions tobacco industry was forced to implement new export polices and practices. Tobacco companies invested in tracking and tracing systems that helped to identify points where shipped tobacco products diverted from the legal supply chain to the illicit markets. The companies implemented security processes in order to clearly identify they business partners and ensure business partners had no criminal records. Government agencies increased information sharing and inter-agency cooperation on a national and international level.  The interventions led to a substantial fall in customs seizures and a rise in legal sales.

CORE project can learn two things in the article. First, the global scope and multifaceted nature of the illicit tobacco trade requires visibility over shipment processes and efficient collaboration between governmental agencies and private sector. Second, the study implies risk to investigations and punitive damages made tobacco companies to pay attention in which markets their products finally end up. In other words, enforceable measures not voluntary agreements made industry liable for controlling their end-to-end supply chain and reduce societal risk.

Reference: Lara Joossens, L., & Raw, M. (2008). Progress in combating cigarette smuggling: controlling the supply chain. Tobacco Control, 17(6), 399–404.

 

CORE1203

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Enhancing security through efficiency focus- Insights from a multiple stakeholder pilot implementation (Sternberg et al. 2012)

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Summary

Efficiency and security are said to be opposing goals of logistics operations: when security goes up, efficiency decreases, and vice versa. Yet, it is suggested that information technologies could improve efficiency and security simultaneously. Sternberg et al. (2012) investigate this hypothesis: whether and to what extent increased attention to efficiency results in improved security in carrier operations in a seaport context. In a longitudinal case study, they research carrier operations in connection with port terminals carrying out Roll-in Roll-out (RoRo) operations on trailers at the port of Gothenburg. They find that investments in new ICT solutions, in fact, remove some of the barriers to higher efficiency and improve security against cargo theft and terrorism. In particular, they report that ICT investments increased efficiency in terms of reduced waiting times and increased ability to plan port operations (pre-arrival notification) and fast positioning of trailers in a port. The new ICT solutions also increased security in terms of more secure document handling (decreases the risk that sensitive information falls into the hands of criminals), better anomaly detection (helps customs identify trailers that are most likely tampered in-transit) and increased visibility. The abstract is available at: http://onlinelibrary.wiley.com.

Review by Toni Männistö (CBRA) based on his doctoral thesis.

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Full review

This article is relevant for CORE demonstrations that focus on sea port operations (WP10-11 and WP13-15 and WP17). The research shows how a ‘common information sharing platform’ – an electronic and highly automated communication network among LSPs, carriers, ferry operators, port operators and authorities – increases logistics efficiency and security performance simultaneously. The main components of this platform include information sharing through a common information area, real-time geographical position of truck and trailer, identification technology in truck, RFID tags on transport units and RFID readers mounted on terminals, electronic manifest, and electronic container seals. More specifically, Sternberg et al. (2012) observed that adoption of a set of IT-enabled SCS solutions eliminated logistics efficiency and security issues simultaneously:

  • Real-time geo-positioning of trucks and trailers enabled the port operator to allocate a vacant spot for a trailer prior to its arrival, which reduced the waiting time at the port entrance. The real-time information enabled also customs to detect anomalies in shipping schedules and routings that would imply a heightened risk of smuggling.
  • RFID-based identification of drivers, trucks, and trailers automated and accelerated the access formalities at the port entrance and increased reliability of driver authentication.
  • Digitalization of cargo manifests eliminated the time-consuming manual document handling and reduced the risk of unauthorised access to confidential information.
  • E-seals enabled customs officers to identify intact containers and spare them from time- consuming inspections.

Reference

Sternberg, H., Nyquist, C., & Nilsson, F. (2012). Enhancing Security Through Efficiency Focus—  Insights from a Multiple Stakeholder Pilot Implementation. Journal of Business Logistics, 33(1), 64-73.

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CASSANDRA compendium. Private sector perspectives on risk management (Ch. 5) and crime prevention and security management in supply chains (Ch. 6)

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Summary: Chapters 5 & 6 of the CASSANDRA compendium provide a general overview on supply chain security risk management from the private sector perspective. Explaining the essentials of supply chain risk management, Chapter 5 introduces commonly used risk management models and tools (e.g., risk matrices and risk registers), discusses various classifications of supply chain risks, and elaborates current trends of risks and risk management in the supply chain context. Chapter 6 focuses on specific challenges of supply chain security risks – the risks that arise from intentional, man-made criminal activities such as terrorism, theft, trafficking, and sabotage. The chapter explains a few early classifications of supply chain security risks (e.g., motive-based typology and taxonomies based on private sector perspectives). Following the classifications of security risks, the chapter puts forth a few models for managing security risks in the supply chain context (e.g., the 8-layer model for supply chain security management). The chapter concludes with a detailed case study on security management of an international security company and a comparison of supply chain security management and the total quality management (TQM) management philosophy. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: Previous observatory entries have already shown the relevance of the CASSANDRA compendium to the community of supply chain management professionals. The compendium’s chapters 5 & 6 give a brief summary of risk management and security risk management in the context of international supply chains. The contents of the chapters are relevant and useful for people involved in FP7 CORE project, especially for those involved in work packages 3 (Multi-method Threat and Vulnerability Analysis Suite) and 4 (SC Situational Awareness Tools & Maps).

Chapter 5 elaborates a set of common supply chain risk management tools. The model of Waters (2007) summarises rather obvious three steps of the risk management process: identifying risks, analysing risks and responding to risks. The model proposes, for example, that managers can identify supply chain risks through analysis of past events, collection of opinions, and through operational analysis. The model also calls for managerial attention to prerequisites of successful risk management – mutual trust, cooperation and information exchange among relevant stakeholders involved in supply chain management – and highlights importance of continuous monitoring and controlling the risk management process. The chapter concludes with the four classic approaches to risk management: risk avoidance, risk reduction, risk transfer (e.g., insurance and contractual agreements), and acceptance. The classifications of supply chain risks include typologies focusing on risk sources (natural hazards operational failure and terrorism), risk consequences (e.g., risk to operations, risk to reputation and risk to profits), and objects of vulnerability (e.g., information, materials, personnel and financial flows).

The chapter on crime prevention and security management (Ch. 6) in supply chains provides a concise summary on supply chain security management from the private sector perspective. The chapter starts by describing some early classifications of supply chain security risks. A motive-based taxonomy classifies such risks into the three categories: economic crime (profit as motive), other crime types (ideological, emotional and other reasons as motive) and facilitating crime that covers activities that do not bring direct crime benefits but help committing other rewarding crime crimes later on. (e.g., document fraud, bribery and use of intimidation). The chapter’s next section elaborates ways to mitigate security risks in the global supply chains, highlighting the key ideas of the so-called 8-layer model for supply chain security management (the model incorporates multiple aspects of risk assessment, hands-on design and planning, implementation of a variety of technologies, procedures, and incentives as well as preparation for dealing with the consequences of supply chain crime). The chapter provides also a case study with an international tobacco company that runs high security risk supply chain operations. The section also contrasts, rather interestingly, principles of security management against the fundaments of the total quality management (TQM) management philosophy. The chapter continues with a brief review of regulations (e.g., EU customs security and aviation security regulations) and standards on supply chain security management (World Customs Organization’s SAFE framework of standards, and industry standards of the Transported Asset Protection Association).

Reference

Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapters 5 & 6

CORE2007

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First results from the WCO Cancun AEO benefit survey

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In today’s CBRA Blog we provide a sneak preview of the outcomes of the AEO Benefit survey carried out by CBRA research team at the 3rd Global WCO AEO Conference, in Cancun, Mexico, 11-13 May 2016.

We keep today’s Blog very simple. First, we would like to introduce a new test-categorization of Customs granted AEO benefits, with the following five groups:

  1. More streamlined / simplified Customs (and related) procedures
  2. Less frequent interventions by the Customs administration
  3. Increased priority over non-AEO companies (“getting to the front of the queue”)
  4. Increased (positive) attention by the Customs administration
  5. Increased number of other privileges granted by the customs administration

And second, we list the AEO benefits from our survey (only question 2 in the survey form, which focuses explicitly on Customs granted benefits to the supply chain companies, and not benefits for Customs themselves, or any kind of “side benefits” for the companies) under each of the five categories. The order of the benefits per category is based on the survey outcomes, i.e. the first bullet point benefit was the most common one in the survey, followed by the second bullet and so forth. Please note that there are no ranking indications between the five groups, neither when it comes to the groups per se, nor to the individual benefits – these will be included in our academic publications, bit later this year…

Group 1. More streamlined / simplified Customs (and related) procedures

  • Enjoying increased paperless processing of import/export shipments
  • Enjoying an access to / pre-qualification with various simplified customs procedures
  • Enjoying having a reduced number of data elements in the (final) declaration
  • Enjoying having entry/exit summary declarations with reduced data sets
  • Enjoying easier access to other governmental certification in the supply chain (e.g. in aviation security)

Group 2. Less frequent interventions by the Customs administration

  • Enjoying minimum number of cargo security inspections
  • Enjoying the option of audit-based / account-based controls (versus only transaction-based controls)
  • Enjoying access to self-audit or reduced audit programs

Group 3. Increased priority over non-AEO companies (“getting to the front of the queue”)

  • Enjoying priority use of non-intrusive inspection techniques when examination is required
  • Enjoying a priority status in Customs processing during a period of elevated threat conditions
  • Enjoying priority response to requests for ruling from Customs
  • Enjoying expedited processes to resolve post-entry or post-clearance inquiries
  • Enjoying priority treatment of consignments if selected for control
  • Enjoying preferential treatment at border crossings in post-disaster/post-attack situations
  • Enjoying a priority status in exporting to affected countries after a security incident

Group 4. Increased (positive) attention by the Customs administration

  • Privilege to deal with designated Customs contact points / assistance by Customs supply chain security experts
  • Privilege to receive training provided by Customs experts
  • Privilege to be notified of the intention to release goods prior to their arrival (“pre-clearance”)
  • Enjoying special treatment in some non-criminal legal cases
  • Privilege to exploit “extended Customs office opening hours”, during high peak / congestion times

Group 5. Increased number of other privileges granted by the Customs administration

  • Enjoying from tax privileges, such as speedier tax refunds and compensation
  • Enjoying the option to manage clearance formalities, inspections etc. at the business site
  • Enjoying from financial guarantee waivers, reductions or rebates
  • Privilege to self-manage the bonded warehouses
  • Enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries
  • Privilege to choose the place of controls (if selected for control)
  • Enjoying reductions on some Customs fees or charges
  • Privilege to conduct self-assessments when Customs automated systems are not functioning

And that’s about it! Please be reminded again that this CBRA Blog is just a first scratch on the surface to start publishing results from the WCO Cancun 2016 AEO conference… And by the way, we are also working to publish the results from the WCO Madrid 2014 AEO conference, as we have been waiting to publish the full results of the both conferences in a parallel manner / in a same paper. In the meanwhile, please email us any feedback, ideas and/or criticism regarding this Blog!

In Lausanne, 8 June 2016, CBRA Blog Dr. Juha Hintsa

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PS. Our earlier Blog with all the WCO Cancun 2016 AEO survey questions can be read at: https://www.cross-border.org/2016/05/08/aeo-benefits-or-no-benefits-thats-the/

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency – a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

Gutiérrez, X., Hintsa, J., Wieser, P. and Hameri, A.P. (2007), “Voluntary supply chain security program impacts: an empirical study with BASC member companies”, World Customs Journal, Vol. 1 No. 2, pp.31-48.

Gutierrez, X. and Hintsa, J. (2006), “Voluntary supply chain security programs: a systematic comparison”, Proceedings of the International Conference on Information Systems, Logistics and Supply Chain (ILS), May 15-17, 2006, Lyon.

MARITIME SECURITY – Vessel Tracking Systems Provide Key Information, but the Need for Duplicate Data Should Be Reviewed, GAO, March 2009 (CORE1065)

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Summary: The US government considers identification and tracking of vessels at the US coastal areas, inland waterways and ports important for protecting the US homeland and economy from maritime terrorism. The US coastal guards use a range of identification and tracking solutions to detect any anomalies in maritime traffic that might suggest terrorist activity, such as transportation of weapons of mass destruction, use of explosive-laden boats as weapons, smuggling of weapons, drugs, people or other contraband. This GAO report reviews the US Coast Guards’ current and future solutions for monitoring the maritime traffic: long-range identification and tracking system (LRIT), long-range automatic identification system (AIS) and various radar and camera systems. The report elaborates strengths and weaknesses of these identification and tracking solutions and proposes a roadmap for further strengthening of the US coastal security. The future advancements should pay particular attention to tracking of small and non-commercial vessels and to reconsider ways to collect and analyze data that is relevant for coastal surveillance.  Offering background information about vessel-level tracking and tracing of maritime cargo movements, the report is a relevant source document for those CORE demonstrations that involve shipping of containers from, through and into the US. The report is available for download at: www.gao.gov/new.items/d09337.pdf.

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Full review: CORE demonstrations of WP9 and WP14 benefit from the background information this GAO document offers on identification and tracking of vessels because these two demos involve US seaports and shipping at the US territorial waters. Also the CORE’s risk and IT clusters might find the information of this GAO document useful. The information that the identification and tracking provide allow the coastal guards to assess risk-levels of individual vessel movements and decide when it is reasonable to intervene and check anomalies. The vessel tracking and identification involves also a great deal of IT integration because it currently involves many technical components and synthetizes data collected from many different sources.

Cross-references:

  • Maritime Security: Information Sharing Efforts Are Improving. GAO-06-933T. Washington, D.C.: July 10, 2006.
  • Maritime Security: Public Safety Consequences of a Terrorist Attack on a Tanker Carrying Liquefied Natural Gas Need Clarification. GAO-07-316. Washington, D.C.: February 22, 2007.
  • Maritime Security: Coast Guard Inspections Identify and Correct Facility Deficiencies, but More Analysis Needed of Program’s Staffing, Practices, and Data. GAO-08-12. Washington, D.C.: February 14, 2008.

Additional keywords: Maritime security, long-range identification and tracking system (LRIT), long-range automatic identification system (AIS), track & trace

 

CORE1065

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AEO benefits, or, no benefits, that’s the?

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“To be, or not be – that is the question”, was Prince Hamlet wondering already some 412 years ago. 400 years later, the CBRA research team started to raise the question of “AEO benefits, or no AEO benefits – that is the ?”…

 

Around year 2004, we first started to study the emerging AEO-types of programs in Europe and globally, working intensively with multinational companies (clothing, cigarettes, machinery etc.), and with multiple governments. Initially, we reviewed any data available from C-TPAT, StairSec, BASC and TAPA programs, and later we concentrated on EU AEO and all other AEO programs across the globe. After 12 years of research our intention is to publish an academic journal paper summarizing all the knowledge from the literature as well as from our own research on AEO benefits for Customs administrations and for supply chain companies – focusing on the tangible, realized benefits, instead of “paper tiger / lip service” types of benefit checklists.

As the last step of data collection, we are now launching the study: “Customs Supply Chain Security Programs (AEO, C-TPAT etc.) – Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 – Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE”. This survey is a direct follow-up with the one CBRA did in the 2nd Global AEO Conference in Madrid two years ago. Ms. Susana Wong Chan from the University of Costa Rica and Cross-border Research Association is presenting the survey in Cancun next week, and collecting as many replies as possible, in person during the conference (and by email after).

We have three main questions in the Cancun AEO survey, each one with multiple sub-questions (all questions are presented with a five-point Likert scale, plus one option for “cannot say”):

  • Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program certified companies in your country benefiting from the following Customs granted incentives?
  • Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program?
  • Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications?

blog 08.05.20162The full list of questions and sub-questions is shared at the end of this blog. In addition, you can download the questionnaire in word-format, in English and in Spanish, at:  https://www.cross-border.org/downloads/

 

 

 

 

 

 

 

 

Why don’t (near) perfect AEO benefit -papers exist yet in the literature? One would think that the topic attracts lots of academics to carry out such research, and to publish their exciting findings, rather sooner than later… Well, it is quite challenging topic to study: where is the objective, non-biased data located, and how do you get access to it? How to deal with all the politics linked to the topic, as maybe many countries would like to be perceived as “leading edge AEO program holders, with a set of fantastic, innovative benefits delivered to the trade and logistics…”? How to differentiate between all the AEO marketing materials and incentive promises from what is actually implemented on the ground, for the real benefit of supply chain companies; and so forth..? To expand on these thoughts, one could revisit our article on the WCO News No 74 of June 2014. The table on page 45 includes a row on challenges and peculiarities with different categories of possible AEO benefits, sharing following observations and notes:

  • As some of the Customs granted benefits existed in many countries before the AEO era, companies which have enjoyed “such pre-AEO benefits” may fear a potential reduction in existing trade facilitation measures – instead of the introduction of truly new benefits.
  • Due to the dynamics in the cross-border flow of goods, outcomes might vary considerably over time – ‘seeing is believing’; in particular, the benefits linked to ‘elevated threat’ and ‘post-incident recovery’, may appear quite theoretical until such situations actually emerge (and the benefits materialize – or, not).
  • Some could also consider that the AEO system may become a technical trade barrier – the ´become an AEO or die´ scenario.
  • Some might think that an AEO program deters crime, as criminals would rather choose an easy target (i.e. a non-AEO target), for example in the case of warehouse theft; and, alternatively, other might think that an AEO program attracts criminals, as they know there are likely to be fewer Customs interventions – the smuggling of narcotics, for example.

 

Blog_080520163Dear CBRA Blog reader: although this is very challenging research topic, and one should not dream of reaching “one ultimate truth out there” – we kindly ask that if you are in Cancun 11-13 May for the 3rd Global AEO Conference, please take 10 minutes to reply the questionnaire..! Next to the good vibrations gained from participation in this highly important study, you will join a lucky drawing of a nice Costa Rican souvenir! In Lausanne, 9 May 2016, Juha Hintsa.

 

 

 

 

 

 

 

PS. List of benefit survey questions, for the CBRA Blog readers:

Customs Supply Chain Security Programs (AEO, C-TPAT etc.) – Survey on Supply Chain and Government Benefits – WCO 3rd Global AEO Conference, Cancun, Mexico, 11-13 May 2016 – Research project by CBRA, ZLC, UCR, HEC UNIL and FP7-CORE

 

Question for Customs administrations, supply chain companies, and all other experts in cross-border supply chains and Customs supply chain security programs: How often are the supply chain security program (AEO, C-TPAT etc.) certified companies in your country benefiting from the following Customs granted incentives?

Use the following scale: Very frequently – Frequently – Occasionally – Rarely – Never / Not applicable in our country (or, this is nothing specific for certified companies) – Cannot say

  • Are companies submitting entry/exit summary declarations with reduced data sets?
  • Are companies benefiting from reduced number of data elements in their final declaration?
  • Are companies benefiting from increased paperless processing of import/export shipments?
  • Are companies offered the option of audit-based / account-based controls (versus only transaction-based controls)?
  • Are companies having access to / pre-qualification with various simplified customs procedures?
  • Are companies self-managing their bonded warehouses?
  • Are companies benefiting from tax privileges, such as speedier tax refunds and compensation?
  • Are companies benefiting from financial guarantee waivers, reductions or rebates?
  • Are companies benefiting from reduction of any Customs fees or charges?
  • Are companies benefiting from access to self-audit or reduced audit programs?
  • Are companies allowed to conduct self-assessments when Customs automated systems are not functioning?
  • Are companies benefiting from designated Customs contact points / assistance by Customs supply chain security experts?
  • Are companies benefiting from training provided by Customs experts?
  • Are companies enjoying easier access to other governmental certification in the supply chain, e.g. in aviation security?
  • Are companies benefiting from the option to manage clearance formalities, inspections etc. at the business site?
  • Are companies benefiting from a minimum number of cargo security inspections?
  • Are companies being notified of the intention to release goods prior to their arrival? (“pre-clearance”)
  • Are companies benefiting from “extended Customs office opening hours”, during high peak / congestion times?
  • Are companies benefiting from choice of place of controls, if selected for control?
  • Are companies benefiting from priority treatment of consignments if selected for control?
  • Are companies benefiting from priority use of non-intrusive inspection techniques when examination is required?
  • Are companies guaranteed a priority Customs processing during a period of elevated threat conditions?
  • Are companies guaranteed preferential treatment at border crossings in post-disaster/post-attack situations?
  • Are companies guaranteed a priority in exporting to affected countries after a security incident?
  • Are companies benefiting from expedited processes to resolve post-entry or post-clearance inquiries?
  • Are companies benefiting from priority response to requests for ruling from Customs?
  • Are companies benefiting from privileges in any kind of non-criminal legal cases?
  • Are companies enjoying tangible benefits due to mutual recognition agreements / arrangements (MRAs) with 3rd countries?

blog 08.05.20164

 

Question for Customs administrations only: What are the benefits for the Customs administration in your country arising from the supply chain security program (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree – Neither Agree nor Disagree – Disagree – Strongly Disagree – Cannot say

  • Better overall allocation of governmental resources
  • Improved indirect tax revenue collection
  • Improved prevention of trafficking and illicit trade
  • Improved detection and/or seizures in trafficking and illicit trade
  • Improved prosecution to judgements -ratio (= higher percentage of successful prosecutions)
  • Increased confiscations of criminal assets and/or proceeds of crime
  • Improved collaboration with supply chain companies
  • Improved collaboration with other national government agencies
  • Improved international collaboration with Customs administrations in other countries

 

Question for supply chain companies only: What are the additional benefits for the supply chain companies in your country, arising from the supply chain security program participations / certifications (AEO, C-TPAT etc.)?

Use the following scale: Strongly Agree – Agree – Neither Agree nor Disagree – Disagree – Strongly Disagree – Cannot say

  • Improved customer service
  • Improved customs loyalty
  • Increased market share/ gaining more new customers
  • Improved security commitment of employees
  • Improved company image and credibility
  • Reduced overall vulnerability of the supply chain
  • Improved supply chain resiliency
  • Reduced cargo theft incidents
  • Reduced tax fraud incidents
  • Reduced illicit trade / trafficking incidents
  • Reduced insurance fees
  • Improved inventory management
  • Fewer delayed cross-border shipments
  • Reduced lead time variability in the cross-border supply chain

blog 08.05.20165

 

PPS. Related literature by the Cross-border Research Association team and key partners:

Most of these papers are available for download at ResearchGate, https://www.researchgate.net/profile/Juha_Hintsa/publications . And all of them can be naturally requested by email ( cbra@cross-border.org )

Hintsa, J., Mohanty, S., Rudzitis, N., Fossen, C. and Heijmann, F. (2014), “The role and value of customs administrations in minimization of socio-economic negative impacts related to illicit import flows in freight logistics systems- three preliminary cases in Europe – FP7-CORE”, Proceedings of the 9th WCO PICARD Conference, September 17-19, 2014, Puebla.

Hintsa, J. (2013), AEO – MRA Study for RTC- Thailand Europe Cooperation TEC-II, PDSC: Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation (Activity Code : TRA 4), Final Report, Bangkok.

Urciuoli, L. and Ekwall, D. (2012), “Possible impacts of supply chain security certifications on efficiency – a survey study about the possible impacts of AEO security certifications on supply chain efficiency”, Proceedings of Nofoma Conference, June 6-8, 2012, Naantali.

Hintsa, J., Männistö, T., Hameri, A.P., Thibedeau, C., Sahlstedt, J., Tsikolenko, V., Finger, M. and Granqvist, M. (2011), Customs Risk Management (CRiM): A Survey of 24 WCO Member Administrations, Study for World Customs Organization (WCO), February 28, 2011, Lausanne

Hintsa, J., Hameri, A.P., Männistö, T., Lazarescu, M., Ahokas, J. and Holmström, J. (2010), ”Conceptual model for measuring benefits of security in global supply chains”, Proceedings of the the 3rd International Conference on Transportation and Logistics (T-LOG), September 6-8, 2010, Fukuoka City.

Hintsa, J., Ahokas, J., Männistö, T. and Sahlstedt, J. (2010), “CEN supply chain security (SCS) feasibility study”, CEN/TC 379 Supply Chain Security, Final report, January 15, 2010

Review of the TIR Convention and its accompanying Security and Risk Management electronic tools, 2013 (CORE1040)

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Summary: The Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention, 1975) constitutes the international legal framework for the TIR system. TIR is the only universal Customs transit system, today operational in 58 countries, that allows the goods to transit from a country of origin to a country of destination in sealed load compartments with Customs control recognition along the supply chain. This minimizes administrative and financial burdens, while Customs duties and taxes that may become due are covered by an international guarantee (covering more than USD 1 billion worth of international trade every day). In order to ensure the security of the TIR System, electronic controls run in parallel with the security elements already specified in the TIR Convention. TIR handbook can be found at: http://www.unece.org

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Full review: The TIR system is an international Customs transit system for goods. ‘TIR’ stands for Transports Internationaux Routiers (International Road Transport) and is an international harmonized system of Customs control that facilitates trade and transport whilst effectively protecting the revenue of each Country through which goods are carried. It is based on six essential principles and an electronic security and risk management control system composed of four tools:

  • Secure vehicles or containers: Goods are carried in sealed vehicles or containers which are approved for use by Customs and re-approved every two years.
  • International chain of guarantee: Duties and taxes due in case of irregularity are secured by an international guarantee chain throughout the journey.
  • TIR Carnet: The goods are accompanied by the TIR Carnet: a harmonized control document accepted by the Customs authorities of the countries of departure, transit and destination.
  • Mutual recognition of Customs controls: Control measures taken in the country of departure are accepted by countries of transit and destination.
  • Controlled access: Access to the TIR system for national issuing and guaranteeing Associations is given by the competent national authorities, and for transport operators, by the national Customs authorities and the national Association.
  • SafeTIR: An electronic control system for TIR Carnets that provides traceability and risk management, as described in Annex 10 to the TIR Convention.

Real-Time SafeTIR (RTS) allows customs officers to enhance their risk management procedures and comprises following three modules:

  • SafeTIR data transmission module: Once a TIR operation is terminated, RTS automatically sends a SafeTIR message to the IRU.
  • TCHQ: TIR Carnet Query Module allows any customs office to obtain immediate information on the status of the Carnet for the prompt detection of any possible irregularities.
  • SafeTIR Reconciliation Automation module: automates the SafeTIR data reconciliation procedure.

TIR Customs Portal is an online service developed by the IRU, which allows customs officers to:

  • obtain immediate information on the status of the TIR Carnet for the prompt detection of any possible irregularities; and
  • transmit SafeTIR data on the termination of the TIR operation.

ASKTIRweb makes it easier for TIR associations to manage the entire life-cycle of the TIR Carnets from the time of order and delivery from IRU until their return to the IRU and the subsequent administrative procedures such as claims and SafeTIR. ASKTIRweb is a mandatory TIR Carnet management system for all new TIR associations.

The TIR-EPD application is intended for submission of advance information on transported goods to Customs Authorities. Fully compliant with WCO SAFE Framework of Standards and with the national regulations of connected countries, TIR-EPD enables Customs Authorities to perform advance risk analysis. TIR Carnet Holders can send advance information free-of-charge simultaneously to the Customs Authorities of the countries according to their itineraries.

In order to ensure the security of the TIR System, electronic controls run in parallel with the security elements already specified in the TIR Convention.

The perceived strengths of the TIR-system include: Access to 58 TIR operational countries; Management of a low cost, high value guarantee; Intermodality; Security in the supply chain; Reduced delays and costs for the international transit of goods; and Trade facilitation – goods move across international borders with minimum interference. Future opportunities include: Increased trust with national Customs; Encouragement of international trade; and Economic benefits for supply chain actors and nations.

Detailed analysis and relevance for CORE:

Research and analysis: The TIR system is based on proven business-to-governments solutions and both CORE and the TIR system could benefit from an investigation and evaluation of the legal, technical and operational feasibility as well as the business benefits of integrating TIR data to the CORE ecosystem and CORE concepts and solutions such as “trusted trade lane”, “data pipeline”, “piggy-backing” for customs and “dashboards”.

Demonstrators: The use of TIR and its security and risk management electronic tools in the framework of CORE demonstrators can have four different types of advantages which meet CORE’s overarching objectives to optimize the security of global supply chain whilst maintaining or improving business performance:

  • Compliance with customs requirements: customs duties attached to the goods guaranteed by the TIR guarantee chain.
  • Security of exchanges: transmission of safety and security data, in accordance with e.g. EU Customs legislation, to national customs before the arrival of the goods at borders.
  • Facilitation of international trade: mutual recognition of customs controls for all TIR countries and reduction of customs formalities at borders.
  • Visibility of data: use of TIR security and risk management electronic tools to check the status of TIR operations in real-time.

CORE Impact anticipation: CORE can have an important impact on the TIR system by reinforcing its place as a global multimodal logistics and trade solution. The investigation and evaluation of the legal, technical and operational feasibility as well as the business benefits of using the existing features of the TIR system within the CORE ecosystem and opening cargo-related datasets can contribute to improving freight and logistics services provision and operations by shippers, LSPs, transport operators, ports and customs authorities. The efficiency and security upgrades will come by significantly reducing waiting times and administrative burden at borders and at the same time providing a more cost efficient way of improved supply chain visibility and traceability of cargo to the benefit of all private and public stakeholders.

Cross-references:

Application of the TIR Convention in the EU: Council Regulation (EEC) No 2913/92; Commission Regulation (EEC) No 2454/93 and Regulation (EU) No 952/2013 of the European Parliament and of the Council applicable as of 1 May 2016.

Youtube video on TIR: https://www.youtube.com

 

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Hold on, before blaming it on the OGAs!

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It is common since many years already that the global customs community is pointing their “blaming finger” to other government agencies – OGAs – when it comes to identifying root causes behind too long cargo release times at sea ports and other border crossing points, high costs for importers and exporters to conduct international trade, and so forth. Now, without denying this as a plausible scenario, the CBRA research team proposes to take one step backwards, by first building a solid framework for analyzing and deeply understanding what is actually happening at the borders with Customs and all the other agencies, before rushing to conclusions on “who is to be blamed for poor / expensive cross-border performance…”. Therefore – for both educational purposes (FP7-CORE, work package 19.1) and for analytical purposes (Border Agency Cooperation study with the Organization of Islamic Cooperation, OIC), we have produced the following “universal border control task list” – naturally understanding that a perfect single universal list cannot exist. The list is first exploited during April-May 2016 in the OIC Embassy survey (here in Switzerland), to explore who is responsible for specific cross-border controls in various OIC member countries, and to what extent customs is performing tasks on behalf of other (border) agencies. Later, we plan to use the this as a “de-facto border agency control check-list” in our future studies, across the globe.

Again, the first step before analyzing which agencies to blame, is all about understanding what are the typical cross-border control tasks all about, considering all three task categories:

  • Border control tasks which typically cover all commodities;
  • Border control tasks which typically focus on specific commodities; and
  • Other border agency control areas.

 

Now, lets go through all three of them, starting with the first one, and followed by the other two:

Border control tasks which typically cover all commodities:

  • Calculation and collection of indirect border taxes:
    • customs duties
    • sales / value added taxes
    • excise taxes
  • Calculation and collection of other import/ transit/ export fees and taxes (e.g. environmental fee at export)
  • Compilation of trade statistics

Border control tasks which typically focus on specific commodities:

  • Control of import quota restricted products
  • Calculation and granting of export subsidies
  • Control of product safety / conformity of goods / trading standards (please separate agencies per product category, if necessary)
  • Control of food, drinks, cigarettes, pharmaceuticals (including for general health and safety purposes)
  • Control of energy related materials / products (e.g. oil and coal, could be for export taxation purposes etc.)
  • Enforcement of intellectual property rights / fight against copyright infringements / anti-counterfeit
  • Control of plant diseases, pests and extraneous species (i.e., phytosanitary controls)
  • Animal quarantine and controls (i.e. veterinary controls, including pet controls)
  • Control of any biohazards (including deliberate ones)
  • Control of CITES protected species (i.e. endangered fauna and flora)
  • Control of natural resources under license requirements, harvesting quotas etc. (including specific fish, wood, minerals, diamonds etc.)
  • Control of cultural artifacts (stolen / looted, and/or illicitly traded)
  • Control of any stolen goods (including vehicles, machinery, cargo etc.)
  • Fight against drugs / illicit narcotics trafficking (including pre-cursors)
  • Control of waste flows (including those in the Basel Convention on transboundary movements)
  • Control of dual use / strategic goods
  • Control of dangerous goods / hazardous materials
  • Control of explosives and weapons:
    • explosives (including pre-cursors)
    • small arms and light weapons
    • defense / war materials
  • Control of nuclear and radioactive materials

Other border agency control areas:

  • Conveyance / cargo transport security and safety controls:
    • for maritime, including sea ports
    • for aviation, including airports
    • other modes: road, rail, inland waterways etc.
  • Traveler, crew and immigration controls:
    • visa and passport controls
    • trafficking of human beings and people smuggling
    • asylum seekers
    • passenger cars and vehicles in terms of temporary admission
  • Control of weight of cargo (including for road safety purposes)
  • Cash controls (cash smuggling and counterfeit currency)
  • Cyber security (customs and supply chain IT systems, critical infrastructure IT etc.)

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Dear CBRA Blog and CBRA Monthly readers: we kindly invite your inputs to make the list more comprehensive / better in the future, so please send us an email with your ideas, to cbra@cross-border.org . And thanks already now to the multiple experts from national Customs administrations and international organizations for your valuable help so far– it has been great working with you on all these studies, keeping them as pragmatic as possible… (detailed acknowledgements will be published later). And it goes without saying that soon we will start looking on the next-step aspects on customs versus other government agencies, in the context cross-border supply chain costs and delays – please stay tuned for more!

Draft SADC guidelines for Coordinated Border Management: A Practical Guide on Best Practices and Tools for Implementation, 2011 (CORE1115)

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Summary: The 15 member states of the Southern African Development Community (SADC) are looking ways to ease the transition of their regional Free Trade Area towards a more integrated Customs Union where people and cargo would cross borders without excessive delays and administrative burden. The countries expect that the smoother cross-border traffic would contribute to the economic growth in the region. Central to the integration effort is coordinated border management, i.e., closer collaboration among various border control agencies, both nationally and internationally. The SADC guidelines provides a comprehensive catalogue and description of best practices of border agency cooperation and guidance how to implement them in the Southern-African context. Besides the guidelines, the document also features a comprehensive glossary of coordinated border management vocabulary. You can download the guidelines here: http://www.sadc.int. Review by Toni Männistö (CBRA)

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Full review: The guideline document suggests that coordinated border management depends on three levels of coordination: 1) intra-agency coordination within boundaries of one organization, 2) inter-agency cooperation between separate border control agencies or between the agencies and associated ministries and other policy-making bodies, and 3) international cooperation among border control agencies at both sides of a border or among governments at various supranational political forums.

The guideline document discusses in detail six key areas of coordinated border management. The most fundamental of the management areas is the legal and regulatory framework that defines a necessary legal basis for inter-agency and international cooperation and exchange of information. The second key management area is the institutional framework that is about governance and organizational structures underlying border control operations and high-level decision-making. The third management area concerns the procedures for cooperation at the borders. The fourth management area focuses on human resources and training, and the fifth on exchange of data, information, and intelligence. The sixth and the last management area is about providing infrastructure and equipment that supports other areas of coordinated border management.

Reference: Southern-African Development Community, 2011. “Draft SADC guidelines for Coordinated Border Management: A Practical Guide on Best Practices and Tools for Implementation”

 

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Governmental actors in supply chains & Governmental procedures, compliance and risk management – CASSANDRA Compendium Chapters 4 & 7, 2012 (CORE2007c)

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Summary: The fourth and seventh chapters of the CASSANDRA compendium elaborate on the roles of government agencies in international logistics and supply chain security (SCS). A broad range of government actors – customs, police agencies, border guards and many others – play a crucial role in enforcing and facilitating cross-border traffic through the global supply chains. These government agencies are critical stakeholders to be involved in the development, design and implementation of the two central CASSANRA concepts: the end-to-end data pipeline and the risk-based approach to cargo inspections and company audits. The CASSANDRA compendium highlights that there are important differences in the national laws and regulations, even within the European Union, that complicate international government collaboration. The differences in the legal framework and organisational cultures must be taken into account when designing new SCS solutions in the CASSANDRA and other projects. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: The CASSANDRA compendium describes how the role of government agencies in the cross-border supply chain operations is changing. The trading community and high-level policy-makers are strongly advocating trade facilitation, to make international commerce faster, more cost-efficient and less cumbersome. To address the demand for trade facilitation, many border control agencies are adopting risk-based approaches for controlling cross-border trade and travel. They exploit information increasingly to identify and target high-risk cross-border movements while facilitating low-risk traffic. To further lowering administrative hurdles to the cross-border trade, many government agencies are eliminating duplicative and redundant reporting requirements and building modern ICT systems to enable fast and reliable digital exchange of data and information.

Many law enforcement agencies are also facing budget cuts and increasing work loads, which forces them to look for new ways to increase productivity. Increased collaboration among border control agencies has been proposed as a solution for boosting productivity. The efforts towards further coordinated border management (CBM) are clearly manifested as joint-border control posts, regional single window systems (an online interface enabling trading companies, customs and other border control agencies to exchange trade-related information) and mutual recognition agreements (MRA) that harmonize customs and security related regulatory requirements across jurisdictions.

Reference: Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapters 4 & 7

 

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