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CIFFA Report

FIATA World Congress 2000 Forum E-Business... Problems & Promise

by George Kuhn

Representatives from some 85 countries gathered in Rotterdam late September for the International Federation of Freight Forwarders Associations (FIATAs) annual congress, sponsored by The Dutch Freight Forwarders Association (FENEX ) .

FIATA, founded in Vienna, Austria, in 1926, is a non-governmental organization, representing an estimated 40,000 forwarding firms, also known as the Architects of Transport, employing approximately eight million people in 150 countries.

Key topics for discussion were the challenges and potential rewards, presented by IT and e-business developments, e-customs, e-education, law, and how the Internet could lead to a closer cooperation with sea and air carriers.

At the core of most discussions was how the freight forwarder, as intermediary, can produce a satisfactory return on his/her investment in the face of the rapidly growing and ever-changing requirements of IT and e-business. It was readily apparent to all that this requires a new skill set for employees that need to be put in place through added training and education.

“Freight forwarders need to monitor the rapid push toward full customs automation on an international basis, so as not to be left behind,” observed John O’Connell of Wilson Logistics, Australia. This was in reference to the fact that industry IT systems must integrate the required components to accept and disseminate customs-specific information effectively. O’Connell believes that eventually the role of customs broker and freight forwarder will merge, and it will be those companies that can best integrate the freight and customs components that will have a decided competitive advantage.

“Clearly,” said Ms. Palicska of Hungary, “customer expectations are growing continuously with either real, or even perceived, needs with regard to IT services provided by the industry and that a good T&T system does not suffice anymore!” Added components such as company-specific MIS reports, on-time delivery reporting, customer integration, etc. are becoming common expectations.

“The movement of goods on a worldwide basis is still increasing, and so is the number of freight forwarders, notwithstanding all the recent mergers and acquisitions,” noted Paul Parramore of the Netherlands. “Customer-specific and customer-focused services, combined with a personalized approach, are ultimately the decisive factors in retaining or gaining new clientele. “Market share (vs. Multi-nationals),” he insists, “is ultimately of no relevance to the user of transport services.” This is how Parramore explains the increasing number of forwarding firms worldwide. “This too,” he continues, “explains why direct carrier competition is not a factor and will not become a factor to the industry because carriers will never be able to deliver service on the individualized basis that our industry offers. ‘Interprise’ is the latest of newly-created words, representing the drive of our industry towards better customer integration and value-added services. The one component that will set us apart from carrier competition that, due to clearly required and clearly set operating parameters, cannot possibly develop the flexibility required.”

The Future: C-Commerce

With computerization, business paradigms have shifted considerably since the mid 90s as was outlined by the presentation of TIE Holding. Prior to 1995, business was enterprise specific, from 1995 to 2000 business was e-commerce-oriented. But by 2005 we will be dealing in c-commerce (Cyber market) collaborative interaction.
These developments drive the business world into new dimensions such as a vastly expanded and integrated “services marketplace” through fulfillment and delivery, product auctions, linkages between trade entities, simplification of interoperations, convergence of the marketplace, application software and ASP business models. Buyer portals will evolve further through e-procurement and resulting commodity auctions, supplier portals will host WEBshops and e-training will take on new dimensions. In short, digital business communities will evolve towards convergence into uniform, collaborative marketplaces through buyer-sites, fair-sites and seller-sites. But the dominant message can be re-capped as follows: “Long-term values will be derived not from enabling transactions, but from collaborative services provided by exchange hubs.”

We are fast approaching the era of paperless transactions and every entity, be it private or public, must be well-aware of and educated in its application and potential.

Customs Workshop

An excellent workshop was held by key representatives from the World Customs Organization (WCO) and the International Chamber of Commerce (ICC) outlining their efforts towards easing trade on a worldwide basis. Key issues discussed focused on “Control versus Facilitation” with common solutions sought towards: co-regulation (governments and industry), informed compliance, self-assessment, risk assessment, compliance audits and sanctions. It is obvious, and much appreciated by our industry, that the Canada Customs and Revenue Agency’s (CCRA) recent efforts toward achieving the ultimate goal of a smooth flow of goods have been in this direction.

Trade Barriers

Trade barriers of any form, visible or not, are to be addressed through continuous meetings within the body of the World Trade Organization (WTO) and such forums as the Common Transport Commission (Convention) that seek transparency and commonality through net-connected facilities. This requires beforehand processes for simplification and harmonization on a worldwide basis and modernization of customs. Here is where the WCO is making great strides toward achieving the operational harmonization of the management of the customs union to overcome such issues as: different cultures, different structures and traditions between member states.

This forum clearly recognized that the quality of transport and customs is critical to economic well-being of a nation! The EC was given as a positive example where 15 member states have achieved a common external tariff and customs code that greatly smoothes the flow of trade and goods.

The ICC:

Transport liberalization and intermodalism are key issues under discussion at the International Chamber of Commerce (ICC) workshop, explained Mrs. Maria Livanos Cattaui, Secretary General of the ICC. Stumbling blocks to overcome, in her view, are bilateral air agreements and the semi-archaic laws governing rail transport. The ICC is preparing a policy paper on both issues to be presented to the respective governments and world bodies.

The ICC presentation concluded with the statement that there is great interactivity on IT issues (such as a paperless business environment, preclearance facilities, harmonization, standardization and evolving legal perspectives, etc.) between the various world bodies such as the WTO, WCO, G7 and the UN (also in regard to Electronic Data Interchange for administration, commerce and transport).

In conclusion, we can state that the congress was extremely well-attended and offered a plethora of workshops throughout the week touching on all aspects and challenges a logistics expert of today can possibly encounter. These included issues on air transport policies, sea transport concerns, the Customs and Facilitation Institute, the evolution of multimodal transport, regional issues concerning the regions of the Asia/Pacific and the Africa/Middle East theatre, dangerous goods, legal matters and, last but not least, vocational training.

The high calibre of people from the public and private sectors attending the congress left no doubt that the FIATA World Congress has become a highly recognized venue for international dialogue and problem solving, as well as an excellent source of information of what the future has in store for global trade and transportation.

The next world congress will be held in October 2001 in Cancun, Mexico, and the city of Istanbul, Turkey, has been chosen as the congress host for 2002.