APEC Alliance for Supply Chain Connectivity & Sub-Committee on Customs Procedures
John A Leitner at APEC -26 February 2016
The Asia-Pacific Economic Cooperation (APEC) is also getting ready for closer ties and bigger trade flows among member-countries when tariffs are reduced by the end of 2015. Both nominal Gross Domestic Product (GDP) and total exports for Asia have more than doubled in the last 10 years, illustrating this rapid growth. Nominal GDP for 2015 is expected to reach more than US$23 trillion and total exports US$6 trillion as growth continues.
If we look at data for the top 15 countries in the world which import and export intermediate goods, nine of those countries are in Asia Pacific. These include China, Japan, Korea, Hong Kong, Singapore and Australia.
But while Asia?s economies are expanding rapidly so too are the risks to companies? supply chains based here.
One example is natural disasters (such as the recent earthquake in Nepal and typhoon in The Philippines) which are becoming more expensive as the cost of living rises in these countries along with their GDPs. Another increasing problem is cyber risk as our use of technology grows along with our connectivity. Big data is a good example of this changing risk.
Experts agree that supply chain disruption can have a devastating effect on a company such as tarnished brand, loss of customers and an overall fall in revenues and share price. All of these can affect market share, liquidity and the ability to secure financing, if not resolved quickly and efficiently. But despite these huge implications, many companies are not devoting enough resources to safeguarding their supply chains.
As the world becomes more connected, supply chains are becoming longer, spread over more countries and creating even more risk. The risks are continually evolving as new business trends emerge. For example, low-cost manufacturing is beginning to shift away from China?s coastal areas to inland provinces. This means the risks to export goods in transit are greatly increased as thousands of miles are added to their routes. Many companies don?t devote the time and effort to understanding and mitigating their risks.
John A. Leitner from APEC, Lima, Peru
Trade Deal With Brazil Next US Priority?
American Shipper - January 29, 2016
The US Chamber of Commerce said that the United States should make it a priority to establish dialogue with Brazil on a comprehensive free trade agreement. Commercial relations between the largest economies in South and North America have grown substantially over the past decade and that trend could accelerate with more liberal trade policies, it said. A fully implemented free trade agreement with Brazil would have a positive impact on the US economy, wages and employment by nearly doubling exports there, according to a study the Chamber?s Brazil-US Business Council commissioned from Trade Partnership Worldwide LLC.
Two-way trade between the United States and Brazil reached $108.3 billion in 2014, with US export values ($70 billion) almost double those of imports. Exports to Brazil have grown 15 percent on an annual basis over the past decade. Key goods exports to Brazil include chemicals, petroleum, transportation equipment and machinery.
Meanwhile, investment by Brazilian companies in the United States ? mostly for manufacturing facilities ? rose from $29 billion in 2007 to over $93 billion in 2012. US Gross Domestic Product would increase .11 percent, or about $24 billion, on the strength of $62 billion or more in additional exports per year.
The study assumes an agreement will be able to fully eliminate tariffs in each nation and about half of the impact of non-tariff measures. Barriers are highest in the agricultural sector. A deal would benefit US manufacturing the most, with agriculture under pressure from competition from Brazilian producers. With the Obama administration trying to round up votes in Congress to ratify the 12-nation Trans-Pacific Partnership Agreement and engaging in talks with the European Union to reduce barriers to transatlantic trade and investment, the Brazil-US Business Council said a Brazil free trade agreement should be next on the agenda.
?The commercial relationship the United States and Brazil have enjoyed over the last decade is deep and broad and a US-Brazil trade agreement would realize the full economic potential of this relationship,? Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce, said in a statement. ?This is not a short-term objective, but it?s important our two governments understand the benefits associated with expanding commercial ties through a trade negotiation.?
The study is designed to spark interest in deeper US-Brazil economic ties. Trade barriers are especially high in Brazil for imported beverages and tobacco, agriculture products, forestry products and fisheries products, according to the study. Motor vehicles and parts, processed foods imports, apparel and leather products also face high rates of protection, as is the case for air and land transportation services exports and business and ICT services. The US also imposes tariffs and non-tariff barriers on imports of goods and services from Brazil.
?The private sector welcomes the reduction of barriers that would help boost trade and investment,? Tim Glenn, president of DuPont Crop Protection and chairman of the Council?s Trade Task Force, said. ?It is time for the Brazilian and U.S. governments to begin a dialogue on a trade agreement that eliminates tariffs and reduces non-tariff barriers, which would have a net positive impact on the U.S. economy, consumer spending, bilateral as well as total exports and imports, employment and wages.?
The Belt and Road Initiative or the Silk Road Economic Belt
HKTDC ? 19 February 2016
The Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, a significant development strategy launched by the Chinese government with the intention of promoting economic cooperation among countries along the proposed Belt and Road routes. The initiative has been designed to enhance the orderly free-flow of economic factors and the efficient allocation of resources. It is also intended to further market integration and create a regional economic co-operation framework of benefit to all. The National Development and Reform Commission (NDRC) issued its Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road on 28 March 2015. This outlined the framework, key areas of co-operation and co-operation mechanisms with regard to the Belt and Road Initiative.
The Belt and Road Initiative aims to connect Asia, Europe and Africa along five routes. It focuses on: 1) linking China to Europe through Central Asia and Russia; 2) connecting China with the Middle East through Central Asia; and 3) bringing together China and Southeast Asia, South Asia and the Indian Ocean. The 21st Century Maritime Silk Road, meanwhile, focuses on using Chinese coastal ports to: 4) link China with Europe through the South China Sea and Indian Ocean; and 5) connect China with the South Pacific Ocean through the South China Sea.
Focusing on the above five routes, the Belt and Road will take advantage of international transport routes as well as core cities and key ports to further strengthen collaboration and build six international economic co-operation corridors. These have been identified as the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar.
The Asian Infrastructure Investment Bank (AIIB), a new multilateral development bank (MDB), has been set up with a view to complementing and cooperating with the existing MDBs in order to address infrastructure needs in Asia. As of December 2015, all of the 57 Prospective Founding Members of AIIB had signed the Articles of Agreement. On 16 January 2016, the Board of Governors held its inaugural meeting, declaring the Bank open for business and electing Mr. Jin Liqun as President for an initial five-year term.
The above learned from participating in a meeting arranged by HKTDC Research in San Francisco on 19 February 2016.
Click to obtain further details and to be kept informed
India Relaxes Cabotage For Modal Shift
PIPAVAV, INDIA: February 17, 2016.
The decision by India?s Ministry of Shipping to relax cabotage regulations on special vessels has enabled the first domestic delivery of cars by ship rather than via train or truck between Chennai and the West India port of Pipavav, Gurjarat.
APM Terminals Pipavav handled the car carrier IDM Symex that arrived earlier this week with 800 Hyundai cars after loading at the port of Chennai on February 5th, in a pioneering use of economic and eco-friendly coastal transport of Indian-manufactured automobiles. APM India car terminalThe Maersk Group subsidiary has been supporting RORO services at Pipavav since 2015 following the investment by NYK Auto Logistics India in a new stockyard and pre- delivery inspection facility.
The new cars destined for West India dealerships were produced at the Hyundai Motor India facility near Chennai, in Tamil Nadu State. The company is India?s second-largest car manufacturer and for the past decade has been the country?s largest exporter of passenger cars.
Project manager Link Shipping was responsible for pioneering the modal shift in a bid to show car manufacturers a more sustainable form of transport: ?We are proud to be a part of this historic and innovative intra-costal shipment of Indian automobiles, serving India?s growing automotive industry with safe, and environmentally sustainable logistics alternatives,? commented APM Terminals Pipavav managing director Keld Pedersen.
APM said the Indian government is studying modal shift incentives for companies to switch domestic cargo from road to sea in order to reduce costs, road congestion and diesel-related emissions. The country is expected to overtake Japan as the world?s leading producer of entry-level automobiles by 2021 ? growing its market share from 20 percent to 28 percent. India?s consumers are expected to buy 2.2 million new cars this year.
APM Terminals Pipavav is India's first Public Private Partnership port in the country and serves as a gateway for the movement of containers, bulk, liquid and cars to the Gujarat region and the North of India.
USCG: Do NOT Expect Delays to SOLAS Container Weight Regulations
United States Coast Guard ? February 19, 2016
United States Coast Guard officials made it clear at a Federal Maritime Commission hearing Thursday in Washington, D.C. the shipping industry will have to comply with International Maritime Organization verified gross mass requirements on July 1.
The US Coast Guard has a succinct message for the container shipping industry: don?t expect a delay in the implementation of the International Maritime Organization?s new container weight verification mandate, and don?t look to the Coast Guard to enforce the mandate on shippers.
In a hearing facilitated by the Federal Maritime Commission in Washington, DC Thursday, USCG Rear Admiral Paul Thomas made clear that the global regulation applies to the loading of ships, and that the Coast Guard won?t play a policing role in ensuring shippers are complying with the regulation. That interaction will largely be determined by the commercial relationship between the ocean carrier, its shipper customers, and the container terminal.
US Department of Homeland Security to Streamline Regulations Related To Flights From CUBA
US Department of Homeland Security ? February 19, 2016
At the direction of the Department of Homeland Security, US Customs and Border Protection will initiate a rule change regarding flights to and from Cuba. This action follows US Department of State and the US Department of Transportation announcements that the United States will re-establish scheduled flights between the United States and Cuba.
?We are executing on the President?s vision for our relationship with Cuba,? said Alejandro Mayorkas, the Deputy Secretary of Homeland Security. ?By eliminating an outdated regulation, we are removing a barrier to authorized travel and benefiting the people of our two nations.? Shortly after the signing, the Department of Transportation will initiate the carrier selection process and invite US air carriers to apply for an allocation of the newly available frequencies to provide scheduled air service between the two nations.
As part of this process, CBP will seek to repeal the current regulation, 19 CFR, 122, Subpart O. These Cuba-related regulations are no longer needed because they are redundant with current regulations that apply to all air travel to the US. Once repealed, flights to and from Cuba would be subject to the same legal requirements under Title 19 as other international flights. Currently, CBP requires flights to and from Cuba to use CBP-authorized airports. CBP?s repeal of Subpart O of 19 CFR Part 122 would have no impact upon any other federal agency, carrier or traveler requirements that may be relevant for flights to and from Cuba.
Port of Oakland OKs Deal With Outer Harbor Terminals, LLC
Port of Oakland ? February 19, 2016
The Port of Oakland has agreed to a lease termination with Outer Harbor Terminals, LLC. The Port?s governing Board of Port Commissioners approved the agreement late this afternoon. It will now be reviewed by a bankruptcy judge in Delaware overseeing Outer Harbor Terminals, LLC?s request for bankruptcy protection.
Outer Harbor Terminals, LLC announced in January its intention to close its Oakland operation, one of five privately operated marine terminals at the Port. Last month it filed for bankruptcy protection. If the bankruptcy court approves the lease termination agreement, Outer Harbor Terminal will close April 29.
The Port said it agreed to the termination to devote its full attention to improving service to cargo owners and other customers in the aftermath of the terminal closure. ?We?re not pleased to see a terminal close, but this agreement helps ensure a smooth transition for our customers,? said Port of Oakland Maritime Director John Driscoll. ?All of our attention now is on efficiently migrating their cargo to the other terminals in Oakland.?
The Port and terminal operator signed a 50-year-lease in 2009. The agreement reached today would terminate that lease and impose several conditions. The Port has developed a Continuity Plan to move ships and cargo to adjacent terminals when Outer Harbor Terminal closes. It has worked with other terminal operators to relocate ships and cargo from Outer Harbor Terminal. It also implemented a $1.5 million Transition Assistance Program to extend gate hours at Port terminals.
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