BIFAlink is BIFA's monthly magazine covering issues of importance for the logistics and supply chain industry.
The magazine of the British International Freight Association May 2024 BIFA link
A reminder
INSIDE: Skills bootcamp launched • ETS surcharge controversy • Air cargo updates • Staff Development Award winner • Northern Ireland developments • UK CBAM consultation
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Issue: 405
Steve Parker’s Column
The passing of an old friend A couple of weeks ago I sat in a Customs Policy Group meeting when Ian Wilkins, one of our colleagues from HMRC, reminded us that you have until Tuesday 4 June 2024 to move to the Customs Declaration Service (CDS) for exports. After this date, you will no longer be
BIFAlink is the official magazine of the British International Freight Association Redfern House, Browells Lane, Feltham TW13 7EP Tel: 020 8844 2266 (A company limited by guarantee. Registered in England: 00391973. VAT Registration: 216476363) Director General Steve Parker s.parker@bifa.org Member Policy & Compliance Director Robert Windsor r.windsor@bifa.org Member Support Director Spencer Stevenson s.stevenson@bifa.org Member Services Director Carl Hobbis c.hobbis@bifa.org Member Engagement Director Denise Hill d.hill@bifa.org International Relations Advisor Robert Keen r.keen@bifa.org Policy & Compliance Advisor – Customs Igor Popovics i.popovics@bifa.org Policy & Compliance Adviser – Sustainable Logistics Mike Jones m.jones@bifa.org Policy & Compliance Advisor – Air David Stroud d.stroud@bifa.org Editorial Co-ordinator Sharon Hammond s.hammond@bifa.org Membership Supervisor Sarah Milton s.milton@bifa.org Web site: www.bifa.org E-mail: bifa@bifa.org Published by Park Lane Publishing peter@parklanepublishingltd.com Contributors Steve Parker, Robert Windsor, David Stroud, Spencer Stevenson, Carl Hobbis, Sharon Hammond, Igor Popovics, Robert Keen, Denise Hill, Mike Jones Note to media: If you wish to use items in this magazine that are older than one month, please contact the editor to ensure that the item in question still reflects the current circumstances. Please be advised that BIFA DOES NOT OFFER LEGAL ADVICE. BIFA is not a law firm and the authors of this publication are not legally qualified and do not have any legal training. The guidance and assistance set out herein are based on BIFA’s own experience with the issues concerned and should not be in any circumstances regarded or relied upon as legal advice. It is strongly recommended that anyone considering further action based on the information contained in this publication should seek the advice of a qualified professional.
able to submit new Customs declarations through CHIEF. If you are granted an exception, you will have until 4 July 2024 to move all your export declarations to the CDS. Whilst I realised that, for some reason (maybe it was the way Ian made the statement, or maybe just old age sentimentality) the statement did leave me a little sad having worked on, and maybe even ‘loved’, the system for the past 30 years. CHIEF first accepted Customs declarations in 1994, following systems
like ACP80 and, dare I mention, TRAVICOM (which still brings me out in a cold sweat) and although there was a bumpy start it has served our industry and country well. Credit should go to its developers and maintenance teams, for the practical and robust system we have enjoyed. Nothing lasts forever, and there is a saying going back to 1422: The King is dead, long live the King. So it is with Customs systems, and we now have to fully embrace CDS. Members have, of course, fully migrated their import declarations and now need to make sure that they are ready for exports. Can I just remind you all at this point that if you file Customs declarations and have not engaged with CDS – NOW is the time. BIFA has some great training to help you and I would urge you not to leave it to the last minute. Annual Report – This is an important piece of information! We have changed the format of the annual report, which is no longer a multipage ‘wordy’ document that we print and post. We have adopted a more visual look and feel, and it will only be available online. Scan the QR code below to view. The report is very different from those of the past and I would welcome any feedback. If you have any views, just send an email to me at s.parker@bifa.org UPCOMING EVENTS Business Leaders Forum The initial capacity was sold out (I say sold - it is free to Members) and we have had to increase the number we can accommodate so that more spaces are available to Members. However, they are filling up quickly as, at the time of writing, nearly 150 of you have registered to attend. We have some excellent speakers lined up on key topics for our industry, like environmental and sustainability issues and ongoing Customs changes. The meeting will take place in central London on 16 May and if you are a leader in our business then you can still join us. Scan the QR code below to register As well as the excellent speakers, I will give an update on the key topics impacting us at BIFA and you will have a great opportunity to network with your colleagues and peers. I look forward to welcoming as many of you as possible to this event. Multimodal This annual event, which takes place at the NEC from 11 to 13 June, is fast approaching and, as in past years, we will be there with a stand as part of the BIFA Forwarders’ Village. Customs issues have dominated many conversations at Multimodal since the Brexit referendum and I am sure that they will again this year. I look forward to seeing as many of you as possible and discussing matters with you over a coffee – mine is a skinny latte with sweetener.
Director General
BIFA Annual Report 2023
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May 2024 | 3
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Industry News
Ian Matheson, from Impress Communications, reviews some recent news that might impact on Members’ business
DP World boosts rail freight volumes from Southampton
more than 60% year-on-year, from 3.3 million teu to 1.3million teu, as carriers opted for safe passage around the Cape of Good Hope. Large container vessels might become increasingly obsolete, according to the renowned economist, historian and journalist Marc Levinson, in a future trading landscape, where trade is more fragmented and regionalised, involving shipping over shorter distances, and where the volume of product shipped grows more slowly due to advances in technology. IN BUSINESS Allianz Trade says that charges implemented under the next phase of the Border Target Operating Model (BTOM) could add £2 billion in costs to businesses, as EU firms exporting to the UK are likely to pass the additional costs on to consumers. This compares with government predictions published in October 2023 that the additional cost of changes to business would be around £330 million. The World Trade Organization (WTO) anticipates a resurgence in global merchandise trade after a sluggish performance in 2023. Projections suggest a 2.6% growth in trade volume for the current year, followed by a further increase of 3.3% in 2025, driven by declining FIATA has published its latest best practice guide, which is available on the BIFA website, to help traders fight against cybercrime by equipping them with the knowledge and resources to fortify their businesses. It includes insights into the evolving threat landscape, practical strategies to anticipate cyberattacks, and expert guidance on managing incidents effectively. inflation and improved economic conditions.
OVERLAND DP World reports that following the Modal Shift Programme trial introduced last September, which is designed to increase the attractiveness of intermodal rail through financial incentives, it has achieved a 33% increase in the share of freight being transported by rail from its Southampton logistics hub (from 21% to 35%). The hub is supported by four new train services to Cardiff, East Midlands Gateway, Hams Hall and Doncaster. Maritime Transport has secured a contract to operate the new West Midlands Interchange’s strategic rail
freight interchange (SRFI) on the West Coast Mainline, the UK’s largest intermodal logistics site. IN THE AIR Ongoing Red Sea conflicts and e-commerce volumes pushed March air cargo demand up 11% year on year for the third consecutive month, according to Xeneta. Growth was driven primarily by increased volumes from the Middle East and South Asia as shippers shifted from ocean to air to avoid Red Sea delays. ON THE OCEAN P&O Ferries has launched its second hybrid-powered
vessel, P&O Liberté, on the Dover-Calais route, which along with its sistership P&O Pioneer, is powered by a hybrid system that reduces carbon emissions by up to 40% compared with older vessels. The UK government launched a bidding process in April for a share of £1.5 million of funds in the latest round of the Clean Maritime Demonstration Competition, which is looking to map out necessary infrastructure, costs and regulatory measures essential for the decarbonisation of shipping routes. It aims to create zero emission shipping routes between the UK, Netherlands, Norway, Denmark and Ireland. Stena Line has secured a freight-only vessel, Bore Song, to operate on its Dublin- Liverpool (Birkenhead) route, boosting freight capacity on the route by 30%. The dedicated freight service has been operational since mid- February. The International Transport Forum has published a background paper on the impact of the Red Sea crisis on shipping, supply chains and the environment. It also details policy considerations and calls for better cooperation between national authorities to ensure connectivity and transparency of surcharges. Diverting containerships to avoid Houthi air strikes in the Red Sea resulted in a 2million teu decline in Suez Canal traffic between 18 December and 7 January, according to analyst MDS Transmodal. This represented a decline of
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BIFA News
Skills bootcamp for freight forwarding launched
Business Leaders Forum – Thursday 16 May
TRS, a specialist in transport and logistics apprenticeships, has partnered with BIFA for its latest venture, a comprehensive Skills Bootcamp offering an introduction to the importing and exporting of goods, suited to those already involved in freight forwarding or those wishing to step into the sector. The first region to benefit is the area covered by the West Midlands Combined Authority, but more regions will follow.
Kevin Birch, managing director at TRS, enthused: “We are very excited about the launch of this Bootcamp – we can offer an essential industry skills course at a greatly reduced rate. “We are very proud to be running this programme in conjunction with BIFA, which will be delivering some of its freight and Customs essentials modules.” The first course started in April and TRS is actively recruiting for future dates,
highlighting a significant moment for businesses to upgrade the capabilities of their teams affordably. SMEs (under 250 employees) can access this training for just £200 plus VAT; the BIFA training alone would usually cost members £580. Businesses interested in boosting their workforce capacity through this ground- breaking Skills Bootcamp are encouraged to contact TRS for further details at info@trstraining.net
This month, BIFA Director General Steve Parker looks forward to welcoming 150 BIFA Business Leaders to the third event in the BIFA Business Leaders Forum series. Introduced during 2023, the Business Leaders Forum events are an important part of BIFA’s initiative to pursue greater Member engagement at all levels, with these events aiming to provide high-level information on issues likely to impact Members’ businesses, thereby allowing you to plan your strategy for the future. Sign up now (https://bifa.org/events/) to secure one of the few remaining spots at this event on Thursday 16 May. Don’t keep it to yourself Not your copy of BIFAlink ? Register for your own copy by contacting Sarah Milton in membership s.milton@bifa.org or visit www.bifa.org/bifalink for a digital version. Dates for your diary In addition to the regular Regional Member meetings, BIFA is planning a number of events this year. Events coming up in the next two months are listed right.
Cargo Insurance London: championing forwarding
• Why trade is vital to the UK, • The importance of maritime, • How all parties need to work together: freight forwarders, hauliers, ports, carriers, etc, • The benefit of freight forwarders as they increase market capacity, choice, etc, and allow more importers/ exporters to trade, • The value of the BIFA STC to insurers as they provide some certainty as to the scale of the risk should a shipment go wrong, • The benefits of freight forwarders from a carrier’s perspective in reducing administration, with just one party to deal with rather than many in a groupage box, and that forwarders increase the amount of freight actually shipped.
Robert Windsor (pictured), Member Policy & Compliance Director, was invited to address delegates at the inaugural Cargo Insurance London (www.cargoinsurancelondon .com) event in March, a dedicated one-day global cargo insurance conference in the City of London focusing on all aspects of the cargo transportation ecosystem. Robert spoke about the things he has learned from a lifetime in freight forwarding including: • His personal interest in trade,
DATE
EVENT
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15 May
BIFA Business Leaders Forum
16 May
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Central London
code to register
11-13 June Multimodal 24
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6 | May 2024
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BIFA News
BIFA Members will recall receiving a copy of the BIFA Annual Report & Accounts with the May issue of BIFAlink in the past. This May, however, in a bid to reduce paper usage, the BIFA Annual Report & Accounts 2023 will not be posted in hard copy but will be available to all to download at https://bifa.org/overview-of-bifa/ Regular readers will notice a change in style: gone are the pages of text reporting on the association’s activity in the year, to be replaced by colourful infographics detailing: Membership; Policy & Compliance; Member Engagement; Communications; Young Forwarder Network, Training; and Apprentices. Key statistics for 2023 were: • 4.5% increase in members, • Establishment of the Sustainable Logistics Policy Group, • Reintroduction of Regional Member Meetings throughout the UK, • Presentation of webinars on key subjects in conjunction with stakeholders, • Improved Member communication via new website and e-newsletters, • 120% increase in training course delegates with 98% delegate satisfaction. The document includes the Income & Expenditure Account and those Members wishing to view the full financial statement for A new look for the BIFA Annual Report & Accounts
Notice of Annual General Meeting Notice is hereby given that the 35th Annual General Meeting of the British International Freight Association (BIFA) will be held at 1 pm on Thursday 16 May 2024 at Etc Venues, Monument, EC3M 1AE in order to: 1. Receive the report of the board of directors. 2. Receive the accounts for the year ended 31 December 2023 and the report of the auditors thereon. 3. Appoint auditors and authorise the board to fix their remuneration. 4. In accordance with the Association’s Articles, to note and approve the election of officers of the Association. 5. Transact any other business that may properly be transacted at an annual general meeting. Steve Parker, Director General A BIFA Member may nominate an attendee, although there will be a limit on numbers once a quorum is achieved. Please email s.parker@bifa.org Note: Any Member entitled to vote at the above meeting may appoint a proxy to vote on a poll in their stead. A proxy need not be a Member of the Association. To appoint a proxy, download the Form of Proxy from www.bifa.org
the year ending 31 December 2023 should visit https://bifa.org/documents/annual-report- 2023-finance-statements/
The Limits of Liability for Carriers
In association with
By air – Warsaw Convention (17 SDR): £17.91 per kg
By sea – Hague Visby rules (2 SDR): £2.11 per kg £702.38 per package
BIFA STC: (2 SDR): £2.11 per kg
By road – CMR (8.33 SDR): £8.78 per kg
Insurance for the Marine & Logistics industries
(The SDR rate on 15 April 2024,
By air – Montreal Convention (22 SDR): £23.18 per kg
according to the IMF website, was 1.05356)
+44 (0) 1628 532613
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May 2024 | 7
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Policy & Compliance
Controversy over ETS surcharges A study has found that in nearly 90% of cases, shipping companies are charging customers more than the actual costs of the EU ETS
T here have been various reports recently stemming from a Transport & Environment https://www.transportenvironment. org (T&E) study that shipping lines are making a pro fi t from the implementation of the EU Emissions Trading System (ETS). The need to reduce carbon emissions in global supply chains is widely accepted. BIFA had immediate concerns regarding the EU ETS, voicing fears that it would lead to another surcharge being introduced. Given the opaque nature of surcharges, ensuring that they are not simply an additional source of revenue or profit is challenging. The Association is not surprised by the T&E report, which supports the view that surcharges need to be kept to a minimum both in terms of their number and level of charging. BIFA and international partners CLECAT and FIATA have repeatedly called on carriers to exercise care when imposing such surcharges to ensure they cover only the costs incurred by the reason for the surcharge, including compliance with ETS. ETS surcharges should not become a revenue/profit stream for carriers at the expense of their customers and of the decarbonisation of maritime shipping. Windfall pro fi ts The T&E study, entitled Profits Uncontained , was published in March and analyses how ocean carriers are making profits from the implementation of the ETS to maritime transport by charging ETS surcharges above their actual ETS costs, resulting in a source of
“ BIFA and international partners CLECAT and FIATA have repeatedly called on carriers to exercise care when imposing such surcharges to ensure they cover only the costs incurred by the reason for the surcharge, including compliance with ETS
windfall profits. Prior to looking at the precise figures, it must be emphasised that the shipping lines, and especially Maersk, have vigorously denied the allegations arguing that the figures are based upon out-of-date information and flawed modelling. T&E analysed over 500 journeys from 20 different ships from each of Europe’s biggest carriers (Maersk, MSC, CMA CGM and Hapag-Lloyd), modelled their expected ETS costs based on past journeys and emissions data and compared them with the ETS surcharges announced by carriers at the end of 2023 before the launch of ETS maritime on 1 January 2024. The study found that in nearly 90% of cases, shipping companies are charging customers more than the actual costs of the EU ETS. Overall, Maersk adds on average around €60,000/voyage, while MSC adds €25,000, CMA CGM €14,000 and Hapag-Lloyd €23,000 per voyage The analysis took several conservative assumptions, including higher emissions efficiency data and lower load factor, which could lower the overall ETS costs of companies while increasing their
profits. In addition, one notable factor to consider is the current price of ETS allowances: the ETS surcharges had been based on an average price (between €80 and €90/tCO 2 ) significantly higher than the current price, around €60/tCO 2 , which can increase the profits even more if ETS surcharges are not revised according to current prices. External factors Nevertheless, current ETS costs are affected by several external factors, most notably by the Red Sea crisis diverting most containerships from the Suez Canal via the Cape of Good Hope, increasing fuel and ETS compliance costs. However, it should be noted that given the tonnage carried on any one vessel the additional cost per teu is relatively small and will have little impact on the cost of moving goods. If the figures in the T&E Report are proved to be correct, it does leave a rather sour taste in the forwarder’s mouth trying to recover the additional costs from an unhappy client. To read the full T&E report, scan the QR code.
8 | May 2024
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Air Ocean Road Imports Exports ustoms declarations Worksheet automation Customs eTariff CFSP management Customs Warehousing Duty management Transit (NCTS) management Transit (CT) Guarantee management Import ETSF management CCS-UK electronic fallback Export DEP management Job costing and invoicing Air waybills and eAWB Bills of lading Barcoded cargo labels Consignment security declarations Collection and Delivery notes Consolidation management and Manifests eDocument management Archiving Limitless integration Limitless automation
Policy & Compliance
Post CBER – raising a complaint with the Competition and Markets Authority
T he Consortia Block Exemption Regulation (CBER), which had been transposed from EU into UK law, lapsed on 25 April 2024. Prior to this, shipping lines were automatically exempted from certain aspects of competition law. The decision not to replace the CBER on expiry, made after a thorough review of shipping line consortia by the Competition and Markets Authority (CMA), means that shipping lines will have to self- assess alliances and vessel sharing arrangements, etc, to ensure that these do not break competition law. This raises the possibility of traders and freight forwarders raising a complaint with the CMA. In many ways the CMA’s decision will impact the structure of the liner trade rather than day-to-day commercial activities. However, it is very clear that, moving forward, competition law will have a greater role to play in the commercial relationships between carriers and their customers. In this article we will examine how to make a complaint to the CMA. BIFA, as part of its submission to the CMA, advocated the establishment of an Ombudsman or use of an existing agency such as the Maritime and Coastguard Agency (MCA) to investigate complaints against shipping lines in the same way as the Civil Aviation Authority (CAA) handles complains against airlines. BIFA also argued that entities acting on behalf of shipping lines, such as ports, should be brought within the scope of the complaints process. These representations were not accepted during the consultation; hence all complaints will need to be submitted to the CMA. The process for reporting a competition issue is remarkably straightforward
Table of key legislation governing Competition Law Notes Legislation/Guidance
Competition Act 1998 (“CA98”)
In particular: 1) Section 2: Agreements etc, preventing, restricting or distorting competition. a. Agreements that prevent, restrict or distort competition are prohibited unless exempt under section 9 of the CA98.
2) Section 9: Exempt agreements a. eg if the agreement improves
production/distribution or promotes technical or economic progress while allowing consumers a fair share of the resulting benefit, an agreement may be exempt from the application of the section 2 prohibition above.
Enterprise Act 2002
This legislation establishes and provides for the functions of the CMA. This should be read in conjunction with the CA98.
CMA Report a competition or market problem
A short guide with contact details setting out how to tell the CMA about competition and consumer issues.
How the CMA handles information and complaints about businesses
The CMA welcomes information about practices in the marketplace but does not respond in detail to individual complaints. Complaints about businesses receive consideration as information of potential value to work that the CMA is currently doing or may in future undertake. However, no guarantee is offered as to whether and how such complaints may be used.
Guidance on the CMA's investigation procedures in Competition Act 1998 cases
See 3.12 – 3.19 in particular (How to make a competition complaint + Pre-complaint discussions).
“ BIFA argued that entities acting on behalf of shipping lines... should be brought within the scope of the complaints process
Making a complaint The complaints process is detailed in a document entitled Report a competition or market problem (scan the QR code to view). The process for reporting a competition issue is remarkably straightforward, probably because many such reports are from the general public regarding consumer matters. Having reviewed the relevant pages, the importance attached to information received from ‘whistle- blowers’ is interesting. The reporting processes for such informants are separate from the general ones with a unique website
and e-mail address. It has to be emphasised that in most cases one complaint is not going to lead to the CMA opening a formal enforcement case. However, should sufficient complaints be submitted an investigation is more likely. The question remains, what potential legislative breaches by a shipping line will lead to an investigation? The key pieces of relevant legislation, against which any potential breaches of competition law will be judged, are included in the table above.
10 | May 2024
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Policy & Compliance
FIATA and the Global Shippers Forum have issued guidance on enhancing data quality and information exchange for the EU ICS2 Regime Call for enhanced data quality and information exchange for EU ICS2
• Information must be presented to the carrier, the import agent, or an authorised freight forwarder, or submitted directly to the ICS2 system by a speci fi ed time before the goods are loaded or arrive at the EU border (depending on the mode of transport and type of journey). • Failure to provide the required information, in the right level of detail and by the speci fi ed deadline, may result in delays and enforcement actions by EU authorities. The document speci fi cally addresses shippers, consignors and freight forwarders involved in goods entering or transiting the EU Customs Territory by air, sea (from June 2024), or road and rail transport (from April 2025). FIATA and GSF emphasise the signi fi cance of data quality, accurate goods descriptions and Harmonised Commodity Codes (HS Codes). The guidance note also provides practical checklists for the submission of essential information for the EU ICS2 for shippers and freight forwarders. It can be viewed by scanning the QR code (left).
S hippers and forwarding organisations called in March for enhanced data quality and information exchange globally to facilitate the effective implementation of regulatory changes brought by the EU’s Import Control System 2 (ICS2) regime, which will take effect for sea, road and rail transportation in 2024 and 2025. The guidance will also be relevant for other emerging pre-loading advance cargo information (PLACI) regimes around the world. FIATA, the International Federation of Freight Forwarders Associations, and the Global Shippers Forum (GSF) have jointly issued an agreed Guidance Note on Enhancing Data Quality and Information Exchange
for the EU ICS2 Regime , which underscores the crucial role of collaboration between shippers and freight forwarders in submitting high-quality data throughout the supply chain to ensure compliance with PLACI requirements in an ef fi cient and timely manner. Key considerations to note are that: • ICS2 will now cover all shipments entering or transiting the EU by sea, road and rail transport, with air transport requirements already fully implemented in 2023. • Shippers and forwarders exporting to the EU Customs Territory are now responsible for
providing more detailed information about each consignment.
FIATA GSF guidance
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Policy & Compliance
New legislation broadens Companies House’s powers so that the Registrar will become custodian of more reliable data. However, Customs agents will still need to remain vigilant Corporate due diligence in light of new legislation
good faith. Consequently, the fact of registration alone could not, in our view, provide sufficient certainty that a registered company was indeed established. The Economic Crime and Corporate Transparency Act 2023, and the amendments it introduces, will now allow Companies House to verify identity for all new and existing registered company directors, people with significant control, and those delivering documents to the Registrar. This should result in a significant improvement of the accuracy of Companies House data, consequently leading to an increased level of transparency, accuracy and, most importantly, reliability of information. The legislation broadens Companies House’s powers so that the Registrar can play a more active role over company creation and become custodian of more reliable data. The new powers will allow for checking, removing or declining information submitted to, or already on, the companies register, thus allowing for retrospective validation of data. This, as mentioned above, is a clear departure from the passive role Companies House adopted previously. Warnings But there are caveats. Clearly the new powers will, as mentioned above, improve the overall quality of data that traders will have for their perusal. Security and transparency of conducting business transactions should also improve. Yet, the sheer volume of data the Companies House register stores means that changes will be slow and will not happen immediately. And that is despite head count increases that Companies House is planning. What this means for Customs agents is that their internal due diligence procedures will, as always, be vital to ensuring compliance but most importantly protecting the company from the unwanted consequences of representing a non-established business. Scan the QR code to view the explanatory video created by Companies House.
R epresentation and considered a ‘standing agenda’ point for both BIFA Members and the secretariat. And it is so for a good reason as understanding one’s position in the supply chain is an essential part of a successful due diligence and compliance programme. Considering the above, BIFA would like to draw Members’ attention to the Economic Crime and Corporate Transparency Act 2023. An act which significantly amends the Companies Act 2006 and delivers additional powers for validation of data provided to Companies House (Registrar of companies). But why is it important? The current guidance on establishment establishment for Customs purposes can almost be for Customs purposes may be viewed as rather liberal in its approach. When reading the guidance, one will come across the following statement: ‘A company is established in the UK if it is incorporated at Companies House.” The statement itself may seem clear and follows the Companies House requirement for businesses to have registered in the UK but, BIFA always argued that incorporation at Companies House alone might not be enough to consider a company established – and there were good reasons to support this view. The main one being the fact that Companies House did not check or validate information provided by companies for the purpose of registration. Consequently, there was no guarantee that a business registered in Companies House was indeed established in a meaningful way which could be derived from UK legislation or Companies House’s own requirements. That is despite the fact that rules relative to UK
“ The new powers will allow for checking, removing or declining information submitted to, or already on, the companies register, thus allowing for retrospective validation of data
establishment can be found in a number of legal acts including the Companies Act 2006 (2006 Act) or The Overseas Companies Regulations 2009. For example, the Companies Act 2006, Article 1261 (2) defines UK establishment as follows: (2) For the purposes of this part, a body is to be regarded as “established in the United Kingdom” if and only if: (a) it is incorporated or formed under the law of the United Kingdom or a part of the United Kingdom, or (b) its central management and control are exercised in the United Kingdom. Companies House guidance and case law have clarified that the above means having a physical presence in the UK, for example an office or a place that the establishment regularly conducts its business. Yet, as mentioned above, Companies House never checked the correctness of information provided by traders and information was only accepted in
12 | May 2024
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Policy & Compliance
Due diligence – a reminder Due diligence and mitigating strategies are becoming increasingly important to business and the range of subjects covered seems to be ever expanding
T he recent £450 million haul of cocaine follow good practice to ensure the compliant movement of cargo. The humble seafreight container has solved many problems and encouraged global trade, but it has also facilitated a growth in concealment. BIFA has recently noted an increase in the number of calls concerning cargo crime; however, in the UK cargo crime is often not reported separately from similar offences. For instance, theft from a vehicle is often reported simply as ‘vehicle crime’ and there is no appetite amongst the authorities to change the current situation. At BIFA, the complexity of the supply chain is fully appreciated, as is the difficulty in conducting due diligence checks. This is exacerbated by the lack of meaningful information available in some government databases. Members should note that it is not just crime that is a major threat; Customs related non- compliance and the avoidance of sanctions and export controls all remain significant issues. All too often the BIFA Member has to deal with the transhipping Southampton has highlighted the need for all participants within the supply chain to
problems of abandoned cargo when it has been deliberately undervalued. When HMRC uncovers this or similar non-compliance the importer will, on occasion, disappear leaving the Customs agent with cargo that no one wants. The Customs agent has the awkward and sometimes expensive task of surrendering the goods to the Crown. There is an increasing tendency in the UK for government to make the freight forwarder/Customs agent responsible for conducting checks to verify client and shipment-related information. HMRC recently issued guidance on the Customs agent’s responsibility to confirm values on consignments over £20,000 and retain evidence that they have done so. Many would argue that this places the Member, when undertaking Customs work, in an impossible position. ‘Know your cargo’ BIFA has consistently advised its Members to ‘Know your customer’ and more recently in our good practice guide we look at due diligence at an individual shipment basis – scan the QR code (left). In other words, ‘Know
Individual shipment
14 | May 2024
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Policy & Compliance
your cargo’. In certain cases, Members will have to consider procedural changes, for instance when ‘on- boarding’ new clients to conduct the appropriate due diligence checks. Let us briefly consider what a Member can do operationally to prevent other parties from exploiting loopholes in the supply chain. These steps could include both physical and documentary checks in their cargo handling procedures. Some of these, such as screening export cargo, are statutory aviation security requirements. A lot of information on due diligence checks is contained within the BIFA website. The BIFA Good Practice Guide Credit Application Procedures provides information and guidance on how to conduct checks at the credit application stage that Members should consider undertaking. Scan QR code (right). The guidance considers what information is required in order to make an informed decision about the potential customer and how to go about obtaining it. It is essential that this information is checked in line with company procedures and challenged where applicable. The BIFA STC must be incorporated in the trading contract and, wherever possible, trade references obtained. Revalidating information One point that is often overlooked is the process for revalidating the above information at regular intervals and how these records are to be retained. At a shipment level, it is important wherever possible that freight and documents are carefully checked and information cross-referenced. For Members using Client Relationship Management (CRM) systems, regular checks must be made on the data held, based on the type of freight handled and volumes. This is particularly relevant where the data is used to pre- populate important documents and, in particular, Customs declarations. It is not possible to provide specific guidance on how frequently these checks need to be made but checking authorisations, etc, may provide an indication. Also, careful thought should be given if an unusual transportation route is
difficulties in explaining its actions. This in turn increases the likelihood of the Member, particularly when acting as an indirect Customs agent, incurring financial penalties or prosecution. Hand-in-hand with due diligence checks, which are a continuous process in the relationship between Member and customer, it is important to consider sensible mitigation processes to limit risks. These can be integrated in the general management procedures of the Member to cover checks both of a general nature and on specific shipments. It is noticeable that Members experience a higher incidence of problems with one-off/unsolicited consignments. The BIFA STC highlight a range of commodities that should only be handled after the Member has agreed in writing to handle such products. In addition to limiting the type
Credit application
of goods handled, particular attention must be given to the risks involved where trade involves geographical regions and countries that are deemed to be ‘high risk’. The Foreign, Commonwealth & Development Office (FCDO) website gives some indication of these risks, but there are various indices that look
into areas such as crime and corruption. Whilst most forwarders use IT systems to process documentation and Customs entries, consideration should be given to employing additional risk mitigation systems. This may include embedding sanctions and export control compliance checks in processes, which would be most applicable at a shipment level. In addition, consideration should be given to establishing geographical location checks, which could involve the assistance of local offices or agents. The importance of knowing your customer and its products is also relevant alongside monitoring any issues in the supply chain. Mistakes will occur However careful Members are, mistakes can occur. Therefore, it is important to have processes in place to cover a situation where something has gone wrong. If something is shipped in error, breaching sanction legislation, there are potentially very significant penalties, costs and, most worryingly, reputational damage. In order to control such situations, it is essential that clear policies and reporting lines have been established. There should be clearly understood areas of responsibility, and consideration should be given to what specialist assistance such as solicitors, PR consultants and insurers may be required to assist in handling the situation and containing the fallout. Due diligence and mitigating strategies are becoming increasingly important to business and the range of subjects covered seems to be ever expanding. For instance, environmental issues are increasingly being included in due diligence checks on suppliers. This is a direct response to customer demand and, in certain cases, BIFA is aware of Members declining business where they feel that the potential customer’s business ethics are at odds with their own.
“ It is important to have processes in place to cover a situation where something has gone wrong. If something is shipped in error, breaching sanction legislation, there are potentially very significant penalties, costs and, most worryingly, reputational damage.
stipulated, or if information is unclear/incomplete or vague. Clarification should be sought to resolve such issues and e-mails retained, or reference to telephone calls recorded on file or held electronically.
From anecdotal evidence, it would appear that files, Customs entries, etc, are not adequately checked before being closed to ensure that the freight movement and its constituent elements were correctly completed. The identification and correction of an error is an important step in remedying a problem and preventing its re-occurrence. From practical experience, BIFA has noted that the UK authorities, confronted by growing non-compliance, are becoming increasingly assertive when conducting investigations. The freight forwarder/Customs agent, if it has not kept accurate records, will face increased
May 2024 | 15
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Policy & Compliance
the guidance document, please direct these in the first instance to the CAA: neil.williams@avsec.caa.co.uk. Are your Dangerous Goods Regulations (DGR) certi fi cates up to date? To meet the registration requirements of an IATA accredited agent or intermediary, it is crucial that a company demonstrates evidence that it employs individuals with a valid certification on Acceptance of Dangerous Goods Consignment training. In order to maintain accredited status, a company is required to demonstrate that it continues to meet this requirement by ensuring that the most recent training certificates for Accepting Dangerous Goods Consignments of employees are submitted to IATA. This ensures that the DGR certificates currently registered in your account remain valid. Members are advised to check or update valid DGR certificates by following the steps explained in the document Important Information on Dangerous Goods Regulation (scan the QR code, left, to view). This document also explains the importance of having a valid DGR certificate, how to obtain one, and finally, how to communicate with IATA easily. Failure to provide the Dangerous Goods Acceptance training certificates to IATA may result in the termination of the agreement with IATA and the company’s removal from the Cargo Agency List.
David Stroud, Policy Advisor – Air, highlights two issues of importance to Members handling air freight shipments Air cargo updates you may have missed
A viation Security Regulated Agents will have been contacted earlier in the year by the Department for Transport concerning Variation Direction & Guidance – Protection of Secure Cargo & Mail . The new provisions come into force on 1 June 2024, allowing a proportionate lead-time as agreed in consultation with the industry.
The communication will have been sent to the company’s aviation security manager and details new provisions that will form part of the Aviation Security Programme and must be reflected therein. If you have any questions on the measures prescribed in the Variation Direction, including in relation to interpretation that may not be answered through referral to
Dangerous Goods
IATA and Smart Freight Centre join forces on CO 2 calculations
cargo, supporting them with pre- shipment and reporting purposes. IATA CO 2 Connect for Cargo is planned to be available as of Q4 2024. SFC (www.smartfreightcentre.org/en) is a globally active non-profit organisation for climate action in the freight sector. Its goal is to mobilise the global logistics ecosystem, in particular its members and partners, in tracking and reducing greenhouse gas emissions. The SFC Clean Air Transport programme comprises over 50 members, including airlines, freight forwarders, shippers and fuel providers. It engages in collaborative actions to support aviation’s decarbonisation efforts.
The International Air Transport Association (IATA) and the Smart Freight Centre (SFC) announced a partnership on 13March to provide consistent and transparent CO 2 emissions calculations for air cargo shipments. The two organisations will focus efforts on developing the cargo component of IATA’s CO 2 Connect platform, which successfully launched its passenger version in 2022. The platform uses primary industry data to power highly accurate carbon calculations. It considers airline specific fuel burn from both full freighter and passenger aircraft carrying belly cargo,
airline specific cargo load factors, and passenger load factors to determine the correct ratio to attribute to belly cargo. IATA (www.iata.org) represents some 320 airlines comprising 83% of global air traffic. The collaboration with the SFC Clean Air Transport Programme will promote a common methodology in CO 2 emission calculations and ensure accurate and consistent CO 2 calculations are distributed to the industry’s biggest shippers and freight forwarders in air
16 | May 2024
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supervisor, we match their courses to the areas that need development – such as leadership skills or communication. And for our new starters we create a pathway, such as air freight, and they do a package of relevant courses.” Appreciating staff Employees who demonstrate particular enthusiasm for learning receive OIA Global’s ‘Level Up’ award. Staff are also recognised and their accomplishments celebrated during the company’s annual Employee Appreciation Week, for which employees can nominate colleagues in categories such as ‘Rising Star’ or ‘Above and Beyond’. Furthermore, each branch receives a budget annually to spend on staff appreciation. This year, the Richmond of fi ce will be running a team-building event, Price said. “In the UK we also ask for ‘good news stories’ every month so that we can highlight positive things and successes,” he added. This emphasis on positivity ties in with OIA Global’s action for mental health, which includes resources like helplines and counselling. Nor does it stop there. Price said: “We did a 17.5-mile sponsored walk from Richmond to the London Eye last year and raised £1,639 for Mind. It was a good team-building exercise – and it is important to keep engagement up on this subject. Being caged during COVID-19 did not do anyone much good.” OIA Global is pulling out all the stops to create a healthy, sociable working environment; its Richmond of fi ce bene fi ts from access to riverside walks and the branch has a pool table, dining area and even a bar. There are also plans to roll out some of the initiatives from Richmond across OIA Global’s network, under the banner ‘Project Purpose’. “Our marketing team at headquarters in the US is designing this,” Price said. “It involves rede fi ning our company culture to include things like social spaces, awards, OIA University and so on. Richmond is a pioneer branch for this. Our culture and values will be re fl ected elsewhere.”
OIA Global nurtures a pioneering culture
OIA Global acknowledges that having strong employees is key to success. Its approach to keeping staff motivated and supported earned it the 2023 BIFA Staff Development Award
S umming up OIA Global’s approach, UK country manager Ben Price said: “Without a good culture and good people, it is hard to exceed your targets.” Therefore, he explained: “We invest in young people at OIA. We see the value of developing them, and giving them the values we feel should run through the company. “We try to give opportunities within the company. For instance, with our supervisor structure, we promote internal candidates who know the business and share our values. Then we bring in new people in lower positions and train them up.” Learning specialist Training takes the form of in- person and online courses, including apprenticeships, certi fi cations, continuing professional development and sponsorship programmes. OIA Global employs a dedicated learning and development specialist, who helps freight forwarding employees navigate technological, industry and
regulatory changes. There are ‘top-down’ initiatives, like the one that saw more than 100 employees advance their CargoWise certi fi cation and resulted in OIA Global being recognised as a CargoWise Certi fi ed Logistics provider. In addition, employees have access to the OIA University online training site and a great deal of input into their learning trajectory. Price outlined: “Some courses [such as GDPR] are mandated by HR, but each employee’s learning programme is tailored following their annual review. “We ask people what they want, so that they engage with it,” he said. “If they want to become a
“ Without a good culture and good people, it is hard to exceed your targets.
BIFA Staff Development Award
Albacore believes that people are a company’s most valuable asset. That is why we are proud to sponsor the Staff Development Award for the 15th year. Albacore supplies and support efficient and reliable IT systems which ensure productive, empowered and satisfied staff.
18 | May 2024
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