Shift in political thought needed to prepare supply chain for future crises

Vector illustration concept of Maritime traffic jam. Container cargo ship run aground and stuck in Suez Canal, Suez Canal blockage.

Governments require a “shift” in political thought in order for a strong supply chain to be fully realised, according to one major logistics association.

The COVID-19 pandemic, Suez Canal, and Yantian crisis have clearly brought the fragility of the supply chain to the political and international fore.

Global governments are increasingly realising the importance of global logistics, evidenced on 9 July when President Biden’s administration pledged to crack down on soaring shipping and freight fees for the first time.

But the International Federation of Freight Forwarders Associations (FIATA) says greater political drive for harmonisation in logistics is necessary to prevent these crises from hampering cargo-owners.

In June, FIATA and the International Cargo Handling Coordination Association (ICHCA) renewed their Memorandum of Understanding (MoU) to work on issues of mutual benefit.

In an interview with PTI, FIATA said logistics stakeholders like the ICHCA and governments “must continue to embrace” technology and enforce the usage of standards to allow logistics agents to more seamlessly exchange data.

“It is clear that the maritime supply chain is severely disrupted, and this has been further exacerbated by the ongoing COVID-19 pandemic,” FIATA said.

“Crises such as the Suez Canal blockage and the Yantian crisis simply worsen the situation in the context of the fragmented supply chain and demonstrate how the current inefficiencies represent costs to all stakeholders.”

Governments must ensure there is a cross-border recognition of electronic documents and digital identity additionally, FIATA said.

“On the governmental level, there is a need to ensure strengthened infrastructure, policies, and legal frameworks to support this, and this requires a shift in political thought, as well as a concise acceptance of the legal implications.”

The industry “is still very much in need” of a global framework on areas such as the FIATA Multimodal Transport Bill of Lading, Mutual Recognition Agreements, Single Window, and other trade facilitative policies, FIATA argued.

“Ultimately, it is important that public authorities build in continuous engagement with industry stakeholders of all sizes to ensure that policies are fit for purpose, feasible, and promote a level playing field,” the federation said.

Paper still dominant

One of the main challenges facing industry is the fact that paper is still dominant, the FIATA argued.

Moreover, the recognition of electronic documentation remains “fragmented and unharmonised” around the world, and the a long-lamented lack of interoperability of tools and standards continues to slow cargo transfer from ships to ports and to inland transport, FIATA said.

The FIATA called on multinational organisations such as the UN to work on Model Law on Electronic Transferable Records (MLETR), stimulate sign-ups to standard trade data/documents, and “leverage industry intelligence” through its everyday tools like Transportation Management Systems (TMS).

In 2020 FIATA created a digital identity registry and digitalised FIATA’s standard trade documents, including its Bill of Lading (FBL).

“The interface to move goods into the markets must be as smooth as possible for traders and importers that handle goods professionally,” FIATA continued.

Emissions calculator on the horizon

Digitalisation aside, FIATA has identified three priorities to address on developing sustainability across multimodal transport: develop a repository of emission calculators; serving as a platform on best practices, and develop an emissions calculator.

The federation told PTI it is also working on practical applications of the Cargo Transport Unit (CTU) code on safety – a pressing issue on cargo protection following disasters such as the X-Press Pearl fire and explosion at the Port of Jebel Ali.

FIATA’s membership is composed of 109 Association Members and more than 5,500 Individual Members, overall representing an industry of 40,000 freight forwarding and logistics firms worldwide. 

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