International Freight Forwarding Group Advocates for Logisics Industry Input in UN Goals

The International Federation of Freight Forwarders Associations (FIATA) has advised the United Nations (UN) to seek more input from the logistics sector in the creation of their post 2015 Sustainable Development Goals (SDG). Noting that the emphasis on the logistics industry in the current plan is insufficient, FIATA asserts that the expertise of those in the International Freight Forwarding logistics industry is central to boosting the global economy and achieving sustainable growth.

The UN's Rio+20 Conference, held in Brazil in June 2012, resulted in an agreement to launch a process to develop a set of (SDGs), building upon the UN's eight Millennium Development Goals. (The Millennium Development Goals address extreme poverty, HIV/AIDS, gender equality, maternal health, childhood mortality rates, education, environmental sustainability, and global partnerships.)

FIATA's position is based on the imitation lag hypothesis and the life cycle (product cycle) theory. Simply put, imitation lags--delays--occur when one country does not have the technology to adopt and diffuse the imported technology of another country. The life- or product cycle theory describes the trajectory of a new product or technology. It is created in Country 1, matures and is shared with economically similar countries. Production standardizes and is outsourced to developing countries. FIATA asserts that the logistics sector is central to international trade and drives global economic prosperity.

In a position paper published by FIATA, the organization states that their global go-between position affords them unique insight into national policies and the limitations of those policies to have impact on local international communities. FIATA says the relationship between national policies and local economies--and their impact on multiple sectors--needs further analysis before appropriate SDGs can be achieved.

In addition to increased input of the international freight forwarding logistics industry, FIATA has urged the UN to involve many civil societies and relevant stakeholders in their discussions. 

Important Differences Between NVOCC (Non Vessel Owned Common Carriers) and Freight Forwarders

There are a number of interchangeable functions between NVOCCs (Non Vessel Owned Common Carrier) and freight forwarders.  However, in certain situations they have important differences which affect transportation protocols.  Knowing the differences can save time and unnecessary paperwork.

• NVOCCs often both own and operate their shipping containers.  At times, they also lease containers for their use or on behalf of others.  This capability allows them to cutout the middle man and makes the shipping process more efficient.  Freight Forwarders cannot operate this way.
• The United States and certain other countries require NVOCC operators to report their tariff to the proper government branch, thus creating a public tariff. There is a range country specific rules, including who is the designated point of contact and when contact is to occur.  Freight forwarders are not required to operate this way.
• Based on where they are operating, NVOCCs may have to assume the status of a virtual carrier.Depending on the jurisdiction, the NVOCC may be required to accept all the liabilities of the carrier.  Although this adds risk and responsibility to the NVOCC, it is considered to be worthwhile.
• Freight forwarding companies may act as either an agent or partner for a NVOCC.  The NVOCC does not need to be the agent or partner of a freight forwarding company.  This provides more flexibilty and allows NVOCCs to adjust based on the situation.

NVOCCs are frequently termed ship less shipping lines, acting similar to a common carrier, except that an NVOCC does not operate the vessel transporting the container.  The NVOCC brokers space on ships for the aggregate volume of its clients.  Volume garners lower rates which they then pass on to their shippers.  Shippers might choose the services of an NVOCC to avoid damage liability.  The NVOCC can be deemed a carrier who works for shippers and also a shipper to the carriers.

The services provided by a freight forwarder can also be undertaken by the NVOCC.  This includes having personnel available to handle the inland shipping when it reaches its destination, arranging for insurance on behalf of clients and clearing customs (end to end logistics).

FMCSA (Federal Motor Carrier Safety Administration): Safety Rules Coming in 2014

The trucking industry is expecting finalization for two major safety rules early in 2014: 1) mandated electronic logs (e-logs); and 2) a searchable database with driver drug and alcohol tests. A third is on-tap for later in the year: carrier safety fitness.

Mandated E-Logs

A great deal of controversy has surrounded the issue of e-logs--also referred to as electronic onboard recorders. Many drivers reference similar devices in the past as avenues for coercion, describing log boxes that beep every hour and require input during delays and sleeper berth time. Many consider the harassment responsible for driver sleep deprivation and therefore detrimental to highway safety.

The FMCSA (Federal Motor Carrier Safety Administration) conducted lengthy surveys regarding the potential for coercion and possible measures to protect against it. Survey results are being used to develop a coercion plan. This plan will be publicized via a Notice of Proposed Rulemaking early 2014 and then opened for public feedback.

Searchable Database for Alcohol and Drug Tests

This proposal will require employers to report all positive test results and refusals to a clearinghouse. A prospective employer may--with the applicant's permission--access the database for individual records.

The database would be maintained by a third party, and records would come with rigorous privacy measures. Any driver testing positive would be required to complete a return-to-duty process and that would be reflected in the database.

Although employers would pay a fee to access the clearinghouse, drivers would be able to access their own records for free. Dispute and appeal procedures will be part of the final rule.

As with mandated e-logs, the final rule will be posted by notice and then opened for commentary.

Later in 2014...

A third major safety proposal is not expected to reach notice until later in 2014: standards for carrier safety fitness. As part of the Compliance, Safety, Accountability (CSA) Program, data in the Behavioral Analysis and Safety Improvement Categories will be used to determine whether or not a carrier is fit to operate.

Ocean Freight E-Commerce Standards for International Freight Forwarding

The EIPP Standards Advisory Board, established in 2010, is comprised of a self-funded global team of ocean industry leaders.  Conceived as a neutral forum for the top ocean carriers and international freight forwarding executives to partner with customers; its purpose is to expedite e-commerce best practices for success in a digital world.  This independent body has regular meetings to collaborate on, and advance e-Invoicing messaging and process standards for ocean freight commerce.  This November, the organization focused on enhancing the best practices already under development.  The discussion centered on three such processes.

One of the items on the agenda was A Payment Advice Process for invoice payments including the use of electronic messaging to provide remuneration information to collectors.  The process will ensure that all participants share understanding of how using remittance messages can automate IT processes for payment applications and proper payment verification.

Another discussion covered A Credit Note Process to streamline the issue and sending of electronic credit notes whose purpose is to correct prior invoices or shipments from ocean carrier to shipper.  In this case, it helps create a converged understanding of the process for exchanging messages in the ocean freight industry. It also supports the automation of credit note acknowledgement, confirmation, accounting, auditing, and reporting for tax purposes. 

Recognizing the value of electronic invoicing in enhancing customer collaboration, efficiency and cost savings;  the players in the ocean freight industry are becoming more demanding of improvements.  Further development of relevant EDI message guidelines will encourage adoption and sustained e-invoicing in ocean freight commerce.  Electronic invoicing standards which satisfy market demands will lead to instant information delivery, automatic routing to the appropriate parties and improved lead time for speedy invoicing.

Every day millions of tons of freight travel the globe.  Every step produces documentation related to logistics, schedules, exports, imports, custom clearance, duties and more.  Requiring critical focus, the management of information in ocean shipping is uniquely challenging due to the complexity of rate and contract administration.  Embracing established best practices of the latest developments in e-commerce will help advance and streamline the international freight forwarding industry

Disagreement Over The New $75,000 Broker Bond

Reports of the impact of the recently enforced $75,000 broker bond on property brokers is mixed. In effect October 1, 2013, brokers were given a 60-day grace period to comply with the increased surety bond requirements. The grace period ended December 1, and the Federal Motor Carrier Safety Administration's (FMCSA's) database has seen a reduction of over 8,000 brokers out of roughly 21,500.

The increased requirement has seen its share of controversy. Backed by the Transportation Intermediary Association (TIA), American Trucking Associations, and the Owner-Operator Independent Drivers Association (OOIDA), it was considered better protection for freight carriers. Supporters argued the $10,000 bond had been in place for 30 years and was no longer adequate to cover losses suffered by carriers jilted by fraudulent brokers. The new and higher bond was touted as proper course to ensure professionalism and legitimacy in the industry.

Others felt it was an unfair hardship inflicted upon small brokers who do not do enough annual business to afford the increased bond. The Association of Independent Property Brokers & Agents (AIPBA) has been the most vocal opponent of the change. In previous negotiations, the AIPBA had agreed to a $25,000 bond that would cover inflation, but argued $75,000 was excessive, overly punitive to small business, and a means for mega-corporations to monopolize the industry.

Estimates of revoked brokerage licenses has varied. Discrepancies in the numbers of affected brokers may be due to whether or not reported statistics include warning notices sent in November, inclusion of those who voluntarily surrendered their licenses, and inactive brokers who were simply cleaned out of the database after December 1. AIPBA maintains that over 8,000 valid and active brokers were shut down. The organization's petition to the U.S. Court of Appeals remains pending.

In the meantime, brokers who have had their licenses revoked may be eligible for reinstatement if they meet the higher bonding requirements.