Home » Across Borders » Changing Rules for Forwarding

LAST month, we wrote about the various trade and customs developments that will likely impact on how importers, forwarders, shipping lines and customs brokers conduct their business with customs. In addition, we have outlined below some other developments that will impact specifically on the freight forwarding industry.

IATA e-Freight

In the past decade, shippers have been demanding faster delivery time, better reliability and lower costs. To date, freight forwarders still rely largely on the manual process using about 30 paper documents which impacts on the transit time, costs and accuracy of air shipments.

Some of these paper-based documents are as follows: Invoice, Packing List, Certificate of Origin, Letter of Instruction, Dangerous Goods Declaration, Master Air Waybill, House Waybill, House Manifest, Export Goods Declaration, Customs Release Export, Import Goods Declaration, Customs Release Import, Flight Manifest, Transfer Manifest, Export Cargo Declaration and Import Cargo Declaration.

Initiated by the air transport industry, IATA e-freight takes a multi-modal approach to automate paper-based processes by involving carriers, forwarders, ground handlers, shippers and customs authorities in the whole process.

In 2009, the target was to convert 16 documents into electronic messaging standards. This year, the target is to convert 20 documents, which account for 60% of the volume of paper documents. It is estimated that annual savings from document processing costs and delivery times will reach USD2 billion. Once fully implemented, IATA e-freight is also expected to promote better security in the supply chain and better regulatory compliance.

Rotterdam Rules

Last year, we wrote about the new rules which will impact on the liabilities not only of carriers (airlines and shipping lines) but also of freight forwarders.

Sometime December 2008, the UN General Assembly adopted new rules for multimodal transport. The same was signed by 16 states in September 2009, with many countries including the Philippines signing soon. Once ratified, these new rules will have a far-reaching effect on the responsibilities and liabilities of shippers, carriers and forwarders.

Otherwise known as the “UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea”, the Rotterdam Rules is aimed at creating a modern and uniform law on the international carriage of goods which include an international sea leg. It provides expanded liability for carriage door-to-door (instead of from point of loading to point of discharge) and additional responsibility for the goods from the point of “receipt” until the point of “delivery”.

Compared to the old rules, the Rotterdam Rules provides new lines of liability for door-to-door carriage, particularly relating to those goods under the DDU and DDP terms of trade. While the emphasis of the old rules (Hague-Visby Rules) was from port to port (port of loading to port of discharge), the new rules require wider responsibility for the carrier responsible for the goods from the point of “receipt” until the point of “delivery”.

In addition, the liability compensation levels have been raised (from a maximum liability limited to two special drawing rights [SDR’s] per kilo or 66 SDR’s per package, whichever is higher, to three SDR’s per kilo and/or 875 SDR’s per package).

Multimodal Transport

Operator – MTO

As signatory to the ASEAN Framework Agreement on Facilitation of Goods in Transit (AFAFGIT), Inter-State Transport (AFAFIST) and Multimodal Transport Operator (AFAMTO), the Philippines will soon be issuing new rules and regulations to accredit and register Multi-Modal Transport and Logistics Services Operators (MTLSO).

While MTLSO operates similarly to freight forwarders, the new program seeks to address continuing changes in the logistics industry, with freight forwarders evolving into integrated logistics providers — with services across various transport modes (air, sea and land) and involving transport, warehousing, distribution and other value-added activities.

The Department of Transportation and Communications (DOTC) has now drafted the rules and is reportedly conducting public consultations. By and large, freight forwarders seeking to register as MTLSO will need to increase their capitalization consistent with requirements of the ASEAN agreements.

To promote MTLSO registration, DOTC is accordingly preparing a set of benefits and privileges for MTLSOs in addition to those already provided for those registered with the Civil Aeronautics Board and the Philippine Shippers Bureau.

The author is the legal director of AFPI, PISFA and PUC. He is a lecturer on logistics, indirect tax and customs, and a trainor of Ateneo Graduate School and BayanTrade Academy on International Supply Chain Management. Please contact agatonuvero@yahoo.com for your comments.

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