2003 Q2 | ITinerary | Portcalls - the Philippines only Shipping and Transport Guide

Findings of JICA Study on Reasons for Delays in Import Cargo Release (June 23, 2003)

Last week a number of news articles were reported by PortCalls on findings and recommendations of the Japan International Cooperation Agency (JICA)-funded time measurement study for the release of import cargoes in the Port of Manila, Manila International Container Port and Ninoy Aquino International Airport.

In today's column, I would like to highlight the findings of that study with regard to the reasons certain process segments in the import processing cycle take more time than would normally be expected.

The following time process segments are considered critical within the entire cycle: 1) between unloading of cargoes and lodgment; 2) between lodgment and modification of registration; 3) between customs clearance and payment of arrastre fees; 4) between arrival of vessel at berth and discharge of cargoes; and 5) between online checking of prepayment of import processing fees and Customs clearance.

Stakeholders surveyed offered explanations why certain process segments are usually lengthy, including limitations of the current computer system, inadequacy of infrastructure, organizational weaknesses, and institutional flaws.

These are summarized in accordance with the specific time process segment:

Discharge to Lodgment (time between discharge of cargo from vessel and lodgment)

Ambiguous description of cargoes in the manifest
Delays in submission of required documents by importer/broker (late submission of documents that Customs examiners require to establish the true value of the transaction)
Disputes over the applicable tariff rate on the commodity
Limited number of computers for use by Customs examiners and appraisers.
Limitations in the facilities of arrastre to handle physical examination of cargoes
Too many selected import entries (huge number of entries that are selected yellow or red)

Delays in turnover of vessel by BOC to arrastre (discharging of containers from the vessel upon berth can only start after BOC has given permission
Manual preparations of vessel before actual discharge (lashings around the containers have to be manually removed which would occupy some significant time depending on the complexity of the lashings that have been installed)
Containers are not properly arranged (improper placement of containers from the previous berth of the vessel may also contribute to the delay in discharge of cargo)
Insistence of vessel owners to use their own equipment for discharging (some self-containing vessels may elect to use their own equipment for the discharge of containers which are normally slower in performance than those from the arrastre equipment)
Weather (inclement weather sometimes slows down discharging at berth especially in conditions associated with strong winds)
Occasional equipment or system breakdown (arrastre equipment breakdown)

Payment of Import Fees to Clearance: Warehousing Entry
For the warehousing entries the time-consuming process that is common with the formal entries from discharge (of last container) to lodgment of declaration. A time-consuming process that is not in common with formal entries is the payment of import fees to the clearance from customs. This invariably holds true (with minimal exceptions) whether the goods are selected red or green, and across most of the kinds of goods that are imported, and where these come from.

Insufficient bonds posted by importer
(Before the import entry obtains Customs clearance, the importer must post a bond to the BOC in the amount equivalent to the duties and taxes that would have been assessed on the imports.
One reason for the delay may be the insufficiency of bonds that the importer has posted. In order to raise the bonds for the payment of import fees, the broker will need to go back to the importer/client to have the bonds charge slip changed especially since only one authorized signatory per company is allowed for bonds charging).
Failure of broker to see through the completion of import processing
(If the import was initially lodged as transshipment, the importer/broker does not have the incentive to accelerate the completion of import processing since the goods are already with the consignee. Thus, the processing time can be longer than when the goods have not been delivered to the consignee prior to documentary clearance.

There are already a number of efforts by various sectors to resolve delays in the import clearance process. It is the expectation of industry stakeholders that the findings of the JICA study will galvanize everyone to eventually resolve these in a collective manner.

The author has 20 years experience in the development, project management and implementation of IT projects in Philippine ports, transport and logistics. He is presently an independent consultant for IT projects and initiatives in Philippine ports and transport industries. For comments or inquiries, email him at leo@morada.name.

For today's column, we shall take a look a brief look at one of the latest technology initiatives in the air cargo sector that is currently creating great interest among freight forwarders worldwide.

Last January 2003, Unisys Corporation, along with Air Canada Cargo, Northwest Airlines Cargo, and United Airlines Cargo, announced in the US the availability of Cargo Portal Services (CPS) to all freight forwarders. Its proponents consider it as the only Internet-based portal that allows them to more easily book and manage shipments on these carriers and enjoy the benefits of reducing transaction costs. Moreover, CPS is available to forwarders free-of-charge.

In March of this year, the launch partners met with freight forwarder and airline staff based in Tokyo in order to show the global availability of CPS. During this event, the attendees viewed live demonstrations of CPS through the Internet. On the same occasion, it was announced that since the CPS launch last 27 January, more than a hundred forwarder organizations in 12 countries already requested the use of CPS and many have actually been using it since then.

In developing this type of technology solution, crucial issues related to integration of separate IT systems, acceptability to all participating entities, and security always have to be successfully hurdled.

One big challenge was to devise a system that could work not just with a wide range of legacy IT systems but also with the different procedures among airlines. These included divergent booking procedures and also different attitudes to pricing. Recognizing that most shipments are sold at negotiated rates, the proponents were reported to have quickly decided not to waste time developing a price quotation system and so avoided one of the pitfalls of attempted solutions that previously failed because they tried to move to auction models of selling capacity.

It was also important to create a solution that would be acceptable not just to the forwarder customers, but also other carriers. Industry observers maintain that forwarders don't want to go to a large number of carrier sites but actually prefer one portal they can use to book across airlines. This means that the site had to meet not just the needs of the three launch carriers but also anticipate the ease through which future partner carriers may join.

Another crucial challenge in a technology solution like this is the issue of security. While CPS is operated as a neutral platform, there are real commercial issues to be involved since the three partner carriers are actually competitors.

The specific services and carriers available to each user can be set and maintained through profiles. Each forwarder has a profile through which they can control access to carrier services and to individual users within their enterprise. Each carrier also has their own profile through which their administrator can control the key aspects of their business available through the CPS portal. At the lowest level, individual users have a profile that records their preferences and settings and which is used to pre-fill regular information where appropriate.

Any registered user can view schedules, flight and shipment status information. Subject to authority being granted by the carrier administrator, users of the services can also:
- View private allocations or free space availability;
- View rates;
- Make new bookings; and
- Manage existing bookings.

Once a shipment has been booked, a set of key time-based milestones is automatically generated covering key milestone events processed by carriers and their ground handlers. These are used to continually track shipments booked electronically against plan and pro-actively alert any exceptions so that remedial action can be taken early. In this way, the services can promote more time-definite shipments and reliable deliveries.

Context sensitive on-line help is also available at all times to help users operate the services fully.

It will be very interesting to know in the immediate future how local-based freight forwarding companies and branch offices of foreign-based forwarders make use of Cargo Portal Services facility to the extent they become available in our country.

For several years now the combined total container volume handled in both South Harbor and MICT already reached the threshold of 1 million TEUs (twenty-equivalent units). Have you ever wondered how port operators manage to achieve 100% real-time recording of all container movements and locations?

Just imagine this scenario: each import container box will have a minimum of four movement transactions within the port - discharge from vessel, transfer to container yard position, loading onto a truck, and exit from the port. This translates to 400 move transactions to be recorded, tracked and monitored. For 10,000 boxes, that means a staggering 40,000 move transactions. The task of manually recording these is simply beyond the human capability of vessel and yard checkers, more so with the process of consolidating these information.
This is where wireless technologies such as state-of-the art radio frequency data communications for on-line and real-time container management come into the picture. Checkers assigned at the exit gates of both South Harbor & MICT, inside the main container yards and those assigned at pier aprons during vessel operations are all equipped with handheld radio data terminals (RDTs) for the purpose of recording each container move. There are also vehicle-mounted RDT units installed onboard quay cranes, rubber-tyred gantry cranes, shifters and even prime movers so that equipment operators can immediately update the terminal management system on the latest move they handled.

Today, the leading radio data technology solutions used in ports all over the world are Psion Teklogix and LXE systems.

According to a white paper prepared by LXE, RF means Radio Frequency Data Communications. This refers to the wireless transmission of data by means of digital radio signals at a particular frequency. RF maintains a bilateral, on-line radio connection between a mobile terminal on location and the host computer. The mobile terminal is used for collecting and displaying the data. Mobile terminals can be portable but can also be mounted on a straddle carrier or RTG. The host computer can be a "separate" host computer (e.g. a PC), a mini-computer or a much larger mainframe used by the terminal operator.

The most important advantage of RF is that the transmission of data is not tied to a specific location. RF allows for direct transmission of data from the point of collection to the host computer and vice versa. Data is processed, files are updated, and information is distributed in a fraction of a second. Mobile users (e.g. cranes, RTGs, straddle carriers) work more efficiently, because they do not have to cover large distances to collect instructions or to report. This translates into more work being done by fewer people using less material.

The advantages of RF communication can be summarized in the LXE whitepaper as follows:

Given these advantages, it is clear that most ports - and most certainly container ports that handle over 100,000 TEUs - need RF to help achieve objectives in terms of quality of service, speed, competitiveness, productivity and utilization of resources.

In the subsequent issues of this column, we shall take a closer look at the differences in technology approaches that Teklogix and LXE have since their solutions are used by ATI and ICTSI, respectively.

The PPA Computerization Project: Requirement for Vessel Info Sheet (April 28, 2003)

Last 08 April, the Philippine Ports Authority invited the port user community to a briefing on its MIS computerization project. Among those present were representatives from industry associations like the Port Users Confederation, Association of International Shipping Lines, and Domestic Shipowners Association, cargo handling operators in MICT and North Harbor, domestic shipping lines, ferry boat operators, tugboat and lighterage service providers, and many other individual entities that directly avail of PPA port services.

The attendees were informed that this project is the direct result of feasibility study conducted by KPMG Consulting from July to September 2000. The most important recommendation of that study is the implementation of an MIS Computerization Project as the key to improving overall efficiency of PPA operations.

Vessel Information Sheet (VIS)
One of the key requirements of this computerization project that directly impacts shipping lines, shipping agents, ferry boat operators, bay and river vessel owners, and all other vessel operators is the creation of a comprehensive and nationwide vessel information database.

In this regard, PPA distributed copies of a new document called Vessel Information Sheet (VIS) which must be accomplished by all vessel owners/operators/agents and submitted back to PPA for subsequent encoding into the centralized vessel database.

A copy of the VIS document is herein shown for the appreciation and reference of all PortCalls readers. The data content actually pertains to standard information normally found in any vessel database - vessel type and category, ownership and registration, tonnage capacity, physical dimensions, cargo handling equipment.

The detailed instructions on how to accomplish the VIS are printed at the back of the form itself. Unfortunately, it is not possible for these to be included in this column due to space limitations.

Benefits from availability of VIS database
A comprehensive vessel database that will be created from VIS information will expectedly be very important when introducing efficiency improvements in vessel clearance processing that PPA performs in all ports under its direct management, specifically with regard to vessel arrival notification and application for berth. This is of direct beneficial value to all vessel owners/operators/agents. The availability of such comprehensive database is also expected to ensure timely invoicing and collection of port dues, thereby further enhancing PPA's revenue collection functions.

It would also be interesting if other agencies such as the Philippine Coast Guard and the Maritime Industry Authority can eventually access this comprehensive PPA database for use in the performance of their respective regulatory functions related to maritime law enforcement and vessel registration. This will be a real benefit to the entire shipping and transport sector.

This column will keep a close watch on subsequent developments related to the PPA MIS computerization project for the benefit of all PortCalls readers.

Those interested in knowing more about the VIS requirement are encouraged to contact the office of Ms Beth Follosco, Project Director and PPA MIS Manager, 5th floor, PPA Head Office, Marsman Building, South Harbor, Port Area, Manila.

In today's column, I am writing about one of the most modern technology solutions used in international ports, shipping and transport activities - GPS.

What is GPS?
Global Positioning System (GPS) is a worldwide radio-navigation system based on a constellation of 24 satellites and their ground stations set up by the US Department of Defense. These satellites (called NAVSTAR) constitute reference points to calculate position locations that are accurate to a few meters or even centimeters. Each satellite sends out a unique radio signal called "Pseudo Random Code" which is picked up by a GPS receiver and used as basis to measure distance to that satellite. The ground stations monitor the operational status of all satellites and exact positions in space.

How basic GPS works?
The basis of GPS is "triangulation" from satellites. To "triangulate", a GPS receiver here on the ground measures its distance from a satellite in terms of the length of time it takes for satellite signal to reach it. Three satellite ranges are enough to determine exact position. A fourth satellite range is measured for the purpose of correcting timing offset and put the receiver's clock in sync with universal time.

What is Differential GPS?
Since the earth's atmosphere can cause delays or abnormalities in the receipt of satellite signals, Differential GPS or DGPS has long been used to provide an error correction factor. It involves the use of a reference receiver that monitors variations in the GPS signal and communicates these to a second receiver that is roving which then applies the corrections for its own position. The impact on accuracy of position location is very dramatic - down to only a few meters.

The cost of using DGPS has significantly gone down for various reasons. Many US government offices such as the United States Coast Guard and international agencies currently transmit these corrections for free. The latest models of GPS receivers are also being designed to directly accept these correction information, thereby eliminating the need for a reference receiver.

A version of DGPS called "inverted DGPS" is now widely utilized particularly in business activities that require tracking movements of vehicles. This involves equipping a vehicle with standard GPS receiver, a transmitter to send GPS position information to a central monitoring center, personal computer, and a software program to calculate the actual and correct vehicle position location.

Real-world applications of GPS technology in ports, shipping & transport. For many years now, most of the real-world applications of GPS can be broadly categorized into the following categories: location (determining a basic location), navigation (getting from one location to another), and tracking (monitoring movements).

The use of GPS technology has found some of its most important applications in international ports, shipping and transport industry. GPS receivers are now standard equipment onboard container ships, passenger cruise vessels and luxury yachts. Some of the biggest foreign ports use GPS-based container tracking systems. Equipping a fleet of trucks with GPS receivers provides many large transport companies abroad with tangible operating cost benefits as a result of efficient fleet scheduling and deployment. Stringent physical security requirements in the transport of high-value goods are satisfactorily met by making it mandatory for such shipments to be loaded only to truck carriers equipped with GPS systems.

Locally, a number of GPS applications are already in various stages of either implementation or planning since 1996. These involve utilization of GPS to track and monitor movements of import shipments from the port zone to inland clearance centers, proposed mandatory use of GPS-equipped trucks in transporting shipments from the port to export processing zones, and requirement by some manufacturing companies to use only GPS-equipped trucking firms in moving high-value inventory from 3rd-party logistics warehouses to dealers/distributors.

A local company called Asian Navigation & Tracking System (ANTS) has pioneered GPS applications in our industry sector and is providing consistent focus in providing new services and products offerings for Philippine ports, shipping and transport.

Is it expensive to invest in GPS?
It will be very helpful if we first try to understand the cost components of a GPS system.

Generally, one-time investment cost is incurred in the purchase of GPS receivers , radio communication link, computer hardware and software application for the specific requirement in mind. The software normally includes a geographical information system capability so that you can monitor vehicles on a digital map of the area being covered. Depending on the supplier or service provider, recurring costs are in the form of monthly fees for the differential correction service. If it is necessary for you to maintain your own central tracking office, another recurring cost is the salary you will pay to the people who will man & operate it. If you require 24-hour GPS operations, you will have to pay for annual maintenance and support charges as protection coverage from system downtimes.

There are several ways through which a reasonable level of investment can be achieved. One option is to outsource the GPS monitoring function to your service provider, eliminating the need to have your own tracking office. If you are a trucking company, a good alternative is to join other carriers or use your trucking association and invest as a group - in this manner the total investment cost will be shared. Finally, don't limit yourself to investing only in the standard GPS configuration. At present, service offerings that feature Internet-based GPS tracking and movement notification through text messages are already available and definitely worth looking into.