Newsletter - October2019

2019 October Issue
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Contents
External Articles
Freight sector concerned over
new UK Customs system 3,4,5
Thailand dangles 50% tax cut
for manufacturers fleeing China 6,7
Trade and the Impact on
Imports and Exports in 2020 8,9,10
Shifting tariff environment
creating new opportunities for
air freight 11,12,13
No sign of gloom lifting for
container sector 14,15
Freight cost management
market set for boom times 16,17
Centrolene AGM2020 18
FINALISTS at the Global
Freight Awards 2019 (ICE) 19
Centrolene Referrals Program 20
Countries wanted:
- Denmark
- Indonesia
- Tunisia
Success project movement by
by Hollandia Forwarding 21
Centrolene Global Coverage 22,23

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Freight sector concerned over new UK
Customs system
Source: Lloyd’s Loading List
Date: 9 th September 2019
BIFA says ‘progress has been inconsistent, with periods of activity and
progress, and then little concrete news’, with concerns heightened by Brexit
issues
The British International Freight Association (BIFA) has expressed numerous
concerns over the progress of the development of a new computer system
that will replace an existing system used for processing Customs declarations.
BIFA director general, Robert Keen said that with the freight and logistics
sector facing numerous challenges including the increasing likelihood of a nodeal
Brexit, and the demands that it will put on the companies that are
responsible for moving the UK’s visible trade, BIFA is concerned that progress
with the development of the new system has been inconsistent, with periods
of activity and progress, and then little concrete news.
Keen stated: “Our single greatest concern is that currently the development
process does not involve representatives of the end-user. This is a dangerous
oversight because it is the end-user who will determine what will actually
work in practice, particularly as IT developers have been flagging up a lack of
clarity regarding data elements.
“To give a simple example, LIC 99 – which indicates a licence waiver for all
types of goods – is to be replaced. The new requirement will be for a licence

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waiver for individual types of licences, which potentially adds complexity and
makes entry completion more difficult in practice.
“Furthermore, despite initial assurances from HMRC to the contrary, it is clear
that the new system will require more significant changes to commercial
software systems than previously envisaged. To give a simple example, a
declaration on the current system –Customs Handling of Import and Export
Freight (CHIEF) – requires the completion of 59 data fields. A declaration on
the replacement system – Customs Declaration System (CDS) – will consist of
78 data fields for import and 65 for export declarations.”
The development of the new system includes many stakeholders – HMRC,
IBM, community systems providers (CSPs), numerous software providers and
representatives.
Keen noted that some of the CSPs and software providers have already
highlighted the difficulties faced in developing the new system, the distinct
lack of clarity regarding some of the data elements and the incomplete nature
of some of the development work. For BIFA, there is a clear indication that the
IT sector has concerns regarding the programme and the suggested
timeframes.
He said: “HMRC has recently announced its proposed plan for completing
delivery of the new Customs Declaration System and migrating traders to the
new platform, which requires all traders to migrate from CHIEF to CDS by
September 2020 in order for HMRC to meet its requirement to turn off CHIEF
in March 2021 when the current contract ends.
“We have heard from CSPs and other software developers, and HMRC itself,
that this timeline is challenging and understand that HMRC has requested
software developers and CSPs to expedite their plans to deliver and assure the
necessary changes to IT systems and business processes without

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compromising the integrity of the border, or the flow of international trade.”
Based on currently available information, BIFA is challenging HMRC, in
conjunction with the IT sector, to identify all the problem areas and formulate
a plan to resolve them, whilst agreeing a realistic timeframe to deliver the
new system, fully developed, stable and tested. It also wants urgent
consideration to be given to involve end-users to ensure that the outcomes
actually work in practice.
Keen added: “Everyone concerned needs to remember that developing the
new core system is only one part of a much bigger jigsaw. Customs agents will
have to collect significantly greater amounts of data from their customers.
Also, within individual data fields we see an increase in options.
“For instance, as previously indicated, LIC99 is a single licence waiver covering
all goods. It is thought that this code will be replaced by multiple options
dependent on the type of licence waiver being claimed. We are encouraging
our members to consider how they will collect and store this additional
information from clients, who often are not fully aware of the new
requirements.
“On top of all these issues, we have to factor in the increasing likelihood of a
no-deal Brexit, and the demands that it will put on our sector. In this scenario
it has to be accepted by all that the implementation of CDS will have to be
delayed, whilst we are using existing systems to facilitate cargo movements
and communicating with the various government agencies to allow them to
perform their role to collect revenues without compromising the integrity of
the border, the flow of international trade, or frontier security.”

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Thailand dangles 50% tax cut for
manufacturers fleeing China
Source: Nikkei Asian Review
Date: 6 th September 2019
Bangkok seeks to draw high-tech production in competitive region
BANGKOK -- Thailand announced a package of incentives Friday, including a
50% tax cut, for companies to relocate production to the slowing Southeast
Asian economy from China amid the Sino-American trade war.
To qualify for the incentives, companies must apply next year for approval to
invest 1 billion baht ($32.7 million) or more in the country and carry out the
investment by 2021.
Approved investors will see their corporate tax obligations reduced by half for
five years.
The incentives show Thailand jockeying for foreign investment against
neighbors like Vietnam as the country seeks to move its manufacturing sector
into higher-value activities.
Forty-eight multinationals including U.S. chipmaker Western Digital are
considering relocating production to Southeast Asia from China, Thailand's
Office of the National Economic and Social Development Council says.

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Ten of these companies are strong candidates for investment in Thailand,
according to the office.
"Under the new package, Thailand can compete with other countries in Asia
for foreign investment, especially to attract advanced technology firms that
want to move production to Thailand," Kobsak Pootrakool, an official in the
prime minister's office, said at an economic policy meeting on Friday.
Beyond offering a tax cut, the government also will create a single portal that
advises companies on their applications and allows them to file.
To encourage training of skilled workers, tax breaks will be offered to offset
the cost of building training centers and providing employee development
programs. Labor rules will be eased to help skilled foreigners work in Thailand.

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Trade and the Impact on Imports and
Exports in 2020
Source: Global Trade Magazine
Date: 11 th September 2019
Significant and sustained increases in the world trade index (an index
measuring the number of times the word uncertainty or its variants are
mentioned in Economist Intelligence Unit (EIU) reports at a country level)
should be a worry for many as “the increase in trade uncertainty observed in
the first quarter could be enough to reduce global growth by up to 0.75
percentage points in 2019”
In August, the US Institute for supply management latest report shows a
contraction in production, purchasing, and employment indices.

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Uncertainty generated from Brexit, theUS-China trade war, Japan – South
Korea trade wars, and general discontentment with global trend towards
widening income inequality is creating a toxic mix for politicians to deal with.
The irony is the conventional approach of blaming your trading partners for
your problems is only likely to exacerbate a general lack of confidence and
increase further uncertainty.
The current round of the G7 summit in Biarritz concluded with support “to
overhaul the WTO to improve effectiveness with regard to intellectual
property protection, to settle disputes more swiftly and to eliminate unfair
trade practices.” In essence, it’s signaling a need to strengthen the capabilities
of the WTO to act faster and more decisively in resolving disputes that are
even more political than structural in nature, requiring a more multi-faceted
engagement approach. Whilst this may help in the long-run, in reality,
companies will have to contend with uncertainty in global trade for some time
to come as well as the impacts on the real economy from these disputes.
And all of this is happening as IMO 2020 approaches, the January 1, 2020,
date by which the International Maritime Organization mandates a switch to
lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions
leading to significant cost increases in the shipping goods via ocean freight
(initial estimates between 180USD – 420 USD per TEU dependent on routing,
base fuel costs, carrier).
So given the significant uncertainty around global trade agreements, the
increasing use of trade as a political football, the increasing costs to trade and
the shortening of product lifecycles as customers want faster, newer more
differentiated offerings. Is it still worth it?
Of course this is very much dependent on what industry you are in. Whether
you’re a global manufacturer or a wholesaler sourcing goods, your
perspectives may be different based on investments made, sensitivity to

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current trade/tariff measures, customer demands, your markets, and the
degree to which you are exposed to political debate and targeting.
However, I would offer that the benefits of specialization, economies of scale
and unique factors of production that have underpinned global trade still exist
as Adam Smith put it in 1776:
“By means of glasses, hotbeds, and hot walls, very good grapes can be raised
in Scotland, and very good wine too can be made of them at about thirty
times the expense for which at least equally good can be brought from foreign
countries. Would it be a reasonable law to prohibit the importation of all
foreign wines, merely to encourage the making of claret and burgundy in
Scotland?”
Today this simple analogy still holds true in skills, competences, capabilities,
and access to markets and insights so that over time the expectation is that
trade will prevail.
While the recent outlook has been gloomy, opportunities for 2020 include a
resolution to a number of ongoing disputes and a final settlement on Brexit
(we hope). Additionally, the maturation in technologies such as blockchain,
process automation, forecasting and demand management solutions can also
offset costs associated with IMO and support greater agility in the uncertain
supply-chain world that we currently live in.
Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative
year in our ability to execute global trade.
Partnering with an experienced supply chain leader will be essential to
minimizing cost increases while ensuring the efficient flow of your company’s
goods and services.

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Shifting tariff environment creating
new opportunities for air freight
Source: Lloyd’s Loading List
Date: 20 th September 2019
Trump decision this month to delay 30% tariff list to 15 October likely to lead
to further adjustments to freighter schedules, notes forwarder Flexport
US President Donald Trump’s decision last week to delay to 15 October the
implementation of new 30% tariffs on a list of imports from China is likely to
lead to further adjustments and fine-tuning of orders and freighter schedules,
according to freight forwarder Flexport, and is a further example of how the
rapidly shifting tariff environment is creating some new opportunities for air
freight.
In the latest twist in the tit-for-tat game of tariff announcements and
increases between the United States and China, Trump said on 12 September
that the 30% tariff affecting List 1, 2, and 3 goods – set to take effect on 1
October – would be delayed to 15 October “as a gesture of goodwill” toward
China. The first week of October, known as Golden Week, is a national holiday
across the country, with Trump stating that moving the tariff deadline came at
the request of China’s vice premier Liu He, to avoid any interference with the
country’s celebrations.
Flexport noted that with negotiations between the US and China set to
resume in early October, this delay may give both parties time to come to an
agreement and avoid the tariff increases altogether. According to Flexport vice
president of customs and trade advisory, Tom Gould, this announcement may

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also have a significant impact in terms of cost savings – to the tune of 5% for
15 days on Lists 1, 2, and 3 goods.
“As with the September 1 tariff implementation, the new October 15 deadline
will likely see freight forwarders adjusting air shipments to accommodate lastminute
imports ahead of rising rates,” Flexport noted. Flexport’s air freight
service provided one such service prior to 1 September – a previous tariff
deadline – rescheduling the arrival of a HKG-ORD flight to land at 23.45 on
31August, “saving customers time and money”.
Gould commented: “The unpredictable nature of the trade war puts a
premium on a freight forwarder’s agility and ability to develop flexible
solutions to best serve customers. As circumstances surrounding upcoming
tariffs continue to change, forwarders must be willing to go above and beyond
to serve their clients as the situation evolves and hopefully reaches a
resolution.”
Flexport said the rapidly changing tariff environment had presented new
opportunities to use air freight, as businesses investigate alternative options
for manufacturing and shipping.
“Trade regulations and tariffs have created an intriguing landscape for
companies worldwide,” said Alexis Boutet, senior director of global airfreight
strategy at Flexport. “We are gradually beginning to see global companies
realign their supply chains to avoid losing money. For these businesses,
airfreight delivers the agility to quickly complete these moves and minimize
downtime.”
As companies seek to build footprints in emerging markets, air freight offers
the opportunity to quickly and efficiently relocate equipment necessary for
manufacturing, Flexport noted, adding: “For companies weighing the costs of
continued high tariffs against opening manufacturing facilities in an emerging
market, air freight presents a compelling option.

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“Relocating an entire manufacturing production facility often requires moving
heavy machinery and putting production on hold. Moving this equipment via
ocean exposes a business to the common pitfalls of container shipping: port
congestion, longer transit times, and more.
“More importantly, however, ocean transport puts a facility out of operation
for weeks, if not months. With airfreight, however, necessary equipment can
be moved and back up and running in days.”
Flexport highlighted a number of moves by companies in response to
changing US-China tariffs. For example, diesel engine manufacturer Cummins
Inc reported $50 million in avoided tariffs by shifting production from China to
India and other nations, while footwear brand Crocs expects less than 10% of
its imports in 2020 to come from China.
In a guide entitled ‘The Agile Supply Chain: Leveraging Airfreight Strategically’,
Flexport said shifting exports was one method companies have used to help
mitigate exposure to tariffs, with air freight used by some to make this
possible, by quickly relocating sourcing or production processes to new
locations.
But for many businesses, it said the challenge of rising tariffs may lie less in
the increasing costs “and more in the potential for reducing shipment delays”,
adding: “With each tariff announcement, a surge of Chinese exports follows,
as businesses aim to get their goods to the US ahead of implementation, at a
lower rate. In these instances, airfreight can also help companies avoid makeor-break
scenarios caused by port congestion.”
It continued: “Unlike the expected crunches of peak season, increased
congestion caused by tariffs is shaping up to be an unpredictable, long-term
concern. With this in mind, more businesses are beginning to lean more
heavily on-air freight to keep things moving.”

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No sign of gloom lifting for
container sector
Source: Lloyd’s Loading List
Date: 19 th September 2019
Carriers are already struggling with a weak market. But a global
manufacturing slowdown means there a few signs of relief in sight
Slowing intra-Asia trade points to a difficult remainder of the year for the
wider container shipping sector, according to a new report from BIMCO.
“Growth rates on intra-Asian container trades are viewed as an indicator of
what is to come on long-haul routes, as volumes here indicate the health of
supply chains in the region and therefore what finished goods are likely to be
exported from Asia in the near future,” BIMCO said.
“With a volume growth rate of 0.8% in the first seven months of 2019, low
growth levels can be expected in global demand for container shipping for the
remainder of the year.”
The continued slowdown in global manufacturing and the broader global
economy will also affect container shipping, with BIMCO expecting the GDP
multiplier to stay around one for the foreseeable future.
“The slowing demand growth means that despite the comparatively low fleet
growth expectations which of 3.5%, the fundamental balance of the container
shipping market will worsen this year,” BIMCO said.

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“Furthermore, with the fleet currently projected to grow by 3.2% in 2020 this
is unlikely to change much next year, with the industry heading deeper into a
hole.”
Cutting costs would remain the main focus if carriers are to weather the
storm, it added.
“Adding to the worsening of the fundamental balance, the added fuel costs
due to the 2020 sulphur cap paints a disturbing picture for the rest of the
2019 and 2020 for container shipping,” BIMCO said.
“The oversupply of capacity is likely to make it difficult for shipowners to
recover the additional fuel costs.”

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Freight cost management market
set for boom times
Source: Lloyd’s Loading List
Date: 20 th September 2019
Rise in data volumes and increased complexity of supply chain across
industries push the need for advanced processing solutions, set to triple in
size by 2025
Europe’s freight cost management (FCM) market is set to expand rapidly in
the next few years, as small to medium enterprises (SMEs) increasingly
digitise their time-consuming invoice verification and claims management
processes.
Analysis by Frost & Sullivan reveals that owing to these development, the
region’s freight cost management market is poised to register a compound
annual growth rate (CAGR) of 17.4%, with gross market revenues predicted to
rise from €484 million in 2018 to approximately €1.49 billion by 2025.
“So far, there has been a lack of transparency and ineffective communication
between shippers and carriers in the end-to-end supply chain process,” said
Krishna Chaithanya Bathala, Industry Analyst for Automotive & Transportation
at Frost & Sullivan.
“However, with the emergence of freight cost management solutions
powered by digital technologies, the shippers’ capability in data warehousing
and benchmarking carriers’ performance has been enhanced.”

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Frost & Sullivan’s latest study, European Freight Cost Management Market,
Forecast to 2025,examines the overall freight cost management market in
Europe. The research offers analysis of the current market scenario and
provides strategic observations and insights for companies that want to
venture or expand into this sector.
While the FCM market is dominated by legacy participants such as SAP,
Oracle, and JDA, which hold a combined market share of about 55%, it will still
remain attractive for niche participants like the Alpega Group, Eyefreight, AEB,
and LOCOM, the report notes, adding: “Their cost-competitiveness,
adherence to changing requirements, capability to offer personalised services,
and new business models are better suited to the needs of SMEs, offering
significant room for the penetration of FCM tools.”
Suriya Anjumohan, Industry Analyst for Automotive & Transportation at Frost
& Sullivan, commented: “Going forward, agility, cost, and speed will be the
top three determining factors for vendor selection in the FCM service market.
Service personalisation and the ability to quickly attend to change requests
from customers will help in gaining a competitive advantage in the industry.”
The report suggests that companies operating in the FCM market should
explore the growth opportunities by:
• Partnering with niche companies rather than legacy participants, which
will facilitate easy onboarding of SMEs due to their highly costcompetitive
offerings.
• Developing or acquiring blockchain capabilities with smart contracts
solutions, which will increase transparency in freight audits, secured
payments, and record management.
• Offering increased process automation capabilities, which enable
companies to improve cost efficiencies by allowing for electronic
submission, processing, and clearance of invoices from carriers.
• Deploying artificial intelligence and data analytics to support effective
freight risk management and freight cost analysis.

Centrolene Network AGM 2020
A successful Centrolene AGM 2019 has just ended in February. While we are busy
following up each and every business generated from the AGM, Centrolene would
like to again invite you to save the date to join the exclusive group of your peers
from the leaders of freight logistics industry from 8th to 10th March 2020 for
industry updates and most importantly, NETWORKING!
As usual, space will be limited so make plan now to be at this exclusive meeting.
Phuket, Thailand has been chosen and conference venue will be announced very
soon.
Please do not hesitate to contact Anna Neo, anna@centrolene.com if you have
questions about Centrolene AGM 2020.

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Breguetlaan 12A 1438 BC Oude meer
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Consignment was designated for an offshore project where
Hollandia has loaded the cargo at the Saipem 7000 Vessel in
Rotterdam with their owned truck.
5 steel plates with a total of 3,418 kg which they sent by airfreight
to final destination.

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2019 October Issue
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