Pushing Boundaries: small steps forward in the yellow flow

The development of completely reliable logistical chains is progressing slowly. It’s still a good idea for businesses, researchers and government authorities to keep working together towards this goal.

A company that knows how to use solid, secure data while maintaining the integrity of its physical goods stream might be eligible to the ideal form of customs supervision. In the Pushing Boundaries enforcement vision we call this the yellow flow. A variety of trials have been conducted in this area in recent years, but fully reliable supply chains in day-to-day operations still elude our grasp. Can we expect to see them in the future?

“Right now, the optimal combination of high-quality data and the physical integrity of goods seems like a bridge too far,” says Pedro op ’t Hoog, Coordinating Adviser Supervision and National Coordinator AEO. “This also means that there isn’t a yellow goods flow in full operation at the moment. We’re waiting for much-needed investments from market players, but they often choose just one of the two parts of the equation. Sometimes companies hesitate because the advantages don’t measure up to the expenses, or because the results are disappointing. Take, for instance, container security devices – also called e-seals – that communicate in real time with the parties involved if there’s any kind of potential issue with the cargo. The success of these smart seals depends on their reliability, but that has not yet reached the level desired. Furthermore: companies don’t invest in these things just to do Customs a favour. One company is interested in constant temperature control for its goods, while another one wants to measure CO2 emissions to find out if there are stowaways hidden in the containers. The producers of semi-conductors often protect their shipments with various kinds of sensors because these products represent a considerable monetary value, but you shouldn’t think that it’s interesting for all kinds of goods. Then again some types of devices are easier for Customs to take readings of, and others aren’t.”

Data is the key
The development of the yellow flow has up to now been realised within the European research programmes SSTL (Smart & Secure Trade Lanes), Cassandra and CORE* (Consistently Optimised REsilient secure global supply chains), and in this country a few national projects under the auspices of the Top Sector of Logistics. Together these have by now produced a lot of useful information about the supply chain. CORE revolves around the so-called data pipeline, a development initially intended for commercial purposes dedicated to providing support and security for global trade. The potential benefits for the industry are big, such as increasing visibility and control of the entire logistical chain. The project was set up to demonstrate that the concept could be technically achieved, but also to study concrete business cases. One successful pilot project was led by Royal FloraHolland. Op ’t Hoog: “The mission was to allow cut flowers from Kenya to find their way to auction in the Netherlands as quickly and safely as possible. This chain has several problematic sticking points, including a lack of transparency and the use of a paper phytosanitary certificate. During the pilot, source data was utilised with the assistance of a data pipeline – supplemented where possible with details about the goods during transport from other links in the logistical chain. Integrity measures were also taken to secure shipments. Two dashboards were used: one for internal communications within the operation and one for external communications with the authorities. Besides proving profitable for Royal FloraHolland, this pilot also led to improvements in the joint workings of Customs and the Netherlands Food and Consumer Product Safety Authority. For this supply chain, we can now speak confidently about coordinated border management.”

“The approach has now become standard practice and is being further developed,” Op ’t Hoog adds. “In fact Royal FloraHolland has already hinted that it wants to use this method after Brexit. After all, about 75% of the flowers from Kenya are shipped on to the UK after arriving at Schiphol – and soon that will be a third country.”

Modest amounts of cargo
Then there’s SSTL. Here, too, sharing secure and reliable data is the main thrust, according to Op ’t Hoog. “The programme was first set up as a joint venture between Europe and China, and later Hong Kong came on board. There’s a clear difference between CORE and SSTL: in the former it’s about governments re-using data shared by commercial parties, while for the latter it’s about customs services sharing information. We really like the goods to be checked by Chinese customs authorities at departure. And naturally this works in two directions: under SSTL we signal our Chinese colleagues when a shipment is ready for transport and share our findings with them.”

SSTL has been operating for more than ten years now, and in the meantime it’s been expanded with air and rail modalities. Moreover, in 2016 a new EU-China Joint Administrative Arrangement was signed, which gives the programme a permanent character. “It sounds really nice, but in all honesty it must be said that we’re talking about a modest stream of goods here, with a handful of participating companies,” Op ’t Hoog continues. “Last year there were about 100,000 containers that entered Europe under the SSTL flag, about 10,000 of them with a final destination in the Netherlands. When you compare that with the total number of containers our port handles, it’s only a very small percentage.”

Keep taking small steps
“The progress of the yellow flow isn’t going as fast as we would like it to,” Op ’t Hoog admits. “But it’s still really important that we keep taking the right steps forward together with people in trade, logistics and research so we can maintain our lead position in the area of data and detection. Developments in this area will, in large part, determine the course of the near future – both for businesses and for Customs. It’s important that our service keeps shaping enforcement within the yellow flow based on safeguards that the logistical market parties themselves offer. So there’s a responsibility here for our private partners. The more data we have, and the more information about its reliability, the smaller the chance that Customs will have to intervene in the chain.”

* ‘Customs NL inSight’ gave extended coverage to CORE last year. TradeLens, a block-chain solution for collecting, sharing and re-using data from the entire logistical chain, also received attention. This global platform – developed by IBM and Maersk – is being used by a growing number of shipping companies, carriers, importers and exporters.

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