Bridging the gap – What modern technology means for logistics

Digital technologies have advanced more rapidly than any other innovation in history, having become nearly ubiquitous today. Studies predict a 45% increase in the number of active Internet users in India in the next five years and, with there being 622 million Indians online already, the society is steadily edging towards digital connectivity being a necessity instead of a luxury. As part of the Digital India initiative, many transformative digital platforms have come up rapidly – UMANG, GSTN and BHIM-UPI to name a few – all with the aim of creating digital security and trust amongst Indians. As the platforms gained greater traction in recent years, this led to a rise in on-demand consumerism. Looking back on the last few years, the preferences and expectations of the average Indian consumer has shifted drastically in response. 

Changing the way we pay

A key success story pertaining to the technology revolution in the country over the past 5 years has been digital payments, with India firmly establishing itself as one of the global leaders in financial technology. UPI is one of the flag-bearers of this transformation, along with the rise of payment gateways, facilitating seamless payments. When UPI was initially launched, the total number of UPI payments was 6% compared to 36% card payments. However, in FY 2021, UPI’s share expanded to 63%, while the percentage of card payments shrunk to 9%. That too with a massive reach – it is estimated that India’s digital payment volume has climbed at an annual average rate of around 50% over the past five years. This success story has had direct repercussions on the logistics industry, easing payments across the logistics lifecycle, both for consumers and logistics suppliers.

The untapped potential of the logistics industry

India’s logistics sector is massive, accounting for around 14% of our GDP, and is expected to grow from around $250 billion in 2021 to around $380 billion in 2025, growing at a compounded annual rate of 10-12%. Furthermore, more than 90% of the logistics sector is unorganised 90% of the logistics sector is unorganised, including the likes of small owners (fleet size less than 5 trucks), brokers or transport company affiliates, small-scale warehouse owners, freight forwarders, and more recently the gig workforce. And, as with any large unorganised play, comes a huge opportunity for technology to make an impact. We have seen this more noticeably in the last-mile sector in recent years.

One of the biggest challenges in the current unorganised logistics sector is scalable match-making between the consumer and the transporter at efficient costs. The challenge is with the long tail of SME and retail consumer use cases (beyond the enterprise use case), which were classically solved through small brokers and transporters with limited reach and speeds. This model is not cost-sustainable at large scales. 

The evolution of logistics 

Modern age platforms have been able to ensure that these transporter networks are digital, immediately available and come without limitations on reach or access. One of the key success stories here is the on-demand intra-city last-mile logistics model. This model has lower ticket sizes due to shorter distances, and, in order to be sustainable, it demands highly efficient match-making costs on the back of seamless discovery, allocation and shipping. And some of the new-age technology platforms are doing a commendable job at this, which directly translates to massive improvement in vehicle utilisation, higher earnings per transporter vehicle, and savings for the customer.

The impact of eCommerce 

The past decade has seen a rapid rise of e-commerce and on-demand consumerism, which has directly influenced the logistics industry, putting high standards on ad-hoc, timely and speedy delivery, causing significant shifts in first-mile, middle-mile and last-mile delivery. This has led to the rise of notions like dark stores and the 2-wheeler gig worker, which were almost non-existent before. We now have an entire industry around the 2-wheeler gig worker, which is a massive long tail workforce, and key technology interventions around onboarding, tracking, payments, etc. has allowed this industry to hit unprecedented scales today. Also, e-commerce is only going to accelerate its growth in the future, thanks to the advent of direct-to-consumer commerce. This allows small businesses to reach a wide audience digitally and sell their products. It will be quite compelling to see how the logistics industry reacts to this change.

The influence of Government intervention 

The Government of India has also invested heavily in India’s logistics sector, with a vision to build an integrated, seamless, effective, dependable, green, sustainable and cost-efficient logistics network that makes use of best-in-class tools, procedures and qualified personnel. And one of the key policies it has introduced in this direction is the National Logistics Policy (NLP), which aims to reduce the logistics cost, from 14% currently to 9-10% of the GDP. Technology initiatives like the United Logistics Interface Platform (ULIP) form a key backbone of the NLP, using a rich database of information related to logistics and resources available with various Ministries to provide functionalities like driver and vehicle verification, consignment tracking, route planning, inventory management, etc.

What the future holds 

In conclusion, these are very promising times for the logistics landscape in the country, with the rapid rise of consumerism putting higher demands on logistics at sustainable costs. And technology is playing a very crucial role in solving this problem, aiming to address reach, discovery, inventory management, shipping, tracking, payments, etc. at large scales and efficient costs. This has seen the advent of many new-age technology-based logistics organisations and is also seeing significant investment by the government through policies and initiatives like NLP and ULIP. It would be very interesting to see how this industry evolves and adapts further over the coming years 

UNCTAD's Review of Maritime Transport 2022

Maritime transport essential items like food and medicine cannot flow, key supply chains for energy and commodities cannot function, and affordable prices are almost impossible to maintain.

But – for the last two years – the maritime industry has suffered from tremendous disruption. COVID-19, the war in Ukraine, Climate change and geopolitics have clogged ports, pushed up prices and closed entire shipping routes.

The logjam in global logistics has affected all of us.

Those especially hard-hit are the economies far from the main lines of trade – small island developing states, landlocked developing countries, and some countries in Africa and Latin America have also suffered.

To ensure global trade benefits all, we need to be better prepared to cope with shocks to global supply chains.

We need the maritime industry to improve efficiency, invest in infrastructure and reduce its carbon footprint.

This report comes with four key messages for policymakers and the millions of people who work in the shipping trade and make the essential lifeline of maritime trade possible.

First, some important data updates:

Maritime trade recovered in 2021, but for 2022 and beyond faces a complex operating environment fraught with risk and uncertainty

International maritime trade bounced back strongly in 2021 with an estimated growth of 3.2 per cent, following a 3.8 per cent decline in 2020.

Growth was driven primarily by increases in demand for container cargo. Fiscal stimulus packages in major economies, coupled with lockdowns, resulted in a high demand for goods rather than services, which drove the growth in this area.

As a result, container freight rates also rose last year. Freight went up seven-fold between October 2019 and January 2022.

For 2022, UNCTAD projects maritime trade growth to moderate to 1.4 per cent, and for the period 2022–2027 to expand at an annual average of 2.5 per cent, a slower rate than the previous three-decade average of 3.3 per cent.

These projections are the consequence of strong macroeconomic headwinds. In addition, faced with rising inflation, consumers are spending less, while also switching back expenditure from goods to services as COVID-19 lockdowns ease. Geopolitical tensions and the war in Ukraine are adding to these downturn projections.

As a result of this, freight rates have also dropped since the second half of this year. Increased capacity not matched by increased demand – with the onset of the global economic slowdown – is a leading reason why. Also, key port bottlenecks (such as the one we saw last year in Los Angeles) have eased in recent months.

However, container spot rates are still one third higher than the pre-covid long-run average. And freight rates remain high for oil and gas tankers due to the energy crisis.

We think that in the medium to longer term freight rates will remain higher and more volatile than pre-covid averages, given increasing geopolitical uncertainty, extreme market consolidation, and patchy environmental regulation. I will refer to this in a minute.

Maritime industry can play a key role in alleviating the current cost-of-living crisis, by helping us implement the two Istanbul grain and fertilizer agreements, that we signed this year with Ukraine, Türkiye, and the Russian Federation.

Shipping can bring prices down and ensure the world has enough food and fertilizer next year.

UNCTAD – particularly our teams working on maritime logistics – has supported these initiatives with data, intelligence, analysis, and policy guidance.

But much more needs to be done.

This review calls for stronger transport infrastructure, improved connectivity, expanded warehouses and fewer shortages of labour and equipment.

In short, we need to tackle the many sources of inefficiencies at ports and in land transport networks.

This review also calls for better implementation of transport and trade facilitation solutions at ports and borders.

At UNCTAD, we work very closely on facilitation through different programs on ports and customs like ASYCUDA and the ports management program. These are our largest technical assistance projects going to really dozens of countries around the world.

This report also calls for a faster transition to smart and green logistics systems and to the widespread use of electronic documents in international trade.

All of these are solutions to reduce logistic costs, which in turn translate into lower prices for the world.

This is not rocket science, very concrete things can be realized with political will and with the necessary financing to take on board the needs of the countries to make this happen.

To succeed, we must work hand-in-hand with the private sector and the international community to ensure that the necessary investments are in place.

And you can count on UNCTAD every step of the way, as we have a program of technical cooperation for basically every single hurdle in the supply chain. From customs to port management, from trade facilitation to data collection.

Our third point in the report is this: “We need a resilient maritime industry for a more resilient world”.

The international community must mobilize resources for a long-term vision that promotes a resilient and sustainable maritime supply chains, especially in developing countries.

This entails five very concrete things.

First, building capacity in agile and resilient maritime transport systems. Second, investing in risk management and emergency response.

Third, bringing more women into the port industry. Among other things, this will help to deal with labour shortages that contribute to port congestion.

Fourth, creating more competition. Over the last 25 years, the top 20 carriers have increased their market share from 48 per cent to 91 per cent, almost double. Such concentration can lead to abuse of market power, constrained supply, and higher rates for shippers worldwide.

Fifth, and finally, to build resilience, we need to avoid a fragmented trade system.

Our final point in this review is that we need to support the maritime industry’s transition to a low-carbon future.

You know, we are just coming out of COP27, so, we need to stress this point very much because the report shows that, between 2020 and 2021, carbon emissions from the world maritime fleet rose by almost 5 per cent.

That number is heading in the wrong direction if we hope to meet the global climate goals.

We are also concerned about ageing ships, and what that means for the environment as ships pollute more as they get older.

We need a whole new generation of ships – ships that can use the most cost-efficient fuels and can integrate seamlessly with smart digital systems.

To support the industry, ports and ship owners need predictable global rules. We understand that.

In terms of green and climate regulation, we must move from the many and messy rules we have now to one system that can be good for all.

Universal and predictable regulation is key to encouraging investment, mobilizing finance, strengthening collaboration, and harnessing the opportunities of the energy transition.

This is critical given a highly uncertain environment with conflict risks, the resetting of supply chains and the unknown prices of carbon in the future.

The sooner that national policymakers and international negotiators deliver predictable multilateral regulations, the sooner the shipping industry will advance with the necessary investments.

US Rail Strike Averted

US Rail Strike Averted

In recent weeks, the United States was on the brink of its first national rail strike in 30 years. The walkout was averted only after President Joe Biden and Congress intervened, forcing rail workers to accept the terms of a new contract.

The bill, signed on Friday, blocks the strike and forces workers to accept the agreements union leaders made in September, even though four of the 12 unions — which include a majority of rail workers — voted to reject them.

The five-year deals that rail workers wound up with include 24% raises and cash bonuses. But concerns about the lack of paid sick time and the demanding schedules that unions say make it hard for workers to ever take a day off dominated the contract talks. The rail unions say they weren’t able to get more concessions out of the railroads because the big companies knew Congress would intervene. 

While they won’t stop fighting for more paid sick leave, they may have to wait for negotiations on the next contract beginning in 2025.

ATA CARNET

About ATA Carnet

ATA Carnet is an International Uniform Customs document issued in 79 countries including India, which are parties to the Customs Convention on ATA Carnet. The ATA Carnet permits duty free temporary admission of goods into a member country without the need to raise customs bond, payment of duty and fulfillment of other customs formalities in one or a number of foreign countries. The initials "ATA" are an acronym of the French and English word "Admission Temporaire / Temporary Admission".

chain provides reciprocal guarantees assuring customs administrations that duties and taxes due in case of misuse will be paid.

Why ATA Carnet?

The ATA Carnet is a simple customs document which is readily made out by the holder and checked by the customs.

For business people the ATA Carnet provides a simple and speedy way to travel abroad with business materials. It saves both time and money and this is a very important factor in international competition.

Trade circles, guaranteeing associations and customs administrations all acknowledge the excellent operation of the ATA Carnet System.

For the customs, the use of the ATA Carnet entails less administrative work and increased customs safety since the payment of import duties and taxes is guaranteed by the guaranteeing association affiliated to the WCF/ATA guarantee chain in the territory of the temporary admission.

The guarantee is automatic and the customs need not check its validity for each Carnet. In addition, the system does not affect the revenue of the nation since the goods covered by the ATA Carnets are intended for re-exportation and not at all for sale in the country of temporary admission. The system is "self-policing" in that should the Carnet holder fail to re-export the goods within the period of validity of the Carnet, duties become payable.

What can be carried & Who can use?

The main categories of goods temporarily imported under cover of ATA Carnets are the following :

Antiques, machinery, machine-tools, catering equipment, canned food, footwear, toys, computers, office equipment, transformers, electric generators, electrical/electronic and scientific equipment, surgical and dental equipment, jewellery and articles of precious metal/stones, "hi-fi", audio-visual, photographic and filming equipment, lasers, musical instruments and records, display material, aircraft, films, motor vehicles and accessories, racing engine machinery, heating and lighting equipment, agricultural machinery, furniture, crockery, paintings and other works of art, umbrellas, race-horses, suitcases, perfume, theatrical effects and sets, concert and musical instruments, leather and sports goods, clothing, yachts and boats, display stands.

The ATA Carnet service is available to business and sales executives, exhibitors at trade fairs and raveling professionals, such as film crews, architects, artists, engineers, entertainers, photographers, sports teams and many more.

Large companies, small companies, individuals on the move - all can benefit. Sales representatives with valuable samples and people with professional equipment are the largest users.

Virtually all goods can be included on a Carnet.

Rules and regulations vary from country to country. You are advised to communicate directly with respective customs authorities prior to your travels. This is provided as general information only.

Items which are excluded from the ATA Carnet System :

Perishable goods and items such as paint, cleaning materials, food, oils, leaflets and brochures, which are considered as "consumable items" and intended to be given away, disposed of, or utilized abroad, are excluded from the system as they would not ordinarily be re-exported.

Also excluded from the ATA Carnet system are the following :

Items already sold or offered for sale. Such

items are not considered samples.

Unmounted gems or gemstones; theatrical

make-up, etc.

Alcoholic beverages, tobacco and fuels, etc.

Goods intended for processing or repair.

Postal Traffic.

Why ATA Carnet?

The ATA Carnet System offers advantages to all concerned: the customs authorities and the trading community, i.e., individuals, enterprises, trade organizations who need temporary duty free importation facilities to prospect outlets for their products on foreign markets.

By replacing the national customs declaration normally required for the temporary duty free admission of goods in any given country the ATA Carnet does away with the need for a customs document at each border point. This means less paperwork for customs officials and Carnet holders.

Since all goods accompanied by an ATA carnet are thus covered by the international surety furnished by the guaranteeing/issuing Chambers, no further action regarding the guarantee need to be taken, either by the customs or by the importer at the time of temporary admission.

Thus, for businessmen the ATA Carnet does away with the need for the deposit of a personal or real guarantee at the border point of each country of temporary admission.

As the ATA Carnet constitutes at the same time the temporary admission document and the proof of the customs security for temporary admission it considerably simplifies and expedites the accomplishment of the formalities for temporary admission for both the Carnet holder and the customs: no further customs document needs to be completed nor any other security produced upon arrival in the territory of temporary admission.

Another advantage greatly appreciated by the trading community is that the ATA carnet is valid for one year. During this period its holder can use it- and abroad the goods covered- for as many trips as he wishes from his home country to one or more of the other countries applying the ATA System, provided the ATA Carnet contains the appropriate number of sheets required for each trip.

This is particularly useful if the holder of the ATA Carnet intends to import goods temporarily into various countries in the course of the same journey (e.g. if a commercial traveler wishes to show samples to a number of potential buyer in different countries).

There are many other cases where this facility is of advantage to the holder of an ATA Carnet.

For the customs, the use of the ATA Carnet entails less administrative work and increased customs safety since the payment of import duties and taxes is guaranteed by the Guaranteeing Association affiliated to the ATA guarantee chain in the territory of temporary admission. The guarantee is automatic and the customs need not check its validity for each carnet.

In addition, the system does not affect revenue of the nation since the goods covered by the ATA Carnets are intended for re-exportation and not at all for sale in the country of temporary admission. The system is "self-policing" in that, should the Carnet holder fail to re-export the goods within the period of validity of the Carnet, duties become payable.

Maersk Revamps Networks amidst lower demand

Major Chinese export markets are showing signs of a recovery after the steep post-Golden Week holiday decline, led by a rebound in demand for intra-Asia services, according to the latest Asia-Pacific market update from Maersk.

Nevertheless, the “new normal” could see Maersk and its liner peers forced to make radical changes to their networks, as they adapt services to meet a short-to-longer-term reduction in demand.

Maersk said the global economic outlook appeared to be deteriorating against a background of slowing growth and elevated inflation levels.

“As a result, global container volumes are continuing to fall, with negative growth in virtually all the main markets, causing Maersk to reduce capacity on major ocean trades from Asia to match demand,” says the report.

However, Maersk’s regional head of ocean management for the Asia-Pacific region, Morten Juul, remains positive. He said: “The demand for ocean transport is stabilising and we are adjusting our network to match the new reality.”

But the slump in demand resulted in a collapse in container spot rates. Indeed, the spot freight rate indices covering exports from China to Europe and the US have suffered several consecutive weeks of high double-digit losses, with, for example, short-term rates from China to North Europe plunging by about 75% since August.

Meanwhile, carriers serving the major tradelane have been obliged to offer their contracted customers “temporary rate reductions”, or, in some cases, waive contract terms altogether and allow shippers to make bookings via their digital platforms at substantially lower rates.

And, at least one of the alliances is considering a ‘winter schedule’ between Asia and North Europe that could see carriers take out a third of their weekly capacity leading up to the Chinese New Year holiday, beginning on 21 January.

A UK-based carrier contact informed that “something had to be done” to adjust supply to meet demand that would bring some stability to the market and enable shippers to plan their supply chains.

“At the moment, it’s complete chaos out there, and the last-minute blankings don’t help at all. But getting the partners to agree on a loop suspension is another matter,” he said.

However, Maersk said there were reasons to be optimistic about the world’s largest tradelane, intra-Asia, which had seen demand bounce back after the Golden Week holiday earlier this month.

“Demand rebounded quickly from China,” says the report, noting that Maersk’s Sealand Asia subsidiary had “maintained healthy utilisation levels” and was in the process of launching a new service connecting the ports of Busan in South Korea, Kaoshiung in Taiwan, Nansha in China and Haiphong in Vietnam.  And, Maersk said, “despite the gloom there are signs of buoyancy” in some retail sectors in the US, and called on shippers to plan their supply chains early.