International Trading and Logistic Conditions. Juan Carlos León Siles Director - CONUDFI Octubre 2017

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1 International Trading and Logistic Conditions Juan Carlos León Siles Director - CONUDFI Octubre 2017

2 International Trading and Logistic Conditions Releasing obstacles at customs make international trade easier, and has the potential of increasing global GDP by about 6% The OECD estimates that a reduction of 1 percent of trade costs would increase the world s income by $40,000 million. The new WTC agreement can reduce trade costs by almost 15% for low income countries, and by about 10% for developed countries. Worldwide, the Liner freight conditions in containers is hook/hook or CY/CY

3 World Freight Conditions Current conditions of freight contracts between shipping companies and charter parties or container transport show wide differences around the world In the case of charter parties, most conditions and agreements are fulfilled On the other hand, for liner container transport, one of the shipping companies main source of revenues are services provided inland, and mainly served by firms vertically integrated with them. This goes beyond what is established in international standards Hook/Hook or CY/CY In many countries, this has caused large associated costs, and the estimated effects of these additional costs are unpredictable

4 World Freight Conditions The mergers and acquisitions between shipping companies is configuring three main blocks, which represent more than 70% of the supply of container maritime transport More and more often, shipping companies develop a strategy that consider inland services. For example they own the ports, or have agreements with them, additional they try to leave from liner conditions making their contracts through their own cargo agents, which push towards a model in which they provide inland services, beyond liner conditions Cases of container liner transport contracts in the US and Europe have established basic regulations which have allowed minimum condition to protect cargo owners

5 Changing the Rules in the Container Supply Chain We have been taking small steps towards simplifying the rules and making them more transparent These rules need to ensure that consignees are free to handle their own cargo, with control mechanisms that follow easy and simple international standards. We want to guarantee a continuous flow of cargo, which uses modern technologies that allow us to anticipate risks using precincts, neurological systems, intelligence networks, remote control, electronic and non-intrusive controls with scanners in ports, airports and frontier checkpoints.

6 Global Rank of Competitiveness World Economic Forum (WEF) Posición en el Índice de Competitividad Global - WEF Prom: Prom: 65 Prom:

7 Changing the Rules in the Container Supply Chain We propose a new worldwide agreement between shipping companies and cargo owners on the reach of container liner transport contracts. Applying new regulations for mergers and acquisitions between shipping companies, general maritime agency, ports, cargo agents, cargo terminals and land transport firms. We propose that the WTO facilitation agreement pushes for reforms that help us improve the conditions in the international physical distribution of cargo and the associated transaction costs.

8 Changing the Rules in the Container Supply Chain We must have as soon as possible the support from an integrated, multisectoral electronic customs and logistic system which makes it easier to process paperwork. This should be enhanced by a national optical fiber network and an internet based payment system. Our model must have the timing standards in the customs procedures used in the leading countries around the world (e.g. Korea, USA, and the Pacific Alliance).

9 Success is Achieved with Public-Private Partnerships in Peru Peru has managed to set a good example on multi-sectorial articulation through the Competitiveness Agenda. We need to cut the logistical costs from the current 32% to the international levels, and hope to reach 20% in the upcoming years. Among the strategic guidelines established, we have specified ways to improve the conditions of the supply chain, including specific goals in the customs agency, logistical rules, and the modernization of transport infrastructure. 9

10 Success is Achieved with Public-Private Partnerships in Peru Strategies to increase competitiveness through improved and more efficient customs and trade management: 1. Define clearly the reach of transport contracts, and simplify them. In the Peruvian case, we need to define the services included in Hook/Hook international standard transactions. 2. Strengthening the Single Window, optimize the procedures, and implement the community s information system 3. Implement the System of Logistical Transparency through the Logistical Observatory, a centralized information dataset and site for the supply chain, and strengthening the system of defense of exporters/importers to be able to protect them from bad practices by logistical operators. 4. Promote an unrestricted rules & conditions for cabotage 5. Improve the laws for Authorized Economic Operators following international standards, mainly to support small enterprises, also promoting agreements with other countries (MR). 10

11 Success is Achieved with Public-Private Partnerships in Peru Strategies to improve logistic and transport infrastructure: 1. Implement a logistical system that articulates ports and logistic platforms for a safe, timely and low cost circulation. 2. Establish a new committee of facilitation and logistics, which is in charge of solving problems of congestion and safety of cargo transport, creating a new urban transport & transit plan for Lima & Callao, with adequate access and proper security controls 3. Create a National Logistic Services Plan. Establish a methodology to measure logistical costs, introduce new quality standards for logistical services, and prepare rules to handle logistical platforms system 4. Improve ground transportation. Reduce informality, create a website for cargo offers, implement truck centers, and increase and improve the road transport infrastructure 11

12 BULLETS Cases of container liner transport contracts in the US and Europe have established basic regulations which have allowed minimum condition to protect cargo owners These rules need to ensure that consignees are free to handle their own cargo, with control mechanisms that follow easy and simple international standards. Applying new regulations for mergers and acquisitions between shipping companies, general maritime agency, ports, cargo agents, cargo terminals and land transport firms.

13 Thank you kindly for your attention