Innovation plays a critical role in attaining sustainable growth in the Logistics industry

As a key figure within IPCSA, could you shed light on the pivotal role IPCSA, and its members have played in enhancing global trade facilitation? Specifically, how have they streamlined the supply chain and bolstered productivity amidst the evolving landscape of international Maritime trade and global mandates like MSW?

Firstly, it is necessary to briefly mention that the introduction of port community systems in the mid-1970s was the initial impulse for a significant change in the effectiveness and efficiency of port processes. The use of electronic means for data exchange, complemented by transparent governance, helped the numerous parties reorganise their processes and thus substantially reduce handling times. This is an integral part of the approach to opt for a PCS or Trade Single Window but by no means the only one. Based on the jointly adopted and accepted governance rules, PCS acts as trusted partners for the entire community involved. This is crucial, as data use and competition go hand in hand and form strong arguments for reservations in the cooperation between the various parties. Therefore, the neutral role of PCS or Trade Single Window makes it possible to connect the parties involved in the logistics process in such an effective way that the necessary data is available at the right moment, and achieving an appropriate level of automation is possible. However, this always considers local specifics and requirements. This approach has resulted in the flow of goods being handled more quickly and, not least, in a more straightforward manner. I would also like to mention that linking various authorities and governmental entities contributes to improving the fulfilment of their mandates and helps them in their monitoring schemes. The interaction between the authorities and the private sector via a PCS is a decisive building block for generating trade facilitation.

So, the question is, how exactly has the construction of a joint association helped to strengthen and support the position of community systems further? The IPCSA was originally founded with the aim of giving the individual PCS and Trade SW operators a common voice. Extensive legislative and standardisation initiatives, in particular, were the driving force behind the need for broad networking within the industry and required an organised structure to represent the interests of the industry in front of institutions such as the UN, the EU, the World Bank, the WCO, and others.

By bringing together the individual PCS and Trade SW operators with the help of the association, a lively exchange of ideas and experiences was created, which in turn led to the development of innovative initiatives to enable cross-border data exchange in addition to the still very important individual local approach and to contribute to the further development of the digitalisation of supply chains. In addition to the challenges of modernisation through the integration and use of new technologies, it is essential for the association and its members to evaluate process design regularly and to question the daily requirements of stakeholders and the market constantly.

In short, PCS and Trade SW are guarantors for trade facilitation thanks to their general approach of combining electronic data exchange with a transparent standard set of rules and trigger events. Since it is a change management solution in which the community is the core element, the further development of the services and the associated ecosystem is a stable constant in the existence of PCS and Trade SW solutions.

One last sentence about the community approach: dealing with the requirements of as many players as possible when implementing and further developing community systems ultimately automatically improves overall processing and clearance handling.

Innovation plays a vital role in the logistics industry in attaining sustainable growth. Considering the significance of Customs operations in this sector, evaluating how technology has influenced this aspect is imperative. Would you like to share your thoughts on it, especially pertaining to the European market?

Customs services worldwide face the daily challenge of fulfilling the mandate given to them in the best possible way. In addition to several diverse tasks, the challenge surrounding safety and security faces the contribution to economic growth, prosperity of society and trade facilitation. Customs administrations are, therefore, required to manage the ever-increasing speed and trade volume appropriately, given the surveillance and security aspects of protecting society and the respective market.

The use of technology, but primarily the electronic data exchange between Customs, other authorities involved and economic operators, was recognised years ago by those responsible and extensive investments were made in the necessary infrastructure. Even if it seems to economic operators that the adoption of technology by customs authorities should happen even more quickly, it should be noted that, in particular, the fundamental revisions of legal acts and the resulting enablement of the use of technology for more effective clearance of goods had to be done first.

The example of the European Union shows how extensive and complicated the path can sometimes be. A harmonised Customs union and a single internal market do not automatically mean simple decision-making processes. Keywords such as general national characteristics, political willingness to compromise, the right political mandate, different tax approaches, and structural challenges are constant companions in the discussion process. Despite this multitude of topics that need to be put into the right context, the EU, in collaboration with the Member States, has successfully introduced electronic data exchange for Customs clearance across the board. Starting with risk management, which includes assessing the movement of goods before they arrive in the EU Customs territory, through the surveillance of various Customs procedures to easily monitorable export processing, countless modules and solutions are involved in the smooth flow of foreign trade activities.

In particular, legal and technological options offer advance clearance as a means of trade facilitation or clearance with a very high degree of automation without reducing the monitoring aspect.

Of course, advanced technologies such as AI or Blockchain are always part of the discussions and the evaluation of possible solutions. However, there is still a strong focus on linking the processes and systems of those involved. Introducing an EU Customs SW environment is essential to organise the seamless exchange between the competent authorities involved in the Customs clearance process efficiently and as quietly as possible. This centralises Customs clearance and increases the speed and convenience of processing.

Let’s not lose sight of the tasks and problems that the developed solution or technology is meant to address during these discussions. In my opinion, it is also not useful to get lost in fundamental discussions about whether the chosen approach corresponds to the common definition. Instead, in my view, it is important that something is being moved and that it is in the right direction, coupled with an acceptable approach to all parties.

Personally, I believe that technology efforts are a significant part of developments in Customs clearance. However, the focus must be on the comprehensive digitalisation of processes, and interoperation must be made the core element of activities. In addition to introducing new technologies and using appropriate electronic infrastructure, the re-design of the process flows should be considered as an accompanying measure and must be given equal weight.

The logistics industry has been experiencing a freight movement decline due to various external factors. What are your insights on how this situation will likely affect the industry dynamics going forward?

In my view, it is necessary to distinguish between two general tracks. On the one hand, we are talking about commercial trade; on the other hand, we are talking about coordinated production processes worldwide.

If we look at the trade flows, I think we can already see that the weighting of the use of transport means is changing. Cross-border e-commerce activities rely on a solution in which air cargo and rail become more critical. This is not only due to the general difficulties in logistics but also to the change in approach in the e-commerce business. What I mean by this is that it is no longer necessary to maintain mass storage in the sales destinations. Pricing is the driving argument here and is opposed to “next-day delivery”, so the continuous delivery process is planned differently.

In the industrial production environment, things look a little different. The global economy and the resulting diversity of the production process, including the supply of spare parts, are facing immense challenges due to logistical capacity problems. Delivery on time or sequence as a planning variable increasingly represents a risk. The first effect is the relocation of holistic production activities back to the closer access radius of the producers. In addition, there are uncertainty factors, which are largely created by geopolitical reasons and due to this, investment activities are shifted to more stable regions.

Stability, acceptable quality, sustainability, and accessibility of resources are critical elements for the future. This is not a new finding. However, it is also important to be prepared in logistics with a view to possible changes in the global supply chains. For an industry like ours – i.e. PCS and Trade SW operators – this also represents a challenge that should not be underestimated. For this reason, under the umbrella of the IPCSA, we have decided to launch a “foresight” initiative to take a closer look at global change and address the industry’s resulting scenarios.

What are the primary challenges the transportation industry faces in Europe, and what strategies can be employed to address them during the ongoing crisis?

The eternal themes remain relevant even at this time – costs, resources, general capacities, and geopolitical challenges. Not only is Europe on the way to transitioning into a new era of energy production and use, but We are also currently hearing a buzzword everywhere – resilience.

If we take these topics and look at the logistics industry in Europe, then cost explosions, the switch to electromobility, more fairness in the supply chain through new laws and traceability, a shortage of skilled workers (i.e. the general situation in the labour market), trade restrictions for climate protection and much more create together a colourful basket of challenges that need to be tackled.

As colourful as the basket of challenges is, the strategic approaches must be as comprehensive and smart as possible. This is very easily said and yet so incredibly difficult to implement. I think that tried and tested recipes have to give way to new, innovative approaches and collaborate with them. So, one approach is government financing programs in targeted education and infrastructure projects. Extensive and sensible introduction and use of modern technologies is another aspect. This includes more efforts in digitalisation. Shortening approval procedures for innovations, including logistics, would be helpful, as would completely new forms of cooperation between researchers, legislators, authorities, and economic operators. The principle of the community approach practised in our industry should receive more attention when developing common strategies.