31 Jul Role of technology adoption in maritime regulatory practices
The Maritime industry lives in world of hardcopy – PDF, email, documents and physical signatures. For single shipment to move from source to destination it takes more than 40 documents, 150 copies and 200+ signatures. In the world of maritime trade, businesses have long struggled with issues like operational inefficiency, rising costs, and escalating competition, all while attempting to meet strict regulatory requirements and guarantee the safety of their crew and vessels.
Traditional methods of managing shipping operations, such as manual record-keeping and communication systems have been plagued by errors, delays, and high costs, making it difficult for marinas to remain competitive in a constantly evolving industry. On this backdrop, the International Maritime Organization (IMO) made amendments to the existing FAL mandate and it stresses upon certain key objectives. The primary one being having a single window for ship-shore interface.
The amendment calls for implementing the Maritime Single Window System in every Port on or before January 01, 2024. While key ports in Africa and Asia Pacific are actively pursuing, it is noted that ports in developed and other developing markets are not considering it seriously, according to industry reports. Here are five objectives, which the regulator is attempting to achieve through the mandate.
Addressing ship-shore malpractices and safety
Several dubious practices are employed by various stakeholders involved in the maritime trade. Disputes can arise either by innocent mistake or deliberate attempts. The industry needs standardization across all functions, and addressing malpractices in ship-shore operations is one among them. International Maritime Organization’s amendment to FAL convention in May 2022 came with five specific objectives. The most important is addressing and eliminating malpractices involved in ship-shore interface management.
The mandate embarks on a systematic approach towards eliminating these malpractices. According to this, the concerned governments as well as the regulators will be implementing preventive measures with an eye to strengthening transparency, accountability and integrity.
Use of Single Window/Port Community System helps in identifying malpractices taking place in the ecosystem with a transparent framework. MSW connects all inter-agencies like Customs, Immigration, Port Health, and other border security forces to share information prior to arrival-stay-departure of vessels and their cargo so that information discrepancy is null. Moreover, it also prevents the users from tampering any data/document submitted thereby preventing malpractices in the trade.
Ensuring crew and cargo safety
More than 200 marine and shipping accidents occur annually, and at least 30-40 crew members sustain injuries and fatal incidents. In addition, cargo theft is becoming prevalent, with US and Canada reporting around 20 per cent increase in thefts and supply chain risks in 2022. The industry and the regulators have long introduced new rules and mandates to tackle this situation. However, the number keeps increasing gradually, and all Maritime stakeholders are at constant risk. At a high level, the International Maritime Organization (IMO) introduced fresh amendments to the existing FAL mandate and the same stresses upon ensuring crew and Cargo safety for a seamless operational flow.
The mandate emphasizes designating Port and ship crew as key workers irrespective of their nationality in that region. All crew and cargo information will be declared before they arrive at the destination Port. Doing so will thwart any delay in treating the injured crew members, and the casualties will eventually get reduced. Regarding Cargo safety, vessels are mandated to declare the contents of the vessel before their departure at the source Port.
With Maritime Single Window/Port Community System, the type of Cargo and amount of Cargo is well defined, and the overall process is transparent for stakeholders to operate seamlessly. Therefore, there would be no question of Cargo theft. Regarding crew safety, the Maritime Single Window System will provide all details on the crew before they depart from the source Port. This way, treating injured crew members will be seamless for the local healthcare workers in any region globally.
Combatting illicit trade
Illicit trade accounts for US$2.2 trillion, which is 3 per cent of the global economy, according to World Economic Forum. Ironically, despite having strict global regulations and frameworks for export import operations, illicit trade thrives and maritime trade is the first victim. In order to combat this long sustaining activities, a one stop solution is needed so that the actual synergies of trade can be achieved. Therefore, Customs authorities are always on the look out to thwart trafficking of illegal goods through legitimate supply chain. This is due to the blind spots set by organized crime groups to move their illegal cargo. International Maritime Organization (IMO) on May 2022 announced fresh amendments to the existing FAL convention, which strictly mandates combatting illicit trade.
IMO, in its mandatory FAL Convention to digitise Ports through Maritime Single Window/Port Community System, addresses this challenge with Digitisation. Why? Because technology sets governance frameworks to counter illicit trade and risk deterrence. Especially with a future proof technology like Blockchain and AI/ML, the entire ecosystem is prone to 100 per cent transparency.
Use of Single Window platform pro-actively identifies emerging threats with pre-arrival shipment information. MSW connects all inter-agencies like Customs, Immigration, Port Health, and other border security forces to share information prior to arrival-stay-departure of vessels and their cargo so that information discrepancy is null. Moreover, it also prevents the users from tampering any data / document submitted thereby preventing malpractices in the trade.
Tacking an unprecedented situation
Having weathered the storms of Covid-19 and the Ever-Given blockage in the Suez Canal, maritime trade has been impacted by an unprecedented heatwave in China, which has caused disruption to vital logistical routes. At the UK port of Felixstowe – which handles almost half of container freight entering the UK – ships have been unable to dock due to worker strikes. Several ongoing problems continue to bite hard, such as the soaring costs of fuel, the rocketing prices of containers, and staff demands for wage increases.
Boosting resilience within shipping is seen as tough due to the lack of alternatives and because its operations rely on many independent factors going right. While the business is getting back to normal, regulatory authorities in the maritime industry are now insisting on having a robust mechanism that offers a reliable and uninterrupted supply chain even during challenging times.
In May 2022, the International Maritime Organization (IMO) announced fresh amendments to the existing FAL Convention. Port authorities, governments, and other regulatory bodies associated with the Maritime trade are deemed to compulsorily follow these rules before 01 January 2024.
The amendment made to the FAL mandate emphasizes keeping the supply chain active even during challenging and unprecedent times. The FAL Convention contains standards and recommended practices and rules for simplifying formalities, documentary requirements and procedures on ships’ arrival, stay and departure.
IMO’s Maritime Single Window which is the outcome of the FAL convention is working to ensure shipping can embrace the digital revolution – while ensuring safety, environmental protection as well as cyber security. With MSW – shippers, ports and logistics stakeholders working together will be vital for enhancing the efficiency and sustainability of shipping and therefore facilitating trade and fostering economic recovery and prosperity.
Ensuring data harmonization
Even though several entities talk about data harmonization, they weren’t successful in achieving the same. Why? Because procedures differ from country to country and sometimes even region to region. For example, the model followed by European Union (EU) stresses on the need for optimising data exchange to improve operational efficiency. This practice allows the authorities to quickly adapt to the existing trends to achieve 100 per cent efficiency without fail. On the other hand, a country in Middle East follows a model called capture, refine, analyse, and reconcile. This model believes in consolidating thousands of data elements and creates a data set for similar ones. By doing so, redundancies and repetitions are voided. In a nutshell, to simplify a complex process, it is mandatory to have a Single Window System. Yet, the Single Window must stress upon the optimization and data repurposing factor.
Capture, Verify, Approve, Reuse – these are the four action words a Single Window System actually requires to ensure data harmonisation in a Maritime trade environment. The definition varies from country to country and region to region. The above two are the best examples to define them. Yet, in several countries achieving data harmonisation and efficiency has been a challenge due to enormous documentation. For example, in one country, thousands of documents were in required for regulatory clearance. With the intervention of a Single Window System, the same has reduced significantly over the years. The data sets are very well repurposed.
Widespread Adoption
Several countries worldwide are now rapidly implementing a Maritime Single Window/Port Community System. Some of the countries in Africa and Asia Pacific top the list. Implementation of the first phase is already over in these countries and the remaining phases will possibly be completed on or before the stipulated timeline.
Necessity or Luxury?
In a nutshell, Maritime Single Window/Port Community System can definitely facilitate trade and ensure smooth movement of cross-border trade that too when it is pushed through regulators. Apparently, Port authorities and governments pursue it as a luxury than a necessity due to misconceptions. Added to this, stakeholders fear a major investment and exposure of their business functions with the implementation of a transparent single window system. Therefore, a change in approach among the decision-makers is essential to achieve larger goals.