We only had 48 hours. My client was in Honolulu, hurrying to finish the bid documents for a project in Somalia, and he was late on meeting the deadline. I called my friend Jimmy Maturo, manager of the old Emery Worldwide in the Pacific, and he put his guys to work delivering the bid documents to Mogadishu. I don’t know what magic they used but they delivered the bid package in Somalia ahead of the deadline. Not an easy thing to do – even in the 1980s.
They made it to Somalia.
Emery is no longer around, though I think UPS bought the name and uses it for an express freight service. But all of today’s express delivery companies face the same kinds of problems every day. And what irks them most is the global uncertainty of customs clearance. You pay a premium for express service, so you expect your packages to be delivered on time no matter where you are sending them. All that can be defeated by a closed customs office, an arbitrary change in the rules, or even an official with his hand out. The result is lower profits for the express delivery company and an unsatisfied customer. The World Economic Forum/World Bank/Bain & Company study
on international supply chain and logistics issues took a careful look at the problems of the express delivery industry.
Most developed countries have made life easier for the express delivery services, automating their clearance systems and employing effective risk analysis strategies in deciding which packages need to be opened up and physically inspected. Developing countries apparently aren’t so trusting or won’t invest in the new risk assessment systems.
In the US, where customs officials target only potentially high-risk parcels for inspection, 92% of Express Delivery Services Co. shipments are cleared prior to shipment arrival at the border, and not all of the remaining shipments are physically inspected. In the Netherlands, officials rely on an analysis of electronic information to determine which shipments will be subjected to physical inspection, reducing the need for examination to just 2% to 3% of parcels. In Mexico by contrast, authorities physically inspect 10% of all shipments and sometimes carry out a secondary inspection by independent contractors to guard against customs errors or wrongdoing. The 10% inspection rate in Mexico is an improvement over the previous regime, where, like in other countries, customs officials inspect 100% of shipments.
Out of 114 countries for which they had information, only 37 use risk analysis to target and limit their inspections. Eighteen inspect every single item that crosses the border, causing massive delays, and the rest inspect inbound express shipments randomly or on the whim of the customs officer on duty. Timely clearance of express shipments is often up to luck in most of the world’s countries.
Another headache is the opening hours of customs offices. In the United States or the European Union, most customs offices at the airports the express delivery companies use are generally open 24/7 year-round. It is not like that in the rest of the world. Express companies complain about unreasonably restrictive hours in China, India and most of Latin America. This forces the delivery companies to schedule their flights around the customs opening hours, often delaying flights. There can be problems even when the customs offices are open because some countries, China and Brazil were named, don’t seem to base their customs staffing on shipping volumes and don’t have enough inspectors on duty. The express companies can sometimes provide extra staff of their own to keep things moving if the customs people will accept their help.
Some problems are surprising. The European Union, for instance, doesn’t have a standard, coordinated clearance process across its member countries, which can lead to confusion when a shipment lands in one country but is bound for another. There can be differences even within EU countries. In the Netherlands, express shipments are greeted by a standard, centralized clearance system that is the same at all points of entry. Further along the Rhine, however, in Germany, that isn’t the case. Germany has no centralized customs clearance, requiring the delivery companies to have people on the spot at each port of entry they might use to fill out the documentation.
The World Customs Organization (WCO) partially addressed the standardization issue by identifying a set of best practices. Under the WCO’s Kyoto Convention guidelines, countries should aim to create simplified custom procedures that can be carried out in a predictable, consistent and transparent environment. Customs should make maximum use of information technology and risk analysis to speed up the clearance process and maintain its integrity through the application of objective tests and procedures. WCO recommends that customs agencies use “single window” electronic procedures, whereby documents are submitted once and are easily transferred across agencies and borders. Just 81 of WCO’s 178 member states have signed on to these common sense procedures, although many others adhere to its recommendations.
Sometimes the express companies run up against infrastructure limits. The United States is covered with efficient airports and has its excellent Interstate Highway system that speeds internal deliveries once the border is crossed. Brazil just doesn’t have that. Airport coverage of the country is one-third of the density in the United States, and the Brazilian road system is woeful. The companies can sometimes invest in their own infrastructure at sub-standard airports, but they can’t realistically build highways for the last mile of deliveries.
Delays at border crossings and the need to hire extra staff in many countries can drastically alter the cost of making express shipments. The company in the study reports that Venezuela and Kenya, in particular, cause them to increase the handling charges they pass on to their customers, making these countries less competitive. On the other hand, handling charges for express shipments are especially low in places like Mexico and Qatar. And Singapore may be the easiest of all.
Jimmy did a fabulous job of getting that bid package to Somalia, so I owed him one. He is a wonderful French chef, and has run a cooking school in his checkered career, so you are always nervous cooking for Jimmy. But I make a killer Caesar salad. Jimmy knew the original Caesar (of salad fame, not the Roman) and tells me that mine is the closest he has had to the original. He has one complaint. I don’t much care for anchovies and don’t put them in, but Caesar always used anchovies. I think Jimmy delivered them.