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March 2009
Dear Members:
When Bob Dylan released his hit “The Times They Are a-Changin'” in 1964 no-one had any idea of how fast and challenging the change in our world could become. More than four decades later as CIFFA goes to press with our Directory 2009 the words ring as true as they did in the laid back sixties. Rapid fire political, social and economic changes continue to challenge the entire industry as we enter the New Year and reflect back on a tumultuous 2008.
How can business succeed in a world where the Dow Jones can go down … or up … 900 points in one day? Where the price of oil can move up … or down … USD 60 in two weeks? Where the Canadian dollar can fluctuate up … or down …20% in three weeks? These are realities of the world we live and compete in today. CIFFA Members face these challenges on a regular basis as we serve customers, fix problems and find viable solutions to the changing issues of the day.
On the ocean side of the business, Members are being pushed by the carriers through a maze of various chores that they, the carriers, have for the most part abandoned within the logistical chain. Many tasks are being off-loaded to forwarders with no change in compensation or commission structure. Forwarders are being asked to do more with less. Serving customers effectively is made even more difficult by carriers’ inability or unwillingness to respond to industry requests for transparency in the network.
Added to these daily obstacles is a never-ending stream of regulatory change coming out of Ottawa, Washington and Brussels that affect international trade. Some of those changes are so minor that the issuing government fails to consider the impacts. The decision by the Canada Border Services Agency in June 2008 to add a test for formaldehyde to containers designated for inspection by Agency officers had and continues to have serious negative impacts on the flow of goods and Canada’s import competitiveness far beyond any consideration officials originally contemplated. This one ill-thought out change implemented by an administration out of touch with the reality of business in today’s world has driven hard costs, soft costs and consequential costs into the inbound supply chain. Importers whose containers are identified for inspection face very hard inspection fees and demurrage charges often mounting to tens of thousands of dollars.
The soft costs of customer service, tracking and communications further erode freight forwarder and importer margins. The cost of uncertainty driven into the supply chain by the ventilation program is mounting, while the consequential cost to the Canadian economy – in lost orders, cancelled sales and discounted pricing are immeasurable. When will the CBSA realize that governments must be held accountable for its decisions and take action to rectify the travesty of its container testing and ventilation program? It is anybody’s guess. Visits to Ottawa, letters to the CBSA, industry consultations and media interviews: CIFFA continues to work with other associations and impacted groups across the country to help the CBSA correct this ridiculous situation.
Washington and Brussels implement their fair share of regulatory change too. This month, the American Transportation Security Administration (TSA) will implement the 50% screening rule for all air cargo destined for passenger aircraft. By the end of next year, it will be 100% screening. Transiting Canadian cargo will only be loaded on passenger aircraft after it has been screened by a Certified Cargo Screening facility in the United States. Although Transport Canada continues to develop its voluntary Air Cargo Security program, without any accompanying legislation, mutual recognition by the TSA remains a long shot. Without mutual recognition between the USA and Canada on air cargo security, reduced capacity, fewer routing options, increased administration and duplication of work will continue to drive increased cost and impact Canada’s export competitiveness.
Implementation in Europe of the Import Control System by the EU Department of Customs in July 2009 will bring more changes to traders, carriers and freight forwarders. All supply chain participants including Authorized Economic Operators (AEOs), will be required to provide advance information on goods importing, exporting and transiting the EU. At the same time, CIFFA has representation on the Steering Committee and both the Design and Communications Working Groups of the CBSA’s eManifest initiative. eManifest takes Air and Ocean Advanced Commercial Information to the highway mode and beyond. Shuffles in CBSA personnel and delays in policy decisions notwithstanding, eManifest will bring significant change to every participant in Canada’s import chain. Every importing, carrier, customs brokerage and freight forwarding organization will need to transform business practices to meet the new reporting requirements scheduled for a mere four years hence.
On the subject of government and the effects of regulation on international trade, it is obvious that as government and bureaucracy grow, the regulatory burden on Canadian businesses engaged in international trade increases. In its 2007 report ‘TEN STEPS TO A BETTER TRADE POLICY’, the Parliamentary Standing Committee on International Trade writes, “Creating, maintaining and supporting international business policy, both at home and abroad, is the responsibility of the Government of Canada and its various departments and agencies. To be effective at this task, the machinery of government that underpins this effort must work smoothly, efficiently and in a cohesive and coordinated manner. However, even a cursory glance at the federal departments and agencies that have a stake in international trade, trade promotion and trade development produces a lengthy list:” The report then lists 13 different federal government departments and agencies that “sometimes operate at cross-purposes.” The Committee’s “objective will be to evaluate how the machinery of government functions, as it pertains to federal trade and investment policy and promotion, and whether or not it could be restructured to operate more logically, efficiently and effectively.” CIFFA strongly supports this initiative and agrees wholeheartedly that government certainly could be more efficient and effective.
Every day, CIFFA meets the challenges of change by raising a strong voice of advocacy in support of its Members. As part of our Education mandate CIFFA maintains current and authoritative professional vocation training. But CIFFA’s job is not only to educate its Members. The association must also educate government and regulators in the intricacies of our industry, in hopes that every one of these thirteen government agencies and departments understands the international trade industry in Canada, the critical role of the forwarder in that industry and the impacts of proposed changes. Educating and communicating. Sifting through the layers of often contradictory information, removing the complexities, winnowing out the core of the critical information, explaining to our Members what it all means and how it might impact their business. Some things change. Some things don’t.
Sincerely.
Robert Walker
President
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