Freight looks forward

Business Asia, March, 2001 by Randolph Ramsay

Even without an Olympic Games or GST, 2001 is shaping up to be just as hectic for Australian freight forwarders.

THE LOW Australian dollar, a slowing global economy and the expected introduction of the Federal Government's new CMR (Cargo Management Re-Engineering) system will be the main challenges for Australia's freight forwarders in 2001, a leading industry body says.

Australian Federation of International Forwarders (AFIF) chairman Peter McNamara says despite not having the major disruptions of 2000 (like the Olympic Games and the introduction of the GST), this year was shaping up to be just as hectic and important for freight forwarders.

Foremost in the industry's mind is the state of the Australian dollar. With nearly all freight forwarders having to deal in foreign currencies, the slump of the Australian dollar has many concerned about its eventual effects on the bottom line.

McNamara says while many in the industry are remaining upbeat, there was no doubt that people were concerned.

"People are always concerned about anything that will affect their business. Any time our currency is unstable, it's a big challenge for us," he said. "But it's hard to assess how much affect it will have on individual companies."

Also of concern is CMR, a new system which could radically change the way freight forwarders report incoming and outgoing goods.

CMR is designed to simplify and facilitate checking and clearance services provided by Customs and other Commonwealth import and export services using on-line capability. It redesigns the procedures for how goods are presented to Customs and associated authorities and covers the physical movement of cargo on and off sea and air craft.

McNamara says exports, under the changes proposed, will have to be cleared in the same way as imports, resulting in a "big change in the way" the industry reports cargo.

"There are penalties for non-compliance with the new reporting standards. These penalties, which could be for inaccurate or late reporting, could be quite substantial," he said.

"It's a big challenge for us. Quite apart from educating our industry, it's also having to manage the new reporting standards. We also have to educate all our people not only in Australia, but our partners overseas as well."

McNamara says with CMR, the Customs department was endeavoring to change its philosophy more towards risk management. Instead of having a large force on the ground checking cargo as it moves in and out of the country, CMR screens by requiring upgraded reporting standards from those directly dealing with the goods. The old screening process will now be done "electronically", with Customs moving only on the intelligence they gather from the new reporting standards.

McNamara says AFIF and the industry had tried for a two-year period to amend or change some sections of the proposed legislation. Unfortunately, changes made to the legislation currently being reviewed by Cabinet were fairly "minor".

"There are some aspects of it which we are not happy with," he said. "Obviously we were trying to change the penalty provision section, as well as some of the actual detail in the way we would report cargo."

McNamara believes sections of the new legislation could be put into effect as early as the end of this year, although he says it would take another two years for its full implementation. Work has already started on preparing the industry for the changes ahead, with McNamara saying that "we have all been preparing for it and have been for some time".

It's not all challenges in the year ahead, however, with AFIF introducing a new electronic payment system which could drastically make life easier for freight forwarders.

Called pay2day, the new system aims to replace the current methods of cheque clearances between companies and replace with it an e-payment platform.

"This is very significant because much of what we do involves moving money," McNamara said. "There are about 2.5 million formal clearances a year -- historically much of this was done by couriers racing across town with a chequebook." The system will be up and running by the end of March.