Global Transhipment Hub

“Global Transshipment Hub: Examining its implications on
the Customs Brokerage profession”
Copyright - Donovan C Wignal,
MSME ALLIANCE
Presented By: Donovan Wignal
March 2014
GLOBAL TRANSSHIPMENT HUB
Copyright - Donovan C Wignal,
MSME ALLIANCE
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INTRODUCTION
• Shipping services constitute a highly competitive market and
represent a typical example of customer-oriented organizations.
• Given the competitive nature of business in the commercial
shipping industry in Jamaica; it is clear that we live in an era of
business without boundaries, where competing effectively means
collaborating across time, distance, organization, and culture.
However, several factors have contributed negatively to the
business of imports and subsequently the increase in the cost of
goods and services to the clearing agent and consumers.
• Against this background, customs brokers in Jamaica now have to
go farther to find the right pieces and rapidly pull them together
to create the best fit for their purposes. The transshipment hub
will be the game changer for those players who are prepared.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
What is Customs Brokerage?


It is a profession that involves the 'clearing' of
goods through customs barriers for importers and
exporters (usually businesses).
This involves the preparation of documents
and/or electronic submissions, the calculation
(and usually the payment) on behalf of the client
of taxes, duties and excises, and facilitating
communication between the importer/exporter
and governmental authorities.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
Who is a Customs Broker?

Any person, including a freight forwarder, who, on behalf
of a client, transacts customs business with the customs,
including the entering of goods of all description under
the customs laws; but does not include a ship’s agent.
(Customs Regulation , 1955, Part 17, Clause 144, Pg45)

Must be licensed
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
What does a Customs Broker do?
Maintains a registered,
tax compliant business
Keeps proper financial
records
Furnishes clients with appropriate
documents and information
concerning entered goods
Accounts to clients for funds
refunded by customs
Accounts to customs for monies
received from clients for
entered goods
Ensures tax & regulatory compliance of importers and exporters
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
What does a Customs Broker do?
He legally
represents
importers in
their
dealings with
Customs.
Plays vital role
in the importing
process by
ensuring that
goods are in
compliance with
government
regulations and
legislation
Copyright - Donovan C Wignal,
MSME ALLIANCE
He facilitates
an entry on the
importer's
behalf
He classifies
goods according
to Tariff
Schedules to
apply duties and
taxes owing to
the state
A customs
broker can
arrange customs
clearance for
your shipments
before they
arrive at
destination
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GLOBAL TRANSSHIPMENT HUB
Other Services provided by
a Customs Broker


A Customs Broker can also arrange Local Trucking,
Warehousing, Customs Bonds and Cargo Insurance. The
broker can also provide Trade Consultants to handle more
serious issues such as Trademark, ICR, and other Trade
issues.
Brokers now play an integral part in the logistics and
supply chain networks of corporations, and also provide
expert consultations on trade issues.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
Import Process
IMPORTER
PURCHASES FROM
FOREIGN SUPPLIER
FREIGHT FORWARDER PACKAGES
GOODS & PREPARES DOCUMENTS
FAXES OR COURIERS
DOCUMENTS TO IMPORTER
BROKER SENDS ELECTRONIC
DOCUMENT TO CUSTOMS
BROKER PREPARES CUSTOMS
ENTRY DOCUMENTS
CUSTOMS INSPECTS
ENTRY
GOODS ARRIVE AT PORT
TRANSPORT AGENT
APPROVE
NO
REDO OR AMEND
ENTRY
YES
IMPORTER
Copyright - Donovan C Wignal,
MSME ALLIANCE
contact
BROKER
BROKER CLEARS &
DELIVER GOODS
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GLOBAL TRANSSHIPMENT HUB
NEW DEVELOPMENTS– CUSTOMS BROKERS OPPORTUNITIES
Types Of Supply Chain Activities
• Expand logistics platforms
to provide value-added
services, such as reefer
storage
• Increased business from
manufacturing clientele who
will seek to capitalize on the
fact that no duty is due if
goods are destroyed or reexported in the zone.
• Import entries are filed less
frequently—substantially
reducing costs which can
be passed on to the
broker’s clients.
Source: Groenewout Consultants & Engineers
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
Main Issues Encountered when Doing
Business in Customs Broking
Import
Policy
Creates more bureaucracy in the system.
The Motor Vehicle Import Policy is seen
by many as burdensome. E.g., persons
importing trucks into Jamaica do not think
that they should have to abide by the
same regulations set out for other
vehicles: A ten year old truck (for e.g.) is
considered relatively new in relation to
the life-span of a truck; and very few
persons are financially capable of
importing newer models.
Copyright - Donovan C Wignal,
MSME ALLIANCE
Recommendations
Investigate other options
for revenue collection in
this regard. One option is
to lower the age range for
certain vehicles (e.g.
trucks) and thereby more
persons would capitalize
on the initiative resulting
in increased importation.
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GLOBAL TRANSSHIPMENT HUB
Main Issues Encountered when Doing
Business in Customs Broking
Customs
• Valuation branch turn-around time
• Application of WTO rules where
submitted values on invoices have
constantly been arbitrarily inflated
with very little expeditious redress
available to the importer. One has
had to pay the marked up prices or
risk having the goods left to the
elements.
Copyright - Donovan C Wignal,
MSME ALLIANCE
Recommendations
Ensure that Customs adapts the
World Customs (WCO) Time
Release Study (TRS) model and
methodology.
Set up a formalized Advance
Pricing Agreement which would
help to resolve actual or potential
transfer pricing disputes in a
principled, cooperative manner, as
an alternative to the traditional
adversarial process.
~ Crimson Logic
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GLOBAL TRANSSHIPMENT HUB
OTHER ISSUES & CONCERNS
 Very low Global Competitiveness Index
 an inefficient bureaucracy
 high energy costs
 the need for appropriate tax reform
 the need for a higher level of business literacy
 the need for a more enabling environment
 lack of law and order
 Financing - Because the risk is high, banks are cautious
and credit processes are complex.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
ISSUES & CONCERNS
“Jamaica’s performance for
advance rulings,
information availability,
automation and internal
border agency cooperation is below the
average for upper middle
income countries and Latin
American and Caribbean
countries”.
OECD (Organisation for Economic
Co-operation and Development)
Source: http://www.oecd.org/
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
HOW DO WE RESOLVE THESE ISSUES & CONCERNS?
• Make best use of the current facilitative approach
• Seek to work closer with the Ministry of Industry,
Investment & Commerce to ensure development of the
spirit of entrepreneurship to stimulate the
consolidation of the customs brokers sector.
• Immediately tackle the crisis of management which
exists, by joining forces with relevant stakeholders and
speedily implement a programme to address the urgent
need for an improved level of business literacy
throughout the sector.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
HOW DO WE RESOLVE THESE ISSUES & CONCERNS?
• Clear separation of regulatory functions from commercial
activities
• Full benefits of private sector participation in operations
and infrastructure financing achieved only through a
balanced formula
• Responsible public authority management
• Prevent the development of local monopolies and
rent-seeking practices
• Explicit regulatory frameworks for unavoidable monopoly
• Ownership issues within the framework of public/private
partnerships for development of port facilities (BOT, BOO,
BOOT, etc.) need to be carefully addressed
Copyright - Donovan C Wignal,
MSME ALLIANCE
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GLOBAL TRANSSHIPMENT HUB
CONCLUDING REMARKS
With the new, positive approach to the development of our sector,
the now visible attention to customs brokers, how the MSME sector
factors in the economic recovery of Jamaica in general, and our
place in the evolution of the logistics hub, with the right guidance,
the right incentives, the right operational climate; and an enabling ,
facilitative business environment, Jamaica’s customs brokers sector
can factor powerfully in this game changing logistics hub project;
thereby sowing the seeds for economic recovery.
The customs brokers sector must now prepare itself for the
opportunities to come— with the necessary training and improved
business skills, knowledge and technologies that will allow us to be
more competitive.
Copyright - Donovan C Wignal,
MSME ALLIANCE
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Copyright - Donovan C Wignal,
MSME ALLIANCE
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