Coordination and Implementation of National Logistics Policies: Improving Trade Facilitation

Coordination and Implementation of National Logistics Policies: Improving Trade Facilitation

There are several tools behind the setting of national logistics policies. One concerns improving trade facilitation through the simplification, harmonization, and standardization of trade procedures and the setting of free zones. The most common strategies involve:

  • Customs and cross-border management. At the main ports of entry, improve the effectiveness of customs operations with single window initiatives where traders can use a single platform to manage all the customs related procedure, and this electronically. The expected benefits concern faster clearance for international trade and improved time performance of supply chains. The use of various forms of scanning and sensing technologies can also improve supply chain security and the accuracy of the levied customs duties. In the case a land border is involved, there is a possibility to develop cross-border logistics, particularly since cross-border flows tend to be at a higher scale and atomized (individuals and vehicles) than flows handled by ports (single shits with large consignments). This, however, brings the risk of cybersecurity and hacking of the platform.
  • Trusted trader program. Coordinate customs operations with trusted importers and exporters. Becoming a trusted trader requires meeting a series of standards and subject to auditing. The main benefits are a reduction in the number of inspections for imported cargo and faster clearance and exemptions from random non-intrusive inspections. The outcome is an improved level of service for customs since they can focus on traders that may present a higher risk. This may create a two tiers system in customs clearance between those who are ‘trusted’ and those who are not. If the auditing process is not recurrent, there could be a decline in the level of compliance of the trusted traders with the risk of losing such a status.
  • Free zones (Foreign trade zones). The creation of special customs zones that are under a different customs regime. This has been a common strategy used for the promotion of exports since it enables a level of flexibility in the use of national customs regulations. The common aspect is to reduce or eliminate duties on goods traded and manufactured within the free zone as long as exported. The expectation is to attract internationally-focused logistics activities using the free zone as a base of operation. The main risks concern the loss of customs duty income and the potential for infractions in customs regulations since the zone is subject to less oversight.
  • Customs corridors. The goal is to expand the ease of moving cargo between customs entities within the same country (ports of entry, free trade zones), particularly when a large amount of transshipment is involved. This supports a better level of integration between major gateways such as ports and airports and enables additional flexibility in supply chain management since cargo can be repositioned without the administrative burden of going through customs and having to pay duties for simply being in transit.