THE ROLE OF CUSTOMS-PORT COOPERATION IN IMPLEMENTING A PCS PHOTO BY: PCS OPERATOR | DPCS, DJIBOUTI Port Community Systems 1 The Role of Customs-Port Cooperation in implementing a PCS 2 Port Community Systems Executive Summary Key Takeaways ■ Cooperation between Customs and port authorities is critical to the success of a PCS. ■ Safe, secure, sustainable, and digitalized maritime trade is underpinned by international instru- ments. These instruments provide a framework to support the operations of a PCS. ■ Customs and port authorities are kingpins of digitalization and must ensure interoperability of their systems. ■ Customs take stewardship among cross-border regulatory agencies. Port authorities lead the effort amongst maritime agencies. ■ Port authorities and Customs must agree on standard policies, procedures, and guidelines that encourage data collaboration and support a matrix of services. ■ A port authority’s responsibility for safety, security, efficiency, and compliance must be matched with and supported by Customs’ role in enforcement and trade facilitation. ■ Customs and port authorities must work harmoniously to achieving a common goal: smooth trade across borders while ensuring compliance with global trade laws. T he success of a PCS hinges on successful cooperation between Customs authorities and port authorities. They are the kingpins of port and maritime digitalization, determining the policies, processes and procedures that turn a port’s digital transformation from vision into reality. Together they ensure safety, security, efficiency and compliance with domestic and international rules, regulations, and laws. A harmonious relationship between Customs authorities and the port authorities is the bedrock on which a strong, secure, and stable PCS is built. Cooperation between Customs and port authorities is also crucial for accelerating the digitali- zation and sustainability of maritime supply chains. Close collaboration between Customs and port authorities is vital for the successful implementation and operations of a PCS. Ports and Customs share operational space and facilities and work in a coherent regulatory environment. Their business processes are intertwined, and data requirements are alike. The two authorities share a mutual goal of ensuring safe, secure, and efficient operations. While port and maritime authorities typically champion the development of PCSs, Customs have a crucial and determining role. There is hardly a PCS that succeeded without the active backing and stewardship of Customs authorities. The involvement, trust, and full participation of Customs in a PCS is vital for its success. The Role of Customs-Port Cooperation in implementing a PCS 3 Port Community Systems This chapter covers the four pillars of cooperation between ports and Customs: (i) Legal and regulatory. (ii) Institutional and governance. (iii) Business processes and data. (iv) ICT systems and interoperability. Several international instruments underpin the regulatory environment to support the design and operation of a safe, secure, sustainable, and digitalized maritime trade environment. Countries have adopted these instruments and integrated the commitments made into their national legis- lation to harmonize the implementation of their respective ICT systems for Customs, trade, port, and logistics. Governments are also collaborating with their trade partners at a regional level to promote and implement regional harmonization. The institutionalization of cooperation between port authorities and Customs is foundational to building trust between them and other port community members. While the National Trade Facilitation Committees focus on the broader issues of cooperation at the national level, the port community needs a dedicated consultation and collaboration platform to work together on issues affecting its members. Local institutional arrangements at each port may involve discussing tacti- cal and operational concerns. At the central level, it may mean dealing with strategic and policy issues. Increasingly, PCSs are being developed for a cluster of ports, or nationally for all ports in a country. Likewise, countries come together to deal in regional groupings to set-up harmonized regulatory requirements and establish and institutionalize regional cooperation. Port authorities and Customs (along with other border control authorities) must collaborate on the business processes for the clearance formalities of vessels and cargo. Ports and Customs must synchronize their regulatory procedures and clearance formalities, while also ensuring that the operations are optimized and remain efficient. A PCS helps ports and Customs ‘to be on the same page’ and implement joined-up procedures based on shared data. Finally, ICT systems of ports and Customs must interoperate to cover the complement of port operations. Several entities are situated at the port in their capacity as contractors (tugboat operators, bunker fuel suppliers, ship chandlers) and concessionaires (e.g., terminal operators). The automated systems operated by these entities also link in the handling of vessel, cargo and passenger operations. Likewise, apart from Customs, there are several other regulatory author- ities such as immigration, health, security and environment that must work closely to support automated handling. The Role of Customs-Port Cooperation in implementing a PCS 4 Port Community Systems 1.  Introduction 1.1.  The context 1.2.  Outline and boundaries of the chapter Customs and port authorities share the infrastructure of trade facilitation. Ports provide the backdrop in which customs and In this chapter we briefly examine the relationship between port other cross-border regulatory agencies implement their regula- authorities and Customs and the rationale for collaboration for tions. Those regulations cover a wide range of topics including the development of a PCS. The chapter does not discuss the taxation, health, safety, security, and the environment. Legislation detailed technical, legal, and business model aspects of the drives the oversight of the regulatory agencies. Ports and airports PCS. We look at the main motivations for the port and Customs host and support the physical and operational infrastructure for the to collaborate in implementing a PCS, namely: (i) To ensure that movement of goods, passengers and means of transport (vessels/ a port remains safe, secure, efficient, and economically compet- barges/trains/trucks) and crew. Building a strong collaboration itive. (ii) To facilitate trade by simplifying and streamlining the between the port authorities and Customs is vital. bureaucratic procedures at ports. 2.  PCS and the complementary roles of port authorities and Customs Ports constitute critical infrastructure for trade. They are often and Customs. Under the principles of border agency co-opera- the beating heart of their region’s economy. Ports serve at the tion, Customs liaise with other government regulatory agencies national frontiers. Therefore, protecting the ports and their (OGA’s), such as immigration, sanitary, veterinary, phytosanitary, operations constitutes vital national security interest. The port health authorities to ensure that vessel and cargo clearance authority provides infrastructure and facilities port operations formalities are followed. Usually, Customs coordinate the final and supports regulatory inspections for cargo control. They notifications of release or hold on behalf of various border control also provide digital systems for processing and communicating authorities. Typically, Customs authorities ensure that if the cargo information about cargo and transportation. The port authority or vessels are to be inspected or controlled, they are carried out assists with regulatory inspections that are conducted in desig- synchronously and in a coordinated manner. nated control areas for veterinary, waste, or dangerous goods controls. Port operators must comply with measures related to Customs operations take place in the infrastructure and facili- plant protection, phytosanitary controls, animal and veterinary ties provided by port authorities either directly or through their controls, food and feed safety, and sanitary measures. The port contractors or concessionaires. A port authority works with and authority ensures that regulatory inspections are coordinated through terminal operators, storage yards, warehouses, tank and conducted in a simultaneous manner. firms, and cargo inspection facilities. On the regulatory side, port authorities must work with the harbor master, port and Discontinuities or disruptions to port operations will have major flag sate control authorities, port safety, fire protection services ramifications for the associated supply chains and in the case of and marine security and other government agencies. Port and/ major ports, can seriously impair economic activity. Customs are or maritime authorities or their concessionaires manage ICT the gatekeepers at the port, as they nearly always take the final facilities to handle vessel and cargo related information for the decision on the release of the goods from the port, with a respon- movement to the foreland or the hinterland. sibility to protect the economic frontiers of the country. They must exercise control over the flow of all means of transport (vessels/ Terminal operators are entities appointed by the port authority barges/trains and trucks) and goods entering or leaving the port (often operating under a long-term lease agreement) and are to ensure that they conform to regulations and do so without the most important stakeholders in the context of collaboration impacting the efficiency of port operations. Port authorities also between Customs and ports. They are responsible for holding have some regulatory responsibilities. The following table briefly cargo securely in temporary storage, protecting against unautho- compares the responsibilities of the two organizations: rized access, tampering, or pilferage until Customs decides to inspect cargo or permits its release. Terminal operators manage To implement the respective mandates, it is necessary to have cargo flows into, out of and through the terminal’s premises that close and trustworthy co-operation between ports authorities are located inside the port. Terminal operators are Customs The Role of Customs-Port Cooperation in implementing a PCS 5 Port Community Systems Table 1. The collaborative complementary role of Ports Authorities & Customs Objective Port Authorities Customs Cargo Clearance Through the port & cargo terminals: Verifying the accuracy and completeness of import, Verifying the identity of goods and entities bringing and export and storage; documentation, including bills of taking out those goods; Responsibility for the inventory of lading, commercial invoices, and packing lists; Calling port goods in bonded areas; terminals to account for goods, passengers; Customs and port authorities work together to facilitate the movement of goods across borders, by ensuring that import, storage, export and exit procedures are clear and streamlined, and that customs inspections are conducted efficiently. Safety & Security The implementation of the SOLAS convention and the Security and safety measures before the entering or exiting International Ship and Port Security (ISPS) Codes; Customs, of the goods OGA’s and port authorities collaborate to assess the risk Customs and port authorities work together to ensure associated with different shipments, including the likelihood the security of the port and its surrounding areas, by of smuggling or the presence of prohibited items. screening visitors and monitoring the movement of goods and people. Customs may also take action against money laundering and terrorist financing; Customs processing of General Declarations, Passenger manifests, Vessel Security Reports. Health & Safety Inspecting ships for food safety and infectious disease Regulatory restrictions and prohibitions, phytosanitary and control; public and environmental health checks; veterinary requirements, goods compliance with the safety Implementation of Occupational Safety & Health (OSH) and health standards intellectual property rights preserva- Standards for all Personnel at ports including customs tion; Drugs, precursors, weapons, marshal goods controls officers. implemented in close cooperation with OGA’s. Taxation & Revenue Port authorities collect port dues, other fees for the use of Customs authorities are responsible for collecting customs port facilities and services. duties and other taxes on imported goods Environmental Intervention of environmental restrictions, waste manage- Enforcement of regulations to control the transboundary protection ment services and controls; MARPOL Convention; Port movement of waste; protection of trade in endangered reception facilities; control and safe handling of dangerous wildlife products; control of nuclear and other hazardous goods; For dangerous goods, customs and port authorities material; work together to inspect cargo to ensure that it complies Customs, OGA’s and port authorities collaborate to ensure with relevant regulations. that shipments comply with environmental regulations, and that the port and its operations do not negatively impact the environment. temporary storage (bonded) facilities and can be called to prop- both agencies. Coordinated law enforcement can integrate the erly account for the cargo they handle. They are required to assist strengths of both agencies and form a stronger law enforce- Customs and port authorities in the event of an inspection. Imple- ment force to avoid the negative consequences of disjointed menting a PCS requires terminal operators to be users of and and random law enforcement actions. linked to the PCS and to collaborate very closely with Customs and ports. The Customs and port authorities by virtue of their Port and Customs authorities highlight the importance of infor- legal powers must effectively persuade terminal operators to mation in the risk-based model for secure international supply collaborate with port community members. chains. Digitalization of maritime cargo information is seen as a common goal for law enforcement agencies, port service provid- Port Authorities play a facilitating role in the performance of ers, and economic operators. Digitalization requires solid rela- controls assigned to cross-border regulatory agencies (often tionships and mutual understanding between port and Customs referred to as OGA’s) such as sanitary, veterinary, hazardous authorities. Pivotal investments into digitalization, such as the waste, dangerous goods etc. Port authorities provide areas desig- PCS and MSW projects, are costly and require long-term planning, nated for the control of such goods. In coordination with Customs, and port and Customs authorities must ensure the compatibility port authorities seek to facilitate joint and simultaneous regula- and interoperability of various digital systems and conformity tory inspections in the interest of cost savings and efficiency. with governmental policies. Legislative requirements and restric- tions may pose challenges. Factors such as organizational, tech- Customs and port authorities need to cooperate closely for nical, and financial resources need to be assessed for successful effective supervision and law enforcement at ports. Mutual implementation. Data confidentiality and privacy protection poli- recognition of supervision and coordination of law enforcement cies also need to be considered. Achieving alignment in cyber- can reduce repetition and operating costs for enterprises, as security requirements and standards among various authorities well as reduce input of resources and administrative costs for and economic operators is a complex and long-lasting effort. The Role of Customs-Port Cooperation in implementing a PCS 6 Port Community Systems 3.  Complementary legal & regulatory powers Maritime and Customs laws require Customs and port authorities to collaborate closely right at the beginning of a port’s inception. Box 1. Customs Trade Partnership That collaboration must continue throughout the port’s existence. Against Terrorism (C-TPAT) Customs law typically defines the territorial boundaries of a coun- try for Customs purposes and allows Customs to authorize ports and cargo reception facilities and which locations and facilities The Customs-Trade Partnership Against Terrorism can handle cargo under international trade procedures. This (C-TPAT) is a voluntary program that relies on collabora- principle is defined under Standard 6.1 of the Revised Kyoto tion between the public and private sectors. It acknowl- Convention, which requires that: “All goods, including means of edges that the most effective way for the US Customs & transport, which enter or leave the Customs territory, regardless Border Protection can ensure cargo security is through of whether they are liable to duties and taxes, shall be subject close partnerships with key players in the global supply to Customs control.” To maintain physical control on the flow chain, including the port authorities, importers, carriers, of goods, Customs authorities establish the port facilities as consolidators, licensed customs brokers, and manufac- ‘bonded’ premises that can securely hold imported and export turers. The Security and Accountability for Every Port Act goods that are under Customs control. Customs authorities also of 2006 established a legal framework for the C-TPAT specify reporting formalities (including declarations) that ships program and mandated rigorous oversight. must submit to facilitate controls. The time-bound implementation of the IMO FAL Convention provides a unique opportunity to foster Customs port collabora- The legal framework should protect intellectual property rights tion. The IMO FAL Convention combines the reporting formalities in the digital environment. (v) Contracts entered electronically that a visiting ship must comply with and covers all data required should be valid and enforceable. (vi) The affected parties should by all government agencies situated on shore. The Convention be able to resolve their liability issues and disputes (including requires contracting parties to provide facilities to receive the the use of arbitration). (vii) There should be adequate consumer regulatory data needed from a calling vessel under various laws to protection for PCS users. be delivered at a single point of entry (“Maritime Single Window”) using a standardized electronic format. By January 2024, the Laws enabling the use of private sector data for Customs control Contracting Parties to the convention must implement the digitali- are an important aspect of Customs port cooperation in the zation of the IMO FAL reporting formalities, including the concept context of a PCS. PCSs offer the opportunity for Customs to use of a “Maritime Single Window”. At a global level, the WCO and private sector data to manage Customs controls. PCSs can be the IMO have partnered to harmonize the IMO FAL Compendium an effective platform for cooperation, and regular and system- (“The IMO Compendium on Facilitation and Electronic Business”) atic consultation between Customs authorities and the port with the WCO Data Model. The updated Compendium has estab- authorities, and by implication, with the members of the private lished the global standard on the submission of maritime data. In sector that are a part of the port community. The World Customs line with this ‘apex-level’ collaboration, Customs and port authori- Organization’s SAFE Framework of Standards (FoS) recognizes ties must coordinate locally at the country and port levels to align and recommends the possibility of Customs authorities access- the legal requirements under their respective Maritime and Trade ing and using economic operators’ commercial systems and to Single Windows. In a PCS context, a dialogue on the mechanism audit them to satisfy customs’ requirements. Under the SAFE to implement the FAL requirements provides the ideal framework FoS, customs have online access to the commercial systems to cement collaboration between a port and Customs. of the parties involved. Once the issues of confidentiality are resolved, the arrangement should provide enhanced access to To implement a PCS, Customs and port authorities must closely authentic information and offer the possibility for far-reaching collaborate in providing the enabling legal framework. The two simplified procedures. organizations have a common cause in promoting the foun- dational e-transaction laws that digital logistics platforms, By aligning with Customs norms under the WCO SAFE FoS, ports PCSs and trade single windows share with one another. The can contribute positively to the integrity, safety, and security of critical elements of the enabling legal framework for electronic the international supply chain. Customs laws and regulations commerce and digital logistics platforms include: (i) Data privacy require port authorities and terminal operators to play their part, and security and measures to ensure that personal data is and PCSs can provide crucial information for achieving those protected, and data breaches are minimized. (ii) The legal frame- objectives. When a port’s facilities fulfil the standards set out work should recognize electronic signatures as valid and legally by Customs under its Authorized Economic Operators (AEO) binding. (iii) The law should recognize electronic records and regulations, they can become a part of the ‘Authorized Supply transactions, and the courts must ensure their enforceability. (iv) Chain’. The concept of Authorized Supply Chains refers to the The Role of Customs-Port Cooperation in implementing a PCS 7 Port Community Systems PHOTO BY: PCS OPERATORS | PORTNET, MOROCCO possibility that all participants in an international trade transac- identify and prevent the entry of goods that may threaten public tion are approved and trusted by Customs as observing specified safety or security, such as illegal drugs, weapons, or hazardous standards in the secure handling of goods and compliant with materials. ACI requirements vary by country, but generally, they the relevant regulatory norms. Transactions under an authorized apply to all goods shipped into a country. Failure to comply with supply chain receive guaranteed and reliable facilitation in cargo ACI requirements can result in penalties and delays. clearance with no or far reduced regulatory hold-ups or Customs inspections. The WCO SAFE FoS also mentions Cargo Commu- The breach of maritime security poses severe challenges to the nity Systems (CCS) as a facility wherein ports or airports, and resilience and business continuity of port operations, and to all other parties involved in the transport chain, agree to estab- meet these challenges effectively, the ISPS Code offers a struc- lish, and operate, an electronic system by which they exchange ture for collaboration between ships and government agencies. all relevant cargo and transport related data. “Provided that The Code helps identify and prevent activities that endanger these systems contain the necessary particulars for Customs maritime security. It enables Customs and ports authorities to purposes, Customs shall consider participating in such systems come together as partners to meet the challenge by facilitating and extracting the data required for their purposes.” The port the recognition and prevention of security risks globally. Under authority and terminal operator are important in the trade chain the Code, governments are responsible for disseminating secu- and should consider accrediting themselves under their respec- rity-related information to ships and port facilities. The Code tive national AEO programs. mandates governments to collect and evaluate data regarding security threats and share this information with internal agen- The PCS can help to improve the efficiency and effectiveness cies and partner countries. The IMO has harmonized the data of the Advance Cargo Information (ACI) process by providing a requirements under the vessel security report covered by the single platform for the exchange of information and coordination ISPS code by including them as part of the FAL Compendium. of activities among the various stakeholders involved. ACI is a Customs and port/maritime authorities are the main recipients Customs requirement under the WCO SAFE FoS that requires of these reports, and a PCS could facilitate the receipt and the submission of detailed information about cargo and related dissemination of the security-related reports to all concerned entities (such as shippers, consignees, and carriers) to a country’s agencies. Individuals working on ships and port facilities must Customs authority before the arrival of the cargo. This information know about security risks and report such concerns to relevant includes the description, value, and quantity of the goods and authorities for evaluation. If those individuals are PCS users, they information about the parties involved in the shipment. ACI aims to can process the information in a timely manner. Implementing enhance border security and facilitate trade by allowing Customs the Code necessitates the creation of an entirely new culture authorities to identify high-risk shipments and conduct risk assess- among those engaged in the routine operations of the shipping ments before the cargo arrives. ACI enables Customs officials to and port sector. The Role of Customs-Port Cooperation in implementing a PCS 8 Port Community Systems 4.  Shared institutional & governance space Customs and ports must join hands to underpin the governance The NPCC should have a two-tiered governance framework and institutional framework for implementing a PCS. The insti- consisting of steering and business process committees. The tutional basis for Customs-port collaboration must exist at the steering committee should comprise heads of governmental national, and regional/port levels, because each level must agencies and trade association presidents, whereas the busi- address a different set of problems. To prioritize actions leading ness process committee should include business process and to a PCS implementation, port authorities and Customs should legal and ICT experts from all members. The steering committee work together at the National Trade Facilitation Committee (NTFC) should be responsible for initiating and launching any digitaliza- that governments have formed in compliance with the WTO TFA. tion initiatives and driving the evolution of the legal framework. The business process committee should review and reengineer Considering the need for a sharp focus on Customs-port collab- business processes, digitize manual processes, implement stan- oration in PCSs, the World Bank and the IAPH recommend the dardization and cybersecurity, and foster best practices and inno- creation of a body that will eventually be subordinate to the NTFC vation. The national port or maritime authority and Customs may called the National Port Community Council (NPCC) (please co-chair the NPCC to signal collaboration and joint leadership refer to chapter 3). on trade facilitation and supply chain security. The patterns of institutional collaboration between Customs and port authorities The NPCC can help establish trust between port community can be best understood through country examples, some of members and facilitate trade while securing the supply chain. which are illustrated below: Box 2. Example 1. United States – Collaboration between FMC and CBP The Federal Maritime Commission (FMC) and Customs & Border Protection (CBP) are the two federal agencies that share the responsibility to ensure secure and facilitated international trade in the maritime sector. The two agencies enjoy a close working relationship and collaborate extensively toward ensuring greater security, compliance, and facilitation of cargo in the maritime environment. CBP and FM have a complementary mission and objectives. While CBP’s mission is to protect and safeguard the country’s borders, and to enhance the country’s economic prosperity through secure and effi- cient trade and travel, FMC’s mission is “to foster a fair, efficient and reliable ocean transportation system and protect the public from unfair and deceptive practices in the maritime sector.” There is a longstanding collaboration between the two organizations to ensure port security and compliance with the Safe Port Act and assist the FMC in fulfilling its regulatory responsibilities under the Shipping Act. FMC and CBP have entered into an MOU to transfer data from CBP’s Automated Commercial Environment (ACE) and other systems directly to the FMC to help the latter fulfil its statutory and regulatory duties and responsibilities. The digital collaboration of customs and ports is reflected in the digital collaboration between CBP’s ACE and port terminals at the US’s ports. ACE provides a centralized platform for importers, exporters, carriers, port terminals and other trade partners to submit documentation and receive real-time updates on the status of their shipments. ACE is the U.S. government Trade Single Window for processing trade-related import and export data required by government agencies. Through ACE’s digital interfaces with ocean carriers and MTOs, CBP helps streamline port logistics while ensuring border security at US ports. ACE ensures that any government agency hold, or release is transmitted as digital messages to inform the carriers and the nomi- nated marine terminal operator (MTO) about movement authorizations, including the physical release of cargo from the marine terminal and to implement holds on cargo movements. The FMC has anchored other collaborative initiatives that require close collaboration with CBP. The most important ones are: 1. Maritime Transportation Data Initiative 2. Ocean Shipping Reform Act of 2022 (OSRA) Implementation 3. Supply Chain Innovation Initiative. Source: CBP and FMC Websites. The Role of Customs-Port Cooperation in implementing a PCS 9 Port Community Systems Box 3. Example 2: China’s E PORT System as the platform for Customs Port Collaboration China’s digitalization of port processes reached the take-off stage in 1998 with the introduction of the E-Port platform, which provides a unified information system for “one-stop clearance, one-stop logistics, one-stop foreign trade”. The platform works at two layers the China E-Port at the national level and the local E-Port serving at the port level. The facility covers the twin functions – the regulatory function of clearance and enforcement at ports, and the window to offer and consume local logis- tical services. In some respects, E-Port can be considered as a hybrid between a TSW an MSW and a PCS. The institutional framework governing E-Port is similar to the National Port Community Council (NPCC) described above. At the apex level, China’s E-Port implementation is driven by the State Council’s Inter-ministerial Joint Conference on port Administration, with the Vice Premier of the State Council as the convenor of the joint conference, and the specific tasks are carried out by the General Administration of China Customs (GACC) as the leading department of single window program, with the relevant units jointly to form the Single Window Implementation Working Group with 25 ministries and commissions participating in it. NDRC MOFCOM E-Port Committee MIIT PBOC MPS SAT MOF SAIC MEP AQSIQ MOT CAAC MOR SAFE GACC E-port Data Office Center Chinese government has established tha National E-Port Coordinating and Stering Committee, cordinate the resolution of mayor issues during the building of E-Port. Administrative office under this committee to be responsible for its day-to-day affairs. Dedicated body to build the E-Port Systems. It is responsible for the design, development daily operation, maintenance and management of the E-Port systems and networks. Source: Presentation on “Development & Application of E-Port in China ——Workshop on Single Electronic Window Development for CAREC” 5.  Collaboration in business process & data Customs and port authorities collaborate to manage an array of boarding the vessel and reviewing documentation received business processes covering cargo and passenger clearances. from the vessel’s master, and the inspection of the vessel’s Lack of coordination between the port authority, the terminal stores. operator and Customs can potentially delay cargo operations. The following are a couple of examples: II. Sharing the results of risk assessment: Customs’ risk assessment based on advance cargo information helps I. Permission to unload: A time gap may arise between the generate the list of containers to be released on arrival, berthing of a vessel and the commencement of vessel oper- sent for inspection or to the x-ray station for scanning. The ations if Customs boarding formalities are not completed, terminal operator, which develops a tentative unloading and permits are not granted on time. In some countries, plan prior to a vessel’s arrival, needs to know about these the permission to unload is linked to the completion of details sufficiently in advance to finalize the offloading boarding formalities, which includes an officer physically sequence, yard storage plans and delivery plans. The Role of Customs-Port Cooperation in implementing a PCS 10 Port Community Systems Box 4. Example 3: India- EDI/eTrade provides the platform for Customs-Port collaboration India’s PCS implementation is the product of close collaboration between the port authorities and customs. As the PCS operator, the Indian Ports Association (IPA) front ends the views of the port sector. The ‘major ports’ of the public sector and other large private ports are IPA members. PCS began its initial implementation in 2008. Before that, customs and port authorities collab- orated at the port level, with an installation of the Indian Customs EDI System (ICES) functioning at each port. ICES exchanged electronic messages with the port authorities’ systems through local Message Exchange Servers (MES). The message set was developed in the early 2000s. In 2008, Indian customs centralized its ICT platform to cover all ports. ICEGATE, the customs’ central EDI Gateway, became the single interface with all external partners and began exchanging electronic messages with the PCS, which acted as the single point interface for all Indian ports. For nearly two decades, customs and port authorities (led by IPA) worked on the data interoperability framework developed under the government’s umbrella “mission-mode projects” (MMP) called Electronic Data Interchange (EDI) For Trade (eTrade). The Cabinet Secretary’s office monitored MMPs to ensure high-level stakeholder coordination, focusing on promoting collabo- ration in the port, aviation, banking and regulatory sectors. In the port sector, the significant effort involved the implementation of the definition and implementation of standard electronic messages between customs, port authorities, terminal operators, NVOCCs, shipping lines (mainline operators) and ship’s agents. High-level monitoring of customs-port authority collaboration continues to date and extends to implementing Advance Cargo Information, Direct Port Delivery, and the tracking port dwell time. The National Committee on Trade Facilitation, also headed by the Cabinet Secretary, closely monitors the implementation of the National Trade Facilitation Action Plan 2020-23. The Action Plan includes 66 action items and about a fifth of the action items involve close cooperation between customs and the port sector led by the Ministry of Shipping. The above examples illustrate the need for mutual understand- 5.1.  Vessel-related operations ing between the main stakeholders at a port. The responsibil- ity to resolve such issues rests jointly with Customs and port I. Vessel operations begin with the shipping line, or the ship’s authorities. agent registering a vessel by submitting a detailed vessel profile to the PCS. Port authorities and terminal operators The integration between Customs, the PCS, and the Termi- need this data for navigation and vessel docking. The PCS nal Operator Systems (TOS) is crucial for the port’s cargo may share a subset of the vessel profile data with Customs entry and evacuation. The PCS is a comprehensive system of because customs must use it to validate the conveyance information sharing between stakeholders covering: (a) The level data it receives in a conveyance or cargo report. ocean-going vessel’s entry to exit cycle. (b) Cargo import and export cycle. (c) The management of hinterland transport by II. The shipping line or the ship’s agent registers scheduled rail, road, and inland waterways. (d) Payment management vessel voyages at ports, announcing them on the PCS for services provided and consumed in the port and terminal to inform the entire port community, including ports and process. Customs needs to obtain the most upstream data customs, who can prepare for the port call’s regulatory and directly from the commercial and transport sources to be commercial aspects and plan the whole port call process. subsequently passed on to the PCS, or alternatively submitted by the information source directly to the PCS where Customs III. One of the foundational functions of a PCS is the assign- can access it online. Customs has the legal powers to demand ment of the stay reference number. The stay reference and receive advance data on vessels, cargo, crew, passen- number is the link that ties up all data and processes gers, dangerous goods, and ship stores. A port’s operations surrounding a vessel’s call. Upon the request of a ship’s depend on these data streams, which serve as the lifeblood agent or shipping line, the port typically assigns a stay of its operation. In theory, exchanging agreed information and reference number to a ship when it arrives at a port. The messages between Customs, port authorities, and terminal port authorities, Customs, terminal operators, port services operators should be automatic and seamless. In practice, and the rest of the port community use this number to track this goal takes a lot of work to accomplish and requires a the vessel’s life cycle of operations for the port call. Unless collective appreciation of the interlinkages in a port’s busi- Customs and port authorities agree to share this number as ness process. The collaborative business processes shared the common identifier, efficient port operations are impos- by port authorities, terminal operators, and Customs is briefly sible. By tracking vessels through a unique identifier, like a illustrated below: stay reference number, port authorities can better manage The Role of Customs-Port Cooperation in implementing a PCS 11 Port Community Systems Table 2. Truck Appointment System via PCS – based on the India PCS Case study 1 Transport Booking – The Customs Broker/ Freight forwarder/Container Freight Station/Importer/ Action performed on the PCS’s web portal Exporter books Trucking company based on the manifest line numbers (in case of imports) and Stay Reference Number (VCN) (in case of an export). 2 Transport Booking Acknowledgement – The Transporter views the Transport Booking Request and Electronic messages exchanged via PCS: approves or rejects the booking request. Once the Transporter approves the booking and allocates TPRORD- Transport Order and PRGMSG- truck and driver against that booking. Pre gate information 3 Delivery Gate Schedule – The Terminal Operator/ Port Authority via the PCS shares the Delivery Electronic messages exchanged via PCS: Gate Schedule with all the Transporters who have accepted the booking (for import). DGTSCH- Delivery Gate Schedule 4 Gate Open Report – Terminal Operator/ Port Authority share the Gate Open Report to all the Trans- Electronic messages exchanged via PCS: porters who have accepted the booking (for export). GOCOFR- Gate Open cut off Report 5 Gate Appointment Booking – Once the Transporter receives the Delivery Gate Schedule or Gate Electronic messages exchanged via PCS: Open Report, the Transporter completes the Gate Appointment Booking. Transporter allots the GTINAP- Gate In appointment Booking time slot to the Port/Terminal. 6 Gate Activity – The driver shares the URN (Unique Reference Number) with the Port gate person. Action performed on the PCS’s web portal Port gate person verifies the URN. If the verification is successful, the vehicle is allowed to Gate- in or Gate- out from the Port. 7 Equipment Interchange Report – The Terminal Operator shares the Equipment Interchange Report Electronic messages exchanged via PCS: with the Customs Broker/ CFS. EIRMSG- Equipment Interchange Report the flow of ships in and out of the port, coordinate the use of Customs. With ACI, port terminals can better plan for of resources, like berths and cranes, and ensure that all the arrival and handling of cargo. ACI allows Customs to vessels are complying with local laws and regulations. pre-notify shipments that require inspection before release, Through stay reference numbers, customs ensures that all allowing terminal operators to plan their operations, helping vessel calls (and, through them, the cargo they carry) are reduce the overall processing time and improving the termi- accounted for. Vessels calling at a port may carry out multi- nal’s productivity. Customs prenotification on a PCS also ple operations at one or more terminals. To track a ship’s enhances the ability of the shipping lines, freight forward- schedule and movements, port authorities and Customs ers, trucking companies, and Customs brokers to plan the may assign rotation numbers to uniquely identify and track uplift and delivery of cargo from port terminals. the vessels’ activities. Port and Customs may also use these identifiers to remain on the same page on the vessel’s II. It is not possible to automate cargo delivery through operations, shared via the PCS. the gates of port terminals without close collaboration between Customs and port authorities. Terminal gate automation,1 which is one of the most important modules 5.2.  Cargo operations implemented under a PCS, requires the two organizations to be on the same page and act in unison to ensure that I. The implementation of Advance Cargo Information (ACI) is all other members of the port community fall in line with an important area for Customs-port collaboration. Customs the requirements. administrations worldwide are implementing the ACI process to receive, risk assess and process cargo clear- • The terminal operator must provide the infrastructure and ance before the cargo’s arrival. ACI enables Customs to technology to automate truck movements at the terminal identify high-risk cargo and perform targeted inspections, gates. Gate automation requires a complex array of hard- reducing the risk of security breaches. When Customs ware and software systems, and includes automated boom introduce ACI as prescribed under the SAFE FoS, it helps barriers, RFID readers, automated numberplate recognition streamline customs workflows, support pre-clearance, systems, smart card solutions, self-service consoles, CCTV and conclude compliance verification almost as soon as systems and integrated vehicle inspection facilities. Customs the consignments leave the last port of call. A port termi- and port authorities need to agree, preferably at a national nal can also benefit in several ways from ACI mandates level, to set the standards for all terminal operators so that all 1 Terminal Gate automation is part of the Terminal Operating System (TOS). Port Gate automation is part of the PCS. Closed ports will have 2 sets of gates: at terminal and port level. Open ports (e.g. Marseille-Fos and Antwerp) have only Gates at Terminal level. The Role of Customs-Port Cooperation in implementing a PCS 12 Port Community Systems terminal operators provide the necessary data and interfaces • It is now a global norm in Customs to implement advance to support the automated truck movement system. cargo information. EU-driven procedures, such as the • PCSs register truckers, trucks and crew that operate across Import Control System and Export Control System, ensure terminals in a port, and across multiple ports. PCSs can that authorities have the required advanced information help Customs and port authorities implement the agreed for all activities, including truck appointment systems. technical and security standards that truck fleet operators Customs and ports can collaborate and develop prior- and crew must follow. All participants must adhere to stan- ity services for AEO clients via the PCS. In consultation dards that enable automated gate operations. For example, with Customs, ports can introduce concepts such as Customs and port authorities may require truckers to fix fast lanes, dedicated AEO Gates, separate cargo holding an RFID tag on the truck’s windscreens, drivers to undergo areas and priority pathways for AEO clients. Gate auto- security clearance and hold identity cards of a particular mation accompanies a series of exchange of messages technical specification. Together, they must ensure that between Customs, shipping lines, terminal operators, members of the port community are trained to implement trucking company, and freight forwarder. The following the solutions. Customs and port authorities can create a table captures examples depicting business processes framework to register trucks that visit the port. and accompanying exchange of messages: 6.  Interoperable ICT framework Port authorities and Customs spend significant money on ICT and Customs and port authorities emphasize the need to provide qual- must co-ordinate their investments in the interest of interopera- ity data in line with regulatory obligations. Stakeholders submit- bility, economy, synergy, and efficiency. A pattern of longstanding ting the regulatory reports are not owners of the data and therefore and close collaboration to promote interoperability between only pass on data received from others. This has a double negative port/maritime authorities and Customs is behind every PCS’s effect: first of all, for the competent authorities (Customs, OGA’s success story. As kingpins in the digitalization space, Customs and port authorities) the low data quality has an effect on the use and port authorities together provide a large tent to cover the they can make of it (risk analysis, decisions on actions to under- PCS community members, and a partnership between them is take, reporting and statistics, etc.) and secondly on the side of vital in establishing and managing interoperability among them. trade it could be the source of delays and even penalties or legal Customs takes the stewardship among cross-border regulatory liability. A PCS can connect to the relevant stakeholders to receive agencies whereas port authorities lead the effort amongst mari- the data directly. Quality data leads to better risk management, time agencies. improved controls, and efficient operations. Customs and port authorities may refer to the European Interop- To enhance and maintain interoperability, Customs and port author- erability Framework (EIF), which provides comprehensive ities may develop models using facilities ranging from groupware guidelines for public authorities implementing collaborative to sophisticated modelling tools. The various elements of interop- digital platforms. EIF recommends the adoption of a common erability require working with and through the interoperability of architectural framework, which may include a set of techni- different models (business process models, data models, and cal specifications, standards, and guidelines for developing architectural models). Models are vital for managing the process interoperable solutions. For ports and Customs to promote of PCS development. Models are vital for managing the process of interoperability in a PCS environment, they must adopt EIF’s developing (and sharing the results of). Models promote efficient principles of using open standards, reusable solutions, aligned communication, information sharing, coordination, and collabora- business processes and harmonized data standards across tion. Tools that enable teams to work in real-time or asynchronously different public authorities and private sector operators. The via a centralized platform (groupware) can assist with communica- EIF promotes a governance framework that supports the devel- tion and cooperation to keep track of goals of interoperability. While opment and implementation of interoperable solutions. Port models can be represented as text or spreadsheets, the complexity authorities and Customs must agree on standard policies, of the transport and international trade environment shows that the procedures, and guidelines that encourage data collabora- usage of modelling standards such as Business Process Modelling tion and support a matrix of services. For PCS to promote Notation (BPMN) or Unified Modelling language (UML) in combina- interoperable solutions, the EIF fosters developing and adopting tion with a dedicated charting tool (open source or proprietary) has standard vocabularies, data models, and application program- many advantages in terms of efficiency, maintenance of models ming interfaces (APIs). A community metadata registry and and quality assurance. For instance, to support an interoperable conceptual data model are vital artifacts that support semantic architecture, experts may use TOGAF (the Open Group Architecture interoperability in PCS implementation. Framework) standards and the ArchiMate modelling language for The Role of Customs-Port Cooperation in implementing a PCS 13 Port Community Systems Figure 1. The linkage between business processes (in yellow) and IT services (in blue) Hinterland Vessel Scheduling/ Truck movement Truck arrival Trucks Loading/Unloading Stowage Dispatching to transition to the gate routing trucks trains planning of trucks point Freigth status Berth management planning Trucks Tracking Truck Container data Data Arrival arrival truck/train appointment tracking: weight, exchange pre-notification prediction position system status, location, with Lines using danger level transponder Enterprise Architecture. The following is an illustration of a diagram With port authorities and Customs in the lead, all participating describing Vessel-related processes - berth planning and stowage organizations must converge on the applicable cybersecurity planning and how these processes can be supported by IT-services, and data governance rules. When Customs and port authori- covering data-exchange with ocean liners. ties come together to implement a Trade Single Windows and PCS, a cyberattack on either system could bring all port trans- It is also commonplace to use diagramming to share interop- actions to a halt. This would be a significant national security erability artifacts for business processes. UNESCAP developed issue. Both authorities should collaborate on cybersecurity and the Business Process Analysis Guide2 that captures a simple create a joint disaster recovery and business continuity plan. methodology to elicit, document, and analyse the existing “as-is” Port authorities are transitioning their PCSs into the cloud to business processes involved in international trade, as well as promote resilience and business continuity. The WCO, IMO and aid in developing recommendations for further improvement. IAPH have produced their respective cybersecurity and business Likewise, to depict shared data models, PCS participants may continuity guidelines. Customs and port authorities may follow collaborate on data models that show the structure and relation- and adapt these guidelines for implementation at Customs and ships of the standard data elements. port facilities, such as the PCS. 7.  Conclusions Port authorities and Customs have an important relationship rules by both parties involved. Regular dialogue between the regarding the movement of goods and people across interna- two organizations helps ensure a steady flow of trade without tional borders. Port authorities are responsible for managing any disruption due to miscommunication or misunderstand- ports, providing infrastructure, and overseeing the movement of ing on either side. This efficient coordination helps ensure ships, cargo, and passengers while ensuring compliance with that all processes related to shipping run smoothly without relevant regulations. Customs is responsible for regulating hindrance from unexpected delays caused by improper paper- imports and exports and collecting taxes on the government’s work handling. This could lead to costly consequences in terms behalf. They also enforce trade regulations to protect countries of time wasted waiting at ports. A port authority’s responsibility from illicit goods or harmful substances entering their borders. for safety, security, efficiency, and compliance must be matched with and supported by Customs’ role in regulation enforcement. PCSs are the living examples of close collaboration between This means they can work together harmoniously to achieve a port authorities and Customs. PCSs can contribute to ensuring common goal: a smooth transition through international bound- that all goods and people moving into or out of a port are prop- aries while maintaining strict adherence with laws governing erly documented and declared legally according to established global trade. 2 https://www.unescap.org/resources/business-process-analysis-guide-simplify-trade-procedures