eCommerce and Trade Facilitation Levaraging Global Standards to address Supply Chain Interoperability and de minimis Challenges Patrik Jonasson Director Public Policy GS1 25 July 2017

E-Commerce the unprecedented opportunity We know that e-commerce is an unprecedented opportunity for small firms to reach new customers in new markets We also know that small firms face major challenges in the cross-border logistics If some of the issues faced at the border could be removed, this would strengthen and embolden the small e-commerce companies Source: Suominen (2017). Ecommerce Development Index.

What are the Stakeholders Concerns? Consumers want online purchases to be delivered quickly, cheaply and reliably Online retailers want each parcel they send out to be delivered in the fastest and most cost efficient way Governments are seeing a growing volume of parcels that only can be managed through greater efficiency at the border. Limited resources mean that efficiencies need to be improved. Government E-Tailers Consumers E-commerce is changing postal and parcel markets Global e-commerce streams have revolutionized shopping but the current parcel streams are ill-fitted to accommodate these changes Cheaper delivery and efficient returns are priorities among consumers Cross-border delivery is generally considered a top obstacle for merchants De minimis remains a major issue There are significant concerns regarding Track and Trace: Parcels are commonly relabeled when they cross borders Due to this track and trace service often stops at the border In Europe about 60% of cross-border postal parcels are traceable* Benefits to these three groups could be achieved with the use of open standards

How to address the stakeholders concerns Be able to uniquely identify each parcel Define what type of information to be shared Ensure interoperability to be able to share the information

The Vision: Harmonized label used by all end-to-end Created and attached by SHIPPER at origin Homes Manufacturers SAME LABEL used by ALL END-to-END Created and attached by SHIPPER at origin Harmonized label used as Parcel ID Only basic address information (From; To) Carrier should use shipper label only Carrier may add proprietary label (above shipper label) Shipper label MUST remain intact Pick up points Wholesalers Parcel services Retail Distribution Centres E-Stores Stores E-fulfilment centres

The Harmonised Label Worldwide unique parcel identifier This label is including the UPU S10 on top and the unique parcel identifier at the bottom, which is an ISO compliant standard or “ISO License Plate” The identifier is a prerequisite for tracking and tracing in many international supply chains Worldwide unique parcel identifier Assigned by the SHIPPER The standard is aimed at managing cross border shipments via a simplified interface, to improve interoperability between different logistics operators in the delivery chains and to improve integration with software solutions commonly used by e-merchants. This interface is composed of two items: The physical label affixed on the postal item: contents, sizes, minimum requirements to guarantee the quality and efficiency of the logistic process (automatic sortation for delivery). The electronic exchanges between the sender and the logistics operator with the description of the data to be provided, and the format of the EDI exchanges. The Harmonized Label provides for two options for a mandatory parcel “number plate”: - The use of the GS1 SSCC (Serial Shipment Container Code). The SSCC is an open global standard which provides a globally unique serialised ID. This is assigned by the e-merchant selling the goods or by their Logistics Operator; or - In the case where only Universal Postal Union (UPU) designated postal operators are involved in the cross-border delivery, they may choose to use the UPU identifier only.

Benefits of open standards Unique Parcel ID & Interoperability What we are foreseeing is that the delivery chain management will be activated directly by data generated via the online retail platforms Linked to a harmonized barcode which provides a worldwide unique identification number for each parcel This number is assigned by the shipper and can be used by all parties in the delivery network including border agencies to link the parcel with the relevant information, making the system interoperable.

How does this address de minimis issues? A scan of the harmonized barcode would identify the supplier or internet shipper and parcel, and enable Customs to retrieve associated EDI data (e.g. product description, duty) from shippers. Authorities and other stakeholders in the process would be provided with data in advance. Allowing authorities to determine the extent of controls required for cross- border transactions before the parcel arrives in the destination country. In principle, this would enable the more rapid processing of parcels (a “Greenlane”).

Identification of consignments and e-tailer To identify if parcels come from GST registered offshore e-tailer paying GST and to manage the physical flow of parcels two items of data are required: A parcel ID and/or number plate that can link the physical item to the manifest information submitted to customs, when scanned or when the number is manually entered online Unique ID of the registered e-tailer The link between parcel contents and parcel ID can also enable expedited Cross Border Processes delivering: - Reduction end-to-end lead time - Fewer delays due to inspection holds - Fewer unexpected tariff charges (better product data available)

Benefits for all stakeholders Government E-Tailers Consumers There are growing expectations from consumers, for delivery to be more efficient and returns easier A harmonized parcel label would help online retailers improve the efficiency of cross-border delivery and return process and meet customer expectations Government can get unprecedented access to product data and supply chain data, which can be pulled as needed. Both for risk management and for duty collection. By using open standards all partners in the delivery network can use one worldwide unique parcel ID to link their relevant available data to the physical parcel, and avoid relabeling - opening new opportunities for better delivery services at a lower cost

Extra slides

GS1 role in e-commerce trade facilitation Just as goods are tracked via barcodes in supermarkets in the analogue world, e-commerce platforms are greatly helped by GS1 standards as well. The GS1 Standards help ensure that products are accurately identified for consumers and search engines. They also help improve product information by making sure product information is accurate and properly structured, so that they can be trusted by consumers and easily understood by search engines. This means better search results. GS1 has worked with industry to develop the label standard for small parcels in number of countries What is most important to note in the context of e-commerce trade facilitation is that GS1 standards are open and interoperable standards GS1 standards for barcoding and data sharing is the world’s most widely used supply chain standards, supporting global trade Businesses have used GS1 standards for decades. It is a globally deployed and proven system for product identification We are in manufacturing, retail, CPG Grocery, logistics, healthcare e-Commerce in 150 countries More than 6 billion scans per day 40-60% of global traded products moving around world barcoded following GS1 standards The GS1 global standards help connect products with unique, universal identities that travel the entire supply chain from factory to consumer Foundation is the barcoding for retail units, pallet labelling, RFID, 2D barcode (for healthcare)

A major barrier for e-commerce market development is the logistics inefficiency, including poor interconnection and track and trace due to a lack of inter-operability and cross border regulatory process challenges. The e-commerce industry led the charge to rationalise courier industry data standards for parcel identification and the associated EDI messages and data. The new CEN/TC 331 standard was ratified the CEN meeting of European countries on 14 April 2017. The standard is aimed at managing cross border shipments via a simplified interface, to improve interoperability between different logistics operators in the delivery chains and to improve integration with software solutions commonly used by e-merchants. CEN/TC 331 specifies the interface between the e-merchant (any commercial Customer sending parcels) and the first logistic operator.