1. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Rapid Response Toolkit Trade Logistics Advisory Service World Bank Group April 6, 2011, Washington DC

2. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Contents Country Program Scoping (Supplemented by Handout 2) Understanding the Fundamentals (Supplemented by Handout 1) Module 1 Module 2

3. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Introduction This module covers the following topics: Handout 1: Key elements of the international supply chain – intermodal transport system, traders (end- users), service providers (facilitators) and regulators (enablers) Cargo and Information Flows across the Supply Chain Chain performance – time and cost indicators Main hotspots in the chain – interconnectivity and sources of time delay and excessive cost 1 2 3 4

4. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 4 Port Operator Terminal Handling Border Clearance Mombasa Port Gatuna Border Malaba Border Farm to Foam – A Coffee Supply Chain Baltimore Port

5. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 5 Bourbon Coffee 2101 L Street Northwest Washington D.C., DC 20037 Farm to Foam – A Coffee Supply Chain

6. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 6 Insurance Buyers Warehouse Buyer Seller Insurance Delivery terms Payment terms Insurance policy Payment preparations Insurance policy Payment preparations Request for Offer Offer Order Invoice BL Copy Commercial Transactions between buyer and seller – - Responsibility: Liability coverage; risk; insurance - Location of transfer - Payment Terms: Guarantees; cash; check; LoC - Payment Time: Advance; On Delivery Cargo & Information Flows Across the Chain

7. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Cargo & Information Flows Across the Chain We do not focus on these commercial documents! Request for Offer Offer Order Dispatch Invoice Bill of Lading Manifest Packing List Letter of Credit Seller Buyer Transport related

8. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 8 Transit Documents Certificate of Origin - EAC COMESA Other FTAs Technical Certificates – Phytosanitary Veterinary Conformity etc Terminal Handling Receipts Import License Cargo & Information Flows Across the Chain Inspection Report Cargo Release Order Customs Declaration Preferential Special Transfer Customs Types of Official Documentation..& stamps This is our focus!

9. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Cargo & Information Flows Across the Chain Seller Vessel Arrival Outbound Port Shipping Agent Customs Cargo in custody Cleared cargo Manifest Bill of Lading Internationa l Shipping Lanes Port Handling & Transfer Terminal Handling Border Clearance The Manifest Submission Process Port Operator Warehouse - Manifest need: Information flow to the place of landing i.e. port - Manifest form – hard copy / electronic - Manifest info: Which containers will be unloaded and which containers will be held in the ports yard under bond to await clearance from customs

10. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Cargo & Information Flows Across the Chain Vessel Arrival Terminal & Port Operations Technical Control Clearing Agent Certificates Test Protocol Customs Inspection B/L Copy Delivery Order Invoice Declaration Supporting Duty & fees Clearance of Cargo: Documents to Customs & Technical Control Duty & fee payments Role of Agents Inspections Conformity Phytosanitary Transport Veterinary Inspection

11. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Cargo & Information Flows Across the Chain Port Operator Terminal Handling Border Clearance Clearing Agent Release order Declaration OK Payment/port fee Release order Clearance: Port Charges Release Order Move to ICD / Private warehouse Seals Transport

12. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 12 Buyer Seller Terminal Handling Border Clearance Day Cost Kenya 3430 USD France 1150 USD Colombia 2200 USD Pick-Up & Inland Transport Day Cost Kenya 41000 USD France 2627 USD Colombia 31000 USD Document Preparation Day Cost Kenya 11370 USD France 5155 USD Colombia 6330 USD Terminal Handling Day Cost Kenya 6390 USD France 3316 USD Colombia 2170 USD Border Clearance Cost and processing times provide hurdle rates whereby countries whose performance levels in the various categories fall short of best practice (i.e. France here) in comparison can be identified as potential hotspots. Time & Cost Measurements as Indicators of Chain Performance

13. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 13 Coffee Farm Border ClearanceTerminal Handling Shipping Transport Retail Seller Outbound Port Hotspots – Common Areas Hotspots Document Preparation Vessel Arrival & Berthing Terminal Handling Border Clearance Pickup & Inland Transportation Interagency – interconnectivity; IT

14. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Document Preparation Trader: Importer/Exporter Freight Forwarders & Customs Brokers Multiple Document Requirements for Customs Ministry of Health Food & Drug Agency Ministry of Agriculture Bureau of Standards Other Border Agencies X Weak Interconnectivity Manual submission of documents Sequential processing Small & Medium Trader Issues Hire low cost/low skill agents Delay in commencing good declaration due to cash squeeze Use of cheap port storage Preference for low cost/low skill services Weak understanding of import requirements Lack of trust in system

15. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Border Clearance Cleared Inspection Required Inefficiencies for Customs High number of supporting documents Repetitious filing of forms Manual processing High inspection rates Lack of electronic support in inspection Frequent valuation disputes Lack of inland clearance capabilities

16. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Border Clearance (cont.) Shipping Agent Clearing Agent Trader X Bureau of Standards Health Department Agriculture Department Other Agencies Sequential Processing Increased dwell time Increased terminal handling charges when moving from one inspection area to another Excessive documentation Lack of clarity on roles Lack of trust and an unwillingness to share data Arbitrary behaviour by government agencies

17. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Vessel Arrival/Berthing International JurisdictionReceiving Country Jurisdiction Harbour Limits Ship Manifest Formalities for Vessel Arrival/Berthing Vessel Control Authority Coast Guard Port Authority Pilotage Association/Authority Customs Immigration Department of Agriculture Department of Health Shipping Agent Port Authority Customs X Manual Processing

18. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Terminal Handling Poorly Configured Handling Facility Poor Labour Practices Inefficient Terminal Tariff System

19. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Inland Transport Travel Delays Compulsory stops at many weighbridge stations Police checks Deficient driver skills that lead to accidents Frequent vehicle breakdowns, and Poor road conditions that affect driving speed Inspection High Carrier Rates High cost imported spare parts Low Utilization due to long cycle time Absence of backhaul cargo High Incidence of Cargo Loss & Damage Frequent accidents High rates of theft Absence of Market Competition Rigid Licensing Tacit promotion of cartels

20. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Hotspots in the Chain – Interagency & Coordination Clearing Agent Trader Truck Operator Port Operator X Road Delays Port Authority Customs Police Pickup & Gate Clearance Delays Truck Operator Communication & Coordination Delays

21. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Questions 21