The Customs of freight forwardingJuly 7, 2017
Christian Laughlin, special projects manager at International Shipping, and Marcus Best, the company’s director of projects in Trinidad and Tobago, talk to TOGY about optimising performance through the modernisation of the country’s port infrastructure. International Shipping began operations in Trinidad and Tobago in 1997.
Trinidad and Tobago’s International Shipping operates as a freight forwarding company in Trinidad and Tobago. Laughlin and Best discuss the company’s regional plans, its aspirations to develop collaborative efforts with companies such as ExxonMobil through existing relationships in addition to the value of reputation and local connectivity. While Trinidad and Tobago continues to suffer from ongoing gas curtailments, a spate of recent developments such as the recently sanctioned Angelin project, TROC and the Juniper project highlight efforts to address the shortages. Freight forwarding and transportation operators are expected to see an uptick in contractual operations as a result of the development boom.
• ON OPTIMISING FREIGHT FORWARDING: There also needs to be a revamp of the port facilities. You cannot have the theoretical part working only to have the operational part slow it down. Down time is an issue. We have some equipment at the Ports, which have not been changed for 20 years. If a crane goes down and there are only four other cranes working, you will have boats out waiting to come in. – LAUGHLIN
• ON REPUTATION: Some of the customers that we do business with today have been with us since the beginning. These companies are very risk averse. They cannot afford down time. In this case, reputation and experience are everything. – BEST
Laughlin and Best also discuss the lessons lessons learned from operating in Trinidad and Tobago, and the cautions considered when the issue of expansion is brought into play. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Christian Laughlin and Marcus Best below.
What are the company’s latest operational highlights and activities?
BEST: Our main business is not so much in upstream oil and gas, but more in petrochemicals and ammonia. Our customers are companies such as Atlantic LNG, Yara Trinidad and PCS Nitrogen. Because of the declining production in oil and natural gas, which these companies depend heavily on to do manufacturing, their business has shrunk, and as a result, our business has shrunk.
We provide full logistics. This means we go to their suppliers, pick up their equipment, ship it, do Customs clearance and deliver it to their facilities in Trinidad.
Have you noticed an increase in door-to-door services now that big shipping companies such as Maersk do not offer these types of services?
BEST: Generally, the conventional or big-line carriers have a scope of work that is limited [compared] to what we do. They generally just do it from port to port. That is why there is work out there for us because we offer the full array of services, from the supplier’s door to the consignee’s door.
There will always be a job out there for us because there are so many small things that they cannot do. For example, certain documentation or fulfilling requirements that the customer has that these lines cannot provide. That’s where we come in.
However, some of these big liners are venturing into the freight-forwarding arena. For example, Crowley Shipping Line now has Crowley Logistics. Tropical and King Ocean always had logistics arms. Still, I don’t think they could perform the teamwork that some of these energy companies require. I think that there will always be something out there for us to do as a freight forwarder.
How do you distinguish yourself from other companies that do freight forwarding?
BEST: We rely on services and experience. Some of the customers that we do business with today have been with us since the beginning. These companies are very risk averse. They cannot afford down time. In this case, reputation and experience are everything.
How is International Shipping dealing with issues related to Customs?
BEST: You have to manage [issues with Customs] as tightly as possible. We try different [tactics] such as getting pre-approval of documents for shipments to come in. We try to foresee problems before the cargo arrives and try to fix them. That is something that we actively try to do. We have always done it. However, Customs is still slow and inefficient.
LAUGHLIN: It also helps that we anticipated that this would be a problem many years ago, so we engaged the services of an ex-Deputy comptroller of Customs, who heads our brokerage department. This individual worked at Customs for 41 years. When he left as the deputy comptroller of Customs, we hired him. In Trinidad, it is a situation of not whom you might know, but who knows you that gets doors open. Our life was made easier by having him on board because people respect him and he gets things done in a timely fashion.
What would you suggest to speed up the Customs processes?
LAUGHLIN: I think that having the electronic platform working would be a major step forward. The idea is brilliant. It has been done in many other countries before coming to Trinidad. If it worked as it should, then everything would be fine.
There also needs to be a revamp of the port facilities. You cannot have the theoretical part working only to have the operational part slow it down. Down time is an issue. We have some equipment at the Ports, which have not been changed for 20 years. If a crane goes down and there are only four other cranes working, you will have boats out waiting to come in.
We have had situations where vessels actually arrive in port and leave with Trinidad cargo to make a full cycle and return because it costs over USD 20,000 per day for them to stay out at sea idle and waiting.
The technical side of the electronic customs platform is supposed to be working fine, but it has to be in line with the infrastructure side.
BEST: There needs to be investment in the ports, improving the facilities, increasing efficiency and speeding up turnaround time to offload vessels. That is the only way that things will improve.
LAUGHLIN: What would help us and other freight forwarding and shipping lines is this: at International Shipping we have a private off-site unstuffing facility for offloading of containerised cargo. It is also a Customs Bonded facility. Just like in Europe, if you have a customs bonded facility that is not in the ports, it is the equivalent of having something at the port, which means your container can move freely from the ports to the facility with electronic paperwork. In Trinidad it isn’t like that. We still have to work with a permit to remove (PTR) system, which sometimes take a day or two. If we could be brought in line with first-world countries, it would speed up the process.
Would the situation be improved if international companies ran the ports?
LAUGHLIN: That has already been tried. It helped but didn’t solve the problem.
BEST: The general efficiency may improve somewhat. However, you can have the technical and IT sides working, but if you have old equipment that breaks down nothing will work.
LAUGHLIN: The port is heavily unionised. You could have a foreign management company doing it, but if the workers are loyal to their union heads they don’t work. You are not going to get anywhere, even with top-class management. The whole thing needs to be revamped or privatised in order for it to work more efficiently.
Do you think there should be more communication between ports since these facilities specialise in different areas?
LAUGHLIN: Generally, the way it operates now is that Point Lisas is more an industrial port that services the industrial estate. This is because of the proximity of the oil and gas and petrochemicals processing plants to natural gas lines. That is how it evolved. I think Point Lisas is perfectly placed.
BEST: It has been accepted that Port of Spain is for container cargo and Point Lisas is for break bulk cargo. I think the ports do communicate. We have been to many functions and seen the GM [general manager] of Port of Spain Port talking to the GM of Point Lisas Port. They have meetings. The ports answer to the Ministry of Trade.
A lot of private businesses are making a pitch to the government for a dry dock facility or to create a new port. The government themselves have had plans for many years to create a new port facility. The problem that they’re facing is that the union is so strong in this country, they are afraid to upset or bring everything to a standstill by interfering with it.
How are the unions preventing this process from happening?
BEST: If the government does what it is supposed to do in order to bring the standards of the port up to mark, a lot of the people currently working in the port may not have a job. Let’s say there is a function that one person could do – the port may have five people doing it. In this sense four people might lose their jobs. Or let’s say there is a function that requires you to have some level of automation or a trained professional. Someone might do it because they have learned it on the job, and there is nothing wrong with that. However, he might lose his job if they go ahead with this plan of modernising the port. That is where the union comes in.
What has International Shipping done to become more efficient in the current economic downturn?
LAUGHLIN: We constantly look at cost. While we have not laid anyone off – we are hoping it will happen through attrition when we have resignations – we are trying not to fill vacancies and make good use of the staff that we have.
Are you interested in having companies that are using more efficient vessels?
BEST: Unfortunately, I think that business right now is so price sensitive that the end customer is only concerned about the fee. They will go for the most cost-effective services, not necessarily the most energy efficient. That means if there is an old vessel that is operating efficiently, if it is reliable and on time, they will take it.
What else have companies done to save on costs?
LAUGHLIN: Coming from New York there are generally two options. There are the vessels that come direct, with a short transit time of about 11 days, and there are vessels that make a stop in Freeport and the cargo comes off and goes onto another ship, and that takes about 18 days. That cost is generally cheaper than the direct cost.
In the old days, someone would go with the direct cost to get the goods faster. Nowadays, we are seeing that the customer is going for the longer transit and cheaper cost. They have to reduce their costs because things are so competitive.
There are other ways that we have found to be more efficient in terms of cost. For example, we identified running our own operation in the USA would be more cost efficient in terms of communication because of our people working there. We have eight staff there and 30,000 square feet of warehousing space in Florida.
When we made the switch, our efficiency increased significantly and our costs were reduced because we did not have to share or rely on the network. Everything is internal. We have linked our phones so that we are saving costs on overseas calls. It was a good move for us.
Are you interesting in the Guyana market?
BEST: Yes, we are. The Miami office is also going to be used as a platform to export to other destinations. For example, two years ago we were generally only shipping to Trinidad from Miami, other states in USA and around the world. Now in the Miami office, we are actively shipping to Barbados, Jamaica and Guyana – so much so that we are going to be opening an office in Barbados in the next couple of weeks. Hopefully, we can open an office in Guyana after that.
Are there any companies that you are eyeing in Guyana?
BEST: The ExxonMobil contract is coming up in June. Our partner in Houston is a company called JAS Forwarding. They currently do work with Exxon to other destinations, especially to Africa; they already have a contract in place. We are hoping that by merging our efforts and piggy backing on their experience and contracts with Exxon, we can get a way in with Exxon.
Are you considering any other countries such as Colombia or Mexico?
BEST: The panamanian and the Dominican Republic markets have been growing for some time now. We hope to do some more business there.
LAUGHLIN: We cannot bite off more than we can chew right now. There is only so much of us to go around. Our plan is to focus on a few markets, and after we have mastered those markets, move onto other markets.
What is the vision and strategy for the company moving forward?
BEST: Our short-term vision is to generate more business from the US office to other Caribbean destinations so that we can generate a US exchange and satisfy the problem that we have in Trinidad right now.
The long-term plan is to develop more markets so that we can be as strong in Barbados, Guyana, the Dominican Republic and Colombia as we are in Trinidad.
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