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ly f o r S1 u p p e n i z a g . Ma agement n a M t. n i Cha nagemen a M e d a r Global T And lT. r 2018 Decembe
December.2018
d ia ▪ AEB Me om w w w .a e b .c 1▪ 63-683 3 2 N S lS
Christmas List
Dear Santa Claus, Practical: G
ift ideas for logistics professionals
Christmas 2025:
AtoB
) n i a g a e c n o ( r a e y s i Th I want a
s a m t s i r Ch issue
Will reindeer be replaced by drones?
China:
Tips for smooth import customs clearance
tings: Season’s Grneoet season y a d li o h e th in will ru Why BREsXt lTnot this year) (at lea
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Merry Christmas! Thank you for trusting us with your business in 2018. On behalf of everyone at AEB, we wish you a healthy and happy holiday season and a prosperous new year.
Matthias Kiess
Richard Groenendijk
Torsten MallĂŠe
Ted Roth
Uwe Henning
Markus Meissner
Geoff Taylor
Ingo Strasser
Cordelia Martin
Mark Brannan
This year, we are once again making a Christmas donation to the AEB Foundation, which promotes not-for-profit educational projects for the disadvantaged to enhance their opportunities in school, in their career training, and in society. www.aeb-stiftung.de
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Page 6 Silent Night poem
It’s easy being part of the dream, bringing equal opportunity to school. A gesture, as small as it may seem, can turn into a life-changing tool.�
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Page 18 Brexit: Season’s Greetings
Traffic nightmares and billions in costs: What businesses need to expect when it comes to Brexit
Contents
Silent Night
06
A Christmas poem about education – and its transformative potential. Reinventing Santa’s sleigh
10
A look at package distribution logistics in 2025 Innovation management
14
Taking design thinking for a test drive
Page 26 Case study: Cloud-based customs software
“Outsourcing allows us to focus on those areas of IT that truly create value for us.” Andreas Lehmann, Villiger
Brexit: Season’s Greetings
18
What businesses can expect when it comes to customs – and how they can prepare Gift ideas for logistics professionals
24
For that special someone: quadrocopter, Magic Truck, or maybe a gridlock game? Case study
26
Cigarmaker Villiger moves its customs software into the cloud Christmas around the world
30
How people celebrate in Sweden, Singapore, Switzerland and beyond A jolly good interview
Page 10 Package distribution 2025
“The next few years will bring changes to last-mile logistics.”
34
How the Christmas spirit transcends customs barriers Exports to China
36
Cutting through the red tape in Chinese customs Credits
44
... all is calm, all is bright ...
Silent Night Poetry slammer Lars Ruppel has penned many a rhyme for AnachB. This time, he found inspiration in the work of the AEB Foundation, which sponsors educational projects for the disadvantaged. And naturally, logistics plays a role in our Christmas poem.
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December.2018
The library in the heart of the town, the place where all of this happened, was packed with shelfs, books all around, world of the words, seldomly entered.
There sat a boy wearing huge headphones Which he only took off in an emergency case, absorbed by his textbooks for hours, alone, studying like he did most nights and days
Even after the opening hours had ended they let him sit there, to read and to write. He even had keys to lock up when intended, so he could stay there till deep in the night.
There he could get prepared in the quiet for at home there was not enough room, instead many siblings and reasons to fight and worries – the only thing that would bloom.
‘cause despite double income money was tight, ‘cause at home he always had to help out, ‘cause for a job he had to put up a fight, “No matter your story, the final score counts!”
So he had no choice but to be his own coach. The books gave him strength when in need. “Work hard till you make it” was his approach, but at times he doubted he’ll ever succeed.
Still he had known his dream job since childhood Some people told him: “Dear, spare the effort!” But he loved the worldwide dance of the goods And believed he could make it to logistics expert!
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One crystal clear an cold winter night He left the library with the usual delay went to the spot where he’d parked his bike, started to pedal and got on his way.
He drove through streets sparsely lit, through his hood on the outskirts of town. There, where the forgotten ones lived, ‘cause you’re only worth what you own.
Behind these windows lives and dreams were unfulfilled and not very much fun, because opportunities were everywhere, but most certainly not meant for everyone.
The parent’s profession, the colour of skin, he had to face hurdles as high as his heart. Like all these people who know deep within, their race to the top will be twice as hard.
The addresses in their IDs reveal from which position they start the race, if they get to develop to an ideal in a favela or co-working space.
He wanted to change things, this wasn’t right! Back home he grabbed paper and pen to write to the world, what was on his mind: “To all it does concern,
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and because I can’t do this alone, we all are part of a bigger system, if only one link in this chain breaks like bone, we all become part of the problem!
Though it’s so easy to be the solution! Equality always starts with education! Even the tinyest contribution can grow to change the whole situation!
To the world’s most valuable treasures education holds the map and the keys. Even the smallest actions and measures, from helping with homework to paying for fees,
help personalities grow – a new thrust! It’s about the first step, let’s begin! So frustration can finally turn into trust. I will start here and now, please join in!”
His letter was read around the world and lit fires in so many hearts. At least that’s how the story goes, for sure that’s how our story starts!
One logistic expert was amazed by the boy. He saw his commitment, saw he was bright. With his help he studied and soon got employed. Now he’s in logistics and coordinates goods worldwide.
About the author: Lars Ruppel, 33, is a celebrated poetry slammer and has won several national championships in this discipline. One of his specialties is composing poems about German idioms.
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December.2018
Ding Dong Merrily on High ...
Reinventing Santa’s Sleigh Many people already do their Christmas shopping online – and this number has nowhere to go but up. But how do gifts find their way to their intended recipients? There are lots of innovative concepts for the last mile. We’ve examined these ideas for their speed of delivery*, cost of delivery**, and acceptance among recipients, then made our predictions for how widespread they’ll be in 2025.
Reindeer sleigh Although we don’t have any serious scientific studies to draw upon, children are probably the main advocates
*From date ordered to date received **For the seller or parcel service
of using a reindeer-driven sleigh to deliver gifts. Nor
Drone
is this surprising, given the adorable propulsion
Two or three years ago, you still saw a lot of headlines about
But as much as we like ol’ St. Nick, we must admit that
airborne drones delivering packages. Today, you hear a lot less
the long-term perspective for this mode of transport
about it. In Europe, regulatory challenges and limited public
is not good, despite its many charms. In the age of
acceptance are the main reason drones have never really
global warming, there simply won’t be enough snow to
taken off or risen above the status of experimental niche
make it feasible. So it might be a good idea to donate
technology – despite offering quite a few benefits.
the reindeer to the local zoo sooner rather than later.
technology and friendly driver. The reindeer sleigh has other advantages as well.
This won’t change any time soon: Drones will have their place in logistics. But as far as becoming a widespread means of
Delivery speed:
transport for Christmas presents … that’s about as likely as
Delivery cost:
running into Santa Claus.
Acceptance: Prediction for 2025:
Delivery speed: Delivery cost: Acceptance: Prediction for 2025:
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Car trunk drop-off The idea of having packages delivered to the trunk of your car goes back at least to Zalando’s “Fashion Concept Car” in 2013: Parcel companies determined the delivery location automatically using the car’s GPS coordinates, then placed the package into an integrated package station in the trunk. But the technology has not evolved very far since then, and the idea still hasn’t really caught on, even though it actually has very few downsides. That’s why we think it will still find a few fans. In the United States, Amazon has teamed up with GM and Volvo to test the idea in 37 cities. And VW has announced that it will offer the service in selected standard models starting in 2019. We believe that in 2025, having packages delivered to the trunk of your car will be an open-and-shut case. Delivery speed: Delivery cost: Acceptance: Prediction for 2025:
Package delivery robot They remind you a bit of R2-D2 from Star Wars: Delivery robots or as an assistant to parcel carriers. Here, too, the initial media
Cargo e-bike
hype has subsided. And the bots must overcome the same
A veritable bike boom is underway
problems with acceptance that drones face. Worse still, they
– and it’s even spread to the
have to worry about being kicked or even stolen.
logistics industry. At least, that’s the
That’s why we’re not so convinced that Christmas presents
impression you might get from the media
will be delivered by robots in 2025. And whether this will ever
reporting. In practice, the trend of electric cargo bikes
come to pass: Only the Ghost of Christmas Future knows for
is limited mostly to food delivery services in big cities.
sure.
Bicycles are still a rarity in package delivery. They
that bring packages to your front door – either autonomously
can’t carry much cargo and are personnel-intensive, Delivery speed:
making them an expensive and unattractive option.
Delivery cost:
Nevertheless, their role in delivering presents is sure
Acceptance:
to grow.
Prediction for 2025: Delivery speed: Delivery cost: Acceptance: Prediction for 2025:
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3D printer Only ten years ago, additive manufacturing was expected to take the industry by storm. The euphoria of that time is evident today only in niche markets, where 3D printing is expected to continue growing. The vision of consumers printing Christmas presents at home is almost as elusive today as it was then. Most gifts won’t likely be printable, so 3D printing will play (almost) no significant role in 2025. Delivery speed:
Delivery cost: Acceptance:
Prediction for 2025:
Gasoline-/diesel truck The traditional mode of transport among last-mile technologies moves on four wheels and is powered by
about 96% still featured diesel or gasoline engines.
Electric van
This yields high levels of emissions and air pollution,
Electric delivery vehicles are literally gaining ground – and
especially in metropolitan areas, and is reflected in
deservedly so, since they’re an ideal fit for the last mile, where
the declining acceptance of such vehicles.
relatively short routes can be precisely planned to match
The result is growing criticism of the dominant mode
battery ranges. So it’s not surprising that parcel companies are
of transport in today’s parcel delivery industry.
testing EVs.
Nevertheless, gasoline- and diesel-powered trucks
Electric delivery vehicles will displace their gasoline- and diesel-
and vans will continue to fill our roads in the years
powered counterparts. And this will happen faster than you
ahead and bring a large – if greatly reduced – share
might think. We believe that in 2025, they’ll transport most
of Christmas presents in 2025.
packages.
a diesel or gasoline engine: Among the some 140,000 package delivery vehicles on German roads in 2016,
Delivery speed:
Delivery speed:
Delivery cost:
Delivery cost:
Acceptance:
Acceptance:
Prediction for 2025:
Prediction for 2025:
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Parcel storage station/locker Package pickup location
Parcel storage stations and lockers are becoming
Package pickup locations are becoming increasingly common.
The role of stations and lockers will gradually increase
In Germany, a logistics industry group found that some 10% of
by 2025, thanks in no small part to e-commerce
shipments to end customers in 2016 were received in one of
giant Amazon and its plans to greatly expand the
the over 40,000 pickup locations.
role of Amazon Locker. And this will likely increase
The number of such locations and their role in parcel logistics
acceptance.
increasingly common as a sort of unmanned variant of package pickup locations. In 2016, however, stations accounted for a mere 3% of deliveries, with lockers accounting for even fewer still.
will continue to grow – despite the long wait times and other downsides. In the weekends leading up to Christmas 2025, we
Delivery speed:
expect to see these package pickup centers as crowded as the
Delivery cost:
city centers they inhabit.
Acceptance: Prediction for 2025:
Delivery speed: Acceptance:
Delivery cost: Prediction for 2025:
Bottom line: It’s all about options. And intelligence. And partnership.
attractive. Many offer a high degree
for such issues as the shortage of
of automation, and some – such
drivers and cost pressures. Cities
as parcel storage stations – have
and parcel services working together
already been field-tested and proven
and deploying smart IT solutions
There is no one single solution
their merit. But the success of a
can
for delivering online orders, nor
delivery solution hinges primarily
leverage synergies, and manage the
will there be in 2025. The same is
on the acceptance of the recipients.
flow of packages from start to finish.
generally true for the last mile in
Acceptance is the holy grail for any
That’s what we want for Christmas
logistics: Only with an assortment of
number of innovative technologies,
this year – so that there will still be
different options is it even possible
each of which offers its own benefits.
presents under the tree in 2025.
to cope with the large volumes of
Drones, package delivery robots,
online orders.
and the other alternatives must first
But in the years ahead, we’ll start to
win over the hearts of consumers.
see this mixture change: Gasoline-
But new ideas and technologies
and
delivery
alone are not enough to ensure
vehicles – the dominant model by
viable last-mile delivery in the world
far – will be overtaken, as it were.
of tomorrow. Partnership and digital
The pollution and other negative
intelligence are key, especially when
aspects are simply too great, and
it comes to managing the challenges
the alternatives are simply too
in large metropolitan areas – or
diesel-powered
help
maximize
payloads,
About the author: Jens Verstaen is an ordinary e-commerce customer with the extraordinary disadvantage of living on the fourth floor. Many delivery services won’t bother to ascend to his heights, so they either hand off his packages to ground-floor neighbors or bring them directly to the parcel delivery station – even when Jens is waiting patiently at home. He hopes this problem will be solved well before 2025.
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December.2018
Let it snow, let it snow, let it snow ...
Shortcut for innovation First you need an idea, then market research, then a business plan: That’s what traditional innovation management looks like. The “design thinking� model takes a markedly different approach, beginning with the potential customers and their problems. Our author gave it a try.
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It’s 3:30 in the afternoon, and the
name basis here – are placed on the
questions to maximize input and
Get Connected Festival is drawing
topmost sheet. Strict time limits are
insights turns out to be spot on.
to a close as the “Design Thinking”
defined for each task: three minutes
Jens returns to his table. Our team
master class heads into round three.
here, five minutes there, occasionally
consolidates what it learned and
What awaits the 15 participants in
ten minutes. Robin and Adriana keep
defines three main problems relating
the next two hours? The only hint is
a close eye on the clock and never let
to commuting. We then agree on an
a table full of Legos, pipe cleaners,
us exceed the allotted time.
issue for which we plan to offer Jens
dough, and colorful corn pellets!
a solution: We want Jens to be able
Wait a second: Wasn’t this supposed to be about design thinking – the
to use the time he spends in his car
The more ideas, the better
more effectively.
innovation method we’ve all heard so
Once again, we collect our ideas,
much about?
That’s part of the plan with design
write them down on Post-its, and
We don’t have much time to ponder
thinking: “We always set deadlines,
stick them on the window pane
this question before our coaches
and
deadline
in the conference room. “Nobody
Robin König and Adriana Markovic-
approaches, the more quickly we
should feel limited. We want crazy
Stump from CODE_n get things
work,” Adriana explains. Our team
ideas, regardless of whether they’re
moving. Design thinking is about
quickly agrees on a number between
doable,” Adriana emphasizes. It’s
stimulating
while
1 and 15. We pick 4, and the next
all about “yes, and ...”: “yes, but ...”
never losing sight of what people
sheet of paper reveals what our
is not allowed. “Ask yourselves how
actually need. A critical ingredient
assigned topic is: commuting – our
your grandma would’ve solved the
in this process of innovation is the
daily route to work. Each of us takes
problem, or imagine that you’re
involvement of a diverse mix of people
a small sticky note and writes down
super-rich with money to burn,”
from various disciplines. That’s no
the first thing we think of relating to
adds Robin. “Go for quantity!”
problem for this master class, since
our topic.
That’s exactly what we do. Then,
we’re a fairly diverse crowd at today’s
Now it’s time to do some research.
we consolidate all our ideas and
event in the south of Stuttgart.
“In
agree on a solution: Jens should
creative
ideas
Post-its as guideposts
the
the
faster
real
that
world,
it’s
not
uncommon for design thinkers to
take
check themselves into the hospital
opportunities.
advantage
of
carpooling
for a few days or become voluntarily homeless to learn more about a
Lego cars to the rescue
Four of us quickly come together to
particular problem,” Adriana tells
form a team. Each team takes position
us. We don’t have that much time,
at a bar table with several sheets of
so instead, we ask Jens from the
Now, we finally learn what the table
paper on it. The tension gradually
team at the next table. In exchange,
full of Legos, pipe cleaners, and
eases as we begin by drawing self-
we allow them to consult with Rayan
corn pellets is all about: We get to
portraits on Post-its. These colorful
from our team.
build a prototype! No problem. Ten
sticky notes will be a recurring theme
We ask Jens to share his thoughts
Legos on a Lego board represent
throughout the workshop. “This makes
on the subject of commuting. One
a 250-kilometer distance and two
our thoughts more transparent and
person asks the questions, another
buildings: home and work. Five
transportable,” our coach explains.
person writes down the answers,
people are sitting in a Lego car.
We have only a short time for our
and a third person watches the body
We’re grateful when coach Robin
first assignment. The Post-its with
language. Robin’s suggestion that
makes a brief stop at our table and
our first names – we’re all on a first-
we ask open and uncomfortable
offers some valuable tips. What can
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December.2018
New paths toward greater innovation we offer Jens? An app, of course – one that brings together drivers and passengers. We show Jens our solution. “Whatever
We all have creative potential within us. Usually, it is buried deep down inside, and
you do, don’t make it a sales pitch”
to bring it to the surface, we may have to turn to unconventional methods. One such
Robin warns us. Instead, use the
method is called design thinking. This method of innovation, which is very much in
time to ask him whether the solution
vogue right now, is the brainchild of Terry Winograd, Larry Leifer, and David Kelley
makes sense for him personally. Does
– founder of the global design and innovation company IDEO. The elite Stanford
he have any comments or criticisms?
University in the United States now even has a special institute devoted to design
What have you overlooked? The
thinking. In Germany, the School of Design Thinking at the Hasso Plattner Institute in
feedback ends up on more Post-its.
Potsdam was launched in 2007.
Are we perhaps on the wrong track?
The design thinking process can be broken down into six steps.
We are! We move quickly to the next problem-solving round. Time
1. The first step is to understand the problem itself: What are the needs
is of the essence, since we want to
and challenges of the project?
present our project to everyone at the master class, of course. The timer
2. The second step is about observing: Design thinkers do in-depth
buzzes once again. But we managed
research to comprehend the project and define a status quo.
to finish, and in the end, Jens seems quite impressed with our solution. Although the two hours have long
3. Step three is about finding the “point of view”: All observations are
since run out, there’s still time for a
broken down to a user, whose needs are consolidated into a single
wrap-up. Many of the master class
brainstorming question.
participants express their enthusiasm for what they learned about team
4. Step four is ideation – one of the core elements of design
leadership and team dynamics. “But
thinking: Team members develop a variety of concepts and solutions.
because this can really become a problem, it definitely helps to have a coach when using this agile method,”
5. This is followed by a development of initial prototypes to illustrate
Robin assures us. Other participants
the ideas.
are happy about the many new ideas and strategies for promoting a culture of innovation in their own
6. At the end of the process chain, a test examines how the prototypes
companies. Rayan is succinct in his
resonate with the target audience. The insights gained here then help
assessment of the day’s experience:
improve the concept or solution. The process concludes with a product
“That was totally cool!” That’s really
that is optimized through its focus on the user.
all there is to be said. The author: Annett Boblenz came as an observer and stayed as a participant. This gave the independent journalist from Stuttgart a front-row seat to experience this celebrated method of innovation. Who knows: Maybe design thinking might be useful to find content for the next issue of AtoB?
Design thinking relies heavily on interdisciplinary teams to achieve as diverse a perspective as possible on a particular issue. Young people work alongside their experienced colleagues, and women and men are both represented. The process also benefits when the participants represent different national, cultural, and professional backgrounds. Diversity is key to creating unique innovations.
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December.2018
Baby, lt’s Cold Outside ...
Brexmas: Season’s Greetings An invisible door will close on March 29, and just like that, the United Kingdom will be outside the European Union, looking in. The consequences will be keenly felt by those on both sides of the English Channel. Exactly how bad it will be depends on the modalities of the “Brexit” – which are still the subject of intense negotiations at the time of this writing. Businesses are advised to prepare meticulously.
Admittedly, the British automobile industry has seen better days. But
Brexit disrupts established supply chains
bolstered by strong brands like
Dr. Christian Kille from IAL can’t help but view this trend with suspicion: “Automotive
manufacturers
have
Bentley, Mini, Land Rover, Jaguar, and
This business model will really be
begun to prepare for Brexit by
Rolls Royce as well as investments by
put to the test under the impending
shrinking the share of supplier
several foreign automakers, assembly
Brexit. In fact, this is already
parts that will have to cross the
lines in the UK roll out 6,600 vehicles
happening.
Export/Import
future external border of the EU.
each and every day – and export
Seismograph for Germany, published
International business collaboration
5,200 of them to countries around the
by the Institute of Applied Logistics
is already suffering.” A similar trend
world. The UK also produces some
Solutions (IAL) at the University
can be observed in other sectors as
5,500 engines each day. But Britain is
of
Würzburg-
well: International trade in chemical
in no way an island unto itself here:
Schweinfurt in partnership with
precursors fell 21% from Germany
Some 1,100 trucks a day bring vehicle
AEB, registered a decline of 9.3% by
to the UK and 5.5% in the other
and engine parts into the UK, and
weight in exports of automotive parts
direction. The response in the steel
many automotive suppliers from the
from Germany to the UK, and a 6.8%
sector was no different, with a decline
European continent manufacture on
decline in the other direction, in the
of 20.5% in German exports to the
British soil.
first half of 2018.
UK and 5.7% in the other direction.
Applied
The
Sciences
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Businesses already bracing for hard Brexit
December.2018
deal” hard Brexit, border customs
and simplification of formalities
offices will have to handle customs
when it leaves the EU. This would
formalities. Dutch customs officials
defuse the problem at the borders,
These steep declines can certainly
anticipate wait times of forty-
since
be attributed in part to the weak
five minutes per truck or container
could also be performed at internal
British economy – but not entirely.
load, up from the average two
customs offices. The only hitch is
It appears that businesses are
minutes that drivers need to take
that, in addition to the EU, other
preparing for the scenario of a
care of formalities when crossing
states must also agree to this – and
“hard Brexit” in which Britain
the current Schengen border. This
that’s a risky proposition, given the
leaves the EU on March 29 without
means that unless parking areas
short time remaining.
any deal or transition period. This
are built at the ferry ports along
Another
would mean that from one day to
the English Channel, trucks will be
supply chain managers headaches:
the next, the UK would revert to a
backed up for miles. And naturally,
Which trucks will even be allowed to
“third country” that levies duties
you’ll need more customs officers to
enter the UK if the EU Community
on EU imports under the rules of
avoid bottlenecks.
license becomes invalid following
the World Trade Organization and
are subject to those same duties.
customs
question
formalities
that’s
giving
a hard Brexit? The only possible
General Agreement on Tariffs and Taxes and whose exports to the EU
the
alternative
Worst-case scenario: chaos at the borders
to
the
Community
licenses are CMR licenses, but they are limited in number. It’s also
These fees are quite prohibitive in
possible that a few of the bilateral
many cases: 44% of customs value
To avert customs chaos in the
authorizations from the time before
for cheese, 40% for beef, 22% for
event of a “no deal” Brexit, the UK
Britain joined the EU might come
chicken, etc. But that’s just part of
wants to accede to the international
into force again. Another possible
the problem. In the event of a “no
conventions on common transit
scenario is a massive shift in transports to short sea shipping: local
companies
moving goods from ports to their
Prediction for customs declarations in DE after Brexit Exports/imports 2016
transport
destination. But the question here
Additional exports/imports due to Brexit
remains whether enough capacities will be in place by March 30. 86.15 Mio.
Whatever path the traffic flows
+ 17.2 %
into and out of the UK in a “no 35.63 Mio.
deal” scenario: The movement of
+ 8.9 %
goods will definitely take much more time. To avoid bottlenecks,
402.21 Mio.
Exports
Imports
Brexit will greatly inflate the number of customs declarations processed by German customs: 17.2% for exports, 8.9% for imports.
Source: DIHK
manufacturers
(Quelle: GZD)
499.51 Mio.
and
retailers
in
Great Britain need to build up safety stock. All that costs a lot of money: The Oxford Economics think tank estimates that a “no deal” Brexit will cost the remaining 27 EU member states €112 billion and the UK a whopping €140 billion by 2020.
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December.2018
• Customs clearance:
Associations such as the German
together a checklist that offers good
Chambers
guidance (see box on page 18).
Are my employees and IT
Commerce (DIHK) advise German
For
systems Brexit-ready?
companies that do business with
experts, there are four main areas
the UK to definitely prepare for
of importance:
of
Industry
and
global
trade
and
logistics
• Origin and preferences: Does my company derive
a “no deal” scenario. Even if the parties manage to agree on a
• Transport routes to the UK:
transitional deal through the end
What’s the fastest and cheapest
of 2020, most of the work would
way for me to get my goods
lose their EU origin after
not be in vain. The DIHK has put
where they’re going?
Brexit?
primary materials from the UK? Could my goods possibly
Business tips for all things Brexit A hard Brexit would almost
Check whether you export dual-use
inevitably lead to delays in the
goods or munitions to the UK. After
flow of goods. Get the word out
Brexit, you’ll need a license for this.
to customers and suppliers, and
If you operate production facilities
amend contracts where necessary.
or sales offices in the UK, make sure they’ll be able to handle customs matters on their own after Brexit. In a pinch, customs brokers
Advice from German Customs:
can help.
All businesses that import from
Work with your logistics service
or export to the UK should check
providers to create a supply
in advance whether their current
strategy: buffer storage, etc.
authorizations can be adapted (to include additional countries Draw up an emergency plan if you
or processing/storage sites in
will need to procure key materials
the UK, etc.) and whether they’ll
or merchandise from the UK in
need to request new customs
If you benefit from free trade
the period immediately following
authorizations, especially for
agreements and purchase material
Brexit. Tap into alternative sources
operating a temporary storage
from the UK, make absolutely sure
if necessary.
facility for imports. Keep in mind
you’ll be able to maintain your EU
that new applications take time
origin after Brexit.
to process.
A TO B
22
December.2018
• Export controls: Will new bans
– bonded warehouse, inward or
The
and restrictions affect my exports
outward processing, etc. – which
example, should not be seen as an
to the UK after Brexit?
require special authorizations from
unnecessary luxury for trade with
the customs authorities, of course.
the UK – no less so than customs
When
it
comes
to
AEO
authorization,
for
customs
It’s important to check whether
training for employees who have
clearance, those businesses that
all the necessary licenses and
previously only been responsible
already export to non-EU “third
authorizations
for inner-Community shipments.
are
on
hand.
countries” will be best prepared.
This problem is not at all limited
“Brexit means that as soon as
to smaller businesses. Even large
Britain leaves the EU, trade with
Where can l find help?
corporations like the automotive
Have Brexit-related questions and don’t
Kistener, Director of Foreign Trade
the UK is subject to all the same rules
and
customs
formalities
as trade with any other non-EU country,” explains Carsten Bente, an expert at AEB. Bente’s “Prepare
advice
to
businesses:
know where to turn? Here are some people and
for
the
worst-case
organizations that can offer assistance:
scenario and figure out what you
supplier Robert Bosch face them. “We’re hoping for a transition phase but bracing for a hard Brexit,”
acknowledges
Operations
at
Michael
Bosch.
Kistener
found that the production facilities in Britain were most lacking in
need to do to computerize your
foreign trade expertise. The British For questions relating to customs
plants manufacture primarily for
have only ever traded within the
and global trade, just ask our
the domestic market, however,
EU will have a long to-do list to get
Brexit expert Carsten Bente, who
so they’ll only have to prepare
through. If the UK were to revert
is a sought-after speaker on this
for a rising number of imports to
to third-country status, importers
topic. Send your questions to
be cleared, and customs service
customs management.” Those who
to
anachb@aeb.com. You’ll find a
complete up to nine additional
wealth of information in AEB’s
documents, says Roel van ’t Veld,
Brexit Toolkit at (www.aeb.com/
a Brexit coordinator with Dutch
uk-en). The latest Brexit news is
Customs, in an interview with the
published regularly in the AEB
and
exporters
would
have
news magazine Der Spiegel.
But
just completing the documents wouldn’t
be
enough.
providers will lend a hand.
UK business faces rising costs
magazine, available on our website (www.aeb.com).
Overall,
Bosch
expects
higher
external costs for customs duties
Everyone
knows that customs declarations
The EU Commission provides
and tens of millions of euros in
must be submitted electronically.
updates on the Brexit
increased transactional expenses
Businesses that don’t wish to enter
negotiations on its website:
their customs declarations online at
https://ec.europa.eu/commission/
million euros in higher internal
the official customs website will at
brexit-negotiations_en
costs to meet customs obligations
duplicates the precise format of the
From the other end of the
import and export declarations.
negotiating table, the British
Ideally, the IT solution should
government maintains its own
accommodate
any
special
procedures that come into play
Add
to
that
several
– plus a few million in one-time
least need specialized software that
also
annually.
initial costs. Even
the
German
authorities
have
Brexit information site:
whether
the
ATLAS
www.gov.uk/government/brexit
system
is
customs questioned e-customs
Brexit-ready.
The
A TO B
23
December.2018
German authorities are, after all,
UK – is that an EU company’s own
effect until the end of the transition
expecting a 17% rise in export
products could also lose their EU
period
declarations and 9% bump in
origin and then no longer benefit
which the parties would have
import declarations after Brexit.
from some or all of the EU’s free
time to negotiate their future
But here, at least, the situation
trade
relationship.
seems to be under control. What’s
can avoid this fate by turning to
current Tory government at least,
unclear is whether the IT system of
suppliers from the EU that can
a free trade agreement similar to
British customs will hold up to the
prove the EU origin of their goods.
that with Canada, with little or no
stress test. The extra burden there
Businesses can breathe a little
customs duties, seems the most
will be many times greater, since it
more easily when it comes to bans
likely option. But to enjoy duty-
needs to absorb the added volume
and restrictions, however – at
free status or customs privileges,
of trade with all EU members. Her
least when it comes to maintaining
businesses would have to comply
Majesty’s Revenue and Customs
the same high level of protection
with rules of origin and prove the
is officially predicting the customs
for British products. The British
origin of their goods.
declarations it processes to surge
Brexit Minister, Dominique Raab,
under this model, they would not
from 55 million now to 260 million
announced in October that to
avoid customs formalities in their
after Brexit.
facilitate
UK trade.
agreements.
trade,
Companies
Britain
would
through
2020,
Under
the
during
UK’s
And even
continue to comply with the EU’s technical standards. Nevertheless,
Some goods could lose EU origin
labeling
requirements
and
the need to submit additional documentation will create more
Less
obvious
new
work. And a license will be required
customs
to export goods subject to bans
processing but no less important
and restrictions to the UK when it
is Brexit’s impact on the area of
reverts to third-country status. It’s
origin and preferences. Companies
not yet clear whether the general
that rely on primary materials
licenses,
from the UK for production should
extended to the UK.
challenges
in
than direct
the
for
example,
will
circle March 29 in their calendars, because when Britain leaves the EU, goods and primary materials from the UK will lose their EU
Even a soft Brexit comes with problems
origin. This is true even if the UK and EU manage to negotiate
If
a transition period through the
manage to agree on and ratify
end of 2020 during which the UK
a last-minute deal, the two
remains in the customs union.
sides would gain time –
Businesses need to take this into
but little else. The
account when calculating their
Union
preferences.
Code would
The
worst-case
EU
scenario – if a large percentage of
remain
primary materials originate in the
in
and
UK
Customs
negotiators
be
About the author: Björn Helmke has watched with growing horror as Brexit negotiations seem headed for inevitable failure. Not only because he considers a hard Brexit to be a bad solution for both sides, but also because at the time of this writing, the negotiations have remained deadlocked.
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December.2018
All l want for Christmas ...
Gift ldeas
FOR LOGISTICS PROFESSIONALS OF ALL AGES
MAGIC TOY TRUCK Send the Magic Toy Truck down your very own street. All you need is a blank sheet of paper and a felt-tip pen. The Magic Toy Truck uses its induction power and optical sensor technology to follow black lines. Its travel-friendly size makes it easy to take along when you’re on the go. Let your creativity flow while having fun with the Magic Toy Truck! www.magictoytruck.com
Illustr
ation
only
DIY WOOD PALLET FURNITURE Recycling and upcycling have been trending for years now – even in interior design and decoration. So building furniture from recycled pallet wood is not just sustainable, it can also yield original and stylish results. www.amazon.com Illustration only
COAST TO COAST When freight hits the road, it all has to go. Get the pieces back on the truck to make your deadline! Hand carved by artisans using the finest materials. www.siammandalay.com
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December.2018
SPOT IT! ON THE ROAD Each colorful symbol is something you would see on a typical road trip. Players scan the scenery for objects that match the symbols from the cards. Whether you are in the big city, cruising down the highway, or just around town, there is always something to spot. You will never be bored on a road trip again! www.mastermindtoys.com
RC QUADCOPTER DRONE WITH WIFI CAMERA This miniature fun machine is sure to be a hit, even for first-time drone pilots: The Quadrocopter with LED illumination is not much bigger than a Rubik’s Cube, but its built-in rechargeable battery provides 4–5 minutes of fun in the air. After that, simply plug in the USB recharger to reload for another round. The Quadrocopter comes equipped with a height sensor for easier handling and can take off and land automatically. It features three speed levels and a flip function for doing loop-the-loops. www.amazon.com
ion
trat
Illus
RUSH HOUR – A TRAFFIC JAM LOGIC GAME Rush Hour® offers a fun and easy way to learn to think strategically. The level of difficulty increases as you play through the cards. The goal is tantalizingly simple: Find a path for your little red car to reach the exit and escape the gridlock. www.amazon.com
only
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December.2018
You come from far away from the clouds up so high ...
Exports and imports from the cloud Smooth and efficient workflows are essential in global trade. This is especially true for cigar and cigarillo maker Villiger SÜhne GmbH, given the many special rules that apply to the import and export of tobacco products. Now the company has migrated its customs software to the cloud – with benefits for the in-house customs and IT specialists.
A TO B
27
December.2018
Villiger’s
cigars
and
cigarillos
provisions, Villiger Söhne GmbH
being available around the clock on
are enjoyed around the world by
works
business days.
traditional
smokers
and
with
software
developer
urban
AEB – a partnership that goes all
What’s more, customs software is
tobacco connoisseurs alike. What
the way back to 1999. At the time,
subject to frequent changes driven
began in 1888 as a small cigarmaker
the company was just looking for
by outside forces – such as laws and
in Switzerland now produces more
software to help its employees
regulations that impact customs
than 1.5 billion cigars and cigarillos
manage packing lists and delivery
and
a year. A portion of these are made
notes. Over the years, the role of the
mandatory restricted party lists are
in the plant in Waldshut-Tiengen,
software grew to include imports,
constantly changing, for example,
export
management.
The
which is owned by the company’s
and the ATLAS e-customs system
German subsidiary. Every month,
is also updated on a regular basis.
Villiger Söhne GmbH sends out some 4,000 shipments from its finished goods
warehouses
to
retailers,
discounters, and tobacco shops in Germany, Europe, and around the world.
“This migration to the cloud allows us to focus on those areas of IT that truly create value for us.” Andreas Lehmann, Villiger
Shipping tobacco goods: anything but easy
Keeping the software running and installing the regular updates was just one more burden on Villiger’s IT resources.
Better safe than sorry Once the decision-makers at Villiger had looked at the situation more
exports, bonded warehouse, EMCS,
closely, the benefits of a software
Shipping tobacco products means
and
management.
migration to the AEB data center
following quite a few special rules.
“Our goal was to use software that
became clear. “We recognized that
“Our cigars and cigarillos are subject
required as few interfaces as possible
moving the solution to the cloud
to excise duties,” explains Andreas
while still fulfilling all the special
made sense for us. This allowed us
Lehmann, Head of Supply Chain
requirements inherent in the tobacco
to focus on those areas of IT that
Management at Villiger. This means
industry,” Lehmann adds.
truly create value for us rather than
compliance
that since 2011, the company has been
spending our time with maintenance
required to manage the movement
and support tasks that can be better
of its goods through Germany or
In-house IT overburdened
the EU under suspension of excise
and more efficiently handled by the solution provider,” Lehmann
duty using the Excise Movement
A while ago, another change was on
explains.
and Control System, or EMCS. The
the horizon: migrating the software
Data privacy and data security
duty-free
non-EU
to the AEB data center. Until then,
considerations were also front and
goods is also subject to special
Villiger had run the software from
center in the decision to move to
regulations. One example is if cigars
its own data center. “But we came to
the cloud, of course. Villiger asked
from the company headquarters in
a point where my employees could
to tour AEB’s ISO 27001–certified
Switzerland are brought to Germany
barely keep up with the workload
data center in Stuttgart and reviewed
and stored temporarily in the bonded
for support services,” explains Bernd
the
warehouse in Waldshut-Tiengen.
Finkenzeller, Head of IT at Villiger.
certificates, and security programs.
To
needs
After all, users needed to know that
The
efficiently, including special customs
they could count on the system
no cause for concern was found.
movement
manage
its
of
shipping
data results
protection were
guidelines,
positive,
and
A TO B
28
December.2018
Started in 1888 as a small cigar manufacturer, Villiger today produces more than 1.5 billion cigars and cigarillos per year.
Villiger’s data privacy officer also
including the database. AEB used
moved to the cloud, since AEB is
gave a thumbs-up. “But what sealed
this to set up a test environment
now responsible for maintaining and
the deal in the end was the trust we
in the data center, which Villiger
supporting the software. “The move
had in AEB through our many years
then put through rigorous testing.
to the AEB data center means that we
of working together,” adds Lehmann.
Meanwhile, AEB worked to set up
now finally have more time for what’s
the production system that would
important,” concludes Lehmann.
later be used.
The users are happy, too. “Now we
July 8, 2015, was the big day: Villiger
have round-the-clock IT support and
completed its shipping activities
don’t need to take the extra step of
The next step was for AEB and
by 11:00 a.m., then it suspended
reaching out to our own IT people,”
Villiger to define a project roadmap
operations in its own data center
relates Brigitte Amann, who works
for the migration – including a
while the data was migrated. Tests
in Supply Chain Management at
timeline
schedule.
were run starting at 8:00 the next
Villiger. “Users all keep the AEB
“We made a conscious decision
morning, and by noon, Villiger
hotline number handy and just call
to schedule the migration during
was able to go live again. Lehmann
them directly whenever questions or
the week and accepted the risk of
sums up the experience: “AEB did
problems arise.”
downtime, because we wanted to
an excellent job of preparing the
test how customs management in
migration. Everything came off as
the cloud worked under real-life
planned and went very smoothly.”
Cloud-based bonded warehouse
Smiles all around
Meanwhile, day-to-day operations
Migrating to the cloud
and
testing
conditions,” Lehmann explains. The migration had to pass off smoothly to avoid major delivery failures.
at
Using the project roadmap, both
the
Waldshut-Tiengen
site
companies began making detailed
Bernd Finkenzeller’s IT team has
have changed very little since the
preparations.
provided
been grateful for a much lighter
migration. AEB software continues
a copy of its current application,
workload since the solutions were
to
Villiger
support
bonded
warehouse
A TO B
29
December.2018
operations from the cloud, keeping
plausible. The customs office decides
The software enables centralized
an eye on all the goods coming in and
whether the goods must be examined
management and transparency of
going out. Precise documentation
by customs or the shipment can be
all movements of excise goods under
is
approved.
suspension
extremely
important,
since
of
duties,
including
every movement of goods into and
Once
the
their current status. This supports
out of the bonded warehouse is
approval, its employees seal up the
our business operations, but it also
recorded in Villiger’s ERP system
goods. This ensures that the goods
enables better customer service and
and by the authorities. “If there is
reach the recipient in an unaltered
ensures compliance with customs
any discrepancy between our data
state and can be identified with
regulations – both of which give
and the customs office records, we
certainty. The seal that Villiger
Villiger a critical edge.
are accountable for the duties,”
uses is documented in the software,
Lehmann explains. The software
making it possible to track this data
helps correctly document all the
at any time during transport. The
bonded
solution also automatically generates
warehouse
transactions.
Villiger
has
received
Better compliance and smoother processes
This helps save customs duties,
the
because if Villiger stores goods from
accompany the goods. Once the
The software support from AEB lets
outside the EU in the customs-free
customer confirms receipt of the
Villiger bring automation, efficiency,
area and sells part of that stock to a
goods online, the duty-free transport
and transparency to its customs-
buyer outside the EU, no duties are
is complete.
related processes, reduce its tax
appropriate
documents
to
burden, and ensure compliance
owed.
in all its transports. The solution
Efficient EMCS processes
eliminates the need for many time-
Complete and plausible data
consuming
manual
tasks
that
“The AEB solutions also have our
Villiger’s workforce would otherwise
When Villiger receives an order
back when it comes to paying
have to perform. The IT team is
requiring goods to be shipped from
excise duties,” says Lehmann. “The
among the beneficiaries since the
the bonded warehouse in Waldshut-
software makes it easy to initiate and
solution was migrated to the AEB
Tiengen, the goods are picked and
monitor the EMCS process.”
cloud. Now they have time for their
then packaged according to the
Now, Villiger uses the software to
own value-adding IT tasks. “Our
specifications of the country where
generate an electronic administrative
experience in working with AEB
the customer is located. For a duty-
document to be submitted to the
over the years has been excellent,”
free shipment of non-EU goods
customs office for each shipment.
Lehmann concludes. “And we will
within the EU, the company must
If the authorities accept the validity
continue to rely on AEB in the future.”
submit a T1 transit procedure. To
of
can
The next step in this partnership
ship the goods to a non-EU country,
ship the goods. For the tobacco
is already being implemented: a
an export accompanying document
company, smooth EMCS processes
warehouse management solution for
is also needed.
and documentation are not just
Villiger’s finished goods warehouse.
The software extracts the necessary
important
data from Villiger’s SAP® system
“The burden of proof lies with us.
and transmits it to the ATLAS
We need to be able to show at any
system of the German customs
time that all goods leaving our tax
office. Integrated checks and alerts
warehouse had the proper follow-up
ensure that the data is complete and
documentation,” Lehmann explains.
the
document,
–
Villiger
they’re
essential. The author: Franziska Widmaier is not a smoker herself but found it intriguing to dig deep into the complex customs and control processes for Villiger tobacco products.
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December.2018
Joy to the World ...
Christmas traditions from around the world of AEB Everything from praising the Christmas tree to Sinterklaas, mince pies, and light shows: We’ve put together a collection of the nicest and funniest Christmas traditions from the various countries where AEB has offices.
A TO B
December.2018
31
GERMANY “Oh, what a lovely tree!” The tradition of “praising the Christmas tree” took hold in the late 19th century in southwestern Germany. This lovely ritual is about taking time to visit friends and relatives between Christmas and the Epiphany. Visitors are supposed to lavish particular attention on the decorated Christmas tree, admiring it lovingly and praising it effusively. And if your host doesn’t have a tree, a houseplant will do in a pinch.
The host thanks the guests for their enthusiasm with some high-proof holiday spirits. Once the tree has been adequately praised, the guests move on to the next house. “Last year we celebrated Christmas for the first time in our new headquarters in StuttgartMöhringen and put up a large decorated Christmas tree in the atrium,” recalls AEB Managing Director Markus Meissner. “Anyone who managed to sing
at least a couple lines of praise for the tree was rewarded with a (little) traditional Schnäpsle.”
NETHERLANDS Early gift-giving and boatloads of Christmas cards “In the Netherlands, we love to send each other Christmas cards. I’m talking personally picked or – for the enthusiasts and creative people among us – hand-made paper cards, with a special (hand-written) message, which we send by traditional mail to family and friends,” says Richard
Groenendijk, General Manager at AEB Netherlands. “A fun tradition, but also a bit of stressful.” His advice: Always buy a few extra cards so that you can react quickly in case you receive a card from someone you forgot to include in your Christmas mailing. This also represents an extreme (logistical) challenge for the Dutch post office because of the estimated 170 million cards sent each year – approximately 22 cards per Dutch family. Traditionally, the Dutch exchange gifts on December 5
(Sinterklaasavond, the Feast of St. Nicholas), not on Christmas. But St. Nicholas does more than just bring presents to children: He is also the patron saint of sailors. In Dutch lore, he leaves Spain on the last weekend in November and, wrapped in a red bishop’s robe and riding on a white horse, visits the port cities of the Netherlands. He is accompanied by one or more mischievous Moors (Zwarte Pieten), who throw sweets to the children.
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December.2018
UNITED KINGDOM Big Ben on the Christmas tree
The season of lights and mistletoe – with Santa Claus, caroling, Christmas trees, and cookies. “We share these traditions with many other countries,” notes Geoff Taylor, UK General Manager at AEB. “Though the Christmas cookies had better include mince pies here – otherwise it’s just not right.” The “Christmas World” shopping floor in London’s
most famous high-end department store, Harrods, actually opens each year in August. It leaves nothing to be desired, especially when it comes to Christmas decorations – be it traditional tinsel or a Big Ben Christmas tree ornament. “One unique thing about Christmas here is the timing,” says Taylor. “The main family celebration is on Christmas Day – so UK children must wait one night longer than
German children before they get to unwrap their gifts on the morning of December 25.” The next day, December 26, is known traditionally as Boxing Day. It’s not about fighting, though: It got its name from a custom that started in the UK about 800 years ago, when collection boxes for the poor were traditionally opened and distributed. Today, Boxing Day is a beloved shopping day, since many stores offer a steep discount on merchandise.
SWEDEN Traditionally international “We love the Christmas season in Sweden – and not only because it’s a wonderful chance to bring some light and sparkle to a dreary winter period. The best thing about it is the wonderful mix of established traditions, foreign and domestic,” says Ted Roth, General Manager of AEB Sweden. It reflects the cultural openness and religious diversity in Sweden. Take the Christmas window decoration,
for example, always showing a seven-armed candelabra, which is typically associated with a Jewish menorah. And St. Lucia Day, a typical Catholic celebration, forms a central part of Advent. We’ve adopted the Christmas tree from Germany – but with a local touch: We decorate it with little Swedish flags alongside lights, baubles, apples, and such. On December 24, families gather to watch the annual rerun of
an over 30-year-old Donald Duck show – with today’s kids wondering why they can’t pause it like on Netflix. And no Swedish Christmas buffet is truly complete without “rice à la Malta” for dessert.
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33
SWITZERLAND Luminous Christmas windows Windows decorated with Christmas motifs delight both young and old during Advent. “In many Swiss communities it has become common practice for 24 families to design an Advent window and unveil it on the appropriate day in the preChristmas period,” explains Ingo Strasser, General Manager of AEB Schweiz AG. “Perhaps with a small aperitif for the neighbors.” In the Swiss canton of Ticino, it is impossible to imagine
Christmas without the panettone. The dome-shaped pastry originally comes from Milan, where, according to legend, it was invented in the 15th century at the court of Ludovico il Moro. One version of the story tells of a kitchen apprentice named Toni who created the specialty by chance. When the cook failed to make the dessert for the Christmas party, Toni saved the day by making sweet bread
from the leftover dough and dried fruit: The pane di Toni (Toni’s bread) remains a big hit today!
SINGAPORE Bright lights, big city “At Christmastime, when Europeans seek refuge in their warm living rooms from the snow and freezing temperatures outside, we here in Singapore celebrate outdoors amid balmy tropical temperatures,” says Frans Kok, General Manager of AEB Asia Pacific. But since the people of Singapore don’t want to do without winter effects, the city is full of machines blowing soap bubbles and artificial snow into the air. The famous shopping street Orchard Road is transformed
each year into a shimmering winter wonderland: Everything gleams and sparkles, the shopping malls and hotels compete for the “Best Decorated Building Award,” and the annual “Christmas Light-Up” show draws specialized light designers. They even have a genuine Christmas market. Singaporeans love to slip into full-body costumes for Christmas, so the Christmas market is filled with thousands of snowmen, Santa Clauses, and gingerbread men. The
diversity of Singapore’s population really shows during the Christmas meal: Restaurant menus offer roast goose with dumplings and red cabbage, stuffed turkey, and of course the national favorite chicken rice.
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December.2018
Santa Claus is comin’ to town ...
How the Christmas spirit transcends customs barriers Santa Claus is more stressed out than usual this year. He reorganized his processes on the recommendation of the consulting firm McChristmas & Company, and now he has some serious questions about his supply chain: What does he need to keep in mind when outsourcing his gift production? Can he bring presents to children in countries that are under embargo? And how can he lower his customs duties? For answers, he turned to the global trade experts at AEB.
Santa
Claus:
I
offshored
my
that status has no basis in law, and
electronic export declaration for
manufacturing, so my presents are
insisting on the point may not evoke
consignments valued at less than
now sourced from suppliers around
any holiday cheer among the civil
a thousand euros. The German
the world and no longer made by
servants in the customs office. It
customs authorities define an “export
elves in my North Pole factory. But
might end badly for you – you could
consignment” as follows: “An export
they’re still presents. They can’t
even have your business license
consignment comprises goods that
possibly be subject to import duties,
revoked.
an exporter ships to a recipient in
right? AEB:
another country on the basis of an We’re
afraid
that
the
My Chief Customs Elf tells me that I
export agreement.” In your case, you
customs authorities may see that
need to submit an electronic export
could interpret a Christmas list as
differently. Your suppliers are now
declaration for every shipment to
an export agreement. As long as the
entrepreneurs. And considering the
children outside the EU. With all the
goods have a value under a thousand
breadth of your operations, you’re
presents I have, that would mean
euros, your elves could provide a
almost certain to be classified as
millions of declarations in short
verbal or implicit declaration at the
an entrepreneur yourself. You’re
order!
office of exit. Given the sheer volume
welcome to talk to the authorities
The small consignment exception
of the goods you’re shipping, though,
and explain that you’re Santa Claus
may be what you need. This
it remains to be seen whether this
and deserve special treatment. But
eliminates the need to submit an
will accelerate your processes.
A TO B
35
December.2018
To be closer to my customers, I moved my central storage facility from the North Pole to Hamburg.
“You’re welcome to talk to the authorities and explain that you’re Santa Claus. But it might end badly - you could even have your business license revoked.”
Over 70% of the goods that I receive from my global suppliers and clear
What
control
launchers, chemistry sets, computer
through customs in Hamburg are
regulations? Do I actually need to
accessories, or anything else that
exported again around the world
screen kids against restricted party
might
on Christmas Eve. It’s an insane
lists?
embargo.
amount of work! Isn’t there an
We
easier way?
maintain your own comprehensive
One more question about imports.
Definitely! Try having your storage
restricted party list for naughty
The customs duties have made my
facility classified as a private bonded
children.
hair turn white! Isn’t there anything
warehouse. Then the goods won’t be
terrorists might be superfluous. By
I can do to reduce what I owe?
subject to customs until they leave
the way, you can hire our IT experts
You can benefit from the 40+ free
the facility. If you re-export them
to input your restricted party list
trade
out of the EU, you won’t even have
into our compliance software and
signed with more than 100 nations
to pay any duties at all. The bad
define it as a manual restriction. One
by taking advantage of customs
news is, you’ll never get it approved
more small suggestion: If possible,
preferences on goods originating
before Christmas.
you should get an ATA carnet for
in these countries. You’ll need to get
your sleigh and whip, since they do
proofs of origin, but that should be
Do I have to actually declare my
qualify as “professional equipment”
worth the trouble for a globalization
sleigh and reindeer when I fly with
in your line of work. Then you won’t
strategy like yours. Then, you can
them into another country?
run into any problems when you
also take advantage of customs
No, not if you re-export them after
import and later re-export them.
preferences
you’ve
delivered
your
about
export
understand
So
you
screening
be
restricted
under
the
already
against
presents.
agreements
when
the
you
EU
has
export
goods made in the EU to a country
You’d better be careful, however:
Am I allowed to bring presents
with which the EU has a bilateral
We’re
to children in countries under
agreement in place.
not
experts,
but
many
countries have strict veterinary
embargo?
regulations governing the import
Sure. Most of the restrictions apply
of live animals. If you don’t want
to weapons, dual-use items, and
your reindeer to end up stuck in
financial instruments – not to items
quarantine for months, you might
for daily needs. But check your
want to use native fauna for local
list twice if kids in places
distribution in each country. In the
like North Korea ask for
United States and Canada, you’ll
rocket
get by fine with caribou. In South America, you could have llamas or tapirs pull your sleigh. In Africa, you could turn to zebras or even ostriches, which are actually quite fleet-footed.
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December.2018
I saw three ships ...
The long way to China`s market Getting your imports into China is no simple matter. But most of the problems that businesses encounter with Chinese customs are preventable. Good preparation, a detailed timeline, the right customs broker, and an in-house expert to watch over the process: That’s what you need for a smooth exchange of goods.
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37
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Champagne corks are popping in Shanghai – and not just in trendy
New products especially difficult
December.2018
Germany that export to China often make the mistake of not preparing
nightclubs. The bubbly is also
properly.
She
emphasizes
the
containers
“It’s a difficult issue, especially when
importance of checking whether you
that end up stranded on docks
you’re importing new products,” says
need an import license, any special
in the hot summer sun. And that
Dominik Bühring, Managing Director
licenses, or even a China Compulsory
happens again and again, because
and Partner at Miebach Supply
Certification
in China, imports can take weeks
Chain Management Consulting in
comparable to other standardized
to clear customs. It’s all due to red
China. Foods, for example, require a
product quality certifications like the
tape – the greatest single challenge
special Chinese label. “The approval
CE marking in Europe. “Exporting
for German businesses navigating
process takes a pretty long time,”
to China is not something you can
Chinese customs, say experts like
notes Bühring, who has worked in
do spontaneously,” Cheng adds,
Jan Buelck, Managing Director
Shanghai for four years and knows of
because the goods will be held up in
for Hong Kong and South China
a case in which baby formula powder
customs.
at the Hamburg-based transport
was held up for nine months.
Chinese authorities are very careful
flowing
in
shipping
which
is
about checking how imports are
and logistics company A. Hartrodt.
classified. Machinery, for example,
“The time and money needed to get goods cleared for import into the
(CCC),
No place for spontaneity
is broken down into the categories of new, used, and leased. “Each
People’s Republic of China is much greater than in Europe,” explains
Qing Cheng, Managing Director
category is subject to its own customs
Buelck, who worked in Shanghai
and Partner at Rödl & Partner
processes,” Cheng explains. Many
for four years before transferring to
Management
in
companies would like to ship their
Hong Kong. The ports of Yangshan,
Shanghai, gets calls nearly every day
own used equipment to China to help
Waigaoqiao, and Wusong all have
from clients whose imports are being
establish new production operations
their own separate procedures.
held up in customs. The Nuremberg-
there. “But the customs authorities
A. Hartrodt advises its customers
based consulting firm serves the
never approve such imports, since
to plan for a standard timeline of
Chinese subsidiaries of about 500
you need to register with the
three to five business days to clear
medium-sized businesses, most of
Chinese
customs at any Chinese port.
which also import and export. Ms.
before importing used machinery.
Cheng has noticed that companies in
The authorities check whether the
Consulting
Ministry
of
Commerce
A local Chinese customs broker knows how much leeway for interpretation a particular customs office has and is much better connected than a German company.” Oliver-Karsten Thormählen, Managing Director, Rieck Sea Air Cargo International
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December.2018
Many companies will have to pay retroactive import duties and VAT in the next three years because of components they forgot to include in their licensing fees.” Qing Cheng, Managing Director and Partner, Rödl & Partner Management Consulting (Shanghai)
equipment requires pre-shipment
Karsten
Managing
or develop alternative solutions,
inspection or an additional Chinese
Director at Rieck Sea Air Cargo
which isn’t easy.” The consequences
import permit. Companies must
International. And this, he warms,
are especially dire when a backup part
apply for the pre-inspection in the
often involves a great deal more
is needed as quickly as possible to fix
country of origin,” she notes. Many
work.
a problem. There are fewer problems
smaller
Wolfgang
German
companies
are
Thormählen,
General
with complete machines, Lupberger
unaware of this and end up thwarted
Manager of the Beumer Group
reports, because unlike replacement
in their attempt to start production in
Hong Kong, regards the CCC as
parts, they don’t require the CCC.
China. And if the customs authorities
particularly burdensome in day-to-
block the goods, then they need to
day business. Beumer, a family-
be shipped back to Europe or Hong
owned business headquartered in
Kong to apply for a pre-inspection
Germany and employing 350 people
there.
at its Shanghai production facility,
Food and machinery require special care Experienced
importers
point
to
Lupberger,
spends a lot of time and money on
As a consultant, Cheng never tires
certification – and this would simply
of explaining to her clients how
be “a bridge too far” for products like
important it is to have a clear timeline
the customized sorting equipment it
for import customs formalities. Allow
manufactures in small numbers for
at least three weeks per shipment for
its customers.
the preliminary license, she advises,
food and machinery as the product
and three to four months for the
groups facing the most scrutiny in China. Rieck Sea Air Cargo International supports customers
Clear timeline for import customs recommended
CCC. Manufacturers need to submit
Headache: replacement parts subject to CCC
in these industries. The Hamburg-
lots of technical documentation, and the Chinese customs authorities are very careful to check whether the
based company established its own
Lupberger knows of cases in which
customs value is correct, the price
subsidiary in Shanghai two years ago
products unavailable on the Chinese
is realistic, and the licensing fees for
and was active in the Chinese market
market and subject to CCC need to
things such as the trademark rights
through a joint venture before
be imported. It starts with electrical
of cosmetic products have been paid.
that. “Certain types of foodstuffs,
cables of a certain quality needed to
Another challenge, Cheng warns:
equipment, and machinery require
ensure proper functionality of the
“Many companies will have to pay
additional documentation in addition
sorting system, he explains: “It’s
retroactive import duties and VAT
to the regular customs forms – such
possible that a certain type of cable is
in the next three years because of
as a CCC or an attestation of quality
not certified. The result is that we’re
components they forgot to include
from the China Food and Drug
unable to import various products and
in their licensing fees.” Businesses
Administration,”
are forced to either find them locally
have the opportunity to correct the
explains
Oliver-
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December.2018
What you need to export to China: Bill of lading or air waybill information they submit until March
China conduct annual audits. Cheng
of the following year – but after that,
strongly urges companies to check the
Packing list
they risk paying fines.
legal status of customs brokers.
Commercial invoice
Tips for choosing customs brokers
Ranking system in Chinese customs
For wooden packaging:
Manufacturers,
firms,
An increasingly important factor is
Most
the customs ranking system used by
importers in the Chinese market opt
China – its counterpart to Europe’s
to use customs brokers rather than
Authorized
working directly with the authorities.
status, which offers expedited security
One reason, says Rieck’s Managing
checks and/or simplified customs
wooden package certificate in
commercial
Chinese
For certain HS codes:
consulting enterprises:
Economic
Operator
preliminary licenses and other
Director Thormählen: “A local Chinese
regulations. The system uses rankings
licenses (certificate of origin,
customs broker knows how much
from AA to D and applies to businesses
import license for special
leeway for interpretation a particular
and brokers alike. Those with the AA
goods, import quota certificate,
customs office has and is much better
or A status enjoy the fastest customs
etc.)
connected than a German company.”
clearance. The customs authorities
Chinese work hard to maintain their
re-assess
personal networks (guanxi) and call
Violations of customs regulations
in favors when they need something.
can result in a downgrade. Cheng
products and parts: CCC
Depending on your arrangement, a
recommends using customs brokers
license (similar to CE marking
broker can provide many different
with a ranking of A or higher. China,
in Europe), including pre-import
services, not just the usual support
she notes, is currently revamping its
inspection by China Inspection
with import and export declarations.
ranking system: “The aim is to bring
and Quality Service (except when
For companies without their own
it into compliance with international
manufacturer supplies CCC)
Chinese offices, the broker can also
standards by using the AEO system,
handle commercial activities or offer
for example.”
For electrical and electronic
rankings
each
year.
additional storage or logistics services. For food and beverages:
The number of local and international
preference document and
customs brokers working the Chinese
commercial invoice from
market has exploded, making it more
producer
difficult to find the right partner. “The first thing you should do is ask to see a business license,” Cheng advises,
For importer: general import license
since not all brokers are registered. Information
about
a
broker
can
be verified in a publicly accessible system, much like the Certificate of Good Standing in Germany, and the fiscal, financial, customs, commercial, securities, and statistical authorities in
“Obtaining the China Compulsory Certification for customized products manufactured in small numbers would be a bridge too far.” Wolfgang Lupberger, General Manager, Beumer Group (Hong Kong)
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December.2018
Food items require a special label, and the approval process takes pretty long.” Dominik Bühring, Managing Director and Partner, Miebach Supply Chain Management Consulting (China)
A face-to-face meeting with two or
thousand euros. The absence of a
be managed without a broker. “Data
three brokers is important to find
service agreement led to protracted
is reported through an online portal,”
out whether the chemistry is right,
negotiations, and in the end, both
Thormählen explains. Among the
Cheng adds: “You need a broker
sides shared the loss.
positive trends he sees are that
who will look out for you, and this
custom processes throughout China
means understanding your unique needs.” An interview can also be
are increasingly standardized and
In-house expert is a must
transparent – and paperless. China’s import and export inspectors
helpful in assessing other relevant criteria, such as expertise or English
But anyone who thinks they can hand
will soon be merged with the customs
skills. The best solution is to find
off 100% of their import formalities
authorities. Cheng is confident that
one agent for all regions. Often,
to a customs broker is mistaken,
this project will succeed and that more
however, carriers work with two or
warns Cheng: “You need to have
and more government agencies will be
three different brokers who were
an in-house expert” – a dedicated
electronically integrated. “Until such
recommended to them.
employee who communicates with
time, interpretations will vary greatly
Cheng reminds her clients to sign
the customs broker every day to
from locality to locality,” says Buelck
a
including
initiate processes and keep tabs on
from A. Hartrodt in sizing up the
a detailed description of who is
service
agreement,
everything. “Many Chinese are not
situation. The company, by the way,
responsible for what, and underscores
used to working independently and
recommends that anyone shipping
the importance of clarifying liability
need
champagne to China use refrigerated
and damages before any dispute
notes.
detailed
instructions,”
she
containers.
arises. She knows of a case in which a customs broker was late in notifying
Everything easier with exports
a client of customs assessments, missing the deadline for claiming an
Fortunately, customs processes for
input tax deduction worth over fifty
exports are much easier and can now
About the author: Kerstin Kloss cultivated her personal networks over meals while researching in China. In the process she not only learned a lot about Chinese customs, she also discovered the delights of dim sum and bamboo.
China’s vision for a single window Great things are afoot in Chinese customs. Kiat Hin Lim, a foreign trade expert in AEB’s Singapore offices, had the opportunity to experience this first hand at Global Trade Development Week in Shanghai. “Until now, customs in China has been managed regionally – the result being that Chinese customs offices currently use 19 different IT systems. But the Chinese government is already planning a nationwide ‘single window’ for customs management,” he reports. The government has begun a nationwide information and marketing campaign for its single window initiative. Customs processes today are already much more efficient than they were only ten years ago. For businesses that engage in cross-border trade with China, a single window for customs makes life a lot easier.
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December.2018
Cutting down import costs: customs-free zones in China An overview of the various customs-free zones in China and their benefits:
Function
Bonded zones
Export processing zones
Bonded warehousing, export processing, transit
Export processing, bonded logistics, inspection, customs examination – no trade activity
Trading, internal exhibition
Bonded logistics zones
International procurement/ distribution/ shipping, simple handling of goods
Bonded ports
Logistics, foreign trade, international production/ distribution/shipping, inspection, after-sales service, repairs, exhibition, R&D, production and processing, port clearance
Integrated freetrade zones Bonded processing and logistics, import and export, international procurement/ distribution, financial services, exhibition
Equipment and materials needed for infrastructure and construction projects in the customs-free zones Duty-free at time of import
Machinery, equipment, tools, and systems for loading/unloading and for equipping warehouses; replacement parts for repairs Office supplies purchased for own use by the companies and administrative authorities in the customs-free zones
Goods stored in the free-trade zone
Input tax reimbursed at time of export
Tax refund when goods are actually exported abroad
Raw materials, replacement parts, components, and packaging used to produce exported products
Goods shipped into the zones
Tax refund when goods enter the zone Construction materials, machinery, and equipment needed by companies in the zone Domestic goods and packaging needed by companies in the zone to conduct business But: No input tax reimbursement for consumer goods, means of transport, etc. shipped into the zones
Credits This is a special AtoB edition of AEB. Published by: AEB GmbH Sigmaringer Straße 109 70567 Stuttgart Germany Responsible for the content: Jens Verstaen Editorial office: Björn Helmke, Stephanie Kollmann, Jens Verstaen, Franziska Widmaier
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Source: Rödl & Partner
Duty relief at time of import
Raw materials, replacement parts, components, and packaging used to produce exported products
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December.2018
Dear readers, December is that magical time of year when we spread
followed their advice: Here you’ll find useful and entertaining
Christmas cheer. And that prompts the question: How can
articles with a link to Christmas – prepared especially for
we still make holiday greetings meaningful in today’s era
you, printed in a carbon-neutral process, and delivered
of digital communications? One etiquette guide offers this
with German punctuality. We hope you like what you read.
general advice: “Don’t reach out via text message, email, or
But most of all, we wish you and your loved ones a Merry
Facebook. Send a personal message that comes from your
Christmas, happy holiday season, and a joyous and peaceful
heart. And say something about Christmas and its deeper
2019.
meaning.” This special Christmas issue of AtoB was already finished by the time we read these wise words, but fortunately, we
Your AtoB team
Björn Helmke Franziska Widmaier
Jens Verstaen Stephanie Kollmann
Laura Rösinger
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December.2018
Keep your exports soaring through the fog of global trade uncertainty Your business needs to be agile to keep a competitive edge. Are your customs and trade compliance systems fit for future changes like Brexit and trade wars? Light the way ahead – with AEB.
Driving performance amidst global trade changes with multi-country customs management, EMCS, broker integration, product classification, business partner screening, and more. Get your free demo:
www.aeb.com