AtoB 12.2018. Christmas issue

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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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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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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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26

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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32

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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December.2018

37

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38

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