World Customs Day: Safe Transportation Environment Project of Customs

Muhammad Wasif Malik
By Muhammad Wasif Malik, ACP Headquarters / Anti Smuggling, MCC Preventive, Karachi

KARACHI: In 2006-07 Pakistan Customs carried out an audit about reconciliation of transit movements under their control. Transit movement mainly originated from Karachi and Port Qasim and ended at border points at Torkham (Peshawar) and Chaman (Quetta). The audit detected loss and pilferage of cargo en route and numerous containers were found missing.
This led to a serious consideration in FBR to take effective measures for enhancing controls over transit movements. FBR chose to explore appropriate technology options for tracking and monitoring cargo which other Customs administration of the world were already using.
In a Collectors’ Conference in Jul-2007, FBR took a decision to initiate a project for safe transits. A formal roadmap was proposed to the Board by Chief Collector (South). The proposal was essentially about selecting a technology partners who could provide solution to Customs for tracking all transit and transshipment movements. Following these discussion, FBR constituted a committee in Sep-2010 to draft terms of reference and pre-qualification criteria for the cargo and vehicle tracking solution provider. The committee was also tasked by the Board to draft legal agreement and Customs rules to effect this plan. The committee prepared their draft in Dec-2010, which were floated for discussion and consultation with specialists having experience in the relevant field.
This initiative further gained importance when Afghan Pakistan Transit Trade Agreement (APTTA) was reviewed in 2010, and it was mutually agreed to track the cargo during transit movement. Meanwhile, the Federal Tax Ombudsman also recommended in his decision in case relating to ISAF Container scam report that FBR should take effective measures to control the menace of smuggling via transit pilferages.
Project initiated by the Board
FBR called for expression of interest (EOI) in Feb-2011 from tracking solution provider companies. The project was named as Safe Transportation Environment (STE) Project. EOI spelled out broader requirement of a comprehensive but flexible solution, rolling out in phases, and achievement of best customs practices for monitoring timely deliveries of cargo in transit. The project duration was initially thought to be five (5) years, extendable. FBR and the selected firm(s) were to carry out the process of implementation as partners.
In wake of revised APTTA, FBR also defined the tracking solution should be extendable to cross-border if so required in future. Compatibility of software with other Customs system was an important consideration. At that time the plan was to award contract to successful tracking solution provider company bidding in the process, under Pakistan Procurement Regulatory Authority (PPRA) Rules. Customs Collectorate of Preventive Karachi was decided to be the project location.
The project was conceived to rollout in three phases. The first phase would cover Afghan Transit cargo, both commercial and non-commercial, including POL products exported to Afghanistan. This phase also included transshipment cargo, that are inland transits from Karachi to upcountry dry ports and special zones. Second phase was planned to include imports, exports, transit and transshipment through Pakistan Railway. The third and last phase was to include export cargo from upcountry ports to Karachi ports, via all means, land or railway.
The desired solution and selection process
FBR conducted thorough research and inquiry about what a tracking solution should provide. The following were identified as critical requirements: container-vehicle synchronization, electronic geo-fencing, alert on route deviation, container door monitoring capability, route-time monitoring, un-authorized stoppage, data analysis and reporting, and option of satellite-based or hybrid (satellite + ) tracking devices with auto-switching.
FBR constituted a technical committee in Mar-2011 for shortlisting and technical evaluation of solutions presented by various technology companies working in the market. Nineteen firms showed interest in the project, out of which sixteen were short-listed by the FBR’s technical committee in Apr-2011. Board issued request for proposal (RFP) in May-2011 to all these technically qualified firms. A pre-proposal conference was held in the Board in May-2011. Twelve companies provided technical and financial proposals, and finally five firms was declared by the Committee as meeting technical criteria.
When the process was evaluated by FBR for financial evaluation, it was argued whether one technology solution provider company should be selected and given the contract or to lay down technical criteria and allow multiple companies to provide solutions. The matter was thoroughly discussed and FBR finally preferred licensing over contracting. Licensing mode has advantages because it would not provide monopoly to any one company nor will create dependence of FBR and Customs on a single firm. This was beneficial both for a competitive environment and pricing for trade and transport community who will use the system on their vehicles and containers. In the envisaged licensing regime, any tracking technology providing firm who fulfills the threshold criteria set by the Board can apply for license and start monitoring and tracking operations and integrate with Customs system.
FBR framed licensing rules for this purpose. Essentially the same criteria which were set for contracting processes were adopted. The licensing rules were issued after vetting by the Law Division in form of notification statutory regulatory order (SRO) No. 413(I)/2012 issued on 25-Apr-2012. The Rules set out technical and financial criteria based on which any tracking solution company can apply to the Board for providing solution. The applicant shall possess the following qualifications: a duly incorporated company; having relevant experience and past performance in vehicles and containers tracking; be in a financial position to undertake the project; and having appropriate managerial capacity to execute and run the project.
The Rules also prescribed processes and conditions for granting and renewal of license. License is granted for a period of three years. It shall be subject to compliance of provisions of the Customs Act and all relevant rules and regulation while running the system. License is non-transferrable and is not be allowed to be used by any sub-contractor.
The components of the tracking and monitoring system
Tracking system is nation-wide spread out in all Collectorates, ports, dryports, special zones, and border points working under Customs control. It comprises of following component: Central Control Room in Customs House Karachi; Regional Control Rooms in all Customs Collectorates of the country; Connectivity of points of entry and exist with all control rooms; mechanism of exchange of real time data with Customs computer system; arrangements at all ports and border points for mounting and un-mounting reusable container security devices.
Licensed tracking company is responsible for managing the system under proper maintenance to ensure smooth operation of the system, compatible with customs procedures and operations so as to ensure running of the system by customs. System has to promptly alert Customs of relevant jurisdiction about geo-fencing violation, pilferage attempts, unauthorized or unusual stoppage.
Operations started in May-2013
The first license was granted to M/s TPL Trakker Ltd. who were among those selected in the technical evaluation, and have been in tracking business for over a decade in Pakistan. Other companies have also applied to FBR for license, which are under process.
The licensee company TPL Trakker Ltd. set up a system for tracking and monitoring system in four months. The system was tested by Customs through a pilot operation. After pilot run, Customs got feedback from all participating Customs formation and bonded carriers. Actual operations of STE Tracking and Monitoring began on 16-May-2013.
Achievement in first six months
Like any new system, there have been teething troubles which eventually were fixed and system is now running smoothly. During this period (May-2013 till now, ongoing), the scope of tracking has been confined to Afghan Transit (AT) containerized cargo movements, starting from Karachi Port and Port Qasim. Country-wide Customs anti-smuggling units and Licensee firm (TPL Trakker Ltd) staff have successfully partnered in delivering the desired objectives from system.
From start till December more than 25,000 containers have been monitored and tracked. The number of containers reconciles 100% by routes and by destinations. About 82% of container left for Torkham and 18% for Chaman. Most of containers departed from KICT (53%), followed by PICT (36%), QICT (11%) and only less than hundred from KPT area.
Tracking system triggered alerts on unusual stoppage, route deviation and door alerts, which were reported to Customs MEUs and focal persons. Most of the alerts were unusual stoppage (65%), followed by route deviation 19% and door alert 16%. Alerts on en route incidents were exchanged from tracking system to Customs via multiple service delivery channels – SMS text messaging, voice calls, fax messages and emails.
STE system has prevented numerous potential pilferage attempts, which were otherwise not possible. Pilferage was prevented by timely responding and reacting. Except one container, all containers reached their destination intact.
Building on the lessons learned
“Use of technology can at best support enforcement, not replace it”. Tracking of AT consignments has, however, given Customs very revealing results, which Customs can build upon for enhancing controls and efficiency, and for optimizing. Improvement is an ongoing process. Thanks to this project, Customs is now enabled to use advanced risk management techniques. Customs is getting actual information about hot-spots (risky areas) and can best leverage and optimize their meagre resources available for enforcement.
Logistic Efficiency of movements under Customs controls is now measured and reported through the tracking system. Average period on AT cargo movements remained about 7 days, but keeping in view the variation in bonded carrier’s behavior, efficiency among Bonded Carriers varies from 6 days average to +10 days. It signifies that actually trip can be completed in the stipulated time of seven days or lesser. But since Carriers have no incentive or any penalty on efficiency, they behave as they want. Customs is now in position to set ‘service standards’ in the form of Key Performance Indicators (KPIs) for Bonded Carriers. This will bring efficiency in overall logistics system, leading to benefits for economy, trade and industry. Building on the lesson learned in the first six months of operation, the tracking system will be rolled out to all other categories of cargo movement as given in the Rules.

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