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Aeroceanetwork Members are Dealing with the Australian Customs Disaster

Aeroceanetwork members throughout Australia have been pushing forward under “friendly fire” in the form of a major customs computer crisis which for the past few weeks has crippled Australian ports and airports. The situation slowly appears to be easing, but...

Aeroceanetwork members throughout Australia have been pushing forward under “friendly fire” in the form of a major customs computer crisis which for the past few weeks has crippled Australian ports and airports. The situation slowly appears to be easing, but the backlog of freight is several days, maybe up to a month by some estimates, away from being cleared up and business returning to normality.

A new Integrated Customs System (ICS) introduced a few weeks ago by the Australian Customs Service, at a taxpayer cost of $A250 million (USD 188 million), with the purpose of speeding up freight processing has had the opposite effect. ICS has been plagued with problems every since it was introduced. The system has led to shipments that used to be cleared within a day taking up to two weeks. Thousands of consignments are currently stranded at Australian ports and airports after the new system started automatically rejecting en masse electronic clearance requests generated by shippers due to poor data quality. While the Customs department has spent the better part of the last two years warning industry that its new system will automatically reject any numerical variation in electronic clearance documentation, it appears both Australian Customs and the Australian freight forwarding industry greatly miscalculated just how strict new data-hygiene requirements would be.

“Debacle is a kind word in describing the past two weeks,” said Mr. Scott Rofe, Managing Director of Flag Seawing in Sydney, “The general brokerage and freight community consensus is that the system should be shut down and we revert back to the old system, which is only about four years old anyway.”

The Australian Customs Service also blamed delays in arranging transport for contributing to freight congestion at the country's sea ports. Cargo industry leaders also have been pleading with forwarders and consignees to help in clearing the backlog at their facilities as well. “All four of our terminals (Perth, Brisbane, Melbourne and Sydney), are at critical capacity levels and delays in the collection of freight will have a major impact, particularly in Melbourne and Sydney,” said Robert Lugton, general manager of freight terminals for Qantas, in a statement to customers. Earlier Mr. Lugton had asked Qantas customers to “use all options of clearance available to them, including the manual contingency under bond movement request option” especially in Sydney and Melbourne, as terminal space was at the critical level.

“Cargo collection from container depots is also a major concern, with missed time slots and delivery schedules placing strains on the ability of the fleet to cope with delivery demands for the following shifts,” said Warren Worswick, director of Melbourne based Aeroceanetwork member Bluefreight in an update to Bluefreight’s customers, “Consequently, delivery timetables are changing on an hour by hour basis. Unfortunately we cannot guarantee deliveries more than 24 hours in advance. According to Mr. Worswick, prior to and since 12 October his company has been working extensively to obtain successful reporting and subsequent clearance of import cargoes, however extensive interruptions and delays are occurring which are out of forwarders’ control. “We are maximizing our efforts to keep additional costs in the way of storage and demurrage to a minimum,” said Woswick.

In calling for the Australian federal government to alleviate the problem, New South Wales Ports Minister, Mr. Eric Roozendaal, said Port Botany was at 90% capacity and space was "rapidly diminishing" as a result of the cargo system problems but at the same time industry estimates cargo clearance rates at Port Botany and Melbourne, Australia’s two most important ports, are down to 30% of normal levels because of the problems with new system. "There couldn't be a worse time to introduce a new computer system”, said Mr. Roozendaal. More than AUD 100 million (USD 75 million) of trade moves through Port Botany alone each day, as such this is having a great impact on Australia’s trade. Coming up to the Christmas rush, this could not have happened at a worse time with 20,000 containers having been stranded in Sydney, Melbourne and Brisbane alone.

Aeroceanetwork member companies in Australia have been very pro-active in dealing with the situation. Bluefreight, CT Freight and Flag Seawing have been regularly keeping the communications lines open with their clients in order that their customers can know the latest up to date information about the situation. “Inbound Freight has been processed by CT in a timely manner due to huge effort by import staff to ensure that the shortfalls in the system did not impact on our clients,” says Clive Thomas, managing director of CT Freight, “This has included transferring cargo into our bond from airline facilities to remove potential storage costs.”

CT Freight was not so upbeat about the clearance situation though as customs brokerage has been a completely different story, with clearances taking approximately 5-10 times as long to process. “We have employed additional qualified staff on a temporary basis to try to minimize these delays” says Clive Thomas, “Our Customs Brokerage staff have been working seven days per week for 10-14 hours per day to try to provide the service that we have traditionally provided.”

Regarding any upcoming claims for damages against customs for the colossal backlog, the current situation in Australian ports and airports is a “user pays” system, so the end cost goes directly to the importer. This includes and extra time spent trying to clear goods through the ICS/CMR systems. . Unfortunately, major costs for forwarders and their clients have been incurred. “We have paid out large sums on behalf of our clients” says CT Freight representative, “and will be passing this to our customers.” Australian Customs have advised that they will be providing a claim form but no Aeroceanetwork member has reported yet to have been able to view this as it has not been made available.”

Aeroceanetwork members claim that there was widespread concern and skepticism at first by their customers. “Once the situation started being taken up by the media, it has improved” says Clive Thomas, “Prior to this I am sure there was some doubt if the issues were general or CT specific.” “Early on the customers were not understanding at all,” added Scott Rofe, “but after a media blitz by the government and general news and media agencies their [the customers] perception of the issues and problems encountered have changed and have diverted their frustrations to the government and not the forwarder and or broker.”

Federal Customs Minister Chris Ellison said he expected much of the backlog to be cleared by the end of the coming weekend, though many forwarders and customs agents are skeptical about this assertion. In the meantime the old computer system would be dusted off and would work alongside the Integrated Customs System until these problems had been fixed.

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