Since February, freight forwarders and shipping lines have been required to submit cargo manifests electronically to US Customs at least 24 hours prior to leaving port. The requirement was primarily designed to improve security at US ports in the aftermath of the suicide attacks on New York and Washington in 2001. But the requirement should also serve to push many of Hong Kong's shipping concerns into the modern world of information technology. Tradelink Talk discussed these and other issues affecting e-commerce with Willy Lin, chairman of the Hong Kong Shippers' Council.

Tradelink Talk: It's been three months since the US Customs new advanced manifest rule for maritime shipping came into effect. How are Hong Kong shippers coping?

"This represented quite a drastic change to the previous arrangements. The whole mode of operations for the shippers, for the forwarders and the shipping lines, was turned up-side-down. Despite the 60-day grace period granted by the US Customs and the numerous seminars and meetings around the world, discussions went down to the wire. From this exercise of questions and answers, I think the US Customs and, as a matter of fact, the HK Customs and the Trade and Industry Department gained a much better understanding of how the trade actually operates. Now it is May, about three months into operations, and we see very few hold-ups. There were a number of cases in which some data was mistyped, cargoes were then deferred to the next steamer, which in the case of Hong Kong, being the world's busiest terminal, meant a two-day waiting time. But other than that, we don't see a lot of problems."

Tradelink Talk: Was there any kind of crash programme to help get those companies not yet connected up to speed?

"I think that for a while back in January we were very, very worried. We did a survey within the trade which showed that 70 to 80 per cent of the companies were either not aware or ill prepared. They had no clue as to what to do. Together with Tradelink and other providers, we set up a publicity programme to raise their awareness one step higher. We requested the freight forwarders and the shipping lines to educate all of the sales force to make sure that the message is clear to the shippers. We wanted to be sure that all shipping clerks of companies understood the importance of inputting accurate data to the best of their ability. Otherwise the consequences can be very severe. We had to make the shippers understand that the deadline was absolute, whether Hong Kong was ready or not. The US government had made it very plain that there would be no extensions. The message to everyone was you had better be ready, or you're in trouble. You know, Hong Kong people always do things at the last minute. But at the same time we're very sensible, so we got down to it with only a very few little mistakes."

Tradelink Talk: You have been quoted in the past as saying the new rule will inflate operating costs. Have you seen this happening?

"Yes, I think it is inevitable. Before, most documentation submitted to the freight forwarders or shipping companies were done manually. Now, per the request of the US Customs, massive data must be in electronic form and must be submitted electronically to the US. Most shipping lines have taken on 50 to 60 new staff just to prepare and transmit all of this data. We have no problem with a company saying we had to take on more staff, so we have to charge you more. But at the same time these companies are not willing to sit down and say, why not use one system, why not work electronically from shippers to forwarders to shipping lines? I don't care which system, so long as it is one platform that everybody in the community can log-on to. By doing so, jobs would be done efficiently with fewer mistakes.

"Let me make this clear. Everything about the way Hong Kong does business is good except this part. We're too slow in integrating our computer systems between trading partners. People are too fragmented. Systems are fragmented. They don't talk to each other. If we could do things more professionally, the costs would not be so high and savings could be achieved. The council has long supported the idea of shipping companies offering a discount for shippers or freight forwarders who submit their data electronically. But so far only one or two lines have actually come out and said they are willing to do this."

Tradelink Talk: Will the new US requirement spur small to medium-sized firms to begin filing electronically?

"If there are SMEs that don't have the capability to submit electronically, they should not be left out! As a society, nobody should be left out! We therefore advocate that some window should be open so to assist those who prefer to stick with manual works. The trade associations and chambers operate a similar system presently with the co-operation of Tradelink. It works to everybody's satisfaction! A lot of SMEs may not be able to pay for a complete system, but they can take their forms from one of the windows to one of the trade associations, and they could type the thing for them. It might cost them HK$30 or HK$40, but it works and the total burden on those companies is not so unbearable since they will use it once in a while. A survey by the Hong Kong Productivity Council last year (see cover story) mentioned that more than 50 per cent of SMEs are computer illiterate. That is quite astonishing and scary when we see what our neighbours are doing. Having said that, the community has to work together on a single platform. Otherwise our costs are going to keep going up."

Tradelink Talk: You've mentioned a standardised platform. When do you think this may come about?

"Some sort of B-to-B-to-Government platform that companies would be able to interface with would certainly be the logical solution for Hong Kong. Everybody knows that they have to work faster with less. I understand from the newspapers that a
number of companies will be offering their proposals to the government for the digital trade and transportation network (DTTN). Maybe the company will come in and bid the project, or maybe only Tradelink will be left. I have no problem either way. Personally, I would prefer a single platform as Hong Kong business is not big enough to have many companies competing for such small volumes. At the end of the day, systems that are not compatible waste time, and there will be no savings or benefit at all."

Tradelink Talk: Is it a good idea for shipping companies to drop their charges for forwarders that file electronically?

"If companies can do things by electronic means, they should be given an incentive because that means savings for everybody in the long term. Unfortunately, the Hong Kong shipping lines have yet to set a policy on it! As I understand, only Maersk Sealand has come up and said it is a good idea. We're very disappointed that the shipping lines are not bold enough to come into this new world of communication and
competition."

Tradelink Talk: By October, US Customs will require that air cargo shippers meet the same requirements as maritime shippers. Is this sector prepared?

"I believe the air cargo industry players are readier than the shipping lines. One has to understand that the air cargo industry is more controlled and less open. Carriers have to provide a lot of data since products are delivered faster, and thus exporting countries and importing countries require data quicker. Furthermore, Hong Kong forwarders and carriers have a known consignee system in place so to ensure that all cargoes loaded on a plane have known exporters, known manufacturers and a known consignee. In co-ordination with the Economic Development and Labour Bureau, an air cargo forum has been formed, and we will be submitting our comments to US Customs in a uniform voice. Furthermore, Hong Kong airport is known as one of the most secure airports in the world."

TradelinkTalk: You recently attended a textile conference in Europe. What impressions did you come away with regarding the outlook for trade with Europe?

"We have to be vigilant for moves from developed countries to curb free trade - Hong Kong is a pioneer of free trade. We want the European Commission to reconfirm their commitment that quotas will be history as of 1 January 2005. We don't want to have any unnecessary protectionist feelings developing. We believe honest and free dialogue will be most welcome. We also have to look out for the so-called social compliance rules and 'green' trade barriers. A lot of countries, and especially Non-Governmental Agencies (NGOs), are attacking Asia on such things as the type of dyes used for fabrics and the heavy metal content for buttons on clothing. And with the SARS problem, we have to prove to the world that we are not dead yet. We have to present a very positive image that Hong Kong is still alive and kicking."

Tradelink Talk: On that subject, is SARS one of the single biggest issues facing Hong Kong trade at the moment?

"We have been explaining to the world that cargoes moving out of Hong Kong or out of China will not transmit disease. There was one incident in which the Spaniards required certain kinds of cargoes of old or used clothes be quarantined or sprayed with a certain kind of chemical. We protested strongly that there was no reason for such a requirement, that we thought it was overkill. The Spaniards agreed but maintained a low profile and said that a law is the law, but they still haven't told us which chemicals to use. We have to make clear that people should not come out with a requirement just to have a requirement, not knowing even how to interpret it.

"Certainly, SARS has hit the region dramatically. We have to make the best deal out of it. I don't see many buyers coming to Hong Kong until maybe June. Every company has to make do in its own way. In our own company, we have an office and a factory in Bangkok, so we ask our customers to come to Bangkok and try to get the business done there. It is very disturbing to say the least, and we just hope it will be over as soon as possible."