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Debate over the future of City Deep – will sanity prevail?

Johannesburg, 01 November 2013 - In light of the recent discussions held at the public hearings on the draft Customs Control and Customs Duty Bills in Parliament on Wednesday 30th October 2013, it appears that the ever constant issue regarding the future of the inland port, namely City Deep, still remains a huge talking point in the freight forwarding industry, according to Jed Michaletos, Lead Director of Customs and Global Trade at professional services firm Deloitte. With the pending promulgation of the Customs Control and Duty Bill, major concerns have been raised around the proposed clearance of goods at the first port of entry with fears that inland ports such as City Deep will become redundant.

Under the current freight forwarding environment, containers arriving at the port of entry are accompanied by a manifest which provides a brief description of each container and its contents. Containers destined for delivery to an inland port are then loaded directly from the ship onto a train and transported to City Deep. Only on arrival at City Deep will the containers be cleared with Customs.

The South African Revenue Services (SARS) upholds that its two key mandates, namely the control of trade and the facilitation thereof,  are areas of concern in the current logistical environment surrounding inland depots. The risk of containers being tampered with and goods being offloaded from trains while in transit have pressured the revenue authority into changing the current processes, with the aim of achieving better control over the movement of goods not yet cleared through customs.  With the belief that the current controls are insufficient, the clearance of goods at the first port of entry has thus been proposed as the control measure of choice by SARS. This is fully appreciated and understood as SARS needs to protect the fiscus and local industries against for example narcotics smuggling, counterfeit imports as well as undervalued imports to name a few. 

Although the need to provide for better control over the movement of goods not yet cleared through Customs is one of SARS’s most important mandates, it still presents a number of practical issues if put into operation. In the past inland ports such as City Deep have relieved the pressure of congestion at sea ports, allowing containers covered under a manifest to be loaded on rail directly on discharge from the ship arriving at the port. The fear is that these containers destined for City Deep will now need to go into the main stack area at the port before a decision can be made as to where the container should be sent, i.e. either re-directed to rail transport or for a customs inspection. It is this potential change in the physical movement of the containers which could place a heavy burden on the already congested port infrastructure.

With SARS and the freight industry at locked horns the need for practical solutions for both parties has become of utmost importance. Michaletos believes that both sides present valid points of concern; however there is scope for practical solutions which could meet both SARS’s need for better control and the industries cry to save inland ports. Michaletos suggests a number of practical solutions which include what is known as the ‘48 hour rule’ - an initiative implemented by Customs & Border Protection Agency in the US where advanced cargo information needs to be communicated to the Customs 48 hours prior to the vessel arriving should importers want their cargo to move seamlessly through the port. If importers fail to submit this pre-arrival information within 48 hours of the ships arrival in the US port, the containers will be offloaded in the port awaiting the Customs release approval.

Such an initiative would give SARS an ample amount of time to perform its necessary risk assessments and to make a decision prior to the vessel’s arrival as to whether the container can be sent directly to City Deep or stopped at the Durban port for a physical Customs inspection.

With a new push for the Preferred Trader Accreditation by SARS, Michaletos believes that this ‘48 hour rule’ could accompany the accreditation as a potential benefit, offering importers who are compliant with customs legislation a ‘smooth’ movement of their consignment from the port of first entry to an inland depot. Other suggestions could include an increase in the level of surety required by SARS for traders who want to move their containers directly to City Deep. SARS could even consider using secure seals to lock these containers on route to City Deep on which the Customs officials could inspect the cargo on arrive in City Deep if required.

Michaletos believes that there is still time to salvage this situation and encourages the authorities to look at alternative methods of retaining the necessary control required whilst still facilitating legitimate trade.

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