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Cargo Dwell Time Study - Improving the Competitiveness of Mauritius Source: Bulletin Semestriel No.

41 Octobre 2008 Publisher: The Mauritius Chamber of Commerce and Industry

Trade facilitation has now become a key measure of the competitiveness and viability of business. In a highly competitive market, the quality of logistics can have a major bearing on a firms decisions about which country to locate in, which suppliers to buy from, and which consumer market to enter. High logistics costs and, more particularly, low levels of service are barriers to trade, foreign direct investment and, also, to economic growth. As a result, countries with higher overall logistics costs are more likely to miss the opportunities of globalization. The efficiency of ports and airports is known to play a vital role by providing critical support to its international trade and ensuring a countrys integration into the global marketplace. Indeed, inadequate port capacity, port congestion, limited cargo handling facilities, high down time of equipment or cumbersome procedures lead to low efficiency and have a serious negative impact on business activities. Our Chamber has been involved in several trade facilitation projects with one of our main initiatives this year being the cargo dwell time study to assess the cargo clearance time in Mauritius. The first study on dwell time for cargo was conducted in 2003 in collaboration with the Ministry of Foreign Affairs, International Trade and Cooperation and with the financial assistance of the COMESA Secretariat. The study benchmarked the port productivity against international ports and identified main bottlenecks in the clearance of goods. A number of recommendations were made in the study so as to improve the cargo release time. In 2008, the Chamber undertook a new Dwell Time Study with the assistance of the Commonwealth Secretariat. The objective of the new study was primarily to assess the impact of reforms following the earlier dwell time study and also to benchmark the critical aspects of cargo handling against international ports. The study was carried out by InfoWave Pte Ltd from Singapore and the findings were presented to members of the Chamber and other stakeholders during a workshop held on 25 September 2008.

MAIN FINDINGS Dwell Time

The dwell time can be defined as the measure of the time elapsed from the time the cargo arrives in the port to the time the goods leave the port premises after all permits and clearances have been obtained. The study revealed that the mean and median for outbound

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cargo had improved as compared to the figures of the previous study done in 2003 but that the dwell time for inbound cargo was still the same as shown in the table below.

DWELL TIME MEAN (DAYS) 6.18 5.14 4.00 5.96 7.03 NA

2003 MEDIAN (DAYS) 4.63 3.68 3.16 6.36 5.31 NA MEAN (DAYS) 6.06 5.50 3.50 4.86 7.52 12.85

2008 MEDIAN (DAYS) 4.50 4.02 2.25 5.46 5.30 10.32

INBOUND MCT MPT OUTBOUND MCT MPT TRANSHIPMENT MCT MPT

MPT: Multi-Purpose Terminal

MCT: Mauritius Container Terminal

According to the report, the average dwell time for captive cargo for international ports such as Singapore and Hong Kong is about 2 to 3 days. The average at the Mauritius Container Terminal (MCT) is about 4 to 6 days which is double that of these international ports. The average dwell time for transshipment in Singapore is about 3 to 4 days while in Mauritius, it is within the range of 5 to 7 days.

Terminal Capacity

An analysis of the volume of containers handled was done based on statistics collected for the period July 2007 to June 2008. The number of containers (TEUs) handled for that period was roughly within a ratio of 50:50 for transshipment and captive containers respectively as shown below: MCT/MPT 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 CAPTIVE 156,009 152,969 172,695 180,422 171,531 168,473 168,352 203,907 % 96% 90% 55% 44% 48% 51% 45% 49% TRANSSHIPMENT 6,440 17,330 140,252 231,344 186,309 162,692 202,166 212,785 % 4% 10% 45% 56% 52% 49% 55% 51% TOTAL 162,449 170,299 312,947 411,766 357,840 331,165 370,518 416,692

(Note: Transshipment containers are counted twice)

There was a overall 12% increase in the TEUs handled over the previous year with captive cargo posting an impressive 21% growth over 2006/2007. In spite of this growth, there seemed to be no noticeable bottlenecks in the MCT operations. However, the berth occupancy at MCT over the 4-month period May to August 2008 was at 77% (though within
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the acceptable range of 60-80%) and was reaching its practical maximum beyond which vessels have to wait for berths or time windows for berth allocation. The consultants pointed out that the situation should be carefully monitored as shipping lines might start looking at alternative ports for transshipment facilities. The study also pointed out that the implementation of electronic Delivery Orders and Shipping Notes as well as pre-notifications of vessel arrivals would ease the clearing process. It was also recommended to introduce a 24-hour acceptance and delivery of containers to maximize the use of port equipments.

Airport Cargo Services

As a comparison of the high level of air cargo turnaround, 80% of the inbound air cargo is cleared within 24 hours at major international air cargo hubs like Singapore and Hong Kong. The statistics in the study revealed that the dwell time in Mauritius had improved considerably at the airport cargo terminal during the five-year period under review. The data collected in 2008 indicated that for inbound cargo, the mean and median dwell time was 3 days and 1 day as compared to 5.3 and 4.4 days in 2003. Similarly, for outbound cargo, the mean and median were less than 2 days in 2008 as compared to 4 and 3.16 days respectively in 2003.

Mauritius Revenue Authority Customs

The study commended the efforts of Mauritian Customs for providing a one-stop centre where Customs and other agencies are housed together as recommended in the 2004 report. The implementation of longer clearance hours at the port has also been commended by the consultants. The report measured the average and median take for clearing the customs declarations as shown in the table below:

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Although the study showed that the average clearance time for customs declaration for the period July 2007 to June 2008 was between 40 and 90 hours, a more detailed breakdown indicated the following: 50% of the customs declarations were cleared within an hour 60% were cleared within two hours 67% or two third were cleared within seven hours The consultants highlighted the very high proportion of duties collected either by cash or cheque in Mauritius and stated that cash payment contributed on average to two days to the dwell time. It was suggested to increase the use of electronic payments. As a comparison, in Singapore and Hong Kong, almost all payments for transactions were effected via electronic means. The study also pointed that Mauritian Customs currently require hundred percent document verification while customs in advanced countries checked the documents based on risk management, risk profiling and based on specific cargo types.

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Ministries and Other Agencies SUMMARY OF MAIN RECOMMENDATIONS Short Term Set up a high level monitoring committee to spearhead all national IT initiatives in the port, customs and traderelated activities Establish a continuous dwell time monitoring system so as to identify the main segments causing delay in the supply chain. Ease the requirements to qualify for the Blue Channel for fast track clearing of cargo Encourage the use of electronics payment of custom duties and other taxes Medium Term Implement a Single-Window System Implement the cargo community system Long Term Continually review investments including major infrastructure changes and port expansion based on market demand

The study noted that the present Single Window System was not being used optimally since only Customs and the Commerce Division of the Ministry of Business, Enterprise and Cooperatives were currently connected to the system. In Singapore, thirty-five government agencies were connected to the Single Window System. The consultants recommended that other Government agencies in Mauritius responsible for the delivery of import permits such as the Ministry of Agro Industry, Food Production and Security, Ministry of Health & Quality of Life and the Mauritius Standards Bureau amongst others be also connected to the system. According to the consultants, when agencies were not connected to the Single Window System, importers were physically required to submit their documents to these agencies for approval thus considerably increasing the dwell time for cargo. The report, however, commended the initiative of the Ministry of Business, Enterprise and Cooperatives for the current review of all import and export-related permits.

Capacity Building Session

As part of recommendations, a high level capacity building working session was held by the consultants with high officials of various institutions, Ministries including Customs Department, Mauritius Port Authority and Cargo Handling Corporation Ltd. on how to ensure continuous dwell time monitoring using statistics and statistical analysis. The capacity building session also provided an opportunity for sharing the experience of Singapore in field of port automation and other supply chain implementations.

Rooma Narrainen Manager Trade Division

Vivagen Amoomoogum Analyst Trade Division

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