Tuesday, August 6, 2013

Changes For TIR Trucks May Delay Freight and Carry Costs for Road Haulage Operators

Russian Customs Move Breaches Convention says EU Commissioner
Shipping News Feature

RUSSIA – EUROPE – The decision taken by the Russian Customs officials to vary the terms of goods shipped employing TIR carnets as transit documents, is due to come into effect on the 14th August, and may well have serious consequences for road haulage operators. Despite EU protests, it seems the move to insist on financial guarantees to ensure completion of all duty payments etc. for road freight will go ahead as scheduled. The Transport Internationaux Routiers (TIR) Treaty allows goods to move under customs control across international borders without having to pay duties and taxes that would normally be due at import/export points.

Early in July, a meeting at the offices of the Russian North-West Customs Department (NWCD) resulted in changes being made to goods travelling into and throughout Russia under a TIR carnet. The reasons given, but apparently not accepted by EU officials, is simply that massive fraud is costing the authorities vast sums of money when the goods fail to arrive and the carnet’s are unfulfilled with no outstanding payments being made.

According to the minutes of the Russian meeting, as at 1st June 2013 the amount owed by the shippers and hauliers to the Customs authorities stood in excess of 20 billion roubles. This equates to 41% of the total amount of foreign traders’ debt to the Customs Authorities. The situation in the North-West region is said to be even more serious with the amount of Association of International Road Transport Carriers (ASMAP) debt standing at about 7 billion roubles and constituting 57% of overall debt. In comparison, the debt with regard to undelivered transit goods registered without TIR Carnet is said to be only 1.73%.

ASMAP brings together over 3,000 Russian logistics enterprises and is a member of the International Road Transport Union (IRU) which in turn represents hauliers from over seventy countries, as well as having membership of the International Federation of Freight Forwarders Associations (FIATA). Problems with collection of duty in the region are nothing new as an ASMAP statement from over a decade ago illustrates.

The EU argues that the measures are likely to seriously disrupt freight traffic flows, and, in a letter sent to the Russian authorities, EU Taxation and Customs Commissioner Algirdas Šemeta pointed out that, in his opinion, the rule change breaches the TIR Convention regulating international transport by trucks, an agreement ratified by both parties.

Russia has form for such a move, in 2008 similar rule changes delaying trucks coming into the country unannounced meant vehicles held at the border, this resulted in massive backlogs which ended only when the Customs authorities cancelled the alterations to procedure the following week. This time the Russians have considered ways of avoiding delays but none would seem to have been thought through according to this statement from the Federal Customs Service, which says:

“In order to prevent formation of long waiting lines of vehicles in front of checkpoints, as well as to ensure full and timely payments of customs fees by carriers’ representatives to the Federal Budget, the owners of temporary storage warehouses were proposed to use other ways, such as suretyship, customs escort, and others, to provide compliance with the customs transit procedure.”

This seems to indicate that extra costs will be involved for a haulier to have any chance of avoiding a (possibly lengthy) delay. The account of the Customs deliberations can be read here.

For his part Commissioner Šemeta has been forthright in expressing his concerns about the possible consequences of a rule change which seems to be aimed at capturing all duty amounts at the earliest possible point following entry into Russia, regardless of the status of goods. An EU spokesperson for Commissioner Šemeta said the Commission was concerned about the consequences the changes could have on EU traders and transporters, in terms of movement of goods, additional financial costs and administrative burdens, and in his letter to the Russians Mr Šemeta is unequivocal, saying as he does:

“If the measure is implemented as announced, we can expect that the additional burdens for operators and customs authorities will lead to serious disruptions to EU-Russia trade flows. It will also be in prima facie breach of the Convention.”

For its part, the IRU has sent its own strongly worded letter to the Prime Minister of the Russian Federation, copying in the relevant parties. IRU Secretary General Umberto de Pretto, called upon Dmitry Medvedev, to urgently cancel what he called ‘the unilateral and illegitimate decision of the Federal Customs Service of the Russian Federation (FCS RF) to not honour the guarantee provided by the TIR System which, if implemented on 14th August 2013, would have devastating effects on Russian trade and economic development, as well as on Russia’s trade partners and international road transport operators'. 

Photo: A sign of things to come? Hundreds of trucks queue at a border point.