Final Report Summary - CORE (Consistently Optimised Resilient Secure Global Supply-Chains)
Executive Summary:
CORE demonstrates how a powerful and innovative Consistently Optimised REsilient ecosystem implementation, integrating interoperability, security, resilience and real-time optimisation can produce cost effective, fast and robust solutions that guarantee the efficient and secure transit of goods through the worldwide Global Supply Chain system.
CORE shows how protecting and securing the Global Supply Chain, and reducing its vulnerability to disruption (whether caused by natural disasters, terrorism or other forms of undesirable or illegal activity), can be done while guaranteeing the promotion of a timely and efficient flow of legitimate commerce through the European Union (EU) and other nations around the world. CORE demonstrates that this can be done while at the same time offering tangible benefits to involved stakeholders (transaction, transport, regulatory and financial operators), thus facilitating its adoption by commercial entities.
Using CORE’s real-time optimisation tools, security and tracking data can be integrated into supply chain operations whilst ensuring that process efficiency is improved and the environmental impact (including CO2 emissions) are reduced. CORE offers solutions that cover all levels of time granularity, ranging from strategic models to dynamic daily plans to real-time fast reacting scheduling and optimisation tools. These guarantee that operators can create resilient contingency plans and be able to react in real-time to unexpected major events in a fast and cost-effective way, avoiding serious economic collapse.
CORE addresses in an integrated and stakeholder-friendly way three main areas:
1. End-to-end Supply Chain Security fostering standardisation, harmonisation and mutual recognition;
2. Controlled global visibility of security risks and other supply chain threats and their impact on supply chain flows around the world;
3. Real-time Lean Agile Resilient Green Optimised supply chain solutions offering a highly innovative approach to designing supply chains resilient (in real-time) to major disturbances caused by high impact events
Furthermore the results of CORE will help the EU (and other countries) introduce changes to Customs policy which strike a balance between public and business interests, within reasonable regulatory constraints. The vision of changing Customs reporting procedures “from push to pull” using secure data pipelines for the whole value and transport chain has already started in a number of previous EU-funded projects. CORE demonstrates this approach in a broader dimension addressing security and supply chain optimisation. CORE has generated a security and SC resilience ecosystem which will operate in an international context and support the implementation of the various EU security and information management policies and directives, with evolving international regulations and standards, including collaborations models with the US and other nations all over the world. CORE’s Supply Chain Security Reference Model (SCSRF) is flexible and powerful enough to establish the basis for standardisation of secure transport & logistics as part of an integrated framework of trusted worldwide networks. In summary, the CORE Ecosystem will offer a distributed adaptive open sociotechnical system, with properties of self-organisation, scalability and sustainability, inspired by natural ecosystems, including data, knowledge, best practices and services that can be plugged in to existing IT systems with minimum effort yielding maximum benefits in terms of enhanced security, resilience and efficiency.
Project Context and Objectives:
Safeguarding supply chains is essential to both the EU's economy and security. The economic impact relates to exports and import flows of the order of 6 billion Euro processed daily by EU Customs. Losses related to security in supply chains have been estimated to €8.2 billion by the European Parliament. These figures are limited to cargo and truck theft and therefore do not include other typical supply chain security incidents such as counterfeit, piracy, smuggling/contraband, sabotage etc. Likewise, besides the monetary impacts, there are other indirect consequences for companies including the loss of brand image, investigation costs, increased insurance premiums etc. These losses may threaten the survival of businesses in the marketplace and ultimately damage the competitiveness and economic development of European countries. The vulnerability of supply chains is not merely expected to damage the trading sectors, but in the long run may also impact the security and quality of life of our societies. If customs administrations fail to collect enough tax revenues there will be less money that governments may reinvest in the country. Likewise, if borders’ controls fail to detect weapons of mass destruction entering a country the consequences could be enormous and devastating. Vulnerabilities from natural disasters have also been visible in recent years. As a consequence, supply chain security is high on the agenda of governments and business boards alike.
Despite the consensus on the importance of supply chain security, misunderstandings and lack of common approaches impact progress. The public sector is actively working with producing newer and more sophisticated security certifications (e.g. Authorized Economic Operator) as well as supporting the development of scanning equipment to detect illegal shipments or tax frauds. On the other hand, the traders perceive these initiatives as bureaucratic resulting in excessive and costly paperwork, as well as delays at the borders because of the necessary cargo scanning and screening. To make things even more complicated, global traders have to deal with a plethora of different security certifications required in different continents. Paradoxically, even within the EU27 member states the same security certifications are being interpreted and implemented differently. Finally, traders already have in place their in-house developed security requirements, that unfortunately may conflict with governmental ones and therefore cause even more costs, and in the end, tardiness to comply.
As a matter of the fact, the EU is aligning security certification with private sector practices, whilst:
1. pursuing harmonization of approaches and cooperation within the EU;
2. establishing mutual recognition on an international level,
Further, European policy highlights the need to maintain or improve supply chain security levels whilst also expanding transport and logistics networks to enable industry throughout the Union to have effective access to the Single Market and the international market2. In addition, momentum towards international co-operation and harmonisation of approaches is gathering pace. A EU-US joint statement on supply chain security advocates “facilitation and expedition of the smooth flow of legitimate international trade through the use of multi-layered risk management tools”.
Other international initiatives concern the development of supply chain security research globally, as well as standards for information exchange. For instance, both the US and China4F4 and other major trading countries are committed in actively collaborating with the EU in the area of supply chain security research, information exchange, and compliance with global standards in the sector. Central to developing these standards is the WCO Globally Networked Customs together with industry associations that act as catalysts for international co-operation, forum discussions and industry engagement.
The emerging picture is that national systems are being developed to facilitate a collaborative approach across the international community of the Global Supply Chain5F5F5F5. This is being done in order to establish:
• Safe and secure, as well as timely and efficient, flow of legitimate commerce;
• Resilience to withstand threats and to recover rapidly from disruptions.
CORE consolidates solutions developed in Reference Projects6 in each supply chain sector (port, container, air, post). Implementation-driven R&D was then undertaken to discover gaps and practical problems and to develop capabilities and solutions that could deliver sizable and sustainable progress in supply chain security across all EU Member States and on a global scale. The implementation approach described in Figure 1 aimed at providing:
• SCS Capabilities /Building Blocks which represent the essential components of SCS solutions and the development focus for the project.
• A SCS Solution Development / Delivery Environment to produce solutions for the demonstrators using the SCS Building Blocks; delivery through the CORE Ecosystem will ensure on demand interoperability between disparate systems that may be attached to the CORE network.
• SCS Solutions Testbed: A set of linked demonstrators creating a test and experimentation environment for SCS Solutions, and showcasing a Secure Global Supply Chain System.
Figure 1: CORE approach and structure
The CORE implementation objectives which specify what was to be done and how to reach the vision were:
1. Undertake requirements analysis and impact assessment.
2. Provide an End-to-end Supply Chain Security (ESCS) through a Multi-method Threat and Vulnerability Analysis Capability.
3. Provide SC Situational Awareness Tools & Maps (SSATM) building on the data pipeline and results from reference projects to satisfy the Customs and business requirements for reliable, accurate, complete data. The SSAM development will involve:
4. Provide Real-time Lean Agile Resilient Green Optimised (LARG+O) SC planning linking with the ESCS and SSSAM capabilities. LARG+O will include:
5. Provide a Supply Chain Security Reference Framework (SCSRF) harmonising CRMF and SAFE Provide CORE Connectivity Infrastructure and Solutions Development Environment including:
6. Provide an SCS Ecosystem dedicated to the needs of the supply chain security communities offering Infrastructure services that amplify the capabilities of CORE components.
7. Demonstrators. The CORE Demonstrators will validate the applicability and benefits of the CORE approach in representative operating scenarios characteristic of the global supply chain. They will specifically show the way towards a Global Secure Supply Chain. The overriding goal is to demonstrate substantial gains in security and facilitation covering every major facet of the supply chain security sector.
8. Stakeholder Engagement, Knowledge Diffusion and Sustainable Development Specify and apply an inclusive Stakeholder Engagement Strategy emphasising international co-operation to promote harmonisation of regulations, and to support further development and implementation of international standards.
THE CORE demonstrators were:
• WP9: P&G Demonstrator – demonstrating an Intercontinental Secure Trade Lane and Resilient Supply Chain Optimisation utilizing trade lanes from multiple P&G sites and international product distributors. The transportation modes include truck and ocean carriers
• WP10: Demonstrator Felixstowe – create a seamless, integrated data pipeline concept in the UK on trade lanes with China and Australia, capturing reliable, accurate and complete data that enables supply chain security and effective risk targeting by businesses and border agencies
• WP11: Demonstrator Rotterdam - improving business supply chain control through security measures and advanced data-sharing for SC visibility in dashboards, and re-use of these business controls for government control purposes of multiple inspection agencies. Demo covers multiple trade lanes on connections with Russia, South America and others, trough Port of Rotterdam (Netherlands).
• WP12: Demonstrator Schiphol – apply global data pipeline concept to air cargo supply chains, managing air freight specific trade compliance requirements, and offering supply chain visibility in dashboards. Trade lanes with e.g. Africa, involving multiple inspection authorities.
• WP13: Demonstrator Belgium - The first part is the 'Drugs free import' demonstrator of EFICO's coffee supply chain from South-America to the Port of Antwerp. The second part is a best practice case on 'Long-range rail transportation of sensitive goods
• WP14: EU-US Demonstrator FALACUS FAstLAne through CUStoms Itay – US tade lanes - Application of Next Generation Scanning systems and CORE Dashboard for combining corridor with SC data in security management decision support
• WP15: BSH demonstrator will develop a secure and efficient port-hinterland connection for a containerized supply chain to show how visibility and better data quality can lead to improved operational efficiency, reduced variability in lead times, improved resilience and better risk monitoring and control
• WP16: Intermodal transport of dangerous goods demonstrator - localisation and tracking solutions focusing on Dangerous Goods
• WP17: EU-US DHL Demonstrator – managing air freight trade compliance requirements EU-US in the context of fast supplying of parts
• W23: Large Scale Demonstrator - demonstrating a breakthrough Shipping Information Pipeline (SIP) which enables shippers, authorities and other stakeholders to exchange confidential information on supply chain events and documents between distributed heterogeneous systems, independently of standards and formats. The focuswas on trade lanes with (1) large number of containers and (2) container security devices for tracking and tracing of containers and goods
Project Results:
4.1.3.1 SCS Controls
CORE has established a taxonomy and repository of SCS Controls, undertaken innovative developments aligned to the demonstrators and ensured that both the knowledge about the SCS Controls is readily usable for the other CORE capabilities and demonstrator solutions. Specifically CORE has
• Established a SCS Control taxonomy & Repository of SCS Control Integration Services to:
o Consolidate project outputs and consortium knowledge
o support Customs, related agencies, and business stakeholders to ascertain the detection and responsepotential of a variety of equipment and technology tools
o Facilitate use in other WPs
• Developed localisation and tracking solutions focusing on the intermodal transport of Dangerous Goods
• Developed detection / prevention controls focusing on Rapid Container Scanning
• Developed additional SCS Controls focusing on System Based Approach (SBA).
4.1.3.2 Multi-method Threat and Vulnerability Analysis (MTVA) Suite
CORE has developed a Multi-method Threat and Vulnerability Analysis Suite of services and components (IT tools) from both public authorities and business perspectives in support of End-to-end Supply Chain Security with specific reference to demonstrator requirements. The scope included both security threats as well as commercial threats.
Developed configurable and interconnected services that were used in demonstrators to address their risk assessment needs. The developed tools constitute the services of the “MTVA Suite”.
Developed components for Authorities based on the services of the “MTVA Suite”. Through these components the Customs and other Authorities are able to advance their threat and vulnerability analysis capacity. The developed components of the “MTVA Suite” were evaluated by the participating authorities (HRMC, DCA, BC).
4.1.3.3 SC Situational Awareness Tools & Maps
CORE developed a significant software infrastructure, spread across many partners, that is indeed capable of delivering a variety of Situational Awareness (SA) and visibility tools to SC stakeholders. This infrastructure comprises the CORE SC data model, and extensions of it for specific demonstrators. In addition, specific software services, such as optimization tools for LARG+O support, and the Tranship Patterns gateway for shipment visibility were developed. The concept of Pipeline and the profile/registration of entities into it via the Multi-method Threat & Vulnerability Analysis (MTVA) suite of tools, of which this SA toolset is a part, was elaborated along with theoretical and real-world uses of fusion services. Data quality and validation rules were elaborated upon, mainly concerning quality of milestone information. The international logistics domain is inherently non-trivial as well as, by definition, covering numerous cultures, languages, practices and with multiple embedded habits and infrastructures that all have to be taken into account. CORE purposely did not try to enforce yet another rigid way of engaging with an interoperability system. CORE tries to minimise the demands on a stakeholder in that regard. The threat and visibility analysis CORE offers is easily consumed and acceptance of the basic CORE concepts and technology was widespread and welcome.
CORE decided to focus on the gateways in the demonstrators that have data pipelines, port community and single window solutions, the input mainly came from work packages 9, 10, 12 and 23. In many cases the Descartes GLN platform was considered as the gateway, however extensive reference has been made to the other data pipeline solutions in work package 10 and 23, port community solutions like Cargonaut and DBH, and other global platforms like INTTRA. Moreover the integration between Descartes and the Shipping Information Pipeline (SIP) follows the SIP specifications as they would be used by other providers or individual companies. The approach of a platform like Descartes to integrate trading partners shows a lot of similarities with PCS, the main difference is that a PCS has a more local or national role, which is often represented by the ownership. The benefit that both have is that existing connections and gateways can be re-used.
Both traditional EDI techniques and new ways of connecting systems were used. As in other projects it still remains a challenge to set up interfaces with a lot of different companies within the context of a demonstration project, even when re-using existing interfaces and protocols and “low tech” solutions. Taking some of the new gateways to a larger scale is still a big task. Some of the gateways are only applicable between governments (such as PAE).
CORE built a Cyber security Situational Awareness (CSA) data fusion tool, built an attack simulator, and tested CSA tools in experiments, There are various technologies available that identify risks as well as ongoing attacks against IT systems. These results produced by these technologies are, however, not possible to easily translate into countermeasures and mitigations. For example, a cyber security vulnerability scanner has been shown to produce up to 18% false alarms and output reports of up to several thousand pages for a small network with 28 machines [4], [5]. Similarly, a network intrusion detection system could have up to 96% false alarms [3]. These are certainly not figures that supply chain enterprise decision makers would be comfortable with. In order to decrease false alarms, extract relevant information, and thus increase cyber situational awareness, there is a need for novel tools that correlate data produced by current cyber security technologies. The tool Sia was developed during the scope of CORE 4.3 for this purpose. Sia helps supply chain decision makers to reason regarding which vulnerabilities to address first as well as detect ongoing attacks. Sia is able to proactively project the likelihood that different threat agents are able to succeed with different cyber-attacks against systems and reactively update its calculations in real-time based on incoming intrusion detection alerts. Sia is also able to automatically test for optimal countermeasure strategies. Its results are produced through a combination of attack graphs, intrusion detection, and Bayesian Networks.
Current cyber security technologies to a large extent are untested with respect to their effectiveness [42]. One of the major reasons behind this is the difficulty of performing valid tests - there is a need simulate both benign (e.g. a user browsing the internet) and malicious (e.g. a cyber-attack) events in a close-to-real-world environment. CORE developed a cyber event simulator SVED (Scanning, Vulnerabilities, Exploits and Detection) [15]. SVED enables automated or manual low-effort design and execution of cyber security experiments, including testing both benign events and malicious events. The purpose of SVED is to enable standardized, valid and reliable tests of CSA solutions such as Sia. Both SVED and Sia have been integrated into a cyber range called CRATE that is capable of instantiating supply chain systems and in consequence conduct CSA tests involving these.
4.1.3.4 Real-time Lean Agile Resilient Green Optimised (LARG+O) SC
CORE designed a SC dynamic risk mitigation reasoning support tool presenting a quantitative approach to risk management which simplifies comparison and evaluation of mitigation strategies. CORE provided a description of design and implementation of a flexible decision support tool, that can help a user to reason about mitigation strategies and threat scenarios, based on the quantitative risk management approach was provided.
The tool was developed using an iterative agile process. During the first development phase, a basic, yet competent, version of (TRIMIT) was developed. The first round of testing and feedback from partners resulted in a list of suggestions for improvement. One suggestion from partners was that TRIMIT should be extended to handle uncertainty in input data and support dynamic probabilities and impact values by treating probabilities and impact values as functions rather than constants. These features were implemented in the second version. The third version of TRIMIT focused on adding features that improved the possibility to reason about cyber threats and cyber mitigation strategies.
CORE also implemented a collaborative Global Supply Chain Visibility tool, providde Supply Chain Dynamic Risk Mitigation tools, delivered a Risk Intelligent Supply Chain Simulator, and provided Real-time Lean Agile Resilient Green Optimised SC scheduling tools
4.1.3.5 SCS Reference Framework and Standards
CORE developed a SCS Reference Framework (SCSRF) and established mappings with key SC Standards. The SCSRF provides a unique domain model that links processes, data, and systems into a unified structure. The SCSRF includes standard information messages from associations (such as WCO, ICAO, IMO, ISO or UPU) and appropriate transformation mechanisms required for data and information exchange across different systems and business processes. The SCS Reference Framework is described conceptually in order to be used for international promotion of mutual recognition of trade partnership programmes and controls and is encoded as a computer based object model to facilitate the development of interoperable solutions for the demonstrators.
Specifically CORE
• Developed a Public-Private Governance Model (PPGM) to provide a means to analyze, explain and design the governance of the SCS data-sharing innovation, to make it acceptable to all parties that are needed to make it work.
• Produce dSCS Reference Framework Specification by rationalising data elements, message exchange schemas, and transformation activities required to support information exchange processes between different partners in SCS including
o specify choreographies of processes to be supported by the SCSRF
o an Object Oriented Unified Data Structure of the SCSRF for data exchange purposes between distributed heterogeneous systems
o set of services and Data Contracts necessary to support the data exchange process using the SCSRF
• Established mappings between SCSRF and key SC Standards
• Defined the semantics of the core relationships between the data and the processes in the SCSRF in
• ontological format in order to enable computer based reasoning during the transformation between different datasets required for data and information exchange purposes.
4.1.3.6 CORE Connectivity Infrastructure and Solutions Development Environment
CORE provided an integrated set of tools for developing solutions for the Demonstrators in line with SCSRF utilising results from reference projects particularly e-Freight and ICargo
Specifically CORE
• Provided Connectivity Infrastructure for the Supply Chain Security Reference Model (SCSRF) based on the e-Freight Access Points and the CASSANDRA Data Pipeline implemented by the Backbone of interconnected community systems;
• Provided Solution development tools for producing applications and dashboards for the demonstrators in line with SCSRF
• Provide Scenario-based simulation of real operational conditions of secure supply chains with a special focus on resilience and controls in case of disturbances.
CORE results have been adopted by the Digital Transport and Logistics Forum (DTLF), raised and chaired by EC DG Move. D7.12 has been adopted and is implemented by the H2020 SmartRail project.
4.1.3.7 CORE Ecosystem
CORE has developed the CORE Ecosystem as a distributed adaptive open sociotechnical system, with properties of self-organisation, scalability and sustainability, inspired by natural ecosystems The CORE Ecosystem will enables CORE participants to share supply chain security ‘solutions’ developed for the demonstrators and innovate through online collaboration
Specifically CORE
• Provides the CORE Ecosystem Architecture
• Provides APIs for CORE Capabilities from WP2 to WP6 and Communication Channels
• Provides CORE Ecosystem Dashboards
4.1.3.8 Demonstrator P&G
CORE demonstrated an Intercontinental Secure Trade Lane and Resilient Supply Chain Optimisation utilizing trade lanes from multiple P&G sites and international product distributors. The transportation modes included truck and ocean carriers. Modern supply chains are global, with different available technology capabilities across plants located across the globe. In such an environment, supply and demand related variability represent challenges that have to be managed through agile operation of the supply chain. CORE demonstrated the positive impact of additional visibility and security and determined data elements needed to add value to commercial entities and governments. At present, for most lanes in the market, neither the manufacturer nor the distributor have visibility of the cargo in transit and no way of confirming its ETA. This affects all manufacturers and their clients in the US and Europe. This data is important as was demonstrated by CORE with the introduction of optimization/simulation algorithms to deliver important collateral benefits including major efficiency gains such as reduced stocks (at the manufacture and/or the distributor sites), supply chain resiliency and agility and reduction in environmental impact).
Specifically CORE
• Improved supply chain visibility for P&G, its distributors and logistics service providers;
• Improved the resilience/agility of the overall supply chain and mitigate disruptions to the supply chain caused by unanticipated (simulated) events; Develop tools to aid planning of appropriate designs of such global supply chains using a scenario based capacity planning mathematical programming formulation coupled with appropriate representation of the impact of variability (researched by PU)
• Improved security and risk management supporting the potential future creation of preferential corridors for ‘legitimate goods’
• Optimized the transport performance and the supply chain design generating potential collateral benefits [e.g. contributing to the reduction of bullwhip effects (i.e. reduced swings in inventory in response to shifts in customer demand as you move further up the supply chain)/unnecessary stock levels]
• Facilitated the identification of potential efficiencies (resulting in better cash-flow and management of ‘travelling’ stock)
4.1.3.9 Demonstrator Felixstowe
CORE concepts were demonstrated in an import and export trade lane centred on the Felixstowe Port, UK. The initial import lane ran from Yantian, China, to Felixstowe and transports various products, from plastic homeware to tinned tuna and chocolates, for large UK retailer Sainsbury. The initial export trade ran from Felixstowe and transports containerized building tractors of JC Bemford to locations around the glob
Specifically CORE
• Improved supply chain visibility for shippers, buyers and sellers, customs and logistics service providers
• Improved security and risk management for public and private sector supply chain actors;
• Improved the quality of data used in supply chain management for commercial and regulatory purposes including planning, distribution, resource allocation and synchro-modality;
• Provided for the assurance of security, supervision and compliance data by export and import Customs
• Facilitated the identification of costs and efficiencies by public and private sector supply chain actors
• Improved the use of automated data and systems by public and private sector supply chain actors including port community systems such as Destin8;
• Improved integrated border management at the Felixstowe Port
• Addressed many of the current weaknesses in supply chain data such as inaccurate manifests, bills of lading, letters of credit and import and export data provided to customs.
4.1.3.10 Demonstrator Rotterdam
CORE concepts were demonstrated in three trade lanes, centred on the Port of Rotterdam, NL. One was an export trade lane from Western Europe to Russia, focusing on integrating aspects of costs, speed and security in the supply chain design and planning phase. The second was on a containerized flow from Colombia/Kenya to Aalsmeer, containing flowers for FloraHolland. Given the country of origin and the type of goods, this flow of perishable goods has a high inspection rate from multiple border agencies, resulting in disruptions of the flow. To address disruptions, both FloraHolland and inspection agencies required more visibility, better data, and improved security, primarily on the Colombia / Kenya end of the trade lane. The third was on improving supply chain visibility for supervision in trade lanes with multiple border crossings and intentional vagueness to conceal criminal activities. An example case is that of goods that are destined for Rotterdam but entering the EU via Antwerp. The Rotterdam demonstrator focused on improving business control of supply chains by advanced supply chain visibility, risk management and security measures. Timely and accurate source data were captured in international data pipelines. This improves visibility for businesses, and when shared with government the latter is better able to assess the security of a goods flow, which reduces the risk of unnecessary inspection interference in safe supply chains.
Specifically CORE
• Improved supply chain security through visibility for shippers, buyers and sellers, customs and logistics service providers, using international data pipelines
• Improved the quality of data used in supply chain management for commercial and regulatory purposes including (synchromodal) planning, distribution, resource allocation risk monitoring and mitigation
• Identified public-private governance models to ensure that relevant SC parties engage in data-sharing needed for the adoption of data-sharing in the CORE Ecosystem
• Helped in selecting the optimal trade routes, from multiple alternatives, based on cost, speed and risk and risk mitigation
• Monitored supply chain operations and support exception handling and resilience;
• Improved interoperability and risk management through advanced data exchange and supply chain visibility solution mean that supply chain operations can be executed more efficiently and risk management can be more effective
• Improved supply chain security in order to reduce lead times and disruptions
• Identified and modified SCS business controls to make them suitable for re-use (piggy backing) for
• government control purposes and thereby enabling a system-based approach (SBA) to assess the compliance of supply chains
• Minimized exceptions and inspections based on expanding supply chain controls, re-using them as part of a system-based approach to risk assessment, and introducing upstream information capturing
• Explore and support Coordinated Border Management (CBM) benefits and document free transport, based on digital data sharing and enhanced visibility created by the data pipeline, and on SCS controls
• Addressed many of the current weaknesses in supply chain data such as inaccurate manifests, bills of lading, letters of credit, transport documents for inland traffic and import and export data provided to customs
• Demonstrate multi-modal application of the IT solutions in a data pipeline for SCS through visibility
4.1.3.11 Demonstrator Schiphol
CORE concepts were demonstrated on an import trade lane centred on the airport Schiphol in Amsterdam, the Netherlands. This import lane runs from Kenya, via the Amsterdam, to Aalsmeer or in transit to e.g. Russia, and transports flowers for commercial partners in the FloraHolland cooperation. Furthermore, with the Schiphol cargo community, strategic solutions for a secure air-cargo supply chain were developed, improving its overall transparency, efficiency and performance, while having at the same time, a positive impact on trade facilitation.
CORE concepts were also demonstrated for a group of air freight shippers, addressing their main issues, being the high costs involved in complying to relevant trade compliance requirements and corresponding procedures, and the disturbance in their supply chain and fulfillment process caused by the current supervision approach. Increased trade & security compliance requirements hinder the seamless flow of goods and increase the costs to ensure compliant trade flows using air freight. CORE integrated the global data pipeline concept developed and applied to the Maritime forwarding community in CASSANDRA, the Neutral Logistics Information platform developments in The Netherlands, and the concept developments under the programmes Smart Gate Schiphol and Seamless Connections. Furthermore, the demo aimed to manage air freight specific trade compliance requirements (e.g. KC status, AEO) and recognition and integrated this compliance management seamlessly into the business processes,
Specifically CORE
• Developed an overall vision on efficient security for traders using air freight.
• Captured and shared reliable source data & monitoring data to support seamless air cargo supply chains and improved risk management & government supervision;
• Reducing the friction costs in global trade using air freight. Focus on:
o Cost of compliance: administrative burden, but also including integration of screening of unknown consignor and known consignor compliance
o Unnecessary controls harming seamless flow of goods (e.g. physical controls and information requests before clearance is being given)
• Enhanced synchronization in the SC
• Developed an applied agenda for system based approach in air freight security
• Identified and modified SCS business controls to make them suitable for re-use (piggy backing) for
• government control purposes
• Improved supply chain security through visibility for shippers, buyers and sellers, customs and logistics service providers, using international data pipelines
• Identified public-private governance models to ensure that relevant SC parties engage in data-sharing needed for the adoption of data-sharing in the CORE Ecosystem, including exploring logistics information platforms as ‘landing places’ for international data pipelines
• Explored and supported Coordinated Border Management (CBM) benefits and document free transport, based on digital data sharing and enhanced visibility created by the data pipeline, and on SCS controls
• Demonstrated multi-modal application of the IT solutions in a data pipeline for SCS through visibility
4.1.3.12 Demonstrator Belgium
The Belgium demonstrator focused on demonstrating best practices in the following areas:
• Assess feasibility of and, initiate implementing so-called Utility Blocks, which are domain-specific frameworks within Globally Networked Customs (GNC) for enabling an industrial implementation of e.g. mutual recognition agreements or procedures for systems-based controls to ensure the integrity of the supply chain. In the demonstrator focus was on drugs free supply chains and on specific measures for long-range rail transportation involving sensitive goods.
• Data sharing for supply chain visibility and control. This demonstrator will show the practical use of this solution, add additional parties and solutions to capture and share data, and explore the full extent of its benefit to roll out information services very quickly, thereby supporting agility of supply chains and reconciling customs and logistics requirements.
Specifically CORE demonstrated
• the business benefits of visibility based on data aggregation and consolidation;
• feasibility of industrial implementation based on Utility Blocks based on Utility Blocks within GNC (Globally Networked Customs);
• Situational awareness of supply chains, using the CORE framework and based on a 3-layer architecture involving data aggregation, data standardization and data consolidation – both for B2B and B2C purposes
• Balance between a data pipeline on the one hand and decentralized controls based on mutual recognition (AEO etc.) on the other hand.
4.1.3.13 Demonstrator FALACUS- FAstLAne through CUStoms
The FALACUS demonstrator, capitalized on the results produced in CONTAIN project in terms of EU Container Surveillance Framework and EAST-WEST MED demonstrator focusing on container security, implemented an extensive supply chain of ceramics products (almost 25.000 cnt per year) along international corridors between Italy and USA. The demonstrator encompassed current and emerging security regulatory, policy and standardization recommendations, new business models fostering on increased visibility and operational collaboration and relevant advanced security management capabilities as specified and developed in CORE to increase the prompt tracking and mitigation of security threats all along the supply-chain.
Geographically, Falacus addressed one of the biggest Italian districts based in Emilia Romagna region, including the biggest Freight Village of Europe (Interporto Bologna) and the Port of La Spezia which represents the Maritime Gate of Italy to US market.
The overall FALACUS objective was to support stakeholders involved along the whole supply chain (both business and administrations) dealing with security threats within logistic chains by utilizing ‘best of breed’ technology options and risk mitigation services as part of an integrated approach to the management of Door to Door (D2D) services along transportation corridors.
FALACUS analyzed the key issues arising from interdependencies among the various components of the supply chain in the above trade lane, in order to identify particular security vulnerabilities inherent in the system. Based on this analysis, a series of measures and technological solutions were implemented making use of the CORE ecosystem risk assessment and supply chains optimization services.
Specifically CORE addressed
• Complex and intercontinental supply chains leading to the coexistence of a number of security vulnerabilities require increased and consistent visibility with emphasis on the interchange points (i.e. intermodal terminals). The heritage of responsibility during modes interchange and operational/administrative handling in the terminals were transparently executed to the benefit of the cargo owning and governing bodies. This was achieved by incorporating and integrating the transport services performance on a corridor level for increased traceability as well as operational and strategic decision making.
• Decentralized and discontinuous systems make cross network security optimization difficult. Advanced interoperability and interconnectivity of dispersed systems facilitated the increased accessibility to information and services irrespective of the geographical and business proximity of those involved.
• Vulnerabilities arising from the lack of a coordinated approach to securing transport chain can be dealt through the new business models and coordinated networking solutions. The new B2A/B2B collaborative framework required consolidated transport related information flows to arm the regulatory bodies in undertaking their clearance task in a targeted and effective way by employing smart risk assessment tools for minimizing disruptions along the supply chain.
• Cargo Integrity is viewed as a shared responsibility by a variety of business and administrative actors, from the supply chain management relevant data (packing list, transport instructions, consignment identity, etc.) up to risk assessment (threats, risk index, preventive/reactive controls etc). Advanced sensing technologies allow the scanning of the load units for dangerous goods and related environmental impacts.
• Tackling vulnerabilities in transport nodes such as rail yards, storage areas, access points and shipping/loading terminal facilities was achieved by introducing operational/administrative services orchestration solutions facilitating the continuous control of the in terminal transport profile. Furthermore, accurate positioning of the unitized cargo secures the prevention from illegal/excessive movements of the cargo within the terminal and beyond using advanced technologies (i.e. EGNOS).
• Cooperative procedures towards customs - Green lane for the inland terminal as a backdoor of the port even for the customs clearance by creating a freeway between the two infrastructures will be the challenge of the innovation toward improvement of security procedures.
Further CORE
• Reduced the time reaching the market for the entire supply chain
• Enhanced the supply chain transparency and resiliency
• Reduced the barriers to trade or delays in commerce between member states and their international trading partners;
• Enabled integrated supply chain management for all modes of transport.
• Enhanced the capabilities of Customs administrations and Strengthen solutions to improve their capability to detect high-risk consignments.
• Promoted cooperation between the Customs and business communities
4.1.3.14 Demonstrator Creating a Secure and Efficient Port-Hinterland Containerized Supply Chain – BSH Demo
Companies operating globally are increasingly subject to greater risks as well as stricter regulations around security, resulting in paperwork bottlenecks and processing delays at every border crossing. The creation/development/harmonization of hinterland containerized port processes between different stakeholders, leveraging advanced data/information decision support and well defined Application Programming Interfaces (API’s), offers an ‘opt-in’ model to support more efficient and resilient port operations. The BSH Electrodomésticos España S.A Demonstrator contributed to, as well as made use of, the CORE capabilities around advanced information sharing between different stakeholders within a supply chain to obtain more reliable and accurate data about its operations. In addition to improved supply chain visibility, which is critical for the company, this CORE project investigated how more reliable, timely and accurate data from CORE systems impacts the operational and financial performance of the company. In addition, this demonstrator provided a showcase of how the CORE ecosystem improves BSH risk (operational or security related risks such as damage, spoilage, theft, etc.) management system. Consequently, BSH was able to optimize operations across the supply chain and to improve responsiveness to unexpected events or disruptions based on up to date and accurate information and decision support from the CORE Ecosystem.
The focus of this demonstrator was on the import and export trade lanes of BSH. However, the analysis was carried out such that the methodology and the results are scalable and can be expanded further to drive insights regarding the potential benefits of improved data sharing/security/efficiency for the rest of the global network of BSH. The China-BSH Zaragoza import supply chain originates at the port of Yantian, China. The goods are transported by MSC to the Port of Barcelona. Later, the shipment is transported to the BSH warehouse in Zaragoza also via rail. The China-BSH Zaragoza import supply chain originates at the port Yantian, China. The goods are transported by Maersk to the Port of Barcelona. Later, the shipment is sent to Terminal Maritime of Zaragoza (TmZ) by rail, and subsequently to the BSH warehouse in Zaragoza also via rail. The export trade lane starts from the BSH warehouse in Zaragoza, the goods are then shipped by rail to the port of Barcelona, and they are then loaded in a vessel through arriving to the port of Istanbul, and final destination Cerkezkoy, where the trade lane for BSH Zaragoza-Turkey finishes. The global supply chain involved many partners and multiple modes of transport were employed to move the products from the port of origin to the clients in Europe. Therefore, it was conjectured that the chosen routes are representative of complex global supply chains that the company operates with and the methodology used to analyse this particular routes along with the end results from this demonstrator would apply to other routes within the network. The output of this demonstrator was an assessment of the potential of the CORE approach and capabilities in further improving security as well efficiency of flow of goods in a real life setting and the creation a more resilient supply chain.
TmZ designed an interface to use with customs administrations and facilitate the electronic transit declarations of block trains departing from Barcelona port to Zaragoza warehouse.
Specifically CORE
• Identified requirements, both operational and security customs related, from the main stakeholders (shipper, terminal operators, logistics service providers, etc.) involved in the supply chain.
• Assessed the current state of the supply chain in terms of operational efficiency and supply chain security and resiliency, which formed the base case.
• Facilitated data/information sharing among stakeholders to improve visibility and improve the accuracy and speed of the information flow via the IT solutions developed within the framework of earlier and ongoing EU projects (e.g. CONTAIN, CASSANDRA, eFreight), which were deployed, consolidated and further developed as the CORE capabilities.
• Developed and maintained security practices using the system based risk assessment approach to supply chain management through visibility.
• Demonstrated the initial economic/social benefits of this CORE approach to different supply chain actors and identified potential problems/challenges that might surface during the implementation phase to provide feedback to the CORE Ecosystem.
• Monitored Key Performance Indicators within the CORE framework to continuously improve security, resilience and efficiency to ensure sustainable growth in trade while keeping the trade lanes secure.
• Analysed the impact of having customs clearance operations at the dry ports (rather than the ports) and the challenges/opportunities that exist in terms of resilience/security/efficiency of the supply chain and identify if this model could be scaled up and proposed as European customs procedure.
4.1.3.15 Intermodal transport of dangerous goods demonstrator
CORE demonstrated concepts related to the use of the European Satellite Navigation (i.e. EGNOS/Galileo) technologies and services, to enable a robust and reliable localization and tracking and a higher safety and security in the freight transport and logistics. In this respect, CORE’s idea was to set up and launch an operational best practice using EGNOS services presently operational over Europe for the traceability of rail tankers (transporting dangerous goods) to support enhanced monitoring of operations/safety/risk prevention.
CORE’s Intermodal transport of dangerous goods demonstrator concerned the development and launch of an operational best practice programme using EGNOS and involving key players, starting from European neighbouring countries as the most suitable way for a European-wide introduction path to:
• Perform technical demonstration and benefits validation;
• Contribute to a large-scale use by conveying the set-up best practice also to other countries and other stakeholders, at both European and international level;
• Support the definition of a suitable introduction strategy, at both European and international level.
Capitalizing on the results and heritages from previous European experiences (e.g. the European SCUTUM and CONTAIN projects), CORE’s Intermodal transport of dangerous goods demonstrator developed a tracking & tracing system using GPS + EGNOS OS & EDAS
The business cases allowed:
• Technology feasibility testing;
• Benefits validation;
• Gathering inputs for the relevant standardization, legislative and policy implementation;
• Collecting elements for the definition of a suitable introduction strategy, at both European and international level.
CORE developed a tracking & tracing system taking into account already consolidated technologies and operating solutions, performing exhaustive real-life trials and operational validation, carrying out tasks related to the gap analysis for standardization, legislative and policy implementation, and implementing the necessary actions/steps for gap filling.
4.1.3.16 EU-US demonstrators (DHL & P&G)
The development of mechanisms to minimize risks and ensure the implementation of effective contingency planning is part of today’s market competitiveness. To deliver both on time and safely are basic parameters in logistics management to ensure optimal service levels.
The DHL demo addressed a global supply chain for Airbus, an aerospace manufacturer which imports parts for aircrafts from different parts of the world. CORE considered suppliers located in Spain and Airbus Plant in Poland and the United States (US). DHL provides Airbus with global logistics services, and in this demonstrator we focused on the logistics activities DHL performs to ship these parts from the suppliers in Seville (Spain) to Warsaw (Poland) As the goods were time-sensitive, road transport was the mode of transport from Spain to Poland. Air-freight is the mode of transport from the US to Spain. The pieces are shipped by plane from the US and arrive at Spanish airports from where it is transported to the manufacturing plant located in Warsaw .
Specifically CORE
• Conducted a review of the risks of all security incidents on a route from a parameter definition
• Designed hardware components to be embedded along the supply chain containers, through which a comprehensive implementation security contribution aimed at protecting special aircraft parts was obtained thereby mmaking it highly accurate and competitive with current methods of control.
• Developed software interfaces suitable for joint management with the provision of real-time transportation and cargo tracking.
• Created a specific design for a Security Control Tower.
• Integrated and validated prototypes, procedures and interfaces by connection in real life conditions of one year of AOG shipments´ transit.
Further the P&G demo addressed a global supply chain issue related to product integrity due to high/low temperature across the globe. P&G has a large number of finished products and raw materials which do not normally require a temperature controlled supply chain, but suffer from some extreme climatic conditions in summer/winter in some regions. There are no adequate and energy efficient solutions, resulting in very high cost and energy footprint. As some goods are temperature sensitive, truck and sea shipment are the means of transporting them to final locations. As a consequence those trucks and seatainers might undergo severe climatic condition throughout the journey resulting in damaged or less secure product integrity. CORE demonstrated a much more efficient solution which reduces both the cost and energy footprint related to guarantying product integrity by keeping mild temperature conditions in trucks and seatainers during shipments.
By monitoring the above solution throughout existing supply chains, this demonstratorprovides a mechanism for Real-time Lean Agile Resilient Green and Optimized supply chain solutions by allowing a 350-470%reduction of the overall carbon footprint caused by commonly used diesel generators. The pilot addressed various phases and the main results were:
• Completed the design and construction of lead prototypes – based on Sunwell unique proprietary technology (Deepchill). The prototypes could be deployed inside seatainers and trucks used on existing supply chain routes.
• Above prototypes can be used to monitor product integrity throughout the entire supply chain and against severe climatic conditions.
4.1.3.17 Stakeholder Engagement Diffusion and Sustainable Development
CORE has
• Developed training and education material and services
• Acceleratde the standardisation agendas in supply chain security ecosystem
• Developed an effective policy influencing strategy and provide policy recommendations
4.1.3.18 Large Scale Demonstrator
CORE demonstrated a breakthrough Shipping Information Pipeline (SIP) which enabled shippers, authorities and other stakeholders to exchange confidential information on supply chain events and documents between distributed heterogeneous systems, independently of standards and formats. The focus was on trade lanes with (1) large number of containers and (2) container security devices for tracking and tracing of containers and goods.
Specifically CORE
• Improved quality of data leading to better risk analysis;
• Provided a solution to speed up Customs clearing
• Improved real-time visibility
• Provided a solution to ensure netter asset utilization through faster processing;
Potential Impact:
4.1.4.1 Background
4.1.4.1.1 Transport security
Effective transport systems are essential to Europe’s prosperity, having significant impact on economic growth, territorial cohesion, social development and the environment. At the same time, transport has always been subject to acts of unlawful interference, ranging from simple criminal acts on the premises of transport providers, to robberies of cargo when being transported, acts of piracy and hijacking, and terrorist acts48F48F48F48. The EU already has a sad history of terrorist attacks on transport49F499F49F.
However, security is not simply about terrorism. The economic cost of transport crime is high. For example, cargo theft from lorries in the EU is estimated by TAPA to cost over €8 billion per year. Transport security - has also an important international dimension: in order to ensure security within the EU it may be necessary for transport security to be performed outside the EU before a journey to the EU commences.
In the 21st century, it can seem that the world is neatly knitted together by sophisticated transport and logistics systems. The trends of globalization, lean processes and the geographical concentration of production, which have brought about this apparently benign state of affairs, have also changed the risk profile of the global supply chains and transport networks which form the backbone of the global economy and which have fuelled trade, consumption and economic growth.
Perhaps extrapolating this concern, an in-depth assessment of future hazards likely to affect transport and logistics, produced by PwC Transport & Logistics as part of its thought leadership series Transportation & Logistics 2030 (T&L 2030)0F50F50F50F, suggests that 90% of the world’s trading volume is concentrated in about 39 "gateways". The failure of even one of these "hubs" would have widespread consequences, addressing the need to devise and execute contingency plans to defend economic actors against a whole variety of risks, not necessarily terrorism attacks.
Various incidents, like the Japanese earthquake and tsunami, or the threat by Somali pirates point to the vulnerability of logistics which depend on time-critical delivery and the way in which reliable transport has permitted the reduction of buffer stocks of goods. We are given warning signals from the rapid effects of delays or labour disputes, or even the occasional shipwreck, which has production lines in factories stopping as their components fail to arrive.
These recent high-profile events have highlighted how risks outside the control of individual organizations can have cascading and unintended consequences that cannot be mitigated by one organization alone. For this reason, supply chain and transport disruptions are no longer seen as the concern only of operational risk managers. Governments also have been increasingly challenged to understand and manage risk across global supply chain and transport networks. The political, economic and security implications of regulating in a complex environment have necessitated new thinking as to the nature of the problem, the potential threats and what new approaches might be considered
In recognition of these concerns, the World Economic Forum in 2011 engaged a diverse group of supply chain and transport risk experts to explore systemic vulnerabilities. This review51F51F51F51examined supply chain and transport risks, looking at external shocks, network trends and vulnerabilities. The report also proposed risk mitigation approaches to further develop and suggest recommendations for action.
The review found that systemic risks within supply chain and transport networks are characterized by an unexpected trigger event and a network setup that cannot absorb the shock and knock-on effects. The initial event results in a cascading disruption or failure across regions or industries. However, prediction of specific disruptions is felt to be less important than having the resiliency in place for effective response, no matter what the cause. While highlighting industry robustness in the face of recent shocks, experts identified the vulnerabilities of most concern that limit the resilience of supply chain and transport networks.
An in-depth assessment of future hazards likely to affect transport and logistics has been produced by PwC Transport & Logistics, as part of its thought leadership series Transportation & Logistics 2030 (T&L 2030)52F52F52F52F . PwC surveyed a global group of experts using the RealTime Delphi method to determine what elements of supply chain security they believe will be most critical in the future. Cyber attacks, which were perhaps barely recognised as a serious threat a few years ago are, says the report, becoming both serious and regular, and any business or even nations could be at risk.
CORE is aligned with the main conclusions from the communication on customs Risk Management: COM 2012(793). In particular:
• Availability of timely and good quality data on "who is moving what to whom”: this is the main objective of the Pipeline Concept (UK & NL demonstrators), which focus exactly on data quality and reliability of sources.
• The efficient sharing of the data between the customs authorities across the EU: this is addressed in the currently running eCustoms projects within DG TAXUD (ECS/ICS/NCTS), e.g. national customs systems need to support exchange of Risk analysis based on ENS among other customs authorities. All this will be input to CORE.
• More structured and systematic cooperation and coordination between customs and other authorities: the Dutch demonstrator with customs and food safety authorities will tackle and cover such Coordinated Border Management issues.
• Engaging more with economic operators: This is the essence of the System Based Approach of CORE.
• Trade facilitation benefits: this is covered in the assessment task
• Potential of international cooperation: CORE will look into the feasibility of demonstrating AEO mutual recognition in the overseas demonstrators which address EU-USA trade.
CORE also aligns itself with the aims of the Dublin Declaration “Strengthening the Security of the Supply Chain and Customs Risk Management in the EU” (26-27 March 2013) and the statements in the Council Conclusions on “Strengthening the Security of the Supply Chain and Customs Risk Management” from 18 June 2013, particularly in its clarification of the data and information required from economic operators to underpin effective electronic risk based assessment and in the definition of mechanisms to enable the submission of data required from multiple sources taking into account the need of customs authorities in processing this information, including how such data and information can best be integrated for efficient risk management avoiding the imposition of unnecessary and ineffective costs on business.
4.1.4.1.2 Costs/benefits of enhanced security for supply-chains
As noted above, governments and companies have introduced a myriad of security measures to protect supply chains from exploitation and attacks. However, security initiatives often improve security at the expense of predictability, speed and cost-effectiveness of supply chains, causing additional trade transaction costs.
For example, Hummels53F53F53F53has calculated that each day a product spends in transit equals additional ad valorem tax equivalent of 0.8 %. The OECD54F54F54 calculates that each 1% saving in trade related transaction costs yields a worldwide benefit of US$43 billion (OECD 2003). Similar findings are confirmed by other studies, like Wilson55F55F55F55F Djankov and Duval57 who also identify enormous trade transaction costs related to administrative procedures between traders and governmental bodies.
Moreover, as noted above, companies are faced with a large and increasing number of “voluntary” initiatives and standards, each requiring an effort (and resultant cost) to attain compliance.
Verwaal58F58F58F58Fdeveloped a micro-model to identify the cost of trade compliance in industrialised countries, his findings on the total compliance costs were in the range of 2-5% of the trade value of the merchandise. Applying this to the import and export statistics of traded goods between EU and extra-EU, respectively 1685 billion and 1,531 billion Euro (Eurostat, 2010) this corresponds to a cost in the range of 100 billion Euro. Though it must be said that Single Window environments and electronic documentation initiatives have increased the efficiency to comply to most compliance requirements, the Verwaal study was performed before European trade and logistics was faced with more stringent security compliance, putting huge demands to the trade and logistics system to capture the corresponding data in an efficient way.
The PwC report recognises the possible costs which may result from mandatory security checks through a whole supply chain by users of transport, but also points to some of the benefits of this, in better risk "profiling" of employees and the employment of only trusted transport companies. It was also suggested that the transportation and logistics industry, which already relies heavily on Information and Communication Technology, will need to look to such technology to provide many of the advances to mitigate some of these risks.
Other experts claim that “collateral benefits” from security measures could off-set detrimental effects of security measures on supply chain performance. It believes that well-planned security investments provide a payback, not only in terms of loss prevention, but also by enhancing supply chain performance. Transportation and logistics companies will need to work together with governmental institutions to develop new security standards that are not only effective, but also efficient.
A survey60F60F60undertaken by the Business Continuity has considered the sources and consequences of disruption along with their origin within the supply chain system. Its conclusions give ample evidence of the extent and consequences, both actual and potential, of supply chain disruption. For example, 85% of survey respondents experienced at least one disruption, and such supply chain incidents led to a loss of productivity for almost half of businesses along with increased cost of working (38%) and loss of revenue (32%). Adverse weather and unplanned IT and telecommunication outages were the main causes of disruption.
The longer term consequences of disruption in the supply chain included shareholder concern (19%), damage to reputation (17%), and expected increases in regulatory scrutiny (11%). For 17% of respondents the financial costs of the largest single incident totalled a million or more Euros. For those with weaker supply chains, the number experiencing higher financial costs almost doubled to 32%.
The ability to demonstrate resilience is starting to become a factor in purchasing decisions with 28% of respondents stating that they always or often have to provide assurance to prospective clients, indicating that effectively managing supply chain continuity is critical, not just because of the immediate costs of disruption, but as a result of the longer term consequences to stakeholder confidence and reputation that arise from failure.
The cost of the rising number of incidents of terrorism and piracy are already substantial and, as these threats are on the upswing, this situation can only get worse. Total direct costs of piracy in 2010 have been estimated to be between US$ 7 billion and US$ 12 billion61F61F61. In addition, there are indirect costs too, so that the real figure is much higher. Piracy damages the tourism industry, causes losses in revenues for canal fees and the costs “loss of use” and “loss of man-hours” while ships and their crew are held hostage are also significant. Many shipping companies are now either hiring special security, working together with UN troops or altering their shipping routes.
Another estimate of potential economic losses due to supply chain crime has been produced by the Transported Asset Protection Association (TAPA), which has calculated that economic losses due to cargo theft in terms of cost of replacement, re-shipping and reputational damage were as high as 8.2 billion Euros in Europe in 2009 (TAPA 2012).
Terrorism remains a concern too, particularly since there are a number of locations that are particularly crucial to the smooth flow of supply chains – and therefore potentially most vulnerable to attack. Logistics hubs and gateway regions are one concern. As just one example, a full 14.8% of containerised and air freight traffic moves through the Hong Kong - Shenzhen freight cluster, so a disabling attack here would have a huge impact. Because logistics hubs drive economic activity, successful attacks could also threaten economic stability.
Trafficking in illicit goods exploits legitimate logistics infrastructure and processes and can have a serious impact on societies. Illicit trade puts citizen safety at risk whenever it results in the uncontrolled presence of dangerous articles on the market, as shown by the death of 2500 people in Niger, after more than 50,000 people were inoculated with fake vaccines during a meningitis epidemic. Other instances, such as fake medicines leading to a trail of death in Argentina in 2004, serve as further reminders of the dangers posed by the unauthorised trade in counterfeit products.
Other examples of uncontrolled trade include the trafficking in banned greenhouse gases and illegally logged timber, which accelerate global warming and deplete irreplaceable natural resources. Underground markets for endangered animal and plant species cause severe harm for the biodiversity. Illegal exportation and dumping of hazardous waste is a booming business that degrades the environment to an alarming extent, especially in developing countries63F63F63.
Another aspect is that the same trafficking networks that flood markets with illicit products can be used to supply terrorists with ground-to-air missiles, enriched uranium or even weapons of mass destruction. There are obvious links between illicit trade and geopolitical instability. There is ample evidence that illicit arms trade triggers and fuels conflicts across the globe, but despite widespread concern and the signing of treaties to try to regulate the arms trade, this problem has proved difficult to resolve.
A report by the International Peace information Service64F64, which was presented at the United Nations on 12th July 2012, presents one of the most detailed exposition of the industry ever produced, providing examples of monitoring actual conventional arms shipments to Egypt and Syria in 2011 and 2012 and of suspected conventional arms shipments to Syria in 2012 by sea.
As well as warning of the dangers inherent in the current state of affairs, the IPIS report suggests that monitoring transport services may instead be the key provision for the implementation and enforcement of the Arms Trade Treaty. Transportation services for the international transfers of conventional arms are performed by logistics companies, shipping agents, freight forwarders, and carriers who organize and carry out the transportation from or across the territory of one State to another.
4.1.4.1.3 An integrated approach to supply-chain security
The expert group that produced the WEF review referred to above assessed the difference between the risk management methods available today and those most important in the future to identify risk management methods most in need of development, and presented the following recommendations for Government and Business:-
1. Improve international and interagency compatibility of resilience standards and programmes
2. More explicitly assess supply chain and transport risks as part of procurement, management and governance processes
3. Develop trusted networks of suppliers, customers, competitors and government focused on risk management
4. Improve network risk visibility, through two-way information sharing and collaborative development of standardized risk assessment and quantification tools
5. Improve pre- and post-event communication on systemic disruptions and balance security and facilitation to bring a more balanced public and private sector discussion
Among the large number of supply chain security initiatives that were introduced following terrorist attacks in 2001 were many voluntary supply chain security programmes, standards, certificates and guidelines. Over time, some of the initially voluntary standards are set to become de facto compulsory over time, as stakeholders realize that participation in a security programme can give a definitive competitive edge for certificate holders over their non-compliant rivals.
The two most influential voluntary supply chain security standards at the global level are the ISO 28000 series of six complementary standards promoting good practices for supply chain security management and the SAFE framework of standards, published by the International Organization for Standardization and the World Customs Organization respectively.
Companies wanting to acquire the ISO 28000 certificate need to establish adequate level of security in their supply chains and pass a third party audit. The SAFE framework of standards is directed at customs and other border control agencies of the WCO members, and introduces a set of non-binding best practices and guidelines describing how to achieve both high level of supply chain security and trade facilitation.
Global standards such as these are often incorporated into national and regional government-driven security programmes, and are therefore one way of driving up the performance of an industry. For example, many countries have initiated, in accordance with the WCO’s SAFE framework, voluntary Authorised Economic Operator (AEO) programmes to facilitate trade and enhance security simultaneously. The AEO programmes set the basis for mutually beneficial partnerships between secure (and trusted) traders and border control agencies.
Other standards to deal with crime and terrorism in global supply chains have been developed by industry organizations, such as the Transported Asset Protection Association (TAPA), an alliance of manufacturers, logistics operators and law enforcement concerned about cargo theft, and the International Road Transport Union. Again, these can deliver a competitive advantage to participating companies and organisations, but there is usually a cost to achieving compliance, and this rises with the proliferation of different standards.
4.1.4.1.4 Necessity in European approach
Governments around the world have recognised the need action on supply chain security, and have responded accordingly. For example, in the USA, the Maritime Transportation Security Act (MTSA) of 2002 and the Security and Accountability for Every (SAFE) Port Act of 2006 required the Department of Homeland Security (DHS) to take actions to improve maritime transportation security. Also, the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) required, among other things, that by July 2012, 100 per cent of all U.S.-bound cargo containers be scanned. Within DHS, U.S. Customs and Border Protection (CBP) is responsible for container security programs to address these requirements.
More recently, the US has sought to develop an integrated framework to assure the security of the global supply chain system, by announcing a National Strategy for Global Supply Chain Security. The Strategy, focused on the worldwide network of transportation, postal, and shipping assets and supporting infrastructures, articulates the country’s national vision and approach, and encourages collaborative implementation with key State, local, tribal, territorial, private sector and international stakeholders.
The European Commission has also taken steps to address the need for greater security in the global supply chain. For example, in a White Paper entitled “Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system65F65F65F65”, issued in March 2011, the European Commission takes a global look at developments in the transport sector, at its future challenges and at the policy initiatives that need to be considered. The document outlines key measures to achieve Commission’s vision of future transport, including Secure Transport, among which the specific initiatives to cover ‘End-to-end’ security, include:-
• Increase the level of security along the supply chain without impeding the free flow of trade. ‘End-to-end’ security certificates should be considered taking into account existing schemes.
• Joint Security Assessment covering all modes of transport.
• Integrate potential effects of terrorist and criminal attacks in the preparation of mobility continuity plans
• Pursue international cooperation in the fight against terrorism and other criminal activities like piracy.
In the priorities for its funding of research and development activities, the European Commission has given "logistics and supply chain security" a special focus in demonstration programmes within the FP7 Framework Programme for R&D. It justifies this approach by stating that the demonstration on logistics and supply chain will tackle one of the central security challenges of the 21st century: the secure and efficient transit of goods around the world. This topic addresses possible attacks on supply chains, trafficking and contraband.
The European Commission has also recognised the need for an international co-ordinated response, and has sought to reach agreements with key trading partners, such as the USA. In a statement released in Washington, on 4 May 2012, Algirdas Šemeta, EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud announced a EU-US agreement to secure the global supply chain, noted that after several years of negotiations, the EU and USA had agreed to mutually recognise each other's "trusted traders". In other words, reliable companies that are security certified under the EU AEO system, and the US C-TPAT system, will enjoy easier, cheaper and more predictable procedures at customs. In addition, greater supply chain security would be facilitated by the EU and USA being able to re-focus resources on where security risks really lie.
A similar agreement has been reached between the European Union and Canada, establishing a legal basis for EU-Canada customs cooperation on matters of supply chain security and risk management, including reinforcing the customs related aspects for securing the logistics chain of international trade while at the same time facilitating legitimate trade.
The intra-EU and external EU trade are following growing patterns, involving different actors of the global supply chains. European and, moreover, international approach are necessary because transport security problem is an issue “without borders” (in respect of the global impact of transport accident) and, very often an issue “about borders” (in respect of the border controls which are necessary in order to prevent possible threats and attacks). With high involvement of EU in the international trade, international approach to this question is also of a high relevance, as in these cases transport security must be insured outside of the EU, before the journey to EU begins.
CORE comprises three US-EU demonstrators (PU, FALACUS and DHL) whose objectives are enhanced international cooperation leading to trade facilitation and cost efficiency. Furthermore, national security policies will be supported by international organizations such as INTERPOL, WCO etc.
4.1.4.2 Expected CORE economic impact
CORE optimises the security of supply chains while at the same time facilitating the global flow of goods across Europe and globally. Europe is one of the major global partners in the world trade transactions, which requires maintenance of highly efficient supply chains. The World Trade Report issued by the World Trade Organization (WTO), includes a review of world trade. This shows that a number of factors combined to produce below average growth in trade and that, as a consequence, world trade growth decelerated sharply.
However, even with the multiple economic shocks that held back economic activity and trade during the year, the volume of world merchandise trade still rose 5.0 per cent, accompanied by global output growth of 2.4 per cent. The total dollar value of world merchandise exports also jumped, 19 per cent to US$ 18.2 trillion
These figures indicate two aspects of international trade that are of relevance for CORE. The first is that, despite adverse factors which have, in the short-term at least, slowed the rate of growth, there is still real growth both in overall economic activity and in international trade. The second is that, for the European Union, continuing and increasing international trade, both trade between European Union member countries and between the EU and the rest of the world, is essential for Europe’s economic recovery. In this respect, it is of paramount importance that the obstacles and barriers to the free movement of goods are minimised, whilst taking account of other concerns such as security.
CORE provides an appropriate combination of harmonised EU and international standards and compliance tools to ensure that EU exports are not disadvantaged by lack of compliance in the international trade environment. It also improves decision support systems to prioritise cargo screening and inspections in order to reduce time delays, cargo hold-up, and increase the probability of finding illicit goods.
The trade and logistics industry is faced with the economic consequences of the international trade compliance framework, corresponding to a cost of 100 billion Euro. A substantial part of that is due to administrative costs, but the majority includes ‘hidden’ downstream logistics costs.
The average annual growth in the value of merchandise trade and commercial services trade between 2005 and 2010 was 8% level, as transportation services reached lower growth rates. To increase the added value services and support their dynamics in Europe, CORE provides a coordination platform for harmonisation of regulations, eliminating barriers and speeding-up the movements of goods in Europe. These initiatives can sustain the competitiveness of Europe and support the achievements of the Europe 2020 Strategy.
CORE also contributes to the minimisation of costs incurred in the events of security threats and possible terrorist attacks. Various attempts have been made to quantify the costs of a recurrence of the attacks by al-Qa`ida on the World Trade Center’s towers and the Pentagon. One such (published in 2005) estimated the costs of an attack on a commercial aircraft as approximately $2.5 billion per day, including losses to businesses and leisure passengers, reduced airlines and associated spending, losses to the whole economy (Balvanyos T., L. Lave “The economic implications of terrorist attack on commercial aviation in the USA”, 2005). Another study, on the Cost-Benefit Analysis of Advanced Imaging Technology Full Body Scanners for Airline Passenger Security Screening, included calculations of the loss of an aircraft and follow-on economic costs and social disruption. It cited a 2007 RAND study which had concluded that the loss of an airliner with 300 passengers by a shoulder fired missile, a shutdown of U.S. airspace for a week, and 15% drop in air travel in the 6 months following the attack would cause an economic loss of more than $15 billion (Chow et al. 2005). Another study, again assuming an attack using shoulder fired missiles also assumed a seven day shutdown, but a two-year period of recovery (Gordon et al. 2007). Losses were summed across airline, ground transportation, accommodation, food, gifts/shopping and amusement sectors to derive loss estimates of $214-$420 billion.
At the same time, the costs of the many initiatives that have been undertaken to enhance transport security have themselves been questioned. For example, in November 2011, the Washington Post reported67F67F67F67Fthat two members of Congress had presented a harshly critical report on the performance of the Transportation Security Administration and had claimed that, despite a $56 billion federal investment in airline security, flying was no safer than it was before the Sept. 11, 2001, attacks.
To prevent such huge losses to the European economy, CORE will coordinate high quality research on supply chain security in order to optimise the efforts of different projects and governmental schemes to provide security tools.
Some of the most obvious direct impacts of secure transport & logistics are related to cargo theft, image & brand recognition and exposure to counterfeiting. As mentioned above, cargo theft from lorries in the EU is estimated by TAPA to cost over €8 billion per year; The cost of counterfeiting is also relevant for physical supply chain security. An EU study, conducted by TERA Consultants defines Europe’s creative industries as “core” and “noncore.” Core creative industries include the music, film, television, software, publishing and advertising industries. Noncore creative industries are suppliers to and customers of the core creative industries. Noncore industries include those that manufacture or sell hardware, such as televisions or music-playing devices, as well as ancillary industries such as transportation. In 2008 approximately 8.5 million people were employed in the core industries and 14 million in the noncore. The study estimates that €10 billion ($13.6 billion) and more than 185,000 jobs were lost to counterfeiting and piracy in the music, movie, TV, and software industries in the EU in 2008.
Although CORE will not directly address the activities of counterfeiting and piracy, it will enhance the effectiveness of security checks in supply chains, and so help in combatting this illegal activity, which is a significant problem for businesses, as shown by the fact that, in 2008, EU customs officials intercepted more than 178 million counterfeited or pirated articles - compared with 79 million articles in 2007.
Increased efficiency and flexibility is a constant requirement of any supply chain, and in recent years resilience has become equally as important, particularly for extended supply chains (or supply networks as they should really be termed) which have become ever more complex through the drive towards globalisation. Supply chain efficiency and resilience optimisation will be one of the key attractions of the CORE solutions to shippers, manufacturers, logistics providers and end customers. A collateral benefit of the CORE platform will be the availability of real-time tracking data (captured for security purposes but of great use for planning and optimisation) which will feed into the CORE LARG+O modules to enable real-time scheduling and optimisation of the supply chain.
Implementations of real-time optimisation systems typically deliver around 10% of savings in terms of costs (as has already been shown in the reference eFreight project). For a single major shipper or organisation this amounts to millions of euros per annum, while for the European (and US) economies as a whole, the figure runs into many billions.
4.1.4.3 Impact on policy and standardisation
CORE had a multifaceted mandate: it combined fundamental research and development activities, complex modelling challenges, ambitious, large-scale demonstrator/living lab initiatives and ambitious timelines. This presented certain challenges in developing standards and policy strategies, since the nature of the project exposed the inherent heterogeneity of the standards and policies in the global supply chains. Despite – or perhaps because of – this challenge, the project was able to make contributions to several standards and policy initiatives. As mentioned in previous sections, it is likely that the impact of the project on standards and policies will grow through the different follow-up activities.
The wide variety of activities and outputs of the CORE project provide a fertile foundation for future supply chain and standards and policy activities. Thus, the following examples should be considered non-exhaustive, presenting confirmed activities that are known to the project consortium at the close of the project.
The follow-up activities related to DATEX II are expected to commence in the second half of 2018. The follow-up activity include:
• “The above points will be detailed in technical annexes of the MoU, they need to be ready by June 2018 in order to be annexed to the MoU (that has to be finalised by the end of 2018). UNECE UML/XML/XSD (with the enhancements proposed by CORE WP16), which will be included in one of the MoU’s annexes, is one of the key outcomes of this demonstrator. Additionally, as detailed in section 6.4 of this document, France’s and Italy’s Ministry of Transport, representing the governmental users of CORE WP16 demonstrator, expressed the interest of formally integrating it in DATEX II”
• TNO will continue to support the activities of DTLF, ensuring the visibility of CORE outputs
• CBRA will participate in UNECE open forums related to the improvement of Recommendation 33 to ensure that the knowledge generated in the context of the CORE project is fully incorporated in the update of the Recommendation and Guidelines on establishing a Single Window (Recommendation 33)
• Supply-chain visibility (see section 3.3 above)
• The “Innovation network for Customs professionals” mentioned in the Deliverable D23.2 will be launched in the second half of 2018 (with the project name PEN-CP).
List of Websites:
The CORE project website can be found at the following address and is regularly updated with news items and downloadable content.
www.coreproject.eu
The project coordinator is EUROPEAN COUNCIL OF TRANSPORT USERS. Contact details below.
Project Coordinator: Mr. Nik Delmeire
Bvd REYERS, 80
B-1030 BRUSSELS
BELGIUM
Email: info@europeanshippers.eu
CORE demonstrates how a powerful and innovative Consistently Optimised REsilient ecosystem implementation, integrating interoperability, security, resilience and real-time optimisation can produce cost effective, fast and robust solutions that guarantee the efficient and secure transit of goods through the worldwide Global Supply Chain system.
CORE shows how protecting and securing the Global Supply Chain, and reducing its vulnerability to disruption (whether caused by natural disasters, terrorism or other forms of undesirable or illegal activity), can be done while guaranteeing the promotion of a timely and efficient flow of legitimate commerce through the European Union (EU) and other nations around the world. CORE demonstrates that this can be done while at the same time offering tangible benefits to involved stakeholders (transaction, transport, regulatory and financial operators), thus facilitating its adoption by commercial entities.
Using CORE’s real-time optimisation tools, security and tracking data can be integrated into supply chain operations whilst ensuring that process efficiency is improved and the environmental impact (including CO2 emissions) are reduced. CORE offers solutions that cover all levels of time granularity, ranging from strategic models to dynamic daily plans to real-time fast reacting scheduling and optimisation tools. These guarantee that operators can create resilient contingency plans and be able to react in real-time to unexpected major events in a fast and cost-effective way, avoiding serious economic collapse.
CORE addresses in an integrated and stakeholder-friendly way three main areas:
1. End-to-end Supply Chain Security fostering standardisation, harmonisation and mutual recognition;
2. Controlled global visibility of security risks and other supply chain threats and their impact on supply chain flows around the world;
3. Real-time Lean Agile Resilient Green Optimised supply chain solutions offering a highly innovative approach to designing supply chains resilient (in real-time) to major disturbances caused by high impact events
Furthermore the results of CORE will help the EU (and other countries) introduce changes to Customs policy which strike a balance between public and business interests, within reasonable regulatory constraints. The vision of changing Customs reporting procedures “from push to pull” using secure data pipelines for the whole value and transport chain has already started in a number of previous EU-funded projects. CORE demonstrates this approach in a broader dimension addressing security and supply chain optimisation. CORE has generated a security and SC resilience ecosystem which will operate in an international context and support the implementation of the various EU security and information management policies and directives, with evolving international regulations and standards, including collaborations models with the US and other nations all over the world. CORE’s Supply Chain Security Reference Model (SCSRF) is flexible and powerful enough to establish the basis for standardisation of secure transport & logistics as part of an integrated framework of trusted worldwide networks. In summary, the CORE Ecosystem will offer a distributed adaptive open sociotechnical system, with properties of self-organisation, scalability and sustainability, inspired by natural ecosystems, including data, knowledge, best practices and services that can be plugged in to existing IT systems with minimum effort yielding maximum benefits in terms of enhanced security, resilience and efficiency.
Project Context and Objectives:
Safeguarding supply chains is essential to both the EU's economy and security. The economic impact relates to exports and import flows of the order of 6 billion Euro processed daily by EU Customs. Losses related to security in supply chains have been estimated to €8.2 billion by the European Parliament. These figures are limited to cargo and truck theft and therefore do not include other typical supply chain security incidents such as counterfeit, piracy, smuggling/contraband, sabotage etc. Likewise, besides the monetary impacts, there are other indirect consequences for companies including the loss of brand image, investigation costs, increased insurance premiums etc. These losses may threaten the survival of businesses in the marketplace and ultimately damage the competitiveness and economic development of European countries. The vulnerability of supply chains is not merely expected to damage the trading sectors, but in the long run may also impact the security and quality of life of our societies. If customs administrations fail to collect enough tax revenues there will be less money that governments may reinvest in the country. Likewise, if borders’ controls fail to detect weapons of mass destruction entering a country the consequences could be enormous and devastating. Vulnerabilities from natural disasters have also been visible in recent years. As a consequence, supply chain security is high on the agenda of governments and business boards alike.
Despite the consensus on the importance of supply chain security, misunderstandings and lack of common approaches impact progress. The public sector is actively working with producing newer and more sophisticated security certifications (e.g. Authorized Economic Operator) as well as supporting the development of scanning equipment to detect illegal shipments or tax frauds. On the other hand, the traders perceive these initiatives as bureaucratic resulting in excessive and costly paperwork, as well as delays at the borders because of the necessary cargo scanning and screening. To make things even more complicated, global traders have to deal with a plethora of different security certifications required in different continents. Paradoxically, even within the EU27 member states the same security certifications are being interpreted and implemented differently. Finally, traders already have in place their in-house developed security requirements, that unfortunately may conflict with governmental ones and therefore cause even more costs, and in the end, tardiness to comply.
As a matter of the fact, the EU is aligning security certification with private sector practices, whilst:
1. pursuing harmonization of approaches and cooperation within the EU;
2. establishing mutual recognition on an international level,
Further, European policy highlights the need to maintain or improve supply chain security levels whilst also expanding transport and logistics networks to enable industry throughout the Union to have effective access to the Single Market and the international market2. In addition, momentum towards international co-operation and harmonisation of approaches is gathering pace. A EU-US joint statement on supply chain security advocates “facilitation and expedition of the smooth flow of legitimate international trade through the use of multi-layered risk management tools”.
Other international initiatives concern the development of supply chain security research globally, as well as standards for information exchange. For instance, both the US and China4F4 and other major trading countries are committed in actively collaborating with the EU in the area of supply chain security research, information exchange, and compliance with global standards in the sector. Central to developing these standards is the WCO Globally Networked Customs together with industry associations that act as catalysts for international co-operation, forum discussions and industry engagement.
The emerging picture is that national systems are being developed to facilitate a collaborative approach across the international community of the Global Supply Chain5F5F5F5. This is being done in order to establish:
• Safe and secure, as well as timely and efficient, flow of legitimate commerce;
• Resilience to withstand threats and to recover rapidly from disruptions.
CORE consolidates solutions developed in Reference Projects6 in each supply chain sector (port, container, air, post). Implementation-driven R&D was then undertaken to discover gaps and practical problems and to develop capabilities and solutions that could deliver sizable and sustainable progress in supply chain security across all EU Member States and on a global scale. The implementation approach described in Figure 1 aimed at providing:
• SCS Capabilities /Building Blocks which represent the essential components of SCS solutions and the development focus for the project.
• A SCS Solution Development / Delivery Environment to produce solutions for the demonstrators using the SCS Building Blocks; delivery through the CORE Ecosystem will ensure on demand interoperability between disparate systems that may be attached to the CORE network.
• SCS Solutions Testbed: A set of linked demonstrators creating a test and experimentation environment for SCS Solutions, and showcasing a Secure Global Supply Chain System.
Figure 1: CORE approach and structure
The CORE implementation objectives which specify what was to be done and how to reach the vision were:
1. Undertake requirements analysis and impact assessment.
2. Provide an End-to-end Supply Chain Security (ESCS) through a Multi-method Threat and Vulnerability Analysis Capability.
3. Provide SC Situational Awareness Tools & Maps (SSATM) building on the data pipeline and results from reference projects to satisfy the Customs and business requirements for reliable, accurate, complete data. The SSAM development will involve:
4. Provide Real-time Lean Agile Resilient Green Optimised (LARG+O) SC planning linking with the ESCS and SSSAM capabilities. LARG+O will include:
5. Provide a Supply Chain Security Reference Framework (SCSRF) harmonising CRMF and SAFE Provide CORE Connectivity Infrastructure and Solutions Development Environment including:
6. Provide an SCS Ecosystem dedicated to the needs of the supply chain security communities offering Infrastructure services that amplify the capabilities of CORE components.
7. Demonstrators. The CORE Demonstrators will validate the applicability and benefits of the CORE approach in representative operating scenarios characteristic of the global supply chain. They will specifically show the way towards a Global Secure Supply Chain. The overriding goal is to demonstrate substantial gains in security and facilitation covering every major facet of the supply chain security sector.
8. Stakeholder Engagement, Knowledge Diffusion and Sustainable Development Specify and apply an inclusive Stakeholder Engagement Strategy emphasising international co-operation to promote harmonisation of regulations, and to support further development and implementation of international standards.
THE CORE demonstrators were:
• WP9: P&G Demonstrator – demonstrating an Intercontinental Secure Trade Lane and Resilient Supply Chain Optimisation utilizing trade lanes from multiple P&G sites and international product distributors. The transportation modes include truck and ocean carriers
• WP10: Demonstrator Felixstowe – create a seamless, integrated data pipeline concept in the UK on trade lanes with China and Australia, capturing reliable, accurate and complete data that enables supply chain security and effective risk targeting by businesses and border agencies
• WP11: Demonstrator Rotterdam - improving business supply chain control through security measures and advanced data-sharing for SC visibility in dashboards, and re-use of these business controls for government control purposes of multiple inspection agencies. Demo covers multiple trade lanes on connections with Russia, South America and others, trough Port of Rotterdam (Netherlands).
• WP12: Demonstrator Schiphol – apply global data pipeline concept to air cargo supply chains, managing air freight specific trade compliance requirements, and offering supply chain visibility in dashboards. Trade lanes with e.g. Africa, involving multiple inspection authorities.
• WP13: Demonstrator Belgium - The first part is the 'Drugs free import' demonstrator of EFICO's coffee supply chain from South-America to the Port of Antwerp. The second part is a best practice case on 'Long-range rail transportation of sensitive goods
• WP14: EU-US Demonstrator FALACUS FAstLAne through CUStoms Itay – US tade lanes - Application of Next Generation Scanning systems and CORE Dashboard for combining corridor with SC data in security management decision support
• WP15: BSH demonstrator will develop a secure and efficient port-hinterland connection for a containerized supply chain to show how visibility and better data quality can lead to improved operational efficiency, reduced variability in lead times, improved resilience and better risk monitoring and control
• WP16: Intermodal transport of dangerous goods demonstrator - localisation and tracking solutions focusing on Dangerous Goods
• WP17: EU-US DHL Demonstrator – managing air freight trade compliance requirements EU-US in the context of fast supplying of parts
• W23: Large Scale Demonstrator - demonstrating a breakthrough Shipping Information Pipeline (SIP) which enables shippers, authorities and other stakeholders to exchange confidential information on supply chain events and documents between distributed heterogeneous systems, independently of standards and formats. The focuswas on trade lanes with (1) large number of containers and (2) container security devices for tracking and tracing of containers and goods
Project Results:
4.1.3.1 SCS Controls
CORE has established a taxonomy and repository of SCS Controls, undertaken innovative developments aligned to the demonstrators and ensured that both the knowledge about the SCS Controls is readily usable for the other CORE capabilities and demonstrator solutions. Specifically CORE has
• Established a SCS Control taxonomy & Repository of SCS Control Integration Services to:
o Consolidate project outputs and consortium knowledge
o support Customs, related agencies, and business stakeholders to ascertain the detection and responsepotential of a variety of equipment and technology tools
o Facilitate use in other WPs
• Developed localisation and tracking solutions focusing on the intermodal transport of Dangerous Goods
• Developed detection / prevention controls focusing on Rapid Container Scanning
• Developed additional SCS Controls focusing on System Based Approach (SBA).
4.1.3.2 Multi-method Threat and Vulnerability Analysis (MTVA) Suite
CORE has developed a Multi-method Threat and Vulnerability Analysis Suite of services and components (IT tools) from both public authorities and business perspectives in support of End-to-end Supply Chain Security with specific reference to demonstrator requirements. The scope included both security threats as well as commercial threats.
Developed configurable and interconnected services that were used in demonstrators to address their risk assessment needs. The developed tools constitute the services of the “MTVA Suite”.
Developed components for Authorities based on the services of the “MTVA Suite”. Through these components the Customs and other Authorities are able to advance their threat and vulnerability analysis capacity. The developed components of the “MTVA Suite” were evaluated by the participating authorities (HRMC, DCA, BC).
4.1.3.3 SC Situational Awareness Tools & Maps
CORE developed a significant software infrastructure, spread across many partners, that is indeed capable of delivering a variety of Situational Awareness (SA) and visibility tools to SC stakeholders. This infrastructure comprises the CORE SC data model, and extensions of it for specific demonstrators. In addition, specific software services, such as optimization tools for LARG+O support, and the Tranship Patterns gateway for shipment visibility were developed. The concept of Pipeline and the profile/registration of entities into it via the Multi-method Threat & Vulnerability Analysis (MTVA) suite of tools, of which this SA toolset is a part, was elaborated along with theoretical and real-world uses of fusion services. Data quality and validation rules were elaborated upon, mainly concerning quality of milestone information. The international logistics domain is inherently non-trivial as well as, by definition, covering numerous cultures, languages, practices and with multiple embedded habits and infrastructures that all have to be taken into account. CORE purposely did not try to enforce yet another rigid way of engaging with an interoperability system. CORE tries to minimise the demands on a stakeholder in that regard. The threat and visibility analysis CORE offers is easily consumed and acceptance of the basic CORE concepts and technology was widespread and welcome.
CORE decided to focus on the gateways in the demonstrators that have data pipelines, port community and single window solutions, the input mainly came from work packages 9, 10, 12 and 23. In many cases the Descartes GLN platform was considered as the gateway, however extensive reference has been made to the other data pipeline solutions in work package 10 and 23, port community solutions like Cargonaut and DBH, and other global platforms like INTTRA. Moreover the integration between Descartes and the Shipping Information Pipeline (SIP) follows the SIP specifications as they would be used by other providers or individual companies. The approach of a platform like Descartes to integrate trading partners shows a lot of similarities with PCS, the main difference is that a PCS has a more local or national role, which is often represented by the ownership. The benefit that both have is that existing connections and gateways can be re-used.
Both traditional EDI techniques and new ways of connecting systems were used. As in other projects it still remains a challenge to set up interfaces with a lot of different companies within the context of a demonstration project, even when re-using existing interfaces and protocols and “low tech” solutions. Taking some of the new gateways to a larger scale is still a big task. Some of the gateways are only applicable between governments (such as PAE).
CORE built a Cyber security Situational Awareness (CSA) data fusion tool, built an attack simulator, and tested CSA tools in experiments, There are various technologies available that identify risks as well as ongoing attacks against IT systems. These results produced by these technologies are, however, not possible to easily translate into countermeasures and mitigations. For example, a cyber security vulnerability scanner has been shown to produce up to 18% false alarms and output reports of up to several thousand pages for a small network with 28 machines [4], [5]. Similarly, a network intrusion detection system could have up to 96% false alarms [3]. These are certainly not figures that supply chain enterprise decision makers would be comfortable with. In order to decrease false alarms, extract relevant information, and thus increase cyber situational awareness, there is a need for novel tools that correlate data produced by current cyber security technologies. The tool Sia was developed during the scope of CORE 4.3 for this purpose. Sia helps supply chain decision makers to reason regarding which vulnerabilities to address first as well as detect ongoing attacks. Sia is able to proactively project the likelihood that different threat agents are able to succeed with different cyber-attacks against systems and reactively update its calculations in real-time based on incoming intrusion detection alerts. Sia is also able to automatically test for optimal countermeasure strategies. Its results are produced through a combination of attack graphs, intrusion detection, and Bayesian Networks.
Current cyber security technologies to a large extent are untested with respect to their effectiveness [42]. One of the major reasons behind this is the difficulty of performing valid tests - there is a need simulate both benign (e.g. a user browsing the internet) and malicious (e.g. a cyber-attack) events in a close-to-real-world environment. CORE developed a cyber event simulator SVED (Scanning, Vulnerabilities, Exploits and Detection) [15]. SVED enables automated or manual low-effort design and execution of cyber security experiments, including testing both benign events and malicious events. The purpose of SVED is to enable standardized, valid and reliable tests of CSA solutions such as Sia. Both SVED and Sia have been integrated into a cyber range called CRATE that is capable of instantiating supply chain systems and in consequence conduct CSA tests involving these.
4.1.3.4 Real-time Lean Agile Resilient Green Optimised (LARG+O) SC
CORE designed a SC dynamic risk mitigation reasoning support tool presenting a quantitative approach to risk management which simplifies comparison and evaluation of mitigation strategies. CORE provided a description of design and implementation of a flexible decision support tool, that can help a user to reason about mitigation strategies and threat scenarios, based on the quantitative risk management approach was provided.
The tool was developed using an iterative agile process. During the first development phase, a basic, yet competent, version of (TRIMIT) was developed. The first round of testing and feedback from partners resulted in a list of suggestions for improvement. One suggestion from partners was that TRIMIT should be extended to handle uncertainty in input data and support dynamic probabilities and impact values by treating probabilities and impact values as functions rather than constants. These features were implemented in the second version. The third version of TRIMIT focused on adding features that improved the possibility to reason about cyber threats and cyber mitigation strategies.
CORE also implemented a collaborative Global Supply Chain Visibility tool, providde Supply Chain Dynamic Risk Mitigation tools, delivered a Risk Intelligent Supply Chain Simulator, and provided Real-time Lean Agile Resilient Green Optimised SC scheduling tools
4.1.3.5 SCS Reference Framework and Standards
CORE developed a SCS Reference Framework (SCSRF) and established mappings with key SC Standards. The SCSRF provides a unique domain model that links processes, data, and systems into a unified structure. The SCSRF includes standard information messages from associations (such as WCO, ICAO, IMO, ISO or UPU) and appropriate transformation mechanisms required for data and information exchange across different systems and business processes. The SCS Reference Framework is described conceptually in order to be used for international promotion of mutual recognition of trade partnership programmes and controls and is encoded as a computer based object model to facilitate the development of interoperable solutions for the demonstrators.
Specifically CORE
• Developed a Public-Private Governance Model (PPGM) to provide a means to analyze, explain and design the governance of the SCS data-sharing innovation, to make it acceptable to all parties that are needed to make it work.
• Produce dSCS Reference Framework Specification by rationalising data elements, message exchange schemas, and transformation activities required to support information exchange processes between different partners in SCS including
o specify choreographies of processes to be supported by the SCSRF
o an Object Oriented Unified Data Structure of the SCSRF for data exchange purposes between distributed heterogeneous systems
o set of services and Data Contracts necessary to support the data exchange process using the SCSRF
• Established mappings between SCSRF and key SC Standards
• Defined the semantics of the core relationships between the data and the processes in the SCSRF in
• ontological format in order to enable computer based reasoning during the transformation between different datasets required for data and information exchange purposes.
4.1.3.6 CORE Connectivity Infrastructure and Solutions Development Environment
CORE provided an integrated set of tools for developing solutions for the Demonstrators in line with SCSRF utilising results from reference projects particularly e-Freight and ICargo
Specifically CORE
• Provided Connectivity Infrastructure for the Supply Chain Security Reference Model (SCSRF) based on the e-Freight Access Points and the CASSANDRA Data Pipeline implemented by the Backbone of interconnected community systems;
• Provided Solution development tools for producing applications and dashboards for the demonstrators in line with SCSRF
• Provide Scenario-based simulation of real operational conditions of secure supply chains with a special focus on resilience and controls in case of disturbances.
CORE results have been adopted by the Digital Transport and Logistics Forum (DTLF), raised and chaired by EC DG Move. D7.12 has been adopted and is implemented by the H2020 SmartRail project.
4.1.3.7 CORE Ecosystem
CORE has developed the CORE Ecosystem as a distributed adaptive open sociotechnical system, with properties of self-organisation, scalability and sustainability, inspired by natural ecosystems The CORE Ecosystem will enables CORE participants to share supply chain security ‘solutions’ developed for the demonstrators and innovate through online collaboration
Specifically CORE
• Provides the CORE Ecosystem Architecture
• Provides APIs for CORE Capabilities from WP2 to WP6 and Communication Channels
• Provides CORE Ecosystem Dashboards
4.1.3.8 Demonstrator P&G
CORE demonstrated an Intercontinental Secure Trade Lane and Resilient Supply Chain Optimisation utilizing trade lanes from multiple P&G sites and international product distributors. The transportation modes included truck and ocean carriers. Modern supply chains are global, with different available technology capabilities across plants located across the globe. In such an environment, supply and demand related variability represent challenges that have to be managed through agile operation of the supply chain. CORE demonstrated the positive impact of additional visibility and security and determined data elements needed to add value to commercial entities and governments. At present, for most lanes in the market, neither the manufacturer nor the distributor have visibility of the cargo in transit and no way of confirming its ETA. This affects all manufacturers and their clients in the US and Europe. This data is important as was demonstrated by CORE with the introduction of optimization/simulation algorithms to deliver important collateral benefits including major efficiency gains such as reduced stocks (at the manufacture and/or the distributor sites), supply chain resiliency and agility and reduction in environmental impact).
Specifically CORE
• Improved supply chain visibility for P&G, its distributors and logistics service providers;
• Improved the resilience/agility of the overall supply chain and mitigate disruptions to the supply chain caused by unanticipated (simulated) events; Develop tools to aid planning of appropriate designs of such global supply chains using a scenario based capacity planning mathematical programming formulation coupled with appropriate representation of the impact of variability (researched by PU)
• Improved security and risk management supporting the potential future creation of preferential corridors for ‘legitimate goods’
• Optimized the transport performance and the supply chain design generating potential collateral benefits [e.g. contributing to the reduction of bullwhip effects (i.e. reduced swings in inventory in response to shifts in customer demand as you move further up the supply chain)/unnecessary stock levels]
• Facilitated the identification of potential efficiencies (resulting in better cash-flow and management of ‘travelling’ stock)
4.1.3.9 Demonstrator Felixstowe
CORE concepts were demonstrated in an import and export trade lane centred on the Felixstowe Port, UK. The initial import lane ran from Yantian, China, to Felixstowe and transports various products, from plastic homeware to tinned tuna and chocolates, for large UK retailer Sainsbury. The initial export trade ran from Felixstowe and transports containerized building tractors of JC Bemford to locations around the glob
Specifically CORE
• Improved supply chain visibility for shippers, buyers and sellers, customs and logistics service providers
• Improved security and risk management for public and private sector supply chain actors;
• Improved the quality of data used in supply chain management for commercial and regulatory purposes including planning, distribution, resource allocation and synchro-modality;
• Provided for the assurance of security, supervision and compliance data by export and import Customs
• Facilitated the identification of costs and efficiencies by public and private sector supply chain actors
• Improved the use of automated data and systems by public and private sector supply chain actors including port community systems such as Destin8;
• Improved integrated border management at the Felixstowe Port
• Addressed many of the current weaknesses in supply chain data such as inaccurate manifests, bills of lading, letters of credit and import and export data provided to customs.
4.1.3.10 Demonstrator Rotterdam
CORE concepts were demonstrated in three trade lanes, centred on the Port of Rotterdam, NL. One was an export trade lane from Western Europe to Russia, focusing on integrating aspects of costs, speed and security in the supply chain design and planning phase. The second was on a containerized flow from Colombia/Kenya to Aalsmeer, containing flowers for FloraHolland. Given the country of origin and the type of goods, this flow of perishable goods has a high inspection rate from multiple border agencies, resulting in disruptions of the flow. To address disruptions, both FloraHolland and inspection agencies required more visibility, better data, and improved security, primarily on the Colombia / Kenya end of the trade lane. The third was on improving supply chain visibility for supervision in trade lanes with multiple border crossings and intentional vagueness to conceal criminal activities. An example case is that of goods that are destined for Rotterdam but entering the EU via Antwerp. The Rotterdam demonstrator focused on improving business control of supply chains by advanced supply chain visibility, risk management and security measures. Timely and accurate source data were captured in international data pipelines. This improves visibility for businesses, and when shared with government the latter is better able to assess the security of a goods flow, which reduces the risk of unnecessary inspection interference in safe supply chains.
Specifically CORE
• Improved supply chain security through visibility for shippers, buyers and sellers, customs and logistics service providers, using international data pipelines
• Improved the quality of data used in supply chain management for commercial and regulatory purposes including (synchromodal) planning, distribution, resource allocation risk monitoring and mitigation
• Identified public-private governance models to ensure that relevant SC parties engage in data-sharing needed for the adoption of data-sharing in the CORE Ecosystem
• Helped in selecting the optimal trade routes, from multiple alternatives, based on cost, speed and risk and risk mitigation
• Monitored supply chain operations and support exception handling and resilience;
• Improved interoperability and risk management through advanced data exchange and supply chain visibility solution mean that supply chain operations can be executed more efficiently and risk management can be more effective
• Improved supply chain security in order to reduce lead times and disruptions
• Identified and modified SCS business controls to make them suitable for re-use (piggy backing) for
• government control purposes and thereby enabling a system-based approach (SBA) to assess the compliance of supply chains
• Minimized exceptions and inspections based on expanding supply chain controls, re-using them as part of a system-based approach to risk assessment, and introducing upstream information capturing
• Explore and support Coordinated Border Management (CBM) benefits and document free transport, based on digital data sharing and enhanced visibility created by the data pipeline, and on SCS controls
• Addressed many of the current weaknesses in supply chain data such as inaccurate manifests, bills of lading, letters of credit, transport documents for inland traffic and import and export data provided to customs
• Demonstrate multi-modal application of the IT solutions in a data pipeline for SCS through visibility
4.1.3.11 Demonstrator Schiphol
CORE concepts were demonstrated on an import trade lane centred on the airport Schiphol in Amsterdam, the Netherlands. This import lane runs from Kenya, via the Amsterdam, to Aalsmeer or in transit to e.g. Russia, and transports flowers for commercial partners in the FloraHolland cooperation. Furthermore, with the Schiphol cargo community, strategic solutions for a secure air-cargo supply chain were developed, improving its overall transparency, efficiency and performance, while having at the same time, a positive impact on trade facilitation.
CORE concepts were also demonstrated for a group of air freight shippers, addressing their main issues, being the high costs involved in complying to relevant trade compliance requirements and corresponding procedures, and the disturbance in their supply chain and fulfillment process caused by the current supervision approach. Increased trade & security compliance requirements hinder the seamless flow of goods and increase the costs to ensure compliant trade flows using air freight. CORE integrated the global data pipeline concept developed and applied to the Maritime forwarding community in CASSANDRA, the Neutral Logistics Information platform developments in The Netherlands, and the concept developments under the programmes Smart Gate Schiphol and Seamless Connections. Furthermore, the demo aimed to manage air freight specific trade compliance requirements (e.g. KC status, AEO) and recognition and integrated this compliance management seamlessly into the business processes,
Specifically CORE
• Developed an overall vision on efficient security for traders using air freight.
• Captured and shared reliable source data & monitoring data to support seamless air cargo supply chains and improved risk management & government supervision;
• Reducing the friction costs in global trade using air freight. Focus on:
o Cost of compliance: administrative burden, but also including integration of screening of unknown consignor and known consignor compliance
o Unnecessary controls harming seamless flow of goods (e.g. physical controls and information requests before clearance is being given)
• Enhanced synchronization in the SC
• Developed an applied agenda for system based approach in air freight security
• Identified and modified SCS business controls to make them suitable for re-use (piggy backing) for
• government control purposes
• Improved supply chain security through visibility for shippers, buyers and sellers, customs and logistics service providers, using international data pipelines
• Identified public-private governance models to ensure that relevant SC parties engage in data-sharing needed for the adoption of data-sharing in the CORE Ecosystem, including exploring logistics information platforms as ‘landing places’ for international data pipelines
• Explored and supported Coordinated Border Management (CBM) benefits and document free transport, based on digital data sharing and enhanced visibility created by the data pipeline, and on SCS controls
• Demonstrated multi-modal application of the IT solutions in a data pipeline for SCS through visibility
4.1.3.12 Demonstrator Belgium
The Belgium demonstrator focused on demonstrating best practices in the following areas:
• Assess feasibility of and, initiate implementing so-called Utility Blocks, which are domain-specific frameworks within Globally Networked Customs (GNC) for enabling an industrial implementation of e.g. mutual recognition agreements or procedures for systems-based controls to ensure the integrity of the supply chain. In the demonstrator focus was on drugs free supply chains and on specific measures for long-range rail transportation involving sensitive goods.
• Data sharing for supply chain visibility and control. This demonstrator will show the practical use of this solution, add additional parties and solutions to capture and share data, and explore the full extent of its benefit to roll out information services very quickly, thereby supporting agility of supply chains and reconciling customs and logistics requirements.
Specifically CORE demonstrated
• the business benefits of visibility based on data aggregation and consolidation;
• feasibility of industrial implementation based on Utility Blocks based on Utility Blocks within GNC (Globally Networked Customs);
• Situational awareness of supply chains, using the CORE framework and based on a 3-layer architecture involving data aggregation, data standardization and data consolidation – both for B2B and B2C purposes
• Balance between a data pipeline on the one hand and decentralized controls based on mutual recognition (AEO etc.) on the other hand.
4.1.3.13 Demonstrator FALACUS- FAstLAne through CUStoms
The FALACUS demonstrator, capitalized on the results produced in CONTAIN project in terms of EU Container Surveillance Framework and EAST-WEST MED demonstrator focusing on container security, implemented an extensive supply chain of ceramics products (almost 25.000 cnt per year) along international corridors between Italy and USA. The demonstrator encompassed current and emerging security regulatory, policy and standardization recommendations, new business models fostering on increased visibility and operational collaboration and relevant advanced security management capabilities as specified and developed in CORE to increase the prompt tracking and mitigation of security threats all along the supply-chain.
Geographically, Falacus addressed one of the biggest Italian districts based in Emilia Romagna region, including the biggest Freight Village of Europe (Interporto Bologna) and the Port of La Spezia which represents the Maritime Gate of Italy to US market.
The overall FALACUS objective was to support stakeholders involved along the whole supply chain (both business and administrations) dealing with security threats within logistic chains by utilizing ‘best of breed’ technology options and risk mitigation services as part of an integrated approach to the management of Door to Door (D2D) services along transportation corridors.
FALACUS analyzed the key issues arising from interdependencies among the various components of the supply chain in the above trade lane, in order to identify particular security vulnerabilities inherent in the system. Based on this analysis, a series of measures and technological solutions were implemented making use of the CORE ecosystem risk assessment and supply chains optimization services.
Specifically CORE addressed
• Complex and intercontinental supply chains leading to the coexistence of a number of security vulnerabilities require increased and consistent visibility with emphasis on the interchange points (i.e. intermodal terminals). The heritage of responsibility during modes interchange and operational/administrative handling in the terminals were transparently executed to the benefit of the cargo owning and governing bodies. This was achieved by incorporating and integrating the transport services performance on a corridor level for increased traceability as well as operational and strategic decision making.
• Decentralized and discontinuous systems make cross network security optimization difficult. Advanced interoperability and interconnectivity of dispersed systems facilitated the increased accessibility to information and services irrespective of the geographical and business proximity of those involved.
• Vulnerabilities arising from the lack of a coordinated approach to securing transport chain can be dealt through the new business models and coordinated networking solutions. The new B2A/B2B collaborative framework required consolidated transport related information flows to arm the regulatory bodies in undertaking their clearance task in a targeted and effective way by employing smart risk assessment tools for minimizing disruptions along the supply chain.
• Cargo Integrity is viewed as a shared responsibility by a variety of business and administrative actors, from the supply chain management relevant data (packing list, transport instructions, consignment identity, etc.) up to risk assessment (threats, risk index, preventive/reactive controls etc). Advanced sensing technologies allow the scanning of the load units for dangerous goods and related environmental impacts.
• Tackling vulnerabilities in transport nodes such as rail yards, storage areas, access points and shipping/loading terminal facilities was achieved by introducing operational/administrative services orchestration solutions facilitating the continuous control of the in terminal transport profile. Furthermore, accurate positioning of the unitized cargo secures the prevention from illegal/excessive movements of the cargo within the terminal and beyond using advanced technologies (i.e. EGNOS).
• Cooperative procedures towards customs - Green lane for the inland terminal as a backdoor of the port even for the customs clearance by creating a freeway between the two infrastructures will be the challenge of the innovation toward improvement of security procedures.
Further CORE
• Reduced the time reaching the market for the entire supply chain
• Enhanced the supply chain transparency and resiliency
• Reduced the barriers to trade or delays in commerce between member states and their international trading partners;
• Enabled integrated supply chain management for all modes of transport.
• Enhanced the capabilities of Customs administrations and Strengthen solutions to improve their capability to detect high-risk consignments.
• Promoted cooperation between the Customs and business communities
4.1.3.14 Demonstrator Creating a Secure and Efficient Port-Hinterland Containerized Supply Chain – BSH Demo
Companies operating globally are increasingly subject to greater risks as well as stricter regulations around security, resulting in paperwork bottlenecks and processing delays at every border crossing. The creation/development/harmonization of hinterland containerized port processes between different stakeholders, leveraging advanced data/information decision support and well defined Application Programming Interfaces (API’s), offers an ‘opt-in’ model to support more efficient and resilient port operations. The BSH Electrodomésticos España S.A Demonstrator contributed to, as well as made use of, the CORE capabilities around advanced information sharing between different stakeholders within a supply chain to obtain more reliable and accurate data about its operations. In addition to improved supply chain visibility, which is critical for the company, this CORE project investigated how more reliable, timely and accurate data from CORE systems impacts the operational and financial performance of the company. In addition, this demonstrator provided a showcase of how the CORE ecosystem improves BSH risk (operational or security related risks such as damage, spoilage, theft, etc.) management system. Consequently, BSH was able to optimize operations across the supply chain and to improve responsiveness to unexpected events or disruptions based on up to date and accurate information and decision support from the CORE Ecosystem.
The focus of this demonstrator was on the import and export trade lanes of BSH. However, the analysis was carried out such that the methodology and the results are scalable and can be expanded further to drive insights regarding the potential benefits of improved data sharing/security/efficiency for the rest of the global network of BSH. The China-BSH Zaragoza import supply chain originates at the port of Yantian, China. The goods are transported by MSC to the Port of Barcelona. Later, the shipment is transported to the BSH warehouse in Zaragoza also via rail. The China-BSH Zaragoza import supply chain originates at the port Yantian, China. The goods are transported by Maersk to the Port of Barcelona. Later, the shipment is sent to Terminal Maritime of Zaragoza (TmZ) by rail, and subsequently to the BSH warehouse in Zaragoza also via rail. The export trade lane starts from the BSH warehouse in Zaragoza, the goods are then shipped by rail to the port of Barcelona, and they are then loaded in a vessel through arriving to the port of Istanbul, and final destination Cerkezkoy, where the trade lane for BSH Zaragoza-Turkey finishes. The global supply chain involved many partners and multiple modes of transport were employed to move the products from the port of origin to the clients in Europe. Therefore, it was conjectured that the chosen routes are representative of complex global supply chains that the company operates with and the methodology used to analyse this particular routes along with the end results from this demonstrator would apply to other routes within the network. The output of this demonstrator was an assessment of the potential of the CORE approach and capabilities in further improving security as well efficiency of flow of goods in a real life setting and the creation a more resilient supply chain.
TmZ designed an interface to use with customs administrations and facilitate the electronic transit declarations of block trains departing from Barcelona port to Zaragoza warehouse.
Specifically CORE
• Identified requirements, both operational and security customs related, from the main stakeholders (shipper, terminal operators, logistics service providers, etc.) involved in the supply chain.
• Assessed the current state of the supply chain in terms of operational efficiency and supply chain security and resiliency, which formed the base case.
• Facilitated data/information sharing among stakeholders to improve visibility and improve the accuracy and speed of the information flow via the IT solutions developed within the framework of earlier and ongoing EU projects (e.g. CONTAIN, CASSANDRA, eFreight), which were deployed, consolidated and further developed as the CORE capabilities.
• Developed and maintained security practices using the system based risk assessment approach to supply chain management through visibility.
• Demonstrated the initial economic/social benefits of this CORE approach to different supply chain actors and identified potential problems/challenges that might surface during the implementation phase to provide feedback to the CORE Ecosystem.
• Monitored Key Performance Indicators within the CORE framework to continuously improve security, resilience and efficiency to ensure sustainable growth in trade while keeping the trade lanes secure.
• Analysed the impact of having customs clearance operations at the dry ports (rather than the ports) and the challenges/opportunities that exist in terms of resilience/security/efficiency of the supply chain and identify if this model could be scaled up and proposed as European customs procedure.
4.1.3.15 Intermodal transport of dangerous goods demonstrator
CORE demonstrated concepts related to the use of the European Satellite Navigation (i.e. EGNOS/Galileo) technologies and services, to enable a robust and reliable localization and tracking and a higher safety and security in the freight transport and logistics. In this respect, CORE’s idea was to set up and launch an operational best practice using EGNOS services presently operational over Europe for the traceability of rail tankers (transporting dangerous goods) to support enhanced monitoring of operations/safety/risk prevention.
CORE’s Intermodal transport of dangerous goods demonstrator concerned the development and launch of an operational best practice programme using EGNOS and involving key players, starting from European neighbouring countries as the most suitable way for a European-wide introduction path to:
• Perform technical demonstration and benefits validation;
• Contribute to a large-scale use by conveying the set-up best practice also to other countries and other stakeholders, at both European and international level;
• Support the definition of a suitable introduction strategy, at both European and international level.
Capitalizing on the results and heritages from previous European experiences (e.g. the European SCUTUM and CONTAIN projects), CORE’s Intermodal transport of dangerous goods demonstrator developed a tracking & tracing system using GPS + EGNOS OS & EDAS
The business cases allowed:
• Technology feasibility testing;
• Benefits validation;
• Gathering inputs for the relevant standardization, legislative and policy implementation;
• Collecting elements for the definition of a suitable introduction strategy, at both European and international level.
CORE developed a tracking & tracing system taking into account already consolidated technologies and operating solutions, performing exhaustive real-life trials and operational validation, carrying out tasks related to the gap analysis for standardization, legislative and policy implementation, and implementing the necessary actions/steps for gap filling.
4.1.3.16 EU-US demonstrators (DHL & P&G)
The development of mechanisms to minimize risks and ensure the implementation of effective contingency planning is part of today’s market competitiveness. To deliver both on time and safely are basic parameters in logistics management to ensure optimal service levels.
The DHL demo addressed a global supply chain for Airbus, an aerospace manufacturer which imports parts for aircrafts from different parts of the world. CORE considered suppliers located in Spain and Airbus Plant in Poland and the United States (US). DHL provides Airbus with global logistics services, and in this demonstrator we focused on the logistics activities DHL performs to ship these parts from the suppliers in Seville (Spain) to Warsaw (Poland) As the goods were time-sensitive, road transport was the mode of transport from Spain to Poland. Air-freight is the mode of transport from the US to Spain. The pieces are shipped by plane from the US and arrive at Spanish airports from where it is transported to the manufacturing plant located in Warsaw .
Specifically CORE
• Conducted a review of the risks of all security incidents on a route from a parameter definition
• Designed hardware components to be embedded along the supply chain containers, through which a comprehensive implementation security contribution aimed at protecting special aircraft parts was obtained thereby mmaking it highly accurate and competitive with current methods of control.
• Developed software interfaces suitable for joint management with the provision of real-time transportation and cargo tracking.
• Created a specific design for a Security Control Tower.
• Integrated and validated prototypes, procedures and interfaces by connection in real life conditions of one year of AOG shipments´ transit.
Further the P&G demo addressed a global supply chain issue related to product integrity due to high/low temperature across the globe. P&G has a large number of finished products and raw materials which do not normally require a temperature controlled supply chain, but suffer from some extreme climatic conditions in summer/winter in some regions. There are no adequate and energy efficient solutions, resulting in very high cost and energy footprint. As some goods are temperature sensitive, truck and sea shipment are the means of transporting them to final locations. As a consequence those trucks and seatainers might undergo severe climatic condition throughout the journey resulting in damaged or less secure product integrity. CORE demonstrated a much more efficient solution which reduces both the cost and energy footprint related to guarantying product integrity by keeping mild temperature conditions in trucks and seatainers during shipments.
By monitoring the above solution throughout existing supply chains, this demonstratorprovides a mechanism for Real-time Lean Agile Resilient Green and Optimized supply chain solutions by allowing a 350-470%reduction of the overall carbon footprint caused by commonly used diesel generators. The pilot addressed various phases and the main results were:
• Completed the design and construction of lead prototypes – based on Sunwell unique proprietary technology (Deepchill). The prototypes could be deployed inside seatainers and trucks used on existing supply chain routes.
• Above prototypes can be used to monitor product integrity throughout the entire supply chain and against severe climatic conditions.
4.1.3.17 Stakeholder Engagement Diffusion and Sustainable Development
CORE has
• Developed training and education material and services
• Acceleratde the standardisation agendas in supply chain security ecosystem
• Developed an effective policy influencing strategy and provide policy recommendations
4.1.3.18 Large Scale Demonstrator
CORE demonstrated a breakthrough Shipping Information Pipeline (SIP) which enabled shippers, authorities and other stakeholders to exchange confidential information on supply chain events and documents between distributed heterogeneous systems, independently of standards and formats. The focus was on trade lanes with (1) large number of containers and (2) container security devices for tracking and tracing of containers and goods.
Specifically CORE
• Improved quality of data leading to better risk analysis;
• Provided a solution to speed up Customs clearing
• Improved real-time visibility
• Provided a solution to ensure netter asset utilization through faster processing;
Potential Impact:
4.1.4.1 Background
4.1.4.1.1 Transport security
Effective transport systems are essential to Europe’s prosperity, having significant impact on economic growth, territorial cohesion, social development and the environment. At the same time, transport has always been subject to acts of unlawful interference, ranging from simple criminal acts on the premises of transport providers, to robberies of cargo when being transported, acts of piracy and hijacking, and terrorist acts48F48F48F48. The EU already has a sad history of terrorist attacks on transport49F499F49F.
However, security is not simply about terrorism. The economic cost of transport crime is high. For example, cargo theft from lorries in the EU is estimated by TAPA to cost over €8 billion per year. Transport security - has also an important international dimension: in order to ensure security within the EU it may be necessary for transport security to be performed outside the EU before a journey to the EU commences.
In the 21st century, it can seem that the world is neatly knitted together by sophisticated transport and logistics systems. The trends of globalization, lean processes and the geographical concentration of production, which have brought about this apparently benign state of affairs, have also changed the risk profile of the global supply chains and transport networks which form the backbone of the global economy and which have fuelled trade, consumption and economic growth.
Perhaps extrapolating this concern, an in-depth assessment of future hazards likely to affect transport and logistics, produced by PwC Transport & Logistics as part of its thought leadership series Transportation & Logistics 2030 (T&L 2030)0F50F50F50F, suggests that 90% of the world’s trading volume is concentrated in about 39 "gateways". The failure of even one of these "hubs" would have widespread consequences, addressing the need to devise and execute contingency plans to defend economic actors against a whole variety of risks, not necessarily terrorism attacks.
Various incidents, like the Japanese earthquake and tsunami, or the threat by Somali pirates point to the vulnerability of logistics which depend on time-critical delivery and the way in which reliable transport has permitted the reduction of buffer stocks of goods. We are given warning signals from the rapid effects of delays or labour disputes, or even the occasional shipwreck, which has production lines in factories stopping as their components fail to arrive.
These recent high-profile events have highlighted how risks outside the control of individual organizations can have cascading and unintended consequences that cannot be mitigated by one organization alone. For this reason, supply chain and transport disruptions are no longer seen as the concern only of operational risk managers. Governments also have been increasingly challenged to understand and manage risk across global supply chain and transport networks. The political, economic and security implications of regulating in a complex environment have necessitated new thinking as to the nature of the problem, the potential threats and what new approaches might be considered
In recognition of these concerns, the World Economic Forum in 2011 engaged a diverse group of supply chain and transport risk experts to explore systemic vulnerabilities. This review51F51F51F51examined supply chain and transport risks, looking at external shocks, network trends and vulnerabilities. The report also proposed risk mitigation approaches to further develop and suggest recommendations for action.
The review found that systemic risks within supply chain and transport networks are characterized by an unexpected trigger event and a network setup that cannot absorb the shock and knock-on effects. The initial event results in a cascading disruption or failure across regions or industries. However, prediction of specific disruptions is felt to be less important than having the resiliency in place for effective response, no matter what the cause. While highlighting industry robustness in the face of recent shocks, experts identified the vulnerabilities of most concern that limit the resilience of supply chain and transport networks.
An in-depth assessment of future hazards likely to affect transport and logistics has been produced by PwC Transport & Logistics, as part of its thought leadership series Transportation & Logistics 2030 (T&L 2030)52F52F52F52F . PwC surveyed a global group of experts using the RealTime Delphi method to determine what elements of supply chain security they believe will be most critical in the future. Cyber attacks, which were perhaps barely recognised as a serious threat a few years ago are, says the report, becoming both serious and regular, and any business or even nations could be at risk.
CORE is aligned with the main conclusions from the communication on customs Risk Management: COM 2012(793). In particular:
• Availability of timely and good quality data on "who is moving what to whom”: this is the main objective of the Pipeline Concept (UK & NL demonstrators), which focus exactly on data quality and reliability of sources.
• The efficient sharing of the data between the customs authorities across the EU: this is addressed in the currently running eCustoms projects within DG TAXUD (ECS/ICS/NCTS), e.g. national customs systems need to support exchange of Risk analysis based on ENS among other customs authorities. All this will be input to CORE.
• More structured and systematic cooperation and coordination between customs and other authorities: the Dutch demonstrator with customs and food safety authorities will tackle and cover such Coordinated Border Management issues.
• Engaging more with economic operators: This is the essence of the System Based Approach of CORE.
• Trade facilitation benefits: this is covered in the assessment task
• Potential of international cooperation: CORE will look into the feasibility of demonstrating AEO mutual recognition in the overseas demonstrators which address EU-USA trade.
CORE also aligns itself with the aims of the Dublin Declaration “Strengthening the Security of the Supply Chain and Customs Risk Management in the EU” (26-27 March 2013) and the statements in the Council Conclusions on “Strengthening the Security of the Supply Chain and Customs Risk Management” from 18 June 2013, particularly in its clarification of the data and information required from economic operators to underpin effective electronic risk based assessment and in the definition of mechanisms to enable the submission of data required from multiple sources taking into account the need of customs authorities in processing this information, including how such data and information can best be integrated for efficient risk management avoiding the imposition of unnecessary and ineffective costs on business.
4.1.4.1.2 Costs/benefits of enhanced security for supply-chains
As noted above, governments and companies have introduced a myriad of security measures to protect supply chains from exploitation and attacks. However, security initiatives often improve security at the expense of predictability, speed and cost-effectiveness of supply chains, causing additional trade transaction costs.
For example, Hummels53F53F53F53has calculated that each day a product spends in transit equals additional ad valorem tax equivalent of 0.8 %. The OECD54F54F54 calculates that each 1% saving in trade related transaction costs yields a worldwide benefit of US$43 billion (OECD 2003). Similar findings are confirmed by other studies, like Wilson55F55F55F55F Djankov and Duval57 who also identify enormous trade transaction costs related to administrative procedures between traders and governmental bodies.
Moreover, as noted above, companies are faced with a large and increasing number of “voluntary” initiatives and standards, each requiring an effort (and resultant cost) to attain compliance.
Verwaal58F58F58F58Fdeveloped a micro-model to identify the cost of trade compliance in industrialised countries, his findings on the total compliance costs were in the range of 2-5% of the trade value of the merchandise. Applying this to the import and export statistics of traded goods between EU and extra-EU, respectively 1685 billion and 1,531 billion Euro (Eurostat, 2010) this corresponds to a cost in the range of 100 billion Euro. Though it must be said that Single Window environments and electronic documentation initiatives have increased the efficiency to comply to most compliance requirements, the Verwaal study was performed before European trade and logistics was faced with more stringent security compliance, putting huge demands to the trade and logistics system to capture the corresponding data in an efficient way.
The PwC report recognises the possible costs which may result from mandatory security checks through a whole supply chain by users of transport, but also points to some of the benefits of this, in better risk "profiling" of employees and the employment of only trusted transport companies. It was also suggested that the transportation and logistics industry, which already relies heavily on Information and Communication Technology, will need to look to such technology to provide many of the advances to mitigate some of these risks.
Other experts claim that “collateral benefits” from security measures could off-set detrimental effects of security measures on supply chain performance. It believes that well-planned security investments provide a payback, not only in terms of loss prevention, but also by enhancing supply chain performance. Transportation and logistics companies will need to work together with governmental institutions to develop new security standards that are not only effective, but also efficient.
A survey60F60F60undertaken by the Business Continuity has considered the sources and consequences of disruption along with their origin within the supply chain system. Its conclusions give ample evidence of the extent and consequences, both actual and potential, of supply chain disruption. For example, 85% of survey respondents experienced at least one disruption, and such supply chain incidents led to a loss of productivity for almost half of businesses along with increased cost of working (38%) and loss of revenue (32%). Adverse weather and unplanned IT and telecommunication outages were the main causes of disruption.
The longer term consequences of disruption in the supply chain included shareholder concern (19%), damage to reputation (17%), and expected increases in regulatory scrutiny (11%). For 17% of respondents the financial costs of the largest single incident totalled a million or more Euros. For those with weaker supply chains, the number experiencing higher financial costs almost doubled to 32%.
The ability to demonstrate resilience is starting to become a factor in purchasing decisions with 28% of respondents stating that they always or often have to provide assurance to prospective clients, indicating that effectively managing supply chain continuity is critical, not just because of the immediate costs of disruption, but as a result of the longer term consequences to stakeholder confidence and reputation that arise from failure.
The cost of the rising number of incidents of terrorism and piracy are already substantial and, as these threats are on the upswing, this situation can only get worse. Total direct costs of piracy in 2010 have been estimated to be between US$ 7 billion and US$ 12 billion61F61F61. In addition, there are indirect costs too, so that the real figure is much higher. Piracy damages the tourism industry, causes losses in revenues for canal fees and the costs “loss of use” and “loss of man-hours” while ships and their crew are held hostage are also significant. Many shipping companies are now either hiring special security, working together with UN troops or altering their shipping routes.
Another estimate of potential economic losses due to supply chain crime has been produced by the Transported Asset Protection Association (TAPA), which has calculated that economic losses due to cargo theft in terms of cost of replacement, re-shipping and reputational damage were as high as 8.2 billion Euros in Europe in 2009 (TAPA 2012).
Terrorism remains a concern too, particularly since there are a number of locations that are particularly crucial to the smooth flow of supply chains – and therefore potentially most vulnerable to attack. Logistics hubs and gateway regions are one concern. As just one example, a full 14.8% of containerised and air freight traffic moves through the Hong Kong - Shenzhen freight cluster, so a disabling attack here would have a huge impact. Because logistics hubs drive economic activity, successful attacks could also threaten economic stability.
Trafficking in illicit goods exploits legitimate logistics infrastructure and processes and can have a serious impact on societies. Illicit trade puts citizen safety at risk whenever it results in the uncontrolled presence of dangerous articles on the market, as shown by the death of 2500 people in Niger, after more than 50,000 people were inoculated with fake vaccines during a meningitis epidemic. Other instances, such as fake medicines leading to a trail of death in Argentina in 2004, serve as further reminders of the dangers posed by the unauthorised trade in counterfeit products.
Other examples of uncontrolled trade include the trafficking in banned greenhouse gases and illegally logged timber, which accelerate global warming and deplete irreplaceable natural resources. Underground markets for endangered animal and plant species cause severe harm for the biodiversity. Illegal exportation and dumping of hazardous waste is a booming business that degrades the environment to an alarming extent, especially in developing countries63F63F63.
Another aspect is that the same trafficking networks that flood markets with illicit products can be used to supply terrorists with ground-to-air missiles, enriched uranium or even weapons of mass destruction. There are obvious links between illicit trade and geopolitical instability. There is ample evidence that illicit arms trade triggers and fuels conflicts across the globe, but despite widespread concern and the signing of treaties to try to regulate the arms trade, this problem has proved difficult to resolve.
A report by the International Peace information Service64F64, which was presented at the United Nations on 12th July 2012, presents one of the most detailed exposition of the industry ever produced, providing examples of monitoring actual conventional arms shipments to Egypt and Syria in 2011 and 2012 and of suspected conventional arms shipments to Syria in 2012 by sea.
As well as warning of the dangers inherent in the current state of affairs, the IPIS report suggests that monitoring transport services may instead be the key provision for the implementation and enforcement of the Arms Trade Treaty. Transportation services for the international transfers of conventional arms are performed by logistics companies, shipping agents, freight forwarders, and carriers who organize and carry out the transportation from or across the territory of one State to another.
4.1.4.1.3 An integrated approach to supply-chain security
The expert group that produced the WEF review referred to above assessed the difference between the risk management methods available today and those most important in the future to identify risk management methods most in need of development, and presented the following recommendations for Government and Business:-
1. Improve international and interagency compatibility of resilience standards and programmes
2. More explicitly assess supply chain and transport risks as part of procurement, management and governance processes
3. Develop trusted networks of suppliers, customers, competitors and government focused on risk management
4. Improve network risk visibility, through two-way information sharing and collaborative development of standardized risk assessment and quantification tools
5. Improve pre- and post-event communication on systemic disruptions and balance security and facilitation to bring a more balanced public and private sector discussion
Among the large number of supply chain security initiatives that were introduced following terrorist attacks in 2001 were many voluntary supply chain security programmes, standards, certificates and guidelines. Over time, some of the initially voluntary standards are set to become de facto compulsory over time, as stakeholders realize that participation in a security programme can give a definitive competitive edge for certificate holders over their non-compliant rivals.
The two most influential voluntary supply chain security standards at the global level are the ISO 28000 series of six complementary standards promoting good practices for supply chain security management and the SAFE framework of standards, published by the International Organization for Standardization and the World Customs Organization respectively.
Companies wanting to acquire the ISO 28000 certificate need to establish adequate level of security in their supply chains and pass a third party audit. The SAFE framework of standards is directed at customs and other border control agencies of the WCO members, and introduces a set of non-binding best practices and guidelines describing how to achieve both high level of supply chain security and trade facilitation.
Global standards such as these are often incorporated into national and regional government-driven security programmes, and are therefore one way of driving up the performance of an industry. For example, many countries have initiated, in accordance with the WCO’s SAFE framework, voluntary Authorised Economic Operator (AEO) programmes to facilitate trade and enhance security simultaneously. The AEO programmes set the basis for mutually beneficial partnerships between secure (and trusted) traders and border control agencies.
Other standards to deal with crime and terrorism in global supply chains have been developed by industry organizations, such as the Transported Asset Protection Association (TAPA), an alliance of manufacturers, logistics operators and law enforcement concerned about cargo theft, and the International Road Transport Union. Again, these can deliver a competitive advantage to participating companies and organisations, but there is usually a cost to achieving compliance, and this rises with the proliferation of different standards.
4.1.4.1.4 Necessity in European approach
Governments around the world have recognised the need action on supply chain security, and have responded accordingly. For example, in the USA, the Maritime Transportation Security Act (MTSA) of 2002 and the Security and Accountability for Every (SAFE) Port Act of 2006 required the Department of Homeland Security (DHS) to take actions to improve maritime transportation security. Also, the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) required, among other things, that by July 2012, 100 per cent of all U.S.-bound cargo containers be scanned. Within DHS, U.S. Customs and Border Protection (CBP) is responsible for container security programs to address these requirements.
More recently, the US has sought to develop an integrated framework to assure the security of the global supply chain system, by announcing a National Strategy for Global Supply Chain Security. The Strategy, focused on the worldwide network of transportation, postal, and shipping assets and supporting infrastructures, articulates the country’s national vision and approach, and encourages collaborative implementation with key State, local, tribal, territorial, private sector and international stakeholders.
The European Commission has also taken steps to address the need for greater security in the global supply chain. For example, in a White Paper entitled “Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system65F65F65F65”, issued in March 2011, the European Commission takes a global look at developments in the transport sector, at its future challenges and at the policy initiatives that need to be considered. The document outlines key measures to achieve Commission’s vision of future transport, including Secure Transport, among which the specific initiatives to cover ‘End-to-end’ security, include:-
• Increase the level of security along the supply chain without impeding the free flow of trade. ‘End-to-end’ security certificates should be considered taking into account existing schemes.
• Joint Security Assessment covering all modes of transport.
• Integrate potential effects of terrorist and criminal attacks in the preparation of mobility continuity plans
• Pursue international cooperation in the fight against terrorism and other criminal activities like piracy.
In the priorities for its funding of research and development activities, the European Commission has given "logistics and supply chain security" a special focus in demonstration programmes within the FP7 Framework Programme for R&D. It justifies this approach by stating that the demonstration on logistics and supply chain will tackle one of the central security challenges of the 21st century: the secure and efficient transit of goods around the world. This topic addresses possible attacks on supply chains, trafficking and contraband.
The European Commission has also recognised the need for an international co-ordinated response, and has sought to reach agreements with key trading partners, such as the USA. In a statement released in Washington, on 4 May 2012, Algirdas Šemeta, EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud announced a EU-US agreement to secure the global supply chain, noted that after several years of negotiations, the EU and USA had agreed to mutually recognise each other's "trusted traders". In other words, reliable companies that are security certified under the EU AEO system, and the US C-TPAT system, will enjoy easier, cheaper and more predictable procedures at customs. In addition, greater supply chain security would be facilitated by the EU and USA being able to re-focus resources on where security risks really lie.
A similar agreement has been reached between the European Union and Canada, establishing a legal basis for EU-Canada customs cooperation on matters of supply chain security and risk management, including reinforcing the customs related aspects for securing the logistics chain of international trade while at the same time facilitating legitimate trade.
The intra-EU and external EU trade are following growing patterns, involving different actors of the global supply chains. European and, moreover, international approach are necessary because transport security problem is an issue “without borders” (in respect of the global impact of transport accident) and, very often an issue “about borders” (in respect of the border controls which are necessary in order to prevent possible threats and attacks). With high involvement of EU in the international trade, international approach to this question is also of a high relevance, as in these cases transport security must be insured outside of the EU, before the journey to EU begins.
CORE comprises three US-EU demonstrators (PU, FALACUS and DHL) whose objectives are enhanced international cooperation leading to trade facilitation and cost efficiency. Furthermore, national security policies will be supported by international organizations such as INTERPOL, WCO etc.
4.1.4.2 Expected CORE economic impact
CORE optimises the security of supply chains while at the same time facilitating the global flow of goods across Europe and globally. Europe is one of the major global partners in the world trade transactions, which requires maintenance of highly efficient supply chains. The World Trade Report issued by the World Trade Organization (WTO), includes a review of world trade. This shows that a number of factors combined to produce below average growth in trade and that, as a consequence, world trade growth decelerated sharply.
However, even with the multiple economic shocks that held back economic activity and trade during the year, the volume of world merchandise trade still rose 5.0 per cent, accompanied by global output growth of 2.4 per cent. The total dollar value of world merchandise exports also jumped, 19 per cent to US$ 18.2 trillion
These figures indicate two aspects of international trade that are of relevance for CORE. The first is that, despite adverse factors which have, in the short-term at least, slowed the rate of growth, there is still real growth both in overall economic activity and in international trade. The second is that, for the European Union, continuing and increasing international trade, both trade between European Union member countries and between the EU and the rest of the world, is essential for Europe’s economic recovery. In this respect, it is of paramount importance that the obstacles and barriers to the free movement of goods are minimised, whilst taking account of other concerns such as security.
CORE provides an appropriate combination of harmonised EU and international standards and compliance tools to ensure that EU exports are not disadvantaged by lack of compliance in the international trade environment. It also improves decision support systems to prioritise cargo screening and inspections in order to reduce time delays, cargo hold-up, and increase the probability of finding illicit goods.
The trade and logistics industry is faced with the economic consequences of the international trade compliance framework, corresponding to a cost of 100 billion Euro. A substantial part of that is due to administrative costs, but the majority includes ‘hidden’ downstream logistics costs.
The average annual growth in the value of merchandise trade and commercial services trade between 2005 and 2010 was 8% level, as transportation services reached lower growth rates. To increase the added value services and support their dynamics in Europe, CORE provides a coordination platform for harmonisation of regulations, eliminating barriers and speeding-up the movements of goods in Europe. These initiatives can sustain the competitiveness of Europe and support the achievements of the Europe 2020 Strategy.
CORE also contributes to the minimisation of costs incurred in the events of security threats and possible terrorist attacks. Various attempts have been made to quantify the costs of a recurrence of the attacks by al-Qa`ida on the World Trade Center’s towers and the Pentagon. One such (published in 2005) estimated the costs of an attack on a commercial aircraft as approximately $2.5 billion per day, including losses to businesses and leisure passengers, reduced airlines and associated spending, losses to the whole economy (Balvanyos T., L. Lave “The economic implications of terrorist attack on commercial aviation in the USA”, 2005). Another study, on the Cost-Benefit Analysis of Advanced Imaging Technology Full Body Scanners for Airline Passenger Security Screening, included calculations of the loss of an aircraft and follow-on economic costs and social disruption. It cited a 2007 RAND study which had concluded that the loss of an airliner with 300 passengers by a shoulder fired missile, a shutdown of U.S. airspace for a week, and 15% drop in air travel in the 6 months following the attack would cause an economic loss of more than $15 billion (Chow et al. 2005). Another study, again assuming an attack using shoulder fired missiles also assumed a seven day shutdown, but a two-year period of recovery (Gordon et al. 2007). Losses were summed across airline, ground transportation, accommodation, food, gifts/shopping and amusement sectors to derive loss estimates of $214-$420 billion.
At the same time, the costs of the many initiatives that have been undertaken to enhance transport security have themselves been questioned. For example, in November 2011, the Washington Post reported67F67F67F67Fthat two members of Congress had presented a harshly critical report on the performance of the Transportation Security Administration and had claimed that, despite a $56 billion federal investment in airline security, flying was no safer than it was before the Sept. 11, 2001, attacks.
To prevent such huge losses to the European economy, CORE will coordinate high quality research on supply chain security in order to optimise the efforts of different projects and governmental schemes to provide security tools.
Some of the most obvious direct impacts of secure transport & logistics are related to cargo theft, image & brand recognition and exposure to counterfeiting. As mentioned above, cargo theft from lorries in the EU is estimated by TAPA to cost over €8 billion per year; The cost of counterfeiting is also relevant for physical supply chain security. An EU study, conducted by TERA Consultants defines Europe’s creative industries as “core” and “noncore.” Core creative industries include the music, film, television, software, publishing and advertising industries. Noncore creative industries are suppliers to and customers of the core creative industries. Noncore industries include those that manufacture or sell hardware, such as televisions or music-playing devices, as well as ancillary industries such as transportation. In 2008 approximately 8.5 million people were employed in the core industries and 14 million in the noncore. The study estimates that €10 billion ($13.6 billion) and more than 185,000 jobs were lost to counterfeiting and piracy in the music, movie, TV, and software industries in the EU in 2008.
Although CORE will not directly address the activities of counterfeiting and piracy, it will enhance the effectiveness of security checks in supply chains, and so help in combatting this illegal activity, which is a significant problem for businesses, as shown by the fact that, in 2008, EU customs officials intercepted more than 178 million counterfeited or pirated articles - compared with 79 million articles in 2007.
Increased efficiency and flexibility is a constant requirement of any supply chain, and in recent years resilience has become equally as important, particularly for extended supply chains (or supply networks as they should really be termed) which have become ever more complex through the drive towards globalisation. Supply chain efficiency and resilience optimisation will be one of the key attractions of the CORE solutions to shippers, manufacturers, logistics providers and end customers. A collateral benefit of the CORE platform will be the availability of real-time tracking data (captured for security purposes but of great use for planning and optimisation) which will feed into the CORE LARG+O modules to enable real-time scheduling and optimisation of the supply chain.
Implementations of real-time optimisation systems typically deliver around 10% of savings in terms of costs (as has already been shown in the reference eFreight project). For a single major shipper or organisation this amounts to millions of euros per annum, while for the European (and US) economies as a whole, the figure runs into many billions.
4.1.4.3 Impact on policy and standardisation
CORE had a multifaceted mandate: it combined fundamental research and development activities, complex modelling challenges, ambitious, large-scale demonstrator/living lab initiatives and ambitious timelines. This presented certain challenges in developing standards and policy strategies, since the nature of the project exposed the inherent heterogeneity of the standards and policies in the global supply chains. Despite – or perhaps because of – this challenge, the project was able to make contributions to several standards and policy initiatives. As mentioned in previous sections, it is likely that the impact of the project on standards and policies will grow through the different follow-up activities.
The wide variety of activities and outputs of the CORE project provide a fertile foundation for future supply chain and standards and policy activities. Thus, the following examples should be considered non-exhaustive, presenting confirmed activities that are known to the project consortium at the close of the project.
The follow-up activities related to DATEX II are expected to commence in the second half of 2018. The follow-up activity include:
• “The above points will be detailed in technical annexes of the MoU, they need to be ready by June 2018 in order to be annexed to the MoU (that has to be finalised by the end of 2018). UNECE UML/XML/XSD (with the enhancements proposed by CORE WP16), which will be included in one of the MoU’s annexes, is one of the key outcomes of this demonstrator. Additionally, as detailed in section 6.4 of this document, France’s and Italy’s Ministry of Transport, representing the governmental users of CORE WP16 demonstrator, expressed the interest of formally integrating it in DATEX II”
• TNO will continue to support the activities of DTLF, ensuring the visibility of CORE outputs
• CBRA will participate in UNECE open forums related to the improvement of Recommendation 33 to ensure that the knowledge generated in the context of the CORE project is fully incorporated in the update of the Recommendation and Guidelines on establishing a Single Window (Recommendation 33)
• Supply-chain visibility (see section 3.3 above)
• The “Innovation network for Customs professionals” mentioned in the Deliverable D23.2 will be launched in the second half of 2018 (with the project name PEN-CP).
List of Websites:
The CORE project website can be found at the following address and is regularly updated with news items and downloadable content.
www.coreproject.eu
The project coordinator is EUROPEAN COUNCIL OF TRANSPORT USERS. Contact details below.
Project Coordinator: Mr. Nik Delmeire
Bvd REYERS, 80
B-1030 BRUSSELS
BELGIUM
Email: info@europeanshippers.eu
