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Tell Me How: Speedy Delivery, Lower Costs When Ports Go Digital – So What’s Stopping Them?

View all episodes on our Tell Me How: The Infrastructure Podcast Series homepage

In this episode, we discuss the digitalization of maritime shipping focusing on the benefits in terms of faster and better service, the regulatory changes needed to advance digitalization, the types of jobs that would be created and importantly, the need for good cybersecurity measures.

This podcast series is produced by Fernando Di Laudo and Jonathan Davidar. 

Listen to this episode on your favorite platforms: Amazon MusicApple PodcastsGoogle PodcastsPodbean, and Spotify


Roumeen Islam: This is the World Bank’s infrastructure podcast. Following on from our last episode, today, we continue looking at shipping, and our focus will be on digitalization. I’m sure you’re all familiar with the Panama Canal. The canal spans 82 kilometers, an engineering marvel, and it took 10 years to build. It allows 14,000 ships a year to cross from the Atlantic, the Pacific Ocean, saving huge distances and untold weeks at sea.

Of course, each vessel also pays a hefty toll, a $50,000. In 2019, the Panama Canal and Maritime Authorities decided to upgrade to their new maritime single window, which relies on digitalization, and at one stroke removed about 300,000 pieces of paper and saved over 3000-man hours every year. That’s a lot of savings, and in the pandemic, digitalization has proved really important.

The more digitalization of ports and shipping can help reduce queues of ships, waiting to dock and unload across major ports faster we will get the goods we are waiting for. Let us find out how countries should approach this change.

Roumeen Islam: Good morning and welcome. I am Roumeen Islam, host of Tell Me How. And today my guest is Martin Humphreys, expert on issues of transport, connectivity, and regional integration, specifically on the maritime sector. Martin will be speaking about how digitalization is transforming ports and the shipping industry. Welcome, Martin.

Martin Humphreys: Hi, Roumeen. Thank you very much, indeed. It’s a pleasure to be here.

Roumeen Islam: Lovely to have you. Martin, could we start by getting an idea of why maritime transport is so important to the world’s economies and to economic development in our client countries?

Martin Humphreys: Yes. By all means let’s start with maybe the larger figures. It’s fair to say that I think four-fifths of global merchandise trade is now carried by the maritime sector. It’s been growing approximately 3 percent a year since 1970 and amounted in 2019 to about 11 billion tons. It’s projected to continue to grow. And although the pandemic has flattened the trend a little bit, the expectation is that it’s going to be close to doubling by 2050. In terms of how it affects our daily lives, one of the sorts of anecdotal comments that people make about the maritime sector is that the maritime sector carries 90 percent of everything. The clothes that you wear, the shoes that you wear, the food that you eat, the furniture you sit on, it’s usually traveled by container ship from somewhere to somewhere before it comes to your door.

And increasingly, as we’ve seen over the last 12 months, whenever you have friction within the maritime sector, it translates very quickly into shortages on the shelves. At the most serious end, that’s food insecurity and increased food prices in our client countries. At the more humorous end, one of the concomitance or outcomes from the Ever Given blockage of the Suez Canal was the risk that you might run out of toilet paper because China makes 25 percent of the world’s toilet paper. And apparently there were a number of large consignments held up at the entrance to the Suez Canal on the way to you. I was just going to add for our client countries, particularly, the maritime sector is a crucial avenue for their international trade, and the relationship between the maritime sector and the cost of that trade, whilst it isn’t entirely clear, there has been an awful lot of work to indicate that a reduction or an improvement in the efficiency of the maritime gateway will have a direct impact on the cost of the international trade and obviously GDP imports and exports, incomes, and prices within the countries. Let me pause there.

Roumeen Islam: Yes, thank you. I was going to say that it wasn’t just a shortage of toilet paper that was worrying us. There were all kinds of shortages. You mentioned food. There were medicines, protective equipment, all sorts of things that depend on these ships getting to the ports, and the goods, getting from there to us. And in terms of what you just said, transport costs have indeed been a very important factor in determining trade flows historically. So, as it’s so important to trade, both internal and external, I assume, there’ve been substantial innovations in technology, both for ships and for ports — they carry much more cargo. And so, I assume you also require constant improvement of the physical infrastructure, is that right?

Martin Humphreys: Yeah, that’s absolutely right. Probably the biggest change in the last 70 years has been the introduction of, what’s known in the industry as the standardized unit load, but outside the industry, it’s the container. This was introduced in the mid-1950s by an American inventor, an entrepreneur by the name of Malcolm McLean. And prior to their introduction, ports historically had been noisy, dirty, extremely labor intensive. And because of the piece rate nature of the work, had led to considerable poverty and deprivation. Ultimately, it led to unionization and the protection of the workers, and that engendered a new set of problems.

The port was usually at that time in the heart of the city. So, every major city of commerce would have, at its heart, a bustling network of narrow streets and vessels and longshoremen and stevedores carrying loads back and forth to the vessels, but also carrying loads individually, sometimes from the port to retail and wholesale establishments. The introduction of the container actually revolutionized all that and realized an emphasis on cost reduction that is ongoing. It allowed, for the first time, a very smooth interchange with other modes.

And just to give you an indication, I think in 1956, in New York, it took approximately 2.5-man hours of work to move one ton. And that every time you lifted it, so from the vessel to the pallets, it would be 2.5-man hours per ton. And then of course, if we’re talking about 10 tons, it’s 25-man hours. And the pallet gets lifted out and put on the quay, and it’s another 25-man hours. And now, that’s done in two or three minutes in one container.

Roumeen Islam: So, containers are much easier to pack than sacks and they can also be lifted by cranes now. So, you don’t need those same laborers?

Martin Humphreys: Absolutely. Yes, it can be done in three minutes. The same work that had taken half a day and 50 men is now lifted out in one container, put on a truck, and driven out of the port. And it actually led to the movement of ports from the city centers to large open areas with good rail and road access.

Roumeen Islam: And the shipping industry also became much more capital-intensive. So, are we seeing that trend continue? Everything is becoming more capital intensive, is that right?

Martin Humphreys: Absolutely. The first vessels or the first container vessels, when they were introduced, carried about 500 containers, and then slowly, and that’s in the early sixties. Twenty years ago, the largest vessels were carrying 6-to-8,000 containers or equivalent containers. We call them 20-foot equivalent units in the industry. Now the largest vessels carry 24,000 containers and are the length of four football pitches and almost one football pitch across. And to access and egress the main ports, that requires the ports to expand both the depth of water that’s available, the strength of the quay, the size of the crane, and the access infrastructure in order to shift those containers in and out of the port quickly. That places a considerable need for public investment in parallel to the investment in the vessel. And there is obviously a difficult calculation. Although it reduces the cost of international trade, does it reduce it enough to justify the investment in public investment terms that will essentially increase or reduce the cost margins for a private shipping line? And that calculus is not always done clearly by the port authority and in our client countries obviously that’s some way that we help.

Roumeen Islam: Is there an estimate of how much a country might gain from investing in its ports?

Martin Humphreys: At the level of the port? Yes. I think it’s much more difficult to come up, partly because the industry is notoriously secretive, on the rates of charges and how they vary from the premium routes, say between China and Europe, or China and the west coast in America. So those routes that essentially serve the smaller ports in our client countries, despite the fact that it’s a network industry, unlike a public mail service, which obviously is a public good and charges the same rate to deliver a first-class letter anywhere– that isn’t true of the shipping industry and our client countries are disadvantaged by distance and by volume. But what that disadvantage is, the lines are very cagey about revealing. Let’s put it like that.

Roumeen Islam: Right, let us go back to digitalization. Can you explain what that term encompasses here, and why is this so critical for the sector? What are the risks? And actually, could you also speak about the risks for our countries if they don’t move on this digitalization path?

Martin Humphreys: Let me just paint you the historical picture. And I think that provides a nice background if I may. When the vessel comes into a port, historically, the captain would have been required as soon as the gang plank is dropped. He will be met by a number of representatives from public agencies within the country and the port in which he’s calling. And he will declare what he’s carrying on the vessel. He will declare the crew that he has. He will declare whether they’re well or not. He will declare whether there’s any personal effects that the crew is carrying. He will declare whether there’s any hazardous materials. And he will also declare what he’s proposing to load and unload at that port. And all that was done by paper.

He would also be met by the agent of the importer, who for a range of different consignments potentially, would also have a piece of paper indicating what they were expecting to receive. And this took quite a long period of time. It could take days. And then, the vessel with the men employed themselves would then be berthed for anything up to a week, whilst that cargo was unloaded by the day workers, the longshoreman or the stevedores.

Digitalization, essentially in its simplest form, means the conversion of all that text and the paper-based transactions into an electronic format. This obviously brings significant savings. It can be done in advance. It reduces the amount of time required at the berth before you can start unloading, to potentially nothing. It also, I think, removes the possibility of error. It removes the need for all those representatives to be there when the gangplank is dropped, and it can be done in advance. Unfortunately, despite the fact that it’s mandatory, it isn’t something that’s done in all ports yet. The international maritime organization standardized the format of the transfer of information and it’s now mandatory that all ports have to be able to receive this information in electronic format from ships, by EDI, electronic data interchange. And that’s basically the first step in the digital roadmap.

Roumeen Islam: Sorry, you’ve already saved several days with that first step. And we know from just reading the newspapers, and how much it costs for the Ever Given to be stuck, that each day cost a lot to a number of different agents. Is that right?

Martin Humphreys: Let’s just look at it from the vessel itself. If we’re talking about a container ship, not a particularly large one here, let’s talk about one that carries maybe 5,000 containers, that’s $50,000 a day, every day, it’s sitting idle. Multiply that by the number of calls the vessels will make in a port. And if you have each vessel waiting two and a half days, you’re very quickly accumulating waiting time costs of up to quarter of a million dollars.

And we did a study in Tanzania in 2013, where we looked at the cost implications of ships waiting at Anchorage. And there, the annual estimate was $252 million, which is similar to what we see now, actually in some of the South African ports.

Roumeen Islam: Okay, these are large numbers. So, you mentioned this one aspect of efficiency improving with digitalization, the paperwork and the processes that you have to do, they’re done fast. Now, what about other advantages? Does it reduce corruption, rent seeking, because you have fewer people, fewer bureaucrats to deal with or agents?

Martin Humphreys: Let’s be kind and say in its purest form, it removes the possibility of errors in the duplicate papers. It certainly reduces the time; it reduces the risks associated with individuals not being able to make a particular time or appointment. The ship’s agent, if he’s not there, his consignment would not be unloaded. If the customs officer doesn’t get there, then, at a particular point in time, there would be a delay until the captain was cleared to start unloading. And at the time of, within a pandemic, moving over to an electronic system obviously removes all the risks associated with a breakdown, of availability of key staff at the quay. So, it improves the resilience of the system as well by moving over to a paper-based system.

Roumeen Islam: Could you explain a bit more what you mean by resilience? We’ve mentioned the pandemic, but are there other areas where it might improve other situations and where it might improve resilience?

Martin Humphreys: If you think about the number of paper-based transactions, obviously the government’s implications are removed by moving over to an electronic data interchange system or digitalization, a digital system. Moving over to a digital system, a digitalized system, assuming that you have consistent power supply, and assuming that you have understanding on the part of the operators, you essentially get a stronger system that is more efficient in terms of cost and time but is also more robust to interference.

The pandemic gives us an excellent example about how the resilience of a system can be tested by the unexplained or unexpected. Another unfortunate, recent tragedy was the explosion in Beirut port on August the fourth. Now, at the time, that halted all the operations in the port, because the container terminal was a little bit further away. They had an electronic system in place. They were able to get back up and running in some form within days.

Roumeen Islam: I see. And I assume then, you hedge your gains, any kind of risk, it could be weather related ones as well. You’re better able to manage.

Martin Humphreys: As long as your power supply doesn’t go down because of the cyclone or the hurricane, yes.

Roumeen Islam: That’s a very important point, indeed. So, I think our listeners might be interested in hearing about all the port and ship infrastructure that’s involved in delivering goods. Could you describe for us a logistical chain for some goods that we use every day?

Martin Humphreys: Yes, by all means. I jokingly mentioned earlier about the maritime sector carrying 90 percent of everything, but the illustration that possibly comes to mind most quickly, and this displays possibly my preferences in the evening when I’m relaxing after work, is let’s talk about a bottle of Pinotage, red wine from South Africa.

Here, the only thing that comes from South Africa to a certain extent is the wine itself. And the bottle: usually sourced in China. The corks, I think I’m writing saying 80 percent of cork production around the world comes from Southern Spain, Portugal and part of North Africa; and are dominated by Portuguese companies, so undoubtedly, the corks will come from there. The eco labeling that goes on most wines now, particularly those that are being sold at a relative premium comes from specialist producers in the United States. So, they are all taken by container, down to South Africa, and they’re taken out of the port of Durban up to Stellenbosch.

The vineyard loads its wine into the bottle, puts the American label on it, and the Portuguese cork, and sends it back in the container at the Stellenbosch. It comes back over from Stellenbosch, to possibly via Northern Europe, to Savannah, Baltimore, and then goes from Baltimore onto a train or truck to the wholesaler where it’s unloaded. And then from there, will go on another smaller distribution vehicle to Wegman’s or Whole Foods, and eventually, you or I will buy it one evening and enjoy a nice glass of South African Pinotage.

Roumeen Islam: That’s amazing. I did not realize that so many ships and ports were involved in that bottle of wine getting to me. So, when I see all these ships, they’re more than ships that pass in the night. They’re actively collectively doing something.

Martin Humphreys: Yes, absolutely. And there’s another famous example that economists often quote as an illustration of how global trade takes place. And that’s, I think there was a publication a few years ago that was well known, The Travels of a T-shirt in a Global Economy, essentially, it’s the same thing. The cotton is grown in Texas, it goes to China to be processed, comes back to the United States to have the graphic printed on it. And then it’s distributed elsewhere in the world from the United States.

Roumeen Islam: Very interesting. So, let’s go to some of the obstacles that there may be in a port or a country to commence its digitalization journey. Is there a logical sequence? How should we think about this?

Martin Humphreys: There is, and the complexity gets more difficult as you travel down the roadmap. We talked a little bit earlier about the mandatory requirements. And it’s possible for those mandatory requirements to be met to a certain extent by the port authority and the stakeholders within the port themselves. So, the EDI interchanges between the vessel and the port authority and the other public agencies, if it goes through one channel, if you like, then it’s known as maritime, single window. When you start linking that to the other clearance agencies via a port community system, then you need to ensure that all the agencies understand how it fits together. You need to ensure that there is trust and willingness to share certain amounts of information, but also no suspicion that information can be accessed by third parties. And there needs to be a willingness to work with the private sector because they’re a key part of that.

Now, often in some of our countries, there is a certain silo mentality between the port authority and the customs agency for instance. Or, between the customs agency and the feeder sanitary agency that precludes, based usually, on a limited understanding of how to work together, that precludes the introduction of the more appropriate and complex technologies as we go forward. So, you need political commitment, usually at the highest level to be above ministry level, to ensure that you have a clear commitment and a clear understanding on the parts of all, that this is the journey you want to embark on. And then, you need to ensure that the people within the different agencies have the capacity to implement, but also to understand what the technology is telling them, and what the technology could potentially allow them to do.

And as one example, the movement of ivory through the ports of East Africa is a known problem. And the international maritime organization requires all loaded containers to be scanned before they’re placed on the vessel. So many of the port authorities have been investing in scanners, but the problem often is that the scanner operator has no capacity to interpret the images on the scanners to look for the ivory that’s in the container, potentially hidden away in, you know, the commodity groups. So there needs to be quite a lot of capacity building in terms of the human capital. And then most importantly, you need a legal, regulatory, and policy framework at the national level, across the different agencies, across the different sectors, that would facilitate the introduction of an optimal system. And that’s quite a challenge.

Roumeen Islam: So, this system would ensure that data are shared across the different units that need the data. That’s one of the important aspects of the legal and regulatory framework?

Martin Humphreys: What if you go back to my earlier example about the group that’s meeting the vessel at the quay side? And now, potentially with a digital system that is appropriate, the customs officer wouldn’t need to leave his office. He can log into the system. He knows in advance what’s coming, and what’s going to be unloaded off that vessel. He can check that the agent has paid the duty and that he can push the button to say that consignment is cleared. Of course, that precludes him, asking the agent for a small gratuity in order to provide that clearance, which is a benefit, but potentially it’s much quicker if he understands that. To get to that point, you need to have the customs agency and the port authority working collaboratively to ensure that the system will allow access to both, but the communication between the vessel and the port authority, and the vessel and the customs.

Yes. Undoubtedly, that data has to be transmitted in a format that will be recognized by the port authority and the customs clearance body. And it has to be done to a standard that would allow that vessel to make that same communication in every port, to every customs authority on every juncture in its journey basically, every point of call on its route.

Roumeen Islam: I want to go back to something you mentioned about capacity development and human capital. So yes, obviously there will be some training needed, some capacity development needed both managerial and technical levels, but then there’ll also be displaced workers, I assume, because as you get more mechanized and more digitalized, I assume that there will be some unemployment or am I incorrect?

Martin Humphreys: No, you’re absolutely right that this is going to be a structural change in the industry. And I don’t think in the same way that the introduction of the standardized unit loads, the container, was a structural change in the industry. Prior to that, the ports would hire many thousands of day workers: stevedores, longshoreman. And obviously with container ships and container vessels, the numbers dropped dramatically. Now, you have one crane operator who can do the work of 500 men in an hour, basically. Digitalization is going to also lead to some structural changes, particularly when you move further down the path towards greater autonomy.

Rather than having a crane operator, now, the crane will be operating automatically rather than having somebody driving a straddle carrier or reach stacker, these are the mobile vehicles that would lift a container for the stacking; that could all be done by autonomous vehicles within the port area, because the port area is secure.

So, the educational requirements, if you like, or the skill level of the port worker on average will go up markedly and yes, the number of port workers required will go down. I wouldn’t say in our countries that you know, our client countries with certain exceptions, that we’re there yet. I think at this end of the spectrum, we’re starting to see this in your Antwerp, your Rotterdam, your Shanghai, your Singapore. I think probably over the next 10 or 15 years, we’ll see this in Dar-es-Salaam, Cotonou, and in places like this.

Roumeen Islam: Yes. I think it’s very important to be cognizant that these structural changes could have impacts on the human level as well in the labor market as well. And to understand that if countries also undertake additional investments in efficiency and structural change, then it creates opportunities for labor to be employed elsewhere. But this is how it is with every structural transformation. Now, you mentioned standardization of documents earlier on, and I guess this is an issue that’s related to interoperability of the various systems used by ships and ports.

Martin Humphreys: The example we can draw before we move on to the digitalization of the text and the paper-based transactions, is one of the reasons that the container has been so successful, is it’s actually standardized. With certain exceptions: we have 20-foot containers, we have 40-foot containers. We have some that are high cubes – a little bit taller, some refrigerated, but the vast majority fall into the two categories of being 20 foot or 60, can be loaded on a ship in one place and unloaded another. We know exactly the type of crane we need to load it. And then it can be lifted onto a lorry which needs no changes or train, and it can go on to its destination. And that container can be loaded or unloaded at any port. So, the technology is the same everywhere. It’s exactly the same with the digitalization aspects. What you need is to ensure that the data that is transmitted by the vessel is done to a similar standard in every port so that every port can receive exactly the same data, the essential data that it needs, and act on it.

But the systems that receive the data don’t need to be the same, but the data needs to be conveyed in a manner that can be responded to by each and every port authority. One of the aspects related to this is the software on the landside, of course. You have options between proprietary software and you have options with open-source software.

Now, some ports have chosen to go down the papaya tree route partly because earlier there was little opportunity to develop open-source software. I think for many of our client countries, particularly the small island developing states, some of the smaller countries, those are pretty expensive options.

The port authority is usually one of the most profitable parastatals. Some form of modular open-source system will probably suit them better. As long as that system can receive exactly the same data.

Roumeen Islam: Could you talk a bit about increasing cyber security risks as we go digital?

Martin Humphreys: Yes. And we may, as we may have, you may have seen on the news relatively recently, we have one of the largest container shipping lines in the world, CMA CGM, a French line based in Paris, it’s entire online booking system went down for five days.

Roumeen Islam: How much did that cost it?

Martin Humphreys: They, as a private company, they’re not going to reveal it, but it would have been a considerable amount of money, it’s undoubtedly, as with anything. As you move down the digital path, whether it’s Wi-Fi in your home, whether it’s your home security system, there’s a risk, and there’s a risk that system could be breached. And what we’re seeing is certainly a significant increase now in the number of cyberattacks. Between February and May of this year, one estimate was a 400 percent increase. In 2017, Maersk, which is one of the biggest container lines was subject to an aggressive cyberattack that involved a Trojan and asked for ransom. And at the time their answer wasn’t paid, but it certainly led to a significant awakening on their part, of the potential risks. And just to give you an indication of the scale of potential intrusions here at the port of Los Angeles, which I think it’s probably fair to say, is one of the leading ports within the world in terms of protecting itself from cyber security risks, has about 40,000 cyber incidents a month.

Roumeen Islam: Oh, goodness. That’s a huge amount. A huge number. Yes. I see. I guess the advice to our clients as they go toward being increasingly digitalized, at the same time, it’s really important to think about these cybersecurity risks. Now, can you very briefly define what a smart port is? I’ve heard this term before, but I’m not sure exactly what it means.

Martin Humphreys: I wouldn’t say that there’s a consistent definition. You can look, depending on where you look, you’ll find a slight variation. It’s the ultimate point in the roadmap that we have laid out, together with the international association of ports and harbors, in the digitalization roadmap. And, essentially, we’re defining it as a sort of automated port that uses data analytics to make the right business decisions and to run their operations effectively, one would expect a smart port possibly to be run along the manner that I described earlier. So, they will use artificial intelligence. They would use autonomous vehicles. All of the equipment within the port will be connected to the internet things. They will use fifth generation, 5G technology to communicate. And potentially, they will have a digital twin, where they could manage the port digitally through an online twin. When you see it, it is terribly impressive, but I’ve only actually seen at the moment, I’m aware of, one port that has a digital twin, and that’s the Port of Antwerp.

Roumeen Islam: What a concept, interesting concept. So, thank you, Martin, that was really quite instructive. And I’m just wondering whether you would like to add anything?

Martin Humphreys: I think the only thing I would add right at the end is, and we touched on this before, it’s that the iconic figure of the dock worker for those of us who like old movies was, the sort of colorful, muscular Marlon Brando figuring on the waterfront. And the 21st century dock worker is going to be very different. And I don’t think the awareness of that or the need for that has sunk in some of the port authorities in our client countries yet, where he’s more likely to have a PhD than he is to have large biceps.

Roumeen Islam: This is a very important point that we’re ending on. Actually, I think perhaps you want to mention the publication that you’ve recently worked.

Martin Humphreys: Roumeen, thank you very much for the reminder. Yes, I do apologize. The publication I referred to in my comments throughout was: Accelerating Digitalization, Critical Actions to Strengthen the Resilience of the Maritime Supply Chain. This was the first in the new mobility and transport connectivity series, which we prepared jointly with the International Association of Ports and Harbors and was released in December last year. And we’re now following up, I think with a subsequent publication specifically on the cyber security guidelines for port authorities in our countries. Certainly, the former is available online, and the latter will be when it’s released.

Roumeen Islam: Thank you very much. And thank you for that information.

Martin Humphreys: Thank you very much for me. It’s a pleasure.

Roumeen Islam: So, listeners, what did we learn today? Well, firstly, we learned that countries could gain substantially by increasing the efficiency of their ports and transparency of their services through digitalization.

Secondly, such a transformation will require a number of regulatory changes and better coordination between different public authorities, such as the customs and port authorities.

Thirdly, digitalization will go hand-in-hand with a lower demand for unskilled workers, and a higher one for skilled, educated workers, as of other technological changes.

Finally, it’s really important that proper cyber security measures are adopted as countries digitalize. Losses from successful cyber-attacks can be large. That’s all for now. Thank you, until next time.

You can find more information about the podcast on www.worldbank.org/tell-me-how. If you’ve got questions or comments, we’d love to hear from you. You can also find us on all popular podcasting platforms. This podcast was released in September 2021.

Don’t forget to subscribe and thanks for listening.

See you in two weeks.

View all episodes on our Tell Me How: The Infrastructure Podcast Series homepage

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Global remittances in particular may see a complete transformation through the use of technology. Cross-border remittances account for $600bn in value and often exceed official developmental aid figures. The average global cost to send these funds in the form of cash is 6.8 percent, while a fully digital transaction drops the cost to 3.3 percent and reduces issues of liquidity.

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At the WBG, we support digital transformation in our client countries by:

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  • Boosting the capacity of governments to harness fintech, data, and expertise while responding proactively to changing regulatory and supervisory requirements.
  • Brokering collaboration between different players- both public and private- in the financial ecosystem to bring about symbiotic positive change.

One specific area where the WBG has been focusing its efforts is on the gender lens and the plight of micro, small, and medium enterprises (MSMEs). For instance, in India and in Ethiopia we are supporting women-led MSMEs – mostly vendors, seamstresses or marginal farmers – in using digital platforms. Working closely with the governments and fintechs on the ground, we are developing an application to support digital literacy while delivering targeted business insights and advice. Moreover, this data along with other alternative data such as repayment of store credit and collaborative behaviors will contribute to a credit score providing a route for access to finance to those without formal credit histories. The use of alternative data is gaining popularity in a number of other countries from Chile to Sierra Leone where  innovative solutions harness the value of transaction data from ecommerce and payment platforms, mobile phones, or even social networks as alternative sources of information to assess creditworthiness. This is financial empowerment in action—especially when combined with measures to protect consumers and financial education to prevent over-indebtedness.

Another important technology that is being tested for its role in developing markets and inclusion is distributed ledger technology (DLT). The WBG is working with the government of Haiti to export their high quality mangoes and avocados using DLT. This supports the supply chain and maintains symmetry of information hence de-risking the investment of third parties that conduct the quality control while allowing the farmer to keep ownership until the final sale to the consumer.

Financial inclusion, however, is not only a goal in itself, but also a means to an end as an enabler and accelerator of economic growth.  It has a multiplier effect, contributes to the economic development and stability of a country, and aids the achievement of the UN Sustainable Development Goals. Through our work, we aim to give the 1.7 billion remaining unbanked —mostly poor, mostly women—access to basic financial services, and we are using fintech to help us. We take a minute to pause and to learn from our experiences, build on the progress made so far, and look into the future—to the next 20 years—as our journey continues.

This article was first published in the Fintech times- Edition 39’.

In a world where access to financial services and high-speed broadband internet is not universal or affordable, fintech can democratize access to finance and the world can move closer to...


In many countries, statistics show a strong uptake of online sales and a big increase in the market share of online as opposed to offline retail since the start of the pandemic. In COVID-19 and e-commerce: a global review, the United Nations Conference on Trade and Development reported that Latin America’s online marketplace Mercado Libre, for example, sold twice as many items per day in the second quarter of 2020 as during the same period in the previous year; African e-commerce platform Jumia reported a 50% jump in transactions during the first six months of 2020.

The three members of the Global Express Association (DHL, FedEx and UPS) have also seen a massive increase in the volumes of non-document shipments they carry.  During the first wave of the pandemic – February to June 2020 – their volumes grew by 50%. Part of this increase was medical equipment (PPEs, masks, etc.), but a substantial proportion was made up of other types of items.

Consumers went online – many millions of them for the first time – because they could not go out to the shop round the corner. Some observers believe that many will return to the shops when they re-open, but many will continue to shop online. In other words, the volumes of shipments of goods purchased online will stay strong during the recovery from the pandemic.

It is more difficult to find data on international online sales, but here as well, volumes are reported to be increasing. When the COVID-19 outbreak became global early in 2020, initial uncertainty and transport disruption caused a dip in international online sales, but according to cross-border e-commerce solution provider eShopWorld, they rebounded in April 2020 and then rose to unprecedented levels throughout the course of 2020.

It has in fact been pointed out that facilitating cross-border e-commerce could help with the economic recovery, provided there is due emphasis on the need to ensure that the smallest traders can avail themselves of the export opportunities this brings.

Many countries have established thresholds below which no duties and taxes are levied and only minimal information is required to be provided when a consignment enters a country. While the value of this threshold varies a lot, in most countries the exponential increase in the sale of physical products online translates into an increasing number of “low-value” shipments crossing a border. Controlling this particular flow of goods to prevent the movement of prohibited and restricted goods, and identify consignments which have been split and/or undervalued to evade duties and taxes, presents a number of challenges.

The pressing issue is how to manage this time-sensitive flow of goods without placing a strain on control operations and on the capacity of logistics service providers, and without creating complex procedures and a heavy workload for small businesses and individuals who have limited capacity to meet complex trade regulations.


To address this issue, WCO Members have been working through a multi-stakeholder Working Group on E-Commerce (WGEC)[1] on the development of international norms and guidance material, which have been brought together in an E-Commerce Package including not only a Framework of Standards on cross-border e-commerce (E-Commerce FoS), but also many tools to support its implementation.

The Framework provides 15 baseline global standards with a focus on the exchange of advance electronic data (AED) for effective risk management. It also encourages the use of the Authorized Economic Operator (AEO) concept, non-intrusive inspection (NII) equipment, data analytics, and other cutting-edge technologies to support safe, secure and sustainable cross-border e-commerce.

Now is the time for implementation, and a broad capacity building action plan which will guide the WCO Secretariat’s activities in the coming months has recently been added to the Package, along with key performance indicators (KPIs) which will make it possible to monitor the implementation of the WCO standards and identify capacity building needs.

In January 2021, the Secretariat started rolling out regional workshops to ensure that all WCO Members had a good knowledge of the Package; these workshops included representatives of the Universal Postal Union (UPU), the Organisation for Economic Co-operation and Development (OECD), the Global Express Association (GEA) and e-commerce stakeholders.

As a next step, in 2022 national workshops will be planned for administrations that have notified their intention to implement the E-Commerce FoS, completed an assessment using the WCO KPIs and made an official request to the Secretariat. The Secretariat has already accredited 11 Technical and Operational Advisers on E-Commerce so it can respond positively to such requests for assistance.


Areas posing specific challenges were identified during the regional workshops. They include the collection of electronic advance information on e-commerce shipments, the improvement of compliance and data quality, the simplification of duty and tax payment procedures which are often too complex, and the strengthening of risk analysis capacities. The topics discussed included expanding the concept of Authorized Economic Operator (AEO) to include e-commerce stakeholders, the use of advanced technologies, and cooperation with stakeholders such as marketplaces, fulfilment centers and free zones/warehouses.


In the same spirit as the regional workshops, on 28 and 29 June 2021 the Secretariat held its Second Global Conference on Cross-Border E-Commerce, thanks to the financial support of the Customs Cooperation Fund of Japan. Some speakers highlighted the tremendous degree of dynamism and also the variety observed in countries nowadays in the area of cross-border e-commerce approaches, legislation and capacity; for example, the ability to analyse data for risk assessment purposes varies a lot between national agencies and countries. Moreover, while the underlying technology enabling data exchange may be similar in terms of its fundamental logic, the requirements differ from one administration to another.

One of the objectives of the workshops and the Conferences has been to enable Customs to share processes and procedures, as well as to better understand the e-commerce “ecosystem” and its business models. Other forums also exist at the national level, with more and more Customs administrations creating working groups with e-commerce stakeholders as they review their legal and operational frameworks. At a higher level, companies have started building their own cooperation frameworks with some governments in order to explore new policies and rules in support of trade.


For the “Dossier” in this Edition, we have invited several administrations to share information on the initiatives they are taking to enhance their capacity to control the compliance of “low value” shipments.

We start with an article by Argentina Customs, explaining how the Administration is reviewing its legal, policy and operational framework to ensure it is aligned with the WCO E-Commerce FoS and other WCO guidance material. The article does not describe the procedures in place to process the flows of goods generated by online sales in Argentina, but interested readers can consult the WCO Compendium of Case Studies on E-Commerce to which Argentina Customs contributed. Instead, the article focuses on the various steps of the review process.

This is followed by an article by United States Customs and Border Protection about two test programmes it recently conducted to assess the possibility of collecting certain advance data related to shipments potentially eligible for release under its de minimis entry process, and to implement a new entry process for such shipments.

Next, the use of three types of technology to enhance targeting capacities is described in an article by the Korea Customs Service. These technologies are blockchain, artificial intelligence and big data. The Administration also shares some interesting lessons, highlighting the fact that successful technology-focused projects aim to find solutions to actual issues faced by operational officers, and that teamwork between ICT and Customs experts is critical.

The last article introduces Peru Customs’ new clearance process for express shipments, as well as the web platform and mobile application it has developed to enable importers to track the status of their shipments and pay duties and taxes at authorized banking institutions. Not only has the new process enabled the Administration to improve its risk management procedures, it has also significantly reduced the time required for the release of goods.

Even if every country’s situation is unique, I believe that it is still important to ensure experiences are shared and initiatives explained. More and more Customs administrations are looking at how to review or enhance their legal and operational frameworks in line with WCO standards and guidance tools. I warmly encourage them to contact us should they wish to communicate on their eff

[1] The Working Group comprised representatives from governments, the private sector, international organizations, E-Commerce stakeholders, and academia.

In many countries, statistics show a strong uptake of online sales and a big increase in the market share of online as opposed to offline retail since the start of the pandemic. In COVID-19 and e-commerce:...


The World Bank approved a $150 million grant from the International Development Association (IDA) in support of the Government of Mozambique’s Digital Governance and  Economy Project (EDGE), which focuses on increasing access to civil identification, digital public services and improving digital business opportunities.

“Sixty percent of the Mozambican population lacks official civil identification.This leads to disenfranchisement and leaves large portions of the population, a majority of whom are women, without legal identity, preventing them from accessing schooling, and later in life financial services, pensions, formal jobs, entitlement claims and property transactions,” noted Idah Z. Pswarayi-Riddihough, World Bank Country Director for Mozambique, Madagascar, Comoros, Mauritius and Seychelles.

The EDGE project comprises investment and technical assistance activities, and is structured around four mutually reinforcing components as follows:

  • Component 1 will focus on two critical aspects of digital transformation: institutional capacity and government connectivity. The objectives of this component are to strengthen the government’s capacity to leverage technologies for improved service delivery, while increasing public sector connectivity across the country.
  • Component 2 will facilitate access to legal identification for all citizens, while supporting the development of digital government services. The main beneficiaries of this component will be citizens who lack legal identification, public service users, as well as public and private organizations relying on identity credentials for the provision of services.
  • Component 3 will support the growth of the digital private sector by supporting digital SMEs to take advantage of business opportunities created through digitalization efforts in the public sector. Activities under this component, in collaboration with the private sector, will also seek to reduce the gender gap in the technology sector.
  • Finally, Component 4 will support effective project implementation, and ensure that the necessary coordination and change-management processes are carried out in a timely manner.

“Leveraging technology for service delivery requires putting users first, combined with strong institutional capacity to design, implement, procure and coordinate digital efforts across government. This is one important challenge this project has set out to address to achieve services that are faster, cheaper, and better,” added Tiago Peixoto, Senior Public Sector Specialist and the project’s lead.

“The project will support the development of Mozambique’s digital business ecosystem in order to take advantage of business opportunities that digitalization efforts will create. It will also promote local digital start-ups and SMEs, which have the potential to grow and spur job creation,” concluded Eva Clemente Miranda, Private Sector Specialist and the project’s co-lead.

The project will leverage an existing coordination mechanism within the Ministry of Science and Technology. This project is in line with the country’s priorities outlined in its five-year plan and the World Bank’s partnership framework with Mozambique for FY 2017-22.

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.

The World Bank approved a $150 million grant from the International Development Association (IDA) in support of the Government of Mozambique’s Digital Governance and  Economy Project (EDGE), which focuses on increasing access to civil identification,...


Trade Ministers of the G7 – a group of wealthy nations composed by the United States, Japan, Germany, Britain, France, Italy, and Canada – agreed on principles to govern digital trade. The principles covered the issues of open digital markets; cross border data flows; safeguards for workers, consumers, and businesses; digital trading systems; and fair and inclusive global governance. With regards to data flows, G7 Members expressed concern with growing data localization measures, and reinforced their support to the principle of “data free flow with trust” (DFFT). This principle had been enshrined before in the G20 Osaka Leaders Declaration from 2019. On that occasion, the ‘Osaka Track’ was launched, a process that aims to intensify efforts on international rule-making on the digital economy, especially on data flows and e-commerce. Three G20 members, India, Indonesia and South Africa, opted out of the Osaka Track.

The recently agreed G7 principles expressed indirect support to ongoing negotiations taking place at the WTO’s e-commerce Joint Statement Initiative (JSI), among a subset of the WTO membership. The WTO is mentioned as the organization where ‘common rules for digital trade should be agreed and upheld’. The G7 also expressed support for rendering the WTO Moratorium on Customs Duties on Electronic Transmissions permanent, an issue that will be discussed in the next WTO Ministerial Conference (MC-12), scheduled to take place from 30 November to 3 December in Geneva.

The G7 principles have significant political importance, as they show the will to overcome differences between the US and the EU when it comes to regulating data flows, in particular different approaches to personal data. The principles could serve as a first step towards a common rulebook of digital trade among Members. The G7 also sends a message to third parties, as they express their ‘opposition to digital protectionism and digital authoritarianism’. The principles were called a ‘genuine breakthrough’ by British officials. The UK holds the Presidency of the G7 in 2021.

Trade Ministers of the G7 – a group of wealthy nations composed by the United States, Japan, Germany, Britain, France, Italy, and Canada – agreed on principles to govern digital trade. The...

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