Definition and characteristics
The European ship supply is a unique "just-in-time" business, which encompasses many transport modes in many countries under particular time and financial constraints. Therefore, global services, economies of scale, efficient logistics systems and operations, prompt local service and unrivalled attention to customer needs are all critical elements in the supply of parts and provisions to ships.
The following are key characteristics of European ship supply:
365 days – 24 hours a day - service at any time – day or night
Although there are still ports where loading and unloading may take several days, generally speaking, modern shipping requires only one day, or even hours, in port before putting it to sea again. So, naturally, this makes a severe demand on the efficiency of the ship supplier.
As a result, a ship supplier must be fully prepared to store ships at any time of the day or night.
Ship suppliers work on a 24-hours-a-day, 7-days-a-week basis. Custom offices closed for the weekend or with limited operation hours create an unsustainable situation, where vessels scheduled to leave the port cannot do so as access to the vessels for ship suppliers is blocked due to a closed customs office. The costs for prolonging the stay in the harbour for the ship supplier to reach the vessel on Monday morning can be enormous.
"Just-in-time" business
The ship supply business is characterized by the need to work against time. Ships can only be loaded with supplies during the short period they are in the harbour, so time is of the essence. It also means having to access a ship directly if small individual items need to be brought to the vessel. Therefore, ship chandlers are required to operate a unique "just-in-time" business, encompassing many transport modes in various countries under particular time and financial constraints.
Small amounts of multiple items – mixed consignments
Ship suppliers often need to put together mixed consignments with thousands of different articles in small quantities purchased from numerous sources. Thousands of different articles are traded – from peanuts and sand to big cylinder liners or heavy anchors, plants, Christmas trees etc. Perishable goods play a unique role in this respect. Dairy products, fresh and frozen meat, vegetables and luxury goods, tobacco, and wine and spirits require special physical treatment. In addition, ship suppliers must maintain detailed lists of manufacturers and depots to obtain rare or unusual items at concise notice.
Special customs procedures
"No vessel should have to stay in port for longer than strictly necessary, so efficient customs clearance procedures are essential to our business". Peter de Haas Jr., former Chairman of OCEAN's Working Group on Customs, Excise, Veterinary, VAT, and Taxation (CEVVT).
When ship suppliers deliver supplies to the vessel, many customs procedures (such as import, export, and transit) will apply in addition to other controls, e.g. veterinary inspections.
Especially, export regulations need to recognize the unique environment in which the ship supply sector operates:
Vessels can call different ports whilst in the EU. Therefore, ship suppliers would generally not know if the next stop of the vessel is in the EU. From a ship supply perspective, this is also irrelevant because ship supply, innately of its name, leaves the EU as soon as it has been delivered to a vessel (which is often foreign-owned). It will never re-enter the EU, and goods supplied are consumed exclusively onboard the vessel by machines or crew (hence the name ship supply). Since ship supplies have the vessel as the final destination, there is no country of import. This has practical consequences for how ship supply is cleared from a customs perspective.
Tax and Duty-Free deliveries
Tax and Duty-Free deliveries are a "conditio sine qua non[1]" for international competition between ship suppliers worldwide. In many countries, especially within the European Union, laws and regulations, mainly those governing customs, maritime and veterinary matters, and food and agricultural products, are very complicated. Compliance with these rules and regulations causes high administrative costs for ship supply companies.
The importance of cooperation and flexibility in ship storing
"Storing the ship is teamwork" – This well-known slogan means that ship supply can only be carried out by smooth cooperation between ship suppliers, shipowners, freight forwarders, port authorities, customs, and tax authorities and others. This is essential, as the time to supply a vessel is limited to a few hours. Furthermore, the ship supply business's documentation and administration are very complicated, whether online or electronic. It is, therefore, necessary to have flexibility in applying the regulations to suit the circumstances under which the ship is being supplied, as well as in an electronic customs and administration environment.
Requirements and skills needed for ship supply
A ship supplier must have many skills: he must know the types of materials best suited for the use onboard the ship, as any error could result in a severe loss to the vessel at sea. The work of the ship supplier requires years of experience in the ship supply industry. The ship supplier must know all the regulations of the national and European customs authorities, in addition to the port and owners' regulations. Therefore, these regulations must be framed in such a way as to be adaptable to suit the circumstances of different ports. This is especially necessary for large port areas where there are large distances between the location of the ship suppliers' warehouse and the ships' berths. Sometimes, deliveries to ships must be made by small boats or helicopters.
Ship supply is a global business – competition with third countries
European ship suppliers are facing intense competition at the international level and have to compete with ship suppliers all over the world. The pressure to supply the highest quality products at globally competitive prices has increased over the last years. Moreover, the nature of the European Union means that trade barriers exist in the EU, outside customs procedures, which do not exist elsewhere. Consequently, fierce global competition and a unique European business environment require all EU Member States to focus on more trade facilitation for European business and industry. A further increase in bureaucracy, administrative burden and other complications must be avoided at all costs! Otherwise, a vessel might divert to non-EU ports, and the ship supply business will be done elsewhere.
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[1] (Source: www.m-w.com) Etymology: Middle English chandeler, from Middle French chandelier, from Old French, from chandelle candle, from Latin candela , Date: 14th century
1: a maker or seller of tallow or wax candles and usually soap
2: a retail dealer in provisions and supplies or equipment of a specified kind
