What does the pandemic and logistics have in common?

This commentary first appeared on aaronmichael.co. Republished here with permission. You can access the other commentaries from the author on the same website as well.

It shows you how stubborn some people can be when they’re told to do something outside of their normal daily routine. The reluctance for change and the resentment that follows when it’s enforced plagues the logistics industry since it even existed. Why is this a problem?

Much like the pandemic, technology and innovation have been around to help shape a better world. Improve efficiencies and reduce cost, is pretty much the name of the game. I mean, it’s the reason why you’re not carrying a telephone, a walkman and a pocket camera anymore. Remember documents and briefcases? (Okay, I still carry a briefcase, but not the point)

The global pandemic of 2020/21 is something that everyone goes through! So, I thought I’d share a little bit about the pain I have, being in an industry that is resistant to change, much like the bunch of you who are all out and about disregarding any form of protection and social distancing measures.

I should mention that at this point, if any of you are a sensitive bunch, maybe it’s time to stop reading.

Governments have started to implement measures to limit the impact of COVID-19 to their nations. Through multiple methods such as:

• Lockdowns
• Social distancing
• Wearing of masks
• Work from home arrangements
• Closing of eateries
• Closing down malls
• Prohibiting/limiting social gatherings
• Limiting travel
• Locking down borders
• Strict testing regiments
• This list goes on…

Now, while I’m no medical expert, I am pretty confident when I say, these are all measures that are in place not only to keep people safe and healthy, but to ensure that the country is not overrun with COVID-19 and potentially enter into an economic meltdown.

These measures, when adopted by everyone, would give a country a high chance to go back to normal. Australia and New Zealand are pretty much almost back to normal, apart from the occasional epic lockdowns due to small outbreaks. They live a mask-free life for the most part and has resumed social gatherings and activities. Not the same can be said everywhere else.

Some countries see fatigue or rebellion towards the measures and that results in stricter measures or prolonged measures being put in place. It’s because people are stubborn, that this is happening.

I digress to the main topic at hand. You might be thinking now, “Aaron, what the hell does this have to do with logistics?”. Simple, it’s everything.

A particularly proud project I’ve worked on in my life is a project that involved postal injection before it was popularised in e-commerce. For the record, I failed this one.

A brief overview of what it is: larger couriers do this in countries where it’s not feasible to do their own deliveries (eg. Australia). Postal injections are when goods are shipped through conventional means and then handed over to the national postal companies to do the import and final mile delivery.

The project was to move e-commerce from China to Indonesia through this postal injection method and to develop the same for other markets, namely Europe and North America into Indonesia. Challenges that we faced was not easy. It was hampered by the archaic systems that exist within the postal network of most countries.

Problem One: The Indonesian postal services refused to accept a Master Air Waybill, instead they mandated the use of a CN 38. Some of you may see CN 22 or CN 23 on some of your international parcels, that’s because it was cleared through a postal import method or regulation. CN documents are the UPU’s version if import and export documents if you will. It is what helps them send mail from one country to another.

You will not know this. While it is okay for any logistics company to generate and ship a CN 22 or CN 23 (parcel level document/label), a CN 38 is more restricted. In the case of China, the China Post prohibits any logistics company from issuing a CN 38, doing so will result in sanctions. Sanctions that we’d like to avoid. Giving the parcels to China Post from the start, wouldn’t yield the same delivery time we want, so we’d have to ship direct on a Master Air Waybill in order to be attractive to people.

We eventually solved this problem. After four months of hard negotiations and brain cracking, we have learnt that China Post and China customs, care very little about CN 38 as long as it is not the main document used to ship the parcels. Our solution: slap that CN 38 behind a Master Air Waybill. Origin challenge, complete.

Problem Two: The reason why we wanted to do postal injection in Indonesia was because back in 2013, Indonesia was not ready for e-commerce. At the time, e-commerce and online shopping had only just started to really take off and Indonesia was foreign to this. The cost to ship and import a parcel to Indonesia was minimally USD 40. We wanted to be able to provide a parcel level clearance, without the regulation ever being there.

Hence, the idea to do postal clearance for parcels. Now this meant that we were not able to do import clearance the regular way, because otherwise, the high costs will be reintroduced.

Remember our CN 38 problem? It’s here to haunt us, and this time, it’s where the industry’s resistance to change comes in.

If you fly with a CN 38 document, your cargo gets delivered to the postal customs centre after arrival. If you fly a Master Air Waybill, it goes nowhere. The operations team of the postal services would then have to make their way to the cargo terminal to pick up the shipment and bring it back to their postal customs centre.

Remember when I said it haunted us? They refused to go and pick it up because for years, the SOP said that it will be delivered to them and that they don’t have to pick anything up.

Two extra months of negotiating led nowhere. The VP of International Post was for the project. The Operations Manager was not. They were resistant to change because this change of SOP meant that they would have to rewire part of their operation, and the deal went bust.

Fast forward a couple of years, we worked with the Customs Authorities and Ministry of Finance to make reforms in import processes for e-commerce. A new method of clearance was born. Importation for e-commerce now mimics the process that the postal services have been doing for years, but now, in the cargo terminal. Millions of parcels now go through Soekarno-Hatta International Airport and all of them, are not serviced by the post.

Moral of the story? Much like COVID-19, be open to change and don’t be a dickhead who thinks the old ways are always better. It may very well be, but if you don’t try, you will never know. Australia and New Zealand live almost normal lives and the industry has seen an incredible explosion of e-commerce in Indonesia. Take risks, be open. You might end up with something better.