Workgroup lead: Ingo Schlosser <email@example.com>
This workgroup is on hold for the time being.
The Transport Solutions workgroup of CARA aims to contribute to a more efficient transport infrastructure for cross border transports in Europe. Strong international transport networks do not exist yet, leading often to high cost and long lead-times for transport vehicles.
The Transport Solutions Workgroup will identify and share possibilities for the remarketing industry to improve efficiency and reduce costs and lead-times.
As transport processes in Europe are scattered and still paper-based (CMR) there is a significant risk of fraud in cross-border sales processes. VAT-fraud, mileage fraud and avoiding import tax fraud are well known issues in the industry.
The Transport Solutions Workgroup aims to identify and promote supply chain processes that reduce or eliminate the risk of fraud in international cross-border processes.
By doing so the Transport Solutions workgroup aims to define professional standards for the industry.
The paper based CMR is the formal, legal document in the European supply chain that provides the evidence that an asset has been handed over to another business party in another country. The availability of a signed paper CMR in the administration is a legal obligation for selling parties. Upon inspection of tax authorities, selling parties need to provide these CMR documents for business transactions in the preceding 7 years.
The United Nations created the possibility for countries to digitalise the CMR process through the use of an electronic CMR since 2008. This electronic CMR has (if processed under the right conditions) the same legal status as the paper based CMR.
19 European countries (27 worldwide) ratified the e-CMR protocol so far. Countries need to sign “the e-CMR protocol” to allow the use of the electronic version of the CMR in their specific country.
Many European countries have ratified the e-CMR protocol in the past years. Ratification means that the e-CMR can be used as a legal document in the specific country. In 2019 United Kingdom, Poland, Rumania, Portugal, and Finland passed the e-CMR legislation in their parliaments. During 2020 Sweden, Norway and Ukraine already ratified the e-CMR protocol. Experts expect that Ireland and Greece will follow too during 2020. Germany has not signed the protocol yet, although the expectation is that this will happen within the coming year. Italy, Austria, Hungary, and the Balkan countries are then the last countries to create a complete European coverage. The expectation is that they will follow soon after Germany has ratified.
Belgium does allow the use of e-CMR in international transport and is even actively promoting its use yet is has not formally signed the e-CMR protocol. Any company that wants to start using e-CMR is advised to formally check with authorities.
It is important to note that although Germany has not ratified yet, transit traffic using e-CMR is allowed. When a transport starts in an e-CMR country and ends in an e-CMR country, the use of e-CMR is possible.
The e-CMR and its application
The electronic CMR is a digital document that is issued by the shipping party to the logistics service provider that executes the international transport. The business party that receives the asset (the vehicle) signs the CMR as evidence that the delivery has been completed.
The driver of the transport company carries the document on his onboard computer system, or a separate tablet or smartphone.
If during the transport the driver is inspected by authorities, the digital document he will show (the e-CMR) is the legal document, replacing the paper-based CMR.
At the hand-over process at the receiving business party, any comments on the state of the vehicle (damage) are added on the e-CMR document. The document will be signed by the receiving party.
In signing the e-CMR all business parties make use of a secure (advanced) signing method, e.g. pin code or QR code. This is an important difference between the current paper process compared to the digital process. Data security is improved, and accountability is fully transparent.
Once the e-CMR document is signed, the responsibility for the vehicle is handed over from transport company to the buying business party unambiguously.
A copy of the e-CMR is immediately available for the shipping party, the receiving party, and the transport company. These documents are shared with all actors, e.g. through e-mail (PDF format).
Advantages of e-CMR
Electronic transactions have many advantages over paper-based processes:
- Real-time availability
Electronic CMR’s are available immediately after the transaction has been completed. In current processes paper based CMR’s need to be sent to shipping parties by the transport companies. This takes time and a lot of (FTE) effort for shipping parties that need to make sure all CMR’s are received.
- Less disputes
Information provided through paper based CMR’s is not always clear. Notes cannot be read, damage information is separately provided and incomplete. This leads to disputes between selling partners/buying partners and transport companies. E-CMR information provides digital, clear information, with GPS and date/time stamp, so no misunderstandings on responsibilities can occur.
- Less risk of VAT fraud
Not all CMR’s always come back and not all CMR’s provide clear evidence on the actual hand-over of the asset to another business party at a certain time and on a certain place. With authorities focussing more and more on VAT fraud in export processes, this is a significant risk for exporting businesses. e-CMR’s provide gps location, date/time stamp and a clear identification of the business party to which the vehicle has been handed over to. Some e-CMR applications also provide additional checks on handover, providing all necessary evidence of the export process. Government accredited e-CMR providers comply with the legal data storage regulations that apply for e-CMR countries.
The implementation of e-CMR
Over the past years multiple companies have started to provide e-CMR services to the logistics industry in the EU. And as many countries have signed the e-CMR protocol, the volume of e-CMR transactions has been growing fast over the last years.
Well known, leading companies that provide e-CMR solutions are: Collect + Go, Pionira, Dashdoc and TransFollow. Together with other -CMR companies they work together in the Digi-Transit initiative, that aims to standardise the interoperability between providers.
Over the past years several large shippers and logistic service providers in the EU have decided to move their delivery processes towards e-CMR. Examples are Ikea, Albert Heijn, AB Inbev, Vos Logistics, H. Essers.
How will the e-CMR develop and what EU legislation supports further adaptation?
From a technological perspective there is no reason for shipping companies not to use the e-CMR as their formal handover document in international transport. There are also no legal barriers to use the e-CMR in those countries that have signed the e-CMR protocol. In the past months, because of the corona crisis, various international organisations and authorities (the International Road association (IRU),Benelux transport ministers, Spanish shippers organisation,) have called for an accelerated implementation of electronic documents, given the contamination risk of handling of paper documents.
Are transport companies ready to use e-CMR?
Most transport companies in Europe in the Finished Vehicle sector are waiting for developments to happen in the sector. The larger companies generally are doing some trials with one of the companies that can provide e-CMR solutions. Many smaller companies are in a “wait and see” mode. The nature of the transport business (small margins, high competition) does not lead to innovative behaviour. The transport industry is used to follow its customers’ requirements.
What can CARA members do to use e-CMR
Those CARA members that trade internationally and that see the benefits of e-CMR, can act today. Those companies that start today with an e-CMR process with (some of their) transport companies, will learn how to use the e-CMR and will be able to gradually extend the use over time. The benefits of using e-CMR are immediately visible (see above) and a positive business case should therefore be easy to calculate. The websites of the e-CMR providers (e.g. Collect + Go, TransFollow) help you to provide you insights.
Although the e-CMR can not be used in all countries yet, companies that start today will be ready for a 100% transition once Germany and the other countries have signed the protocol.
CARA members that want to capture the benefits of e-CMR and should start to require from their transport companies that they work with an e-CMR solution as a condition to do business with them.
In this dialogue between shippers and transport companies more and more transport companies will be confronted with a clear requirement from the remarketing industry members to implement digital processes.
The current (post) corona climate provides additional opportunity for companies to switch towards a digital process. Businesses are looking for break-through cost reduction opportunities. More transport companies will be looking for opportunities in the remarketing business, as industry volumes of new vehicles have dropped and will most likely remain at lower level for years.
Transport companies will be more open than ever to accept the requirements of shippers that aim to digitise their processes.