WORLD FOOD PROGRAM'S (WFP) INTERNATIONAL SHIPPING

UNCLAS SECTION 01 OF 02 ROME 002947 SIPDIS E.O. 12958: N/A TAGS: EAID WFP EAID WFP SUBJECT: WORLD FOOD PROGRAM'S (WFP) INTERNATIONAL SHIPPING CONFERENCE HIGHLIGHTS ORGANIZATION'S EFFORTS TO MEET THE NEEDS OF THE WORLD'S HUNGRY POOR. -------------- SUMMARY -------------- ¶1. THE WORLD FOOD PROGRAM (WFP) CONVENED ITS SECOND INTERNATIONAL SHIPPING CONFERENCE AT THE ORGANIZATION'S HEADQUARTERS IN ROME, ITALY, ON APRIL 18 AND 19, 2002. THE CONFERENCE BROUGHT TOGETHER APPROXIMATELY 205 PARTICIPANTS, INCLUDING WFP TRANSPORT AND LOGISTICS STAFF, REPRESENTATIVES FROM VAROUS GOVERNMENTS, AND SHIPPING AND LOGISTICS AGENTS UNCLASSIFIED PAGE 02 ROME 02947 01 OF 02 180802Z FROM AROUND THE WORLD. THE CONFERENCE HIGHLIGHTED QUALITY CONTROL OF COMMODITY DONATIONS, THE VARIANCE IN COSTS ASSOCIATED WITH COMMODITY DELIVERY AND THE ROLE OF WFP'S U.S. PRIMARY FREIGHT FORWARDER, WILSON LOGISTICS. END SUMMARY. -------------- BACKGROUND -------------- ¶2. WFP'S OCEAN TRANSPORT SERVICE (OTS) DELIVERED 3.9 MILLION METRIC TONS OF COMMODITIES IN 2001. IN THE FOUR-YEAR PERIOD LEADING UP TO 2001, OTS DELIVERED THE FOLLOWING TONNAGES FOR THE RESPECTIVE YEARS: 1997, 2.4 MILLION TONS; 1998, 2.5 MILLION TONS; 1999, 3.1 MILLION TONS; AND 2000, NEARLY 3.3 MILLION TONS. IN ADDITION, WFP HAS GONE FROM CONTRACTING A FLEET OF 941 SHIPS IN 1998 TO 1344 SHIPS IN 2001. INCLUDED IN THESE FIGURES ARE FREIGHT TRANSPORTED ON BOTH LINERS (BOOKING NOTES) AND UNDER OCEAN FREIGHT CHARTERS IN THE PERIOD UNDER REVIEW. ¶3. BETWEEN 1997 AND 2001, WFP'S SHIPPING FEES, INSURANCE AND SUPERINTENDENCE COSTS ASSOCIATED WITH THE DELIVERY OF DONATED COMMODITIES WERE AS FOLLOWS: 1997, USD 138.8 MILLION; 1998, USD 147.4 MILLION; 1999, USD 216.6 MILLION; 2000, USD 223.1 MILLION; AND 2001, USD 255.9 MILLION. THESE COSTS ARE ATTRIBUTED TO THE USE OF BOTH LINERS AND BULK CARRIERS UNDER CHARTERS AND ARE COMPONENTS OF WFP'S FULL COST RECOVERY. -------------- UNCLASSIFIED PAGE 03 ROME 02947 01 OF 02 180802Z PIPELINE DELIVERY ISSUES -------------- ¶4. WFP LOGISTICS OFFICERS IDENTIFIED SEVERAL REGIONS THAT ARE FACING CRITICAL FOOD SITUATIONS. THESE REGIONS ARE SUB- SAHARAN AFRICA (THOSE COUNTRIES IMPACTED BY THE SOUTHERN AFRICAN DROUGHT, PLUS KENYA AND ETHIOPIA),THE MIDDLE-EAST, NORTH AFRICA AND WEST ASIA (AFGHANISTAN AND THE PALESTINIAN TERRITORY),ASIA (INDONESIA AND THE DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA),EASTERN EUROPE (ALBANIA, AZERBAIJAN AND THE FORMER REPUBLIC OF YUGOSLAVIA),AND LATIN AMERICA (COLOMBIA, GUATEMALA, EL SALVADOR AND PERU). ¶5. WFP IDENTIFIED A NUMBER OF STRATEGIES DESIGNED TO PREVENT PIPELINE BREAKS. THE ORGANIZATION'S STRATEGIES INCLUDE INTENSIFYING ITS FUND-RAISING STRATEGIES (INCLUDING APPROACHING THE PRIVATE SECTOR) AND ACCESSING COMMODITIES FROM DONOR'S PRE-POSITIONED STOCKS AT LOAD-PORTS. FURTHERMORE, WFP WILL EXPLORE A VARIETY OF COMMODITY LOANS, INCLUDING IN-COUNTRY LOANS, LOANS FROM NEIGHBORING COUNTRIES OR LOANS FROM OTHER FOOD-AID AGENCIES. -------------- -------------- QUALITY CONTROL AND OTHER ISSUES -------------- -------------- ¶6. THE ISSUE OF QUALITY CONTROL REGARDING COMMODITIES WAS HIGHLIGHTED AT THE CONFERENCE. WFP'S LOGISTICS OFFICER FOR WEST AFRICA RAISED QUESTIONS CONCERNING THE QUALITY OF SECTION 416(B) COMMODITIES RELATED TO SHIPMENTS SENT TO MAURITANIA, GAMBIA AND MALI. HE QUESTIONED USG OFFICIALS AS UNCLASSIFIED PAGE 04 ROME 02947 01 OF 02 180802Z TO THE QUALITY-CONTROL SAFEGUARDS UTILIZED BY THE USG AND THE USG'S POLICY REGARDING REPLACEMENT OF LOST OR DAMAGED COMMODITIES. THE USDA REPRESENTATIVE EXPRESSED CONCERN REGARDING THIS ALLEGATION AND ASSURED CONFERENCE PARTICIPANTS THAT USG QUALITY-CONTROL SAFEGUARDS ARE IN PLACE AND EMPLOYED THROUGHOUT THE SHIPMENT PROCESS. THE USDA REPRESENTATIVE REQUESTED THAT FUTURE CONCERNS REGARDING THE QUALITY OF USG DONATED COMMODITIES BE REPORTED DIRECTLY AND QUICKLY TO USG OFFICIALS. THE LACK OF COMMUNICATION MAY BE ATTRIBUTABLE TO WFP HAVING THE RIGHT TO CLAIM DIRECTLY AGAINST OCEAN CARRIERS FOR LOSS AND DAMAGE ON USG SHIPMENTS. THE USG ALSO STATED THAT COMMODITIES UNDER GRANT ARE NOT NORMALLY REPLACED. ADDITIONAL COMMODITIES WOULD REQUIRE AN ADDITIONAL GRANT. ¶7. WFP'S PRIMARY FREIGHT FORWARDER, WILSON LOGISTICS, MADE A PRESENTATION TO THE CONFERENCE. WILSON LOGISTICS IS A FULL- SERVICE LOGISTICS PROVIDER OFFERING AIR, SEA AND ITNERMODAL TRANSPORT, WAREHOUSING, DISTRIBUTION AND FULFILLMENT. THE COMPANY'S NETWORK OPERATES 16 FULL-SERVICE CARGO CENTERS COAST-TO-COAST IN THE U.S., EMPLOYS OVER 230 INDIVIDUALS AND UNCLASSIFIED UNCLASSIFIED PTQ9485 PAGE 01 ROME 02947 02 OF 02 180803Z ACTION ECA-00 INFO LOG-00 NP-00 AGRE-00 AID-00 AMAD-00 COME-00 CTME-00 SRPP-00 EB-00 EUR-00 E-00 UTED-00 TEDE-00 IO-00 NSCE-00 OIC-02 OMB-01 CAEX-01 STR-00 TEST-00 TRSE-00 USIE-00 EPAE-00 PRM-00 SAS-00 /004W -------------- BEB5B7 180803Z /38 R 180825Z JUN 02 FM AMEMBASSY ROME TO SECSTATE WASHDC 4260 USDA FAS WASHDC 2183 UNCLAS SECTION 02 OF 02 ROME 002947 SIPDIS E.O. 12958: N/A TAGS: EAID WFP EAID WFP SUBJECT: WORLD FOOD PROGRAM'S (WFP) INTERNATIONAL SHIPPING CONFERENCE HIGHLIGHTS ORGANIZATION'S EFFORTS TO MEET THE NEEDS OF THE WORLD'S HUNGRY POOR. GENERATES ANNUAL REVENUES IN THE U.S. EXCEEDING USD 100 MILLION. THE COMPANY ALSO OFFERS A GLOBAL TRACK AND TRACE SYSTEM THAT NOT ONLY ALLOWS TRACKING SHIPMENTS, BUT ALSO TRACING AN ORDER OR INVOICE. THROUGH WILSON'S SYSTEM, ONE CAN ALSO RETRIEVE PERFORMANCE REPORTS, STATISTICS AND DATA ANALYSIS OF THE LOGISTICS FLOW. NOTE: THE USG HAS IN THE PAST EXPERIENCED SERIOUS REPORTING LAPSES FROM WILSON LOGISTICS. END NOTE ¶8. FOLLOWING THE FINANCIAL SUB-CONSULTATIONS BETWEEN USG UNCLASSIFIED PAGE 02 ROME 02947 02 OF 02 180803Z OFFICIALS AND WFP OFFICIALS HELD IN WASHINGTON, DC, IN EARLY APRIL 2002, THE USG REQUESTED A BRIEFING FROM WFP ON THE SERVICES PROVIDED UNDER THE FREIGHT FORWARD CONTRACT BETWEEN WFP AND WILSON LOGISTICS, ESPECIALLY WITH RESPECT TO VOUCHER PREPARATION AND DISBURSEMENT TRACKING. WILSON LOGISTICS' PRESENTATION DURING THE CONFERENCE SHED SOME LIGHT ON THIS RELATIONSHIP AND SET THE STAGE FOR FOLLOW-UP DISCUSSIONS BETWEEN THE U.S. MISSION AND WFP STAFF (THIS WILL BE REPORTED SEPTEL.). ¶9. THREE SEPARATE PRESENTATIONS WERE MADE DURING THE CONFERENCE BY WFP LOGISTICS OFFICERS REGARDING INLAND TRANSPORTATION IN VARIOUS PARTS OF AFRICA. VARIANCES EXIST IN THE COSTS ASSOCIATED WITH INLAND TRANSPORTATION. THESE VARIANCES REQUIRE A MORE SYSTEMATIC REVIEW. WITH THAT IN MIND, USG WILL PURSUE A BETTER UNDERSTANDING AS TO WHY SUCH VARIANCES EXIST WITH AN EYE TOWARDS IDENTIFYING SOME SORT OF STANDARD COST RATE. ¶10. DURING THE CONFERENCE, A SIDE MEETING WAS HELD ON THE ISSUE OF INSURANCE FOR COMMODITY SHIPMENTS BETWEEN USG OFFICIALS FROM THE U.S. DEPARTMENT OF AGRICULTURE (USDA), THE U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID) AND WFP OFFICIALS. ACCORDING TO WFP OFFICIALS, WHEN THEY RECEIVE INSURANCE RECOVERY, WFP INFORMS THE DONOR OF SUCH A RECOVERY AND ALLOWS THE DONOR TO DECIDE HOW IT WOULD LIKE THE RECOVERED AMOUNT TO BE HANDLED. USDA OFFICIALS REQUESTED ADDITIONAL CLARIFICATION ON THIS PROCESS FROM WFP AND PROMISED TO PROVIDE WFP WITH WRITTEN CLARIFICATION ON ITS POLICY REGARDING INSURANCE, AS WELL AS ANY CLAIMS RECOVERY HISTORY ON USDA CARGO. UNCLASSIFIED PAGE 03 ROME 02947 02 OF 02 180803Z -------------- COMMENT -------------- ¶11. WFP'S SHIPPING COSTS (OCEAN AND INLAND) ARE PRESENTLY USD 260 MILLION. US MISSION PLANS TO STEP UP THE DIALOGUE WITH WFP SHIPPING RELATED TO MAXIMIZING COST SAVINGS AND EFFICIENCIES. PARTICULARLY AS WFP DECENTRALIZES WITH REGIONAL OFFICES NOW RESPONSIBLE FOR CONTRACTING ALL OVERLAND TRANSPORT OPERATIONS LOCALLY, WFP NEEDS TO ENSURE THAT ITS HEADQUARTERS CONTROL UNIT ENSURES THAT PROPER MONITORING OF FORWARDING AGENTS AND TRANSPORTERS IS BOTH IN PLACE AND EFFECTIVE. MOREOVER, ADDITIONAL FOCUS IS NEEDED ON WHAT CONSTITUTES A REASONABLE RATE FOR SURVEY CHARGES IN INDIVIDUAL COUNTRIES. HEILEMAN UNCLASSIFIED > 2002ROME02947 - Classification: UNCLASSIFIED