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.

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SUMMARY
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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.

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BACKGROUND
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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.

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UNCLASSIFIED

PAGE 03 ROME 02947 01 OF 02 180802Z
PIPELINE DELIVERY ISSUES
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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.

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QUALITY CONTROL AND OTHER ISSUES
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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

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COMMENT
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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

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2002ROME02947 - Classification: UNCLASSIFIED