US embassy cable - 02ROME2947

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 
---------------------- 
 
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 
--------------------------------------------- ------------- 
 
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 
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