Illicit economies and the spaces of circulation

Lead Research Organisation: Durham University
Department Name: Geography

Abstract

This research is concerned with examining the flows of goods in globalisation. Whilst most academic work focuses on how and where goods are produced, consumed and disposed of, relatively little addresses the circulation of goods in the global economy. Turning attention to the circulation of things highlights the critical role of maritime space (the sea) and of ports, trucks and truckers in holding the global economy together. It also flags the signficance of 'Plan D' or 'System D' in the global economy; that is, the vast range of informal or unregulated economic activity which underpins globalisation. This research examines these intersections, starting from four of the major EU ports, including in Northern and Southern Europe. It entails research with truckers, haulier agents, shipping agents and customs and excise inspectors. The focus for the research is the potential gap between the physical contents of the container box, and their value, and the description of those contents on the box manifest. As such, the research addresses the collision between a global economy predicated upon the uninterrupted flow of goods and security concerns which are beginning to identify ports as the weakest link in global security.

Planned Impact

The potential beneficiaries of this research are three-fold in the first instance: (1) policy makers in the EU and the nation states of the ports that comprise the focus for the research; (2) those working directly in port logistics and distribution, including, but not limited to: truckers, haulier agents, shipping agents, customs and excise workers; (3) the media and general public.

For policy makers, both at the EU level and within EU member states, border security has largely focused on the legal and illegal movement of people, with the airport as the key site for policy intervention. By contrast, and as is increasingly being recognised in the US, port (in)security is an even greater challenge, rendered highly problematic by economies' need for goods to circulate with minimal delays for inspection. This is the collision of economics with security. For resasons to do with the ethical conduct of our research, it is inappropriate to involve these beneficiaries during the conduct of the research. Previous experience of working in a related area with policy makers shows that the primary point of interest is at the point where we have our research findings. These will be disseminated via short briefing notes and through 'highlights summaries' of key publications, in which academic work is translated to the policy audience. This will be particularly significant at the EU-level, where debate has hitherto focused on Fortress Europe and internal labour mobility.

The research is likely to produce significant evidence for all stakeholders involved in port logistics and distribution within the EU. Of these, the most likely immediate beneficiaries are truckers. These are the workers positioned at the lowest point in the sub contract distribution chain. Many are self-employed and the workforce generally is largely non-unionised. Security measures have affected this group hard. Our work, conducted with stringent assurances of anonymity, is likely to show the effects of the downturn in Europe on this group of workers. We are most likely to publicise this work via standard media channels, but only once we have completed the work, and without compromising sources. There is the potential to link this work to an emerging concern with ethical distribution, which has begun to appear in relation to seafarers' working conditions.

The public: ethical production and consumption have become increasingly important, in response to academic and NGO/journalistic accounts which have exposed the inequalities in global production, consumption and disposal. Distribution remains hidden from view. This research will make distribution visible and is likely to bring about significant public debate on the distribution chains on which consumers' lives in the EU depend. Not in terms of air miles, carbon accounting, or sustainability, but in terms of the distribution jobs on which they depend.

Publications

10 25 50
 
Description The research has focused on the relation of 'spaces of circulation' to illicit economic activity. Key findings include:

1. Logistics provision is characterised by major downward pressures on costs, to achieve efficiencies and to respond to demands from clients.
2. These drivers have led to the emergence of a precariat in containerised road haulage in the UK, which is most noticeable in, but not confined to, the owner-driver sector.
3. The rise of a precariat, plus the endless drive to reduce costs, has brought about a crisis in labour supply, as drivers leave the sector, unable to make the work pay.
4. The sector is increasingly characterised by Eastern European firms/drivers and by increasing pressures towards illegal working practices and/or 'doing the goods' (i.e. working in the illicit economy).

On the movement of freight cargo:
5. When applied to freight cargo, logistics involves the coordination of economic flows of economic things across sea and land (and also air).
6. The physical movement of freight is coordinated by data information handling systems which translate physical freight to data. The visibility in these systems allows for the anticipation and planning of key logistical tasks and then their execution, through pausing, or interrupting, flow.
7. More time is made by these systems for certain types of work than others, resulting in key pressure points where freight flows come undone. Most notable here is the interface of the port with the road haulage system.
8. Freight flows are not therefore continual, smooth and seamless; they are characterised by discontinuities, which are produced by logistical software in order that work can be done and coordinated across sea and land.
9. Data information handling systems are largely bespoke systems; logistics is the tool of commercial interests. There is a collision between data information handling systems that are distribution-centred (where coordination is effected from port terminal operations) and those that are supply-chain centred (where coordination occurs from retailers or manufacturers and where port terminals become 'suppliers'). The most advanced versions of these latter systems are found in relation to major supermarkets and manufacturers.
10. Physical freight flow across sea and land is not achieved by the container alone. Rather, freight flow involves the scalar integration of systems of packaging. Mostly freight flow will involve the coordination of ship [truck-train-barge] - container-pallets and/or boxes.
11. Research on freight cargo needs to go beyond its current emphasis on maritime space, the container and the port, to examine the processes of freight consolidation and deconsolidation. It is here where the relation of freight cargo movement to illicit economic activity is most clearly seen.

On money:

12. Misdeclarations of values in import export accounts tend to be 'netted' off (misstatements in imports against misstatements of exports) in world trade statistics concerned with overall economic flows, whereas this actually hides two sets of illicit transactions.
13. Misdeclared customs returns not only are about escaping taxes but also ways of moving money between entities.
14. Discrepancies can be large - the statements of what the UK says it exports and China says it imports in terms of wine and vinegar differ thirty fold.
15. There are clear examples of this being used to move money around central bank controls. For instance, in 2014 China recorded $1.56 of exports to Hong Kong for every £1 in imports Hong Kong registered, suggesting a $13.5bn illicit financial flow per calendar month at its peak.
Exploitation Route Findings on road transport feed in to the current concerns over a crisis in labour supply in the UK road haulage sector. This is largely explained in policy/campaigning circles in terms of an ageing workforce and the costs of EU compliance, but this overlooks the pressures on drivers towards illegal and illcit working.

Misdeclarations on cargo manifests are widespread (content, weights) as are inappropriate practices of packing containers. The H&S implications of both for worker (and cargo) safety are considerable. This information is important for organisations campaigning on safe cargo handling and transportation. Although attention has been paid to misdeclared weights, there is as yet no resolution to this issue. Inappropriate packing needs be given the same visibility, and attention.
Sectors Government, Democracy and Justice,Transport

 
Description We have a Twitter account for this grant - https://twitter.com/illicit_econ This has over 850 followers at present, spread across the user areas identified below. The terms of the grant scheme were such that non-academic impacts were not a priority.
First Year Of Impact 2014
Sector Creative Economy,Digital/Communication/Information Technologies (including Software),Education,Transport
Impact Types Cultural,Societal,Economic,Policy & public services