The Halal Compliant Port

Background

The halal industry, according to the 2023/24 State of The Global Islamic Economy Report, is an estimated USD 2.29 trillion market consisting of the following key sectors: halal food, modest fashion, media & recreation, travel, pharmaceuticals, and cosmetics. Next to the halal certification of food and non-foods, also services can be halal certified including logistics operations: transportation, warehousing, inland terminal, seaport terminal, and airport terminal operations.

According to UNCTAD, over 80% of the volume of international trade is carried by sea. A big share of food, cosmetics and pharmaceutical ingredients and end products are imported into Muslim (majority) countries. For Muslim (majority) countries the halal integrity of imports into their country are essential to provide assurance that the food, cosmetics, pharmaceuticals and other consumer products available in their market meet the requirements for Muslims based on their Islamic school of thought, religious rulings (fatwas), and local customs. As a result, there are different halal requirements for different Muslim destination countries. Halal compliance of maritime supply chains is an emerging requirement.

Halal regulations are not static and moving from a product approach to a supply chain approach. Most halal standards in Muslim (majority) countries already have requirements regarding the segregation between halal and non-halal in transport and storage, but until now was not strictly enforced by halal certification bodies. This will change in the coming years. Indonesia is implementing law 33 by 17 October 2024, making halal certification of the food industry and their supply chain partners (including logistics service providers) mandatory. Although quite a number of logistics service providers already have been halal certified, both local and multinational companies, there has been few initiatives by ports and shipping lines to address halal compliance in the maritime supply chain. There is no IMO classification for halal cargo, like the IMDG Code (international maritime dangerous goods code) for the safe transportation or shipment of dangerous goods or hazardous materials by water on vessel. Second, there is no harmonised system (HS) customs code for halal, making the identification of halal in maritime supply chains difficult.

Muslim (majority) countries are developing their halal industries, to boost self-sufficiency levels as well as creating halal production hubs for the export of food, cosmetics, pharmaceuticals, and other products. For this purpose, several Muslim (majority) countries like Indonesia and Malaysia are creating so-called halal (industrial) parks to cluster halal industries. The halal-compliant port is an important building block for these halal ecosystems.

Global initiatives

Although you would expect halal-compliant port initiatives to start from Muslim (majority) countries, instead Europe has been the birthplace for halal-compliant port initiatives. In 2007 the Port of Rotterdam in the Netherlands established a halal logistics handbook in collaboration with the Halal Audit Company, a halal certification body in the Netherlands. This handbook covered halal requirements for shippers, inspection, storage, packaging, and transport. Eurofrigo operating a cold storage facility in the Port of Rotterdam, received the halal certificate soon after that. In July 2012 the Port of Zeebrugge in Belgium was certified by the Halal Food Council of Europe. The certificate was granted on the basis of forwarding, traceability and document management. The port handling relates to transport, inspection, customs, packaging and storage. In March 2019 Docks Logistics received halal certification for the facilities it manages in the port of Algeciras, Spain. Docks, which specialises in logistics for the maritime sector, is the manager of the Border Inspection Point (PIF) at the port.

In Asia, Northport and Penang Port in Malaysia had a dedicated halal-certified warehouse facility on the port premises for the storage of halal cargo. In Indonesia, at the main maritime gateway, Tanjung Priok, Multi Terminal Indonesia established a dedicated halal-certified warehouse facility. These initiatives focus on a warehouse only, not the complete port terminal operations. Then Johor Port Authority established a comprehensive halal port supply chain guidelines in 2020 for its port terminals and jetties in the State of Johor in Malaysia. This exercise was done in direct collaboration with the halal authorities (JAKIM and the State Religious Department of Johor) and the port ecosystem: customs, terminal operators, depot operators, logistics service providers, etc. The port authority leaves it to the individual port terminal operators to apply for halal certification (or not), as halal certification is voluntary in Malaysia. In Malaysia, the shipping line CMA CGM introduced a halal container service, for which it provides the halal industry with a ritual cleansed container (7 times cleaning of which one cleaning with a clay solution). The ritual cleansed container comes with a halal certificate and special seal. Although branded as a CMA CGM service, CMA CGM has fully outsourced this service to a container depot operator in Malaysia.

There is currently no dedicated halal-compliant port terminal standard. Most port operations refer to either a general halal (food) standard or like Malaysia the MS 2400:2019, a halal supply chain management system standard covering transportation, warehousing and retailing. Based on the Malaysian halal supply chain management system standard, there is an international halal supply chain management system standard developed under the international halal standard development body SMIIC in Turkiye. This supply chain management system standard OIC/SMIIC 17:2020 covers the same three modules as Malaysia’s halal supply chain management system standard. But, since 2022 SMIIC technical committee TC 10 has been working on drafting a fourth module: port. This port module has not been completed yet.

The building blocks of a halal-compliant port

There has been a general misconception that a halal-compliant port is just about a halal warehouse in the seaport. In fact, only a fraction of the imports and exports is temporarily stored at the port (which is mostly bulk cargo). Most of the cargo handled by the port just passes through. The essence of a halal-compliant port is the segregation of halal from non-halal cargo. This is provided as a service, similar to dangerous goods, meaning that it does not require the entire port terminal to be handling halal only. The halal-compliant port terminal has control points in various key areas, namely communication, transportation, warehousing, livestock holdings, and inspection. As a result, a halal-compliant port terminal should be developing protocols for these key processes.

Case study Kuantan Port (Malaysia)

Kuantan Port Consortium (Kuantan Port) in Malaysia is developing a halal hub for the East Coast, facilitating halal trade with China, Vietnam, Thailand, Indonesia, East Malaysia and the Middle East. Kuantan Port is the first port in Malaysia to implement halal-compliant port terminal operating procedures together with its port ecosystem partners. For this purpose Kuantan Port has been closely working with the halal authority JAKIM and the State Religious Department of Pahang. Kuantan Port will be starting a pilot in August 2024 with full container loads for imports and exports facilitated through its halal-compliant port terminal on the East Coast of Peninsular Malaysia, which are clearly identified with a halal supply chain sticker on the containers and halal supply chain coding on the freight documentation.

Conclusion

Following the example of European ports in recognising the importance of halal compliance of port operations, it is expected that more halal-compliant port terminals will be developed in Muslim (majority) countries in Asia, Middle East, and Africa.

Shipping lines will also launch in the coming years halal maritime logistics solutions to provide door-to-door halal transportation solutions via sea, meeting halal import requirement for Muslim (majority) countries. It is expected that after Indonesia, which is the first country to start with halal supply chain regulations by this October 2024 for the food industry, also other Muslim (majority) countries will be follow suit.

In order to protect the halal integrity of international halal trade via sea, it is important to harmonise halal logistics and supply chain management standards for the ports and shipping industry. The introduction of the port module under OIC/SMIIC 17 halal supply chain management system standard and acceptance of this international standard by (Muslim) countries will be a critical step. Finally, to better facilitate an effective identification of halal sea freight, a halal IMO code and HS customs code will be needed.

This article was published in LogiSYM August 2024 edition. For the full article, visit LogiSYM.