Clear the track for digital customs management
Dec 07, 2018 Comments (0)
One of the most important trends in global business right now is the digitisation of business processes and supply chains.
One prime candidate for digitisation is enterprise customs management, which has a massive impact on cross-border supplychains. So, what is the current state of affairs in businesses, and what are the prospects for the coming years? The Global Trade Management Study, carried out by AEB and DHBW University in Stuttgart, features input from experts.
The study shows that, while customs operations are not the main focus of businesses’ digitisation plans, they play an important role, with 33% of respondents reporting that their company considers it a high priority, while 40% consider it a medium priority. Figures are even higher among management-level respondents, possibly due to the “Trump effect”, which has caused a debate on the issue of tariffs.
Respondents identified export management and export controls as the two most important areas for digitisation. Over 35% report that their company has already implemented a customs digitisation project, and almost as many are already planning or implementing such a project. Most expect digitisation to bring about centralised archiving, better visibilityof decentralised transactions, and improved communication with customs authorities. They also expect markedly lower personnel expenses in customs management – but only 6% ofcompanies actually plan to cut personnel in their customs department in the coming three years, due to a shortage of qualified customs staff.
Nearly three-fourths of respondents report that their companies communicate exclusively or directly with customs authorities about their customs processes, and submit their own customs declarations – because in-house management is faster, cheaper, and more efficient. The remaining 27% prefer to work with customs service providers.
While most companies are satisfied with their customs service providers, over 60% complain of a lack of IT integration. Some 63% communicate by email or phone with their providers, and only 26% have set up an interface to the provider’s IT system. Clearly there is potential for digitisation.The same applies to the monitoring and control of the providers: only 43% perform audits or spot checks. Over 25% don’t monitor their customs service providers at all. Given the legal responsibility of the companies as the declarant, this situation is not tenable.
For many UK companies that currently only trade with other EU member states, customs management is a completely new topic. In case of a hard Brexit, these companies would face customs procedures for the very first time. And the overall volumes for import and export declarations, as well as the number of customs broker engagements, are expected to skyrocket after Brexit, which will also impact seasoned exporters.
So, it’s key to establish solid foundations for customs management to ensure supply chain efficiency across UK borders. In the digital age and in the fast-changing environment of global trade, such foundations should be built on flexible technology that supports businesses in quickly adapting to market changes. And which way to go – self-management or broker collaboration – depends on a company’s business strategy.
But IT system integration – both internally with the own ERP and other relevant systems, and externally with customs brokers and customs authorities – is crucial in both scenarios and a key take-away for today. It increases efficiency, delivers better risk mitigation, and generates transactional savings for a business.
And with the ongoing spotlight on current global trade developments, customs management is certainly a hot candidate for moving up on the digitisation agenda of businesses today.
Iqubal Singh Pannu
Iqubal Singh Pannu is Senior Solutions Consultant at AEB in the UK and has been with the company since 2006. With considerable consultancy and project management experience, spanning several areas of the supply chain, Iqubal is advising companies on solutions for optimising supply chain performance and generating value through automated global trade and logistics processes.