5 GLOBAL CUSTOMS TRENDS
This article explores the latest customs clearance trends impacting import and export supply chains and suggests ways your organization can respond effectively.
It pays to know what’s happening in global customs.
How to Align and Respond Effectively
Customs clearance is one of the final things that needs to be done right as your goods travel from A to B across trading borders. Even if everything else runs smoothly, a protracted declaration process, for example, could mean you wasted your money on rapid air freight or securing limited container space on next-day sailings.
Trend 1: Uncertainty in the Trade Environment
The trade environment is becoming much less predictable due to a combination of profound changes. Along with the devastation of the global Covid-19 pandemic, the world has experienced high-profile trade wars and many less widely publicized trading disputes, and the upheavals of Brexit. Added to this, there’s been frequent regulatory change on import and export data and document requirements, each of which must be carefully considered before sending goods on their journey.
This uncertainty in the trade environment is impacting shippers in several ways. For a start, it increases executive attention on fundamental supply chain issues, particularly the requirement for global supply chain transparency and resilience. And more companies recognize the need for clarity and consistency in their import and export clearance processes. With much higher costs involved, previously tolerable clearance time fluctuations are now completely out of the question. For many products, clearance time consistency is even more important than clearance speed.
To overcome these challenges, shippers are seeking proactive intelligence achieved through an integrated approach to global customs. Local declaration services must be pulled together into a global system with common KPIs so that brokerage operations are measured and harmonized on a global scale wherever possible.
Trend 2: Broker Rationalization
Related to this response of integrating and harmonizing all customs brokerage functions is the trend of broker rationalization. Organizations may have a high number of customs brokers – often between 50 and 150 for many global companies – and this results in zero transparency. Many companies have kicked off initiatives to reduce the overall number of customs brokers they use.
Lack of rationalization not only causes many invisible costs but also negatively impacts service levels. It is not unusual for companies to discover long-standing compliance gaps, performance breakdowns, or out of market costs once local customs brokerage operations are carefully assessed. It’s no exaggeration to say that all key parts of the supply chain organization benefit from streamlined brokerage. For example, people in procurement are able to achieve better brokerage prices and terms, the compliance team can effectively target risk, and logistics professionals can achieve greater consistency and transparency in customs clearance times.
Slimmed-down broker numbers are a good fit with an integrated approach to global customs. In addition, companies can greatly benefit from customs reporting and analytics on a global scale, supported by one-stop information access on a global customs data platform.
Trend 3: Targeted Surveillance
In any country, the number of import and export declarations being processed runs into the millions, if not the tens of millions annually. In the past, it’s been obvious that customs agencies could only look in depth into a tiny percentage of these, so there was only a very low chance of them catching wrong information. But that’s changing as customs and other trade authorities – including agencies like health ministries or telecom ministries who also provide import/export approvals – are now starting to employ new programs and technologies to tighten trade compliance.
Customs risk management is becoming a pressing issue, as authorities use IT systems capable of automatically auditing a much higher percentage of files and, in some cases, even using artificial intelligence to identify possible non-compliance. Exporters and importers must be more careful to make high-quality, compliant declarations. What’s more, they face ever-growing data requirements imposed by the many agencies and ministries that oversee trade in specific goods.
An effective response to this trend towards more targeted surveillance is a multi-layered compliance approach. Shippers should ensure their forwarder participates in customs authorized economic operator (AEO) ‘trusted trader’ programs and have modern controls in place like the automation of file auditing so that outliers in the data are spotted early and swiftly put right if needed.
Trend 4: Demand for Digitalization
Businesses expect 21st century services and solutions and, in the context of customs, this means companies trading in multiple markets worldwide anticipate a single IT project response that covers all countries.
Exporters and importers expect to be able to easily share data with their customs brokers, and they are demanding more data fields and tighter KPI reporting with the expectation of achieving deeper, value-adding insights from their customs data.
All this necessitates a global customs data platform and effective comparative analytics. For example, one DHL Global Forwarding customer now uses analytics provided from our global customs platform to compare the clearance timeframes of its business units against industry norms, enabling the company to target specific entities and – working jointly with DHL Customs Services – change data and document flows to close any gap. Another customer uses analytics to compare the use of free trade agreements (FTAs) and other preferential trading programs within its group to target opportunities for substantial customs duty savings.
Trend 5: Protectionism vs Facilitation
With the trend of protectionism versus facilitation, two things are happening at once. Many countries are raising barriers to certain types of trade in an attempt to protect their domestic industries, yet, at the same time, many countries are easing import and export processes and signing far-reaching FTAs, the most striking of which is the Regional Comprehensive Economic Partnership (RCEP). Some countries, such as India, appear to be doing both at the same time.
It's no wonder that shippers are struggling to keep up with these changes. They can be surprised by new barriers, maybe working with out-of-date regulatory requirements for their products, and could miss out on the cost saving and process improvement opportunities of available FTAs.
This trend makes it even more important to adopt an integrated approach to global customs. Too much is changing, there are too many variables; a proven customs data platform provides the only solid ground from which to make informed decisions and take effective action.
Senior Vice President
Global Customs Services, DHL Global Forwarding
With over 22 years of diverse customs and global trade compliance experience, Greg leads customs brokerage services globally at DHL Global Forwarding. With a team of over 4,000 customs experts worldwide, DHL Global Forwarding provides customs brokerage services in over 100 countries.
Prior to joining DHL in 2019, Greg led Customs and Trade consulting practices at KPMG, PwC, and Expeditors Tradewin in Singapore, China, and the United States for over 15 years. He started his career in customs and freight operations management roles with DHL and Expeditors.
In his current role at DHL, Greg is driving the digital transformation of customs brokerage and related trade services to provide greater transparency, consistency, and value to all customers worldwide.