The global economy depends on global trade, the import and export of goods around the world. One of the chief bottlenecks – and an area that is ripe for technological innovation – is customs clearance, the mechanism governments use to control and tax the flow of goods across borders. Historically, customs clearance has been characterized by bureaucracy (requiring lots of documentation) and inefficiency (requiring lots of manual processing).

Enterprises that depend on international shipping understand the complexity of this dynamic challenge. The drivers of customs clearance are changing constantly: geopolitics and trade agreements, everchanging regulations and procedures, and, of course, the fact that every country handles the process slightly differently. In addition, the systems used by shippers are often siloed according to geography, making it difficult and time-consuming to ensure they reflect the most current set of rules and requirements. Customs clearance must be done right; an impounded shipment can be damaged or stolen and, obviously, it can’t be sold.

Managing customs clearance can be easier, and the solution is technology: electronic data interchange (EDI), digitization, and automation. A tech-centric approach to customs clearance will enhance efficiency, standardize and optimize processes (reducing costs), and use resources and infrastructure more effectively. 

Start with EDI

Large shippers should start by building an electronic data interchange (EDI) between clearance systems and supporting (business) systems like inventory, imaging, and scanning. This alone improves process efficiency by 50% to 60%. EDI can be used effectively for the fast, secure exchange of information – like advance shipment notifications, clearance invoices, bills of lading, and airway bill numbers – among and between consigners, consignees, freight forwarding agents, and customs brokers. Many EDI solutions include software to automatically translate documents, which accelerates the flow of information. By accelerating business process integrations, EDI systems can help increase business agility.

EDI offers another benefit as well: Companies that integrate customs clearance systems with their business systems achieve better consistency of pricing payments for duties and other related taxes. Because the customs laws are specific to countries, leveraging standardized software will enable enterprises to measure and track process variances and generate insights for process efficiency improvements.

Embrace Digitization

Digitization can also improve the efficiency of customs clearance tasks. For example, using scanners and digital files instead of papers handled manually can greatly accelerate the customs clearance process. Many bureaucratic details like manifest checks, quality inspections, packaging, and forwarding can be digitized, improving efficiency by up to 50%. Digitization can enable real-time updating of freight costs in clearance systems, very granular tracking of shipments using IOT (internet of things technologies), and automated profiling of customer details – all of which expedite the processing of customs declaration and release of goods.

Apply Automation

A compliance certificate is provided to importers or exporters to ascertain that the goods have adhered to the required standards of each country the shipment touches. For certain regulated import consignments, advance notification must be given to customs for every declaration. For example, robots can be used for shipment validation based on predefined criteria, such as segregating high-value shipments from low-value shipments or separating restricted goods from non-restricted goods. In both cases, some shipments require more customs scrutiny.

Robotic process automation (RPA) can be used to automatically update customs invoices, providing detail information on every exported item including collection address, delivery address, shipment value, and country of manufacture. Moreover, RPA systems can process manual imaging, scanning, and updating for customs clearance systems.

Other Technologies for Customs Processes

Moreover, enterprises and customs officials are applying artificial intelligence to the challenges of automating customs clearance processes. Customs administrations are developing robust solutions to identify high-risk commercial shipments before arrival at the border as a way to make better decisions. These systems will leverage alerts, configurable business rules, known profiles, intelligence, and other risk indicators. An AI-based system can be leveraged for customer matching processes, evaluating shippers, creating customer profiles, and harmonizing codes to match and link shipper to shipment.

Another path to greater efficiency is the use of application monitoring tools to reduce system failures and downtime from enhanced experience perspective. Enterprises typically use multiple IT systems running in parallel to provide end-to-end customs clearance business processes. Each system has its own upstream and downstream dependencies. Accordingly, the downtime of one system impacts the entire chain. Application monitoring tools can help pinpoint systems downtime, process outages, and slowness. The ability to ingest this information helps minimize downtime.

And IoT-enabled applications can help ensure that shipments that need special storage while waiting for clearance get to the right facility. For example, many perishable shipments must be stored in a temperature-controlled environment; IoT sensors on the shipment can provide remote monitoring while they are awaiting clearance.

The “Big Picture”

Finally, the other big benefit of moving to a more automated, more digitized approach to customs clearance is that it can provide shippers with a much-improved big picture perspective. A digital dashboard, for example, can monitor key metrics – whatever is important to a particular enterprise – by leveraging data captured by various systems. Building a globally harmonized and modernized clearance process will enable enterprises to develop a strategic plan for optimizing decision making while fostering continuous improvement.

Muralikrishnan
Domain Consultant, Transportation & Logistics, Consumer Domain & Consulting

Murali comes with around 18 years of experience in IT encompassing various roles in Delivery, Presales, consulting and operations with expertise in Transportation, Retail, Ecommerce domains in addition to industry work experience in Ocean / Marine transportation, Manufacturing, Production & Process engineering. He has played a pivotal role for success of large transformation programs and customer wins.