Digitalization in customs clearance procedures as part of transport and logistics is an important driver for efficiency, simplification, lowering costs, and better use of resources and existing infrastructures. Digitalisation also creates new opportunities for business and has the potential to change the way cargo and traffic flows can be organized and managed in the future.
Trade has long been the driver of economic growth of any nation. Any new system demands on-time delivery for which trade needs to be faster and more reliable. Digitalisation of logistics in trade is important for efficiency and cost reduction.
Digitalization as a key enabler
Seeing how digitalization is helping various operating procedures in the industry, the need for a digital revolution in the customs clearance cannot be overlooked. The digitalization of customs clearance increases the efficiency and the ease of doing trade. Data flow reduces the coordination cost by sharing the information among various organs of the logistics chain.
It also reduces information asymmetry and lower coordination and transaction costs. They make it easier for businesses or consumers to connect with potential trade partner, strike a deal and get information about regulations and standards as well as about consumer preferences.
When pricing for import and export customs declarations are displayed online, it eliminates the need to provide shippers with a quote, thus saving time, money and resources.
An Industry First
Leading the way, A.P. Moller – Maersk recently announced the launch of a digital customs clearance platform. Claiming to be the industry’s first ever container shipping company to offer such a service, this platform was launched in Germany, France, Denmark, The Netherlands, Poland, the U.K. and Spain. They had also affirmed their plans to expand the service globally by the end of 2019.
Steve Felder, Managing Director at AP Moller-Maersk, India, Sri Lanka, Bangladesh, Nepal, Bhutan and the Maldives told Logistics Insider, “The industry is moving forward due to the steps taken towards the digitization of customs clearance. From a reduced turnaround time in cargo movement, there is also increased transparency among all parties engaged in the supply chain.”
The fruits of digitalization are already conspicuous in many areas of business, but when it comes to customs, many companies are still in the dark as to whether and how the digital revolution has already arrived. Areas, where digitalization has improved, include cargo community system, single window system, automatic clearance for green channel declaration, electronic submission of certificates such as IOC, fast track cargo, warehouse management system, customs enforcement, and management systems.
In addition, increased trade digitalisation, which reduces human interactions at customs, creates fewer opportunities for bribery and fraud. Digitalisation solutions for processing customs documents, and the general automation of customs clearance, leave little to the discretion of individual customs officials and reduce opportunities for corruption.
Felder said “Digitalization is a key enabler of transforming the industry. Innovative digital solutions delivered in 2018 are removing the complexity, increasing the visibility and bringing much-needed simplicity to supply chains and documents.”
Adding customs clearance online also strengthens Maersk’s position as one of the digital leaders in the ocean freight industry. According to Felder, considerable progress on digitalisation to ease customer experience has already been taken.
For instance Self-Service Instant Booking (SSIB), an online self-service platform which makes it as easy as booking a flight ticket, compared to hour-long wait times only a few years ago, Remote Container Management (RCM) which leverages digital opportunities to create full visibility into the conditions of the perishable goods during transport and quote automation, from zero per cent to 90 per cent of quotes produced via Maersk’s website in three years, to name a few.
He said, “By enabling our customers to self-serve on multiple platforms, with 24/7 availability, we are well on our way to achieving our goal, and today, maersk.com is one of the largest business-to-business transaction sites in the world with more than 35,000 daily users and close to 20,000 bookings a day.”
International Bodies and Government Support
World Customs Organization had declared 2016 to be the year of Digital Customs. It had appealed its members to showcase and further promote their use of Information and Communication Technologies (ICT).
ICT has become the fundamental of trade delivery system. Countries that have digitised their customs procedures offer evidence of greater transparency and improved efficiency in daily trading processes.
Countries including India, Colombia, the Philippines, Albania, Singapore, and Sweden have adopted the ‘single window platform’, defined by the United Nations Centre for Trade Facilitation and Electronic Business.
Indian authorities have lately shown a keen interest in simplifying customs procedures and eliminating bureaucratic obstacles that have long been a major drag on faster economic growth. Digitisation of various parts of the business model plays a vital role in this and will benefit customers in terms of ease of use and user-friendliness.
e-SANCHIT is the digital push in Indian Customs by Modi government under Digital India Mission. India Customs Single Window allows importers and exporters, the facility to lodge their clearance documents online at a single point.
Single Window Interface for Trade (SWIFT) aims to reduce interface with different bureaucratic machinery, dwell time and the cost of doing business. CBEC had already executed major projects to automate customs clearance processes and provide electronic data interchange (EDI) with all agencies.
Indian Customs and Excise Gateway (ICEGATE) integrates the information required for import clearance by government agencies concerned. Further, the government of India has also eliminated the need for physical printouts for customs clearance by Importers and exporters.
About the Single Window Interface for Trade (SWIFT) initiative set up by the Central Board of Excise & Customs, Felder said “It enables traders the ease of doing business by lodging their clearance documents online at a single point. In order to work collaboratively with agencies and industry stakeholders, port and central level Customs Clearance Facilitation Committees (CCFCs) have been established to simplify and streamline their inter-agency procedures and documentary requirements for import and export of cargo.”
Hemant Bhatia, Director, Tulsidas Khimji Pvt Ltd told Logistics Insider, “The main advantage of digitization has been the security of documents, as loss in transit, misplacing them during internal processing etc. can be reduced. However, there is still manual intervention and presence required at supporting agencies like ADC, etc. This needs to be improved in order for the trade to reap seamless working. Often, the system and servers slow down due to traffic during peak hours/weekends, when submission of documents suffers. Overall it is a good initiative and with a bit of fine-tuning and improvement in infrastructure, greater benefits should accrue.”
In January 2018, Maersk and IBM announced the intention to establish a new blockchain platform to provide more efficient and secure methods for conducting global trade using blockchain technology. The two companies gradually developed “TradeLens” to apply blockchain to the global supply chain and now it processes 10 million events every week.
Trade digitization of global supply chain documentation processes holds a vast potential to enable global trade, especially for small and mid-sized businesses across the world. World Economic Forum estimates that removing barriers to the global supply chains could boost global trade by 15 percent. Global supply chains require trust between the high number of stakeholders involved in any cross-border shipment. Blockchain technology enables this trust as we move manual documentation processes online to the TradeLens platform.
In a nutshell
Countries around the world are digitizing their customs administrations, and the World Bank’s Doing Business 2019 report shows the resulting impact on the time and cost of cross-border trade. Given the present scenario at which the demand for digitalization is increasing, it can be ascertained that the future seems bright for customs clearance. It is right on its track to remove its label of being one of the most complex processes in the whole shipment process.