CUSTOMS: Diffusing the global compliance storm
Ritu Rooney, Kewill | Monday, 09 July 2012
Ritu Rooney says stricter compliance requirements mean increased supply chain risk
With all these new regulations, it is fair to say that the management of global customs integration is becoming ever more complex.
There are a number of obstacles for companies importing and exporting. Different countries and ports have different systems. Additionally, companies need to have an extensive knowledge of the requirements of each port that they operate in. All local customs authorities implement changes regularly throughout the year, and detailed local knowledge is required to stay on top of these changes.
For companies that don’t adhere to compliance regulations there’s a high risk involved. In addition to the financial penalties companies run the risk of shipments being delayed if they aren’t compliant, further impacting costs and schedules and causing failures to stick to service level agreements.
Supply chain security is also a huge threat, with global terrorism still a major risk. Europe is swiftly catching up with the US, where the Importer Security Filing (ISF) standards have been implemented to protect the US from high-risk inbound shipments.
Legislation introduced to counter the security threat includes the Import Control System (ICS) which became mandatory for all shipments into EU customs territory at the start of 2011. ICS is a mandatory electronic customs procedure designed to improve security by providing advance visibility of shipments into Europe.
The authorities have put various measures in place designed to help increase supply chain security with many more electronic custom changes scheduled. These include harmonised customs codes and an internationally standardised system of names and numbers for classifying traded products.
Whilst these measures are vital for security they also mean that freight operators face stricter compliance procedures and, consequently, increased risks to their own supply chains.
It doesn’t have to be such a bleak picture as there are a number of options available to companies to make this process easier. One option is to outsource customs compliance to experts, thus easing the burden and making the whole process both efficient and cost effective. Alternatively, the completion of electronic documents can be automated, preventing duplication and errors that can lead to fines.
Companies can also take a number of steps to protect themselves against security risks. Firstly, by complying with security legislation and secondly by introducing paperwork-led controls which act as an audit of goods under shipment. In the case of ocean freight, for example, this can prevent non-compliant goods arriving in the EC.
Another option is to use a solution that provides regulatory compliance screening for denied/restricted parties, export licence determination, and embargoed/ sanctioned countries, and which can identify issues prior to accepting shipment.
Technology is now capable of transmitting customs data from the export country, and routing it to experts in the local country of destination. This minimises the internal need for local knowledge and allows companies to benefit from economies of scale.
Even though we are trading in a challenging economic climate opportunities do exist for growth, but in order to achieve this it is imperative that export businesses keep pace with the ever-changing international rulebook.
- Ritu Rooney is Global Product Manager Freight Forwarding at logistics software provider Kewill
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