Global trade optimization

Patchwork issues? Just go for a customs platform.

Internationalization harbors great potential for businesses. But customs software is often left behind when networks expand. Why harmonizing customs processes pays off.

Success in new markets

New markets, new customers, new revenues: Internationalizing their business has been a success story for many companies over recent years. And many of them not only focused on organic business growth by opening new offices in foreign markets. They also acquired local competitors in an agile approach to tap the potential of foreign markets more quickly. The advantage here is that the company taking over a business also takes over the competitor’s existing customer base. The disadvantage, however, and a strong cost driver, is the resulting complexity of managing parallel products, business processes, and IT systems.

System patchwork struggles

I’ve experienced such consequences first-hand. In my days as customs manager at an international logistics service provider, I was dealing with 13 different domestic IT systems. To be honest, it was a nightmare. That’s why today, harmonization of IT landscapes has a very high priority in integration projects following a company acquisition or merger.  But one type of IT solution often remains untouched in integration projects: global trade software. And interestingly, even start-up companies – every now and then – can be found implementing purely domestic software in this area, despite their full freedom of choice.

One here, one there – one everywhere

Why is that? In terms of customs, every country has its own, national peculiarities and processes that deviate from those of other countries. And every national customs authority has defined different IT procedures. Germany, for example, uses ATLAS, the United Kingdom works with CHIEF, and the Netherlands deploy AGS, NCTS, and Portbase. These decentralized customs structures are met by numerous companies working with decentralized solutions: all locations that manage either import or export shipments have their own customs team that is well versed in local customs specifics and uses an independent, local customs system. Or alternatively, companies outsource customs management to customs brokers to avoid the set-up of in-house customs management structures all together.

Continue wasting money until 2020?

It’s hardly a surprise to learn that such fragmented processes are generally expensive and also drive personnel costs. From an IT perspective, procurement, maintenance, and support of individual global trade solutions on a national level is a seriously heavy burden. And customs managers and responsible parties for export controls significantly lack transparency. Under these conditions, it’s a significant challenge to uniformly manage, for example, classification of goods on a company-wide level.

A great solution would be a central customs management – as the Union Customs Code (Article 179 UCC) provides for. But the customs authorities still require more time for the implementation, which means such a procedure will be available only – and earliest – by 2020. Taking part is also subject to strict requirements – AEO-C status is precondition. You can find more information about changes under the UCC here.

Always an option: customs platforms

So, what to do? Continue struggling with the burden of such international patchworks of systems? There are certainly alternatives at the sole discretion of companies: instead of running several local systems, a uniform, international customs platform is established for customs management in different locations and different countries. Such platforms must meet the legal requirements for all connected countries and must be certified – or tested and released – by the respective customs authorities. This also applies to the interfaces to the electronic customs authorities’ systems.

How do such platforms operate?

It’s best to explain with an example: AEB’s ASSIST4 Customs Integration delivers solutions to manage import and export procedures, but also special procedures like NCTS, bonded warehousing, Inward/Outward Processing Relief (IPR/OPR), local clearance procedures, or port messages in a number of countries.

  • As a first step, the solution extracts the data that is required for a customs declaration under a specific process from the involved host systems.
  • Customs Integration provides special data collectors for SAP® systems that gather relevant data from the ERP system and make it available for the customs declaration.
  • Intelligent logics for individual processes and countries then enrich the data sets with additional information automatically.
  • Based on rule sets, the software accesses templates that are required for an export declaration, for example, in the Netherlands or Belgium.
  • Once the customs declaration is complete, the solution manages the communication with the national customs authorities through direct data transfer.

What’s the benefit of customs platforms?

Such integrated platforms deliver a number of benefits to responsible parties in both customs and IT departments: declarations are archived centrally, which significantly improves transparency and traceability – for example, for customs audits. Central data management also enables analyses across country borders. On the IT side, efforts for implementation, maintenance, updates, and support are considerably reduced compared to those required for individual solutions per country.

And last but not least: joint management of data and uniform graphical user interfaces make it possible for national customs departments to support each other, and – if desired – establish a central competence center. At the end of the day this translates to fewer staff managing a higher number of declarations more efficiently.

Global trade and customs management are complex matters, especially for businesses operating in various locations and countries across the globe. But there are powerful solutions available these days that can save businesses a lot of money, take the hassle out of regulatory requirements on an operational level, and give peace of mind in terms of global trade compliance.

How many locations that import and export does your company manage? How many customs systems does it involve? I’d like to hear from you on this topic, and continue the conversation on LinkedIn.