The importance of customs clearance has grown manifold as the volume of internationally traded goods has increased over the past few decades. To deal with the greater volume of work involved, customs departments have laid down stringent processes and standardized documentary requirements, which are intended to safeguard national interests and security. U.S. Customs and Border Protection (CBP) plays a key role in border protection by regulating cargo entry into the U.S. and ensuring compliance with customs laws during importation.
Exporters and importers are obligated to comply with all relevant customs requirements, before their cargo is cleared for entry or exit into the country. Customs declaration is crucial in streamlining filing processes and ensuring compliance with fiscal requirements, improving productivity, and facilitating adherence to regulations in various regions.
In the past decade, trade wars, sanctions, tariffs, and supply chain disruptions have further compounded the complexity of the customs clearance process. Customs clearance has thus become a highly specialized role, requiring considerable expertise and detailed knowledge of customs procedures.
It is in this context that most manufacturers and importers now prefer to outsource customs clearance services and partner with customs brokers, freeing up their resources and time to focus on core manufacturing and sales activities.
What Happens During Customs Clearance
Customs clearance is a crucial process to ensure goods comply with local regulations and that the necessary documentation is properly filed. The customs clearance process involves four key steps: inspection, approval, release, and clearance.
During inspection, customs authorities verify the contents, origin, and destination of the shipment. Approval involves ensuring that all customs duties are paid. that the shipment meets all regulatory requirements, and it passes various risk assesment variables. Once approved, the goods are released and can proceed to their destination. Finally, clearance confirms that all necessary documentation has been filed and that the shipment is compliant with customs regulations.
Utilizing a customs broker can simplify this process, as they have the expertise to navigate the complexities of customs procedures and ensure that all paperwork is in order. Accurate documentation is crucial in simplifying and streamlining the customs process. A customs broker is responsible for clearing customs faster with solutions that deliver transformative automation and visualization capabilities. Customs brokers assist importers with the transaction of their customs business, including organizing custom entries, payment of duties, and other related tasks.
They are also responsible for ensuring regulatory compliance and staying up-to-date with changing regulations. Customs brokers can help companies navigate complex customs regulations and procedures, reducing the risk of errors and fines. By leveraging their expertise, companies can streamline the customs clearance process, ensuring their shipments are processed efficiently and in compliance with all relevant regulations.
Commoditization of Customs Brokers and Clearance Services
Unlike most other segments of the transport chain, which are asset-heavy industries (such as shipping, trucking, or warehousing), customs brokerage is a people-based business where the barriers to entry are low.
Instead of having to invest in capital-intensive assets, a customs broker primarily relies on knowledge and experience. This has resulted in a growing supply of customs clearance services, with many new players entering this segment.
Since customs clearance procedures for any specific country are well documented and apply universally to all exporters and importers, the work of a customs broker remains broadly uniform (varying only on account of the commodity or the geography involved).
This results in customs brokers providing services that are quite identical, with relatively limited parameters differentiating themselves from the competition. Customs brokers are particularly important in managing international shipments, especially for complex shipments or specific countries. Due to this, the trend of commoditization of logistics and transport services is now being witnessed in the customs clearance industry as well. So what can make a customs broker stand out in a crowded field?
Leveraging Customs Clearance Software to Create Competitive Differentiators
In this scenario, where competition is intense and the scope for differentiation is low, customs brokers are compelled to compete on prices, which can cause erosion of profit margins and pressure the company’s financials.
Further, the situation can quickly degenerate into a price war, where customs brokers attempt to undercut each other in order to win business, creating a downward spiral of unviable rates.
To create a unique position for themselves in the industry and avoid competing solely on prices, customs brokers need to find truly value-adding competitive differentiators. Focussing on these competitive differentiators can help professional customs brokers maintain reasonable margins while also attracting and retaining customers, thus creating a sustainable business model that can thrive amidst market uncertainties.
Since the activities under the purview of customs clearance services offer scant scope for such differentiation, the only avenue left for customs brokers to set themselves apart is through service quality and efficiency. This includes managing international shipping by detailing the essential documents, regulations, and customs processes involved in shipping goods across borders.
Superior quality services and greater efficiency can create significant operational and commercial value for exporters and importers and will therefore be perceived by customers as a crucial factor in selecting a customs broker. Additionally, filing the proper paperwork is essential for customs brokers managing high volumes and complex shipments to avoid delays and ensure successful transportation of goods.
Technology is the key to unlocking this competitive differentiator, as it can streamline processes, automate workflows, ease information flows, and smoothen coordination, all of which help accelerate the customs clearance process, enable goods to reach consumer markets faster, improve cash cycles, and allow Licenced Customs Brokers to focus on higher value added services.
Key Features and Benefits of Customs Clearance Software
Customs clearance software is designed to streamline customs processes and reduce the risk of errors. Key features of customs clearance software include real-time visibility into all transactions, duties, fees, and customs response messages in a single window. The software enables the filing of various documents, including ISF, Entry Summary, Cargo Release, 7512s, e214s, Drawback, Reconciliation, AES, eManifest, Entry Type 86, and more.
Customs clearance software also provides pre-populated filing forms, reporting, and tracking capabilities, making it easier to manage customs declarations and stay compliant with regulations. By centralizing and automating these tasks, customs clearance software helps businesses maintain accuracy and efficiency in their customs operations.
Using customs clearance software can significantly improve productivity by automating customs clearance processes. It ensures regulatory compliance by staying up-to-date with changing regulations, reducing the risk of errors and fines. Customs clearance software can help companies reduce costs associated with customs clearance, including hidden fees and fines.
Additionally, the software provides real-time visibility into customs processes, enabling companies to track shipments and stay informed. This not only enhances operational efficiency but also helps businesses maintain a competitive edge in the global market.
Partnering with Klearnow to develop compelling Value Propositions in Compliance with Customs Regulations
KlearNow has been one of the pioneers in the field of customs brokerage technology, with their AI and ML-powered logtech solutions helping customs brokers digitize workflows, unlock supply chain insights, and create transparency across the import lifecycle.
For customs brokers who intend to create a niche for themselves in a saturated market, KlearNow offers two bespoke solutions, KlearHub360 and Customs Engine.
KlearHub360 is a cloud-based platform, which besides automating the customs clearance data entry process, also has a dashboard with actionable insights and can create customizable reports, providing customs brokers with unparalleled levels of visibility and exception management reporting.
Customs Engine enables data capture, ingestion, and collaboration in a platform business model, aimed to simplify complex customs clearance using automation. It is capable of handling shipment volumes of any scale or complexity and provides powerful reports for faster insightful decisions. KlearNow.AI is an ABI provider in the US and can file to US CBP as part of this service.
To know how KlearNow can help you create a compelling value proposition and stand apart from your competitors, schedule a free demo by clicking here.
