The customs clearance process has several complex systemic and procedural steps, making it time-consuming, manual, and at times cumbersome. Customs Authorities, like U.S. Customs and Border Protection (CBP) in the United States, play a crucial role in this process by implementing border protection measures. CBP is responsible for safeguarding national interests, collecting applicable duties, and ensuring compliance with relevant international and national trade laws and bilateral agreements.
Understanding policies and procedures is essential for importers and exporters to ensure smooth clearance of merchandise. These challenges come from the complex nature of customs clearance, involving multiple steps and stakeholders, so no single party is solely responsible for any delays or issues.
A strategic partner in the customs business is the customs broker, who facilitates the clearance process by bridging the gap between importers, exporters, and customs authorities. These licensed professionals assist importers and exporters in navigating the complex web of customs regulations and procedures. A customs brokerage plays a crucial role in the preparation of customs declarations, the payment of duties and taxes, and the release of goods from customs custody. Working with customs brokerages helps importers and exporters ensure that their goods are cleared through customs efficiently and effectively, minimizing the risk of delays and non-compliance.
Business Case for Leveraging Customs Clearance Software
Given this situation, customs brokers and importers are legally obligated to comply with complex procedural and documentary requirements, including the payment of customs duties. Efficiencies can only be generated by streamlining internal operations, focusing on controllable factors to avoid customs violations and minimize delays.
The most effective way to achieve this is by deploying customs clearance software like KlearNow, to augment procedural knowledge and sectoral expertise with technology. The benefits of using customs clearance software are becoming increasingly apparent with more and more progressive and tech-savvy customs brokers and importers investing in logtech technology to optimize internal efficiency and gain an edge in a fiercely competitive market.
Challenges in Deploying Customs Clearance Software
While the benefits of deploying customs clearance software are substantial and undeniable, the community of customs brokers still has a considerable reluctance to adopt it widely or to swap from existing legacy systems that “get the job done.”
While some of this hesitation can be attributed to the tendency to maintain the status quo and resist changes to current ways of working, other factors also contribute to the unwillingness to invest in technology.
These factors include:
1. Fear of Technology
The logistics and customs brokerage industry has traditionally relied on human effort, and the usage of technology is not as prevalent here as it is in other industries. There is a certain level of discomfort regarding the deployment of logtech solutions, which can hinder efforts to introduce customs clearance software.
2. High Upfront Costs and Maintenance Expenses
Deploying customs clearance software involves high initial costs and subsequent maintenance and licensing costs. This necessitates considerable CAPEX and regular OPEX. Most companies, especially smaller players such as customs brokers, would balk at incurring such costs.
3. Unclear Role of Tech in Supporting, Not Replacing, Human Roles
With technology, there are also apprehensions about rendering humans redundant and resulting in job losses. This increases the reluctance to implement technological solutions.
4. Difficulty in Quantifying Intangible and Consequential Benefits
While certain advantages are tangible or obvious (such as cost savings, automation of documentation, and faster processing), there are several other benefits that are intangible and not as apparent. These benefits include higher efficiency levels, streamlined processes, reduced probability of errors, and violation of customs rules, all of which help deliver a better customer experience and attract more customers. Since these benefits are either intangible or flow gradually, they are often overlooked while building the business case for customs clearance software.
5. Ability to Pass on Costs to Customers
Given the fiercely competitive environment and slim margins, customs brokers try to pare their costs to the bone, to ensure commercial viability. In this scenario, the willingness to incur higher costs depends on the ability to pass on the incremental costs to customers. Given the market realities, it is doubtful whether customs brokers will be able to recover the CAPEX and OPEX from customers, which adds to the hesitation in investing in customs clearance solutions.
Operational Benefits of Customs Clearance Software
Emphasizing the immediate benefits of the investment can effectively address opposition to deploying customs clearance software, allowing skeptics to recognize its value clearly.
These benefits include:
1. Reduced Manual Effort
With technology automating workflows, the human effort is reduced, leading to lower manpower costs and freeing up resources for other revenue-generating activities.
2. Reduced Usage of Paper
Digitizing documentation reduces the cost of paper, enhances data security, and reduces the probability of errors. Besides, it helps customs brokers and importers reduce their carbon footprint.
3. Faster Document Processing
Equipped with Intelligent Document Processing capabilities, customs clearance software is capable of ingesting unstructured data and providing accurate output in the stipulated format, in a fraction of the time that it would take humans to perform similar tasks.
4. Higher Accuracy Levels, Timely Action, and Advance Planning
With the digitization of documents, accuracy levels are far higher, and the automation of workflows ensures automated pre-alerts on upcoming transport milestones or where action is required. This eliminates the probability of errors, ensures timely action by the stakeholders concerned, and also facilitates advance planning.
5. Better Compliance with Customs Processes
The improved compliance levels minimize the risk of customs violations and associated risks of penalties that would otherwise accrue due to procedural lapses or incomplete documentation. Customs brokers play a crucial role in assisting importers with customs transactions by ensuring adherence to Customs and Border Protection (CBP) policies and procedures. This familiarity with CBP regulations helps avoid complications during the clearance of goods.
6. Lower Cost of Logistics
All the benefits enumerated above help reduce overall logistics costs, which directly help rationalize the cost base and make customs brokers and importers more competitive.
By leveraging customs clearance software, businesses can ensure that their goods are cleared through customs efficiently and effectively, even in the face of global trade uncertainties. This proactive approach helps mitigate risks and maintain the smooth flow of goods in the supply chain.
Partner With KlearNow for Seamless Customs Clearance
KlearNow, with its range of logtech solutions, can be the ideal partner for customs brokers and importers endeavoring to optimize their customs clearance processes. An importer is responsible for paying customs charges, ensuring compliance with legal requirements, and often utilizing the services of customs brokers for smooth transactions.
With AI and ML-powered products such as Customs 360 and Customs Engine, customs brokers and importers can access advanced functionalities that help streamline their operational activities.
Customs 360 is a cloud-based platform for document management, automated workflows, shipment tracking, exception handling, customs filing, and viewing updates on customs statuses. It also has a dashboard that provides actionable insights and customizable reports, with natural language search, for faster, accurate decisions.
Customs Engine enables the ingestion of unstructured documents and data for filing with customs, helping transform all trade documents into meaningful data for validation and pre-populating customs filing documents. It is, in essence, a single platform to manage shipping documents and customs clearance processes, also providing comprehensive visibility and the ability to handle shipment volumes of any scale or complexity.
To schedule a free demo and learn how KlearNow can help you, click here.
