Exporters and importers have been using technology to optimize their supply chains for many years now. Manufacturers catering to international markets use supply chain planning software for forecasting demand and managing inventory and transportation. Likewise, retailers and importers who source from overseas suppliers rely on logtech solutions to plan the movement of goods and inventory, to ensure timely delivery to their markets and that consumer demand is fulfilled.
The logistics and transportation industry, however, has been relatively slow to incorporate technology in its operations. Part of the reason lies in the interconnected nature of the transportation business, while another reason is the multitude of geographically dispersed stakeholders, which makes it difficult to implement a standard technological solution.
As a result, international transport is still characterized to a great extent by manual processes and paper-based documentation, at least in some parts of the supply chain. Customs brokers play a crucial role here as they assist importers with customs transactions and compliance with tariff laws.
Consequently, there exists a disconnect between importers and logistics service providers (LSPs) due to the gap in technological capabilities.
Understanding Customs Clearance
What is Customs Clearance?
Customs clearance is a vital procedure that must be completed before goods can be imported or exported across international borders. This process involves the submission of necessary documentation to confirm that customs duties have been paid and that the goods comply with all applicable customs regulations.
Customs clearance is a critical step in the supply chain, as it ensures the smooth movement of goods from one country to another. Without proper customs clearance, shipments can be delayed, leading to potential disruptions in the supply chain and increased costs for businesses.
The Role of a Customs Broker
A customs broker acts as an intermediary for importers, assisting them with the complexities of their customs business. These professionals are authorized by tariff laws and licensed by government authorities like in the US the customs and border protection agency (CBP) to handle various customs processes. Customs brokers are responsible for organizing customs entries, ensuring the payment of duties, and navigating the intricate web of customs regulations.
Their expertise is crucial in helping an importer comply with federal requirements and avoid potential penalties. By leveraging the knowledge and skills of customs brokers, businesses can streamline their customs operations and ensure that their goods are cleared efficiently and in compliance with all relevant regulations. AI-powered digital customs brokerages have cropped up in recent times, like KlearNow Customs 360, which can act as a customs brokerage for clearing imports.
Technology is Prominent Across All Facets of Logistics Operations
Driven by the digital ambitions of global container liners, the pace of technology adoption has been gaining momentum within the logistics ecosystem. This starts from the cornerstone of a logistics move — the bill of lading (BOL). The BOL has witnessed technology ingress, with electronic bill of lading (EBL) becoming increasingly more acceptable in the market today, thanks to global shipping companies and international freight forwarders issuing EBLs to their customers.
Another example is container liners equipping their containers with RFID devices to improve cargo tracking and provide visibility to cargo location and status. In recent years, the larger shipping companies and global freight forwarders have, either individually or collectively, endeavored to expand the usage of technology – with mixed success.
These forays by the larger supply chain players have created an imperative for entities in other related logistics activities to invest in technology, with customers expecting similar digital experiences throughout the holistic supply chain. However, while some organizations have embraced these technologies fully, others have struggled with integration challenges, high costs, or a lack of skilled personnel to drive adoption. This has resulted in a fragmented landscape where the benefits of technologies like blockchain, AI, and Machine Learning are not uniformly realized across the logistics ecosystem.
The Growing Imperative for Customs Brokers to Use Technology
The nature of the customs clearance business is such that there is a considerable amount of physical paperwork and manual processes to be followed. Commercial invoices are essential in this process, as they are verified by customs officers to ensure accuracy and compliance with shipping regulations. The information required has to be collated from various sources and is in different formats (such as Excel spreadsheets, Word documents, PDF files, and emails).
Customs brokers have traditionally relied on the knowledge and skills of their employees to provide effective customs entry services. HTS codes, which are crucial for product classification, are also managed by customs brokers to ensure accurate classification for customs processes.
Licensed customs brokers are now finding it critical to leverage technology to improve their efficiency and provide superior customer experience in the changed global scenario. As the demands on supply chains grow more complex, traditional manual processes are proving insufficient to keep up with the pace and volume of international trade. The introduction of digital platforms, AI-powered tools, and automation in customs operations is becoming a necessity rather than an option.
For instance, customs brokers are increasingly turning to automated customs management systems like KlearNow Customs Engine to streamline the classification of goods and ensure the correct application of HTS codes. These digital tools reduce the risk of human error, which can lead to costly delays or fines, and they can process large volumes of customs declarations far more efficiently than manual systems. Furthermore, these technologies allow for real-time tracking of shipments, enabling both brokers and their clients to monitor the progress of goods through customs, reducing uncertainty and improving supply chain visibility.
Risks for Customs Brokers Delaying Technology ImplementATion
Recent technological advances in the fields of Artificial Intelligence (AI), Machine Learning (ML), and Robotics, have now enabled the digitalization and automation of customs brokerage activities.
Customs brokerage technology can help customs brokers streamline their operations, eliminate manual data entry, generate alerts for important milestones or where action is required, and automate workflows, thus lending a significant edge in a fiercely competitive market.
Customs Authorities, like CBP, are already embracing AI to review their collected data sets and improve risk assessments, identify bad actors in international trade and ensure importers are compliant with relevant laws.
Customs brokerage technology can improve accuracy levels, reduce human errors, make documentation faster, and in general, accelerate the pace of customs clearance — all of which will ultimately benefit customers.
Though the benefits of customs brokerage technology are apparent, the rate of adoption has been slow, due to the natural reluctance to change current ways of working and disinclination to alter the status quo. In delaying the deployment of customs brokerage technology, customs brokers run the risk of missing out on the opportunity to be part of the digital customs transformation.
Customs brokers who have the foresight to use customs brokerage technology to enhance their service offerings will be the preferred partners for importers and exporters, as their digital capabilities will be complementary. On the other hand, customs brokers who insist on sticking to manual processes will be at a disadvantage in effectively servicing their customers and run the risk of losing their clientele to tech-savvy competitors.
Begin Your Customs Digital Transformation with KlearNow
While customs brokers intending to embark upon their digital journey have a range of logtech solutions to choose from, substantial benefits will accrue from the selection of customs brokerage software that is designed specifically for the customs clearance process.
KlearNow is one of the market leaders in this segment, offering two distinct products, Customs360 and Customs Engine.
Powered by AI and ML, both products are digital customs clearance products, with sophisticated functionalities such as document management, shipment tracking, customs filing, and exception management. Get in touch with us to identify which of these two products can give you a head start in your digital transformation journey.
