The Growing Complexities and Requirements of Customs Management

We talk a lot about globalization in supply chain management, but when you peel back the onion on it, you realize how enormously complex and risky it is to move goods across borders — and if you don’t have the right people, processes, and technologies to effectively manage the process, your ability to move goods across borders can literally come to a halt.

How has customs management changed over the years?

“It has changed significantly,” said Celeste Catano, Global Product Manager Customs Management at BluJay Solutions, in a recent episode of Talking Logistics. “Customs is now requesting a lot more data and all of the customs authorities, at least in the major countries, are automated, and so they’re expecting everything to be in [electronic format] as they work toward creating a paper-less environment.”

“In the U.S., for example, in just the last few years, we now have what is called the Single Window,” explained Catano, “where you now have to report data to up to 15 different agencies in addition to customs [such as the Department of State and Department of Commerce] all within a single data set…So before you had shippers filling out forms and sending them directly to the required agencies. Now it’s the brokers or filers who are responsible for collecting all of this data and supplying it to the required agencies because before you can clear customs you have to satisfy the requirements of all the other agencies.”

Historically, companies have relied on brokers to handle customs management. Some companies, however, are bringing this process in-house, mainly to reduce costs and to have more direct control over the process since they (as the importers) are ultimately responsible for compliance. But it’s not the right move for every company, as Catano explained:

“If you’re an importer with a very narrow range of products, where you make one widget and that’s all you do, in those cases you can probably bring compliance in-house because once you learn what you need to do to import that widget you’re pretty much done. But if you’re a mass retailer, for example, with a wide variety of different goods that you’re bringing into the country, you’re not going to know all of the different regulations that customs requires for all of those different items, so in those cases you really need to rely on a customs broker whose core competency is to know everything about customs compliance.”

Take product classification as an example:

“You can have a woman’s sweater that is made out of a certain type of wool and it is classified under one number, but if you add a pearl button to it, all of a sudden you now have to worry about Fish and Wildlife getting involved in the mix and understand what you need to comply with them. So it’s helpful to have customs experts involved, especially when you’re introducing new products.”

Not surprising, technology plays an important role in this area. What capabilities should companies look for in a customs management solution? What’s the role of a Global Trade Network? Catano addresses those questions in the short clip below:

“A number of years ago, a lot of companies would try to develop their own customs compliance systems themselves,” said Catano, “but customs authorities are so complex today, and they can change their requirements on a whim, it would require dedicated IT resources to continuously reprogram those systems to keep up with the changes. So, from the software side, we’re seeing fewer companies [developing and maintaining] their own systems anymore.”

I encourage you to watch the rest of my conversation with Celeste for additional insights and advice on this topic. Then post a question or comment and share your perspective!

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