Cracking the Customs Code: Can customs clearance ever be automated?

It starts with the airport

So, where is the best place to initiate the domino effect of full digitalization, keeping in mind the interlinked nature of the supply chain? Jean Verheyen, CEO of Belgium-based IT company Nallian – of which DHL is a client – believes that the airport itself is the best place to start a chain reaction.

“You have a lot of companies involved in the same value chains whereby they often have the same problem they cannot resolve on their own: the synchronization of actvities,” he said. “Airports can help them by offering not only physical infrastructure, but also digital infrastructure.”

Nallian’s most well-known project is its BRUcloud network at Brussels Airport (BRU), where “95 percent of all actors are customers of ours,” Verheyen said. BRUcloud provides centralized data-sharing between ground handlers, freight forwarders or customs authorities, “so that the companies do not have to send the same data for different purposes.”

While the continuity of data between E.U. supply chain partners seems to be continually smoothening with the help of MASP, the U.K.’s customs processes, on the other hand, are about to combust. Should the “no deal” status between the U.K. and the E.U. maintain through the Brexit deadline on March 29 – which seems the most likely scenario – the U.K. will be lifted out of MASP and its digital infrastructure.

IT company Descartes’ director of product management, Martin Meacock, described the ramifications of Brexit to the U.K.’s customs processes, and how software providers are preparing to help.

“Whereas there are no customs declarations at the moment, no safety and security information required for those movements [between E.U. countries and the U.K.] – potentially, midnight on the 29th of March, those requirements come into force,” he said. “It will be disconnected [from MASP] and will have to have its own systems to operate those kinds of movements.”

Meacock said that Descartes is poised to help its customers operating in the region navigate the inevitably arduous process. “As software providers, our customers will look to us to simplify things and reuse data where they can,” he said. “If they’ve started an export declaration in one country, [we ask], ‘how can they use that data or can they use that declaration data for import into another territory?’ It’s sometimes harder than it sounds.”

At present, there is not much software companies or forwarders can do to prepare for the blow, as no one knows what the fallout will look like. The U.K. isn’t the only country facing implications of protectionist policies. During 2018, U.S. importers had to adapt to Trump-era tariffs on certain trans-Pacific goods, which software companies such as Descartes and U.S.-based SmartKargo say they are well-equipped to tackle.

SmartKargo is another emerging cloud-hosted IT company that its vice president of sales and marketing, Jay Shelat, described as “new to the block,” although it already has clients like Alaska Airlines and Oman Air. Among other software offerings, SmartKargo hosts customs communications for clients operating at various international hubs.

Shelat said the company has helped clients at different levels of digital advancement. Sometimes, customers come to them with digital systems already in place and sometimes SmartKargo has to hold clients’ hands through onboarding them – for example, helping them integrate the e-AWB, if they do not use it already.

“Now, if they choose to print it, that’s their business,” he said, referring to the air waybill. “We are fully e-compliant. We have to be, because we want all our customers to be.”

Its most recent client, Aerolineas Argentinas, conducts operations at some of the world’s remaining paper-based customs hubs, like AEP. SmartKargo can do only so much to optimize the airline’s movements at Argentina’s airports within the parameters of the airport’s paper-based customs department. The software platform takes into account the different rules and regulations at all of its clients’ hubs of operation – except, of course, the airports that have still yet to digitalize.

“What our system allows everybody to see is the same constant information more accurately on a single source, versus going from four different screens or five different tablets,” Shelat said. “The value add becomes quite clear, up front … it gives transparency at every single level in a single-screen environment.”

Nallian’s CEO, Verheyen, made very similar claims of his company’s software. He is an advocate that the way to bring the vision of digitalized international trade is by tackling hubs one airport at a time. He noted that European airports like Budapest (BUD) and Vienna (VIE) are examples of up-and-comers that are investing in their supply chain connectivity in order to provide the most efficient cargo processing times.

“The more of these local communities that will be initiated and organized by the airports, the faster that process will go,” he said.

While the global supply chain is slowly moving, piece by piece, toward a digital reality, challenges in the form of protectionist policies, old-school airports and resistance from paper-based supply chain partners, will continue to be roadblocks that the industry will face.

But eventually, as industry leaders from airlines, forwarding outfits and airports continue to demonstrate the necessity of digitalization to supply chain efficiency, we will continue to move closer and closer to the finish line.