Forwarders brace for impact of new EU customs code

In May, the new European Union Customs Code will come into effect. According to its authors, the new code will streamline the clearance process and make it more transparent and user-friendly. But there are concerns about some elements, as well as the time frame for its introduction. Forwarders, especially, are looking with some trepidation to the advent of a new customs regime that may do more harm than good.

Arguably, the biggest concern may come from potentially added costs. For instance, the new regime will make financial guarantees for clearance mandatory across the EU. This may not sit well with forwarders in countries like the United Kingdom, where, so far, financial guarantees are not required. Even in places where financial guarantees are already mandatory, forwarders are worried that rates are going to go up. The Austrian Chamber of Commerce advised the industry in December that the “reference amount” for bundled exports processed without a declared amount will increase from €7,000 to €10,000 per clearance.

Uwe Glaser, CEO of Vienna-based forwarder Cargomind, said he favors the American system of export bonds that are borne by the shipper. The European regime places the onus on the forwarder, he noted.

Fortunately, there is an option for relief in the code. Forwarders can obtain a reduction or even an outright waiver of the financial guarantee if they sign up for the Authorized Economic Operator (AEO) scheme, which certifies them as “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards.”

The authorities have been gunning for maximum adoption of the AEO scheme, which has been elevated in the new customs code through a number of AEO-only benefits. For example, only certified AEOs are eligible for a simplified declaration process and for self-assessment – although it remains unclear how risk assessment will be handled.

“They are pushing everybody to become AEOs,” said Andreiv Geurtsen, general manager of Dutch forwarder Legero.

Probably the most important AEO perk under the new regime is the ability for companies to perform customs clearance in multiple locations from one central spot. “This is a significant benefit,” Glaser said. “If you can perform central clearance from one location, you don’t need to duplicate the work and the investment in the requisite skills in all branches in your network.”

These incentives, however, come at a cost. Glazer estimated that certification fees are in the range of about €5,000 to €10,000 per company. The price tag may make some forwarders think twice, but smaller agents may have an even larger problem beyond the financial outlay, Geurtsen said. To be AEO-certified, applicants must have at least three years of demonstrable customs clearance experience, and the licensing process can take about six months. This would be well past the implementation deadline in May for new applicants, he said.

Glaser said he views the push for broad AEO adoption as an effort to formalize the industry, rather than a push to improve quality. “Are you a better forwarder if you are AEO licensed?” he asked. He also questioned whether an AEO cert is any better than an ISO 9002 certification.

Then there’s the timing issue. The International Air Cargo Association (TIACA) voiced its concerns about the timing of the new customs code in December. In a note to members, TIACA secretary general Doug Brittin warned that “the Union Customs Code is just six months away from coming into force and will have a considerable impact on businesses importing into, or exporting from, the European Union.” The pending regulations, he wrote, propose “imposing an obligation on traders to provide financial guarantees for the use of temporary storage. “This obligation can be waived, Brittin said, but only by a specific authorization that must be granted by EU member states.

“It currently appears that the appropriate systems will not be in place to provide, handle and maintain those authorizations,” Brittin went on. “It looks as if it will be virtually impossible to apply for a new guarantee or a waiver in time.”

The Austrian Chamber of Commerce noted that the new regime aims to make electronic data exchange the norm, which requires better alignment and augmented data flow between national customs authorities. This will not be achievable by May, it concluded.

Despite these concerns, Glaser said he doesn’t think that the EU will push back the implementation deadline, or that day-to-day processing of cargo will be affected. “It doesn’t paralyze business,” he said.

Many shippers probably would hardly notice, Glaser said. “Forwarders take this quite seriously,” he added. “[But] from the rest of the industry, I see only limited interest – only if you perform value-added processes and need close cooperation with customs.”

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