Growing Accustomed: Customs platforms give edge to smaller forwarders

Sometimes the smallest things can have the greatest impact. Take customs clearance, for example, in the air cargo handling process.

Carlos Jaramillo, president of Miami-based freight forwarder Marca Global Logistics, recalls a shipment of cargo earlier this year coming from the Far East into Miami to be trans-shipped to Chile, but was held up briefly in customs because there was a discrepancy between the weight printed on the air waybill and the actual weight of the arriving shipment.

It was indeed a small detail, but it potentially had major repercussions for Marca and the shipper. In the recent past, Jaramillo, who runs a small eight-person operation in the Miami office, outsourced all of his customs work to a broker to save on costs. “We used to have to call our customs broker about the held shipment, and it would often take 24 to 36 hours to hear back from them and get the issue resolved,” he said.

From there, delays could cascade further while shipments sat in limbo. “If the resolution could not be solved within a day or two, there was a good chance you could lose your booking on the outbound flight,” Jaramillo said, which would, in turn, lead to an uncomfortable discussion with an unhappy shipper asking why the cargo didn’t arrive on time.

In this instance, however, Marca had taken its customs brokerage duties in house, using a new platform called SkySpace Cargo, which operates completely online with real-time notifications of problems with shipments. Rather than having to make a phone call to a broker, Jaramillo saw an alert on the platform appear on his smartphone. Via a live chat line, he was able to find out about the discrepancy instantly and take action to resolve the problem, which was an incorrect label made from the origin in China. Within minutes, he said, the hold on the shipment was removed and the cargo continued on its journey.

“That’s a difference of a day and a half,” he added. “That definitely saved us a lot of time and money.”

More importantly, the online SkySpace service allowed Marca, which has about 50 total employees at all of its branches, to work as fast as one of the larger, multinational freight forwarders that can afford premium 3PL service. “That 24- to 36-hour delay wouldn’t happen with a larger forwarder,” Jaramillo said. SySpace itself is not seen in the transaction; all Marca customers would see is an online portal with the Marca logo and contact information.

With this customs technology, a smaller “David,” using technology from a startup that had been operational for just a few weeks, just passed itself off as another super-efficient “Goliath” forwarder that would have otherwise undercut his business.

For Marca and other small- to medium-sized enterprises (SMEs) in the logistics world, it may be a game changer.

The last shall be first

Companies like Marca Logistics are the ideal customers for online customs brokerage portals, according to SkySpace Cargo co-founder and CEO Toby Raworth. “Our market is the small- to medium-sized freight forwarders. If a business wants to import cargo from China, you would need emails to four or five different forwarders and wait 12 to 24 hours for a response, and a total of 48 to get a booking. With our system, they can do that all in real time.”

Launched in the United States in April, the SkySpace Cargo freight booking portal is currently moving 50 to 60 shipments per day, Raworth said. Essentially, platforms like SkySpace enable almost any forwarder, regardless of size, to globalize their operations. “Say you’ve got a forwarder in the U.K. or in Paris or Belgium with seven or eight employees,” he explained. “Our system gives them instant access to over 50,000 flights from 50 carriers worldwide. That puts them on the same level of infrastructure as, say, Expeditors.”

The key concept for SkySpace is the global infrastructure it offers. “Until very recently the only way to insure standardized process and methodology for the freight forwarding industry was to create large networks either by organic growth, meaning slowly, or by acquisition, meaning costly,” Raworth said. “In relation to customs brokerage this has given the global forwarders a distinct advantage as they have the ability to work closely with vendors at origin to ensure compliance with customs and other government agencies.”

While creating SkySpace, Raworth gathered an enormous pool of forwarding talent over the last three years, with hundreds of customs agents in dozens of offices around the world. A small freight forwarder, he said, can now leverage local customs expertise from an origin anywhere in the world.

Air & Sea Freight LLC has been using SkySpace for about five months, said Karime Ruiz, director of the Miami-based forwarder. During that time, Air & Sea had to move dangerous goods from China to Europe, despite having no experience with such shipments. The system “showed us what documents were mandatory and gave our supplier in Suzhou the ability to upload the documents into the system,” Ruiz said. “The docs were shared with the destination agent, the destination broker and us at the same time. It’s very helpful for us, as a small-size freight forwarder, as we now can sell almost anywhere and not have to hire any more staff.”

Also, the information shared on can be customized on a dashboard to fit the forwarder’s logo and brand colors, so clients won’t know it’s being handled by another party. “The forwarder at origin can view all documents via the web and approve, amend or reject them prior to shipping,” Raworth said. “All data is stored for their clients on the cloud and all stakeholders are using the same digital infrastructure, nullifying the traditional advantages of the global players. Small forwarders can exchange information and documents in real time anywhere in the world with the relevant customs authority’s through local brokers with years of experience.”

Growing competition

While the use of these online tools has been relatively recent, Raworth is hardly without competition. A Los Angeles- and Philadelphia-based tech startup, called INLT, also made its debut in the logistics industry this year, earning final U.S. government approval as recently as April 12 to commercially launch its cloud-based web application, which it has been testing with a handful of forwarders and shippers for the last few months.

Freight forwarders can connect their agents globally via INLT’s cloud-based application, reducing the need for calls, emails, and faxes in a heavily paper-driven industry. “We watched as the market began to change while U.S. Customs and trade compliance was ignored,” said Chris Reynolds, INLT co-founder and CEO. “Our role is to be the glue in the supply chain, from a communication and technology perspective, as well as a compliance one.”
After raising US$1 million in funding from strategic, angel and other private investors last year to expand its engineering and trade compliance teams, INLT is seeking more clients. “We have a mix of 25 to 30 importers and then another 15 freight forwarders, each of which bring a couple dozen importers themselves,” Reynolds said. “About half of the entries arrive by airfreight.”

One of the first and most important benefits INLT offers is cost savings. “That’s what gets us in the door,” Reynolds said. “We’re about half the cost of what forwarders are paying for brokers. Brokers have always historically discounted their entry fees to logistics partners — $50 to $60. We’re doing it for $30 an entry.”

INLT’s founding team is comprised of a trade attorney, a customs broker, a software engineer and a veteran of the importing business. “We raised seed capital over the summer,” Reynolds said. “And with that money hired a small team of engineers, began building the API product and started going through the process of getting certified through U.S. Customs, beginning with DHS. It took five to six months. We were the first ones doing it with all-Amazon Web Services, which was kind of new to Customs.”

Part of the INLT module was also based on input from forwarders. “We had a few forwarders ask us ‘What if I want to amend an entry or we’ve had a conflict with an importer who has indicated they’re not going to pay their duty, or not going to pay our bill? How do we communicate that to you or pay our bill?” Reynolds said. “We’ve made that interface a two-way street. They can now go into the billing module and then remove an entry from the statement.”

Still new to the scene

It should be noted that many of these customs systems are very new to the market. Companies like INLT and SkySpace have only been operating commercially for a few months. However, the systems are already winning over converts.

There are, of course, plenty of IT companies that offer online customs brokerage services – some that come to mind include Flexport, Logitude (a service of CHAMP) and Fleet — but most of them include customs as just one of several services offered that are geared to work directly with shippers rather than forwarders. Some of the firms do not even have licensed brokers on staff.

INLT has generated some excitement in the industry about its focus on customs, but it’s so new that it has not yet been seriously tested in the field.

“Our trial started just last week,” said INLT customer Steve Love, vice president of international business development for Saturn Freight Systems, in a mid-April interview with Air Cargo World. “It’s given us a break on the price, compared to paying a broker, and it will allow us to go paperless, which we’ve wanted to do for some time. We don’t have much experience with it yet, but after seeing the demo we were very impressed. We were saying ‘Where has this been all this time?’”

Stan Chu, president of Triumph Link, in Southern California, has been experimenting with INLT for about three months and praised its ability to store all customs data in one place. “Once the data is very carefully input, it makes the process so much more efficient for repeat shipments,” he said.

Triumph’s operations manager, Linh Van, also said the system was too new for her to comment about its ability to solve disputes, but she liked the ability to join chat groups with other forwarders to discuss common customs problems and find quick answers.

“We haven’t seen anybody else do quite what we do,” Reynolds said. “There’s a serious barrier to entry – you need to be a licensed broker, for one. And two, you’ve got to get your software built and certified by DHS and U.S. Customs and it’s kind of a painful process. I don’t see anyone else building an API system fresh from the ground up. It’s mostly a bunch of companies creating a patchwork of Band-Aids and bubblegum to fix legacy ATS systems.”

As for SkySpace, Raworth said now that the U.S. service has been rolled out, the next target will be Latin America, where it will be represented by Craft Intermodal in nine different countries. “We’re expecting at least 2,000 to 3,000 shipments there per month,” he said.

Marca Global Logistics’ Jaramillo said that, after using the SkySpace portal for the first four months of 2018, he is convinced that these cloud-based apps could mean the survival of the SME forwarding business, at least in the United States.

“I have been in this business for many years,” he said, “and I’ve seen nothing else like it. We always thought that platforms like this would exist in a couple of years, but they’re already here right now.”

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