Understanding the Customs Clearance Software Landscape
What is Customs Clearance Software, and Why Is It Important?
Customs clearance software is a software-as-a-service application that allows logistics operators to seamlessly manage complicated clearance processes while avoiding the many pitfalls inherent in such operations.
Next-generation customs clearance software is critical in the world of logistics as it make it possible for customs agencies and customs brokers to achieve reduced operational costs and enhanced efficiency in service.
Some of the most important benefits that customs clearance software provides include:
The enablement of digital customs filling and the accommodation of ever-changing regulatory requirements. Customs procedures and rules are always in a state of flux, and as such, customs clearance software, unlike manual filing, ensures all changes in import and export modules are taken into account in filing to ensure compliance and avoid costly fines or delays.
Customs clearance software makes the customs clearance process more efficient, easier, and faster through automation. It automates many of the processes involved, including filing paperwork and calculating taxes, duties, and tax refunds on exports, saving businesses a lot of time and money.
Most custom software comes with an easy-to-follow and straightforward interface that makes it easier for staff to do their jobs without too many errors. It will also improve visibility into the supply chain as it generates standard reports at critical points of the process, thus providing information and data to enhance efficiency.
The Evolution of Customs Clearance Software
Customs clearance software is fast evolving and becoming one of the most efficient ways of enhancing efficiency and reducing costs in import and export processes.
In recent times, many technologies have been introduced by various customs and tax administrations. Some of these changes include the introduction of electronic data interchange (EDI), direct trader input, advanced cargo information systems, and Internet use. The development and evolution of these four components have driven the growth of customs clearance software.
Electronic Data Interchange (EDI)
EDI Provides a structured approach to securely transfer and exchange data between two systems, usually a broker/client and the customs or tax administration. EDI systems are designed with rules that set out the characteristics of data to be exchanged between computer systems. This makes it easier for the receiving systems to receive, understand, and process information and data.
Direct Trader Input
The trade community, which includes brokers and clients, can submit their customs information and data directly to the customs authorities. This reduces the costs to customs authorities as they have less need to maintain and man workstations where brokers will submit customs documentation.
Moreover, direct trader input is more efficient as information entered is interactively validated and declarations printed almost instantaneously. This has, over time, resulted in simplified procedures, reduced processing charges, and faster release times, resulting in greater adoption of customs clearance software.
Advance Cargo Information Systems
Developments in customs software mean that operational arrangements make it possible for brokers and clients to process their transactions through computerized systems even before the arrival of their cargo.
Since customs can process cargo and release data through automated release systems and notify customs brokers and clients through EDI, advanced cargo information systems usually result in substantial cost savings in storage and transport operations.
The internet is an easy-to-use and inexpensive option that has made it possible for computers belonging to customs and their clients to connect securely and efficiently, thus promoting fast data exchange.
The constantly dropping prices for telecommunications and hardware, the development of encryption and other safety standards, and simplifications of measures such as EDIFACT and ANSI X12 have made the development of customs software inevitable.
Examining the Adoption Rate
The Global Adoption Rate: An Overview
According to a survey study conducted by Deloitte from AEB, about 75% of companies use customs clearance software. However, it is essential to note that companies use customs clearance software very differently.
In essence, businesses engage customs service providers with custom-designed customs clearance software that provides support so they can currently and efficiently declare goods to customs authorities.
With the rise of international customs processing systems such as ASYCUDA, which has now been adopted by more than 102 countries worldwide, the adoption rate of customs clearance software has risen to greater than 75 percent in Western countries and is nearing 50 percent in developing countries.
Adoption by Company Size: SMEs vs Large Enterprises
When it comes to company size, large enterprises have been at the forefront of the adoption of customs clearance software. This is because large enterprises tend to favor adopting new technologies as they stand to gain a lot more from such innovations.
SMEs have not been quick in the uptake of customs clearance software as they are not involved in international shipping and logistics compared to large enterprises. Enterprises that depend a lot on international shipping have a good understanding of the dynamic challenges in such endeavors.
With constantly changing customs clearance processes, including trade agreements, geopolitics, ever-changing procedures and regulations, and they operate in many more countries, large enterprises understand that customs clearance needs to be done right.
As such, large enterprises tend to default to using customs clearance software to manage their customs clearance processes compared to small and medium-sized enterprises.
Insights from User Companies
Direct Feedback: Benefits Experienced and Challenges Encountered
At Customs City Global Solutions Inc., we have been working with many companies, and as such, we have the data on the many challenges international companies face and the benefits they have experienced after switching to our customs clearance software.
Some of the most prominent countries that we have insights into include Evolve, a direct-to-consumer e-commerce company, Great Way, a high-volume e-commerce company; and Sung Moo Kim CHB, another high-volume e-commerce company.
Evolve Supply Chain Solutions LLC
Evolve is a fast-growing global fulfillment solutions provider that had challenges with slow communication and importation processes of Section 321 eCommerce shipments. It also needed a solution that provided 24/7 access via the internet and real-time visibility.
The biggest challenge was that most customs clearance providers used complicated and time-consuming manual processes. Moreover, their communication was slow, and the customs clearance process was too complex.
Great Way Trading & Transportation Inc
Great Way Trading is a company that provides third-party and fourth-party logistics in international freight forwarding and customs brokerage.
Great Way Trading & Transportation’s biggest challenge was that the submission and uploading of high-volume Section 321 eCommerce shipments was very slow.
They needed an intuitive, cost-effective, and reliable, end-to-end solution that processed customs quickly and efficiently.
Sung Moo Kim CHB
Sung Moo Kim CHB is a company that provides CFS and customs brokerage services, particularly about Section 321 eCommerce shipments between North America and Asia.
Sung Moo Kim’s biggest challenge was the lack of a solution to submit and upload large volumes of Section 321 eCommerce shipments that offer real-time visibility and data validations.
Their previous vendor used manual processes in submission, which was time-consuming, inefficient, and expensive and often resulted in late submission of HAWB data to CBP.
The company needed a cost-effective, reliable, robust, easy-to-use, and fast-processing solution for their high-volume shipments.
Some of the benefits that Evolve, Great Way, and Sung Moo Kim have realized from using customs clearance software include:
- Custom pricing plans are designed for their high-volume eCommerce shipments.
- Access to Custom City’s huge range of partners, from warehouse companies to other customs brokers.
- Increased accuracy and efficiency in data submission and validation through API integration.
- 24/7 Web-based access, which provides visibility of the entire customs process from just about any location with the internet.
- A Smooth and short onboarding process with full support from customs clearance experts from Customs City.
- Access to a system designed for high-volume processing, as it has no limits on submissions and uploads.
Company Profiles: Real-World Examples of Software Use
Company Profile: Evolve Supply Chain Solutions LLC
To help Evolve expand its direct-to-consumer business, Customs City Global Solutions offered an all-in-one customs clearance software solution. This enabled Evolve to work with the best CFS and customs brokers.
Evolve can access a streamlined customs clearance process where Type 86, ISF, and AMS Ocean are uploaded and easily validated before submission. Even better, the company has complete visibility of the process as they have 24/7 access to monitor every aspect of the customs process.
The Customs City software can instantly flag errors, including invalid HTS codes, and replace them with correct ones, which can be a massive time saver.
Company Profile: Great Way Trading & Transportation Inc
To assist Great Way Trading in processing high-volume shipments, Customs City provided access to its web-based solution comprising both Type 86 and AMS Air. This made it possible for the company to upload and submit more than 30 thousand shipments using a single file in addition to quickly validating HTS codes.
This significantly improved efficiency as Great Way previously used to manually validate the data, which was a massive time sink. Moreover, Customs City Software can flag errors in the HTS codes and replace them with correct ones.
The company now has access to customs clearance information and statuses as they can closely monitor everything through 24/7 access via the web. This means Great Way Trading has more confidence in the data they submit to the CBP.
Company Profile: Sung Moo Kim CHB
To help Sung Moo Kim streamline their processes, they turned to Customs City’s all-in-one solution that made it possible to submit more than 50 thousand shipments in one file and validate all the HTS codes before submitting, which is a massive time saver.
Another massive benefit of the Customs City clearance software solution is 24/7 access to the web, which makes it possible for Sung to monitor every aspect of the customs process.
The ability of the software to flag and validate and, in some instances, replace erroneous codes makes the work of employees more accessible and efficient.
Factors Influencing the Adoption of Customs Clearance Software
The Role of Globalization and International Trade Growth
Since the turn of the millennium, international trade and globalization has gathered a lot of pace. The global economy is highly dependent on global trade and the export and import of goods globally.
Since customs clearance is one of the biggest bottlenecks in globalization and international trade, governments have been developing mechanisms to tax and control the flow of goods across borders.
To reduce inefficiencies and bureaucracies, many jurisdictions have implemented customs clearance software systems such as ASYCUDA to help improve efficiency and streamline customs clearance processes.
On the other hand, large and small businesses involved in international shipping and logistics had to deal with constantly changing customs clearance procedures and processes and the differences in laws and regulations among different jurisdictions.
Since noncompliance can result in massive losses or costly delays, companies have been turning to technology, including automation, digitization, and electronic data interchanges, to streamline customs submission and validation processes.
Technological Innovations Driving Adoption
Technological innovations spread like wildfire in an increasingly globalized world and soon become standard practice. In the case of customs clearance software, the most important technological innovations are Electronic Data Interchange (EDI), digitization, and automation.
The Electronic Data Interchange
Large shippers and logistical solutions providers are turning to electronic data interchange, which is now used for anything from scanning, imaging, inventory, and clearance systems as it improves efficiency by up to 60%.
EDI can be used for the secure, fast, and effective exchange of information such as airway bill numbers, advance shipment notifications, bills of lading, and clearance invoices between and among customs brokers, consignors, freight forwarding agents, and consignees, which can make a business more agile.
Companies that integrate EDI-based systems into clearance processes achieve more visibility into their customs clearance processes. This makes it easier to track variances and generate data that can be used to enhance efficiency, which will reduce organizational costs.
Through digitization, companies have been improving the efficiency of customs clearance tasks. The rise in the use of digital files and scanners rather than paper, which has to be handled manually, makes customs clearance processes easier.
Digitization can make components of critical and export processes such as quality inspections, manifest checks, forwarding, and packaging more efficient.
Digitization can also make it possible for businesses to have automated profiling of customer details, granular tracking of shipments using the Internet of Things (IoT), and real-time updating of freight costs, all of which make the processing and releasing goods more efficient.
Most jurisdictions require importers to provide advance notification to customs for regulated import consignments. Using automation, robots can now validate shipments on predefined criteria, such as separating non-restricted goods from restricted goods or low-value shipments from high-value shipments.
Automation can also automate customs clearance aspects, such as automatically updating customs invoices and providing details on factors such as country of manufacture, collection address, shipment value, and delivery address.
Automation can also process scanning, imaging, and customs clearance systems.
The Future of Customs Clearance Software
Predicted Trends in Adoption
Customs remains constantly evolving and complex, and the transformation is still very early. Using customs clearance software will significantly improve efficiency in the short term, providing a more efficient solution to the laborious, slow, and error-ridden manual submission and validation processes.
In the future, more businesses will be adopting customs clearance software in their companies. By embracing digitization, businesses can gain a competitive advantage and potentially consolidate their market.
Lastly, as governments worldwide shift to digitized customs clearance systems such as ASYCUDA, more businesses must change to customs clearance software. This is because using such software will significantly ease the customs processes, thus considerably reducing costs.
Emerging Technologies and Their Impact on Software Use
The use of emerging technologies by customs officials and enterprises is one of the most significant things that will impact the use of customs clearance software.
Artificial Intelligence (AI)
Using technologies such as artificial intelligence has resulted in developing robust solutions to identify high-risk consignments before they arrive at the border, thus allowing them to make better decisions.
These systems can be leveraged for linking shippers to shipments, harmonizing codes to match, creating customer profiles, the valuation of shippers, and customer matching processes using configurable business rules known as intelligence, known profiles, and other risk indicators.
Application Monitoring Tools
Most businesses use multiple IT systems to provide end-to-end visibility to reduce downtime and system failures.
Given how easily it is for one of the multiple systems to fail, thus impacting the entire chain, businesses are now using application monitoring tools to pinpoint bottlenecks, process outages, and system downtimes.
IoT Enabled Applications
Through IoT-enabled applications, businesses can have information on what shipments need special storage while they are being queued up for clearance.
For instance, some goods require storage in temperature-controlled environments, and IoT sensors on the consignment will provide remote monitoring while the goods are awaiting clearance.