Customs

Looking to a future of paperless customs

TradeLens

For Nicolas Buhmann and Norbert Kouwenhoven, it all comes down to 450. That’s the number of hours that a container spends idle during a typical 30-day transit from Shanghai to Rotterdam.

Reducing those hours is what drives Buhmann and Kouwenhoven—both commercial managers working on TradeLens—to speak with customs administrations from India to the Netherlands and everywhere in between. They’re gaining detailed insights as they work with customs authorities around the world to find the smartest ways the platform can help move cargo quicker and smarter.

One solution they’re proposing builds on a system that’s already out there. The concept of a “global trusted traveler program for containerized freight,” as Buhmann describes it, has universal appeal. Today almost every country has an Authorized Economic Operator (AEO) program in which authorities grant customs-vetted organizations preferential treatment, thereby reducing inspections and scrutiny—and the delays, costs and frustration they can bring. The AEO program is one of the main aspects of the World Customs Organization (WCO) Framework of Standards to Secure and Facilitate global trade (SAFE), and most nations have implemented their own version in some shape or form.

TradeLens could boost the benefits of AEO programs by providing a more efficient, predictable and secure exchange of information.

For customs authorities worldwide, Buhmann and Kouwenhoven say, TradeLens could boost the benefits of AEO programs by providing a more efficient, predictable and secure exchange of information.

TradeLens collects supply chain data like bills of lading, packing lists and advance customs declarations from partners throughout the supply chain and allows customs administrations permissioned access. That data, which also include transport milestones, encrypted in TradeLens blockchain, can provide a new way for customs authorities to balance enforcement (i.e. preventing risky cargoes and collecting duties) and facilitation (i.e. supporting trade through the fast and easy flow of goods).

Buhmann says, “It might appear like these two ideas are contradictory, but the truth is, if you have good processes and state-of-the-art IT, you can do both at the same time, and better. The key is that customs have to have more data. That leads to more targeted, more accurate inspections.”

Kouwenhoven points out that when companies use TradeLens, they voluntarily provide insights or additional data to customs. In return, he says, that could lead to companies being “de-risked” by customs and granted special treatment in the form of less inspections, questions and requests.  

“There’s a lot of time lost in questions from customs like, ‘Can you provide this document?’ ‘Can you tell me how this works?’ and ‘Can you give me the name of your trucking company?” he says. “All that cumbersome stuff that is always asked at the wrong moment, when you’re busy doing something else… and then you have to figure out where the document is.” 

If the transport company is sharing their data with TradeLens, and the customs authority is a partner as well, all that information is instantly visible to the authorized users, verified, authentic and trusted. That can be an advantage and save all parties time, especially when containers are moving across borders.

Buhmann and Kouwenhoven believe that standardizing trust ratings systems could offer clear benefits for companies and customs alike, increasing with the amount of data they share with platforms like TradeLens. The more open they are, the more stars they could earn, Kouwenhoven muses, “This platform is an ‘integrity sieve’, because it attracts companies that are transparent.” 

TradeLens could facilitate prepopulated declarations. Kouwenhoven says if a trader is trusted and uses TradeLens properly, customs authorities could simply pull the data elements from TradeLens instead of waiting for a declaration from the trader. That would take a country’s AEO program to the next level, saving traders from paperwork and making customs authorities’ review processes easier.

These “declaration free border crossings” are a likely outcome of platforms like TradeLens. To Kouwenhoven, it’s the ultimate in digital transformation. “If it’s trusted traders, you don’t have to bother them at the border at all. Customs could just pick out the data they want, send the trader an invoice or even pull the money from their bank account,” he says. 

The future isn’t that far away. The desire for a worldwide “trusted traveler” program for containerized freight is evident as more and more countries implement some form of AEO program. This movement towards greater trust and less friction in international trade is growing as more countries work together to establish the agreements needed to enable AEO standards.

To Kouwenhoven and Buhmann these developments provide strong encouragement that the time is right for platforms like TradeLens. The idea that trust and transparency result in better treatment is not a major mental leap for companies and customs authorities around the world.

For now, Buhmann and Kouwenhoven are most concerned with how to evolve their approach in line with WCO’s AEO standards. As they continue their dialog with customs authorities around the world, they’re investigating how best to implement TradeLens, what form it will take and what legislative adaptations might be needed.

The countdown to closing the 450-hour gap has begun. 

Watch how TradeLens is helping realise the potential of paperless customs. The below video, courtesy of the Dutch Ministry of Economic Affairs, highlights how this internet of logistics — built using the TradeLens platform — is enabling less intrusion, more security, lower costs and improved predictability for customs authorities and other network partners along the supply chain.