Globalization, eCommerce, the democratization of technology, the “long-tail”, our never-ending pursuit after increased convenience, and the latest catalyst, COVID 19, are all driving the worldwide delivery economy to unfathomable heights at an increasing speed. To put some numbers to these words, Pitney Bowes 2019 Parcel Shipping Index notes that over 100 billion parcels were shipped in 2019 and that a double-digit CAGR will propel this number to 262 billion by 2026.
Naturally, the need to clear parcels through customs will grow in a similar fashion, if not faster, seeing as it is likely that an even greater portion of said deliveries will entail cross-border shipments. Practically, conventional, people-dependent clearance processes are not even close to keeping abreast of the skyrocketing volumes of clearances required. While there are many small hacks and tricks we can do as humans to improve the situation, the only viable long-term alternative is to turn to automation, and more specifically, to artificial intelligence (AI) and robotic resources (RR) such as AIDock’s Bailey and Cody customs processing robots.
Customs clearance processes, a lesson in non-scalability
A telling statistic: The CBP (U.S. Customs and Border Protection) estimates that 20 percent of shipments between the US and Canada are delayed at the border due to incomplete or missing documentation.
Traditionally, growth in international shipments and the resulting growth in customs clearances would mean that those responsible for said clearances, e.g. importers, exporters, and customs brokers, would need to hire a proportional number of data entry clerks and other related professionals to process the clearances. Under the explosive growth described above, this is an untenable model for the following reasons (amongst others):
- Insurmountable paperwork requirements – Every package and all goods to cross a border must be declared and forms filled to clear customs. Exponential shipment growth equals, therefore, exponential growth in paperwork. Across the board, experts agree that this is the biggest challenge faced by clearance specialists who typically rely on manual labor to process the paperwork. Beyond the gruel of dealing with such mounds of forms and documents, increased volumes lead to more missing and incomplete documentation and more errors in data entry.
- The insufficient pool of experienced personnel – While the skill set required of data entry clerks is minimal, experience, or lack thereof, in the customs sphere can significantly impact processing speed and accuracy.
- Faulty HS Codes – Harmonized System Code classifications are a cornerstone of efficient customs clearance. Improper assignment of HS Codes can lead to a whole slew of problems and fines for importers and exporters and put a strain on the entire customs system. Greater volumes result in more HS Code misclassifications.
- Country variances in customs rules and regulations – Regretfully, there are few global standards for clearing customs, such that each country “does its own thing” to varying degrees. Again, relying on human expertise in these areas can be problematic and expensive.
Any and all of the above can hamper customs clearance processes and lead to delays, fines, and other negative consequences, such as:
- Per diem storage fees for products held in customs.
- Regulatory fines and fees.
- Consistent delays can cause business deterioration, e.g. production delays, supply delays, etc.
- Long delays can make the shipment of seasonal goods irrelevant.
A case in point – Brexit
The crippling effect of customs’ requirements where none existed before
To bring home the issue, consider what has happened in the UK and the EU in light of the Brexit. Beforehand, goods and services were allowed to travel between the UK and EU with no customs checks or other border formalities. As of January 1, 2021, however, the UK is being treated as a non- EU country, stopping the customs-free transfer of goods. The spike in customs clearance costs, including the very expensive salary costs associated with additional personnel, has severely impacted trade, with many European companies scrambling to restructure their operations to meet the new situation or forgoing the purchase of British goods altogether.
What you can do, and what AI can do even better
While the picture painted above may seem grim, there are things you can do about it. Namely, add AI and RR technologies to the mix and you’ll be able to scale in lockstep with the market.
- What you can do: Prepare a checklist of all documentation needed to clear customs.
- What AI can do: Auto Generate the checklist for each country and track completion.
- You: Determine the required information for each document.
- AI: Auto Generate a list of all the information you need for each document.
- You: Fill in a detailed declaration document, using the existing documentation as a reference. Review the document as needed to limit errors.
- AI: Autofill the declaration document based on existing documentation that the AI has scanned and given humans an opportunity to double-check its work when uncertain about the value to place in a specific field.
- You: Eventually move on to the next package.
- AI: Process hundreds of documents in a fraction of the time.
- You: Make sure all necessary parties receive the required documents.
- AI: Automatically distribute documents to the relevant parties.
- You: Try and remember, perhaps document, where you made mistakes for the next time.
- AI: Learns from its mistakes, never making the same error twice.
Relevant AI solution – typing robots: Typing robots automate data entry for any data field in a form, asking for human assistance when needed.
HS Code Classifications
Countries and their customs officials are not fans of people who skimp on properly classifying the goods they are shipping, and can, at best, decide to delay a shipment until things are sorted out. There is not much we can do about this, other than hiring a seasoned expert in HS Code classification.
On the other hand, AI-based HS Code classifiers can classify a great many goods in a short amount of time allowing you to handle much larger volumes of parcels.
Relevant AI solution: HS Code classification robots – Using an HS Code robot to automate HS Code classification, will allow you to perform thousands, even millions of classifications every second with excellent accuracy.
Additional areas of improvement.
There are quite a few additional areas where we, as humans, can better the customs clearance process, and that AI can help out even further, such as:
- Ensuring that the appropriate duties and taxes are collected at the border.
- Make your cargo accessible for inspection.
- Analyzing container images made by x-ray scanners to improve the efficiency of cargo inspection.
- Learning how to use mobile apps provided by customs authorities.
In a few short words, there is nothing artificial about the value of artificial intelligence, and more specifically, of the value leading AI systems can bring to customs clearance.