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How to Build an AI Rollout Strategy for Trade Compliance

How to Build an AI Rollout Strategy for Trade Compliance

The exponential increase in international trade of goods and services has been accompanied by a surge in trade complexity. With more countries engaged in global trade, we have seen a higher number of bilateral partnerships and the creation of trade blocs and regional economic groupings, each of which has a different set of rules. Organizations must comply with trade compliance regulations, including export controls and import compliance, to avoid breaching legal requirements and exposing themselves to significant risks.

Today, add the rapid deployment of tariffs by the United States and other countries and not only has this compounded the inherent trade compliance complexity, driven by the numerous jurisdictions involved, multiple tariff regimes, and the use of trade barriers but it has made proper documentation, duty and tax management, and processes adherence even more essential in trade compliance.

Globalization has also led to the rise of multinational corporations, whose supply chains and markets are spread over several countries and regions. For these entities, the scale of operations and geographical diversification mean that their commercial and technology strategies are characterized by multinational deployment and local customization. Organizations across every industry must determine the right practice to manage import and export operations, considering various factors such as laws, restrictions, and legal obligations.

These big players had to, of necessity, incorporate technology in their playbook while designing their AI rollout strategy.

For example, a company that neglected proper documentation and failed to comply with trade regulations faced costly delays and penalties when its exports were held at customs — underscoring the critical importance of effective compliance and legal adherence.

Beware of the Slow Local-to-Global Trap

Given that customs and trade compliance requirements vary significantly across countries, a one-size-fits-all approach is generally not considered to be the most appropriate to navigate the diverse requirements in each of the geographies that the company operates. Companies must determine the specific customs and trade compliance processes required in each country to ensure effective compliance.

This implies that companies have to take into consideration the specific customs and other trade-related regulations in each country, as well as the different tariff rates that are levied for each trade partner. Taking cognizance of this, most companies, while preparing their AI rollout strategy, have typically preferred to implement trade compliance solutions separately for each country.

The process of implementing these solutions involves determining the right approach for each organization and aligning with the organization’s processes. The playbook here dictates that the company takes a bottom-up approach, deploying the selected artificial intelligence (AI) tool country-by-country and then working up to the global level, as their local organizations successfully implement the compliance tool.

Over time, this approach has shown clear limitations, as deployment speeds vary across countries.
These delays create a bullwhip effect, causing even greater setbacks at the global level.

In short, the company gets stuck in the slow local-to-global trap, creating a situation where significant delays are unavoidable. This can seriously impede the progress of the AI rollout strategy and cause the multinational deployment to be suboptimal.

Flip the Multinational Deployment Playbook with Local Customization

Recognizing the challenges posed by the local-to-global approach, companies now alter their AI rollout strategy process, flipping the script for multinational deployment.

The new approach combines a global trade compliance solution with phased local customization. Once the global framework is in place, the company proceeds country by country, tailoring the solution to local requirements and deploying it over time.

Local customization means mapping each market’s regulatory requirements and customs procedures, then adapting the compliance solution accordingly. Strong management practices and clear processes are essential to ensure alignment between the company’s AI strategy, local regulations, and organizational priorities.

This AI rollout strategy balances the need for rapid deployment with ground-level requirements, ensuring a smooth and successful multinational implementation. Including local customization in its playbook thus enables the company to strike the right balance between pace of deployment and compliance.

That said, for attempts at local customization in multinational deployment to be effective, the selected trade compliance solution needs to be both flexible and scalable.

Scalable intelligence enables the organization to derive benefits from day one, while operational flexibility ensures that the solution can easily be adapted on ground and integrated into local-level operations without the need for extensive reconfiguration.

Partner with KlearNow for a Seamless AI Rollout

Given the evolving playbook for multinational deployment, companies are opting for sophisticated logtech solutions that complement their AI rollout strategy and support local customization.

KlearNow’s suite of trade compliance and control tower solutions is apt for companies that intend to deploy globally and then roll down to individual countries.

Combining technical expertise with extensive experience in the logistics, supply chain, and trade compliance, KlearNow’s products are designed for scalability and flexibility — critical functionalities to support local customization.

Guided by a customer-centric philosophy of simplicity and ease of use, KlearNow has been solving trade compliance challenges for over five years — proven by the success stories of our customers.

Schedule your free demo today and witness firsthand how KlearNow can support your AI rollout strategy and local customization initiatives.

Frequently Asked Questions (FAQs)

1. What makes a successful AI strategy in trade compliance?

A successful AI strategy ensures that AI systems are aligned with business objectives, regulatory obligations, and existing data. It balances fast deployment with local customization, enabling organizations to meet trade regulations and import compliance requirements without costly delays.

2. How do companies build a robust AI strategy for global deployment?

A robust AI strategy combines scalable AI solutions with effective management practices. By tailoring AI initiatives to local markets while maintaining a global framework, companies can ensure smooth AI implementation that meets both regulatory and operational needs.

3. How does AI adoption help with trade regulations and import compliance?

AI adoption allows businesses to automate documentation, monitor evolving trade regulations, and streamline import compliance. Machine learning models can flag anomalies, improve accuracy, and reduce risks, ultimately turning compliance into a competitive advantage.

4. What role do AI systems and AI models play in trade compliance?

AI systems leverage machine learning to process large volumes of customs data, classify goods accurately, and monitor transactions against trade regulations. A well-trained AI model can adapt to new rules quickly, reducing errors and ensuring effective compliance.

5. How can AI initiatives support business objectives while using existing data?

AI initiatives become most effective when they integrate with existing data and align with broader business objectives. This ensures AI implementation not only improves compliance but also creates efficiencies, strengthens supply chain visibility, and delivers a sustainable competitive advantage.

 

Safeguard Your Customs Data Flow with Smart AI Integration

AI Integration and Customs Data: How to Prevent Smart Tools from Breaking Your Data Flow

As they say, well begun is half done, and deploying an AI-driven trade-tech solution is only the starting point of your stack strategy. In customs brokerage and compliance, the real value emerges after go-live — when high-volume customs data such as commercial invoices, HS/HTS codes, manifest details, and PGA (Partner Government Agency) attributes must move cleanly between systems. A robust post-implementation roadmap must therefore ensure seamless AI integration and customs data cohesion so you can reap the return on your technology investment.

While this might sound obvious, organisations often focus so intensely on implementation that they overlook the post-implementation realities — especially those unique to customs data, where an incorrect digit can trigger fines or cargo holds. That’s why many importers and customs brokers encounter challenges with AI integration and data cohesion once the system is nominally “live.”

A comprehensive stack strategy has to anticipate those challenges and embed safeguards for customs-specific datasets — including entry numbers, country-of-origin flags, valuation elements, and license references — so issues can be avoided or swiftly mitigated.

Common Pitfalls in the Post-Implementation Stage

Customs-facing AI solutions promise substantial efficiency gains, and importers often heave a sigh of relief after a successful deployment. Unfortunately, benefits do not flow automatically. Two traps are especially common:

Disconnected Stacks

Most organisations run legacy ERP or WMS platforms alongside modern log-tech tools. If newly generated customs entry data cannot feed downstream systems like accounting, delivery-order management, or government portals (e.g., ACE, CHIEF/CDS, ICS2), new silos form instead of an integrated network.

Integrated AI is crucial in preventing these data silos by embedding intelligence directly into existing processes. Additionally, working with the right vendors ensures that AI solutions are compatible and can be smoothly incorporated into your current systems.

Example: A classification engine correctly identifies HTS codes, but if it cannot push that data into the customs filing module, brokers resort to copy-and-paste, re-keying values and re-introducing error risk. Using the right tool is essential to ensure seamless data transfer between modules and avoid manual intervention.

Data Drift & Duplication

Customs datasets are prone to frequent updates — binding rulings, tariff shifts, new Free Trade Agreement qualifiers, and more. Thorough documentation is essential to track changes and prevent data drift. When the same invoice or HS code is stored in multiple systems, mismatches emerge, especially if the data is not organized, undermining declaration accuracy and audit trails.

Both issues undercut your stack strategy, generate compliance risk, and dilute ROI, forcing human intervention to patch the gaps unless you manage data updates effectively to prevent duplication.

Smart Deployment to Complement Smart Integration

Post-implementation success is possible when teams adopt a holistic mindset — treating customs data as a first-class citizen during architectural design. The key steps involved in smart deployment include the following pillars:

Systems Integration

Verify during discovery that AI tools expose robust APIs/webhooks capable of pushing and pulling customs datasets (eManifest, ISF, DTP, CTPAT data) into existing applications. Map data dictionaries early and test with real entry samples.

End-to-End Information Flows

Build pipelines so that data captured in pre-clearance stages (SKU-level attributes, COO, Incoterms, charges) flows automatically into post-clearance steps such as duty draw-back, landed-cost analysis, and recordkeeping—without duplication.

Customs-Aware Stack Strategy

When (re)designing your stack, pressure-test scenarios like tariff code changes, embargo updates, and multiple customs authorities. Embed validation checkpoints where AI flags discrepancies before filings reach government systems.

Organizations that plan for both implementation and the long haul will dismantle silos, maintain customs data integrity, and accelerate their digital transformation.

KlearNow’s Unified Architecture Sustains Your Customs Data Flow

KlearNow.AI has been at the forefront of AI-driven customs compliance for over half a decade. By combining deep domain knowledge with cloud-native engineering, our platform ensures that deployment goes hand-in-hand with customs data integration.

Our unified architecture:

  • Ingests unstructured trade docs (commercial invoices, packing lists, certificates) and converts them into structured, reusable customs datasets, utilizing natural language processing to interpret and process complex document formats.
  • Automatically links classifications, product master data, and regulatory flags to every transaction and distributes that data to TMS, ERP, and governmental nodes in real time, using advanced analytics for optimal data distribution and decision support.
  • Maintains a single source of truth — so amendments flow across all connected systems, preventing version skew and reducing post-entry corrections, while supporting predictive maintenance to ensure system reliability.

In effect, KlearNow’s AI becomes the connective tissue between systems rather than an isolated brain. Schedule your free demo today and see how our suite of customs-focused solutions can elevate your stack strategy and safeguard your downstream data flow.

Frequently Asked Questions (FAQs)

1. What are the key lessons learned from completed AI integration projects in customs compliance, and how can they guide future projects?

Post-implementation reviews of completed projects show that setting clear objectives, tying them to measurable outcomes, and documenting every process step are indispensable lessons learned. Capturing these insights in a formal post implementation review lets teams refine data mappings and de-risk future projects before development even begins.

2. How can companies calculate the actual costs and ROI of successful AI integration across the entire project life cycle?

Begin by mapping each stage of the project life cycle — design, build, testing, go-live, and support — and allocating direct and indirect expenses to every phase. Predictive analytics then contrasts these actual costs with productivity gains and compliance savings, delivering a data-driven picture of successful AI integration. Embedding risk management metrics ensures hidden costs such as rework or penalties surface early.

3. Which repetitive tasks in customs brokerage benefit most from artificial intelligence, virtual assistants, and advanced AI models such as machine learning and deep learning?

Tasks like HS code lookup, document validation, duty calculation, and status messaging are prime candidates for automation by virtual assistants powered by artificial intelligence. Leveraging AI models — from traditional machine learning to deep learning — can eliminate up to 80% of repetitive tasks, boosting analyst productivity while reducing errors.

4. What role does risk management play in determining secure access to external data on site during AI deployment?

A robust risk management framework drives the process of determining who gets access to external data, whether it resides on-site or in the cloud. Least-privilege access controls, continual audits, and encryption protect business operations while still feeding AI engines the real-time data they need for accurate decision-making.

5. Why is a post-implementation review report essential for inventory management, aligning the project’s deliverables with users’ needs, and sustaining overall business objectives?

A thorough post implementation review report measures whether the project’s deliverables, such as automated entry creation or inventory management triggers, match users’ needs in daily workflows. Its findings feed continuous-improvement loops, keeping the solution aligned with broader business objectives and ensuring long-term resilience in customs-data processes.

 

What To Ask Before You Choose a Trade AI Tech Provider

Over the past few years, advances made in the field of AI and ML have increased their adoption across industries. The logistics and supply chain industries are no exception, with trade AI gaining in popularity amongst importers, exporters, and customs brokers.

Awareness of the potential benefits of AI – and consequently the demand for AI-powered products – has grown significantly. As a result, AI has become more of a marketing tool, with almost every tech product that automates a process or part thereof being marketed as AI-powered. Current practices in tech evaluation often fail to distinguish between true intelligence and simple automation.

In this sense, AI-powered has become a cliché, somewhat akin to the manner in which the term cloud-based became overused and underdefined about a decade back.

Automation vs Intelligence: Why Automated Doesn’t Always Mean Smart

It’s easy to conflate automation with intelligence, but in the world of trade AI, the difference is crucial. Automated systems excel at processing a massive amount of data quickly, but speed alone doesn’t guarantee valuable insights or informed decisions. True intelligence goes beyond routine automation by leveraging real-time data and data-driven decisions to deliver continuous improvement and a genuine competitive advantage.

This has caused a blurring of lines between what constitutes trade AI and products that merely digitise or automate certain tasks. It makes technological due diligence during the vendor evaluation stage crucial. Besides technical assessments, soft due diligence is also important, as it assesses the provider’s culture, management, and integration capabilities.

The key is to grasp the concept of automation vs intelligence.

While automation involves performing tasks efficiently and rapidly using technology, it can perform only within its defined scope and doesn’t learn or improve.

The implication is that it is more of a tool designed to perform a static task and reduce human effort for that particular task, examples of which could be using macros in Excel to automate data processing. Though automation might have saved human effort, its benefits stop at this point, and is not dynamic or adaptable.

Intelligence – as used in the term AI – refers to the system having the capability of simulating human learning, comprehension, problem solving, and expanding its scope of tasks handled, through an iterative process where the more data it processes, the better it becomes. In this context, trade AI presupposes the ability to adapt, predict, and refine its processing abilities.

Due Diligence Process Checklist to Identify Trade AI Capabilities

Recognising this difference between automation vs intelligence can help users ask the right questions during the vendor evaluation process, thus making their due diligence robust and more effective.

This is all the more relevant while procuring Trade AI solutions, to ensure that the solution addresses broader issues and integrates across all functions, rather than operating in silo’s.

Before initiating the vendor evaluation process, users must have in place a structured due diligence process that can gauge the difference between automation vs intelligence, understand what their business requirements and organizational needs actually are, and then select an appropriate trade AI product.

To do this, a comprehensive checklist for vetting AI claims and ascertaining value-add functionalities is of the utmost importance. Using a cleverly designed checklist can help sift the wheat from the chaff by asking the right questions to separate real capabilities from mere buzzwords and jargon.

A handy due diligence checklist for use during the due diligence process is shared below:

1. Clarify Business Objectives

  • Map your organizational objectives and user-specific requirements.
  • Ensure alignment between business needs and the capabilities of the trade AI solution.
  • Define success criteria to guide the evaluation process.

2. Get a Comprehensive View of Solutions

  • Evaluate various trade AI products side by side to obtain a comprehensive view of each provider’s offering.
  • Identify whether the solution addresses isolated tasks or enhances end-to-end supply chain efficiency.

3. Assess Intelligence vs Automation

  • Does the system simulate learning and problem-solving – or simply automate static tasks?
  • Can it adapt to exceptions, process unstructured information, and improve over time?

4. Functional & Predictive Capabilities

  • Look for Intelligent Document Processing (IDP), real-time analytics, and predictive features.
  • Is the AI system explainable? Can users understand why a decision was made?

5. System Integration & Scalability

  • Check for seamless integration with existing systems and smooth data flow across departments.
  • Ensure the solution is scalable across business units and geographies.

6. Supplier Evaluation & Vendor Reliability

  • Conduct a thorough supplier evaluation to assess the vendor’s delivery record, compliance posture, and risk profile.
  • Review key financial metrics and past performance to evaluate long-term reliability and growth potential.
  • Request case studies or success stories relevant to your industry.

7. Engage Stakeholders Early

  • Engage stakeholders across departments – especially the procurement team – to gather diverse perspectives and ensure alignment.
  • Involve both technical and business users to assess usability and fit.
  • Confirm that all material information and facts are disclosed during the evaluation process.
  • If needed, engage a law firm to perform legal due diligence and validate regulatory compliance.

These questions are designed to ensure comprehensive vendor evaluation and assist in selecting a trade AI tool that is suitable for the business, considering its scale and complexity, and to support effective decision making.

KlearNow’s Helps You Control Trade Risks

Data is the lifeblood of international trade, and smooth information flows accelerate cargo flows. It is vital to ensure that data is shared on time with all relevant stakeholders, and there is visibility at all stages of the supply chain.

It is therefore necessary that trade AI products need to be designed with a transparency-first approach.

With its customer-centric mindset, KlearNow has always prioritised transparency while designing its trade AI products.

KlearNow’s logtech solutions are designed to automate the end-to-end supply chain and trade compliance process, digitizing documentation and simplifying customs submissions, besides being scalable, easy to integrate, and infusing intelligence in your operations.

Click here to schedule a free demo on how KlearNow can ensure you remain in control. 

Frequently Asked Questions (FAQs)

1. What does a thorough vendor evaluation process involve when selecting a trade AI provider?

Diligence involves examining not just product features, but also the provider’s ability to meet your evaluation criteria, including performance standards, quality standards, and cost control. A well-structured vendor evaluation form can help compare offerings objectively and flag potential risks early on.

2. Why should regular reviews of trade AI solutions be part of our strategy?

Trade environments evolve constantly. Regular evaluations ensure that your AI provider keeps up with shifting market trends, complies with updated quality standards, and continues to align with your strategic goals. These reviews also help identify performance gaps and ensure consistent vendor performance.

3. How does trade AI impact cost control and shareholder value?

Smartly implemented trade AI can enhance cost control by reducing manual effort, minimizing compliance errors, and streamlining documentation. By boosting operational efficiency and resilience, it directly supports long-term shareholder value creation.

4. What role does market data play in evaluating trade AI tools?

Market data helps benchmark your vendor’s performance against industry norms and identify leaders who are innovating with AI. Evaluating providers in the context of current market trends can reveal who is genuinely driving progress versus those using “AI-powered” as a buzzword.

Ensure that the provider retains control over its intellectual property and that usage rights are clearly defined. This reduces potential risks of IP disputes or vendor lock-in. A legal review – often done in collaboration with a law firm – can also ensure the solution complies with regulatory frameworks and protects your business.

 

The No-Code Advantage: Why Operators (Not IT) Are Leading the AI Charge

Trade volumes are steadily growing, while trade compliance is becoming more complex. A volatile tariff environment and rising protectionism — through both tariff and non-tariff barriers — are driving this change. This has resulted in AI playing an increasingly important role across trade compliance and logistics.

Logistics automation has been the focus of most importers, exporters, freight forwarders, and customs brokers, driven by the desire to leverage technology to digitally transform their trade compliance functions.

Traditionally, AI in the customs and trade space was built by software developers and data scientists who, while technically skilled, often lacked deep domain knowledge of customs regulations and supply chain complexity. The tools they created reflected that gap—technically sound, but disconnected from the day-to-day realities of compliance teams. These solutions were designed top-down, with IT departments leading the charge and little input from the operators actually navigating trade flows.

That’s starting to change. No-code AI platforms are now making data science accessible to a broader audience, not just those with technical backgrounds. The people who live the complexity — compliance officers, logistics managers, and customs brokers — are now shaping the tools themselves. Instead of relying on dev teams to guess their needs, they can build, configure, and adapt AI tools to fit real-world processes. This shift democratizes AI and puts problem-solving power in the hands of those who actually understand the problems.

Common Challenges and Limitations of IT-led AI platforms

Considering that strong IT skills were necessary to develop AI code, it is unsurprising that the development of AI-powered logtech solutions was the forte of developers and data scientists, whose academic qualifications and expertise were primarily in IT, rather than the trade compliance and logistics industries.

This meant that most logtech software lacked the industry perspective and insights, knowledge of which was a prerequisite to developing solutions that addressed the underlying operational problems and procedural intricacies faced by most importers, exporters, freight forwarders, and customs brokers. Traditional IT-led systems often failed to determine the critical factors influencing operational efficiency.

As a result thereof, logistics automation using traditional AI posed some common challenges and limitations, which only became apparent to users at post-deployment. These limitations also affected the workforce, as manual interventions and staffing adjustments were often required to compensate for inflexible systems.

Amongst the more critical ones were:

1. Inadequate industry expertise and understanding of procedural minutiae

Because IT experts drove logistics automation, the products developed, though technologically sound, often did not take into account specific aspects of trade compliance and logistics.

2. Limited ability to customise or alter workflows

Due to the complexity of the AI code used, it was difficult to make changes to the software to incorporate unique industry-specific requirements. Traditional platforms often lacked features that allowed users to easily customize workflows to their specific needs.

3. Delays in implementation or changes

Since these were not operator-first platforms, additional requirements or modifications identified at a later stage would necessitate the involvement of IT personnel, who, with their existing workload and limited business understanding, would require more time to handle the change requests, leading to delays.

4. Lack of scalability

As IT was needed to handle every change requested, the product’s scalability across geographies and verticals was restricted, adding to additional costs and time, resulting in increased cost due to IT-dependent scalability.

Rise of No-Code AI

As users become cognizant of the limitations of traditional AI tools, they are turning towards no-code AI for trade compliance and logistics automation.

It is estimated that by 2025, 70% of new applications will be developed using low-code or no-code AI technologies, up from less than 20% in 2020.

In essence, no-code AI enables users to create applications and automate business processes without writing code, thus democratizing software creation and adaptation to business requirements.

No-code AI facilitates user-led innovation through the creation of operator-first platforms by using elements such as drag-and-drop interfaces and visual components. No code tools enable users to perform tasks such as building applications, automating workflows, and analyzing data without programming expertise.

Ergo, even users with no coding knowledge can create the applications they need.

Advantages of No-Code AI

No-code AI helps businesses overcome the limitations of traditional AI tools and has the following advantages:

  1. Accelerating speed of development and deployment: As the reliance on IT is eliminated, supply chain players are equipped with the ability to make necessary changes.
  2. Incorporation of industry-specific expertise: With user-led innovation, information and insights that are unique to the industry are incorporated, creating operator-first platforms.
  3. Lower costs: Since changes are managed by supply chain professionals who actually use the tool, rather than expensive IT staff, expenses are lower.

The key benefits of no-code AI for logistics and supply chain operations include more efficient processes, reduced costs, and simplified workflows, leading to improved operational efficiency.

No-code AI has thus ushered in a new era of user-led innovation in the field of logistics automation, replacing the IT-led model.

Frontline users such as supply chain operators, compliance leads, and analysts are leading the development of operator-first platforms. These platforms offer seamless integration with existing enterprise systems, further enhancing their value by enabling real-time data flow and operational insights.

KlearNow’s Configurable AI Empowers Supply Chain Operators

For businesses looking to boost user-led innovation, KlearNow’s configurable no-code AI is the ideal choice. The platform allows users to build and deploy AI models tailored to their business needs.

KlearNow enables logistics automation through operator-first platforms, empowering supply business users to adapt faster, act faster, and scale smarter without waiting for a development team. In this process, the process of software development and enhancement is rendered faster and smoother, with greater industry relevance. KlearNow also functions as a comprehensive system for logistics automation, integrating advanced AI models to streamline operations.

To gain the no-code AI advantage, contact KlearNow and book your free demo today.

Frequently Asked Questions (FAQs)

1. How does warehouse automation benefit from no-code logistics automation software?

Warehouse automation increasingly relies on logistics automation software powered by artificial intelligence to streamline everyday tasks like material handling and order fulfillment. No-code platforms enable companies to easily configure these tools without developer input, improving access for frontline users and allowing faster adjustments to real-world warehouse operations—leading to reduced operating costs and greater customer satisfaction.

2. Why is artificial intelligence more effective today than in earlier logistics systems?

Earlier programs were developed by IT teams with limited knowledge of trade and logistics. Today, artificial intelligence tools are more effective because operator-first platforms give direct access to the people who perform repetitive tasks and manage human resources daily. This shift allows the AI to better reflect actual workflows, improving outcomes and making automation support far more relevant.

3. Can no-code platforms help companies reduce operating costs and improve support?

Yes. By removing the dependency on IT for every system change, companies can make quick updates themselves using no-code tools. This leads to lower development costs, faster deployment, and improved support for logistics operations—all while maintaining or improving customer satisfaction and gaining a competitive advantage in the market.

4. What kind of repetitive tasks in logistics and compliance are ideal for machine learning?

Tasks like data entry, document classification, customs form processing, and scheduling in material handling are perfect candidates for machine learning automation. With no-code tools, these can be automated directly by logistics and compliance professionals, eliminating bottlenecks and freeing up human resources to focus on strategic activities.

5. How are companies using no-code AI to gain a competitive edge in the logistics market?

Leading companies are adopting no-code AI to streamline logistics automation, reduce costs, and respond faster to market shifts. With greater access to AI tools, compliance teams and warehouse staff can automate everyday tasks, adapt systems to local requirements, and enhance customer satisfaction — giving them a true competitive advantage without needing to code.

 

HTS Classification And the Hidden Costs of Single-Use AI in Trade Compliance

As the name implies, single-use AI refers to AI tools that are intended to solve a specific task. Since these tools are designed keeping in mind one particular activity, their scope is narrow, taking into consideration only the requirements and challenges of the task it is designed for.

This implies that single-use AI solutions do not address challenges with the broader trade compliance activity, nor are they capable of integration with other systems, thus effectively creating AI silos. These silos are often created when departments implement isolated solutions without considering broader integration, leading to fragmented data. This lack of integration results in a loss of control over data and processes, making it difficult for organizations to manage information effectively. Such failures in integration and data management can negatively impact overall business performance and outcomes.

Prevalence of Single-Use AI in Trade Compliance

Single-use AI first gained prominence in trade compliance when importers and customs brokers realised the need to automate certain tasks which posed great challenges, especially where the consequences of errors were high.

Since the objective was to automate specific activities and not the entire process, the mushrooming of AI silos was inevitable.

One of the most common single-use AI models was HTS classification.

The HTS classification process is considerably complicated, due to factors such as frequent regulatory changes, complexity of product composition, multiple-origin sourcing, unclear product descriptions, and misinterpretations. This process involves assigning specific HTS codes to products, which are used by customs authorities for enforcement and compliance. The HTS table serves as a key resource for identifying the correct codes for products.

The risks emanating from even inadvertent errors in HTS classification can range from overpayment of customs duties, delays in customs clearance, imposition of monetary fines and other penalties, and supply chain disruptions. US Customs and Border Protection (CBP) relies on accurate HTS classification to enforce trade regulations and border protection measures.

The deployment of AI for HTS classification can streamline the process and eliminate errors, accelerating customs clearance and rationalizing human effort. However, data fragmentation can occur when information is not integrated across systems, leading to inconsistencies.

Shortcomings of Single-Use AI Concerning HTS Classification

HTS classification is one of the most visible examples of successful single-use AI deployment.

However, by their very nature, single-use AI tools lend themselves to the creation of AI silos and data fragmentation, leading to automation traps. Data fragmentation can exist across different functions and departments within an organization, making it difficult to maintain data consistency and standardization.

As it is designed to handle only one task (such as HTS classification), the lack of integration with the broader tech stack gives rise to new AI silos. The resultant data fragmentation undermines the purpose of implementing AI, and the benefits thereof are thus negated at the organizational level, ultimately culminating in automation traps, where automation isolates rather than integrates.

Let’s take HTS classification as an example: since these classifications are stored only within the AI tool and not integrated with the organization’s other systems, the organization is unable to fully leverage this information across its operations. For instance, a single-use AI tool can accurately handle HTS classification for thousands of SKUs but the information doesn’t flow into the organisations ERP or customs compliance software, thus creating AI silos.

When data flows are not automated and systems are not integrated, organizations face the issue of data fragmentation, where data is often distributed and stored in separate databases and data storage systems, making it difficult to manage and allocate storage efficiently. Different departments could work with different HTS classification data for the same commodity, which in turn could create discrepancies in customs submissions and information shared elsewhere.

HTS classification, though crucial, is just one of the multiple stages in customs compliance. With AI silos and data fragmentation, importers and customs brokers will have to duplicate the work, re-entering the data and manually validating it. Different functions within a company may store the same data in multiple locations, leading to redundant stores and inefficient storage allocation.

Consequently, the organization is stuck in automation traps, with its operational efficiency impeded by disjointed workflows and profits margins eroded by hidden costs. These issues can occur at any point in the data management process, impacting the entire organization. The investment in single-use AI, often substantial, is therefore rendered suboptimal and could, in fact, create more problems than it solves.

KlearNow’s Integrated Approach Fuels End-to-End Intelligence

To fully realise the benefits of technology, importers and customs brokers need to move away from single-use AI tools and focus on deploying integrated AI solutions that are designed for the holistic supply chain.

KlearHub, which is the AI-powered global trade data hub offered by KlearNow, is one product that has found favor amongst importers and customs brokers.

KlearHub streamlines workflows and information sharing, automating all rote tasks such as HTS classifications and customs submissions, and more importantly, allowing data to flow across stages and departments, so data processed at one stage forms the inputs for the next stage, without the need for manual intervention or validation. The platform ensures secure access to data by implementing robust access controls and enforcing data governance policies across the organization.

This eliminates AI silos and data fragmentation, since data flows across the organization and stakeholders, with adequate data security and compliance checkpoints.

In this manner, KlearNow’s integrated approach ensures that AI doesn’t stop at task automation; it rather fuels end-to-end intelligence. This approach is applicable across different industries, supporting a wide range of trade compliance needs.

To understand how KlearNow can elevate your supply chain performance, click here to schedule your free demo.

Frequently Asked Questions (FAQs)

1. What is Schedule B and how does it relate to HTS classification?

Schedule B is the U.S.-specific export classification system that aligns with the first six digits of the Harmonized System (HS), used globally for customs declarations. While many importers rely on HTS codes for imports, Schedule B codes are necessary to classify exports accurately and comply with U.S. trade regulations.

2. Why do many importers still struggle with accurate tariff classification despite using AI tools?

Many importers rely on legacy systems or disconnected file systems that don’t integrate well with new technologies. This leads to data islands where HTS or tariff classification information is stored in different systems, making it hard to ensure consistency across departments and customs filings.

To classify products, you can start by using the HTS search bar, ideally in a tool that references the harmonized tariff schedule. Focus on keywords, product composition, and use cases to locate potential matches—keeping in mind the first six digits of the Harmonized System are standardized globally.

4. What are the risks of storing HTS data in different locations or systems?

When classification data is stored across different systems or locations—such as spreadsheets, disconnected platforms, or department-specific tools—it leads to fragmentation. These data islands increase the chance of duplicate or conflicting entries, resulting in errors during customs clearance and compliance checks.

5. How can integrated platforms like KlearNow help eliminate data islands in tariff classification?

Unlike single-use tools, KlearNow connects data across the trade compliance lifecycle. Its centralized platform ensures that HTS classifications flow into downstream systems, preventing data silos, improving accuracy, and enabling seamless coordination between departments using different systems.

 

Is Your Tech Stack Hurting Trade Compliance and Costing You Money?

Since the early 2000s, transnational commerce has experienced sustained growth as more countries embraced globalization, prioritized export-oriented manufacturing, and liberalized their markets to allow greater import flows. To enhance trade efficiency and strengthen border security, many nations have implemented customs reforms and embraced digitization.

With organisations like the WTO promoting free trade and actively striving to reduce trade and non-trade barriers, exporters and importers found it easier than ever to penetrate foreign markets. Countries too started adopting business-friendly policies and fostering bilateral ties with other economies, in the form of FTAs, regional economic groupings, and trading blocs.

International free trade agreements and bilateral understandings, have shaped reciprocal trade terms and influenced tariffs and non-tariff barriers. The European Union serves as a prominent instance of a customs union that harmonizes customs rules and tariffs across its member states. The importance of trading partners in shaping trade relations and economic security has also become increasingly evident. Non-tariff barriers, such as standards and regulations, play a significant role in restricting market access and influencing trade patterns.

The environment was conducive to the development of geographically dispersed and deeply interconnected supply chains, and smooth trade compliance, where each country capitalized on its strengths to specialize in the manufacturing of specific products or provision of certain services, while becoming consumers of foreign products and services. Sectors like agriculture and food have been particularly impacted by tariffs and trade barriers, affecting both exports and imports.

Examples of the former include China positioning itself as the factory of the world, while countries like India capitalized on their favourable demographics and a young and skilled workforce to become an outsourcing hub for services. While the world economy did have to contend with recessions and slowdowns, these were primarily cyclical in nature, and the economy did rebound within a year or so.

Rise in Trade Compliance Complexity

Since 2020, however, countries have had to bear the brunt of several disruptive and black swan events, most of them being unprecedented in scale.

The COVID-induced lockdowns and mobility restrictions hindered supply chains for almost 2 years, while incidents such as the Suez Canal blockage further exacerbated the situation. Since then, military conflicts and geopolitical tensions have also dampened business sentiment and further slowed down global trade.

The latest blow fell in the form of the diverse and multiple tariffs announced by the Trump administration. The White House framed these tariffs as necessary to address unfair trade practices and protect domestic industries, declaring these measures as part of a broader trade war, aiming to restore balance with key trading partners. These actions, often referred to as Trump’s tariffs, led to pushback from other countries and a realignment of trade patterns to mitigate the impact of these tariffs and reduce exposure to the US markets.

The breadth of Trump’s tariffs, in terms of geographical scale and commodities, and the pace of tariff imposition created considerable uncertainty for importers and manufacturers. Importers have adapted to Trump’s tariffs, with some absorbing costs to remain competitive and minimize the expected impact on prices.

Consequently, the trade compliance environment went from being fairly stable to extremely volatile, leaving importers and customs brokers scrambling to get the latest updates on tariffs, determine the correct tariff rates applicable, ensure visibility into product components and sourcing locations, comply with documentary requirements, and avoid tariff overpayments while ensuring customs compliance.

Trade compliance in international trade and logistics has typically been very complex, due to paper-based processes and reliance on manual effort, as well as a lack of standardization in processes and documentation, resulting in the industry being relatively slow with adopting technology.

Over the past few years, advances in AI and ML have enabled the development of tech solutions aimed at various aspects of the supply chain and logistics industry. Companies such as KlearNow.AI have been at the forefront of this tech revolution, with their sophisticated and scalable products designed to simplify trade compliance and customs processes.

Common Technology Challenges in Trade Compliance

Most globally operating corporations have recognized the imperative of adopting technology to optimize supply chains, streamline trade compliance, reduce costs, and minimize manual effort.

However, in most instances, these efforts have been restricted to specific pain points or elements of the supply chain. Rather than taking a holistic and long-term approach, most corporations have invested in technology on a need basis, as a result of which they are today saddled with several disparate systems, of varying capabilities and functionalities.

These systems too often don’t integrate well and work independently of each other, resulting in companies not able to accrue the full benefits of digital transformation. Systems where data does not flow automatically create a siloed way of working, and amplify coordination and communication gaps rather than resolving them. This lack of integration can also hinder the effective tracking and management of equipment, such as transport machinery or technical devices, across the supply chain.

For example, an American importer might use several visibility vendors for various legs of the transport, so they might have different visibility solutions for ocean transport and drayage. The implications is that while they have visibility during the duration of ocean transport and the drayage movement, they lack comprehensive visibility at the handover points during ocean transport and drayage, resulting in a blind spot, despite having invested in visibility. These communication gaps and poor integration can also increase the risk of reputational damage if companies fail to deliver on time or comply with trade requirements.

In these situations, KlearNow.AI’s real-time visibility solutions very well meet the need of the importer for E2E visibility, and support trade facilitation by streamlining customs processes and reducing transaction costs.

Change management is another potential challenge, as employees will need training in using the new systems. Training can not only be expensive and time-consuming, but the inherent human reluctance to change will also complicate matters.

KlearNow Is Your Trusted Trade Compliance Partner

In a scenario where businesses contend with rapid and unpredictable changes, volatility, and ambiguity, KlearNow.AI has emerged as the preferred partner for major global corporations and importers.

KlearHub, its global trade data hub, can help fully understand the financial implications of trade tariffs and provide real-time updates as freight moves through the customs pipeline. This empowers businesses to accurately determine tariff rates, ensure trade compliance, avoid tariff overpayments, and expedite customs clearance.

KlearHub effectively serves as a one-stop solution for all trade compliance and customs tasks, while providing transparency on cargo movement and facilitating coordination amongst stakeholders for timely action.

With KlearHub, change management becomes significantly easier—users simply need to copy KlearNow in emails. Its AI-powered platform automatically ingests and interprets the data, streamlining customs submissions, automating information flows, generating actionable alerts, and flagging potential delays.

Click here to schedule your free demo and understand how they can support your business.

Frequently Asked Questions (FAQs)

1. What is the Harmonized Tariff Schedule and why is it important for importers?

The Harmonized Tariff Schedule (HTS) is the official system used to classify imported goods and determine the tariffs owed. It plays a vital role in ensuring compliance with international export controls and helps businesses navigate the complex landscape of world trade. Accurate classification under the HTS reduces delays at customs and supports consistent operations in the global economy.

2. How do changes in U.S. trade policy impact global supply chains?

Trade policy shifts — like the tariff measures introduced under President Donald Trump — can significantly alter supply chain costs and routes. These changes often force companies to reevaluate sourcing strategies and manage exposure to volatile markets. Understanding these impacts is essential to maintaining competitiveness in global markets and aligning with evolving export controls.

3. What role does U.S. Customs and Border Protection play in international trade?

U.S. Customs and Border Protection (CBP) enforces trade regulations at entry points to ensure compliance with both tariff schedules and export controls. CBP helps protect domestic industries and monitor sensitive goods, contributing to the overall integrity of the global economy and the stability of world trade.

4. How can businesses maintain tariff compliance while reducing costs?

To maintain compliance without overspending, businesses must monitor changing tariff regulations, classify goods accurately, and leverage technology that automates documentation and risk alerts. These practices help avoid overpayments and delays, especially when dealing with imported goods affected by unpredictable policies or new trade agreements.

5. Why does the Federal Reserve monitor global trade conditions?

The Federal Reserve closely tracks world trade and the movement of imported goods because fluctuations in tariffs, regulations, or trade volume can impact inflation, interest rates, and overall economic stability. Trade compliance and efficient cross-border logistics are therefore crucial not just for individual companies, but for maintaining health in global markets.

 

How to Turn Trade Compliance from Cost Center to Strategic Advantage

Even as the pandemic-induced disruptions abated after 2021, global supply chains continue to reel under ongoing military conflicts and geopolitical factors. These include the Red Sea crisis as well as trends such as nearshoring and friendshoring, which have caused elongated supply chains and affected the reliability thereof, resulting in higher transport and landed costs. Companies also face challenges when goods are exported to different countries, each with its own set of regulations and compliance requirements.

Since the beginning of 2025, the situation has further exacerbated due to the imposition of multiple rounds of tariffs, several of which were subsequently withdrawn or paused. These tariffs were extremely broad-based, targeting countries, commodities, and sectors. Tariffs function as a form of tax on imported goods, increasing costs for businesses. In addition to tariffs and countermeasures, new import licensing and controls have been introduced, making it essential for companies to understand import procedures and comply with all relevant regulations.

As countries at the receiving end of higher tariffs have responded by imposing counter tariffs or other trade restrictions, as well as exploring other trading partners, transport costs have edged even higher, while trade compliance costs have increased substantially due to the new tariffs and greater supply chain complexity. Companies must comply with new trade regulations and customs procedures to avoid penalties, delays, and reputational damage. When considering alternative sourcing and cost analysis, businesses must assess the impact of new regulations and tariffs on their procurement decisions.

Imports Face Increasing Cost Pressures

While trade wars in the past have exerted inflationary pressure on transport and operational costs, the magnitude of cost increases following the latest round of Trump tariffs has been far higher, primarily due to excessively high tariff levels and trade compliance requirements, which are governed by international commercial law and related legal frameworks.

Further, with tariffs being imposed on a large number of countries and commodities, the proportion of imported goods impacted is far greater than during Trump’s first presidential term.

These tariffs and trade policy changes are so designed as to render imports from certain countries (such as China) effectively unviable, and impacting entire sectors in other countries (such as the textiles and garment industry in Lesotho).

In this highly uncertain environment, trade compliance departments have had to contend with rapidly rising costs, compelling them to seek alternative sourcing locations. These costs are associated with higher tariff levels, increased transportation and trade compliance costs, and costs related to other functions of the broader supply chain, such as inventory and warehousing (as companies have to hold a greater amount of inventory to account for the uncertainty and cover for possible disruptions). Customs authorities also have significant responsibilities in ensuring compliance with trade laws and facilitating the efficient conduct of international trade transactions.

Trade Uncertainty to Continue in the Foreseeable Future

Since we are just at the beginning of Trump’s second term, and with few signs that President Trump and the administration’s approach to international trade and policies — including President Trump’s tariffs — will change, most analysts expect the uncertainty to continue over the next few years.

Further, as other countries prepare to retaliate immediately through trade and non-trade measures and also plan to diversify away from the American market, it is unlikely that we will witness any early return to normalcy. The administration has also invoked national emergency declarations to justify such actions, emphasizing concerns related to national security and sovereignty.

Although a US trade court has now blocked these tariffs, uncertainty persists, as the US government has appealed the decision. The Supreme Court has the authority to decide and rule on the legality of these measures, which could ultimately determine the outcome of the legal challenge to President Trump’s tariffs.

Similarly, in other significant trade cases, the court’s decisions have had a profound impact on trade policy. Regardless of the outcome, the administration has several other tools at its disposal to increase the cost of American imports and impose trade restrictions on other countries. The significance of oral arguments in the Supreme Court’s deliberation process cannot be overstated, as they play a crucial role in shaping the final decision.

The situation can be categorised as a permacrisis, which will bring structural changes to the international trade framework, lead to the formation of new trading partnerships, and alter cargo flows.

While it is a difficult guess on how this volatility will play out at the micro level, there is general consensus that corporations and importers will see their operational costs rise while also facing a more onerous regulatory burden, where trade compliance and finance implications — such as increased costs for financial institutions, banks, and insurers — assume critical importance.

Variations in Tariff Levels Alter Manufacturing and Sourcing Patterns

The fact that the levels of tariffs imposed on various countries exhibit large variances implies that imports from some countries will be more expensive than from countries subject to lower tariffs. This will prompt a shift in procurement strategies to incorporate sourcing locations that enjoy a comparative advantage due to lower tariffs. For example, a company may shift its sourcing from Country A to Country B after new tariffs make imports from Country A significantly more costly, thereby optimizing its supply chain and reducing expenses.

At a macro level, this will also drive shifts in manufacturing capacity to newer locations, resulting in diverging supply chains.

In this scenario, trade compliance will be extremely challenging, as companies must monitor the frequent tariff changes, assess the cumulative impact on their prices and profits, and then make informed decisions regarding procurement, applying tariffs based on product composition, and leveraging legal loopholes.

Why Trade Compliance Is No Longer Optional

Trade compliance is the foundation of successful international trade, ensuring that companies adhere to the complex web of trade compliance regulations and laws governing the movement of goods and services across borders. In today’s globalized world, international trade compliance is more critical than ever, as businesses must navigate a constantly shifting landscape of trade regulations, export controls, and customs requirements.

The importance of trade compliance extends far beyond simply following the rules—non-compliance can expose companies to significant risks, including hefty fines, legal penalties, and lasting damage to their reputation. The recent tariffs have not only raised prices costs but also introduced a level of uncertainty that makes it essential for companies to stay vigilant and proactive in their compliance efforts.

The legal landscape has also evolved, with the Supreme Court hearing cases brought by two toy companies, Learning Resources and Hand2Mind, challenging the president’s authority to impose tariffs. Such high-profile cases underscore the need for companies to understand the legal framework surrounding trade, as court decisions can have far-reaching implications for trade regulations and business operations.

For companies engaged in international trade, the ability to mitigate risk and ensure compliance with all relevant laws and regulations is essential. This requires a deep understanding of the countries involved, the specific trade regulations that apply, and the potential impact of changes in policy or enforcement. As global trade continues to evolve, businesses must prioritize trade compliance as a core component of their strategy, recognizing its importance in maintaining operational continuity, protecting their bottom line, and upholding their reputation in the world market.

Leverage KlearNow to Transform Trade Compliance to a Cost-Saving Engine

As cost pressures erode margins and undermine competitiveness in global markets, pressure falls squarely on the shoulders of company CFOs. As the Chief Financial Officer, they control the company’s finances and carry the responsibility of ensuring that they mitigate cost increases and risks while staying compliant.

Trade compliance professionals now have a broader mandate, involving extensive analysis of components and sourcing locations, to design innovative procurement strategies, eliminate avoidable expenses, and carefully review existing legislation to understand how to minimize tariff payments, all while ensuring adherence to customs regulations.

CFOs need to be aware that deploying visibility and trade compliance tools will help the organization navigate the volatile tariff and regulatory environment. Capturing data at this level of granularity and thereafter analysing it in minute detail will be possible only through investments in technology.

Even as visibility tools provide real-time updates on shipment status and help flag potential delays, compliance tools streamline customs processes, tariff calculations, and payments, and smooth the clearance process.

The payback in trade compliance software like KlearNow.AI can be felt almost immediately, as customs filings and tariff calculations are automated. The benefits extend beyond avoiding tariff overpayments and lower costs, as organizations can effectively manage their global customs footprint and ensure customs compliance, without compromising the pace of cargo movement.

While there are many logtech products that cater to specific aspects of the supply chain, a digital transformation of the entire supply chain and trade compliance processes will necessitate the deployment of products such as KlearNow.AI’s global control tower product, KlearHub.

KlearHub has the potential to transform global trade documents into structured data using AI, providing unparalleled transparency and real-time analytics for informed decision-making, thus facilitating trade compliance.Click here to schedule a free demo and understand how importers and manufacturers worldwide have benefited from KlearHub

 

The Evolving Role of the Compliance Officer in Global Trade Strategy

The past two decades have witnessed the rapid spread of globalization, as countries have seized the benefits of global trade and strived to foster relations with multiple partners worldwide. Organisations like the WTO played a vital role in ensuring a level playing field for developing countries, through the rationalization of tariffs and advocating for free trade.

Global corporations and large importers built their businesses on the back of globally dispersed supply chains, spanning a vast network of suppliers in several countries. It is crucial to understand and comply with the regulations and standards of all countries involved in the supply chain, as each country may have unique legal requirements. Every business owner, regardless of company size, is responsible for understanding and managing trade compliance regulations to mitigate legal and financial risks.

Traditional Role of a Compliance Officer in Global Trade

While multinational corporations dealing with physical products usually have a larger customs footprint, the presence of a structured trade framework governed by a set of globally accepted rules and processes meant that trade compliance and regulatory landscape was not prone to unexpected and rapid changes.

Therefore, business decisions were primarily based on commercial factors, while trade compliance, although important, was not given significant weight, as settled regulatory, procedural, and documentary requirements did not pose exceptional difficulties in designing supply chains.

The basic role of the trade compliance officer in this situation was to monitor import and export movements, ensuring that goods were properly exported and that importing activities complied with all relevant regulations, legal requirements, and standards.

Ergo, the trade compliance officer was perceived as a support function, whose role was largely restricted to adhering to standard operating procedures, ensuring efficiency and accuracy during the international movement of cargo.

Eroding Supply Chain Stability Due to Export Control and Disruption

Since the formation of the WTO in 1995, tariff levels have been declining, with tariffs applied by WTO members almost halving since 1996. The reduction in tariffs and simplification of their structure has helped smoothen international trade and mellow down the complexities of trade compliance.

Over the past few years, however, a series of disruptive factors have severely undermined the reliability of supply chains and existing procurement models. Frequent tariff changes have made trade compliance increasingly challenging to work through. This impact has been magnified by several geopolitical events that have occurred in immediate succession, giving global supply chains little time to recover from the shock.

In recent years, the pandemic compelled countries and corporations to diversify their sourcing networks to reduce the risks associated with overreliance on a single source. As a result, trade compliance officers have had to broaden their expertise, staying up to date with regulations and procedures across a wider range of countries.

Trump’s tariffs have been the latest in a series of disruptive factors, upending the relatively stable international trade environment that had prevailed since the early 2000s. Besides the latest tariff levels and exemptions, trade compliance officers also need to identify each component of their products and track the source. It is crucial that each component is accurately identified to ensure proper classification and compliance with relevant regulations.

In addition, varying tariff rates across trading partners and exceptions for certain essential commodities have added complexity to sourcing decisions. Trade compliance officers must now assess the most cost-effective sourcing locations while maintaining clear visibility into the origin of each component to ensure customs compliance and avoid tariff overpayments. Since requirements and risks vary depending on country and product, staying informed of specific, ever-changing regulations is essential.

Businesses have legal obligations to obtain necessary permits and comply with export legislation as part of export controls and customs compliance. Failure to meet these obligations can result in other penalties, such as financial sanctions, delays, or even criminal consequences.

Trade Compliance Officer as a Strategic Navigator

Trade compliance officers are now recognized as key strategic navigators within their organizations, responsible for ensuring compliance with international trade regulations, export controls, and trade compliance regulations. Their expertise in relevant laws, including those governing import and export compliance, enables them to guide organizations through complex regulatory environments and identify potential compliance risks before they impact business operations.

What was once a relatively stable role, where responsibilities were primarily restricted to following established procedures for export and import of merchandise, has now assumed critical importance. Compliance officers are now expected to develop and oversee comprehensive compliance programs and control systems to ensure organizational integrity and adherence to laws and regulations.

Expectations from the trade compliance officer have changed, from managing a support function to being a strategic navigator. In addition to their traditional duties, they are now responsible to implement policies and run regular auditing to ensure compliance with all relevant regulations and internal controls.

Today, trade compliance officers play a far more strategic role, staying abreast of frequent tariff changes, country-specific exceptions, and evolving documentary and procedural requirements. They assess regulatory risks, calculate applicable tariffs, and evaluate their impact on total cost of ownership (TCO) and profit margins.

Based on these insights, they recommend sourcing strategies, advise on supply chain reconfigurations, and guide the business to minimize both tariff payments and landed costs — while ensuring full customs compliance. Their responsibilities now span the entire trade lifecycle, covering both export and import compliance, and navigating complex regulatory requirements across multiple jurisdictions.

In short, the trade compliance officer now drives commercial decisions and steers the organization towards success in these turbulent times. They play a crucial role in maintaining corporate compliance, and holding certified compliance credentials such as CCEP or CHC can add significant value and credibility to their position.

Leverage KlearNow to Navigate Trade Compliance Regulations

In this quest, technology is the trade compliance officer’s best friend. The magnitude of the incremental complexity renders it beyond human capabilities to evaluate all possible permutations and combinations, and recommend the best strategies, while also increasing the probability of inadvertent errors and the risk of customs violations.

Deploying logtech solutions that automate workflows, digitize documentation, and streamline the overall customs process is the only viable solution.

While the trade compliance officer has several options to select from, depending on the supply chain element that they aim to address, experience suggests that sophisticated solutions that cover the E2E supply chain deliver the best results.

Logtech solutions providers, such as KlearNow.AI, have introduced several such products since the industry’s pioneering days. Building on knowledge and data gathered over the last six years, KlearNow.AI has continually upgraded its products to meet the changing requirements of the logistics and trade compliance industry, achieving exponentially higher accuracy levels.

KlearHub, the AI-powered global trade data hub, has been one of the market leaders in this segment, with customers testifying to its transformative benefits for their customs brokerage and trade compliance activities.

KlearHub does not require complex integration or training, since employees only need to copy KlearHub in the email, and the system then analyzes and ingests the data, automates customs submissions, and eliminates trade compliance errors.

Click here to book a live demo and understand how KlearNow can become your trusted partner.

Frequently Asked Questions (FAQs)

1. What is the role of a compliance officer in international trade?

Compliance officers in international trade ensure that all trade transactions adhere to the legal and regulatory requirements of the countries involved. They monitor import and export activities, manage trade documentation, and help businesses navigate complex customs regulations to avoid penalties and delays.

2. How can companies mitigate risk in global trade operations?

Companies can mitigate risk by conducting regular compliance audits, staying informed about changing international trade regulations, and leveraging technology to improve visibility and accuracy across their supply chains. Using practical solutions like KlearNow’s AI-powered tools helps reduce errors and ensure regulatory compliance.

3. What are the consequences of non-compliance in trade transactions?

Non-compliance can lead to serious consequences, including fines, shipment delays, legal penalties, or even criminal charges. It can also harm a company’s reputation and result in the loss of trading privileges with key partners or countries.

4. How do compliance audits help in managing global trade?

Compliance audits identify gaps in current processes and ensure that internal controls align with relevant trade regulations. Regular audits help businesses proactively detect risks, strengthen compliance frameworks, and maintain credibility with regulatory authorities.

5. What practical solutions are available for simplifying global trade compliance?

Logtech platforms like KlearNow offer practical solutions by automating customs documentation, providing real-time regulatory updates, and streamlining trade transactions. These tools empower compliance officers to focus on strategic decisions while minimizing the risks of non-compliance.

 

Turn Customs Chaos into a Trade Compliance Advantage

Recent shifts in U.S. trade policy — marked by the introduction of a 10% base tariff, along with reciprocal and sector-specific measures — have added new layers of complexity for global businesses that were recovering from persistent headwinds, including the pandemic, logistics bottlenecks, and geopolitical tensions. These changes have significantly impacted both exports and imports, requiring companies engaged in cross-border trade to stay agile and informed as they navigate evolving trade laws and customs procedures.

Notably, some of these tariff policies have extended beyond traditional geopolitical rivals to include long-standing trade partners, creating widespread implications for supply chains across nearly all major economies.

Most of the US’s major trading partners, with the economic heft to counter the US, have retaliated by imposing tariffs on US products. Countries lacking a similar scale have, in the short term, attempted to negotiate more favorable terms with the US, while simultaneously making concerted efforts to build relations with other major markets, such as China, India, Middle Eastern countries, the European Union, or even at the intra-regional level. These responses are shaped by national policies and regulations that govern trade compliance and export controls.

The immediate impact of the volatility has been evident in the lower growth forecasts for global and regional economies, with the IMF lowering its 2025 global GDP forecast to 2.8%, a decrease of 0.5 percentage points. Companies must now adapt to new trade compliance requirements as changes in national laws and regulations alter the landscape for both imports and exports.

The US growth forecast was cut from 2.8% to 1.8% for 2025 and 1.7% for 2026, reflecting damage that the tariffs will cause. The odds of a downturn have increased from 25% to 37%, while headline inflation is expected to reach 3.0% in 2025, one percentage point higher than forecast in January.

Most other countries have had their growth forecasts similarly downgraded, implying that global trade volumes will be affected, while trade compliance complexity will rise exponentially.

Reconfiguring Trade Patterns and Diversifying Trade Partners

The tariffs are expected to alter cargo flows and precipitate a reconfiguration of trade alliances, with countries shifting their focus away from the US and strengthening ties with other major economies.

According to WTO estimates, trade between China and the US is expected to decline by 81%. Other than the country-level impact, specific regions within a country will bear the brunt, as is happening with US West Coast ports expecting to lose volumes (since China accounted for a sizeable chunk of volumes discharged at US West Coast ports).

Supply chains will be redesigned to incorporate alternate sourcing locations and new markets, whilst optimising costs and minimising tariffs payable.

For importers and customs brokers, the cost-accretive impact of the tariffs and the slowdown in volumes traded will be further compounded by the greater regulatory requirements, more stringent documentary requirements, complex tariff calculations—including the responsibility to pay duties—complications in correctly classifying commodities, and increased trade compliance and customs checks. Freight forwarders can assist in ensuring that duties are paid efficiently and documentation is handled properly.

Customs brokers play a key role in helping clients ensure their merchandise is properly processed through customs. They assist with the classification and valuation of goods, ensure compliance with regulations, and make sure the responsible party pays the required duties and taxes to facilitate smooth import and export operations.

Peak Season and Trade Compliance and Customs Clearance Process Complexities

With the upcoming peak season, importers and customs brokers are staring at a grim scenario, where the uncertainty regarding the quantum and applicability of tariffs and the overall trade volatility has created apprehensions about a potentially chaotic situation regarding trade compliance and customs clearance. During this period, adherence to trade compliance requirements becomes even more critical to ensure legal conformity and smooth international transactions.

The frequency of changes and policy reversals, as well as the exemptions granted, will render the trade compliance process more difficult.

Importers and customs brokers will also need to have visibility into the sources of individual components and determine the appropriate commodity classification and applicable tariff rate.

Failure to do so could result in slower customs clearance and undermine trade compliance activities, thereby exposing importers and customs brokers to the risk of penalties and monetary fines. It is essential to comply with all customs regulations to avoid such penalties and ensure uninterrupted trade flows. These challenges will result in prolonged transit times, lower inventory turnover, delayed cash conversion cycles, and ultimately higher costs for the business.

Turning Customs Chaos into Competitive Advantage

A proactive approach can enable importers and customs brokers to convert these challenges into opportunities.

With proper planning and a methodical approach, the complexity of customs clearance can be a source of competitive advantage, provided importers and customs brokers succeed in managing trade compliance and customs clearance better than their peers and competitors.

This can be effectively achieved by focusing on certain critical aspects that:

  1. Digitize documents and automate information sharing
  2. Provide visibility into the sources of each component
  3. Track all changes to tariff levels and determine the precise rate of tariff applicable for their product
  4. Analyse data on tariffs currently in force, along with internal data on the source of each component, to evaluate the most appropriate sourcing locations and diversify supply chains accordingly
  5. Automate processes and workflows to ensure accurate tariff calculation
  6. Leverage the services of customs brokers and freight forwarders to streamline exporting goods, improve trade compliance, and coordinate logistics efficiently

Leverage Technology to Optimize Trade Compliance in Peak Season

Technology is an indispensable adjunct in achieving the above-mentioned objectives.

Importers and customs brokers would be well-advised to invest in robust and sophisticated logtech solutions that are capable of storing and ingesting vast amounts of trade data, automating information sharing and customs submissions, streamlining workflows, generating auto-alerts about potential delays and procedural and documentary errors, and providing visibility across the supply chain.

The resultant process efficiencies will translate into superior trade compliance and better management of peak season volumes, creating a compelling value proposition.

Using AI and ML-powered logtech solutions such as KlearNow’s control tower solution, KlearHub can help importers and customs brokers elevate their supply chain planning and accelerate customs clearance.

To gain deeper insights into how KlearNow can be your reliable trade compliance partner, schedule a free demo now.

Frequently Asked Questions

1. Why is international trade compliance becoming more complex?

International trade compliance is increasingly complicated due to constantly changing trade regulations and laws, frequent tariff updates, and shifting global trade agreements. Businesses must continuously adapt to ensure compliance when goods cross international borders.

2. What role do HTS codes and customs duties play in international shipping?

HTS codes (Harmonized Tariff Schedule codes) determine the classification of goods and the customs duties payable when importing into a country. Accurate classification is essential to avoid penalties and ensure smooth international shipping.

3. What information must exporters submit to customs authorities?

Exporters must submit customs declarations that include key details such as the origin of goods, HTS codes, consignee information, and full compliance with border protection requirements imposed by the customs authorities of the importing country.

4. How long can customs clearance take and what causes delays?

Customs clearance can take several days or longer if there are errors in documentation, missing data on the origin of goods, incorrect addresses, or issues with payment of duties. Delays often occur when declarations don’t meet the standards set by customs authorities.

5. How can businesses improve trade compliance and reduce border delays?

Businesses can streamline compliance by using digital tools to automate document processing, validate HTS codes, and ensure all required information is submitted accurately — reducing risks at international borders and ensuring faster customs clearance.

 

Strengthening Trade Compliance for the Pharma & Life Sciences Supply Chains

While international trade has grown steadily over the past two decades, refrigerated cargo volumes have been growing at a faster pace. While factors such as the pandemic, military conflicts, trade wars, and logistics bottlenecks have weighed down on overall trade volumes in this decade, reefer cargo is expected to continue growing at a robust pace, driven, in part, by the pharma industry.

Pharma is a subset of the broader life sciences sector, which also includes biotechnology and medical devices. Pharma and life sciences products are typically high-value items that are highly regulated and subject to strict trade compliance requirements. There are different aspects to trade compliance, including regulatory requirements, documentation, and adherence to international agreements and governmental authorities, which must be carefully managed to ensure legal and efficient movement of these products.

It is therefore crucial that these products are transported safely and reliably, with the utmost care to preserve their quality and efficacy. At the same time, maintaining full trade compliance throughout transit is essential to avoid costly delays, fines, or product holds at the border. Compliance efforts must align with the specific trade laws and regulations of each country involved, as requirements often vary significantly across jurisdictions and must be met without exception.

Pharma Supply Chains Are Complex and Dispersed

Given the value of pharmaceuticals, both in terms of price and to human lives, their supply chains are carefully designed to ensure that quality is maintained at optimal levels throughout the transport process.

This involves specialized warehouses, temperature-controlled vehicles, and refrigerated containers, as well as ensuring reliable delivery mechanisms. Equally important is robust trade compliance, as the highly sensitive nature of these products makes them subject to stringent import and export controls across multiple jurisdictions.

At the regulatory level, trade compliance in the pharmaceutical and life sciences industries encompasses strict quality certifications, country-of-origin documentation, accurate tariff classification, and adherence to customs regulations and laws in all relevant countries. Understanding and adhering to the law in each country involved in the supply chain is essential to avoid regulatory issues and ensure smooth operations.

This includes obtaining mandatory licenses and certifications, ensuring precise documentation aligned with customs codes, and implementing compliance protocols to satisfy country-specific trade laws. International agreements, such as the WTO Customs Assessment Agreement, play a significant role in shaping customs valuation and trade compliance requirements for the industry.

This requires accurate and complete documentation, strict adherence to regulatory requirements, full customs and trade compliance, proactive planning, and timely corrective actions when delays are anticipated — responsibilities that all manufacturers, exporters, and importers of pharmaceutical and life sciences products must actively manage.

Pharma and life sciences supply chains are dispersed and interdependent, with sources of raw materials, manufacturing capacity, and distribution networks often located in different countries and continents.

Several countries, including the US, rely heavily on China and India for the manufacturing of active pharmaceutical ingredients (APIs) used in generic medicines. In turn, the Indian pharmaceutical industry is highly dependent on China, with over 43% of total pharmaceutical imports coming from China. This interconnectedness makes global trade compliance not just a legal requirement but a strategic necessity for uninterrupted operations.

Challenges and Sensitivity of Parma and Life Sciences Supply Chains

The pharma supply chain faces multiple challenges, arising from its unique nature and special requirements.

These include:

  • Regulatory risks
  • Non-compliance with international quality standards
  • Inadequate transport networks
  • Tariff-related disruptions
  • Complex documentation and multi-country trade compliance mandates
  • Trade restrictions

The time sensitivity of pharmaceutical products is especially critical, given their short shelf life and high value. As a result, companies tend to minimize inventory, which increases pressure on supply chain timelines.

Additionally, pharma products are frequently shipped across multiple customs jurisdictions. Each touchpoint introduces potential risk — from misclassification and missing paperwork to non-compliance with evolving trade regulations.

The Trump-era tariffs, applied unevenly across countries and product categories, added yet another layer of complexity. These tariffs and related trade restrictions not only increase costs and cost volatility but also impact pricing strategies for pharmaceutical companies. As a result, pharma companies must produce accurate trade documentation proving origin, ensure compliance with updated tariff codes, and stay current on exemptions and changes.

Leveraging Technology to Streamline International Trade Compliance

Manual customs clearance processes are no longer sufficient to support the complexity of the modern pharma and life sciences trade environment. Especially with the fluid nature of global tariffs and increasing scrutiny, automating trade compliance has become a competitive advantage.

Businesses in the sector are increasingly investing in technology to digitize documentation, automate classification and validation, and centralize compliance workflows.

KlearNow, as a leader in the logtech space, enables pharma and life sciences companies to meet evolving trade compliance demands while optimizing their supply chains.

Its global control tower product, KlearHub, is designed to:

  • Automate customs filings and document preparation
  • Ensure trade compliance across jurisdictions through built-in rule engines and validation layers
  • Provide real-time visibility into shipment and compliance status
  • Flag discrepancies before they become regulatory issues
  • Leverage data analysis to compare shipment and compliance data with external lists, enhancing trade compliance screening and identifying entities linked to sanctions or risks

With KlearHub, importers can significantly reduce non-compliance risks, improve customs clearance timelines, and avoid costly shipment delays. Data-driven analysis helps identify and mitigate compliance risks before they escalate into regulatory issues.

In an industry where every delay can impact lives, trade compliance is not just a legal concern — it’s a mission-critical function.

To see how KlearHub can strengthen your compliance and logistics strategy, schedule a free demo here.

Frequently Asked Questions

1. Why must pharma companies comply with international trade regulations?

Pharma companies must comply with a wide range of trade and customs regulations to ensure the safe, legal, and timely movement of sensitive products. Non-compliance can result in delays, financial penalties, and risks to patient health.

2. How do shipping procedures and import compliance impact pharmaceutical supply chains?

Proper shipping procedures and import compliance are essential for maintaining product integrity and avoiding customs delays. Temperature control, accurate documentation, and adherence to applicable regulations help ensure regulatory approval at every border.

3. What steps can companies take to mitigate risk and maintain consumer trust?

To mitigate risk and preserve consumer trust, companies should automate compliance workflows, monitor regulatory changes, and ensure full visibility across their supply chains. Proactive planning and real-time tracking reduce the chances of non-compliance.

4. Why is trade compliance critical to delivering treatments to patients around the world?

Effective trade compliance ensures that treatments reach patients around the world without disruption. By focusing on compliance and ethical practices, pharma companies can uphold safety, efficiency, and access to life-saving medicines.

 

FAQs for Importers and Customs Brokers Navigating the Trump Tariff Era

The Trump administration has upended global trade in a short period, with the announcement of multiple rounds of tariffs at the commodity, sector, and country levels. Temporary pauses and revocations for certain commodities and countries compounded the uncertainty. 

With other larger economies and economic blocs retaliating by imposing counter-tariffs and other restrictions, the ability for multinational corporations, importers and customs brokers to understand implications and strategically scenario plan has become a daily challenge. While some headway has been made in the past few weeks, as tariff rates are lowered and discussions initiated with countries to find common ground, the burden of interpreting and applying the various tariffs correctly is widely expected to remain elevated over the next four years.

Importers, customs brokers, and trade compliance professionals will have to act quickly on heir procurement and compliance planning to ensure they are aware of the latest tariff levels and policy changes, analyse their sourcing data to calculate the exact rate of tariff applicable, and devise strategies to avoid tariff overpayments, while ensuring adherence to all customs regulations and without hindering the smooth movement of goods.

We have shared below some commonly asked questions that our client base of importers and customs brokers must find answers to or understand completely, if they intend to remain ahead of the game in a constantly evolving international trade environment. We often remind our clients they ‘had better know their data better than CBP does.”

Q1. Where can I get authentic information on the latest applicable tariffs and rules?


While it is difficult to track the frequent changes, trade compliance professionals can use the sources below, which provide up-to-date ‘official’ information:

·       Federal Register: https://www.federalregister.gov/

·       CSMS Alert Registration and Archive: https://www.cbp.gov/trade/automated/cargo-systems-messaging-service

·       Executive Orders: https://www.whitehouse.gov/

Q2. What does the current 90-day pause on reciprocal tariffs mean?

With the announcement of base tariffs of 10% and higher reciprocal tariff rates ranging from 11% to 50% on the table in the coming weeks, depending on the country of origin, importers and customs brokers have their task cut out in figuring the impact of tariff stacking.


The initial 90-day pause was announced on April 9 for the reciprocal tariffs on all countries, except China, with a flat 10% tariff on all exports to the US. After several tit-for-tat hikes in retaliatory tariffs between China and the US, which saw US tariff rates on China reach a stunning 145%, the countries jointly announced a 90-day pause on these high tariffs on May 12, bringing the baseline US tariff rates on China all the way down to 30%. 

The 90-day pause is intended to offer a brief window for bilateral discussions, whereunder tariffs will be reevaluated depending on concessions made for American exports. Importers can effectively utilize this period to strengthen their supply chains by seeking alternative sourcing centers and analyzing policy changes to minimize the impact on their businesses.

Q2 a). What does the current pause on some tariff categories from the Court of International Trade in the U.S. mean?


The CIT ruled on May 28th that the IEEPA tariffs (Fentanyl and Reciprocal) were illegal (find a reference). The Trump administration likewise filed an immediate appeal which will take time to work through the courts.  As per question 1 above, it is suggested to ensure that any announced policy changes or challenges go through the main information flows before action can be taken. 

Q3. How are dates calculated for country-of-origin tariffs for China?

Tariff applicability is determined by the “Release Date” provided by CBP, which is assigned after the customs entry is accepted and generally coincides with the arrival at the final port of entry.

Both the Fentanyl and Reciprocal tariff programs included in-transit exceptions, allowing for a phased-in approach to tariff assessment. This meant that if cargo was loaded onto the mother vessel for ocean freight before the effective date of the tariff, and the shipment would unload at a U.S. port, it could qualify for an exception — but only if the program explicitly allowed it. These exceptions have since been clarified by CBP with specific guidance on the mode of transport and what constitutes eligible loading.

It’s essential for importers and customs brokers to carefully track shipping documents — particularly the actual date of arrival and the CBP Release Date — to ensure that the correct tariff rate is applied. Monitoring these timelines helps avoid unexpected tariff charges and ensures compliance with customs regulations, particularly during transitional periods such as tariff increases or temporary pauses.

Q4. What is tariff stacking? How does tariff stacking work?


Tariff stacking refers to the compounded effect of multiple tariffs that apply to the import of a single commodity. Since tariffs have been announced at the commodity, sectoral, and national levels, most consignments will be subject to more than one tariff.

For example, aluminum derivative imports are subject to the base reciprocal tariff of 10%, imposed on the country of origin, as well as the Section 232 tariff of 25%. Thus, the final rate of punitive tariff for aluminum imports is the sum of these applicable tariffs plus any most favored nation and possible antidumping and countervailing duties, as they are stacked on top of one another.

The implication for importers and trade compliance professionals is added complexity, as they will be required to evaluate their global customs footprint, identify all applicable tariffs, and calculate costs accordingly, to ensure compliance and avoid tariff overpayment.

Q5. How is CBP keeping up with these changes? Will the importer be penalised even if there is an inadvertent omission or delay on the part of CBP?

While CBP relies on AI tools and analytics for enforcement, the sheer pace of changes announced and the extremely short timeframe for implementation render it difficult for CBP to incorporate the revisions into its software. Therefore, what we have seen happening is that the CBP sets up the HTS codes and tariff rates, but they don’t always have the validations in place to reject errors at the time of entry filing.

Therefore, while an import or customs broker can transit customs entries based on their best understanding of the applicable duty rates, and CBP might also accept the duty calculations, there remains risk that CBP subsequently identifies some discrepancy or deficiency in the customs filing and rate advance the entry sending an invoice to the importer for additional payment. The importer is then liable for paying the duty difference, along with interest.

Q6. If goods were shipped when the reciprocal tariffs were higher, and the tariff was then reduced at a later date, can the importer apply the reduced rate?

Each shipment will be subject to the tariffs that are in effect on the Release Date assigned by CBP when the goods arrive in the United States. Even if the tariff rate is revised at a later date, either upwards or downwards, the new tariff rate cannot be applied unless CBP announces retroactive refunds through a certain Release Date.  We have not seen this in practice during the current administration and thus importers and customs brokers have considered whether to delay entry filings while pending imminent announcements and the impact of the tariff fluctuations versus potentially paying storage while they await the details.

Importers can use certain strategies to try and minimise the impact of tariff rates increasing, such as:


a) Take goods to a Foreign Trade Zone, in which case the tariff rate is locked into Privileged Foreign status based on the date of admission into the zone. Even if higher tariffs are announced subsequently, they will not apply to goods in Privileged Foreign Status.  Likewise, if goods are re-exported from the Foreign Trade Zone they never become subject to tariffs at all.  However, this strategy also risks tariffs being locked into a higher rate in effect at the time of admission if tariff rates could go down later.


b) Store goods in a bonded warehouse so that the tariff rate is based on the day the shipment is removed from the bonded warehouse.  Bonded warehouses do not lock in the tariffs at the time of admission like Foreign Trade Zones.  However, bonded warehouses have limited activities that can be performed and time limits for removal unlike Foreign Trade Zones making each program more or less appealing on a case-by-case basis

c) You can also distribute through Canada or Mexico so that the tariffs are assessed based on when the cargo crosses into the US and is released into US commerce.  If you unload at a US port and move in bond to export into Canada or Mexico, you would not be subject to tariffs until the goods return to the US.  However, you may also need to defend the activity in Canada or Mexico being more than circumvention of the tariffs to avoid CBP scrutiny and potential penalties.

Q7. I’ve been flagged for section 232, but I don’t have any metal derivatives in my product. What should I do?

Section 232 has multiple subsections of HTS codes that can have the 25% tariffs based on the full entered value or only the respective metal value.

If your HTS code flags for Section 232 based on the full entered value, you are not able to disclaim the Section 232 tariffs.  In this case, you may want to review your HTS code to confirm it is appropriate if your import does not contain that metal.  These HTS codes are typically found in the HTS chapters specific to the respective metal.

Otherwise, if your HTS code flags for Section 232 based on the metal value, and your import does not contain that metal, then the customs broker would file the entry without declaring an HTS code for Section 232, and there would be no tariffs assessed.

CBP has clarified that in order to be “subject to” Section 232 for the HTS codes that flag for Section 232 based on the metal value, the import must contain greater than zero metal.

There is also a Reciprocal tariff exception for imports subject to Section 232.  If there is no metal content for an HTS code flagged as a derivative (with the tariff based on metal value) then the Reciprocal tariff exception would not apply.  If CBP finds that a customs entry used the Reciprocal tariff exception without also paying greater than $0 Section 232 duties, then CBP can “rate advance” the entry and invoice the importer for the Reciprocal tariffs. 

Q8. What do I need to do to ensure bond sufficiency?

The annual customs bond amount needs to be at least 10% of the total duties and fees assessed by CBP during the bond’s effective period.

While importers may set the next year’s bond amount based on past years’ records and expectations for the forthcoming year, in times when exponentially higher tariffs have become the norm, such an approach may add risk that the bond may not be sufficient to cover the additional costs.

To overcome these challenges and avoid a situation where CBP issues a bond insufficiency notice and the flow of imports is impeded due to inadequacy of the bond amount, importers need to adopt a proactive approach in terms of:

a) Leveraging dialogue and using algorithms such as increased uplift factors to determine the bond amount

b) Monitor imports against the bond

c) Seek clarity from your surety as to what bond thresholds start to trigger additional underwriting requirements that could include sharing copies of your financial statements and putting up collateral to approve the bond.

Given the dynamic nature of the tariff scenario, importers and customs brokers will be under pressure to ensure compliance and accurate tariff payments. The frequent changes also make it difficult to plan customs activities.  The volume of post-entry corrections may also increase due to changes in interpretation or other guidance from CBP.

While importers have no control over the pace or direction of policy changes, staying informed and proactive — using the guidance above — can help mitigate volatility and reduce the commercial and operational risks to their business.

Partnering with KlearNow and using the company’s AI-powered global trade data hub can make it easier for importers and customs brokers to navigate the turbulent trade environment by capturing all your trade data without complex integrations, digitizing documentation, and allowing you to run tariff scenarios using your own data in near real-time.

Click here for a demonstration on how KlearNow.AI can elevate your trade compliance.

 

How Trade Compliance Teams Have Always Been Core To Supply Chain Strategy

While international trade amongst geographically distant nations has thrived since ancient times, its extent was generally determined by the presence of safe and reliable transport routes and the strength of bilateral relations.

In the 20th century, after witnessing the devastation wrought by the Second World War, countries started prioritising peace and friendly relations, which in turn boosted international trade. The end of the Cold War gave further impetus to this trend, as the dissolution of antagonistic military groupings paved the way for even greater cooperation between countries in the Western and Eastern hemispheres.

The positive effects of these geopolitical events were supported by the formation of global trade agencies, whose objective was the furtherance of international cooperation and trade amongst nations, through the elimination of trade barriers and the creation of a level playing field which enabled all countries involved to participate.

Initiatives and agreements such as the GATT (General Agreement on Trade and Tariffs), which was succeeded by the WTO (World Trade Organization), have as their core objective the facilitation of trade amongst member countries by minimizing tariffs and other trade barriers. In the WTO, members have committed to lowering tariffs and operating a non-discriminatory trade system, which has boosted international trade.

Besides, countries across the globe are attempting to integrate themselves into the global market in order to reap the consequent economic and social benefits. They are doing this by forging commercial relations with other countries and regional trade blocs and manifesting in forms of Bilateral Agreements, Free Trade Agreements, and Regional Economic Communities.

Perception of Trade Compliance Being a Support Function

As a result of the economic cooperation and global integration, international trade has, to a great extent, been well-regulated, with an established framework for the promotion thereof and settling trade disputes.

Tariff rates levied by countries have also been relatively stable, with most countries attempting to strike an equitable balance between fostering international trade and protecting domestic industries. The international trade environment is thus largely stable, wherein exports and imports have flowed smoothly across international boundaries, with a relatively high degree of reliability and safety.

Corporations engaged in distribution across borders can trade beyond their national boundaries with considerable confidence, banking on stable tariff rates and the regulatory environment.

While the nature and geographical spread of their business activities mandated the creation of internal trade compliance departments, the stability in the international trade environment meant that trade compliance was largely a question of adhering to established rules and policies, complying with pre-defined trade compliance regulations, and a generally stable tariff regime.

Before the recent  tariff volatility, the role of the compliance department was to ensure  procedure and policy adherence once initial processes and workflows were set in place. By most in the organization, trade compliance was viewed as a support function at best,For example, trade compliance departments often illustrate specific instances where operational controls on goods and adherence to regulations are crucial for maintaining smooth international trade operations.

#Trumpontrade Compounds Post-COVID Volatility in Global Trade 

The COVID pandemic and the subsequent disruption shook the foundations of the international trade systems and eroded their stability, as countries and companies started looking beyond established production hubs and consumption centres.

Procurement and sourcing trends such as nearshoring, friendshoring, China+1, and Alt Asia gained prevalence, as corporations endeavoured to strengthen the supply chain operations and make them resilient to future shocks by relocating manufacturing capacity, diversifying their supplier base, scouring for new markets, and boosting trade ties with politically aligned countries.

The latest variation to international trade has been in the form of Trump tariffs, which are intended to regulate imports from certain countries by imposing high reciprocal tariffs, and have the potential to upend trade patterns and alter EXIM cargo flows, impacting sourcing channels significantly. Countries have retaliated by levying counter tariffs and restrictions, and will ultimately be compelled to look for other trading partners, with a focus on regulatory scrutiny.

We are now witnessing an era of unprecedented volatility and a sharp increase in costs, tariffs, and non-tariff trade barriers, which have initially stymied global growth but have definitely exacerbated the complexity of international trade, especially for goods manufactured abroad that must adhere to export controls and import compliance.

Evolving Role of Trade Compliance Teams and Importance of Technology

In this volatile trade environment, importers and exporters have to exercise extreme care and diligence to ensure trade regulations and mitigate risks associated with non-compliance, while keeping abreast of almost daily tariff rate changes.

It is in this context that trade compliance teams have assumed greater significance, as they need to adapt to the incessant changes and navigate their organizations through this turbulent period. Trade compliance teams are now core to business strategy, as their effective functioning is vital for exporters and importers.

The role of trade compliance teams has evolved to incorporate adherence to the applicable laws of a greater number of jurisdictions that companies now operate in, monitor tariff rate changes at an individual component and SKU-level, advise on optimal sourcing locations and application of correct HTS codes, avoid tariff overpayments, and ensure smooth customs clearance. These efforts can safeguard a company’s reputation and enhance its relationships with customers, which are now more reliant on supply chain transparency and agility.

To be able to effectively manage this complexity, trade compliance teams need to deploy logtech solutions that simplify the end-to-end supply chain, through digitisation of documents, automating information sharing and work flows, eliminating documentary and procedural errors, accurately classifying goods and calculating the tariff payable, highlighting potential delays and lapses, and providing visibility across the transport process.

In this transformative journey, several importers have turned to KlearNow and its control tower product, KlearHub. Powered by the latest advances in AI and ML, KlearHub helps streamline the entire global trade process and transport movement, accelerates customs clearance, and provides an advantage over various services in the market today.

Click here to experience how KlearHub can help you sail smoothly to success.

Frequently Asked Questions (FAQs)

1. How does trade compliance help protect a company’s reputation in global markets?

Missteps in compliance — such as incorrect tariffs, delayed customs clearance, or regulatory violations — can damage customer trust and brand credibility. A well-functioning compliance strategy not only prevents costly mistakes but also signals reliability to partners and customers.

2. What are the key components of effective supply chain management in a volatile trade environment?

In today’s landscape, key components include proactive tariff monitoring, real-time visibility, automated compliance workflows, and integrated transportation and compliance data systems. These help companies respond to shifting regulations and maintain resilience across sourcing, shipping, and customs.

3. Why is supplier relationship management more important than ever post-COVID and post-tariffs?

As companies diversify sourcing through strategies like China+1 or nearshoring, managing supplier relationships is critical. A strong relationship helps navigate new compliance requirements, ensures documentation accuracy, and fosters alignment on rapidly changing trade policies.

4. How can trade compliance efforts improve quality across global supply chains?

Compliance teams help ensure that products meet regulatory and quality standards in every destination market. Their oversight reduces risk of rejected goods, mis-classifications or rework and enables consistent delivery of high-quality goods across borders.

 

Navigating Tariffs Without Production Delays in the Semiconductor Industry

The importance of semiconductors in the modern world cannot be understated. Semiconductors, also referred to as microchips, are the brains of most modern electronics, including smartphones and laptops, and have driven advances in communications, computing, clean energy, and other fields.

The criticality of semiconductors is only expected to increase in the future with the greater focus on sustainability and green technologies, since semiconductors are vital to technologies that enable the shift towards sustainability, as they are found in wind turbines, solar farms, and similar technologies. They are equally important for the healthcare sector, as components for medical devices, as well as implantable technology such as pacemakers and insulin pumps.

Geopolitics in the Semiconductor Materials Sector

Semiconductors have been the theatre of geopolitical conflicts for quite a few years now, even before the Trump presidency. Semiconductors are made using critical minerals, the supply of which is generally concentrated in a few regions globally.

The African continent is one such region, being rich in critical minerals essential for semiconductor production, including cobalt, tantalum, and rare earth elements.

Over the course of the past two decades, China has strategically built up its presence in African mining and infrastructure sectors through global-scale projects such as the Belt and Road Initiative (BRI), as well as FDI and developmental loans to African countries. As a result, China has acquired mining concessions in multiple countries across the continent and today controls a significant portion of the African supply of critical minerals.

This has helped China secure a steady supply of raw materials for semiconductor production, putting it at a relative advantage to the US and Europe, who are only now attempting to counter Chinese dominance. The US has considered invoking international emergency economic powers to address these trade imbalances and protect its national security.

Impact of Geopolitics and Trump Tariffs on Semiconductor Supply Chains

In recent years, geopolitical tensions have impacted the semiconductor industry, as tariffs and export restrictions have hit international trade hard.

The US has attempted to curtail China’s technological development by limiting exports of advanced semiconductors and the machines to manufacture them, while China has retaliated to the tightening restrictions by banning or restricting the sale of critical minerals like antimony, gallium, and germanium. US Customs and Border Protection (CBP) plays a crucial role in enforcing these new trade policies, ensuring compliance with the latest regulations.

The raft of tariffs announced by the Trump administration did not exclude the semiconductor sector. While some tariffs were subsequently kept on hold for the time being, bearing in mind the broad-based impact of a sudden reduction in imports or availability of semiconductors, Trump has already said that new tariffs on chips would be announced soon.

The semiconductor supply chain is highly geographically dispersed, with critical minerals being sourced from Africa, processed outside the continent, manufacturing dominated by Taiwan, South Korea, Japan, China, and the US, while the electronic components that they are used in are being manufactured by various countries (including China).

This has resulted in extremely intricate and interdependent supply chains, spanning numerous countries, each of which is subject to different tariff levels and trade restrictions. The impact of new tariffs on goods shipped, particularly semiconductor goods, has been profound, affecting pricing and delivery times.

Potential Challenges From Tariff Wars

The tariff complexity can give rise to several supply chain-related challenges, such as delays in imports and consequently upstream production, unreliable supplies disrupting production planning and schedules, difficulties in computing the correct tariff rates, and risks of tariff overpayments.

These challenges could potentially undermine supply chain integrity, elongate production cycles, elevate risks of customs violations, and add to overall landed costs.

Precision in HTS Classification and Country-of-Origin Tracing

It is in this regard that importers and manufacturers have to pay careful attention to sourcing patterns of individual components and ensure precise HTS classification.

Manufacturers and importers must have visibility to the source of each component, in order to be compliant with the applicable restrictions and tariff rates. They will subsequently have to ascertain that the HTS classification is accurate and in accordance with customs and regulatory requirements.

These two steps can go a long way in ensuring importers remain customs compliant and also avoid tariff overpayments. Doing so will facilitate the smooth movement of semiconductors past Customs, enabling them to proactively prevent possible delays in manufacturing.

KlearNow: Optimizing Semiconductor Supply Chains

Semiconductor manufacturers must, of necessity, invest in logtech solutions to overcome the challenges posed by Trump tariffs and mitigate potential production delays.

While KlearNow offers a diverse range of products aimed at simplifying various aspects of supply chains, the current VUCA environment demands a holistic solution.

KlearHub, which is KlearNow’s global control tower product, is well-positioned to bridge this gap between complexity and capability by offering functionalities that enable digitization and accurate handling of customs and trade data, enhancing visibility and control, and improving compliance and accuracy.

With KlearHub, semiconductor manufacturers can track the source of each component and accurately calculate the tariffs applicable, thus ensuring adherence to customs requirements while also avoiding overpayments.

Book your free demo now to understand how KlearHub can support your business.

Frequently Asked Questions (FAQs)

Q1: How do foreign trade barriers affect semiconductor supply chains?

Foreign trade barriers such as tariffs, export bans, and import quotas can severely disrupt semiconductor supply chains. These restrictions from other countries complicate sourcing raw materials and components, leading to longer lead times, increased costs, and potential production delays. Navigating these challenges requires deep visibility into your sourcing strategy and strong compliance with international trade laws.

Q2: What role do executive orders and presidential memoranda play in semiconductor trade?

Executive orders and presidential memoranda can rapidly alter the regulatory landscape for global semiconductor trade. These tools have been used to impose tariffs, enforce export restrictions, or prioritize national security concerns, directly influencing how companies navigate customs and compliance. Businesses must stay informed to avoid costly missteps and ensure continuity amid changes in the global economy.

Q3: How do reciprocal trade agreements influence the semiconductor industry?

Reciprocal trade agreements between countries can help reduce the impact of tariffs and trade restrictions by fostering more favorable conditions for semiconductor imports and exports. These agreements can also encourage smoother cross-border collaboration, improving access to critical materials and expanding market reach in the global economy.

Q4: Why is it important to understand laws and regulations in semiconductor trade?

Understanding international trade laws and customs regulations is essential for semiconductor manufacturers to stay compliant, avoid penalties, and prevent shipment delays. Accurate HTS classification and country-of-origin documentation are crucial when navigating foreign trade barriers, executive orders, and evolving legislation in other countries.

Q5: What impact does the global economy have on semiconductor tariffs and trade flows?

The global economy shapes demand, pricing, and policy decisions around semiconductor trade. Economic instability, political shifts, or supply chain shocks can lead to new executive orders, presidential memoranda, or trade barriers that directly impact semiconductor imports and exports. A dynamic strategy and digital tools like KlearHub are vital for staying agile and compliant.

 

The Real Cost of Trade Tariffs On The Automotive Industry

The current administration has rapidly expanded tariff policies first introduced during President Trump’s initial term and maintained under President Biden — creating an environment of accelerating regulatory change and growing uncertainty that makes it increasingly difficult for businesses to plan, forecast costs, and navigate global incentives.

The trade tariffs have been extremely broad-based, in terms of both the countries sanctioned and the commodities/products affected. Tariffs also impact energy imports, raising concerns about national economic security and the balance of trade flows. Instead of imposing tariffs only on certain countries (such as China, historically perceived as an economic and political adversary), the Trump administration has levied targets on imports from even countries that have traditionally been geopolitically and economically aligned with the US, such as the European Union, Canada, South Korea, and Japan.

Introduction to Trade Tariffs

Trade tariffs are taxes imposed by a country on imported goods or services, designed to protect domestic industries and influence the flow of international trade. The United States Trade Representative (USTR) plays a pivotal role in negotiating trade agreements and tariffs with other countries, including major trading partners such as China, Canada, and Mexico.

Tariifs can significantly impact any industry, but the automotive industry, with its complex supply chains and large number of parts, is particularly vulnerable. The United States has experienced a trade deficit in the automotive sector, with American consumers importing significantly more cars and parts into the country than US auto companies exporting to the rest of the world.

While tariffs can be used as a tool to reduce the trade deficit and protect domestic manufacturing jobs, they can also increase costs for consumers and businesses. The World Trade Organization (WTO) sets rules and guidelines for international trade, including tariffs, to ensure fair competition and cooperation among countries.

Countries can impose tariffs on specific products, such as cars or automotive parts, to protect their domestic industries and markets. However, tariffs can also be used as a means of retaliation against other countries that impose tariffs on domestic products, potentially leading to a trade war. The impact of tariffs on international trade and the automotive industry is a complex issue, involving numerous factors and stakeholders, including governments, companies, consumers, and the concept of free trade itself.

Trade Tariffs’ Impact on the Automotive Sector

Since the stated objective of these trade tariffs is to reduce American imports by making them more expensive and encourage domestic manufacturing, the tariffs also target sectors where imports comprise a significant proportion.

Since almost half of all cars sold in the US were imported, the automotive sector was also a target of the new trade tariffs. The US imported automotive products worth $474 billion in 2024, including passenger cars valued at $220 billion. 

Though the biggest suppliers were Mexico, Japan, South Korea, Canada, and Germany, all of whom share strong relations with the US, their auto imports are also subject to the new trade tariffs. The future of the automotive industry, particularly in relation to upcoming regulations and innovations, is also a significant consideration.

The uncertainty has been compounded by the varying tariff levels and the stacking of tariffs, which depend on both the country and commodity of the finished product, as well as its components, and the temporary suspension of other trade tariffs for certain countries. Additionally, new compliance conditions such as Pour and Smelt requirements, which mandate that certain materials be not only sourced but also processed in specific countries, further complicate origin tracking and emphasize the importance of accurate, detailed Bills of Materials.

Besides these factors, the highly intertwined nature of auto supply chains adds an additional layer of complexity. The decline in domestic manufacturing jobs in the United States is exacerbated by globalization and structural imbalances in trade relationships. While automobiles manufactured in Mexico rely on Chinese components, the US and Canadian auto industries have been integrated since 1965. The free trade agreements signed in 1989 and 1994 bind these two countries and Mexico even more closely, where each country specializes in specific auto parts. The historical context of oil imports and their significance in the global economy is also noteworthy.

Despite the higher costs and greater intricacies, automotive manufacturers would be reluctant to lose access to the US market, as it is the second-largest automotive market globally after China, with a 17.7% share. Historical shifts and developments within the automotive industry over the decades have shaped the current landscape. Therefore, it is likely that automobile manufacturers will adapt to the new regulatory requirements and attempt to navigate the rapidly evolving tariff landscape through improved supply chain management and analysis of sourcing patterns, however, this will take time and provide uncertainty in manufacturing capacity and sourcing. The role of China in global trade practices and its impact on tariffs and access to its domestic market are also critical factors.

Bill of Materials and Its Significance

It is in this context that the Bill of Materials assumes greater significance. Customs policies play a crucial role in the import of goods and significantly impact trade relations.

A Bill of Materials (BOM) is an extensive list of all the raw materials and components that went into manufacturing the finished product. The availability of imported goods enhances consumer choice and helps prevent inflation.

Manufacturers initiate the assembly process by preparing the BOM. The BOM typically lists the finished product at the top, followed by the individual components.

Each component must be clearly identified, including details such as the part number, material specification, and sourcing information, which ensures traceability. The value of imports and exports has significant implications for a country’s economic balance and trade policies.

In a scenario where the rate of tariff can vary depending on the proportion of specific components and the source country, having visibility into the source of each component and its origin is critical for manufacturers. Border protection measures are crucial in regulating the flow of goods across borders and maintaining national security.

This holds even more true for automotive manufacturers, given that modern vehicles can have over 30,000 parts, which are often sourced from different countries and assembled in another country.

Implications for Automotive Manufacturers

For automotive manufacturers, this is a potential blind spot, as if they do not analyse the tariff applicability at the individual component level, they could end up paying a higher amount in tariffs than is due. Customs policies play a crucial role in the import of goods, significantly impacting trade relations and affecting the overall cost structure for manufacturers.

Conversely, a thorough analysis of the BOM, and sourcing patterns can help automotive manufacturers unlock significant savings and avoid overpayments through the accurate calculation of the total tariff amount, as well as by optimizing sourcing networks and reconfiguring supply chains to ensure procurement from locations where the landed costs (including tariffs) are lower. The availability of imported goods enhances consumer choice and helps prevent inflation by maintaining a steady supply of affordable products.

It is therefore recommended that automotive manufacturers carefully scrutinize the Bill of Materials and calculate the exact amount of tariff payable for each component, taking into account its nature, the country of origin, and the applicable tariff rate. Research and development are crucial for advancing US manufacturing and innovation, thereby ensuring competitiveness in the global market.

Using Technology to Ensure Compliance and Avoid Tariff Overpayments

Since tariffs and regulations are constantly changing — with new trade tariffs being imposed, paused, and met with counter tariffs — automotive manufacturers can use the BOM as a tool to avoid overpaying tariffs. Over time, this also presents an opportunity to streamline supply chains, optimise procurement strategies, and adjust manufacturing locations to reduce exposure to tariffs. The availability of imported goods enhances consumer choice and helps prevent inflation.

Managing this effectively, however, is beyond the scope of human capabilities, given the overwhelming volume of documentary requirements in international trade. Leveraging technology is the ideal option for automotive manufacturers to streamline supply chain documentation, analyze data to gain insights, and proactively reconfigure procurement and transportation networks.

Products such as KlearHub, an AI and ML-powered control tower solution offered by KlearNow, can facilitate this through sophisticated functionalities that enable digitization and centralization of data, real-time analytics, and orchestration of the global compliance process.

Click here for a free demo and experience firsthand how KlearNow can support your business.

 

Streamline Customs Clearance with Document Visibility Platforms

Businesses and individuals involved in international shipping must understand the customs clearance process and ensure compliance with customs regulations. As explained in previous articles, document visibility is crucial in international trade, given the large amount of data involved and the need to share relevant data with customs authorities. Document visibility settings can manage multiple files, ensuring that each recipient only sees the files relevant to them.

Customs brokers and importers can feel the ramifications of the lack of document visibility, including delays in customs clearance and final delivery, additional costs and avoidable administrative work, and impediments in supply chains and transport movement. Enabling document visibility by streamlining and automating information flows benefits all parties involved in international trade.

It is worth noting that the keyword here is ‘automation.’ Existing manual documentation management practices suffer from inherent shortcomings, so document visibility cannot be improved beyond a certain extent. For this reason, investments in technology must support sustainable improvements in the document visibility process and the broader supply chain.

Benefits of Document Visibility

In this section, we will explore the key advantages of document visibility and discuss how deploying the right technology can help businesses unlock these benefits to streamline operations and enhance efficiency.

1) Timely sharing of information and streamlined communication

Digitizing documents and automating data flows ensure timely information sharing with all relevant parties. This simplifies communication channels and eliminates the need for manual oversight, improving efficiency.

2) Empowers stakeholders to meet expectations

With information shared in time, all parties to the transaction are empowered to perform their functions in the process, within stipulated timelines and as per expectations. This minimizes the probability of a stakeholder failing to discharge its duties due to lack of information.

3) Facilitates planning of customs clearance and transportation

With pertinent data available to stakeholders, supply chain planning becomes easier. Understanding the regulations of the destination country is crucial for effective planning, as shipping rules regarding product restrictions, taxation, and packaging standards can significantly differ. Customs brokers and importers can arrange the pre-clearance of imported goods or inbound cargo by contracting drayage providers even before the cargo arrives.

4) Accelerates cargo flow and facilitates smoother customs clearance

Seamless information flows, along with proper documentation for the shipment, translate into accelerated cargo movement and faster customs clearance. This speeds up the overall supply chain and improves turnover and cash-conversion cycles.

5) Reduces administrative work and coordination

Effective document visibility reduces the load of administrative work and routine tasks. This leads to time and cost savings and improves coordination amongst the parties involved.

6) Improves customs compliance levels

The probability of inadvertent customs violations is greatly reduced, as customs brokers and importers have access to information required for customs clearance, thereby ensuring high compliance levels.

7) Robust data security and convenient storage

With data being digitized and stored on cloud-based servers, data security is enhanced, and the storage of documents is made more convenient. Digital storage solutions reduce the need for physical space to store documents, making it easier to manage and protect critical information.

8) Ease of access and retrieval

Information can be easily accessed, regardless of geographical location, as long as the user has a computer and is connected to the server. This saves a considerable amount of time, as instead of sifting through reams of paper, the required information can now be accessed at the click of a button.

Leverage Technology to Unlock the Full Potential of Document Visibility

Document visibility solutions like KlearNow’s KlearHub leverage the latest advances in AI and ML to digitize documents and accurately interpret and collate data, further extending into pre-populating forms and automating information sharing and customs submissions.

Additionally, customs brokerage can provide expertise in ensuring smoother customs clearance and regulatory compliance, which is crucial for businesses dealing with international logistics.

Common functionalities that offer the most value include:

1) Digitizing of documents

Digitizing documents is the first step to efficient document management and visibility. With the digitalization of information, it is easier to save and share documents, and access information from one computer, rather than sifting through reams of paper.

2) Intelligent Document Processing (IDP)

IDP is the ability to process unstructured data from documents and convert it into meaningful insights. Since most information across businesses is unstructured, IDP is extremely useful in ensuring document processing and visibility throughout the supply chain.

3) Automated data flows and information sharing

Once documents are digitized and saved in the system, sharing information is easier, as this can be done electronically. This greatly facilitates information sharing and also leads to the automation of data flows, which minimizes the manual element.

4) Pre-populating forms and submissions

Document visibility software can pre-populate forms based on historical data and after processing the latest documents. This helps save time, and human intervention is required only where new information has to be updated and to verify accuracy.

5) Cloud-based storage

Data stored on the cloud makes it easier to access data, even from different geographical locations. However, potential additional costs may arise from various fees associated with cloud-based storage and customs procedures. Storage space requirements are reduced, and the need to maintain paper-based records is eliminated. Historical records dating back several years can also be retrieved with a few clicks.

6) Authority-based access to data

Data security is strengthened as access to documents is given based on user requirements. This negates the risk of unauthorized personnel gaining access to personal or confidential information.

Partnering with KlearNow for Document Visibility

A leading global logistics provider implemented a document visibility platform powered by KlearNow.AI to improve the visibility of its international shipments and streamline customs clearance operations. The platform digitized and centralized all shipment documents, allowing for real-time tracking and automated updates on customs statuses. This eliminated manual data entry errors and ensured that all required documents were readily accessible to stakeholders.

By integrating automated workflows and cloud-based storage, the company reduced delays caused by missing or incomplete documentation. The platform also improved coordination among teams by enabling instant access to shared data, ensuring faster responses to exceptions and discrepancies.

KlearNow.AI’s document visibility platform incorporates AI and ML technologies to digitize information, process unstructured data, and automate information flows, enhancing efficiency, compliance, and data security. With products like KlearCustoms, KlearEngine, and KlearHub, KlearNow.AI is designed to improve document visibility and streamline the entire customs clearance process.

To learn more or request a free demo, click here.

 

Impact of Inadequate Document Visibility on Customs Clearance

Customs clearance requires businesses to provide accurate and complete documentation, including commercial invoices, bills of lading, and certificates of origin. This involves staying updated on the latest customs regulations, maintaining accurate records, and working closely with customs brokers, freight forwarders, and customs authorities to ensure all paperwork is in order and customs duties are properly accounted for.

The lynchpin to a seamless customs clearance process is document visibility, which enables stakeholders to access the information they need, when they need it. Building on our previous discussions on document visibility and its role in documentation management, this article will examine the challenges that can arise from insufficient document visibility.

Document visibility ensures that each stakeholder has access to the documents and data relevant to their role, enabling them to effectively fulfill their responsibilities in the import process.

While adequate document visibility supports optimal supply chain planning, its absence can create obstacles that disrupt the smooth flow of goods. Poor document visibility may result in various fees associated with customs procedures, such as processing and inspection expenses.

Challenges Caused by Insufficient Document Visibility

Insufficient document visibility can create significant obstacles in customs clearance and supply chain management. From delays and increased costs to compliance risks, the lack of proper visibility disrupts workflows and affects overall efficiency. Below, we outline the key challenges businesses may face.

1) Increased Coordination Efforts

If documents are not readily available, more effort will be required to coordinate and follow up on information. This will increase administrative workload and necessitate the allocation of additional manpower and resources. Understanding the regulations specific to the destination country is crucial for effective coordination and avoiding additional administrative work.

2) Slower Transportation Processes

Without the necessary information, the shipper, importer, or customs broker will not be able to perform their functions effectively. This will slow down the transport process while the information is sought and obtained.

3) Delays in Customs Clearance

If the information needed for customs clearance is not available on demand, customs submissions will be delayed, causing a corresponding delay in customs clearance.

4) Rising Operational Costs

Delays in customs clearance can add significant costs, in the form of detention, demurrage, and storage.

5) Weak Collaboration and Slow Issue Resolution

Without document visibility, collaboration between the parties involved in the shipment will be poor. This will also increase the time needed to resolve issues and add redundancies to the process.

6) Misclassification of Goods and Incorrect Duty Calculations

Lack of document visibility can cause goods to be misclassified. The value of goods directly affects the calculation of duties and taxes, leading to potential customs violations if misclassified. Duties will also be calculated incorrectly, resulting in customs violations and under-declaration.

7) Risk of Penalties for Customs Violations

With the greater probability of customs violations, importers and customs brokers will be exposed to the risk of monetary fines and other penalties.

Impact of Information Silos on Importer Operations

Information silos in supply chains can lead to fragmented communication, delays, and increased costs, affecting overall efficiency and profitability. Below, we examine the key ways in which these silos disrupt importer operations and supply chain performance.

1) Rising Total Cost of Ownership (TCO)

The combination of higher costs all along the supply chain, in the form of detention, demurrage, storage, administrative expenses, fines, and higher inventory carrying costs, will increase the Total Cost of Ownership (or landed cost of goods), far more than was estimated. Since prices for exported goods are quoted taking into account the TCO, an unexpected increase in TCO will erode the profit margins of both the exporters and the importers.

2) Cascading Delays Across the Supply Chain

Delays at various stages in the supply chain may cascade and impact delivery times. The impact of delays across the transport process will be magnified down the chain, with the total delay exceeding the sum of individual delays.

For example, if a container misses the cut-off date at the origin port by one day and isn’t loaded on the scheduled vessel, the effective delay will be one week (as container shipping services are weekly, and the next vessel on the service will arrive after a week). This, too, assumes that the next vessel is not full and can accept the container; otherwise, the delay will be greater.

3) Compromised Supply Chain Integrity and Reliability

The net result of these issues is that supply chain integrity and reliability are compromised, as delays and the stage they occur in cannot be predicted. Due to this, the shipper and importer will have to add some buffer in their supply chains, in the form of additional time, spare capacity, and surplus inventory. The bullwhip effect comes into play across all aspects of supply chain planning, as each party adds buffer time and resources to account for potential disruptions — often resulting in a cumulative slack that far exceeds the actual delays.

4) Damage to Brand Reputation and Business Relationships

The absence of document visibility can undermine trust between business partners. Inadvertent errors arising from inadequate information can result in business losses, sowing the seeds of legal disputes. Besides, the importer’s brand reputation can suffer if they regularly delay deliveries to customers or often do not have stock in hand to ensure continued production and a steady supply of finished goods to the market. Addressing the most common questions related to customs clearance can help mitigate misunderstandings and maintain strong business relationships.

Enabling Document Visibility with KlearNow.AI

With extensive experience in the logtech sector, KlearNow.AI combines industry expertise and technical innovation to develop solutions that effectively address gaps in the transport process.

KlearNow.AI’s document visibility platform incorporates AI and ML technologies to digitize information, process unstructured data, and automate information flows, enhancing efficiency, compliance, and data security. With products like KlearCustoms, KlearEngine, and KlearHub, KlearNow.AI is designed to improve document visibility and streamline the entire customs clearance process.

To learn more or request a free demo, click here.

 

Simplify Customs Documentation Management with Intelligent Software Solutions

Customs clearance is the process of obtaining permission from customs authorities to import or export goods across international borders. This process helps prevent the smuggling of prohibited goods, ensures the accurate collection of customs duties and taxes, and facilitates the smooth movement of goods across international borders.

Critical to customs clearance is the process of documentation management. The complexity of the paperwork involved and the necessity of ensuring absolute compliance with customs requirements pose challenges for customs brokers and importers. Implementing document management systems to capture, organize, and ensure accessibility of business documents can automate processes for HR and other departments, enhancing efficiency and regulatory compliance.

Poor documentation management practices can cause delays in customs clearance and have a material impact on businesses and the overall supply chain. Delays at customs hinder the smooth movement of goods, translating into higher costs, lost sales and revenue, and reputational loss. Besides, violating documentary requirements exposes the importer or customs broker to the risk of not just fines and penalties, but also the loss of privileges.

The Workflow of Document Management in Customs Clearance

Effective customs documentation management involves several critical steps that, when followed, help companies avoid delays, fines, and other complications. These steps include:

  • Preparation of customs declarations: Meticulously prepare all necessary customs declarations, ensuring accuracy and compliance with customs regulations.
  • Document capture and storage: Capture and securely store all documentation, simplifying information management and retrieval.
  • Compliance with customs regulations and laws: Ensure all documentation complies with the latest customs regulations and laws, reducing the risk of non-compliance.
  • Payment of duties and taxes: Handle the payment of all required duties and taxes, ensuring timely and accurate transactions.
  • Customs clearance: Facilitate the entire customs clearance process, ensuring the smooth movement of goods across borders.

Today, a lot of this document management process is outsourced to freight forwarders and customs brokerages. Besides enabling companies to focus solely on their business, it also benefits them with improved efficiency, reduced costs, and enhanced compliance with customs regulations. Customs brokers have the expertise and knowledge to navigate complex customs regulations, ensuring that businesses avoid delays, fines, and penalties.

Using Technology to Overcome These Challenges

A major part of these challenges can be attributed to manual documentation management processes, where information is prepared and shared manually, mostly relying on paper-based documentation.

Documentation management practices are, therefore, prone to the same shortcomings that invariably impact any manual process. Further, there is little scope for improvement in accuracy and timeliness beyond a certain extent, given the inherent limitations of human effort. There is always the possibility of inadvertent errors while preparing documents, sharing information with stakeholders, and during customs submissions.

It is for these reasons that customs brokers and importers are turning to technology to optimize their documentation management process. Digital document management plays a crucial role in transitioning organizations from paper-based systems to electronic documents. The use of technology helps overcome the limitations in the manual process, eliminating the possibility of human errors, increasing accuracy levels, and ensuring customs compliance.

Customs Clearance Software: Functionalities to Simplify Document Management System

In their quest to leverage technology to automate the documentation management process, customs brokers and importers are looking to invest in a document management solution like customs clearance software like KlearHub to enhance their document management practices.

While the upfront costs, like implementation, can be high, incorporating technology can deliver short-term gains as well as substantial benefits in the long term. Customs clearance software is designed to meet the unique requirements and intricacies of the customs clearance process.

Here are some of the most useful functionalities that sophisticated customs clearance software offers:

1. Digitising documents and information

It digitizes all paper documents and information, thus making documentation management easier. A document management system plays a crucial role in regulatory compliance and operational efficiency by providing features such as archiving, indexing, and accessibility.

2. Ability to handle unstructured data

AI and ML-powered software solutions have the ability to handle unstructured data and glean relevant information therefrom. Considering that international trade involves vast amounts of unstructured data, that is generally difficult for humans to handle, this functionality is particularly useful for enterprise content management, which encompasses a broader range of functions beyond just documentation management.

3. Intelligent Document Processing

IDP refers to the ability of the customs clearance software to process information and documents across diverse non-standardized formats, from multiple file types (Excel, Word, PDF, emails, and paper), and analyze historical data to extract information and meaningful insights.

4. Automate information sharing

Customs clearance software helps automate information sharing with the customs department and other stakeholders. This ensures that key information about the consignment, transport milestones, or required actions is shared with stakeholders. This helps complete all formalities on time.

5. Deciphering data and pre-populating forms

Customs clearance software can decipher data and pre-populate forms, saving time and costs. Relying on historical data and predictive analytics, the software can perform rote tasks with more precision.

6. Data security

Data security is enhanced, as documents are digitized and saved on servers, with version control ensuring access to the latest version of documents, granted only to authorized personnel. Furthermore, the level of access granted varies depending on the confidentiality of information involved and the need to know. This infuses an additional element of security in documentation management.

7. Ease of storing and retrieving data

Customs brokers and importers are legally obligated to save information for a certain stipulated period. There are also times when historical records need to be accessed for legal or internal purposes. Both these aspects of documentation management are simplified by the digitalization of information. Digital documents eliminate the need for extensive storage space, as they can be securely saved on a server. This data can be accessed at any time and from any geographical location, making it easier to retrieve information whenever required.

Simplify Documentation Management with KlearNow

As a provider of the market’s best document management software solutions, KlearNow.AI enables importers, exporters, and customs brokers to manage their documents electronically and streamline their business processes.

Solutions such as KlearEngine and KlearCustoms are all equipped with comprehensive documentation management functionalities. Each of these products is capable of digitizing information and automating workflows, thus accelerating customs clearance of merchandise.

While the basic functions are similar, the utility of each solution depends on the scale and specific requirements of the customer. To explore these products and evaluate their suitability for your business, please schedule a free demo with us here.

 

Crucial Role of Documentation Management in Global Trade and Tariff Analytics

Given the sheer quantity and diversity of information flows in international trade, the data that importers and customs brokers need to process, prepare, and share can often be of overwhelming magnitude. This humongous volume of data handled is matched by its complexity, which generally has its source in bureaucratic customs regulations, like tariffs, duties and taxes. Effective documentation management is essential to streamline these processes, ensuring accuracy, compliance, and efficiency in handling trade paperwork and regulatory requirements.

In recent years, new trends in procurement driven by geopolitical and macroeconomic factors have led to the emergence of alternate sourcing locations, giving rise to new trade relationships and altering trade flows. We can see this today with the announcement of several increased and new tariffs by the incoming administration in the United States. 

This has led to an increase in the evaluation and actual number of trading partners that importers and exporters work with, each with its own regulations and nuances.

Additionally, to ensure sanctions, quotas, and covenants of bilateral agreements are not violated, customs departments have correspondingly increased their documentation requirements to effectively regulate imports and international trade.

While these documentary processes that importers and customs brokers are legally obligated to comply with might seem cumbersome, they are necessary to ensure the seamless clearance of imported and exported merchandise.

Importance of Documentation Management

The greater number of trade documents and the underlying complexity have rendered the role of documentation management even more critical.

Whilst historically, documentation management has been handled manually, the evolving trade landscape now warrants a more structured and data-driven approach. To optimize documentation management, it is crucial to identify essential workflows within digital document management systems, particularly in key business areas such as finance and HR.

Documentation management comprises not just digitizing, preparing, sharing, and storing documents and information, but also automating and pre-populating documents, ensuring data security and ease of retrieval.

With stringent fines and penalties being prescribed for transgressions of customs laws, the onus is on customs brokers and importers to optimize documentation management and ensure complete compliance with relevant customs rules and procedures.

Types of Documents Involved in International Trade

International trade involves a wide range of documents that are essential for the smooth execution of transactions. These documents can be broadly categorized into several types:

  • Commercial Documents: These include invoices, packing lists, and certificates of origin, which provide details about the goods being traded. Accurate commercial documents are crucial for ensuring that all parties have a clear understanding of the transaction details.
  • Customs Documents: These include customs declarations, commercial invoices, and bills of lading, which are required for customs clearance. Properly prepared customs documents help facilitate the efficient movement of goods across borders and ensure compliance with customs regulations.
  • Shipping Documents: These include bills for lading, airway bills, and freight forwarders’ receipts, which provide details about the transportation of goods. Shipping documents are vital for tracking shipments and verifying the receipt of goods.
  • Financial Documents: These include letters of credit, bank guarantees, and payment receipts, which facilitate payment and financing for international trade. Financial documents ensure that the financial aspects of the transaction are secure and transparent.
  • Regulatory Documents: These include permits, licenses, and certificates of compliance, which are required to ensure that goods meet regulatory requirements. Regulatory documents help businesses comply with various international trade laws, local trade laws like tariffs and quotas, as well as,  other governmental standards.

Effective document management is critical for international trade, as it helps to ensure that all necessary documents are accurate, complete, and readily available. By organizing documents efficiently, businesses can streamline their trade processes and avoid potential delays and penalties.

Challenges in Documentation Management

The current manual process of documentation management is fraught with challenges, which are explained below:

1. Multiple jurisdictions and unique requirements in each country

The interconnected nature of global supply chains means that trade in goods generally involves more than two countries and a multitude of stakeholders. Besides, the contents and formats of documents in each country will invariably differ, necessitating that the same information be presented in different forms.

This implies that the parties to the transaction have to deal with multiple jurisdictions and comply with each other’s requirements, besides having to obtain information from several entities, amplifying the challenges of documentation management. In other cases, data from previous years may not be available or may not meet the criteria for inclusion, further complicating the documentation process.

2. Range of commodities and specific requirements in each country

Information requirements vary depending on the commodity, the nature of the commodity (such as perishable items or hazardous cargo), and compliance with country-specific laws regarding restrictions on other countries/ preferential access to certain countries/ environmental laws.

Since the range of commodities traded internationally is vast, the documentation process becomes more complicated. 

There is also a further complication when you consider that raw materials and parts of finished commodities can originate from multiple countries, making the research and presentation of such documentation even more complicated and cumbersome. For instance, in the US, there is a continued focus on General Identification, and having visibility into all the suppliers throughout the value chain. 

3. Information available in different modes and formats

Information is made available to the importer or customs broker in diverse modes, including Excel spreadsheets, Word documents, PDF files, emails, and paper. The format in which information is shared is also generally different, depending on the entity that compiles the information and country-specific mandates.

This makes it difficult to consolidate information and compile it in a standardized format.

4. Unstructured information

Most data shared in international trade is unstructured, making it difficult to interpret. These difficulties can arise from factors such as the document being illegible, missing some information, or being in a different language.

5. Manual process, making it cumbersome and expensive

The manual method of documentation management relies primarily on human efforts, making it an onerous task that involves painstaking efforts and is also expensive, given the manpower required.

6. Greater probability of errors in customs documentation preparation and submission

A combination of manual processes and unstructured data increases the probability of human errors, in interpreting data and preparing documents. While some errors are relatively minor and can be rectified, errors such as misclassification of the commodity or incorrect application of duty thereupon can have far more severe consequences.

7. Greater probability of missing deadlines or not sharing information

The reliance on human effort also increases the probability of missing deadlines or not sharing information as mandated, resulting in non-compliance.

8. Exposure to risk of penalties and fines

These challenges expose the importer to the risk of monetary fines and penalties, besides the commercial impact of delayed customs clearance and localized supply chain disruptions, resulting in reputational loss and missed sales opportunities.

Best Practices for Document Management

Effective document management requires several best practices to ensure efficiency, accuracy, and compliance:

  • Centralized Document Storage: All documents should be stored in a centralized location, such as a document management system, to ensure easy access and retrieval. Centralized storage helps organize documents systematically and reduces the risk of misplacement.
  • Standardized Document Templates: Document templates should be standardized to ensure consistency and accuracy. Standardized templates streamline the document creation process and ensure that all necessary information is included.
  • Automated Document Workflows: Document workflows should be automated to reduce manual errors and improve efficiency. Automation helps in routing documents to the right personnel for review and approval, speeding up the process.
  • Regular Document Backups: Documents should be regularly backed up to ensure that they are not lost or corrupted. Regular backups protect against data loss due to system failures or cyber-attacks.
  • Access Controls: Access to documents should be controlled to ensure that only authorized personnel can view, edit, or delete documents. Implementing access controls helps maintain data security and integrity.
  • Detailed Data Capture: Capturing information down to a SKU-Level or a Part-Level is critically important when considering value chains or tariff changes. Understanding how much a change in a tariff will impact your business is extremely difficult if you don’t have the combination of HYTS level information plus transactional volumes to estimate accurate potential impacts.  

By following these best practices, businesses can ensure that their document management processes are efficient, effective, and have the flexibility to be compliant with regulatory requirements and changes. Proper document management enhances operational efficiency and reduces the risk of errors and non-compliance.

Leverage KlearNow to Overcome These Challenges

Leveraging technology is the most sustainable way to optimize documentation management and overcome these challenges. Document management software plays a critical role in enhancing business processes, efficiency, and compliance.

The deployment of AI-powered logtech solutions like intelligent document processing (IDP) can help redesign existing documentation management practices, making it easier for importers and customs brokers. Parts database management is possible only when you capture all the data from your documents, standardize and validate the information, and then combine it with transactional shipment volume to get a full picture of the impact of your compliance on your business. 

KlearNow, with its repertoire of sophisticated products, aimed at simplifying documentation management and customs compliance, is the ideal choice for importers and customs brokers evaluating technological solutions to streamline their operations.

Products such as KlearCustoms and KlearEngine are all designed to enable the digital transformation of customs clearance and documentation.

Click here for a free demo to see how you can benefit from technology for your customs clearance processes.

 

Impact of Poor Documentation Management Practices on Customs Clearance

Customs clearance is a crucial step in international trade, ensuring that shipments comply with local regulations and safeguard a nation’s economic, health, and security interests. As we have explored in previous articles, international trade involves extensive and complex paperwork, making efficient documentation management a necessity for modern customs brokers and importers.

As businesses navigate tariffs and change international regulations, it’s essential to understand the customs clearance process, pick a suitable customs brokerage to work with, audit them consistently and ensure they create and hold the right documentation. That said, the existing manual documentation management process is afflicted by several systemic gaps, which pose operational and commercial challenges. These challenges arise from the multiplicity of jurisdictions, as well as the magnitude and variances in documents required for each commodity and country. Additionally, they include issues such as information being shared in different formats, the unstructured nature of data, manual processing and associated accuracy problems, and non-automated workflows.

In this article, we will see the impact of sub-optimal documentation management practices on customs brokers and importers, as well as the broader supply chain, and discuss best practices for implementing a good document management system.

Challenges With Poor Document Management in Customs Business

1. Higher probability of errors while processing and preparing documents

Due to the manual nature of the documentation management process, there is a lack of standardized formats as information is being shared in different modes and languages. This results in the majority of data being unstructured, and with all the crucial detailed information, the probability of errors is higher while documenting them.

2. Delays in submitting documents and information to customs

Due to challenges in processing data and preparing documents manually, it is quite common to see delays in submitting the stipulated documents to Customs.

3. Delays in customs clearance

Errors in documentation or delays in submitting information can cause delays in customs clearance, with the customs department holding the imported goods until the errors have been rectified and all requisite information submitted.

4. Penalties for non-compliance

Customs regulations prescribe monetary fines and other penalties to be imposed on the non-compliant party. Depending on the magnitude of the violation, the penalties can be extremely severe (to act as a deterrent in the future).

5. Incurring additional costs

Delays in customs clearance result in the incurrence of additional costs and hidden fees towards storage, detention, and demurrage. These costs can add up rapidly, as the container is tied up and goods occupy storage space beyond the free time granted.

6. Delayed sharing of information

Poor documentation management lends itself to delayed information sharing with other stakeholders, like reporting on milestones in the transport process. This information is generally necessary to plan transport activities in advance, wherefore delays herein can cascade downstream and result in the imported goods being delivered to their final destination after the scheduled delivery dates.

7. Reputational loss

Customs brokers can face reputational loss as delays in cargo delivery and higher costs caused by poor documentation management reflect poorly on their expertise and efficiency.

8. Manpower spent auditing, following up and rectifying errors

Once a procedural or documentary error is committed, rectifying it involves more human resources and costs than were initially estimated. To prevent this audits are often conducted but they are also manual, time consuming and in some cases subjective. 

Impact on Overall Supply Chain Operations

The fallout of poor documentation management practices is felt in the overall supply chain as well, in the following ways:

1. Higher costs and TCO

Delays can lead to avoidable detention and storage costs and various fees, adding to the overall Total Cost of Ownership (TCO).

2. Prolonged delivery times

Delays in customs clearance and international shipping add to the total delivery times, resulting in the actual transit times exceeding what was initially scheduled, which in turn disrupts the timelines for all subsequent activities in the supply chain.

3. Affects supply chain reliability

The combination of prolonged delivery times and higher costs erode supply chain reliability, to the extent that the intended transport planning and timelines are no longer feasible. Regular deviations in delivery times, from initial estimates can render supply chain planning sub-optimal.

4. Longer cash conversion cycle

If goods are delayed, they reach the markets late, resulting in delayed sales, and lengthening the cash conversion cycle. This, in turn, reduces the inventory and asset turnover ratio.

5. Higher inventory requirements

Due to the lack of reliability of supply chains, businesses are forced to maintain higher levels of inventory, which results in higher storage costs and risks to cargo.

6. Cash tied up in inventory and storage

Higher inventory levels mean that valuable working capital is tied up in inventory, impairing cash flows and liquidity.

7. Lost sales and missed revenue

If goods do not reach their final markets on time, the importer will have to contend with lost sales opportunities and revenue and decreased customer satisfaction. If the shortages are ongoing, consumers will start using competitors’ products, giving rise to the danger of a long-term shift in favor of competition.

Implementing a Smart Document Management System

Document management systems (DMS) are essential for businesses to manage their documents and automate workflows. A DMS captures, manages, retrieves, and stores documents in electronic format, enabling organizations to achieve new levels of speed, accuracy, and transparency.

Today, the advent of AI in documentation management has introduced intelligent document processing (IDP), which enables shippers and customs brokers to collect information from unstructured data sources with ease. KlearNow leverages IDP to read, collate, and streamline the document management process. KlearNow’s ability to decipher unstructured data, pre-populate documents, and automate custom filing preperation, makes documentation management faster and more accurate for businesses.

KlearNow’s diverse product line of KlearCustoms and KlearEngine helps customs brokers and importers process data more efficiently by digitizing documents and automating information flows. This enables shippers to focus on their core value-adding business activities while being assured of being customs-compliant.

Click here for a free demo to decide the product most suitable for your business.

 

CARM Compliance Made Easy with KlearNow

The Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) system is a critical component of Canada’s import regulations. Designed to streamline the import process, CARM aims to improve compliance and enhance the overall efficiency of trade-related transactions.

For importers, understanding CARM regulations is essential as they impact various aspects of business operations, including duties, taxes, and advance rulings. By familiarizing themselves with the CARM system, importers can better navigate the complexities of importing into Canada, ensuring a smoother and more efficient process.

The CARM regulations apply to all imports and, therefore, will impact all Canadian importers and customs brokers, as well as US exporters to Canada, regardless of the size or scale of their business. The intent is to simplify the import process and provide a user-friendly Single Window system for importers, besides optimizing how CBSA assesses and collects duties and taxes.

The third phase of the CBSA’s CARM initiative was released in October 2024. Some of the major requirements include:

·       Obtaining a Canadian Business Number and Import-Export program account (RM)

·       Creating a CARM Client Portal (CCP) Business Account

·       Authorizing customs brokers to handle their imports

·       Posting financial security to obtain Release Prior to Payment (RPP)

In this process, customers face various hurdles, right from registration to setting up their financial security or bonding requirements. While approaching the CARM Help Desk for support is common, working with customs clearance providers like KlearNow.AI can come in handy.

Understanding CARM Regulations

The CARM system comprises several key components that importers must be familiar with to ensure compliance and avoid potential issues. These include:

  • Advance Ruling (Tariff Classification and Origin) Program: This program provides binding rulings on tariff classification and origin, helping importers determine the correct classification and origin of their goods. By obtaining an advance ruling, importers can ensure they are applying the correct tariff codes, which aids in accurate duty assessments and compliance with Canadian regulations.
  • National Customs Ruling Program: Unlike the advance ruling program, the national customs ruling program offers non-binding rulings on tariff classification and origin. While these rulings are not legally binding, they provide valuable guidance to importers on the classification and origin of their goods, helping them make informed decisions and avoid potential issues.
  • Duties and Taxes: The CARM system is used to assess and collect duties and taxes on imported commercial goods. Importers must understand their obligations regarding duties and taxes to avoid any penalties or delays. By staying informed about the duties and taxes applicable to their imports, businesses can ensure compliance and avoid unexpected costs.

What are CARM APIs?

To facilitate seamless integration with existing business systems, the CARM API offers several useful functionalities, such as:

Commercial Accounting Declarations (CADs): The API enables the electronic submission of CADs, streamlining the post-release accounting process for imported goods.

Duty and Tax Calculations: It provides functionalities to calculate duties and taxes accurately, ensuring compliance with Canadian regulations.

Tariff Code Classification: The API assists in classifying goods under the correct tariff codes, aiding in precise duty assessments.

KlearNow.AI has integrated these APIs on its customs clearance platforms, to streamline the clearance process and make it smoother and faster.

Embedding these APIs helps automate submissions, reduce errors, and accelerate customs clearance. With data flowing directly from the client systems, errors are minimized and delays avoided, helping importers be customs compliant.

Ensuring Data Accuracy

With Intelligent Document Processing (IDP) capabilities, KlearNow’s platforms can process information and auto-populate documents accurately and swiftly.

As part of client onboarding, KlearNow.AI sets up a product library, wherein all relevant information about the commodity is stored. Thereafter, as each shipment is handled, IDP is used to extract information from the documents, which can then be reviewed and compared with the product library to help ensure it aligns with predefined parameters.

Multiple checkpoints exist throughout the process to validate the data. Ensuring data accuracy also involves obtaining the applicant’s consent for the use of their information in various customs processes.

For example, if an invalid HS code is detected, the system alerts the customs broker, so they can rectify the gap before filing the customs entry with the CBSA.

This multi-layered approach helps maintain data integrity, while the reduction in manual effort enables the customs broker to focus on compliance.

Surety Bonds for Non-Resident Importers

While KlearNow.AI doesn’t obtain surety bonds for non-resident importers, it has an experienced partner to whom customers are referred, for professional guidance on surety bonds. Compliance with CARM regulations often involves adhering to the guidelines provided in ruling letters, which offer clarity on tariff classifications and origins.

Mitigate Risks of Non-Compliance

Once the existing grace period for the Release Prior to Payment (RPP) program expires, from April 2025 onwards, surety bonds will be mandatory before goods can be imported.

In today’s interconnected world, compliance with CARM regulations is crucial for maintaining smooth international trade operations. CBSA has also provided a grace period of approximately 60 days for CARM registration, during which time importers need to grant customs brokers access to their CARM portal, so the broker can complete relevant formalities. Once the grace period is over, failing to file the Commercial Accounting Document (CAD) on time will attract a penalty of $100/ shipment.

We recommend that importers negate these risks by:

  • Obtaining a Surety Bond before the deadline
  • Grant customs broker access to the CARM portal

Tips for US Exporters

The process remains the same for American exporters, except for issues related to payment options, as CARM only accepts payments in Canadian dollars and works with two banks.

American exporters can reach out to KlearNow.AI, and our team of experts will assist in finding a viable solution.

Overall Impact of CARM Client Portal

While the implementation of CARM has compelled importers and customs brokers to adapt to the new regulations, the initiative is advantageous for users in several ways.

Some advantages include importers being able to view CAD documents and directly accessing their statement of accounts with CBSA, besides which they can also rectify errors within the portal itself.

Overall, this makes it easier and more efficient for importers to manage their documentation.

How KlearNow Can Ease Compliance With CARM Regulations

Apart from being a leading vendor of customs clearance software in the US and Canada, KlearNow.AI is licensed to customs clear in the US and Canada with considerable expertise in customs processes.

KlearNow.AI is focused on helping importers and customs brokers navigate the transition to CARM. In addition to the technological aspect, KlearNow aims to be a trusted advisor and long-term partner to importers looking for guidance.

Our platforms are scalable and useful for businesses of all sizes — whether small importers unfamiliar with digital customs systems or large enterprises seeking to streamline operations, reduce errors, and enhance compliance.

KlearNow’s robust reporting capabilities complement the enhanced visibility provided by the CARM portal, by delivering advanced analytics. Platforms such as KlearEngine and KlearCustoms permit importers to analyze data at the most granular level possible, providing detailed operational insights and facilitating better decision-making.

To find out how KlearNow can help your business, please click here.

 

How KlearNow Can Help Importers Comply with CARM Regulations

The Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) system is a critical component of Canada’s import regulations. Designed to streamline the import process, CARM aims to improve compliance and enhance the overall efficiency of trade-related transactions.

For importers, understanding CARM regulations is essential as they impact various aspects of business operations, including duties, taxes, and advance rulings. By familiarizing themselves with the CARM system, importers can better navigate the complexities of importing into Canada, ensuring a smoother and more efficient process.

The CARM regulations apply to all imports and, therefore, will impact all Canadian importers and customs brokers, as well as US exporters to Canada, regardless of the size or scale of their business. The intent is to simplify the import process and provide a user-friendly Single Window system for importers, besides optimizing how CBSA assesses and collects duties and taxes.

The third phase of the CBSA’s CARM initiative was released in October 2024. Some of the major requirements include:

·       Obtaining a Canadian Business Number and Import-Export program account (RM)

·       Creating a CARM Client Portal (CCP) Business Account

·       Authorizing customs brokers to handle their imports

·       Posting financial security to obtain Release Prior to Payment (RPP)

In this process, customers face various hurdles, right from registration to setting up their financial security or bonding requirements. While approaching the CARM Help Desk for support is common, working with customs clearance providers like KlearNow.AI can come in handy.

Understanding CARM Regulations

The CARM system comprises several key components that importers must be familiar with to ensure compliance and avoid potential issues. These include:

  • Advance Ruling (Tariff Classification and Origin) Program: This program provides binding rulings on tariff classification and origin, helping importers determine the correct classification and origin of their goods. By obtaining an advance ruling, importers can ensure they are applying the correct tariff codes, which aids in accurate duty assessments and compliance with Canadian regulations.
  • National Customs Ruling Program: Unlike the advance ruling program, the national customs ruling program offers non-binding rulings on tariff classification and origin. While these rulings are not legally binding, they provide valuable guidance to importers on the classification and origin of their goods, helping them make informed decisions and avoid potential issues.
  • Duties and Taxes: The CARM system is used to assess and collect duties and taxes on imported commercial goods. Importers must understand their obligations regarding duties and taxes to avoid any penalties or delays. By staying informed about the duties and taxes applicable to their imports, businesses can ensure compliance and avoid unexpected costs.

What are CARM APIs?

To facilitate seamless integration with existing business systems, the CARM API offers several useful functionalities, such as:

Commercial Accounting Declarations (CADs): The API enables the electronic submission of CADs, streamlining the post-release accounting process for imported goods.

Duty and Tax Calculations: It provides functionalities to calculate duties and taxes accurately, ensuring compliance with Canadian regulations.

Tariff Code Classification: The API assists in classifying goods under the correct tariff codes, aiding in precise duty assessments.

KlearNow.AI has integrated these APIs on its customs clearance platforms, to streamline the clearance process and make it smoother and faster.

Embedding these APIs helps automate submissions, reduce errors, and accelerate customs clearance. With data flowing directly from the client systems, errors are minimized and delays avoided, helping importers be customs compliant.

Ensuring Data Accuracy

With Intelligent Document Processing (IDP) capabilities, KlearNow’s platforms can process information and auto-populate documents accurately and swiftly.

As part of client onboarding, KlearNow.AI sets up a product library, wherein all relevant information about the commodity is stored. Thereafter, as each shipment is handled, IDP is used to extract information from the documents, which can then be reviewed and compared with the product library to help ensure it aligns with predefined parameters.

Multiple checkpoints exist throughout the process to validate the data. Ensuring data accuracy also involves obtaining the applicant’s consent for the use of their information in various customs processes.

For example, if an invalid HS code is detected, the system alerts the customs broker, so they can rectify the gap before filing the customs entry with the CBSA.

This multi-layered approach helps maintain data integrity, while the reduction in manual effort enables the customs broker to focus on compliance.

Surety Bonds for Non-Resident Importers

While KlearNow.AI doesn’t obtain surety bonds for non-resident importers, it has an experienced partner to whom customers are referred, for professional guidance on surety bonds. Compliance with CARM regulations often involves adhering to the guidelines provided in ruling letters, which offer clarity on tariff classifications and origins.

Mitigate Risks of Non-Compliance

Once the existing grace period for the Release Prior to Payment (RPP) program expires, from April 2025 onwards, surety bonds will be mandatory before goods can be imported.

In today’s interconnected world, compliance with CARM regulations is crucial for maintaining smooth international trade operations. CBSA has also provided a grace period of approximately 60 days for CARM registration, during which time importers need to grant customs brokers access to their CARM portal, so the broker can complete relevant formalities. Once the grace period is over, failing to file the Commercial Accounting Document (CAD) on time will attract a penalty of $100/ shipment.

We recommend that importers negate these risks by:

  • Obtaining a Surety Bond before the deadline
  • Grant customs broker access to the CARM portal

Tips for US Exporters

The process remains the same for American exporters, except for issues related to payment options, as CARM only accepts payments in Canadian dollars and works with two banks.

American exporters can reach out to KlearNow.AI, and our team of experts will assist in finding a viable solution.

Overall Impact of CARM Client Portal

While the implementation of CARM has compelled importers and customs brokers to adapt to the new regulations, the initiative is advantageous for users in several ways.

Some advantages include importers being able to view CAD documents and directly accessing their statement of accounts with CBSA, besides which they can also rectify errors within the portal itself.

Overall, this makes it easier and more efficient for importers to manage their documentation.

How KlearNow Can Ease Compliance With CARM Regulations

Apart from being a leading vendor of customs clearance software in the US and Canada, KlearNow.AI is licensed to customs clear in the US and Canada with considerable expertise in customs processes.

KlearNow.AI is focused on helping importers and customs brokers navigate the transition to CARM. In addition to the technological aspect, KlearNow aims to be a trusted advisor and long-term partner to importers looking for guidance.

Our platforms are scalable and useful for businesses of all sizes — whether small importers unfamiliar with digital customs systems or large enterprises seeking to streamline operations, reduce errors, and enhance compliance.

KlearNow’s robust reporting capabilities complement the enhanced visibility provided by the CARM portal, by delivering advanced analytics. Platforms such as KlearEngine and KlearCustoms permit importers to analyze data at the most granular level possible, providing detailed operational insights and facilitating better decision-making.

To find out how KlearNow can help your business, please click here.

 

How Does Document Visibility Help with Customs Clearance Compliance

International trade involves a number of documents, which means collating, interpreting, analyzing, and updating massive amounts of data.

Information requirements are vast and varied, as the numerous stakeholders in any export and import transaction need data for various internal and regulatory purposes. This information is available and shared in various forms, such as Excel spreadsheets, Word documents, PDF files, emails, and paper.

Many document management systems are available on the market to address these challenges. These systems are designed to store, manage, and track electronic documents alongside digital images of paper-based records. These systems not only streamline documentation processes but also play a crucial role in enhancing document visibility. By centralizing access and ensuring that stakeholders can view and share accurate, timely, and complete information, document management systems help parties effectively meet customs documentation requirements.

Given the significant costs and delays associated with late, inaccurate, incomplete, or non-compliant information regarding customs regulations, document visibility has become indispensable. Ensuring all stakeholders have access to relevant, reliable data is key to smooth international trade operations.

Document visibility and management are closely intertwined

Implementing effective documentation management systems is essential for achieving complete document visibility for all parties involved in trade.

Common Documents in International Trade

The volume of data that is shared and documents prepared in an international transaction is staggering.

Besides common documents, such as the Bill of Lading, Commercial Invoice, Letter of Credit, Import Customs Declaration, Import License, Letter of Credit, and Certificate of Origin, several other documents are also required depending on the commodity, origin, destination, and local customs requirements. These documents are created and managed within document management systems, which help streamline the process and ensure compliance with various regulations.

For instance, shipping flowers from Kenya to the Netherlands can involve managing an astonishing 200 documents.

Each of these documents is vital for the smooth transport and customs clearance of imported goods. Even if one document is missing, incorrect, or not submitted on time, there will be delays while the document is rectified or information is provided to the customs department, port authorities, or the transportation vendor.

The Need for Document Visibility in Customs Clearance

In this information maze, each party must have access to the data and documents they need to perform their role. This is the essence of document visibility. Effective documentation management systems allow users to create customized envelopes containing specific files for different recipients, ensuring that individuals only see the documents relevant to them.

If an importer is required to submit a certificate of origin to the customs department in their country, complying becomes much easier if they have ready access to the certificate and its information. If they lack such document visibility, they will either fail to comply with customs regulations or delay their submissions.

Conversely, document visibility can enable them to proactively retrieve documents or information and arrange pre-clearance of imported goods.

Similarly, with document visibility to pre-arrival notifications, Customs can be informed in advance about the arrival of cargo, enabling the importer or customs broker to make appropriate arrangements for timely customs clearance and inland delivery to the final destination.

It is obvious that document visibility enables the smooth flow of global supply chains and the rapid movement of cargo across borders. By instituting good documentation management practices, importers can facilitate document visibility, and streamline information sharing and the customs clearance process.

The Role of Technology in Document Visibility

Improvements in documentation management and document visibility have to be underpinned by technology. Manual processes, reliant on human efforts, are sub-optimal and prone to errors and delays, both in processing information and keeping stakeholders updated.

When a shipper submits a proforma invoice to importers and awaits their confirmation before proceeding with shipment formalities, the process can face setbacks if the document gets lost amidst other paperwork. In such cases, the shipper must resubmit the proforma invoice, resulting in delays to the shipment timeline and additional administrative effort.

Likewise, if an employee makes a mistake while preparing the Import Customs Declaration, which is detected after it is submitted to Customs, clearance of the goods will be delayed until the document is rectified and resubmitted.

With document visibility in place, the probability of such errors or omission and commission is greatly minimized, as the information is digitized, auto-populated, and easily retrievable.

Enable Trade Document Visibility with KlearNow

KlearNow’s customs clearance platforms digitize paper-based transactions, automate workflows, and provide transparency in international trade transactions, thereby creating document visibility and making customs compliance easier. Understanding who is responsible for paying customs duties is crucial in the shipping process, and KlearNow’s platforms help clarify these responsibilities, ensuring smooth customs clearance.

KlearNow’s suite of products includes KlearCustoms, KlearHub, and KlearEngine. Each is equipped with functionalities that enable document visibility.

Click here for a free demo of how these products can help your business.

 

Give Your Business a Competitive Edge With Customs Clearance Visibility

Customs clearance visibility has thus far not received the focus that an activity of its criticality deserves. Due to this, most importers and customs brokers generally lack adequate visibility or transparency at the customs clearance stage, in terms of the accuracy or completeness of documentation or compliance with stipulated procedures. They are, therefore, unable to accurately forecast the time taken for customs clearance or potential delays.

The absence of visibility into customs clearance hinders the ability to ensure compliance, proactively rectify customs submissions, and thus prevent violations and delays.

Impact on Customer Service Levels

Lacking visibility into customs clearance means customs brokers cannot provide their customers — importers or freight forwarders — with regular, accurate updates on the time required for customs clearance.

They are also unable to anticipate delays caused by procedural lapses or flag situations where additional information or corrections are needed, as they themselves lack the necessary insight. Furthermore, unreliable data from ocean carriers exacerbates the issue, making it even harder to deliver precise updates on shipment status.

This impedes their effectiveness in ensuring timely customs clearance and providing satisfactory levels of customer service, leading to reputational and business losses.

Benefits of Customs Clearance and Shipment Visibility

Conversely, having customs clearance visibility can help customs brokers and importers manage their business better and provide superior customer service. Visibility has a direct commercial impact, such as:

1) Cost savings

With customs clearance visibility software to handle trade documentation, process unstructured data, prepopulate customs submissions, and automate the process and information flows, customs brokerage can generate substantial savings. These savings extend beyond manpower that would otherwise be allocated to these tasks. They also include a reduced risk of human errors and inadvertent omissions, which could otherwise lead to costly fines and penalties. Moreover, freeing employees from the monotony of repetitive tasks allows them to focus on higher-value activities, such as acquiring new business opportunities or strengthening relationships with existing customers through deeper engagement and cross-selling.

 2) Improved customer service

With trained and experienced employees being able to focus on core business, customs brokers can utilize their expertise to understand the customer’s business and identify unmet needs, which can help deepen partnerships with customers and create long-term relationships. This opens up cross-selling opportunities and creates customer loyalty.

3) Higher customer satisfaction levels

The consequent higher customer satisfaction levels and positive word-of-mouth publicity will attract more business as well as referrals from existing customers.

4) Faster time to market and cash conversion cycles

With customs clearance visibility, potential delays are avoided, enabling cargo to reach the market faster. This helps importers meet market demand and fulfill orders promptly and accelerates the cash conversion cycle.

5) Better cash flows

With faster cash conversion cycles, the company can realize its revenues and profits earlier, which helps improve its cash flows and ensures the short-term liquidity that is so essential for the smooth day-to-day functioning of any business.

6) Lower inventory and storage costs

With predictable delivery times, inventory management becomes easier, as businesses are in a better position to estimate the time taken for replenishment of stocks. This ensures that money is not tied up in excess inventory, thus saving on inventory carrying and storage costs.

7) Facilitates onward planning and drayage movement

With an accurate idea of the time taken for customs clearance, importers can arrange drayage in advance, rather than at the last moment, helping avoid high spot rates.

Customs Clearance Visibility as a Competitive Advantage

Although most customs brokers and importers have yet to invest in customs clearance visibility platforms, increasing awareness of the significant benefits these solutions offer is likely to drive their adoption of this technology.

Customs brokers who take the initiative to incorporate customs clearance visibility software in their daily operations will be able to provide importers with accurate and regular updates, ensuring transparency and efficiency in the clearance process.

Therefore, customs clearance visibility can create the ability to provide timely customs clearance updates that will lend their business the much-needed edge in a fiercely competitive market.

Give your business the KlearCustoms advantage

As part of its mission to digitally transform logistics and supply chain systems, KlearNow.AI has introduced several logtech products to cater to different segments and stakeholders.

KlearNow’s products offer functionalities such as Intelligent Document Processing (IDP), which enhances visibility and control and increases scalability for customs brokers.

KlearCustoms, its AI and ML-powered customs clearance visibility platform, transforms trade documents into structured data. It offers a clear, real-time view of all customs and shipment activities, including automated alerts for exception management.

The software, designed by licensed customs brokers, is intended to simplify complex data gathering and make it easier to manage customs clearances.

To find out how KlearNow can support your business, click here for a free demo.

 

Deploy Customs Clearance Visibility Platforms to Improve Customs Processes

The logistics industry incorporates technology into its operations, making it better positioned to provide visibility during freight movement. The introduction of smart containers, RFID-equipped trucks, and rail wagons, along with the role of freight forwarders, has also created visibility during the inland transport legs.

Importers and customs brokers typically enjoy visibility across the extended supply chain, but this often diminishes during the customs clearance stage. This is because customs clearance involves more than just the physical movement of goods — it requires meticulous compliance with documentary requirements and adherence to stipulated processes.

Challenges arising from lack of Customs Clearance Visibility

As explained in the previous article, the lack of visibility into customs clearance can be the source of multiple challenges. These include the absence of pre-alerts in case of inadvertent omissions, the inability to amend submissions in time, and the risks of penalties and reputational loss. It also contributes to delivery delays, suboptimal planning, higher landed costs, and poor supply chain reliability.

Furthermore, this lack of visibility increases the risk of errors in calculating and paying customs duties and taxes, making it more challenging to navigate the complexities of international shipping. Such errors not only heighten the likelihood of financial penalties but also compromise the efficiency and integrity of the entire supply chain.

The consequences of these challenges can be severe. They can impair the importers’ ability to serve their markets (in the case of finished products) or ensure continued production (in the case of inventory and spares), resulting in missed sales opportunities and revenue losses.

Benefits of Gaining Visibility into Customs Clearance Process

Having visibility into customs clearance can generate significant process-related benefits for customs brokers and importers. This visibility is crucial for brokers to efficiently manage their customs business, including data entries and ensuring timely payment of duties.

These benefits help streamline and optimize the customs clearance process, ensuring smooth cargo clearance and movement and staying on schedule.

These benefits include:

1. Enhanced compliance levels and lower probability of customs violations

With customs clearance visibility, it is easier to ensure compliance upfront and also proactively rectify errors. This helps customs brokers and importers comply with documentary requirements and procedures, thus reducing the probability of customs violations.

2. Minimising delays

With higher levels of customs compliance, the chances of delays in clearance are minimized, resulting in smooth and fast movement of imported goods through customs.

3. Better supply chain planning and transport scheduling

With better compliance and smooth movement of goods due to customs clearance visibility, the quality of supply chain planning improves as potential bottlenecks are eliminated. Transport scheduling and drayage movement are also simplified as the time needed for customs clearance can be estimated with a greater degree of precision.

4. Rationalizing costs

Eliminating the risk of customs violations and delays helps avoid associated costs, including storage fees, detention charges, demurrage, inventory carrying expenses, and fines. By mitigating these risks, businesses can rationalize their cost structure, ensuring that only planned expenses are incurred. This proactive approach prevents the erosion of profit margins caused by unplanned or unforeseen costs, safeguarding financial performance and enhancing overall operational efficiency.

5. Automated information flows

With the digitization of trade documentation and automation of information flows, all relevant information is shared with the parties concerned. This ensures timely pre-alerts where action is required, thus negating the possibility of information not being shared or necessary action not being taken by the stakeholder responsible.

6. Higher customer satisfaction levels

As customs clearance visibility leads to streamlined customs clearance, customers get their goods on time and without undue delays, resulting in higher customer satisfaction levels.

7. More resilient supply chains

With customs clearance visibility optimizing customs tasks, the movement of goods is in accordance with what was initially planned. Adherence to estimated delivery timeframes and minimizing delays help build more resilient and robust supply chains.

How Technology Can Unlock These Benefits

With the inherent limitations of manual customs submissions — including human errors, mistakes in product classification, incorrect duty application, noncompliance with stipulated procedures, and incomplete documentation — it is obvious that process efficiencies cannot be realized by relying on human effort alone.

Technology must be deployed to complement human expertise. This will eliminate errors, process unstructured data, facilitate accurate classification and application of duties, and generate pre-alerts on milestones or where action is needed.

Importers and customs brokers will therefore have to eventually shift towards a more digital mode of working, leveraging logtech solutions in their quest to gain customs clearance visibility.

Best Practices for Implementing Customs Clearance Visibility Platforms

Implementing customs clearance visibility platforms can provide numerous benefits, including improved efficiency, reduced costs, and enhanced compliance. To ensure successful implementation, the following best practices should be followed:

  • Choose a platform that provides real-time tracking and monitoring of shipments
  • Ensure that the platform is integrated with customs data and provides access to key performance indicators
  • Select a platform that offers customizable customs data feeds and alerts
  • Implement a platform that provides extensive global trade intelligence and import and export databases
  • Ensure that the platform is user-friendly and provides automated communication systems
  • Work with a reputable customs broker like KlearNow.AI, who has expertise in customs clearance and can provide guidance on implementing the platform

By following these best practices, importers and exporters can pick their ideal customs clearance visibility platform. Such a visibility platform will provide them with the tools and insights needed to navigate the complex customs clearance process, leading to improved compliance, better shipment visibility, and a more efficient customs clearance process, ultimately enhancing the overall supply chain.

KlearCustoms: The ideal Customs Clearance Visibility platform

As one of the pioneers in the logtech industry, KlearNow.AI has, over the years, developed a suite of products aimed at transforming the way businesses approach customs clearance.

KlearNow’s suite of products includes KlearCustoms, KlearHub, and KlearEngine. The platform transforms customs brokerage by automating document processing, enhancing visibility and control, and increasing scalability. The software was developed by Licensed Customs Brokers (LCBs) and battle-tested as an ABI provider in the US and a licensed broker in Canada, the Netherlands, and Spain.

To explore KlearNow’s products or schedule a free demo, click here.

 

Common Trade Challenges Due to Lack of Customs Clearance Visibility

Customs clearance is a blind spot in supply chains. In a world where supply chain visibility is fast becoming the norm, with importers and customs brokers investing in solutions that provide visibility during the transportation process, stakeholders often lose visibility during the customs clearance process. Achieving complete supply chain visibility presents a big challenge, primarily due to the complexity and fragmented nature of global supply chains.

This is thanks to the customs process being completely under the ambit of the customs department. The department is duty-bound to thoroughly check to ensure that the shipment complies with all applicable regulations, while detecting and penalizing violations as and when they occur.

This implies that exporters or importers have little influence over the customs process or with ensuring compliance, save for completing customs formalities and documentation.

During the customs clearance stage, importers and customs brokers cannot receive regular updates on shipment status. They can only be informed formally about anomalies in data submission or procedural violations by the customs authorities.

Potential Challenges Due to Lack of Customs Clearance Visibility

Importers and customs brokers could potentially face several challenges arising from a lack of customs clearance visibility or not using customs clearance software, including:

1. No pre-alerts in case of missing or incorrect customs documentation/ procedural lapses

With manual processes, it is not possible to receive pre-alerts or notifications about inaccuracies in customs data or procedural lapses.

2. Inability to proactively rectify or amend as needed

In the absence of such pre-alerts or notifications, customs brokers will not be able to correct mistakes or rectify omissions.

3. Risk of customs violations and penalties

Since they lack the ability to correct lapses in customs submissions, customs brokers and importers are exposed to the risk of penalties for non-compliance.

4. Delays in cargo delivery and prolonged transit times

International shipping involves complexities and responsibilities, such as delays in customs clearance or additional time required to rectify deficiencies in customs filings, which will delay the movement of goods, increasing transit times and the time to market.

5. Not able to efficiently plan onward movement and drayage

If importers or customs brokers do not have customs clearance visibility from ocean carriers, they are not in a position to accurately predict the time needed for clearance of cargo, in which case, they will not be able to efficiently plan drayage and onward movement of cargo.

6. Higher costs

Delays at customs add to avoidable costs, resulting in higher TCO or landed costs. This is due to the incurrence of charges towards storage, detention, demurrage, inventory carrying costs, and monetary fines.

7. Supply chain reliability undermined

All the above factors affect supply chain reliability, as they directly prolong delivery times and the costs involved.

8. Reputational risks

Customs delays could be construed as a reflection of the professional expertise and knowledge of the customs brokers, and repeated instances thereof could result in loss of reputation.

How Technology can help overcome these Challenges

With the increasing availability of supply chain visibility products in recent years, the focus is now shifting to customs clearance visibility platforms.

Powered by AI and ML, customs clearance visibility platforms can help importers and customs brokers avoid most of these challenges related to customs processing.

Customs clearance visibility platforms provide insights into the status of customs clearance for shipments, which ensures that importers and customs brokers are aware of the status and timelines for each shipment. This helps them adhere to all customs regulations, like customs duties, taxes, and restrictions. In case of delays, the stakeholders can plan onward movement and inventory accordingly.

Advanced software solutions are crucial for validating and managing HTS codes, enhancing efficiency during the customs clearance process.

In addition, features such as error flagging and autogenerated pre-alerts for upcoming milestones or required actions empower stakeholders to address errors, amend submissions, and take timely action, effectively preventing potential process delays.

The use of technology thus minimizes the risks of non-compliance and the incurrence of additional costs, such as storage, detention, demurrage, or customs penalties.

Additionally, smooth cargo movement through customs helps safeguard supply chain reliability and adhere to committed delivery times.

Enhancing Customs Clearance Visibility with KlearCustoms

In their quest for customs clearance visibility, a growing number of importers and customs brokers are partnering with KlearNow.AI.

KlearNow’s KlearCustoms is AI- and ML-powered digital customs clearance software designed to provide visibility into customs clearance and streamline the entire process.

KlearCustoms operates by integrating data, real-time analytics, timely notifications, customs filings, and reporting and audits. Trade agreements play a crucial role in customs clearance processes, especially for large enterprises engaged in international shipping. To navigate these dynamic challenges effectively, advanced technologies like customs clearance software are a necessity today.

By transforming trade documents into structured data and all customs-related data into a single platform, KlearCustoms provides importers and customs brokers with a clear and real-time view of all customs and shipment activities, thereby enhancing customs clearance visibility.

The incorporation of KlearNow’s logtech solutions has delivered tangible benefits for customers, as demonstrated by the consistently positive feedback.

To explore KlearNow’s products, please click here for a free demo.

 

Top Trends in the Supply Chain and Logistics Industry in 2025

2024 has been a mixed bag for the international trade and transportation industry, buffeted by shocks emanating from various geopolitical, policy, and economic factors. At KlearNow, we wrote a forecast of the trends that would materialize or accelerate in 2024, and looking back, it has been largely proven right.

The industry continues to grapple with the effects of the Russia-Ukraine conflict, the ongoing hostilities in the Middle East, and the lengthening Red Sea crisis. The latter has created several operational challenges to maritime movement, as carriers are compelled to route vessels across the Cape of Good Hope to circumvent the risks of Houthi rebels attacking their vessels.

Protectionist policies and the imperative to diversify manufacturing and sourcing origins have reconfigured traditional bilateral relationships and altered trade flows, necessitating the redesign of trade networks and supply chains.

While some of those trends will remain strong in 2025, we’ve identified a few new trend headwinds.

With this background, we will explore the top trends and factors that are expected to have a material bearing on the compliance, logistics, shipping, and global supply chain sectors in 2025.

1. Military Conflicts and Supply Chain Disruptions

Given the widening theatre of conflict in the Middle East, with more countries being dragged there, the chances of an early resolution are bleak. Therefore, vessels are likely to continue sailing around the entire length of the African continent. This Cape of Good Hope routing is not only longer but also more expensive (primarily due to increases in bunker costs, charter expenses, and crewing charges).

Due to the longer sailing distances and higher costs, supply chain reliability will be affected. Growing hostilities among different blocs will also invite more sanctions on countries, which will continue to impact businesses’ sourcing operations. Diversification will continue to be a top priority for companies, both in finding new manufacturing partners and export destinations.

 2. Labor Strife at US and Canadian Ports

While the threat of a protracted strike was averted at US West Coast ports, a labor strike at US East Coast ports is very real.

Though the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) ended a three-day strike in Oct. 2024, following a temporary agreement on wages, the interim agreement is valid until Jan. 15, 2025. With both parties not seeing eye-to-eye on the issue of port automation, there is a high possibility of the strike happening right on time when the new US administration takes over.

The situation is equally grave at Canadian ports, where Unions in Montreal and British Columbia have challenged the federal labor minister’s back-to-work order.

If negotiations remain inconclusive, the ensuing labor action will cause extensive supply chain disruptions. Vessel congestion and cargo backlogs will cause delays and higher costs.

 3. Trump’s Presidency

With Donald Trump’s second presidential term just a few weeks away, importers and trading partners are anxious about the effect of his policies on international trade. The impact of proposed measures, including a tariff of 10% or more on all American imports and additional restrictions on Chinese imports, could be far-reaching. These measures could result in retaliatory tariffs from other countries, making it difficult to quantify their magnitude.

What is certain is that regulatory and policy changes will increase the costs and complexity of doing business, further complicating global supply chains.

 4. Extreme Weather Events and Environmental Regulations

As climate change alters weather patterns across the globe, international shipping and logistics face the brunt, as droughts afflict key maritime routes.

Over the past couple of years, key maritime trade arteries such as the Panama Canal and the Rhine River in Germany have suffered from low water levels, reducing the draught and hence restricting the size, weight, and capacity of traversing vessels.

The Panama Canal Authority was compelled to reduce the number of daily vessel transits for a considerable period due to low water levels. While the situation reverted to normalcy during the course of 2024, it highlights the risks posed by the vagaries of weather.

To reduce the carbon footprint of the shipping industry, various governments have introduced legislation that enforces the usage of clean fuel and emission limits. More locally, states like California are pushing for tighter emissions regulations, which can be extended to other states once communities start appreciating the benefits. Ultimately, all this would increase the cost of freight operations, as stakeholders will have to invest in new equipment and low-emission assets.

While the current market volatility has pushed the spotlight away from weather events and environmental regulations, these factors will remain critical for supply chain planners in 2025.

5. Sustainability and ESG Efforts

Sustainability and Environmental, Social, and Governance (ESG) efforts are increasingly becoming focal points for supply chain organizations. As consumers become more environmentally conscious, businesses face mounting pressure to reduce their carbon footprint and adopt sustainable practices.

Supply chain organizations can enhance their sustainability by implementing green practices such as reducing energy consumption, utilizing renewable energy sources, and establishing recycling programs. Sustainable sourcing practices, which prioritize the procurement of materials from environmentally responsible suppliers, also contribute to a greener supply chain.

Adopting a circular supply chain model, which emphasizes the reuse and recycling of materials, can significantly reduce waste and promote sustainability. Additionally, improving labor practices by adhering to fair labor standards, ensuring safe working conditions, and fostering diversity and inclusion can bolster a company’s ESG efforts, making it more attractive to socially conscious consumers and investors.

6. Risk Management and Resiliency

In an era of frequent supply chain disruptions, effective risk management and resiliency are critical for ensuring business continuity. Considering supply chain disruptions can arise from various sources, including natural disasters, geopolitical tensions, and cyber-attacks, businesses are increasingly wary and looking at risk mitigation strategies.

Building resilient supply chains involves adopting agile and flexible models that can quickly adapt to changing market conditions and disruptions. Having visibility into trade data will help companies stay on top of tariffs and regulations, allowing them to react quickly to changes.

Supply chain visibility into freight movement is another key component of resiliency. More companies are pushing for real-time tracking and monitoring, as it enables them to identify potential disruptions early and take proactive measures to mitigate their impact. This not only ensures smoother operations but also strengthens the overall resilience of the supply chain, enabling businesses to navigate uncertainties with greater confidence.

Greater Role of Technology in Supply Chain Resilience

Technology solutions that leverage artificial intelligence (AI) and machine learning are growing in numbers, helping bring unprecedented efficiency and precision to supply chain operations. By automating repetitive and labor-intensive tasks such as data entry, inventory management, and demand forecasting, AI enables supply chain organizations to streamline processes, reduce costs, and enhance customer satisfaction.

Within the customs clearance vertical, the raft of legislative changes and revision of tariffs and duties will be difficult to keep pace with and will inevitably result in human errors, resulting in inadvertent violations. Here, technology like intelligent document processing (IDP) can help importers and customs brokerages manage trade data and stay on top of documentation required to stay compliant with regulations.

Incorporating logtech solutions like KlearEngine can help importers and customs brokers to ensure that all documentary requirements are completed, customs processes are followed, instances of misclassification and misdeclaration of goods are minimized, and customs violations are avoided.

Tackling Global Trade Uncertainty With KlearNow

KlearNow.AI has been the preferred solution for customs brokers and importers seeking to address market and regulatory uncertainty. In trade compliance and supply chain management, its AI-Powered products, such as KlearCustoms and KlearHub, can digitize documentation, automate information sharing, and streamline workflows, thereby making the supply chain more resilient.

Using these software solutions boosts operational efficiency, lending customs brokers and importers a distinct competitive edge and enabling them to serve customers better.

Click here for a free demo of how these products can support your business.

 

How To Improve Documentation Management For Seamless Customs Clearance

Customs clearance is mandatory for imports of all goods. It is essential for national security, ensuring compliance with trade regulations, and the accurate levying and collection of customs duties. To fulfill these responsibilities effectively, customs officials require comprehensive information about each import shipment, such as the exporter, importer, commodity details, components, origin, value, and other critical data.

This process involves an extensive number of documents, which must be provided by the importer or customs broker to the customs department to ensure timely and hassle-free clearance of cargo. Customs brokers, authorized to conduct customs business, play a vital role in organizing customs entries, facilitating payment of duties, and ensuring compliance with the regulations set by customs authorities.

Proper documentation management is crucial for efficient customs clearance. However, documentation requirements are often onerous, requiring manual collation and compilation of information from various sources and formats, including Excel spreadsheets, Word documents, PDF files, emails, and even physical paperwork. The growing interplay of geopolitical and economic factors — such as sanctions, bilateral treaties, new tariffs, regional trading blocs, nearshoring, and preferential access agreements — has further exacerbated the complexities and volume of trade documentation requirements.

To ensure a smooth and efficient customs clearance process, businesses and individuals must adopt best practices, including:

  • Staying up-to-date with changes in customs regulations and requirements: Customs regulations evolve frequently, making it essential to stay informed and adapt to new requirements.
  • Using document management systems: These systems streamline the customs clearance process by organizing and managing documents efficiently, reducing the risk of errors and delays.
  • Embracing electronic documents and digital document management solutions: Transitioning to electronic business documents can optimize operations, enhance accessibility, and significantly reduce paperwork burdens.

By implementing these strategies, businesses can minimize risks associated with customs clearance, ensuring a seamless and efficient global trade experience. Effective documentation management not only supports regulatory compliance but also plays a pivotal role in mitigating delays and enhancing the overall supply chain efficiency.

Common documents in Imports

Amongst the more important documents in the imports process are:

  • Bill of Lading
  • Commercial Invoice
  • Arrival Notice
  • Import Customs Declaration
  • Import License
  • Certificate of Origin
  • Letter of Credit
  • Import Security Filing
  • Other local Customs requirements

The documents listed here are the common ones, with additional documentary requirements depending on the commodity, nature of cargo, or other specific regulations (such as regarding the use of child or forced labor or the EU’s Carbon Border Adjustment Mechanism).

Customs brokers assist with completing and submitting customs declarations, ensuring compliance with customs regulations, and paying duties on behalf of the importer. Customs brokerage services facilitate smooth communication and logistics for international shipments, offering features such as expedited cargo clearance and comprehensive regulatory compliance.

Documentation Management and its Importance

Since the implications of non-compliance or inadvertent violations can be severe, resulting in the imposition of monetary fines and other penalties, it is imperative for importers and

customs brokers to efficiently manage and handle trade documentation. Customs brokers are authorized by the U.S. Customs and Border Protection (CBP) to assist importers with customs business transactions, ensuring compliance with CBP regulations.

Besides, importers and customs brokers also have a legal obligation to store documents for a predefined period, which makes it necessary to arrange storage and security of documents.

It is in this context that documentation management assumes great importance. Documentation management refers to the process of gathering, storing, organizing, and retrieving files and documents. It essentially involves digitizing trade documents, which then offers subsequent benefits such as Intelligent Document Processing (IDP), automated information flows, enhanced data security, and faster access for authorized personnel.

Documentation management is essential to streamline the customs clearance process, replacing the cumbersome manual process with automated workflows, that are intended to reduce errors and instances of non-compliance, thus reducing manpower costs and associated risks, freeing up valuable human resources to concentrate on core business and value-added tasks.

Using Technology to Streamline Document Management Systems

As inefficiencies in traditional document handling become increasingly apparent, the need for standardized, efficient processes supported by technology has grown more urgent. The physical handling of documents and reliance on manual effort are no longer sufficient to meet the demands of modern international trade. Deploying technology is not just an option — it is essential for enhancing the efficiency and compliance of the global supply chain while ensuring faster, more accurate customs clearance.

Technological advancements have ushered in innovative solutions like intelligent document processing (IDP). Providers such as KlearNow leverage IDP to reduce manual workloads, automate repetitive tasks, and deliver seamless, end-to-end documentation management. These systems eliminate errors, accelerate processing times, and improve data accuracy, enabling smoother operations across the supply chain.

Documentation management systems are gaining widespread adoption as importers, customs brokers, and logistics service providers embrace digital transformation. By integrating technology into their workflows, these stakeholders are optimizing processes, improving compliance, and unlocking new efficiencies. As the industry becomes increasingly tech-savvy, such systems are proving indispensable in revolutionizing documentation management and driving operational success.

Simplify Customs Documentation Management with KlearNow

For businesses looking to utilize technology for documentation management, KlearNow offers a range of products, to meet the unique needs of importers and customs brokers of varying operational scale and geographical spread. Understanding customs charges is crucial for international shipping, and KlearNow’s solutions help importers manage these responsibilities effectively.

As one of the pioneers in this field, KlearNow has considerable industry expertise, which in conjunction with the continuously improving systems, has positioned KlearNow as the preferred customs clearance partner for importers and customs brokers. KlearNow’s suite of logtech solutions, including KlearEngine, and KlearCustoms, simplifies complex customs clearance processes. It functions as a single platform for managing shipping documents and related processes, with the ability to digitize and transform trade documents into meaningful data for validation and pre-populating customs filing documents.

This makes it easier to store, archive, and retrieve documents, as and when needed, besides enhancing data security by allowing authority-based access to information.

For more information and a free demo to explore KlearNow’s products and determine which one is most suitable for your business, click here.

 

What is CARM and How Does it Impact Your Business

CARM stands for Canada Border Service Agency’s (CBSA) Assessment and Revenue Management. It is a digital initiative launched by CBSA to assess and collect duties and taxes that apply to goods imported into Canada. 

CARM was launched with the purpose of simplifying the import process and providing a user-friendly Single Window system for importers, besides optimizing how CBSA assesses and collects duties and taxes. The immediate purpose of the CARM updates is to make the process easier for IORs (Importer on Record), enable access to account information and online payments, provide importers with easy access to their information, and improve importer’s compliance with trade rules. 

The ruling on the latest CARM regulations stipulates that any company importing goods into Canada must register in the CCP and post financial security by October 2024 (extended from May 14, 2024). The regulation primarily impacts Canadian importers and customs brokers, as well as U.S. exporters to Canada.

What Changes in CARM With Phase 3

The government of Canada has previously launched two phases of the CARM. The first phase was the Importer Launch, which covered the calculation of import duties and taxes, online payment of applicable duties and taxes, classification of goods, and viewing transactions and online statements. 

The second phase was the internal CBSA launch, under which the CARM portal was made available to all importers with a Business Number (BN) for registration. Importers could no longer use their Customs Brokers RPP security to clear shipments before paying duties and taxes. 

Phase 3 was officially introduced on Oct. 21, 2024, after which CARM is now the system of record for duties and taxes. Business owners can create their accounts after their business is registered to access all portal functionalities. 

Key changes include: 

  • Changes to the RPP program 
  • Electronic corrections and adjustments processing 
  • Harmonized billing cycles 
  • New offsetting options 
  • Electronic management of appeals and compliance actions 
  • Ability for resident chain partners to register a business number (BN9) and sign in to the CARM Client Portal 

Benefits of CARM and National Customs Ruling Programs 

The implementation of CARM is anticipated to generate the following benefits: 

  • Eliminate cumbersome and time-consuming paper-based processes. 
  • Provide better tools to improve fairness and consistency in the treatment of all importers. This will reduce missed opportunities to apply taxes and/or duties, thereby reducing revenue leakage. Understanding customs regulations in different countries is crucial to ensuring compliance and avoiding legal issues. 
  • Improve functionality for importers through the ability to enroll in commercial programs, submit accounting documents, and receive notifications through their CARM Client Portal account. When importing goods, be aware of restrictions on food items to prevent penalties or confiscation at customs. 

Getting Started with CARM

To get started with the CBSA Assessment and Revenue Management (CARM) system, businesses need to register for a CARM Client Portal account. The CARM Client Portal is an online system that allows businesses to manage their trade chain and comply with customs regulations. To register, businesses need to provide their business information, including their name, address, and contact details. Once registered, businesses can access the CARM Client Portal and start using it to manage their trade chain. 

CARM Portal and Resources 

The CARM Client Portal is a key component of the CARM system, providing businesses with a single window to access all CARM-related services. The portal allows businesses to view their account information, submit declarations, and make payments. The CARM Client Portal also provides access to various resources, including the CARM API Catalogue, which is necessary for users with their own customs software to transmit information to the CBSA electronically. Additionally, the portal provides information on national customs ruling programs, advance rulings, and tariff classification.

Advance Rulings and Compliance

The CBSA offers advance rulings on tariff classification and origin through the Advance Ruling program. This program provides businesses with a binding ruling on the classification and origin of their goods, helping them to comply with customs regulations. To obtain an advance ruling, businesses need to submit an application to the CBSA, providing detailed information about their goods. The CBSA will then review the application and provide a ruling letter, which is published on the CBSA website with the applicant’s consent. The ruling letter provides guidance on the classification and origin of the goods, helping businesses to ensure compliance with customs regulations. 

How Does It Impact Importers and Exporters?

Under CARM, all duties and taxes on imports to Canada must be paid through the CARM Client Portal, and the importer is responsible for paying customs fees. 

It is crucial for importers and exporters to understand customs regulations in different countries. Each country has its own specific rules regarding prohibited items, export permits, and the potential legal consequences for violations. 

This is a change from the previous process, where a customs broker could assume responsibility for payment of customs duties and taxes, provided they had a surety bond. Now, however, the importer has to register with the CARM portal and secure the surety bond. The importer also has the onus of following up on the payment of duties and taxes.

Implications for U.S. Exporters

CARM will impact American companies exporting to Canada, either to Canadian retailers or to fulfillment centers in Canada. 

Understanding customs regulations in different countries is crucial, as each country has its own specific rules regarding prohibited items, export permits, and potential legal consequences for violations. 

American shippers will no longer be able to rely on their customs broker to settle customs duties and taxes. Instead, they will need to register as Non-Resident Importers (NRI) on the CARM portal, obtain a surety bond, and manage their own duties and taxes. 

This involves American shippers getting an NRI account and thereafter registering themselves on the CARM portal. For the RPP (Release Prior to Payment) privilege, U.S. shippers must purchase a D120 Customs Bond or pay a cash deposit. 

Duties and taxes need to be paid on a regular basis. 

If a customs broker’s services are utilized, the broker must be given authority to access the importer’s CARM data. After that, the broker can still submit the customs entry, but the payment must be made through the CARM portal. 

NRIs need to verify that they can meet the requirements and pay their duties and taxes to CBSA, through the following means: 

  • Online banking, through 
    • Canadian financial institutions 
    • American institutions – Bank of America and JPMorgan Chase
  • Physical cheque, drawn in Canadian Dollars, mailed to CBSA in Ottawa 
  • Pay in-person by Cash or Credit Card (latter option only if the amount is under CAD 5,000)

It is important to note that shipments released by October 11th, 2024, will be payable to CBSA in October, while shipments released on or after October 12th, 2024, will be payable to CBSA in November.

Best Practices for CARM Adoption

To ensure a smooth transition to the CARM system, businesses should follow best practices for CARM adoption. These include registering for a CARM Client Portal account, familiarizing themselves with the CARM API Catalogue, and obtaining advance rulings on tariff classification and origin. 

Businesses should also ensure that they have the necessary systems and processes in place to manage their trade chain and comply with customs regulations. Additionally, businesses should regularly review and update their account information and ensure that they have the necessary support and resources to use the CARM system effectively. By following these best practices, businesses can ensure a successful transition to the CARM system and take advantage of its benefits.

Contact KlearNow To Assist With the CARM Client Portal

With its AI and ML-powered customs clearance platforms, KlearNow can help your business navigate the complex regulatory maze, ensure accurate and timely compliance, and expedite customs clearance of goods. KlearNow can help with registering for Canadian Business Numbers (BN) and CBSA programs and surety bond applications for Release Prior to Payment (RPP) Privilege. 

Click here for a free demo of how KlearNow can help streamline your customs clearance activities in the post-CARM scenario. 

 

Futurizing Global Supply Chains with Customs Clearance Software 

As supply chains become more geographically dispersed and complex, major players therein, such as carriers, global freight forwarders, supply chain managers, and importers, are cognizant of the need to leverage technology to better manage the end-to-end transport process. Technology helps integrate various business processes within the supply chain, enhancing visibility, optimization, and competitiveness across different companies. 

Over the past decade, in response to the growing number of geopolitical factors and disruptive events that have impacted international trade, manufacturers, importers, and logistics service providers are increasingly turning to technology to strengthen global supply chains. 

Customs Clearance Process: Slow Shift Towards Technology 

Supply chains comprise several distinct interconnected activities, such as shipping, warehousing, inland transport, inventory and distribution management, and customs clearance, each of which is generally handled by different entities. A supply chain includes every step involved in delivering a product or service to customers, detailing processes such as sourcing raw materials, production, and distribution. Transportation companies and intermediaries, as well as importers and exporters, generally tend to focus their digitization efforts on activities such as maritime transport and inland distribution that account for the bulk of supply chain costs. 

Therefore, even though customs clearance is a critical and mandatory activity in the supply chain, industry stakeholders have not displayed the same sense of urgency when it comes to overhauling the current manual customs processes. 

However, this is gradually changing, as customs clearance becomes more complicated and customs requirements more stringent. With global merchandise trade being affected by trade wars, sanctions, embargoes, protectionist policies, formation of trading blocs, and alternate procurement strategies (such as nearshoring, friendshoring, China+1, and Alt Asia), importers and customs brokers now need to navigate through an intricate maze of bureaucratic processes and onerous documentation requirements. 

A customs broker assists importers with completing and submitting customs declarations, ensuring compliance with customs regulations, and paying duties and taxes on their behalf. By streamlining these activities, customs brokers reduce the burden on importers and provide valuable expertise in navigating customs requirements efficiently. 

In this evolving landscape, the manual customs clearance process is often found wanting, as it is prone to human errors, delays, associated inefficiencies, and the risk of inadvertent customs violations. As a result, importers and customs brokers are increasingly including customs clearance and global trade management in the scope of their digitization initiatives, turning to customs clearance software solutions that automate the process of clearing customs and minimize potential pitfalls. 

Benefits of Customs Clearance Software 

Deploying customs clearance software offers substantial benefits, including: 

Faster completion of customs formalities 
Timely and complete submission of information 
Freeing up valuable human resources 
Accurate calculation and payment of customs duties
Customs-compliant operations 
Smoother clearance of goods
Management of trade documentation
History of documents and clearance information for mandatory audit periods 

Importance of Customs Clearance Software in Digitizing the Entire Supply Chain 

In light of the context and benefits explained above, it is obvious that customs clearance software complements technological initiatives underway in other aspects of the supply chain. This helps complete the loop, effectively leading to the digitization of the holistic supply chain. Different supply chain models can benefit from the integration of customs clearance software, as it helps tailor the responsiveness and efficiency of the supply chain to meet specific operational objectives and constraints. 

This ensures that gains accruing from streamlined transport and distribution flows are not negated due to sub-optimal customs clearance processes; rather, customs clearance tasks are digitized to compound the aggregate positive impact. 

Importers, customs brokers, and freight intermediaries focusing on automating supply chains and customs clearance tasks have gained a competitive edge over competitors who have neglected to do so. 

The benefits of faster and smoother customs clearance help accelerate supply chains and improve delivery-to-market cycles, besides lowering costs and minimizing the risk of non-compliance. 

By adopting a resilient supply chain model, companies can proactively mitigate risks, enhance customer satisfaction, and gain a stronger competitive edge. With streamlined customs clearance processes in place, the entire supply chain becomes more robust, better positioned to handle disruptions, and optimized for efficiency in a complex global landscape. 

How Technology Redesigns and Optimizes Supply Chain Management 

The future of supply chains is inevitably digital, and customs clearance software will play a pivotal role in completing this transformation. Customs clearance, being a mandatory step in both export and import processes, holds a wealth of trade and shipment information — an untapped data set with immense potential. Once digitized, this data can revolutionize operations by enabling advanced trade document management, enhancing shipment visibility down to the SKU level, and providing precise insights into total landed costs. 

Importers and customs brokers who recognize this opportunity and embark on their digital transformation journey early will gain a competitive edge. By leveraging technology to unlock the value of customs data, they can offer superior customer experiences, setting themselves apart in an increasingly competitive market. Conversely, those who delay their adoption of digital tools and continue to rely on manual processes risk falling behind and losing customers to more innovative competitors. 

KlearNow: Turning the Vision of Futurized Supply Chain into Reality 

As a pioneer in the logtech industry, KlearNow offers a diverse range of products that address various facets of the supply chain and cater to players of varying sizes. 

KlearNow’s product portfolio also includes sophisticated AI and ML-powered software intended to automate and digitize customs clearance activities. Customs 360 and Customs Engine are both developed to address key clearance challenges such as manual data entry, limited visibility, and inefficient communication channels. 

To understand which of these products suits your business better, click here for a free demo. 

 

How to Gain Quick Wins with Customs Clearance Software

The customs clearance process has several complex systemic and procedural steps, making it time-consuming, manual, and at times cumbersome. Customs Authorities, like U.S. Customs and Border Protection (CBP) in the United States, play a crucial role in this process by implementing border protection measures. CBP is responsible for safeguarding national interests, collecting applicable duties, and ensuring compliance with relevant international and national trade laws and bilateral agreements.

Understanding policies and procedures is essential for importers and exporters to ensure smooth clearance of merchandise. These challenges come from the complex nature of customs clearance, involving multiple steps and stakeholders, so no single party is solely responsible for any delays or issues.

A strategic partner in the customs business is the customs broker, who facilitates the clearance process by bridging the gap between importers, exporters, and customs authorities. These licensed professionals assist importers and exporters in navigating the complex web of customs regulations and procedures. A customs brokerage plays a crucial role in the preparation of customs declarations, the payment of duties and taxes, and the release of goods from customs custody. Working with customs brokerages helps importers and exporters ensure that their goods are cleared through customs efficiently and effectively, minimizing the risk of delays and non-compliance.

Business Case for Leveraging Customs Clearance Software

Given this situation, customs brokers and importers are legally obligated to comply with complex procedural and documentary requirements, including the payment of customs duties. Efficiencies can only be generated by streamlining internal operations, focusing on controllable factors to avoid customs violations and minimize delays.

The most effective way to achieve this is by deploying customs clearance software like KlearNow, to augment procedural knowledge and sectoral expertise with technology. The benefits of using customs clearance software are becoming increasingly apparent with more and more progressive and tech-savvy customs brokers and importers investing in logtech technology to optimize internal efficiency and gain an edge in a fiercely competitive market.

Challenges in Deploying Customs Clearance Software

While the benefits of deploying customs clearance software are substantial and undeniable, the community of customs brokers still has a considerable reluctance to adopt it widely or to swap from existing legacy systems that “get the job done.”

While some of this hesitation can be attributed to the tendency to maintain the status quo and resist changes to current ways of working, other factors also contribute to the unwillingness to invest in technology.

These factors include:

1. Fear of Technology

The logistics and customs brokerage industry has traditionally relied on human effort, and the usage of technology is not as prevalent here as it is in other industries. There is a certain level of discomfort regarding the deployment of logtech solutions, which can hinder efforts to introduce customs clearance software.

2. High Upfront Costs and Maintenance Expenses

Deploying customs clearance software involves high initial costs and subsequent maintenance and licensing costs. This necessitates considerable CAPEX and regular OPEX. Most companies, especially smaller players such as customs brokers, would balk at incurring such costs.

3. Unclear Role of Tech in Supporting, Not Replacing, Human Roles

With technology, there are also apprehensions about rendering humans redundant and resulting in job losses. This increases the reluctance to implement technological solutions.

4. Difficulty in Quantifying Intangible and Consequential Benefits

While certain advantages are tangible or obvious (such as cost savings, automation of documentation, and faster processing), there are several other benefits that are intangible and not as apparent. These benefits include higher efficiency levels, streamlined processes, reduced probability of errors, and violation of customs rules, all of which help deliver a better customer experience and attract more customers. Since these benefits are either intangible or flow gradually, they are often overlooked while building the business case for customs clearance software.

5. Ability to Pass on Costs to Customers

Given the fiercely competitive environment and slim margins, customs brokers try to pare their costs to the bone, to ensure commercial viability. In this scenario, the willingness to incur higher costs depends on the ability to pass on the incremental costs to customers. Given the market realities, it is doubtful whether customs brokers will be able to recover the CAPEX and OPEX from customers, which adds to the hesitation in investing in customs clearance solutions.

Operational Benefits of Customs Clearance Software

Emphasizing the immediate benefits of the investment can effectively address opposition to deploying customs clearance software, allowing skeptics to recognize its value clearly.

These benefits include:

1. Reduced Manual Effort

With technology automating workflows, the human effort is reduced, leading to lower manpower costs and freeing up resources for other revenue-generating activities.

2. Reduced Usage of Paper

Digitizing documentation reduces the cost of paper, enhances data security, and reduces the probability of errors. Besides, it helps customs brokers and importers reduce their carbon footprint.

3. Faster Document Processing

Equipped with Intelligent Document Processing capabilities, customs clearance software is capable of ingesting unstructured data and providing accurate output in the stipulated format, in a fraction of the time that it would take humans to perform similar tasks.

4. Higher Accuracy Levels, Timely Action, and Advance Planning

With the digitization of documents, accuracy levels are far higher, and the automation of workflows ensures automated pre-alerts on upcoming transport milestones or where action is required. This eliminates the probability of errors, ensures timely action by the stakeholders concerned, and also facilitates advance planning.

5. Better Compliance with Customs Processes

The improved compliance levels minimize the risk of customs violations and associated risks of penalties that would otherwise accrue due to procedural lapses or incomplete documentation. Customs brokers play a crucial role in assisting importers with customs transactions by ensuring adherence to Customs and Border Protection (CBP) policies and procedures. This familiarity with CBP regulations helps avoid complications during the clearance of goods.

6. Lower Cost of Logistics

All the benefits enumerated above help reduce overall logistics costs, which directly help rationalize the cost base and make customs brokers and importers more competitive.

By leveraging customs clearance software, businesses can ensure that their goods are cleared through customs efficiently and effectively, even in the face of global trade uncertainties. This proactive approach helps mitigate risks and maintain the smooth flow of goods in the supply chain.

Partner With KlearNow for Seamless Customs Clearance

KlearNow, with its range of logtech solutions, can be the ideal partner for customs brokers and importers endeavoring to optimize their customs clearance processes. An importer is responsible for paying customs charges, ensuring compliance with legal requirements, and often utilizing the services of customs brokers for smooth transactions.

With AI and ML-powered products such as Customs 360 and Customs Engine, customs brokers and importers can access advanced functionalities that help streamline their operational activities.

Customs 360 is a cloud-based platform for document management, automated workflows, shipment tracking, exception handling, customs filing, and viewing updates on customs statuses. It also has a dashboard that provides actionable insights and customizable reports, with natural language search, for faster, accurate decisions.

Customs Engine enables the ingestion of unstructured documents and data for filing with customs, helping transform all trade documents into meaningful data for validation and pre-populating customs filing documents. It is, in essence, a single platform to manage shipping documents and customs clearance processes, also providing comprehensive visibility and the ability to handle shipment volumes of any scale or complexity.

To schedule a free demo and learn how KlearNow can help you, click here.

 

Overcoming Customs Clearance Challenges with Cutting-Edge Software

Customs clearance is an integral part of the import and export process and is essentially a means to safeguard the country’s security, national interests, and revenue. Regulatory compliance plays a crucial role in ensuring that customs services are efficient and meet all legal requirements. 

The objective of customs clearance is to detect contraband and prevent illegal or dangerous goods from entering the country, besides ascertaining that duties have been applied at the correct rate. 

In order to fulfill these objectives effectively, customs officials, like the U.S. Customs and Border Protection (CBP), have laid down intricate processes and exhaustive documentary requirements. Customs brokers are obligated to comply with these regulations to handle customs business on behalf of their clients, the importers. 

Impact of Customs Clearance Gaps on Brokers and Importers 

These documentary and procedural complexities present considerable operational challenges to importers and customs brokers. 

Due to the magnitude of information required, the manual nature of the process, and the regulatory maze that needs to be navigated, there exist several gaps in the customs clearance process. Ensuring the proper paperwork is filed is crucial for overcoming these challenges and achieving timely and efficient customs clearance. 

These gaps arise from several factors, including: 

1.  Complex Tariffs and Duty Structures 

The duty levied on products varies based on factors such as the commodity, its origin, and bilateral agreements between importing and exporting countries. HTS codes, which consist of 8-10 digit classifications, play a crucial role in the classification of goods for customs and import processes. Given the sheer variety of products, geographical dispersion of production centers, and existing geopolitical dynamics, tariff and duty structures can be incredibly complex. 

2. Cumbersome Documentation and Paperwork 

Customs departments mandate that importers and customs brokers share information about all aspects of the commodity, transaction, and the parties involved, highlighting the shift from manual paperwork to electronic documents. 

This information has to be collected from various stakeholders, is available in different forms, and has to be consolidated in the stipulated format, prior to submitting to customs, as a result whereof the likelihood of human errors and inadvertent omissions is higher. 

3. Incorrect Classification of Goods 

In international trade, goods are categorized using the HS code, which consists of 21 sections and numerous subsections. The categorization consists of numeric codes and is very detailed, with variants of the same broad commodity being assigned different codes. Considerable care needs to be taken while updating codes to avoid mistakes in categorization. 

4. Lack of Real-time Visibility 

Because of the manual and paper-based nature of the customs clearance process, it is generally difficult to ascertain the precise location and status of the consignment. This lack of real-time visibility prevents importers and customs brokers from planning cargo movement in advance. 

5. Communication Delays 

Since communication between stakeholders is largely manual, there is the possibility of delayed or incorrect communication regarding the actions required. This can cause avoidable delays and is a hindrance to proactive planning. 

The cumulative impact of these gaps on the customs clearance process is felt by importers and customs brokers in the form of delays at customs, penalties, costly rectifications, and additional paperwork, all of which impede smooth cargo flows and can cause financial and reputational loss.  

The Role of Software in Enhancing Customs Clearance Efficiency 

Customs brokers and importers can use technology to overcome the inherent gaps in the customs clearance process. 

Deploying customs clearance software can smoothen and accelerate the import process by addressing the root causes of inefficiencies. Integrating customs clearance software with third-party systems enhances operational efficiency and visibility, facilitating seamless data exchange with external partners and governmental authorities. 

1. Digitalization of Documents and Information 

With customs clearance software, documents can be digitized, easing the load of paperwork. With digitalization, it is easier to organize, store, and retrieve information. Data security is also ensured by restricting access while making it easier for authorized personnel to obtain relevant data. 

2. Intelligent Document Processing (IDP) 

Customs clearance software is equipped with IDP functionality, which can help process information across different formats and collate it as required by Customs. Forms can be auto-populated, and unstructured data processed faster and with more accuracy, leading to automated information flows. 

This increases accuracy levels and cuts down document processing and preparation times to a fraction of what it would take if handled manually. 

3. Automated Workflows 

Customs clearance software can automate the entire workflow, meaning that information flows seamlessly from one stage to the next, and is transmitted to all stakeholders. The automation of workflows ensures that all procedural requirements are complied with and that timely alerts regarding the required action are generated and flagged for the concerned person. 

Automating segments of the customs clearance process can help save time and increase efficiency, allowing customs brokers to focus on higher-value tasks and providing importers with faster and more reliable customs clearance. Additionally, automation tools like KlearNow’s Customs Engine can help to improve compliance, reducing the risk of penalties and fines associated with non-compliance. By automating customs clearance, importers and customs brokers can also gain greater visibility and control over the customs process, enabling them to make more informed decisions and optimize operations better. 

4. Accurate Classification of Goods 

Customs clearance software, combined with the expertise of a customs broker, ensures accurate classification of goods using the appropriate Harmonized System (HS) code. The software can suggest the most suitable HS code by analyzing product descriptions, previous classification history, and trade agreements, reducing the likelihood of errors. This accuracy helps avoid delays, rejections, or penalties due to incorrect classification, which can result in additional inspections or fines. Furthermore, the software can track changes in HS codes over time, ensuring compliance with the latest classification standards. 

5. Apply Correct Tariff or Duty 

The software calculates the correct tariff or duty rates for each shipment, factoring in trade agreements, duty exemptions, or preferential treatments that may apply. It can automatically apply changes to tariffs due to regulatory updates, ensuring compliance with the latest rules and minimizing the risk of violations. Additionally, the software can identify opportunities for duty savings, such as taking advantage of free trade agreements, duty deferral programs, or tariff exclusions. This level of precision not only helps avoid overpayment of duties but also enhances cost savings and optimizes the customs clearance process. 

6. Risk Management 

Customs clearance software uses Artificial Intelligence (AI) and Machine Learning (ML) to flag potential issues and delays, besides identifying high-risk consignments (based on analysis of historical patterns, origin country, shipper and consignee involved, and goods shipped). This enables importers and customs brokers to identify high-risk shipments and take remedial measures in case issues or delays with the consignment become apparent. 

Enhance Your Customs Clearance Process with KlearNow 

As one of the pioneers in the logtech industry, KlearNow’s product suite includes solutions aimed at the holistic supply chain as well as for individual stakeholders. 

For customs brokers, KlearNow offers two dedicated customs clearance software products, Customs360 and Customs Engine. 

Both these products help transform customs brokerage, leveraging AI and ML to bridge the gaps in the customs clearance process, unlocking efficiency, and improving compliance and accuracy. 

With these products, customs brokers can eliminate manual data entry, provide real-time visibility, and streamline communication channels and workflows. 

To learn more about how KlearNow can assist your customs brokerage business, click here for a free demo. 

 

How Customs Brokers Can Leverage Technology to Differentiate Themselves

The importance of customs clearance has grown manifold as the volume of internationally traded goods has increased over the past few decades. To deal with the greater volume of work involved, customs departments have laid down stringent processes and standardized documentary requirements, which are intended to safeguard national interests and security. U.S. Customs and Border Protection (CBP) plays a key role in border protection by regulating cargo entry into the U.S. and ensuring compliance with customs laws during importation.

Exporters and importers are obligated to comply with all relevant customs requirements, before their cargo is cleared for entry or exit into the country. Customs declaration is crucial in streamlining filing processes and ensuring compliance with fiscal requirements, improving productivity, and facilitating adherence to regulations in various regions.

In the past decade, trade wars, sanctions, tariffs, and supply chain disruptions have further compounded the complexity of the customs clearance process. Customs clearance has thus become a highly specialized role, requiring considerable expertise and detailed knowledge of customs procedures.

It is in this context that most manufacturers and importers now prefer to outsource customs clearance services and partner with customs brokers, freeing up their resources and time to focus on core manufacturing and sales activities.

What Happens During Customs Clearance

Customs clearance is a crucial process to ensure goods comply with local regulations and that the necessary documentation is properly filed. The customs clearance process involves four key steps: inspection, approval, release, and clearance.

During inspection, customs authorities verify the contents, origin, and destination of the shipment. Approval involves ensuring that all customs duties are paid.  that the shipment meets all regulatory requirements, and it passes various risk assesment variables. Once approved, the goods are released and can proceed to their destination. Finally, clearance confirms that all necessary documentation has been filed and that the shipment is compliant with customs regulations.

Utilizing a customs broker can simplify this process, as they have the expertise to navigate the complexities of customs procedures and ensure that all paperwork is in order. Accurate documentation is crucial in simplifying and streamlining the customs process. A customs broker is responsible for clearing customs faster with solutions that deliver transformative automation and visualization capabilities. Customs brokers assist importers with the transaction of their customs business, including organizing custom entries, payment of duties, and other related tasks.

They are also responsible for ensuring regulatory compliance and staying up-to-date with changing regulations. Customs brokers can help companies navigate complex customs regulations and procedures, reducing the risk of errors and fines. By leveraging their expertise, companies can streamline the customs clearance process, ensuring their shipments are processed efficiently and in compliance with all relevant regulations.

Commoditization of Customs Brokers and Clearance Services

Unlike most other segments of the transport chain, which are asset-heavy industries (such as shipping, trucking, or warehousing), customs brokerage is a people-based business where the barriers to entry are low.

Instead of having to invest in capital-intensive assets, a customs broker primarily relies on knowledge and experience. This has resulted in a growing supply of customs clearance services, with many new players entering this segment.

Since customs clearance procedures for any specific country are well documented and apply universally to all exporters and importers, the work of a customs broker remains broadly uniform (varying only on account of the commodity or the geography involved).

This results in customs brokers providing services that are quite identical, with relatively limited parameters differentiating themselves from the competition. Customs brokers are particularly important in managing international shipments, especially for complex shipments or specific countries. Due to this, the trend of commoditization of logistics and transport services is now being witnessed in the customs clearance industry as well. So what can make a customs broker stand out in a crowded field?

Leveraging Customs Clearance Software to Create Competitive Differentiators

In this scenario, where competition is intense and the scope for differentiation is low, customs brokers are compelled to compete on prices, which can cause erosion of profit margins and pressure the company’s financials.

Further, the situation can quickly degenerate into a price war, where customs brokers attempt to undercut each other in order to win business, creating a downward spiral of unviable rates.

To create a unique position for themselves in the industry and avoid competing solely on prices, customs brokers need to find truly value-adding competitive differentiators. Focussing on these competitive differentiators can help professional customs brokers maintain reasonable margins while also attracting and retaining customers, thus creating a sustainable business model that can thrive amidst market uncertainties.

Since the activities under the purview of customs clearance services offer scant scope for such differentiation, the only avenue left for customs brokers to set themselves apart is through service quality and efficiency. This includes managing international shipping by detailing the essential documents, regulations, and customs processes involved in shipping goods across borders.

Superior quality services and greater efficiency can create significant operational and commercial value for exporters and importers and will therefore be perceived by customers as a crucial factor in selecting a customs broker. Additionally, filing the proper paperwork is essential for customs brokers managing high volumes and complex shipments to avoid delays and ensure successful transportation of goods.

Technology is the key to unlocking this competitive differentiator, as it can streamline processes, automate workflows, ease information flows, and smoothen coordination, all of which help accelerate the customs clearance process, enable goods to reach consumer markets faster, improve cash cycles, and allow Licenced Customs Brokers to focus on higher value added services.

Key Features and Benefits of Customs Clearance Software

Customs clearance software is designed to streamline customs processes and reduce the risk of errors. Key features of customs clearance software include real-time visibility into all transactions, duties, fees, and customs response messages in a single window. The software enables the filing of various documents, including ISF, Entry Summary, Cargo Release, 7512s, e214s, Drawback, Reconciliation, AES, eManifest, Entry Type 86, and more.

Customs clearance software also provides pre-populated  filing forms, reporting, and tracking capabilities, making it easier to manage customs declarations and stay compliant with regulations. By centralizing and automating these tasks, customs clearance software helps businesses maintain accuracy and efficiency in their customs operations.

Using customs clearance software can significantly improve productivity by automating customs clearance processes. It ensures regulatory compliance by staying up-to-date with changing regulations, reducing the risk of errors and fines. Customs clearance software can help companies reduce costs associated with customs clearance, including hidden fees and fines.

Additionally, the software provides real-time visibility into customs processes, enabling companies to track shipments and stay informed. This not only enhances operational efficiency but also helps businesses maintain a competitive edge in the global market.

Partnering with Klearnow to develop compelling Value Propositions in Compliance with Customs Regulations

KlearNow has been one of the pioneers in the field of customs brokerage technology, with their AI and ML-powered logtech solutions helping customs brokers digitize workflows, unlock supply chain insights, and create transparency across the import lifecycle.

For customs brokers who intend to create a niche for themselves in a saturated market, KlearNow offers two bespoke solutions, KlearHub360 and Customs Engine.

KlearHub360 is a cloud-based platform, which besides automating the customs clearance data entry process, also has a dashboard with actionable insights and can create customizable reports, providing customs brokers with unparalleled levels of visibility and exception management reporting.

Customs Engine enables data capture, ingestion, and collaboration in a platform business model, aimed to simplify complex customs clearance using automation. It is capable of handling shipment volumes of any scale or complexity and provides powerful reports for faster insightful decisions. KlearNow.AI is an ABI provider in the US and can file to US CBP as part of this service.

To know how KlearNow can help you create a compelling value proposition and stand apart from your competitors, schedule a free demo by clicking here.

 

Port Strikes: Another Bullwhip in Navigating Global Trade

By staying informed and leveraging advanced technology, trade compliance managers can navigate the uncertainties of global trade with greater confidence and efficiency

The overnight ILA port strike has once again underscored the vulnerabilities within our global supply chains. In June 2023, a single day of closures led to a three-week recovery period for West Coast ports, with delays surging by as much as 148%. As the East Coast faces the potential of a prolonged strike, the repercussions could be even more severe, with recovery times stretching 4-6 weeks for each week of strike action. This disruption threatens to send shockwaves through global supply chains, potentially extending well into 2025. The number of containers and vessels taken out of the global supply chain affects all participants in international trade. A bullwhip effect is already evident, with exporters scrambling to dispatch containers ahead of anticipated delays.

Impact on Customs Clearance

While port strikes primarily affect the physical movement of goods, customs clearance remains a critical component of the supply chain. The direct impact of port strikes on customs clearance procedures may be limited, but the ripple effects can be significant. Delays in cargo movement can lead to congestion at ports, creating a backlog of shipments needing clearance. This situation can increase the pressure on customs officials and entry writers and potentially slow down the entire clearance process.

In times of disruption, flexibility and resilience become paramount. Trade compliance managers must be prepared to adapt quickly to changing circumstances. This includes having the ability to connect with new suppliers, transport providers, and other essential partners to ensure that goods continue to move smoothly through the supply chain. The ability to pivot and adjust strategies in real-time can mitigate some of the adverse effects of port strikes and help maintain operational continuity.

Resilience = Flexibility + Grit

There remains a critical need for flexibility and resilience in these challenging times. The ability to immediately connect new supply chain partners, new suppliers, and new transport providers is critical as companies hustle to ensure goods are on shelves. But rushing to find new routes and even new suppliers often means a drop in the levels of visibility companies are accustomed to. By leveraging advanced technology, like AI, businesses can navigate the complexities of customs clearance and minimize the impact of disruptions.

Combining real-time track and trace updates and data accuracy, with continuity in trade compliance allows managers to make informed decisions swiftly. In an era where adaptability is key, AI is providing tools and support needed to maintain operational efficiency and navigate the uncertainties of global trade.

This port strike serves as a stark reminder of the fragility of global supply chains and the importance of adaptability. While the direct impact on customs clearance may be limited, the broader implications can be profound. KlearNow.AI stands ready to support flexibility and resilience, ensuring that trade compliance managers and operations have the tools they need to weather these challenges. Together, we can futurize global trade.

 

How to Choose the Best Customs Clearance Software for Your Business

Metrics to determine the best Customs Clearance Software for your Business

Customs clearance is the activity of clearing merchandise for export or import internationally, which is a critical component of the global supply chain. The activity involves complying with all the applicable customs procedures and regulations, after which the goods are cleared for export or import.

The exponential rise in international trade, accompanied by increasing levels of globalization, has led to a corresponding increase in the goods and products that need to be cleared by customs.

Customs requirements have also become complex over the years, where business owners and supply chain managers engaged in international trade have had to allocate more resources and time for customs clearance tasks.

Compliance with customs processes and rules has largely been challenging, involving vast amounts of documentation and coordination with various players in the international transport process.

Exporters, importers, customs brokers, and supply chain managers increasingly use customs clearance software to automate and streamline the process. Every international shipment must pass through customs clearance, transforming this essential step into a powerful catalyst for unparalleled data collection across the supply chain.

Customs Clearance Software and its Role in Supply Chain Management

Customs clearance software can assist in digitalizing paperwork and automating information sharing and customs processes.

Effective customs clearance software can significantly ease the complexities associated with business ownership, particularly for those engaged in international trade.

Leveraging technology reduces the struggle of the task, reducing human effort and thus enhancing efficiency and accuracy levels.

Challenges in selecting customs software can arise from several factors:

  1. Lack of clarity on desired business outcomes
  2. Incorrect understanding of how functionalities of customs clearance software will help attain ultimate objectives
  3. Numerous customs clearance software solutions available in the market
  4. Element of subjectivity in evaluating and selecting customs clearance software

For business owners or supply chain managers considering deploying customs clearance software, shifting their focus from functionality to results is important.

Benefits of Using Customs Clearance Software for Supply Chain Management

Customs clearance software is a game-changer for supply chain management, offering many benefits that streamline international trade operations. Businesses can significantly reduce the risk of delays, fines, and penalties associated with non-compliance by automating and optimizing the customs clearance process. Here are some of the key benefits of using customs clearance software for supply chain management:

  1. Improved Compliance: Ensuring all necessary documentation is accurate and complete is crucial for avoiding costly errors and omissions. Customs clearance software automates this process, reducing the risk of non-compliance and associated penalties.
  2. Increased Efficiency: Automation saves time and reduces the need for manual data entry, allowing staff to focus on higher-value tasks. This not only enhances productivity but also minimizes the likelihood of human error.
  3. Enhanced Visibility: Real-time tracking and monitoring of shipments provide businesses with up-to-date information on the status of their goods. This transparency reduces the risk of lost or delayed shipments and allows for more proactive supply chain management.
  4. Better Decision-Making: Data analytics and reporting capabilities offer valuable insights into supply chain performance. These insights enable businesses to make informed decisions about their logistics and supply chain operations, ultimately improving overall efficiency and effectiveness.

By leveraging these benefits, supply chain managers can enhance their strategy and ensure smoother, more efficient operations.

Key Factors to Consider When Choosing Customs Clearance Software for Business Owners

A shift in perspective by business owners and supply chain managers can lead to a more objective software selection process. By approaching the decision with a broader view — from the initial business idea to final software deployment — they can significantly improve the chances of choosing the most suitable solution and ensuring its successful implementation.

It is essential to focus more on the expected outcome and the ultimate benefits anticipated by deploying the customs clearance software, rather than on specific functionalities. This implies emphasizing how functionalities will serve the organization’s purpose instead of considering the functionalities in isolation.

The critical points entailed in this process are explained below:

1. Defining business outcomes

The starting point involves defining the expected business outcomes. This paves the way for deciding which specific functionalities will best help achieve the desired outcomes.

For those running their own business, defining clear business outcomes is crucial for selecting the right customs clearance software.

To take a real-life example, a business that wants real-time visibility of cargo status has to first decide whether the objective is to provide customers with daily updates on the status of their shipments or to optimize inventory levels. Depending on the objective, the business is then in a better position to decide the frequency and accuracy of information related to the status and location of the shipment.

2. Key Metrics for Supply Chain Strategy Evaluation

Critical metrics for evaluating customs clearance software would include:

a) Business needs: determining business needs and the degree of flexibility permitted and aligning with software capabilities. A case in point is the example of the need for real-time visibility mentioned above.

In addition to traditional metrics, incorporating social media marketing strategies can provide a more comprehensive evaluation of the software’s impact on business growth.

b) Software and Counterparty Risks: Decision makers in the customs clearance software procurement process must consider risks arising from both the technology and the vendor.

Technology risks arise from the software not incorporating the latest advances such as ML and AI, while counterparty risks pertain to the vendor’s financial stability, industry expertise, and commitment to R&D.

c) Value: The evaluation is based on the holistic value that the competing software options can bring to the business, both in tangible and intangible terms, rather than being guided solely by costs and the purported sophistication of functionalities offered.

d) Longevity: Guage the vendor’s commitment to innovation in the logtech solutions segment and the possibility of forming long-term partnerships, forming the bedrock of the company’s technological roadmap.

3. Key Features to Look for in Customs Clearance Software

Selecting the right customs clearance software is critical for optimizing your supply chain process. Here are some key features to look for:

a) Automated Data Entry and Validation: The software should automatically populate customs forms and validate data to ensure accuracy and compliance. This feature reduces the risk of errors and speeds up the clearance process.

b) Real-Time Tracking and Monitoring: Real-time updates on the status of shipments are essential for staying informed and making timely decisions. This feature enhances visibility and allows for better supply chain logistics management.

c) Integration with Existing Systems: The ability to integrate with existing enterprise resource planning (ERP) systems, transportation management systems (TMS), and other logistics software is crucial. Seamless integration ensures that all systems work together efficiently, allowing managers to apply their supply chain management skills more effectively.

d) Compliance with Regulatory Requirements: The software must comply with all relevant regulatory requirements, including customs regulations and trade agreements. This ensures that your business remains compliant and avoids potential fines and penalties.

e) Scalability and Flexibility: The software should be able to handle large volumes of data and adapt to changing business needs. Scalability ensures that the software can grow with your business, while flexibility allows for adjustments as your supply chain strategy evolves.

By focusing on these key features, supply chain managers can select a customs clearance software that meets their specific needs and enhances their overall strategy.

Importance of Partnering with Vendors in the Global Supply Chain

Businesses need to adopt a partnership approach when it comes to selecting a customs clearance software vendor, especially for those managing their own company, with the intent of developing a strong and strategic relationship, wherein the vendor’s role evolves to that of a technology partner.

While opening discussions with software vendors, business owners, and supply chain managers need to be upfront about their long-term vision and the business issues that the technology is expected to address.

Often, it so happens that the software selection process degenerates into an exercise in compiling functionalities required by each department and evaluating the available options in terms of specific functionalities (as opposed to the overall value they add to the business or how well the functionality serves the overall objective).

Decision makers need to change their stance and communicate more openly on the end goals, thereafter putting the onus on the software vendor to explain how their products will add value and help in attaining the stated goals.

Such an approach would ensure the vendor’s commitment to the company’s objectives right from the onset and form the basis of a long-term, mutually beneficial partnership.

Implementation and Integration

Implementing and integrating customs clearance software requires careful planning and execution. Here are some key considerations to ensure a smooth transition:

Planning and Strategy

Before implementing customs clearance software, businesses should develop a clear plan and strategy for the implementation process. This should include:

  1. Defining Project Goals and Objectives: Clearly outline what you aim to achieve with the new software. This could include improving compliance, increasing efficiency, or enhancing visibility.
  2. Identifying Key Stakeholders and Their Roles: Determine who will be involved in the implementation process and what their responsibilities will be. This ensures that everyone is on the same page and working towards the same goals.
  3. Developing a Project Timeline and Budget: Establish a realistic timeline and budget for the implementation process. This helps to manage expectations and ensures that the project stays on track.
  4. Identifying Potential Risks and Mitigation Strategies: Anticipate potential challenges and develop strategies to mitigate them. This proactive approach helps to minimize disruptions and ensures a smoother implementation process.

Training and Support

To ensure successful implementation and integration, businesses should provide comprehensive training and support to staff. This should include:

  1. User Training: Provide staff with the skills and knowledge needed to use the software effectively. This could include hands-on training sessions, online tutorials, and user manuals.
  2. Technical Support: Offer technical support and troubleshooting to resolve any issues that may arise. This ensures that any problems are quickly addressed, minimizing disruptions to the supply chain process.
  3. Ongoing Maintenance and Updates: Regularly update and maintain the software to ensure optimal performance. This includes installing software updates, monitoring performance, and addressing any issues that arise.

Ongoing Maintenance and Updates

To ensure that customs clearance software continues to meet the evolving needs of the business, ongoing maintenance and updates are essential. This should include:

  1. Regular Software Updates: Ensure that the software is regularly updated to reflect changes in customs regulations and trade agreements. This keeps the software compliant and up-to-date.
  2. Performance Monitoring: Monitor the performance of the software to identify areas for improvement. This helps to ensure that the software continues to meet the needs of the business.
  3. User Feedback: Solicit feedback from users to identify areas for improvement and optimize the software. This ensures that the software remains user-friendly and effective.

By following these steps, businesses can successfully implement and integrate customs clearance software, enhancing their supply chain process and ensuring long-term success.

Final Thoughts

It is evident that in a dynamic tech landscape, businesses need to modify their customs clearance software procurement strategies, and perceive vendors more as entities who add value to the business (and not merely as providers of off-the-shelf logtech solutions).

In a dynamic tech landscape, the role of a supply chain analyst becomes increasingly important in ensuring the smooth operation of customs clearance processes.

Decision makers in charge of procuring customs clearance software, including supply chain managers, need to deliberate and focus on result-driven metrics, and thereafter strategically engage with competing logtech vendors in the interest of forming long-term relationships.

If you aspire to stay ahead of the curve in global trade and international shipments by partnering with a customs clearance software provider, look no further than KlearNow. Customers have testified to its efficacy, reporting that KlearNow’s customs clearance solutions have helped reduce the average time taken per shipment from 15 to 30 minutes to just a couple of minutes.

Schedule a demo with us today and feel the difference.

 

Don’t Get Left Behind: Embracing Artificial Intelligence In Supply Chain Management

Disruptions are now commonplace events and have impacted supply chains with increasing frequency since the COVID-19 pandemic. In addition to geopolitical and economic factors that affect global trade, importers and freight forwarders also have to deal with challenges like energy shortages, labor costs, geopolitical crises, and uncertain weather conditions. All these factors exert inflationary pressure on operating expenses for manufacturers and exporters.

According to the 2024 Agility Index Research study by Epicor and Nucleus Research, nearly half of the surveyed companies across the make, move, and sell industries consider escalating costs as their foremost challenge.

Even stronger evidence of the penetration of AI and ML is found on the fact that the majority of companies surveyed have already began using these technologies in supply chain applications, to address such challenges.

Incorporating AI and ML technologies has also been pivotal in enhancing supply chain resilience, allowing businesses to maintain robust production capacity and manage supply chain risks effectively.

High Growth Businesses adopting AI and ML

The trend is especially pronounced among high-growth businesses operating in a highly dynamic and competitive environment. The need to ensure agility and resilience that will counter potential supply chain disruptions has spurred these companies to leverage AI and ML-powered technologies. These companies are leveraging advanced technologies, such as neural networks, to enhance their operational efficiency and decision-making processes. Incorporating AI and ML in operations has created a positive cycle, where the benefits of technology help these companies grow even faster and maintain their dominant position in their industry.

The 2024 Agility Index also found that 63% of high-growth businesses (with revenue growth of 20% or more over the past three years) have integrated generative AI into their supply chain operations. This has enabled these companies to manage costs and tackle operational challenges more effectively

Adoption of Generative AI across Supply Chain functions

The aspects of the business where generative AI was most widely used were customer service chatbots (72%), product descriptions (67%), natural language querying, reporting, and in-application assistance.

All these aspects involve customer interactions or analytics, highlighting the potential of generative AI.

With highly saturated markets compelling companies to become more customer-centric, it is essential to leverage technology to enhance customer service levels.

Generative AI plays a crucial role here. It can streamline customer interactions and enable more informed product design and feature development, by enabling companies to introduce sophisticated chatbots and comprehensive product descriptions.

Artificial Intelligence Applications in Supply Chain

For most businesses, critical decisions regarding the efficacy of the supply chain include demand forecasting and inventory maintenance. Demand forecasting forms the basis for most supply chain planning, as businesses plan subsequent activities based on this information.

Inventory management is equally important, as it is imperative to strike the right balance between having enough inventory on hand to ensure customer demand is met while avoiding overstocking and thus tying up financial resources and warehousing space in surplus inventory.

Additionally, computer vision is being utilized for tasks such as product inspection and inventory tracking, further enhancing the efficiency of supply chain operations. Businesses now rely on machine learning system(s) to optimize these decisions, with a reported 45% using it for inventory management and 40% for demand forecasting.

Future Investments in Artificial Intelligence and Machine Learning Technology

With the benefits ofAI and ML fast becoming evident, larger numbers of importers, manufacturers, and freight forwarders are incorporating these technologies into their entire supply chain planning.

As these automation technologies gain sophistication, the greatest anticipated impact will be experienced in terms of increased efficiency and productivity (32%), cost savings (26%), and improved supply chain automation (23%).

The effective deployment of AI and ML by high-growth businesses will incentivize other companies to use digital tools to augment their supply chains and close the technological gap.

The latest McKinsey research has revealed that not only has the rate of usage of AI and ML doubled in just under one year, but it is also expected to accelerate even more, with 75% predicting that generative AI will lead to significant or disruptive change in their industries in the years ahead.

It is, therefore, not farfetched to expect that AI and ML will mold the supply chains of the future, and companies that ignore this trend will do so at their own peril.

How KlearNow can integrate AI and ML in Supply Chains

As a market leader in the AI logtech solutions industry, KlearNow has provided innovative solutions for optimizing supply chain workflows.

In its endeavor to provide cutting-edge technological solutions to the logistics and transport industry, KlearNow has tapped into artificial neural networks and supervised machine learning algorithms to provide products intended to simplify various aspects of the holistic supply chain.

KlearNow’s products use AI to automate processes and smoothen supply chain operations, while their Intelligent Document Processing (IDP) functionality digitizes all documentation associated with customs clearance and the import process, resulting in more accurate, complete and timely compliance with customs formalities.

Users of various KlearNow logtech solutions have reported significant benefits, such as:

1) End-to-end Solutions: an integrated platform for trade document management, exception handling, customs filing, and real-time updates on customs statuses; ensuring seamless operations and effective management of supply chain processes.

 2) Enhanced Visibility and Data Consolidation: helps provide a single source of real-time information aiding better decision-making and streamlining operations.

 3) Cost Savings and Efficiency: reduced manual workload and increased operational efficiency to achieve cost savings of up to 30%.

 4) Scalability and Adaptability: provides agility and quick response to disruptions with scalability to adapt to volatile market conditions and changing demands.

 5) Empowering Workforce and Innovation: focus on innovation and value creation by automating routine tasks and leveraging enhanced training data to empower a motivated workforce to foster a culture of continuous improvement.

In the forthcoming years, AI will play an increasingly important role in logistics and transportation, by enhancing logistical efficiency through predictive analytics and augmenting the role of humans. The explosive growth in data, combined with the enhanced computing power, will enable AI to handle more complex tasks.   

By embracing AI and machine learning models with KlearNow, supply chain operators can stay ahead of their competitors, overcome operational challenges, and drive sustainable growth.

If you aspire to stay ahead of the curve in global trade and international shipments, contact KlearNow today to schedule a demo.

 

Importer Security Filing (ISF): Challenges and tips to streamline the ISF process

Importance and Relevance of ISF

As explained in our previous blog, the Importer Security Filing (ISF) is an important piece of legislation that enables the U.S. Customs and Border Protection (CBP) to detect high-risk cargo in advance based on analysis of the information submitted by importers or their agents, such as a licensed customs broker.

The ISF filings are a relatively new rule or policy that went into law in 2008 and is intended to enhance national security and prevent imports and exports of merchandise that could be detrimental to public health and safety.

Each piece of data is essential in the risk assessment process. For example, information regarding the parties to the transaction can help identify if a sanctioned entity (including private individuals) is involved. Similarly, if the origin commodity and container stuffing location is from a part of the world plagued by high levels of political instability or violence, additional checks will be warranted.

It is, therefore, essential that the stipulated information be provided accurately and on time.

Consequences of non-compliance

The ISF rules address importer(s) or their agents on the importance of filing the necessary data within the prescribed timeframe.

In instances where the information is not shared in time or is inaccurate or incomplete, the CBP’s ability to detect illegal cargo is hindered, thus undermining the purpose for which the legislation was enacted.

Considering the gravity of the potential risks in case such proscribed cargo is not detected by the CBP due to lack of information, the ISF rules also mandate penalties to ensure that importers and customs brokers take this responsibility with the utmost seriousness and comply with the federal requirements in their entirety.

Noncompliance can result in the following consequences:

1) Monetary files: The CBP is authorized to levy fines and enforce $5,000 per violation payments in inaccurate, incomplete, or untimely filing cases.

2) National security compromised: as there is a greater probability of illicit goods entering the country.

3) Consignment can be delayed: The consignment can be held until issues related to compliance are resolved. This will result in accrual of storage charges and commercial losses arising from delays in cargo delivery.

4) Revocation of right to import goods: in case of repeated violations, the entity could revoke its right to import goods to the US.

5) Loss of reputation: instances of noncompliance could result in loss of reputation for the organization.

Challenges in the ISF process

While importers will always aim for 100% compliance with ISF regulations, they generally face some common challenges due to the nature of the international transport process, the diversity of stakeholders, and the disparate sources of information.

These challenges include:

1) Human errors: Employees could make errors while updating the data or miss filing on time.

2) Lack of training: If employees are not aware of the data elements that need to be filed or have not been made aware of the criticality and time-sensitivity of this task, they might not give the task the focus it deserves, resulting in inadvertent errors.

3) Information not received on time: Some pieces of information might not be available at the time of the actual filing, which can result in delayed or incomplete filings

4) Inaccurate data provided: If the data provided is not correct, the inaccuracy will spill over to the ISF filing.

5) Misclassification of commodities: Commodities can be misclassified, either due to lack of knowledge or not exercising due diligence.

6) Numerous data sources: Since data elements will have to be collated from multiple sources, there is a greater probability of errors while collating data.

Tips to avoid these challenges

Some practical measures that can help importers and customs brokers overcome these challenges are explained below:

1) Train staff on process and criticality: Ensure employees are trained well on all ISF requirements, such as shipment information and lading number. Also, they should be made aware of the ramifications of noncompliance.

2) Collaboration between departments and with customs brokers or freight forwarders: Since data has to be collated from multiple parties and then communicated to licensed customs brokers or freight forwarders, all stakeholders must collaborate with each other for a smoother flow of information.

3) Streamline processes and optimize workflows: Given the complexity of ISF, importers need to streamline their processes to ensure that information flows smoothly and that concerned stakeholders have access to appropriate information. 

4) Use technology: Importers and customs brokers can leverage technology to automate the ISF process. Recent technological advances have led to the development of sophisticated logtech services, which can digitize documents, automate workflows, eliminate human errors, and ensure timely submissions.

KlearNow supports Importers and Customs Brokers in ISF and Customs Clearance

In a market surfeited with logtech solutions targeted at various aspects of logistics and international trade, especially ocean cargo imports, KlearNow’s Customs Engine has emerged as the preferred choice for importers, customs brokers, and freight forwarders who are looking to leverage technology to automate their ISF and customs clearance tasks.  

Customs Engine is an AI and ML-powered software that can simplify complex customs clearance activities. It helps address seller(s) and their pain points in the customs clearing process.

Customs Engine can assist with improving staff productivity with pre-entry processing, introducing validation checks for better compliance, and generating operational efficiencies up to 10x.

Satisfied customers who have reaped the benefits of using KlearNow’s products and services have reported accelerated customs clearance procedures.

To schedule a free demo on how KlearNow can help your business, click here.

 

Importer Security Filing (ISF): Concept, Benefits, and Best Practices

Understanding the Background

Countries across the globe today face elevated levels of risks, in the form of various threats to national and economic security. These risks emanate from the actions of countries damaging to a country or groups engaged in illegal or subversive activities. It is not inconceivable that such hostile entities could attempt to import goods and equipment into the country that could threaten the country’s citizens and its image at large.

For the US, the U.S. Customs and Border Protection (CBP) has a huge role in this equation, introducing several legislative and associated initiatives to curb imports of embargoed or proscribed commodities.

The Importer Security Filing (ISF) is one of those crucial federal regulations, which took effect on January 26, 2009.

What is the Importer Security Filing (ISF)

Officially termed Importer Security Filing and Additional Carrier Requirements, the rule is commonly called “10 + 2”, alluding to the number of pieces of information to be submitted thereunder.

The purpose is to enhance the CBP’s ability to identify high-risk shipments or cargo arriving to prevent smuggling and ensure cargo safety.

The rule is primarily aimed at containerized ocean imports while exempting imports of bulk cargo or other transport modes. The filing is to be submitted to the CBP no later than 24 hours before the cargo is loaded on the vessel destined to the US.

While the ultimate responsibility of providing the data rests with the importer, the actual task of collating and submitting data can be handled by the importer’s agent (such as a licensed customs broker or freight forwarder).

The ISF has to be filed electronically, comprising the following elements:

·        Seller

·        Buyer

·        Importer of record number / FTZ applicant identification number

·        Consignee number(s)

·        Manufacturer (or supplier)

·        Ship to party

·        Country of origin

·        Commodity Harmonized Tariff Schedule

Apart from the above, two additional data elements also need to be submitted at least 24 hours before the vessel’s arrival at a US port:

·        Container stuffing location

·        Consolidator

You may also add the customs entry.

Benefits of complying with ISF requirements

It is to the benefit of the importer and customs broker to comply with ISF requirements and other regulations related to the policy, as this can help with:

1) National security: Providing data in time enables the CBP to identify potentially dangerous shipments and detect contraband.

2) Fast customs clearance: Timely and accurate ISF submission helps expedite the customs clearance process.

3) Minimizing risks of penalties and delays: Adhering to ISF rules can help the importer avoid penalties and minimize delays in the customs clearance process. The CBP has the power to break bulk cargo upon suspicion. You don’t want that.

4) Reduced costs: With goods being cleared on time, the importer can avoid costs related to detention and demurrage, as well as commercial losses arising from delayed deliveries

5) Corporate reputation: A compliant organization will be perceived positively by both the public and government authorities. Non-compliant entities, on the other hand, could suffer loss of reputation

Penalties and consequences of ISF violations

Instances of violations of ISF stipulations are viewed with utmost seriousness. The CBP may levy penalties of $5,000 per violation in the case of inaccurate, incomplete, or untimely filing.

Best practices to follow

An importer or customs broker can adopt certain practices that have been proven to be effective in optimizing the ISF process, explained hereunder:

1) Proactive planning: Planning in advance to collect the requisite information and ensuring that it is submitted well in time can smoothen the ISF process

2) Employee training: Training employees on the criticality of ISF submissions will sensitize them to the importance of data accuracy and the implications of even inadvertent errors, thus enabling them to exercise due diligence and lowering the probability of human errors

3) Leverage technology: Use technological solutions and systems to transact customs business. Technology can be used for data compilation and submission of import and export documents to reduce manual effort and automate the submission process

Technology as an invaluable adjunct to the ISF process

While improving internal planning and training employees are quick wins for the importer and customs broker, going a step further and harnessing the recent advances in AI and ML can provide a significant competitive edge when it comes to ISF and other customs clearance tasks.

Importers and customs brokers increasingly invest in technology to automate the ISF, customs process, and other customs formalities.

One such sophisticated solution available in the market is KlearNow’s Customs Engine, targeted at importers, freight forwarders, and customs brokers.

Possessing the ability to process unstructured data backed by six years of deep learning from its patented AI and ML data ingestion tool, Customs Engine can digitize documentation and automate all tasks related to ISF, thus ensuring regulatory compliance and accurate submissions.

Click here to schedule a free demo of the capabilities and functionalities of Customs Engine.

 

The Advantages of Intelligent Document Processing Within Customs Operations

Role of Customs Brokers and Freight Forwarders in International Trade

The exponential rise in global trade has been accompanied by trade imbalances and lopsided Balance of Payments for certain countries.

Various countries have started imposing trade restrictions through tariff and non-tariff barriers to redress these challenges and respond to geopolitical pressures.

As a consequence of these factors, the inherent complexities of international merchandise trade have now been compounded by the need to comply with additional regulations arising from trade restrictions.

In this context, customs brokers and freight forwarders play a vital role in ensuring regulatory compliance and facilitating the smooth flow of international trade, acting as value-adding intermediaries and occupying a critical position in global supply chains.

Rising Role of Customs Brokers & Freight Forwarders in International Trade

Given the geographical dispersion of manufacturing capacity and globalization of supply chains, most products comprise components that are sourced or manufactured in other countries.

The growing intricacies of international trade legislation and customs requirements in different countries make managing logistics and customs clearance a highly specialized role, requiring considerable expertise and knowledge.

Further, in this era of specialization, companies find it reasonable to focus on their core competencies, which generally are product development and manufacturing, where they rely on external logistics service providers to efficiently handle export and import procedures, trade documentation, and customs clearance activities.  

In this context, the significance of customs brokers and freight forwarders becomes increasingly critical. Their specialized and comprehensive understanding of trade documentation, customs, and other logistical processes empowers them to streamline customs clearance and manage trade documentation efficiently. This expertise allows for the optimal handling of merchandise exports and imports, showcasing their pivotal role in the international trade environment.

Manufacturers and exporters have acknowledged this and are more amenable to contracting customs brokers and freight forwarders for logistics management. Customs brokers have certain innate advantages by virtue of their expertise in trade documentation and procedural requirements, as well as their established rapport with government officials, which can sometimes help resolve issues faster. 

Besides that, since their primary responsibility is handling customs clearance and trade documentation, customs brokers invest heavily in building teams of qualified professionals, which would be unviable for a typical manufacturer. A resultant benefit for manufacturers, importers, and exporters is that using customs brokers or freight forwarders can reduce their cost per transaction and save on logistics overheads.

Overcoming Challenges for Customs Brokers & Freight Forwarders with AI/ML

It is clear businesses within the supply chain are interested with adopting AI/ML solutions to tackle challenges, as reflected in the recent MHI Industry Report where roughly 85% of manufacturing and supply chain leadership surveyed look to adopt these technologies within the next five years. While customs brokers and freight forwarders are better placed to manage customs clearance and trade documentation, they nonetheless face specific challenges, the most common of which are:

1. Handling Extensive Documentation

Trade documentation covers each stage of the supply chain, ranging from certificates of origin to commercial invoices to bills of lading to insurance policies and delivery notes. It is estimated that global trade involves 4 billion paper documents daily. The volume of documentation can be overwhelming, rendering the process time-consuming and prone to errors.

Customs brokers and freight forwarders can use AI and ML-powered platforms to streamline the process, ensure accuracy, reduce processing times, and minimize risks of delays.

2. Managing Large Volumes of Trade and Customs Data

Customs brokers and freight forwarders collate, process, and transmit humongous amounts of data, which is generally beyond human capacity to analyze.

AI and ML algorithms provide Customs brokers with the computing prowess to store and analyze all such data, delivering valuable insights, predictive analytics, and optimizing operations through data-driven decisions.

3. Diverse Formats of Trade Documents

The complexity in efficiently managing trade documentation is exacerbated by the varied formats in which information is available. The wide range of stakeholders and geographies involved contribute to this challenge, resulting in information being shared in multiple formats such as Excel spreadsheets, Word documents, PDF files, emails, and even traditional paper documents, all without a universally accepted standard.

Manually extracting relevant information from all these documents is extremely cumbersome and error-prone. Customs brokers and freight forwarders can benefit by using a smart platform equipped with advanced Optical Character Recognition (OCR) technology, which can seamlessly interpret and process information across formats, ensuring a smooth and standardized workflow. 

4. Dispersed Customs Data and Multiple Languages

Customs data is prepared by numerous stakeholders, depending on their roles and requirements. This results in information being stored across locations, often in different languages.

Smart AI and ML-powered platforms serve as central data repositories, storing information from disparate sources, and facilitating a centralized and cohesive approach. The infusion of natural language processing capabilities can aid in interpreting multilingual documents, ensuring accurate and consistent data extraction.

5. Lack of Standardization in Document Templates

The absence of globally mandated documentation standards and stipulated templates complicates customs clearance processes.

AI and ML algorithms can adapt to varying document structures, learning from patterns and establishing a standardized approach to extracting information. This ensures that the platform remains effective in the face of evolving document formats.

6. Unstructured, Non-Digitized Format of Trade Documents

With an estimated 80% of enterprise data being unstructured, processing data can be challenging. Trade documentation and information required for customs clearance are often unstructured and non-digitized, where a smart platform becomes a transformative tool.

Customs brokers and freight forwarders can leverage AI and ML technologies to convert unstructured data into a structured format, unlocking the potential for automation, improved accuracy, and enhanced efficiency in customs clearance processes.

7. Speed of information flows and updates

In response to the VUCA (volatility, uncertainty, complexity, and ambiguity) environment and rapidly evolving macro-level supply chain trends, manufacturers in recent years have had to contend with supplier diversification, dispersion of manufacturing capacity, emergence of new markets, consequent changes to transportation networks, and altered demand patterns. In this scenario, the speed of information flows is crucial to ensure that relevant information is passed on to concerned parties. Missing updates on shipment status or milestones in the transport process can result in costly service delivery failures.

AI and ML ensure that every piece of data is captured as soon as it appears. These tools ensure the information is categorized, allocated to the correct shipment, and validated for any changes that operators must act on. 

8. Overwhelming complexity in integrating systems

Most organizations have adopted a siloed approach to implementing technology, depending on organizational priorities and the perceived criticality of core functions. As new systems are introduced, they are linked to existing systems, resulting in a myriad of disparate but interlinked systems. The fragility of these linkages means that issues with one system can have organization-wide repercussions.

For customs brokers and freight forwarders, AI simplifies this process of integration. Smart ML and AI-powered systems can easily collate and validate information and subsequently format it into an output that integrates back into operating systems or legacy systems.

Transformative Role of Technology

In a market characterized by intense competition and growing customer expectations, customs brokers must incorporate technology to enhance operational efficiency and position themselves as reliable partners.

In this context, implementing AI and ML-powered smart trade documentation platforms in this context can be a strategic move toward efficiency, accuracy, and competitiveness.

By addressing challenges associated with extensive documentation, diverse document formats, and multilingual data, these technologies empower logistics professionals to navigate the complexities of global trade with confidence.

Embracing the digital transformation propelled by smart platforms ensures customs brokers and agencies are well-positioned to thrive in an ever-evolving and demanding international trade landscape.

KlearNow and Data Engine: Futurizing Supply Chains since 2018

A recent Descartes’ study found that over half of all supply chain and logistics operations they surveyed were prioritizing automation. And for good reason. KlearNow has been at the forefront of digitizing trade documentation and automating customs clearance activities, with its suite of products designed to cater to the holistic and specific requirements of customs brokers and freight forwarders. 

KlearNow’s Data Engine is an innovative and reliable trade platform, having a 95% first-time hit rate on new documents and 99.9% accuracy in transforming unstructured data, which lends customs brokers a competitive edge and helps them deliver a superior customer experience.

To learn how Data Engines can benefit your business, click here.

 

Futurizing Logistics: The Power of AI and Machine Learning in Customs Clearance

The crucial role of data in Supply Chain and Logistics

The supply chain and logistics industry generates vast amounts of data, capturing every detail of a shipment, especially during customs clearance. This encompasses descriptions of the commodity, shipper and consignee’s financial and operational specifics, commercial and pricing information, and transportation details. It also includes data on components and their origins, as well as related information on insurance, drayage, and credit terms.

When structured and aggregated, this data can be a veritable treasure trove of information, with the potential to yield insights at the most granular level possible.

The sheer volume of data however also poses challenges related to collation, interpretation, and analysis.

Ensuring the storage and physical safety of these reams of paper is another challenge that needs to be addressed.

While the supply chain and logistics industry has made technological forays — like using blockchain to simplify customs clearance and trade documentation, these efforts are limited in scale.

In this context, emerging technologies such as Artificial Intelligence (AI) and Machine Learning (ML) attain significance in resolving enduring business challenges by harnessing synergies between various technologies.

Challenges typically faced by organizations, such as siloed information contributing to poor decision-making and difficulties in sharing milestones and relevant information across the supply chain, highlight the need for a more integrated technological approach.

AI and ML: Description and applicability in the Supply Chain and Logistics industry

Artificial Intelligence is a technology that enables computers to simulate human intelligence and problem-solving capabilities. Recent advances have increased exponentially its computing power and facilitated the fast processing of massive amounts of data that would be beyond the capacity of human employees.

AI is expected to impact global supply chains, profoundly permeating every aspect.

In particular, AI has been immensely useful in processing documents and streamlining paperwork through Optical Character Recognition (OCR) and Natural Language Processing (NLP), which combine to recognize and interpret contents from structured and unstructured documents and help systems understand text.

Machine Learning (ML) focuses on using data and algorithms to imitate how humans learn, thus paving the way for software to handle rote tasks with greater precision, and subsequently make predictions on new data.

Since the quality of ML output depends on the amount of data ingested, it is evident that the longer ML is used, the more data it ingests, bettering the quality of analyses and accuracy of predictions.

This is especially helpful in supply chain and customs clearance as ML’s ability to extract relevant data from trade documents improves with prolonged usage.

Benefits of leveraging AI and ML

We will explore the transformative advantages of combining these technologies in logistics processes, specifically focusing on customs clearance and the pivotal role of data.

Several conglomerates have incorporated AI and ML technologies in their daily supply chain planning and logistics operations, resulting in higher productivity and efficiency, which translates into superior customer experience. The competitive advantage thus created can be invaluable in a fiercely cutthroat competitive market.

Notable benefits of fusing these technologies include:

1. Enhanced efficiency in Customs Clearance

Harnessing the combined power of these technologies can elevate the efficiency of the customs clearance process. With the ability to swiftly process vast amounts of data across various document formats, routine tasks are automated, superior accuracy levels are attained, and customs clearance is expedited.

ML algorithms can learn from historical data, incorporate regulatory amendments, and optimize the overall customs clearance process.

2. Data-driven decision making

The logistics business involves collating and sharing data to facilitate the export process; however, the amount and complexity of data can be overwhelming for humans. AI and ML help overcome this challenge by analyzing data related to shipments, regulations, and historical customs clearance patterns, enabling supply chain managers to make strategic decisions faster, predict potential challenges earlier, proactively address issues in the customs clearance process, and ultimately optimize inventory management.

3. Improved accuracy and compliance

Precision and compliance with regulatory requirements are paramount in customs clearance and can be best achieved by leveraging AI and ML. These technologies digitize documentation and automate logistics workflows, thus helping detect discrepancies, flag potential issues, and reduce the risk of errors and, consequently, delays and penalties. The result is a more reliable and compliant customs clearance process.

4. Predictive Analytics for Supply Chain Optimisation

Sophisticated algorithms powering AI and ML tools provide predictive analytics, helping supply chain managers anticipate challenges and optimize supply chain processes. These systems analyze historical data to predict potential bottlenecks and recommend mitigative measures. This proactive approach minimizes disruptions and infuses reliability in supply chains.

5. Real-time Tracking and Visibility

Real-time visibility is fast becoming the norm in international transport, with logistics professionals considering this information crucial for their upstream and downstream planning. AI and ML can monitor data from many sources to provide accurate and up-to-date information on the status of shipments during customs clearance. This transparency allows stakeholders to track progress, address issues promptly, and enhance overall supply chain visibility.

Growing usage of AI and ML for Customs Clearance and other Logistics activities

The supply chain and logistics industry witnessed a surge in the deployment of logtech 

solutions post the COVID-19 pandemic, with reputed companies such as Walmart, Siemens, Unilever, and Tyson Foods using AI to aid their procurement and logistics activities.

As the advantages of incorporating AI and ML in logistics processes, especially customs clearance, become apparent, the industry is rapidly embracing these technologies. The combination of AI and ML allows efficient, accurate, and quicker decision-making capabilities, offering a competitive edge in the global marketplace.

In today’s VUCA environment, it is imperative to embrace AI and ML to stay ahead of the competition. The future of customs clearance lies in the intelligent utilization of data through these transformative technologies, paving the way for a more streamlined and resilient logistics ecosystem.

KlearNow’s Data Engine platform: Unleashing the power of AI and ML

For corporations intending to garner benefits of AI and ML to streamline customs clearance, KlearNow offers Data Engine, an intelligent trade documentation platform that ingests unstructured documents and data, converts it into structured data, and prepares customs clearance and other documentation in the stipulated format.

The Data Engine has the ability to process and interpret documents in various formats and extract meaningful insights, helping improve staff productivity and saving time and money — with up to a 10x increase in operational efficiency.

Customers have testified to its efficacy, reporting that KlearNow’s logtech solutions have helped reduce the average time taken per shipment from 15 to 30 minutes to just a couple of minutes.

Learn more about Data Engine by clicking here. 

 

Navigating Customs Clearance: Hindrances to Business Growth in Supply Chain Logistics

Rapid Globalization and growing Trade Documentation requirements

Global trade has grown exponentially since 1995, when the WTO was established. As of 2022, international trade volumes had experienced an average growth of 4%, while the average value of goods traded had expanded even faster, at 6%.

During this period, international trade helped revitalize the global economy and was a critical engine for prosperity. As the benefits of globalization become evident, more and more countries are endeavoring to integrate themselves into global supply chains and increase their international trade.

Further, protectionist tendencies have been gaining ground over the past decade in response to tepid growth rates, tenuous macroeconomic conditions, and the interplay of intense geopolitical pressures, with both advanced and developing nations increasingly implementing tariff and non-tariff barriers.

In this context, a smoothly functioning and efficient supply chain is vital to the success of any business. To efficiently regulate and execute the associated logistics activities, comprehensive trade documentation requirements are necessary, encompassing the entire supply chain and, especially, customs clearance.

Thus, trade documentation has emerged as an inevitable adjunct of international trade and logistics, with statutory compliance emerging as a critical task in the customs clearance process.

It is estimated that global trade and logistics depend on 4 billion paper documents daily, illustrating not only the importance of trade documentation but also the extent of reliance on paper-based processes.

Trade Documentation Complexities and its Solutions 

While there are many challenges in the normal course of international trade, the administration of trade documentation, which is vital in customs clearance, has emerged as a major cost center. It has the potential to impede the growth trajectories and international ambitions of most companies.

This is because each government and regulatory agency stipulates its distinct documentary requirements, depending on their role, scope of activities, and purpose, wherefore exporters, importers, freight forwarders, and customs brokers are compelled to keep themselves abreast of the latest developments, failing which they run the risk of falling afoul of mandatory guidelines.

Given how deeply interconnected global supply chains are and the gamut of logistics activities involved, international trade generally spans multiple jurisdictions.

The global nature of supply chains implies greater complexity in terms of trade documentation, arising from the diverse nature of requirements, disparate sources of information, and the need to interpret and update the data received accurately.

In this blog, we will explore these complexities, examine how they hinder business growth, and explore potential solutions.

1. Documentation overload

Perhaps the most challenging aspect of Customs Clearance is navigating through the maze of documentary formalities, commencing with awareness of such requirements, across all geographical locations and for associated activities, collating information from various sources, interpreting the data, and preparing documents in the stipulated formats, to checking for accuracy, and finally ensuring timely submission to the relevant government agencies.

These documents include bills of lading, commercial invoices, shipping instructions, certificates of origin, purchase orders, packing lists, cargo insurance, delivery notes, and a host of other country or commodity-specific documentation.

It is estimated that one shipment could involve 50 sheets of paper exchanged with up to 30 stakeholders.

The sheer diversity and scale of trade documentation make this a time-consuming, labor-intensive, and error-prone process, leading to delays in customs clearance.

Solution

Implementing document processing solutions, such as IDP software, helps automate trade documentation and information processing across the supply chain, and smoothens the flow of logistics activities. Errors are minimized, human effort is reduced, and overall supply chain efficiency is enhanced.

IDP systems also automate information sharing, thus ensuring that stakeholders are informed of key milestones and critical information needed to discharge their responsibilities.

2. Document complexity

Besides the number of documents, the complexity of international trade documentation can be overwhelming. Without a standard format for most documents, compounded by the divergent requirements of various countries and agencies, businesses can find themselves floundering. Since the data is mostly unstructured and shared in different formats (such as emails, Excel spreadsheets, Word documents, and PDF files), compiling data for customs clearance can pose considerable difficulties.

Further, language barriers and varying levels of technological capabilities in countries add to the complications in handling data across the supply chain.

The implications include lower accuracy levels, resulting in a greater probability of errors in the customs clearance process.

Solution

The key to reducing complexity is to simplify the trade documentation process and standardize the output of shipment data.

Leveraging technology to process and store documents, interpret, translate, and validate the information contained therein, and finally automate documentation across the entire supply chain can yield substantial benefits. This will vastly enhance logistics efficiency, ensure compliance with relevant legislation and adherence to processes, highlight missing or inaccurate information, and keep all stakeholders informed.

3. Manual data updates

The industry still relies heavily on manual customs clearance processes, with trade documentation laboriously prepared by employees. This greatly increases the probability of accidental and inadvertent errors, introduces inefficiencies in the logistics flow, and exposes the organization to the risk of penalties and operational issues.

Manual data entry methods usually imply lower accuracy levels and consume effort and time, detracting from the organization’s core commercial activities. The consequent poor data quality undermines strategic decision-making.

Solution

Using advanced technologies such as AI and ML to automate trade documentation and customs clearance can significantly reduce errors and enhance the speed of supply chain and logistics workflows. Automated systems can validate data, ensure compliance, and flag potential issues for human review, thereby improving overall efficiency. 

Leveraging Technology to Streamline Documentation and Customs Clearance

As most industries and even government agencies incorporate technology to increase efficiency, exporters and importers, as well as trade intermediaries such as freight forwarders and customs brokers, can ill afford to rely on legacy systems and manual processes.

With globalized supply chains becoming the norm, enabled by efficient logistics operations, customs clearance complexities must be addressed.

Hindrances related to trade documentation and manual effort demand innovative, tech-enabled solutions that have the potential to streamline international trade transactions.

Companies can navigate the customs clearance maze more efficiently by fostering digitization, standardization, and automation within the organization, facilitating smoother supply chain logistics and successfully expanding in the global marketplace.

Businesses must stay abreast of technological advancements and adopt modern solutions to overcome these complexities and unlock the full potential of their international operations.

KlearNow’s Data Engine platform to automate Customs Clearance

Organizations exploring technological solutions to automate trade documentation and optimize their supply chain can find themselves in a quandary, due to the wide range of software available in the market.

Most logtech solutions focus on improving specific parts of the logistics process. A business that adopts a broader, long-term perspective would choose a solution covering the entire supply chain, including customs clearance. This comprehensive approach is ultimately the most effective.

In this scenario, KlearNow offers Data Engine, an AI and ML-powered intelligent trade documentation platform that ingests unstructured documents and data, converts it into structured data, and prepares customs clearance and other documentation in the stipulated format.

The Data Engine has the ability to process and interpret documents in various formats and extract meaningful insights, helping improve staff productivity and saving time and money — with up to a 10x increase in operational efficiency.

Customers have testified to its efficacy, reporting that KlearNow’s logtech solutions have helped reduce the average time taken per shipment from 15 to 30 minutes to just a couple of minutes.

Learn more about Data Engine by clicking here.

 

Prioritizing Accuracy, Speed and Scalability Through Intelligent Document Processing

ROLE OF DOCUMENTATION IN NAVIGATING INTERNATIONAL TRADE LAWS AND SHIPPING OPERATIONS

The international shipments involve extensive documentation. Given the variety of goods exported, the diverse scope of activities that comprise end-to-end logistics, and the multiple jurisdictions involved, the amount of paperwork can be overwhelming.

Trade documentation involves collating data from various entities, interpreting and compiling it, and thereafter sharing it with other stakeholders and government agencies at various stages in the transport process.

The volume of paperwork is such that documentation for a single shipment can sometimes require up to 50 sheets of paper and involve up to 30 different stakeholders.

COMMON CHALLENGES FACED IN DOCUMENT PROCESSING

Most of the paperwork is prepared and processed manually, requiring considerable effort and time. While data flows from various sources, the onus generally lies on the freight forwarder or customs broker to compile, check, and consolidate the information.

Data at each stage of the process comprises inputs for the next stage, such as information gathered for shipping instructions being used to prepare the Bill of Lading. This means that data quality errors pass on to subsequent stages, amplifying the magnitude of inaccuracies and making corrections a difficult and time-consuming task.

Data is provided in multiple formats, ranging from emails to Excel spreadsheets to Word documents to PDF files, increasing the complexity and difficulty of compiling relevant data.

In the absence of a standard template for sharing data, stakeholders usually provide data in their distinct formats, which might be vastly different (in terms of layout and content), adding to the challenges of compiling data.

The data that is thus compiled needs to be submitted to various government agencies, each of which has prescribed specific formats. This entails gathering data and updating it in the stipulated format for all regulatory submissions.

Given how labor-intensive and cumbersome manual data processing is, certain common issues often arise:

1) Accuracy: Due to human errors, data quality is often compromised during manual data entry.

2) Speed: The pace of preparing documents is often tardy, slowing down the entire process.

3) Considerable manual effort: Given the challenges and quantity of information, significant effort and time is required

4) Costs: While human labor is in the short run cheaper than the cost of procuring technology, this option is generally more costly over the long term when taking into account the effort expended, lost productivity, slow processing, and the greater probability of errors. 

CONCEPT OF INTELLIGENT DOCUMENT PROCESSING (IDP)

Intelligent Document Processing (IDP) technology leverages natural language processing, AI, and ML techniques for processing documents with greater speed and higher accuracy automatically. IDP can process structured, semi-structured, and unstructured data, interpreting and converting it into meaningful insights.

This frees up the organization’s expensive human resources to handle more value-adding tasks and focus on core business activities.

With advancements in IDP technology, the applicability and practical utility thereof have been improving, wherefore a growing number of organizations can now apply it for automating and digitizing their documentation.  

ADVANTAGES Of INTELLIGENT DOCUMENT PROCESSING SOFTWARE And How IT CAN HELP OVERCOME THESE CHALLENGES

IDP has certain inherent advantages over manual document processing, helping organizations overcome the common challenges explained above.

The most prominent of these benefits are:

1) Accuracy: With the human element removed, accuracy levels increase exponentially, making customs regulations easier to manage.

2) Speed: IDP technology can process data far faster than humans, thus reducing the time taken to compile data and prepare documents

3) Streamlining processes: IDP also helps streamline processes, as information is extracted and interpreted accurately, whereafter it is used at subsequent stages in the transport process

4) Automated information sharing: With data being processed and stored by the system, data extraction and sharing can be automated by the timely sharing of information amongst relevant stakeholders

5) Scalability: In most organizations, document volumes fluctuate and, in the long term, grow as the business expands. These organizations, therefore, need scalable solutions that seamlessly adapt to evolving needs, enabling the organization to grow without constraints.

6) Digitally stored and easy to retrieve: Because data is stored in the digital format, it can be retrieved quickly and efficiently whenever required

7) Data security and controlled access: Data is stored in central servers, and access is restricted to authorized personnel, which vastly enhances data security

WHY KLEARNOW’S DATA ENGINE IS THE RIGHT IDP SOLUTION FOR YOUR BUSINESS

KlearNow’s ML and AI-powered trade digital documents processing platform, Data Engine, is helping Customs brokerage firm(s) and freight forwarders automate documentation and streamline the customs clearance process.

With ML technologies, the more extracted data they process, the more accurate their output is. Data Engine has been learning since 2018, where its accumulated knowledge helps achieve 99.9% accuracy in transforming unstructured data and a 95% first-time hit rate for new documents.

Data Engine has helped organizations save time and money with operational efficiencies up to 10x.

To understand how intelligent document processing work(s) can help streamline your documentation processes, download KlearNow’s eBook, which explains the concept and associated advantages in comprehensive detail.

For a free demo, please contact our company representative or click here.

 

AI’s role in the digital transformation of BCOs and Freight forwarders

Growing role of AI in the International Logistics and Supply Chain industry

The adoption of technology in the supply chain and logistics industry has gained momentum in recent years. While the broader supply chain and transportation sectors have traditionally relied on manual processes and paper-based documentation, a growing number of players are leveraging AI-powered technological solutions to automate supply chains.

The initial reluctance to incorporate technology is waning, replaced by a growing acceptance of logtech software, as the benefits thereof become apparent.

The COVID-induced supply chain disruptions and mobility restrictions made virtual working and collaboration a necessity and compelled forwarders and BCOs to expend resources and efforts on digitization and automation, leading to the rapid adoption of software solutions.

Recent advances in AI and ML provided impetus to this trend, by enabling systems to handle even complex processes and ingest unstructured data, eliminating a factor which had thus far been a hindrance in the mass adoption of technology in logistics and supply chain.

As the sophistication of AI-powered software renders it increasingly capable of handling supply chain planning and logistical activities, Beneficial Cargo Owners (BCOs) and freight forwarders are now cognizant that is a source of competitive advantage.

In a manner, AI is reshaping supply chains, with some of the biggest BCOs using AI to prevent supply chain disruptions and optimize logistics.  

Primary players in International Trade: BCOs and Freight Forwarders

Other than transportation service providers (shipping lines), the two most prominent parties in international trade are BCOs and freight forwarders. While BCOs are the customers who drive demand for transportation services, freight forwarders are intermediaries who play a key role in ensuring the smooth movement of goods.

Freight forwarders offer a wide range of services, ranging from customs clearance and inland transport at both ends (which would include pre-carriage and in-carriage, warehousing, and storage) to more value-added services such as packaging, palletization, documentation, and coordinating with the shipping company for the transport of goods. Global freight forwarders with large volumes go a step further and act as NVOCCs, whereunder they enter into contracts with shipping lines directly and then act as a transport provider as well.

BCOs and freight forwarders share a symbiotic relationship, wherein the freight forwarder efficiently handles logistics activities, offering innovative solutions and expertise, thus allowing BCOs to focus on their core business of manufacturing and expanding in overseas markets.

Given the interdependence between BCOs and freight forwarders and how intertwined their businesses are, it is necessary that information flows and the exchange of data be smooth and timely.

Differing requirements and expectations from Logtech solutions

While both BCOs and freight forwarders have benefitted from using AI-powered technology, the differing nature of businesses and scope of activities means that even though the common objective is to optimize supply chain planning and execution, there is a divergence of focus on certain key aspects, which are explained below:

a) Operational Workflow:

While BCOs need systems that can help them manage the complexities of supply chain planning and scheduling, including aspects such as inventory management, cargo visibility, and warehousing, Forwarders will primarily rely on functionalities that help them navigate the transport and logistics activities for multiple clients simultaneously, while providing personal attention to each client’s shipments. Additionally, given their role as an intermediary, Forwarders also need to ensure collation and submission of data and documentation, while ensuring that all relevant information is shared with concerned parties.

b) Regulatory Landscape:

Given the onerous regulatory requirements and multiple jurisdictions involved in international trade, compliance therewith can pose challenges, with even inadvertent errors exposing the non-compliant party to the risk of penalties and monetary fines.

BCOs need to adhere to laws regulating their industry, the manufacturing sector, and the export of goods. These laws cover rules regarding the country of origin, avoid dealings with sanctioned entities or trading with embargoed countries, and documentary requirements at the origin and destination countries.

As experts in the logistics business, Forwarders need to be cognizant of all regulations governing international transport, Customs requirements, and documentary formalities. Forwarders are expected to guide BCOs to prevent procedural lapses and also complete all legal formalities and customs clearance tasks.

c) Data Management and Integration:

Since most industries other than logistics and transport have already made progress in terms of incorporating technology in their daily operations, it is quite conceivable that BCOs will have implemented various systems covering specific functions, wherefore their priority while selecting a logtech solution would be to ensure that AI is seamlessly integrated into their existing systems.

Freight forwarders, on the other hand, handle similar tasks for multiple clients, wherefore they require AI solutions that are robust and scalable, capable of efficient data integration and interoperability. Forwarders would likely evaluate software on parameters like data ingestion, automating documentation and timely alerts on various milestones, shipment status visibility, and reducing human effort.

KlearNow: The preferred Technology Partner for BCOs and Freight Forwarders alike

In a market saturated with logtech solutions of differing scales and functionalities, KlearNow has emerged as a market leader in its own right.

As one of the pioneers in the field of logtech, KlearNow’s bespoke AI-powered solutions have helped several BCOs and forwarders streamline their supply chains and automate operations. A testimonial from one of our satisfied customers can be viewed here.  

KlearNow’s wide repertoire of products offers scalable solutions to both BCOs and forwarders, aimed at resolving challenges unique to the segment.

Products such as CUSTOMS ENGINE and KlearHub360 greatly simplify documentation and customs clearance tasks, besides providing comprehensive visibility and robust reporting functionalities that enable faster and more insightful decision-making.

Contact KlearNow.AI today to discover how our advanced AI technologies can transform your business. 

 

Top five trends defining the supply chain industry in 2024

Uncertain outlook for the logistics industry

As we exit a tumultuous 2023, where the logistics and shipping industry witnessed a reversal to normalcy and freight rates dropped from record highs to pre-pandemic levels, importers and freight forwarders are hoping that the new year will bring some much-needed stability in the freight market.

With the outlook for the maritime transportation industry clouded by uncertainty and volatility, 2024 is expected to be another difficult year for the industry.

Altered geo-political realities and a subdued macroeconomic environment will give rise to new challenges, compounded by stringent emission control regulations that will come into effect from January 2024 onwards.

To successfully navigate these challenges and ensure smoothly functioning supply chains, importers and freight forwarders will need to be aware of the trends expected to impact the transport and logistics sector, as well as keep abreast of the latest developments to respond to the changed operational dynamics effectively.

We will in this article explore the top trends that will influence the logistics industry in 2024, the implications thereof, and how importers and transporters can tackle them. 

1. Nearshoring

As trade wars intensify and geo-political events complicate relations between major economies, American and European companies are increasingly exposed to risks arising from overdependence on certain locations for procurement and manufacturing.

The operational disruptions witnessed post-Covid compelled companies to diversify their sourcing locations and bring manufacturing capacity closer home, to reduce the geographical distance between their production base and consumer base. The rationale was that the shorter the distance, the more control the company had over its supply chain, and consequently the lesser the probability of transport-related disruptions hampering operations.

This reallocation of production capabilities closer home is called Nearshoring and has gathered pace in the last few years.

For American importers, Mexico is the viable alternative, helping it emerge as America’s largest trading partner.  

European companies have nearshored to countries in Eastern Europe and the Mediterranean region.

2. Diversification to improve resilience

After being buffeted by diverse disruptive factors in the post-Covid era, companies have made concerted efforts to imbue their supply chains with resiliency, to better withstand the aftershocks of global events.

An important strategy in this endeavor is the diversification of sourcing origins and foraying into new markets.

In their quest to create alternate manufacturing bases comparable to China, Western corporations are investing in other Asian countries, such as India, Vietnam, and Thailand.

However, given how deeply China is intertwined in global supply chains and given the sheer scale of its infrastructure, it will remain a major sourcing location, while the other options under evaluation will be hampered by inadequate manufacturing scale and lack of world-class ancillary infrastructure.

This implies that most Western corporations will operate two (or more) supply chains, increasing the intricacies of supply chain planning.

The geographical expansion of supply chains across the globe will broaden the regulatory landscape that companies are subject to, as they will need to comply with the applicable laws of all the jurisdictions where they operate.

With the inherent complexity of the task of adherence to relevant regulations being magnified, companies will be constrained to expend considerable resources to understand their statutory obligations, track revisions thereto, and ensure continuous compliance therewith.

Another aspect of diversification is extending the network of service providers within locations, to reduce dependence on one vendor. For importers, this would entail working with multiple brokers, to mitigate risks and have a contingency plan in case any one broker’s operations are disrupted due to cyberattacks or other reasons.

Ergo, entering new markets will create both opportunities and threats.

3. Environmental regulations

As apprehensions grow about the carbon footprint of the shipping industry, governments worldwide have introduced a raft of legislation aimed at reducing emissions generated by the shipping industry.

With shipping emissions rising almost 5% in 2021, stiff targets are being set for decarbonizing the industry.

These include the introduction of the EEXI (Energy Efficiency Existing Ship Index) which came into effect in 2023 and the EU’s Emission Trading Scheme (ETS) which will come into effect in 2024.

The impact of these green regulations will be felt by other players in the transport chain (such as freight forwarders), as well as their customers (importers and exporters).

The cost of regulatory compliances is significant, with just the ETS estimated to cost the industry an aggregate of USD 3.6 billion in 2024, which most carriers and transport vendors will pass on to their customers.

Considering the nature and intent of environmental regulations, these costs are unavoidable; however, with better supply chain planning, route optimization, and streamlining of logistics processes, importers and forwarders can minimize them.

4. Utilizing logtech solutions

To effectively tackle these logistical challenges, importers and forwarders are leveraging technology, to optimize their supply chains. With technology as an adjunct to supply chain planning, transport, and inventory management is to a great extent simplified.

Logtech solutions can be used to automate the end-to-end supply chain or specific elements thereof. The diverse range of logtech solutions is designed to cater to all aspects of the transport process, ranging from customs clearance, intelligent document processing, drayage planning, and real-time visibility.

By incorporating the use of technology in their logistics operations, importers and freight forwarders can make optimal choices regarding consignment sizes, route selection, reducing lead times, and minimizing detention and demurrage.

Therefore, more logistics companies are considering investing in logtech, with a McKinsey survey finding that 87% of shippers have maintained or grown their technology investments since 2020, and 93% plan to maintain or increase their spending over the next three years.

Another key consideration is the fact that many new solutions are not complete in themselves, so companies need to use multiple systems and service providers. In this scenario, the key is the ability to integrate these diverse solutions seamlessly and without impacting existing systems. Should one system malfunction, businesses are exposed to the risk of the impact cascading down to other systems. Companies therefore need to have a network of network approach, backups for information and simple integration between new providers and existing legacy systems.

5. Continued disruptions

The resilience of global supply chains is facing an ongoing challenge due to unforeseen events such as issues in the Panama Canal, disruptions in the Suez Canal, and security threats in the Red Sea. While these events are beyond our control, they highlight the importance of having robust backup plans in place.

Importers and freight forwarders must proactively address potential obstacles. Diversifying sourcing locations and establishing contingency plans are crucial steps.

Identify alternative routes, transportation modes, and suppliers to maintain operational continuity, even in the face of unforeseen challenges.

Leverage logtech solutions to enhance visibility and streamline processes. Automated systems for customs clearance, real-time visibility, and intelligent document processing can significantly contribute to efficient supply chain management. By doing so, businesses can mitigate the impact of unforeseen disruptions, ensuring the smooth flow of goods.

 

Boost Customs Clearance Resilience with cloud-based platforms

Customs clearance is integral to any international movement of goods, implying that all goods and merchandise exported are subject to some form of customs process.

In the US alone, goods worth an estimated $3.35 trillion were imported in 2022, on which duties of $111.8 billion were collected.

Given the criticality of the customs process, these customs inspections and associated documentary requirements and filings are quite comprehensive and complex, with stringent penalties prescribed for violations.

To accurately assess the value of imported merchandise and ensure that the duties levied thereupon are correct, Customs regulations stipulate that they be provided information regarding the goods, such as the value, details of the parties to the transaction, pricing and costing data, insurance, personal information of the importer and exporter, and financial records of the entities involved.

To provide this completed and error-free information, employees in importers’ and freight forwarders’ offices will have to compile and collate requisite data from various sources.

Considering the sensitivity of this information and that it is handled by numerous persons, it is imperative that the data be stored securely and that utmost care be taken to ensure that it is not misused or leaked to unauthorized persons.

The storage and security of data thus becomes an important responsibility, with the onus lying on the importer and freight forwarder.

Cloud platforms: a secure medium to store and share data

Cloud platforms are software applications hosted in the cloud, which users can access from anywhere using the internet.

Cloud computing gained rapid popularity as companies realized that cloud-based solutions offered more flexibility and were reasonably priced in comparison to the traditional physical IT infrastructure.

Amongst the many advantages of cloud platforms is the ability to store information securely, thus eliminating the need for local storage.

Cloud storage is therefore being used by more and more businesses., as companies look to digitize their data and streamline documentation handling.

Advantages of Cloud Platforms for Customs Clearance

From the perspective of customs clearance, cloud platforms are especially well-suited to meet the needs of importers and forwarders, with the prominent advantages being :

1. Data accessibility and reliability:

The nature of Customs data is such that it needs to be accessed by multiple stakeholders are various points of time, as and when the need arises.

Local data storage options are at a distinct disadvantage, as data stored locally can be accessed only by some employees, and if it needs to be shared, then employees with access have to do it. This might cause delays in time-sensitive customs clearance tasks, given the time difference between the exporting and importing countries or if employees are engaged elsewhere.

With cloud platforms, however, data is stored in a central location, readily accessible by all authorized personnel. This ensures real-time access to data and avoids delays that might arise from delays in sharing information.

KlearNow’s cloud-based infrastructure guarantees reliable and secure storage, enabling businesses to retrieve critical customs data instantly, thereby enhancing operational efficiency.

2. Scalability and adaptability:

One of the challenges faced by SME enterprises during their growth phase is to ensure that their IT infrastructure and systems are scalable and adaptable to meet the higher volume of work and information that would inevitably come with growth in trade volumes.

With local IT servers or standard technological solutions, given their inherent capacity limitations, it is generally difficult to handle greater scale in terms of business transactions or geographical locations.

Premium solutions, such as KlearNow’s proprietary software, offer scalable solutions that seamlessly adapt to the evolving needs of businesses, ensuring efficient data management without compromising performance.

3. Disaster recovery and business continuity:

The current business environment is characterized by high levels of instability and rapidly evolving commercial dynamics.

The dispersion of supply chains and interdependencies with multiple economies and modes of transport have greatly increased the likelihood of contingencies and disasters, which have the potential to cause severe operational and commercial disruptions.

The criticality of data in today’s world has elevated data security to the top of business risks as perceived by organizations, since loss of data or systems failures in traditional data storage methods can translate into financial losses, lost sales opportunities, prolonged delays in meeting customer orders, erosion of goodwill, and expose the company to the risks of regulatory violations and failure to comply with customs requirements.

Considering the magnitude of the ramifications, organizations are extensively focussing on disaster recovery plans and business continuity strategies, wherein KlearNow’s cloud-based backup solutions can play a vital role in disaster recovery measures, by providing a robust mechanism to maintain continuity in the face of unforeseen events, ultimately safeguarding critical customs data.

Innovative cloud integration with KlearNow

In the logistics and supply chain industry, KlearNow has made a mark with its AI/ML-powered cloud-based platforms, which go beyond conventional solutions to offer a seamless, secure, and user-friendly experience for businesses in the realm of customs data management.

For importers and forwarders who deal extensively with customs, KlearNow offers some compelling value propositions:

1. AI-driven security measures:

Apart from automation of global trade workflows, KlearNow’s solutions are underpinned by cutting-edge technology, offering a maximum level of security, and ensuring that critical customs data remains protected from potential cyber threats and unauthorized access.

When documents are submitted on KlearNow’s platform, they are treated as classified information, with access restricted only to authorized users. The platform also protects the IP address of the parties accessing the data.

2. User-friendly interface and Analytics

The utility of any system, no matter how sophisticated, is dependent on the ability of the person using it. Therefore, companies prefer systems that are easy to use and navigate.

KlearNow’s intuitive interface makes it easy for businesses to navigate and analyze customs data efficiently. This user-friendly approach enhances the overall user experience, contributing to the effectiveness of cloud-based data backup strategies.

3. Ease of customs audits

Considering the numerous audit requirements that are mandated or conducted for the sake of good corporate governance, it is an advantage if the data is stored securely and in a structured format.

This is especially useful during customs audits, as the information and documents are readily available, which helps quicken the audit process.


Contact KlearNow.AI to elevate your customs data security with our cloud-based solutions.

 

Using Generative AI to Streamline Customs Clearance

Over the past two decades, international trade has experienced consistent growth, driven by a range of factors including the outsourcing of production, rising levels of prosperity, and the deepening trade connections between nations.

This expansion has been facilitated by the establishment of faster and more dependable transport links between countries and regions, resulting in the development of globally interconnected supply chains that facilitate the smooth movement of goods.

According to estimates from UNCTAD, global trade in goods and services reached a record $32 trillion in 2022, marking a 12% increase from the 2021 trade value of $28.5 trillion. The year-on-year growth rates for 2021 and 2020 were recorded at 25% and 13%, respectively, reflecting the rapid pace at which global trade has expanded.

In 2022, goods and merchandise constituted the majority of international trade, valued at $25 trillion, with a year-on-year increase of 10%. The robust growth rates, despite challenges such as the Russia-Ukraine conflict and geopolitical tensions among major economies, underscore the resilience of global trade.

In a somewhat unexpected development, the demand for products surged during the pandemic. Economic stimulus packages implemented by governments ensured that income levels remained stable, and lockdowns led to a shift in consumption patterns from services to products.

As the lingering effects of the pandemic dissipate and travel restrictions are lifted, there is a likelihood of a return to the historical balance between expenditure on goods and services. This shift may moderate the demand for goods and products, a trend expected to persist through much of 2023. However, in the long term, there is an anticipation of increased demand.

The Growing Significance and Expanded Role of Customs

Every instance of cross-border movement involving goods and products is subject to Customs scrutiny and inspections within each respective country.

Customs inspections and procedures are designed to limit the entry of contraband or illicit goods and to regulate the flow of restricted commodities. Moreover, the role of Customs officials has heightened due to the necessity of controlling the influx of commodities that could potentially harm domestic producers, necessitating the imposition of anti-dumping duties or additional tariffs.

In the context of escalating trade conflicts and the imposition of sanctions on an increasing array of commodities, the Customs Department assumes a progressively crucial role in safeguarding the commercial interests of the importing country.

Another contributing factor is the phenomenon of economic cooperation, manifested through the signing of Free Trade Agreements (FTAs), bilateral agreements, and the establishment of regional trading blocs. These initiatives confer special advantages to member countries, such as preferential tariffs, streamlined procedures, and priority access to export markets. To ensure that only eligible commodities, entities, and countries benefit from these advantages, Customs must diligently scrutinize the origin of the cargo and the background of the transacting parties.

Achieving these objectives demands substantial due diligence, involving meticulous physical and documentary examinations. This is achieved through the implementation of appropriate processes and comprehensive documentation requirements to verify the nature, composition, and origin of the commodities and to confirm the applicability of the correct tariffs.

Consequently, exporters, importers, and forwarders are compelled to stay informed about the latest procedural and documentary requirements, ensuring strict adherence and compliance. This necessitates considerable manual efforts and a significant investment of time and resources, thereby contributing to the intricacy of the transportation process.

Obstacles in the Customs Clearance and Documentation Procedure

Some of the common challenges in the customs clearance and documentation process are explained below:

1. Labor-intensive and time-consuming:

Given the number of documents required for customs clearance and the fact that the information is provided by various entities, the task of compiling all documents and verifying their accuracy and adherence to the appropriate format is extremely labor-intensive. Besides the manual labor involved, it also requires a lot of time.

2. Multiple formats, lack of standardization of contents, and diverse sources:

Documents are in different formats, ranging from Excel spreadsheets to Word documents to pdf files to plain emails. The information is neither standardized nor in the prescribed format. Given that the sources are multiple, there are added difficulties in obtaining documents on time.

3. Higher probability of errors:

Due to the variety of formats and disparate sources and formats, collating information and filing information is an arduous task, with a very high probability of error. Considering these requirements are statutory, any inadvertent errors can attract stiff penalties.

4. Delays in receiving documents

Waiting for documents diminishes the time available for customs authorities to analyze and assess risks in documents. Obtaining information earlier not only enhances the identification of potentially risky shipments but also facilitates accurate duty and tax analytics.

Consequences of Non-compliance with Customs Requirements

Apart from the consequences arising from the violation of legal provisions, incomplete or inaccurate documentation or other mistakes in following processes can result in detention and demurrage charges should the cargo be inordinately delayed and exceed the free time permitted.

For the importers, there are also potential revenue losses and missed sales to contend with.

In the case of perishable commodities, delays in customs could impact the shelf life of the product, which in turn will affect its value.

How Generative AI Can Assist in the Customs Clearance Process

The application of generative AI tools is proving to be a game-changer when it comes to customs clearance. Entities whose business or work involves customs clearance have to expend considerable resources to ensure adherence to all mandatory requirements, failing which they are exposed to the risk of penalties.

With advances in AI and the introduction of sophisticated Logitech solutions, the customs clearance and documentation process is streamlined to a great extent.

Functionalities like data ingestion automate the process of collating information from disparate sources, files, and formats and thereafter compile the data in the stipulated format. This reduces the manual and laborious element of the customs documentation process and eliminates the possibility of human errors.

The more advanced Logitech solutions infuse AI and ML to vastly enhance the utility of their software. Besides using real-life data, they also generate synthetic data, so the software has more data points to process while performing analysis. This, in turn, helps the predictive modeling functionality by improving the quality of predictions made.

Functionalities and benefits of KlearNow’s AI-powered platform

In the past few years, KlearNow has emerged as one of the prominent players in this industry, with its technological solutions being adopted by an increasing number of companies.

KlearNow’s software offers functionalities addressing the most common problems faced by the industry, such as:

1. Automating the Customs documentation process workflows

2. Ensuring complete and accurate documentation is gathered within correct timeframes

3. Pre-alerts in case of upcoming transportation milestones, which assists in advance planning

4. Real-time visibility to ensure timely action in case of contingencies

5. Highlighting possible issues with the shipment and in customs clearance, which enables users to avoid commonly occurring mistakes

Conclusion

Customs clearance has always been one of the more challenging aspects of international transport, and regardless of the amount of caution exercised by companies, the intensely manual process means that the possibility of errors was never completely ruled out.

In recent years, however, using technological solutions such as the ones provided by KlearNow, importers and forwarders can automate the customs clearance process, pre-empt possible issues, and leverage predictive modeling techniques.

This will ease overall planning and make the customer’s supply chain more robust and reliable, thereby reducing costs and enabling goods to reach the market faster.

For more information on how KlearNow can help your business, please click here. 

 

Simplifying Customs Clearance with KlearNow

Introduction

The customs clearance process can be complicated and fraught with risks and challenges.

Considering that all goods and products that are internationally transported have to go through customs in both the exporting and the importing countries, it is evident that Customs departments worldwide have to scrutinize a very high number of documents, besides conducting physical inspections.

To effectively and efficiently cope with the heavy workload, Customs officials have put in place comprehensive processes and documentary requirements for exporters, importers, freight forwarders, and customs brokers to follow.

The onus of complying with these requirements is upon the importers, exporters, and their agents (such as freight forwarders or customs brokers).

The consequences of non-adherence with these regulations can be quite severe, ranging from monetary fines to seizure of goods to other penalties, which could have commercial and operational ramifications for the importer. Given the stringency of customs procedures, even inadvertent errors render the importer liable to these penalties.

In a recent case, two importers of e-bikes were charged with a €6.6 million customs fraud. While the European Public Prosecutor’s Office (EPPO) in Brussels is investigating the allegations, if found guilty, the defendants face between four months to five years in prison, along with a fine of five to ten times the evaded customs duties.  

The above instance highlights how crucial it is for importers and customs brokers to ensure complete compliance with all the stipulated formalities, to avoid delays in clearance and imposition of penalties.

Consequences of non-compliance with Customs regulations

In today’s increasingly globalized world, where interdependent supply chains and geographically dispersed markets have propelled international trade to new heights, companies are increasingly focused on overseas markets, which ipso facto implies a greater need to ensure compliance with customs regulations.

A study of British businesses revealed that 54% of respondents considered international trade as their single biggest opportunity; however, 70% of these firms had no plans in place to avoid risks associated with customs compliance.

In this scenario, it is even more critical for importers and customs brokers to keep themselves abreast of Customs requirements in each of their markets, to ensure a smooth flow of goods.

The absence of a structured workflow and lack of knowledge regarding applicable regulations will render the task of customs compliance more difficult, leading to a corresponding increase in the probability of Customs violations, arising from procedural lacunae, administrative lapses, and human ignorance, thus exposing importers and customs brokers to avoidable risks.

In the US, companies that have been fined for breaching customs regulations include Ford Motor Company, Trek Leather, Titan Metals Corporation, and Univar USA, INC.

Common causes of Customs violations

While there are considerable complexities in customs procedures, the bulk of violations can be attributed to certain common causes, which are explained below:

1) Documentation Errors:

The mass of paperwork involved in importing cargo, with unique documentary requirements for various commodity groups and sub-categories thereof, is difficult to navigate for the average importer or customs broker.

Difficulties associated with collating data from disparate documents, which are in diverse and non-standardized formats, further complicate the task of submitting information to customs.

Inaccurate or incomplete documentation can result in costly delays in the customs clearance process.

2) Tariff classification and valuation:

Apart from having different procedures and documentary requirements for different classes of commodities, the rate of duties levied thereupon could also vary considerably.

Therefore, while exporting or importing any commodity, it is of utmost importance that the goods be classified correctly, in accordance with the Harmonized System (HS) codes.

Misclassification of goods could result in the levying of wrong rates of duties and underpayment or overpayment of customs duties. While underpayment of duties can lead to the imposition of fines and penalties, in the case of overpayment of duties, claiming a refund can be time-consuming.

3) Compliance and Regulatory Changes:

Customs regulations are frequently amended, in response to changing trade scenarios and the country’s economic policies.

In the current volatile eco-political environment, where sanctions and countersanctions are imposed with alarming regularity, importers can expect repeated amendments to customs regulations and documentary requirements and therefore proactively seek information regarding such changes to ensure that their consignments comply with the regulations that are in force at the time of shipment.

Considering the rate of regulatory changes, this can be an arduous task, where even the smallest omission or act of negligence can result in inadvertent customs violations.

How KlearNow.AI can help mitigate these risks

KlearNow’s AI-powered proprietary platform simplifies the customs clearance process and aids the importer or customs broker in complying with applicable regulations.

The platform has several functionalities that help importers and customs brokers achieve this, with the notable ones being:

1) Automated document verification for accuracy:

The platform offers Intelligent Document Processing capabilities to decipher multiple documents, extract relevant information therefrom, and collate data to be submitted to Customs, in the prescribed format. The automation of the document handling process eliminates the possibility of human errors or mistakes due to oversight and increases accuracy rates significantly.

2) Real-time regulatory updates for compliance:

KlearNow’s platform provides real-time updates on various tasks and timelines related to the customs process. This vastly minimizes the risk of inadvertent violations.

3) Process optimization for timely and accurate duty payments:

Due to the automation and streamlining of the customs clearance process, Licensed customs brokers spend more time on goods classification reviews, and applicable duties being calculated accurately, which ensures that duty payments are made on time.

4) Natural Language Reporting for timely action, globally:

Using KlearNow’s advanced reporting platform, create any report you need from any field our AI / ML engine captures from your documents. Combine information from all your customs brokers into a single report allowing KPI management and overall visibility. All of these reports are based on Natural language processing without the need to build complex reports. E.g. typing in “Show me all the red sofas I imported last month” creates a report that brings back this Sku description.

5) Data-driven decisions for smoother processes:

As documents and data are digitized and stored in a standardized format, it is easier to compile and retrieve information. This makes it easier to analyze data for insights and trends, which improves the quality of decision-making since it is now data-based.

6) Efficiency and Speed for timely delivery:

The cumulative effect of leveraging the above-mentioned functionalities is manifested in the form of greater levels of operational efficiency, which in turn is reflected in the faster delivery of cargo. With IDP and automated submissions, the customs broker can ensure prompt and accurate provision of supporting paperwork to Customs, due to which the clearance process is expedited.

KlearNow’s customized products for Importers and Customs Brokers

To smoothen the process of customs clearance and help importers and customs brokers move goods with minimum delays, KlearNow offers solutions that are specifically designed to optimize the clearance process.

These include KlearHub360 and Customs Engine, both of which ease supply chain bottlenecks by digitizing paper-based transactions. Importers can use Customs360 to access a KlearNow Marketplace of licensed customs brokers, including KlearNow in the UK, Canada, Spain, and the Netherlands, to clear their goods.  

Customs Brokers can use Customs Engine, an AI/ML-powered platform to simplify complex customs clearance and transform all trade documents into meaningful data for validation and pre-populating customs filing documents. 
To learn how KlearNow can help your business, please click here.

 

Drayage industry: Current status and future trends

The drayage industry has historically been characterized by high levels of complexity, posing challenges for both drayage operators and their customers.

The complexity arises from the fragmented nature of the industry and the relative lack of standardization in terms of processes and commercial policies, which are compounded by the loose framework within which the industry operates.

Drayage refers to short-haul trucking movements, generally for distances under 50 miles, and as such is a segment of the trucking industry.

Drayage generally involves transporting the container or cargo from the discharge port to the customer’s premises or the rail depot. At the origin, drayage movements involve transporting the cargo from the manufacturer’s factory to the load port. Apart from this, drayage also encompasses movements to and from warehouses and container freight stations.

Drayage is thus the enabler of first and last-mile delivery that most transport vendors nowadays aim to provide, in their quest to provide end-to-end logistics services.

Its importance stems from the fact that almost all cargo discharged from the shipping vessel will need drayage for transport from the port to the customer premises or the next connecting multimodal point.

It is estimated that there are approximately 60 million drayage movements in North America each year, valued at over $50 billion.

The North American last-mile delivery market is expected to grow at a CAGR of 14.85% between 2022 and 2027, driven in large part by the growing B2C e-commerce industry, as well as greater preference for buying online.

Bottlenecks in the Drayage process

The drayage process is fairly straightforward, involving the evaluation and selection of drayage vendors for incoming containers, negotiating and finalizing freight rates, and thereafter sharing requisite information and documents with the drayage operator to enable them to pick the containers and deliver them inland.

There are however some potential bottlenecks in the process which both the importer and the drayage operator need to be cognizant of and take proactive action to avoid.

The more common bottlenecks include:

1. Supply Chain disruptions

2. Port congestion delaying cargo pick-up and delivery

3. Poor route planning and scheduling

4.  Risk of incurring avoidable costs

5. Spate of environmental regulations introduced that can drive up operational costs

Importance of selecting the right Drayage partner

Considering the criticality of drayage to the overall transport chain and in maintaining supply chain integrity at high levels, it is obvious that the choice of drayage operator must be made after a careful evaluation of the drayage operator on several parameters and with due consideration to certain factors.

Awareness of these selection parameters can go a long way in ensuring that the importer partners with the right drayage operator, who has the capability to:

1. Handle the importer’s cargo movement efficiently,

2. Ensure delivery of cargo with minimal lead times, and

3. Help reduce the overall Total Cost of Ownership (TCO).

The increasing role of technology in Drayage planning

Importers are now increasingly turning to technology to streamline the drayage process and operational aspects thereof.

Recent advancements in the fields of AI and ML, coupled with rising amenability on the part of importers and transport vendors to leverage technology, have provided impetus to the development of software solutions targeting the unique requirements of the logistics industry.

KlearNow, which is amongst the notable players in the logtech industry, offers Drayage 360, a dedicated drayage management platform which facilitates the selection of drayage operators in advance, and also simplifies the management of inland movement of containers.

e-Book on Drayage

KlearNow will soon publish an e-Book on the Drayage industry, covering the following aspects of the industry:

1. Origin and evolution of Drayage

2. Market size and future trends

3. Drayage process

4. Common challenges and bottlenecks in the drayage process

5. Factors to Consider While Selecting a Drayage Provider

6. Increasing role of technology in drayage management

The e-Book is intended to create awareness of the drayage industry’s operational practices and help importers select the right drayage partner for their business.

To get the e-Book, please contact KlearNow.

 

Logistics Technology Product Failures: Avoid Common Mistakes

Modern supply chain management is greatly intertwined with technology, and logistics operations are no exception. The logistics technology market has grown rapidly over the past few years, with a massive spurt in the number of software solutions available in the market. What has traditionally been a brick-and-mortar industry is now rapidly embracing digitization, partly out of compulsion in the post-Covid world and partly by choice, to streamline operations.

GROWTH OF LOGISTICS TECHNOLOGY MARKET 

Whilst bigger logistics service providers are adopting technology, we have also witnessed the rise of digital freight forwarders.

It is estimated that 47.7% of goods handled in 2022 were through digital freight forwarding platforms, which is expected to exceed 60% by 2027.

The expanding logistics industry presents a lucrative market for technological solutions providers, who have introduced solutions designed to meet the industry’s unique requirements.

HIGH FAIL RATE FOR LOGISTICS TECHNOLOGY START-UPS

While the low entry barriers in the logistics technology and digital freight forwarding services have facilitated the entry of a large number of players, the intense competition, constant pressure of margins, complex operating environment, and uncertain macro-level outlook have also meant that the success rate for these technology-driven businesses is not very high.

Due to a combination of factors such as inadequate comprehension of the industry’s dynamics, inability to meet customer’s expectations, elimination of the personal touch that the traditional freight forwarder brings to the business, and general lack of awareness of the holistic benefits accruing to supply chains, a number of recent entrants have been compelled to scale down or wind-up operations.

Recent instances include Flexport, which is laying off 20% of its global workforce, while Seattle-based Convoy Inc. has confirmed that it will close operations.

While these are amongst the more high-profile instances, the list of casualties is quite long and includes mid and small-sized entities as well, such as Freightwalla, an Indian logistics technology start-up, which realized that its technology-driven business model could not cope with the intricacies of the logistics market.

COMMON REASONS FOR FAILURE AND MISTAKES TO AVOID

Logistics is one of the most consequential of the supply chain processes; optimizing it goes a long way to streamlining the entire supply chain. Technology plays a key role in that, so it is easy to jump on any available tech solution that promises optimization. However, when leveraging logistics technology, there are five major reasons for failure or mistakes to avoid:

1. Freight is a commoditized market that works on human relationships:

The transportation sector is becoming increasingly commoditized due to a combination of standardized industry-wide processes and the growing intensity of competition, which has stifled innovation. Another aspect is that the forwarding industry is a “people’s business”, where human relationships and interpersonal skills often constitute the competitive differentiator in an otherwise commoditized market. Logtech solutions reduce the human touch, which is one of the primary determinants in the choice of a logistics service provider, with customers still valuing personal contact and therefore do not quite perceive the removal of the human layer as positively as freight forwarders do. So, excessively focusing on technology at the expense of the human element is a somewhat unviable approach in the logistics industry.

2. Investor pressure to gain market share dilutes focus from product innovation:

Several digital freight forwarders and logtech solutions providers are funded by Venture Capitalists, whose objective is to allocate funds to the most high-yielding investment avenues, rather than the creation of a sustainable business model in the long term.

Their priority is therefore to ensure that business valuations rise quickly, whereafter they can cash out their investments at a reasonable profit. Given the financer’s focus on short-term profits and rapid growth, companies are compelled to adopt a sub-optimal approach, whereunder they offer substantial discounts to gain market share instead of emphasizing improving the product.

While this approach helps them gain customers in the short term, the customer base generally consists of smaller and transaction-minded customers who control low volumes with irregular flows rather than bigger customers who tend to value the quality of service and rate highly the reliability of service and long-term partnership.

Also, since these small customers are typically price-sensitive, they will shift their business if some other competitor offers a lower rate.

Due to these factors, customer churn is high, while product development is also neglected, leading to the company’s eventual downfall.

3. Failure to address real problems with innovative solutions:

Technology-enabled disrupters aim to solve real-world problems by designing appropriate solutions. While this model works in most other industries, it is much more difficult to implement in the logistics industry because of the vast number of activities, diversity thereof, and the number of stakeholders in the process. Failure to address real problems will do little to engender customer satisfaction, leading to customers turning their backs on the product

Nonetheless, solutions that do address the industry’s pain points and those of other supply chain operations, such as inventory management are gaining traction. Remember, they are all correlated. Examples of these solutions in the logistics and supply chain industry include real-time visibility solutions, big data analytics, and container tracking software.

In this scenario, vendors providing a digital interface rather than tackling specific issues are unlikely to gain acceptance in the industry.

4. Not creating capacity, but only regulating it:

To provide reliable logistics services, logistics companies need to invest in assets, such as trucks, warehouses, and cargo handling equipment, which necessitates significant capital expenditure.

If a digital freight forwarder were to position itself merely as an intermediary, relying on procuring trucking capacity from other transporters, its business model would be inherently unstable, as their core offering is reliant on procuring transport capacity externally and at viable rates. Besides, there exists the risk of the capacity owner directly approaching the customer, thereby making the digital forwarder redundant. After all the customer expectations are the same, so why not bypass the middle man?

Hence, digital freight forwarders and logtech start-ups operating on an asset-light model, and whose product offering essentially consists of a tech-enabled interface connecting cargo owners and transportation service providers, will find it difficult to hold their own as competition intensifies.

Companies like Uber, which have succeeded in offering discounts initially to lure people on its platform and subsequently increase costs to profitable levels, are better positioned to compete with incumbents than are regulators of capacity such as Convoy Inc, who had not made significant investments in capacity.

5. No consistent scalability in a cyclical market

The transportation and logistics industry is cyclical in nature, and established players have adapted their strategies to counter the cyclicity, with the intent of surviving the troughs and maximizing profits during the peaks. Their control of assets, relationships with customers, and financial wherewithal enable them to play industry cycles successfully.

Digital freight forwarders lack these advantages and instead are under pressure to deliver consistently high growth and capture market share, a task rendered difficult due to the cyclical downturns.

This divergent strategic approach can jeopardize the survival of digital forwarders, as their success parameters are not consistent with the industry’s operational dynamics.

HOW KLEARNOW USES TECHNOLOGY TO ENHANCE THE HUMAN TOUCH

As one of the pioneers of the logtech industry, KlearNow has focused extensively on developing its core products to streamline logistics processes.

KlearNow’s artificial intelligence-powered platform automates the end-to-end logistics process, digitizes customs clearance workflows, enables proactive drayage management, and provides other functionalities that enable freight forwarders to improve their efficiency.

These reduced manual work and optimized processes free up the forwarder’s time and enable their employees to focus on customers, deepening the interpersonal relationships that are vital to success.

Thus, KlearNow’s products complement the freight forwarders’ core business and strengthen the people-oriented approach rather than attempting to replace human interaction.

To find more on how KlearNow can help your business, click here.

 

Importance of data security for customs brokers

Customs brokers are an important link in the supply chain and act as liaisons between the importers, exporters and the Government and Customs Authorities. Since they undertake the responsibility of submitting the stipulated documents and information to Customs and ensuring clearance of imported goods, they are in possession of all the trade and commercial information related to the consignment, including sensitive information such as bank details and personal data, underlining the importance of data security.

Considering the sensitivity of the data, it is of utmost importance that the data is safeguarded against unauthorized access and to prevent misuse of data.

Apart from the typical data security-related risks arising during the normal course of business, customs brokers now also have to contend with cyberattacks.

In the recent past, hackers have targeted prominent market-leading customs brokers, including Livingston International and Daniel B. Hastings. Other targets in the transport and logistics sector include Expeditors, a global freight forwarder, and the Canadian trucking company Manitoulin.

The potential consequences of data breaches can be extremely serious, with both legal and commercial ramifications.

The legal implications arise from the spate of legislations introduced by Governments the world over, intended to protect data privacy, whereunder the onus of security is on the customs broker, as well as the claims for damages from the aggrieved parties.

The commercial implications include operational disruptions and delays, and the associated additional costs, besides the loss of revenue and business.

Besides the pecuniary losses, the loss of reputation stemming from the customs brokers’ inability to protect against cyberattacks can result in a loss of customer trust and an inability to comply with government regulations, which will further erode the customs brokers’ goodwill and deter potential customers from contracting them. 

How customs brokers can ensure security of information

It is therefore vital for Customs brokers to put in place robust security systems to ensure the safety of internal and customer data, failing which the fallout can have a debilitating impact on the businesses of all parties involved.

As data security increasingly takes center stage, governments are strengthening legislation related thereto, which also aims to clarify the roles and responsibilities of the diverse entities that handle third-party data as a part of their dealings. In the US at least 45 states and Puerto Rico introduced or considered more than 250 bills or resolutions that deal primarily with cybersecurity.

Due to the growing awareness of the impact of data breaches at the vendor’s end, and with importers demanding that transport intermediaries deploy robust information security systems, it is utlimately end customer expectations in terms of data security that are increasing,

Data Security Best Practices

To improve data security levels, Customs brokers can identify and implement relevant best practices prevalent in the logistics and supply chain industry.

The most effective of these best practices are explained below:

1. Encryption – Encrypting data helps protect the confidentiality of data and also enables regulation of access thereto. This is a fundamental tool to ensure the security of data and is now being widely adopted across the logistics and shipping industry. Encryption of data ensures that the data can be safely transmitted, without the risk of unauthorized persons accessing it.

Vessels plying piracy-prone waters could use data encryption for sharing information such as their location and cargo, which will make it difficult for pirates to pinpoint the vessel’s location and launch attacks, thus facilitating safe passage.

2. Access controls – Access controls refer to the process of formulating policies governing access to data, including specifying the level of data that can be accessed by individual employees.

3. Regular audits – As a matter of standard practice, organizations should conduct regular security audits, to test for cyber weaknesses and potential loopholes that could be exploited by hackers.

4. Employee training – Regardless of the level of sophistication of data security technology deployed by an organization, since it is humans who will operate the systems and execute processes, it is necessary to train employees in the importance of data security, standard protocols, and actions to avoid. If employees are unaware or lackadaisical about data security, it is probable that during the course of their daily work, they will expose the organization to the risk of cyberattacks. Organizations therefore expend considerable resources to ensure cyber security training for their staff.

KlearNow.AI stands out in the logtech market with its state-of-the-art technology. Prioritizing the needs of importers and freight forwarders, the platform ensures efficient logistics automation, digitization, and superior data management. Without delving into specifics, users can rest assured that their business information is managed with the utmost care and modern security practices. 

To learn more about how KlearNow’s proprietary data management platform can help secure your business and information, please click here.

 

Common Challenges in Drayage Operations and Ways to Solve Them

Background and Importance of Drayage

Drayage refers to the movement of cargo and containers between the port and the final premises or the nearest rail depot, CFS, or warehouse, both at the origin or the destination ends of the journey. Drayage involves carrying the cargo in trucks over short distances, with the average distance per trip being less than 50 miles.

In theory, every container that needs to be delivered to the origin port or carried inland from the destination port needs drayage services.

It is an integral component of the multi-modal transport offerings that integrate various modes of transport utilized for a single shipment.

Drayage is thus the crucial initial and final link in international transport chains, complementing and completing the shipping process. Its function as the facilitator of first-mile and last-mile delivery makes it pivotal to providing end-to-end delivery services that global integrated logistics service providers are now focussing on.

The importance of drayage services lies not just in their role of facilitating timely transfers of containers between ports and final destinations, but also as a critical cog in the supply chain. When this element encounters issues — be it logistical, operational, or any other variety of potential factors — the impact on the entire supply chain can be significant, leading to delays, increased costs, and inefficiencies.

Challenges in Drayage Planning and Implications Thereof

Some of the common challenges encountered in drayage planning are explained below:

1. Delays due to supply chain disruptions or congestion at ports or Customs:

Global supply chain disruptions and congestion at ports can have a spillover effect on drayage services, as delays in unloading containers from the vessel or getting containers out of the port will also delay drayage transport.

Delays in customs clearance can also have a similar impact, as the drayage service provider faces a prolonged wait to pick up the cargo.

Importers are particularly badly affected because real-time information regarding possible delays and shipment status is often not provided to stakeholders in advance, which diminishes their ability to make alternate plans.

2. Equipment and space shortages:

Disrupted supply chains and congested ports also absorb capacity and cause equipment to be tied up. This leads to capacity and equipment shortages, which impede the drayage provider’s ability to adhere to schedules and deliver cargo on time. Chassis shortages and driver shortages are commonplace in the US ports often leading to bottlenecks and poor delivery performances based on a supply and demand imbalance and the constant fluctuation in volumes due to seasonality and wider demand. 

Here, too, the lack of adequate information regarding the availability of space and equipment limits the importer’s ability to identify equipment-deficit locations and plan around these shortages.

3. Sub-optimal scheduling and routing and human errors:

Given that a lot of importers and cargo owners still rely on manual processes for planning their drayage requirements, there are bound to be errors. Also, considering the number of parameters that need to be evaluated while arranging drayage, it is conceivable that human planners will not be able to configure the optimal drayage plan the way a drayage software could, with its far superior computing power and analytical capabilities.

4. Higher Costs:

The combination of global disruptions, equipment shortages, below-par planning quality, and imperfect execution infuses additional costs, ultimately borne by the transport vendor and/ or the importer in the form of higher TCO.

In 2021, when the industry was reeling due to Covid-induced transport and mobility restrictions, national drayage rates were 51% higher than they were in 2020.

5. Shortage of drayage drivers:

The hardships inherent in the job of a drayage driver are deterrents in attracting young workers to the industry. This is another factor that adds to the challenges in drayage operations. Due to the scarcity of drivers, each consignment has to wait at the port for a longer period before an available driver can deliver the cargo.

In 2021, the truck driver shortfall was 80,000 and is expected to grow to 160,000 by 2030.

As drayage rates increase as a direct consequence of the labor shortage, importers experience higher costs.

6. Stricter emission-control regulations:

With greater scrutiny on emissions generated by the trucking industry and the accompanying focus on reducing the carbon footprint of the drayage industry, the onus is on drayage operators and users to take immediate action. Leveraging technology can help optimize route planning and cargo pick-ups and drops, as well as reduce fuel consumption, making drayage a more eco-friendly transport option.

Importance of Real-time Visibility

A common theme running through the challenges explained above is the lack of real-time visibility and the latest information about the status of shipments. Due to a combination of legacy systems and antiquated processes, shippers (or indeed most stakeholders) lack real-time visibility throughout the entirety of the supply chain.

This places considerable limitations on the planning process and acts as a barrier to effective supply chain execution, thereby magnifying the impact of the systemic problem.

If importers and shippers have access to real-time visibility and receive appropriate pre-alerts about various milestones in the transport process, they are in a much better position to proactively plan the future stages of the journey, such as selecting a drayage services provider even before the consignment had landed at the destination port, or arranging pick-up of containers within the free time allocated.

Ergo, receiving precise information about cargo’s location and status well in advance can enable better planning, thereby optimizing supply chains and reducing waste and redundancies in international transport.

Technology as an Enabler of Optimal Drayage Planning

Organizations worldwide increasingly rely on technology to overcome these common challenges and mitigate the impact thereof.

Logtech solutions have rapidly gained in sophistication, incorporating cutting-edge technologies to enhance their functionalities.

Today, Importers can select software solutions designed to cater to their industries and meet their unique business needs.

The new-generation Logtech solutions can provide real-time visibility, thereby increasing the efficacy of supply chain planning and execution and contingency management. Besides, they can automate processes and logistics workflows, streamlining operations and reducing manual labor.

As the pace of adoption of logistics technology increases, importers will garner the intended benefits and pass them on to customers, creating more value for themselves and their customers.

How KlearNow’s Drayage Solution can Help

In what is now devolving into a saturated Logtech solutions market, KlearNow’s ML /AI-powered platform stands apart from most competitors by virtue of its superior features and exceptional reliability. Having been operational for almost five years, KL has a clear advantage over new entrants, as its platform has ingested and processed far more data, thereby improving the quality of output and reducing the need for human intervention.

In its quest to empower importers and shippers with data necessary to optimize business operations, KlearNow has partnered with Project44 to offer real-time visibility.

KlearNow’s digital drayage platform simplifies logistics management by allowing users to book, track, and manage the transport of containers from the port to the warehouse. Combining our earlier access to shipment visibility, near real-time customs hold information and in platform billing allows for a single platform for optimal drayage management.

KlearNow also offers the KlearDray app for our drayage providers, which  offers a marketplace for access to new spot loads & contracted jobs from importers already connected to KlearNow.AI 

For more information on how KlearNow can help your business futurize its drayage operations , please click here.

 

Steering Through International Trade Waters: A Thorough Exploration of Customs Clearance Procedures

Global commerce is, at its very core, an intricate and complex web. Spanning continents and countries, shippers need to have a near-omniscient level of customs clearance awareness when it comes to local laws and regulations. 

A multifaceted process that interweaves bureaucracy, law, and logistics, customs clearance serves as a linchpin in the landscape of international trade. This blog post unravels the complex steps that form this vital procedure, elucidating the need for exacting attention to detail and regulation.

The Customs Clearance Process: An Overview

Customs clearance is an intricate procedure that requires precision and adherence to international laws and regulations. Its significance extends beyond legalities, fostering trade, safeguarding consumers, and ensuring national sovereignty. The process unfolds through several critical stages:

  1. Document Preparation: Includes meticulous assembly of vital documents such as commercial invoices, packing lists, bills of lading, certificates of origin, licenses and permits. Incorrect or missing documentation can lead to delays, fines, or seizure of goods.
  2. Customs Broker Engagement: Involves enlisting the expertise of a licensed customs broker versed in international trade laws. This step ensures professional handling, guidance on legal requirements, and streamlining the overall process.
  3. Goods Classification: Utilizing the Harmonized Tariff System (HTS) code to classify goods in alignment with World Customs Organization guidelines. Accurate classification is crucial to determining applicable duties and taxes, in addition to other government agency requirements, and mistakes can lead to costly penalties.
  4. Customs Declaration: Submitting the customs declaration, often electronically, to provide detailed information on the goods, their value, intended use, and relevant tariffs. Failure in accurate declaration can result in legal consequences up to the potential loss of import privileges.
  5. Examination and Valuation: Undergoing physical inspection by customs officers or other government agencies to confirm the information and assess the goods for duty calculations or other national risks such as to consumer safety. This step may require time-consuming lab tests or certifications and can uncover potential violations.  Although exams may be rare and/or randomized, utilizing a defensible valuation methodology and other reasonable care efforts can help to facilitate a smooth closure and release of your merchandise.
  6. Duty and Tax Payment: Fulfilling legal obligations by paying relevant customs duties, taxes, and tariffs. Various payment methods exist, and a delay or failure in payment can result in costly consequences.
  7. Release and Delivery: The release of goods for onward delivery follows confirmation of all legal and procedural requirements. Timely release avoids costly demurrage storage charges at the port.  The release also includes coordinating with shipping and transportation services to ensure timely delivery.

Consequences of Failure to Adhere to Customs Clearance Protocols

In a global economy where time, efficiency, and integrity are paramount, understanding the potential consequences of failure in customs clearance protocols is essential for anyone engaged in international trade. Whether it’s a small enterprise shipping a single package or a multinational corporation with goods traversing the globe, the pitfalls are real, and the costs can be considerable.

Failure to meet these stringent standards can lead to various forms of penalties and disruptions, some of which can have a long-lasting impact on a company’s operations and reputation. The range of potential issues is vast, encompassing everything from administrative fines to legal actions. Even seemingly minor oversights can escalate into significant problems, affecting not only the involved businesses but potentially rippling through the entire supply chain.

  • Fines: Penalties for incorrect declarations, misclassifications, erroneous valuations, or failure to provide mandatory information can be hefty and affect the company’s bottom line.
  • Fees: Additional costs for extended examination, legal inquiries, or third-party inspections. These expenses can pile up, particularly if goods are held for extended periods.
  • Detention: Temporary withholding of goods for non-compliance with regulations, leading to delays, storage fees, and potential loss of perishable goods.
  • Demurrage and Per Diem: Extra charges for storage or holding of goods at a port, warehouse, or terminal in the case of demurrage and failure to return a shipping container timely in the case of per diem. These can increase rapidly if issues are not resolved promptly.
  • Delays: Time lags due to paperwork inaccuracies or compliance issues can affect the entire supply chain, impacting other businesses, causing missed opportunities, and harming reputation.
  • Legal Repercussions: Failure to comply with statutes and regulations may result in legal actions, including litigation, and could affect the ability to trade in the future.
  • Reputational Damage: Regular issues with customs clearance can harm a business’s reputation, affecting relationships with clients, partners, and governing bodies.
  • Other Repercussions: Including potential exclusion from future trade activities, loss of specific trade privileges, or even criminal charges depending on the severity of the violation.

Challenges and the Power of Modern Solutions

The intricacy of customs clearance procedures can be a minefield, even for seasoned professionals in the field of international trade. A variety of challenges arise from this complexity, potentially exposing businesses to obstacles, delays, and additional costs. In this demanding environment, innovation is key, and advanced solutions like KlearNow.AI are transforming the landscape in significant ways:

Simplifying Complexity: Customs clearance requires compliance with an array of international laws, intricate documentation across various languages, and navigation through regulatory obligations. KlearNow.AI streamlines this complexity by automating these processes. The company’s intelligent platform interprets and adapts to various international regulations, recognizes, classifies, and extracst relevant data from various forms of documentation, and provides real-time insights. By demystifying these multifaceted procedures, businesses can confidently manage their import and export operations.

Minimizing Delays: Time is a critical factor in international trade. Delays in customs clearance can have a ripple effect, causing disruptions in the entire supply chain and incurring substantial costs. By partnering with Project 44, KlearNow.AI provides unparalleled visibility into shipments, a feature crucial in reducing delays that can cost businesses billions annually. The real-time tracking and AI-driven data validation enable quick identification of potential errors, allowing for immediate corrections. Such precise and proactive management of shipments translates into on-time deliveries and a more efficient supply chain.

Enhancing Security: Ensuring data security and confidentiality is paramount in the customs clearance process. KlearNow.AI offers sophisticated encryption and security protocols that ensure sensitive information remains confidential. With the increasing incidences of cyberattacks in the modern world, having a robust security measure in place provides businesses with an extra layer of protection.

Reducing Costs: The automation and technological advancements employed by KlearNow.AI also contribute to significant reductions in operational costs. Automated documentation management, real-time tracking, and intelligent compliance checks save time and human resources, leading to more cost-effective operations.

Ensuring Compliance: Non-compliance with international trade laws can lead to serious legal and financial consequences. KlearNow.AI’s continuous monitoring and validation of data ensure that businesses adhere to legal frameworks across different countries. By detecting inconsistencies and flagging potential compliance issues, KlearNow.AI helps businesses navigate the ever-changing landscape of international trade laws.

As international trade continues to flourish, contributing over $19 trillion to the global economy, the significance of customs clearance grows ever more paramount. The blend of innovation with traditional practices, as seen in platforms like KlearNow.AI, is crafting a more streamlined and intelligent approach to global commerce.

For businesses steering through the challenging terrains of international trade, a profound understanding of the customs clearance process, coupled with a keen appreciation of the available technological tools, is not just an advantage; it’s an essential compass guiding through the complex waters of global trade.

For more information on how KlearNow.AI can help your business, please click here.

 

Unlocking Efficiency in Global Trade: A Comprehensive Guide to Customs Clearance Services

In the complex world of international trade, customs clearance is a critical component that requires attention to detail, adherence to regulations, and a deep understanding of global rules and commerce. Various services and technologies have emerged to address these complexities, with AI and automation taking center stage. In this context, customs clearance services are evolving, incorporating intelligent solutions that are transforming traditional practices.

UNDERSTANDING CUSTOMS CLEARANCE: DEFINITION AND IMPORTANCE

Customs clearance is the process of fulfilling all the required legal procedures to allow the entry or exit of goods from one country to another. This means a lot of paper works and potential legal issues. It encompasses everything from accurately classifying goods and calculating duties and taxes to ensuring compliance with various domestic and international regulations. The importance of effective customs clearance cannot be overstated; it safeguards national interests, ensures legal compliance, facilitates global trade, and protects consumer safety.

Customs clearance involves the preparation and submission of documentation required to facilitate the export or import of goods into a country. From standard import/export clearances to specialized commodity clearances, these services are vital to the seamless functioning of global trade, ensuring legal compliance and protecting national interests.

The growth in international trade has made customs clearance more complex and multifaceted, thus giving rise to the need for rules and adequate safeguards to protect the commercial and strategic interests of the countries involved.

DIFFERENT TYPES OF CUSTOMS CLEARANCE SERVICES

  1. Standard Import/Export Clearance: Addresses regular import and export procedures, including documentation, compliance checks, and duty calculation.
  2. Transit Clearance: Facilitates the legal and efficient transit of goods through a country.
  3. Temporary Import/Export Clearance: Permits temporary entry of goods for exhibitions, trials, or other specific purposes.
  4. Bonded Warehouse and Free Zone Clearance: Pertains to goods stored in special customs-controlled areas, often involving deferred payment of duties.
  5. Specialized Commodity Clearance: Designed for unique commodities, such as hazardous materials or pharmaceuticals, and requires specialized knowledge.
  6. Automated and AI-Powered Clearance: Utilizes technology like AI to streamline and automate the clearance process.

THE ROLE OF TECHNOLOGY IN CUSTOMS CLEARANCE SERVICES

In recent years, there has been a proliferation of technological solutions aimed at solving problems at various stages of the supply chain. AI-powered platforms offer functionalities such as data ingestion, automating workflows, and real-time visibility. For example, some technologies can mistake-proof the process by preventing inaccurate or illogical data entries and offering real-time visibility into the status of shipments.

Such advancements can be seen in AI-powered customs clearance technologies that aim to make the customs process much more efficient and effective. Research indicates a significant reduction in document processing time and improvements in day-to-day logistics management due to such innovations.

CHALLENGES IN CUSTOMS CLEARANCE AND HOW KLEARNOW.AI ADDRESSES THEM

Regulatory Complexity: International trade laws, with their multifaceted complexity, can be daunting to navigate. KlearNow.AI simplifies this process through automation and real-time insights. KlearNow.AIs intelligent platform is designed to interpret and adapt to various international regulations, offering seamless guidance and compliance.

Documentary Obligations: Handling diverse documentation across various languages and jurisdictions is a common challenge in international trade. KlearNow.AI employs automated processes and advanced technologies such as machine learning, making the handling of these documents more manageable. The AI-powered platform can recognize, classify, and extract relevant data from various forms of documentation, facilitating centralized and efficient recordkeeping.

Compliance Risks: Ensuring compliance with different regulatory bodies poses significant risks. KlearNow.AI minimizes these risks through its continuous monitoring and validation of data. The company’s advanced technology can reduce manual human error by digitalizing various formats such as PDFs and image files into structured data, flag potential compliance and cost saving considerations, and provide recommendations to adhere to legal frameworks across different countries.

Time Delays and Human Errors: Real-time visibility into shipments is crucial to identify and address delays promptly, reducing the probability of human errors. KlearNow.AI offers an unparalleled level of visibility into shipments, thanks to its partnership with Project 44, bringing customers continuous monitoring of their goods. KlearNow.AIs proprietary AI-driven data validation identifies potential errors and allows for immediate correction, thus minimizing delays.

Confidentiality of Data: With the increasing incidences of cyberattacks, ensuring data security and confidentiality has become paramount. KlearNow.AI utilizes technological advancements to offer sophisticated encryption and security protocols. Its system ensures that sensitive information remains confidential, providing peace of mind to businesses and customers alike.

Users of modern AI-powered solutions in customs clearance have reported significant improvements in their operations. Document processing time has been reduced by 70%, and there has been an 80% enhancement in day-to-day logistics management. Such advancements have contributed to a 95% improvement in global customs compliance and a 90% reduction in operational costs.

CONCLUSION

As global trade continues to expand, the scope and complexity of customs clearance services grow in tandem. The advent of technological solutions, including AI-powered platforms, is ushering in a new era of efficiency and effectiveness in customs clearance.

Whether standard procedures or specialized services, customs clearance is a nuanced and multifaceted component of international trade. The blend of traditional practices with innovative technology is fostering a more streamlined, secure, and intelligent approach.

For imports and exports businesses navigating the global trade landscape, embracing these advancements and aligning with the right customs clearance services could be a decisive factor in achieving operational excellence and boosting cash flow in today’s interconnected world.For more information on how KlearNow.AI can help your business, please click here.

 

How AI-based Data Ingestion can Improve Compliance in Customs Document Processing

In the present era of globalization, international trade is growing by leaps and bounds. As countries increasingly see the benefits of developing commercial relations with other countries as a means to increase prosperity levels and elevate standards of living, the export and import of goods have reached historically high levels.

The United Nations has estimated that the value of international trade will reach around $32 trillion in 2022, an increase of approximately 26% over the pre-pandemic levels of 2019.

More interestingly, the growth in global trade has exceeded the growth in global output during the last two years. The implications of this trend for international trade and commerce can be seen in the fact that the ratio of global exports to global output increased from 29% in 2019 to 32% in 2021 and is expected to grow even further to a record 34% in 2022.

Despite continued concerns over a global recession,   the sustained  acceleration of exports and imports presents unparalleled opportunities for exporters, importers, forwarders, shipping companies, and other transport intermediaries, it is accompanied by ever-growing regulations intended to control the volume and flow of goods and services.

Customs departments in countries all over the world have stringent requirements regarding documentation and procedures that exporters and importers need to comply with. Besides regulating the nature and quantity of commodities being imported into the country, customs departments also play a crucial role in enforcing indirect tax regimes at the border.

For this reason, exporters, importers, and forwarders need to be aware of all applicable customs formalities and ensure compliance therewith.  

Challenges of Traditional Customs Clearance Documentation

The customs clearance process has traditionally relied extensively on customs document processing, apart from random physical checks of consignments.

Therefore, importers and customs brokers must ensure that all the stipulated documents are provided well in time and in the specified format to ensure smooth customs clearance.

While this might not sound difficult, in reality, the sheer number and nature of documentary requirements make this a humongous task at a macro level.

Some common documents required for customs clearance are the Bill of Lading, Proforma Invoice, Packing List, Country of Origin certificate, Customs Packing List, Bill of Exchange, Export License, and Health certificate. In addition, based on the specific nature of the commodity, countries and entities involved, other relevant laws may also need to be taken into consideration.

Considering the international nature of the transaction, documents could be in multiple languages with different pieces of information therein. The documents will most likely also be in various formats, such as Word documents, pdf files, excel spreadsheets, or even plain emails, which means that not only is the information provided not standardized, but there is also a lack of uniformity in the format or contents thereof.

So, the data shared for customs document processing to file the customs entry is completely unstructured, making it difficult to decipher and collate the data and then structure it in the format necessary to file an entry. A further challenge is presented by the scattered availability of these documents throughout the transportation process, which requires importers, forwarders, and customs brokers to ensure timely submission upon generation.

All these factors increase the complexity of customs document processing, necessitate considerable effort, time, and resources required by workers to process this data, and increase the probability of human errors and inadvertent mistakes. 

What is Data Ingestion

Data ingestion is considered the first layer in big data architecture and is essentially the stage where data is collected from various disparate sources and consolidated into a common repository. It is also known as Intelligent document processing (IDP)

Further stages include grouping the documents according to their nature, deciphering and standardizing contents, and transforming the data into the format required to deliver the desired output.

Implementing data ingestion can enhance accuracy and mitigate common errors, making it a valuable tool for organizations. It can help them save time, money, and human resources through automated data collation, standardization, and accelerated processing.

How data ingestion helps optimize customs document processing

AI-powered data ingestion platforms can help streamline tasks such as customs document processing, which are inherently cumbersome and time-consuming.

As the global transport industry displays an increasing propensity to leverage technology to optimize operations and workflows, various players in the supply chain are investing in technological solutions such as data ingestion platforms, real-time visibility tools, and transport planning software.

Data ingestion platforms help importers and customs brokers collate, analyze, sanitize, and transform data across various sources and formats, so it can be readily used in the customs clearance process.

This development is a big step towards eliminating manual processes and automating critical tasks in international transport.

Functionalities and benefits of KlearNow’s AI-powered data ingestion platform 

KlearNow’s proprietary AI and ML-powered platform helps importers, exporters, shippers, carriers, and logistics professionals manage supply chains by delivering visibility, automated workflows, and insights for goods in transit.

The KlearNow platform offers sophisticated AI-powered data ingestion capabilities that are aimed at optimizing customs documentation processing and improving compliance therewith.

Importers, forwarders, and customs brokers can derive significant benefits from the platform through the following functionalities:

1. Classifying documents and categorizing data

2. Sentiment analysis: to decode the contents of emails or documents and decipher whether it pertains to old shipments, a new consignment, or customs clearance is needed.

3. Intent classification: wherein the platform analyzes the email’s intent.

4. Automated workflows

5. Smart user interface 

KlearNow thus helps users take control of the customs documentation and clearance process by improving trade compliance with AI-powered customs entry processes and providing real-time visibility to current customs clearance and shipment status. We like to call this our ‘Intelligent Trade Document Processing’ expertise.

Conclusion

Given international trade’s extensive complexity and regulatory requirements, importers, customs brokers, and other transport intermediaries can gain a competitive edge by leveraging innovative products such as KlearNow’s AI-powered data ingestion platform.

Not only does it improve compliance in customs document processing, but it also turns daunting paperwork into robust data, insights, and near real-time visibility.

Utilizing KlearNow has helped customers improve day-to-day logistics management by 80%, reduce document processing time by 70%, and helped improve global customs compliance by 95%.

For more information on how KlearNow can help your business, please click here.

 

Drayage and its significance in international trade and transport 

Drayage is a commonly used term in the logistics industry, but most people have vastly divergent notions of the activities that drayage encompasses. Further, the term drayage is so inextricably linked to shipping that it is often thought of as an extension of the shipping process, rather than the distinct and independent activity that it is. 

In this article, we will explore what drayage means, and its significance, and delve into the characteristics of the North American drayage market. 

A brief history of drayage 

The term itself derives from the word “dray”, which was a horse-drawn cart, commonly used for the transportation of cargo until the early 1900s, prior to the advent of mechanized means of transport. 

Given the obvious limitations of horse-drawn carts, both in terms of the weight carried and distance covered, its application was limited to short distances. As trucks started becoming the standard mode for short-haul freight movements, drays were phased out; however, the term remained in the popular lexicon. 

In its broadest sense, drayage refers to the transport of containerized cargo by truck, from the port to the final destination or from the origin premises to the loading port. It is used for freight movement across short distances, rather than long-haul or cross-country transport. 

In reality, however, drayage comprises a wide range of activities. The Intermodal Association of North America defines drayage as the “transportation of freight between a cargo facility and a customer’s facility”, splitting it into six categories: 

  • Drayage, Cross-Town, or Inter-Carrier — A movement of an intermodal unit (or a 20’,40’ or 45’ container) “across town” from one railroad to another for the continuance of the move. 
  • Drayage, Door-to-door — Retail drayage involving over-the-road movement of a unit to a customer location. 
  • Drayage, Expedited — A movement of an intermodal unit over the road to get it there on time. This exceptional drayage usually involves time-sensitive freight. 
  • Drayage, IMX, or Intra-Carrier — A movement of an intermodal unit from a carrier’s rail hub to the same carrier’s intermodal hub. IMX drayage extends the reach of an intermodal hub. 
  • Drayage, Pier — An over-the-road movement of an intermodal unit from a carrier’s rail hub to a port’s dock or pier. 
  • Drayage, Shuttle — A movement of an intermodal unit either loaded or empty from a hub to another parking lot because the railroad has run out of room at the hub.  

Drayage Market: Size and growth prospects 

As increasing globalization leads to the intensification of commercial ties between countries, the higher volume of cargo transported internationally by containers has driven a corresponding increase in demand for drayage services. 

As per WTO data, world trade volume has grown by 4500% from 1950 to 2022, with the growth rates of both the volume and value of international trade accelerating since 1995. As of 2022, world trade volume and value have expanded 4% and 6% respectively on average since 1995. 

Higher volumes in international trade have generated greater demand for services connecting maritime ports with the customer’s premises, which in turn has propelled the demand for drayage services. 

Equally relevant to drayage services is the increase in the number of maritime ports, which implies a greater probability of the port being closer to the consuming hinterland, wherefore the shorter distance increases the suitability of drayage for such transport movements. 

The drayage services market is expected to grow at a CAGR of 2.24% between 2022 and 2027, translating into an increase of USD 2,960 million. In the US, the market size of the General Freight Trucking (Truckload) industry has grown faster than the economy, at an average rate of 4.2% per annum, between 2017 and 2022. Before Covid, it was reported that there were over 60 million drayage moves annually in North America. 

Significance of drayage: Enabling First and Last-mile connectivity 

The significance of the drayage sector lies in the fact that it is the facilitator of containerized cargo to and from ports, making them an integral to supply chains. Drayage, albeit a fractional part of the entire linehaul, is effectively the segment that completes the transport loop and complements the shipping mode of transport. Any disruptions or delays in drayage services will cascade downwards, impacting cargo delivery times and shipping schedule reliability. 

Therefore, while drayage might not be in the limelight as much as maritime transport is, it is nonetheless an integral part of the multimodal transport mix, and crucial for a smoothly functioning supply chain. 

Besides being the final link in international cargo movements, drayage can also be utilized for domestic freight movements further inland, thus offering a viable alternative to rail and barge. 

Of all the inland modes of transport, drayage is the most flexible since the cargo can be delivered to the importers or customer’s premises. Rail and barge modes generally cannot operate on a standalone basis, as they require connecting drayage services for transporting cargo from the rail depot to the final destination.  
 

Who arranges drayage 

Drayage services can be provided or arranged by the buyer or his intermediaries or even the ocean carrier. 

In their quest to offer End-to-End logistics solutions, ocean carriers are increasingly offering Door-to-Door freight rates, which cover the inland leg as well. In these cases, the freight rates quoted by the ocean carrier will include the costs of drayage services as well. 

Buyers and Importers also have the option of procuring from ocean carriers only marine transport services and subsequently arranging drayage themselves. In this case, the importer will have negotiated and procured one rate for ocean transport (from the shipping company) and another rate for drayage (from drayage service providers). 

Freight forwarders too have similar options, wherein they can negotiate contracts with shipping companies, with rates that include pre-carriage and on-carriage, or negotiate shipping and drayage rates separately from different vendors. 

The option that an importer selects depends on his specific requirements and is taken after evaluating a host of factors, ranging from service levels, lead times, and TCO, to reliability levels. 

Future trends: Leveraging technology for drayage management 

The significance of drayage in international logistics cannot be overstated, as challenges related to inland cargo delivery can significantly impact supply chain integrity and hinder the seamless movement of goods. 

In addition to the importance of drayage highlighted earlier, there are further critical challenges that underscore its pivotal role. The drayage market often faces limitations, including a shortage of drivers and chassis availability. Moreover, periodic spikes in container volumes arriving at international ports can exacerbate disruptions along the route between ports and drayage providers, resulting in bottlenecks and delays. 

Given these multifaceted challenges, it becomes even more imperative for importers and freight forwarders to emphasize drayage and engage in meticulous advance planning to ensure the efficiency of both first and last-mile deliveries. 

To successfully navigate the complexities of drayage and mitigate potential disruptions, companies are strongly advised to leverage advanced technology for enhanced transport planning, spanning the journey from the port to the ultimate destination. By adopting technology-driven strategies, businesses can proactively address the aforementioned challenges, optimize their logistical operations, and foster a smoother flow of goods throughout the entire supply chain. 

KlearNow.AI, a leading Logitech solutions provider, offers an advanced AI and ML-powered platform for drayage management, which lets users book, track, and manage the transportation of containers from port to warehouse, simplifying logistics management and reducing the need for multiple systems or processes. 

To find out how KlearNow.AI can help simplify your drayage process, please click here. 

 

Optimizing Supply Chain and Logistics in the Chemicals Sector with KlearNow

The chemicals sector is a vast one, comprising a wide variety of chemicals of diverse compositions, uses, and characteristics. These chemicals can be used either for household, medical, or industrial purposes. Chemicals can have varying degrees of toxicity and different storage and packaging requirements.

Most chemicals form the inputs or raw materials for several other commonly used consumer and industrial products, resulting in many applications.

While the value of the global chemicals sector was estimated to be over $4.7 trillion in 2021, the importance of the sector lies not so much in its value as it does in its criticality to several other industries and sectors. Chemicals are an indispensable component in the manufacture or processing of a multitude of commonly used products. 

Chemicals logistics market and international trade

As has been the case with most other industries, the chemicals sector, too, has seen the relocation of manufacturing capacity to countries in Asia. For certain classes of chemicals, though, given the considerable expertise and technical know-how required in their production, supply chains are also centered around Europe and North America. This makes it one of the few sectors whose production is not concentrated in one particular geographical region but is spread more equitably.

The leading chemical exporting countries, based on value, in 2021 were:

China – $106.2 billion

USA – $56.4 billion

Germany – $44.6 billion

Ireland – $38 billion

Belgium – $34 billion

South Korea – $31.3 billion

Switzerland – $30.5 billion

Netherlands – $27.9 billion

Japan – $27.7 billion

India – $23.6 billion

In the US, the chemicals sector manufactures over 70,000 products, which in turn are used in the manufacturing of over 96% of American goods.

As per US government data, chemicals and related products account for over 9% of US exports.

Considering that chemicals form crucial inputs for other sectors, and also given the nature of the chemical products, reliable supply chains are of paramount importance. Unique supply chain requirements range from temperature-controlled transport, secure storage facilities, high-quality packaging, and proper handling.

This has led to the evolution of dedicated supply chains designed to cater to the different classes of chemicals.

Market research agencies have valued the chemical logistics market at $253 billion in 2019 and it is expected to grow at a CAGR of 3.9%, to reach $322 billion by 2027.

Supply chain and logistical challenges faced by the Chemicals sector

Some of the key challenges involved in the chemicals supply chain are explained below:

1. Geographical spread and scale of supply chains, with numerous sourcing origins

With production centers and consuming markets dispersed globally, the geographical breadth of the chemicals industry is vast. Therefore, finding reliable and frequent transport connections connecting the origin and destination is sometimes difficult. In the absence of direct connections, exporters and importers have to rely on transshipment services or multimodal options, which add to costs, and time and are relatively less reliable (due to a more stretched supply chain and multiple handover points).

2. Time-sensitive

Some chemical products are time sensitive, either because of the limited product life or because of the need to deliver them in time for the production of the dependent product. In both situations, if delivery is delayed, it could mean financial losses or operational disruptions.

3. Maintain Temperature control at all times

A significant number of chemical products require temperature-controlled transport and storage solutions. Besides, given the sensitivity of the product, the temperature must be maintained at the intended levels throughout transit. This requirement is rendered more difficult due to extended supply chains.

4. Special precautions considering toxicity in terms of storage, packaging, handling, and labeling

While some chemicals are classified as hazardous or toxic and hence have specific handling guidelines, other chemicals, too, require special packaging, labeling, and handling. This is to ensure that the product does not harm workers handling it during transit or does not cause damage due to leakage or spillage.

5. Real-time visibility

Considering the above-mentioned challenges, it is obvious that real-time visibility of shipment status and cargo condition is vital to ensure a smoothly functioning supply chain and avoid damage to or arising from the commodity. Besides, pre-alerts regarding standard transportation milestones and timely notifications in case of contingencies can help exporters and importers handle the consignment better and take prompt remedial action, as warranted by the circumstances.

6. Environment and Sustainability

The harmful impact on the environment in case of spillage of chemicals during transport or storage is an area of concern. Considerable focus is therefore given to this aspect while planning end-to-end logistics. Besides the damage to the environment, companies are also exposed to the risks of loss of reputation and financial penalties.

What KlearNow can offer the Chemicals sector

1. Real-time visibility:

In partnership with project44, KlearNow’s platform enables real-time visibility of the status and condition of the cargo. Exporters and importers are, therefore, cognisant of the status of their consignment and well-positioned to take appropriate remedial measures in case of delays or mishaps.

This, in turn, helps minimize potential losses arising from damage to cargo or delayed deliveries.

2. Alerts on various milestones and automating the shipping process

KlearNow’s platform automates the logistics process, reducing the amount of manual effort required in capturing critical shipment data. This eliminates the probability of human mistakes and helps avoid risks arising from inadvertent errors.

The platform also provides alerts on various milestones in the shipping process, helping optimize the transport planning process.

3. Simplifying customs clearance and documentation

KlearNow’s AI-powered data ingestion platform reduces the complexity traditionally inherent to the customs clearance and documentation process. The platform can collate information across multiple sources and disparate formats, thus ensuring that customs documentary requirements are accurate and filed on time.

Conclusion

The chemicals supply chain is extremely complex and has specific challenges that exporters, importers, freight forwarders, and customs brokerages must deal with.

These challenges include geographically dispersed and interdependent supply chains, special transport, storage, and handling requirements, precautions mandated by the potentially hazardous nature of the cargo, complying with environmental regulations, and the need to monitor shipment status at all stages during transit.

Handling these challenges requires considerable expertise and knowledge to efficiently transport chemicals, without compromising on supply chain integrity.

While the traditional processes have been manual and relied extensively on human due diligence, the advent of supply chain software has helped optimize transport planning.

Solutions such as KlearNow’s sophisticated AI-powered platforms provide multiple functionalities designed to automate logistics workflows, ease customs clearance, and ensure complete and accurate documentary filings.

This helps manufacturers and importers of chemical products make the export process and customs formalities efficient, creating a competitive advantage and helping to deliver a superior customer experience.

For more information on how KlearNow can help your business, please click here.

 

Driving Success: How KlearNow Empowers the Perishables Sector

The perishables sector comprises all time-sensitive commodities characterized by limited shelf lives and needs special temperature-controlled transportation and storage arrangements.

This includes edible items like meat, fruits, vegetables, milk, juices, and other foodstuff, as well as non-edible items such as flowers, medicines, and other pharmaceutical products.

The geographical market, size, and growth rates for each perishable commodity vary considerably, which is why the segment exhibits incredible variance, particularly at a granular level.

The size and growth rates of a few important perishable commodities are mentioned below:

·       The global pharmaceutical market was valued at USD 1.42 trillion in 2021, with North America accounting for 49.1% of the overall revenue.

·       In the case of flowers, which are primarily transported by air, over 80,000 flowers are transported daily.

·       International trade in major tropical fruits recorded an 8% increase in 2021 over 2020.

The growth of the perishables segment has given impetus to the growth of cold chain logistics, which essentially refers to supply chains for products requiring temperature control.

It has also boosted demand for ancillary logistical services, such as reefer shipping, cold storage, and innovative products designed for fast and efficient transport of perishables.

Perishables logistics market and international trade

The expansion in the international trade of perishable products has broadened not just the geographical scope of the industry but also the logistical infrastructure and requirements necessary to cater to the growing volumes.

The operational complexities are significant, given that each perishable product has a different life span and transportation requirements in terms of optimal temperature, transit times, and packaging and handling requirements.

This translates into higher demand for cold storage at the landside and reefer containers for maritime transport.

In 2021, the volume of reefer cargo transported by sea was 137.4 million tonnes, an increase of 2% over 2020. After a lackluster 2022, seaborne reefer trade is expected to increase by 4% in 2024 and 2025.

The global cold chain logistics market was valued at USD 242.39 billion in 2021 and is expected to grow at a CAGR of 15% until 2028.

Supply chain and logistical challenges faced by the Perishables sector

Given this segment’s nature, the typical supply chain challenges faced by most other industries are amplified in the case of perishable commodities. Besides, the segment also has a set of challenges unique to the industry.

The most pressing challenges are explained below:

1. Limited shelf life

The limited shelf life of commodities poses a unique logistical challenge in the perishables sector. As products get closer to their shelf life, their utility might deteriorate, leading to a subsequent erosion in value, which could potentially cause significant losses to the parties involved in the transaction. Smoothly functioning supply chains and well-co-ordinated logistics activities are therefore essential to ensure that the product’s delivery time, as a proportion of its shelf life, is minimized.

2. High-value cargo and risk of potential claims

Perishable commodities are generally of high value, wherefore the total value of cargo stuffed in a reefer container could easily be up to a few hundred thousand dollars. Combined with the time-sensitive nature of the cargo, this means that in the event of damage to cargo, potential claims for damages would be correspondingly high, coupled with the additional risk of loss of reputation and costs of litigation.

Therefore, It is of utmost importance to ensure that the transport planning is done carefully and executed diligently thereafter.

3. Real-time visibility of cargo status and condition

To preserve the value and utility of perishable cargo, the temperature must be maintained at the stipulated levels. Any fluctuations in the temperature can cause damage to the cargo, lowering its value. Also, any delays in delivering the cargo can reduce the shelf life left for the consumer to use the product.

Therefore, exporters and importers need real-time visibility of the status and condition of the cargo at all transit points to avoid or minimize damage and delays.

4. Supply chain disruptions

The widespread supply chain disruptions witnessed since 2020 have compounded the risks arising from the limited shelf life of products.

With vessel capacity and equipment being tied up in congestion at ports, shippers faced shortages of reefer containers, which prolonged delivery times and affected supply chain reliability.

In 2021, at the peak of the disruptions, 20% of US agricultural exports were lost due to carrier issues, while ocean carriers initially declined 40% of export booking requests, and shipping lines canceled 31% of confirmed export bookings.

Shippers were thus faced with the prospect of their perishable goods awaiting allocation of empty containers and thereafter lying at the port for a vessel connection. Even after being loaded on a vessel, congestion at the destination port could cause further delays.

During 2021, only 35% of US agricultural exports reached overseas customers on time.

5. Compliance and regulations

Exporters and importers of perishable products have to contend with a litany of regulations, complying with which involves extensive documentation and adhering to stringent processes.

This requires considerable effort and costs and entails severe consequences in the event of even an inadvertent mistake.

Penalties range from monetary fines to rejection of the entire consignment.

What KlearNow can offer the Perishables sector

1. Simplifying customs clearance and documentation

KlearNow’s AI-powered data ingestion platform reduces the complexity that has traditionally been inherent to the customs clearance and documentation process. The platform can collate information across multiple sources and disparate formats, thus ensuring that customs documentary requirements are accurate and filed on time.

2. Real-time visibility:

In partnership with project44, KlearNow’s platform enables real-time visibility on the status and condition of the cargo. Exporters and importers are, therefore, cognisant of the status of their consignment and well-positioned to take appropriate remedial measures in case of delays or mishaps.

This, in turn, helps minimize potential losses from cargo damage or delayed deliveries.

 3. Automating the shipping process and alerts on various milestones

KlearNow’s platform automates the logistics process, reducing the amount of manual effort required. This eliminates the probability of human mistakes and helps avoid risks arising from inadvertent errors.

The platform also provides pre-alerts on various milestones in the shipping process, helping optimize the transport planning process.

 4. Selecting a drayage partner in advance

Importers can also use the platform to select a drayage partner in advance, resulting in smooth handovers and seamless cargo delivery at every stage in the supply chain.

Conclusion

Given the operational complexities and comprehensive documentary and procedural requirements, exporters and importers of perishable commodities are gradually incorporating technological solutions to streamline logistical aspects and customs clearance.

While the market is replete with several Logitech solutions targeting various pain points, KlearNow has emerged as a leading player, with its sophisticated platform easing each aspect of the end-to-end transport process.

KlearNow’s AI-powered data ingestion platform helps exporters and importers of perishable commodities manage their supply chains much more effectively.

For more information on how KlearNow can help your business, please click here.

 

How Generative AI is Revolutionizing Customs Clearance: A Solution Driven by Synthetic Data and Predictive Modeling

International trade has been growing steadily over the past two decades, propelled by diverse factors such as outsourcing of production, increasing prosperity levels, deepening trade relations between countries, and the emergence of AI-driven customs clearance.

This growth has been enabled by faster and more reliable transport connections between countries and regions, which has facilitated the creation of globally interconnected supply chains through which goods can flow smoothly.

As per UNCTAD estimates, global trade in goods and services hit a record of $32 trillion in 2022, an increase of 12% over the 2021 trade value of $28.5 trillion. Year-on-year growth rates for 2021 and 2020 were recorded at 25% and 13%, respectively, indicative of the pace at which global trade has expanded. 

Goods and merchandise accounted for most of international trade, valued at $25 trillion in 2022, notching a year-on-year increase of 10%.

The healthy growth rates in the face of the Russia-Ukraine conflict and other geo-political tensions affecting relations amongst major economies illustrate the resilience of global trade.

In a counter-intuitive turn of events, trade in products saw higher demand during the pandemic, as economic stimulus packages announced by governments ensured that income levels did not erode, while Covid-induced lockdowns drove a shift in consumption patterns away from services and towards products. 

As the aftereffects of the pandemic begin to wear off and travel restrictions are eased, we will likely see a reversal in household expenditure to the historical mix between goods and services. This will likely moderate the demand for goods and products. While this trend is expected to continue for most of 2023, demand in the long term is expected to increase.

Increasing Role and Scope of Customs

All cross-border movement of goods and products is subject to Customs checks and inspections in each country involved.

Customs inspections and procedures are intended to restrict the import of contraband or illegal goods and curtail inflows of restricted commodities. Further, the need to regulate incoming volumes of commodities that could threaten domestic producers by imposing anti-dumping duties or additional tariffs has increased the role of Customs officials.

As trade wars intensify and more and more commodities are subjected to sanctions, the Customs Department plays an increasingly important role in ensuring that the importing country’s commercial interests are protected.

Another driving factor has been the phenomenon of economic cooperation which has resulted in the signing of FTAs and bilateral agreements and the formation of regional trading blocs, which confer special benefits to member countries in the form of preferential tariffs, smoother and easier procedures, and priority access to export markets. To ensure that only eligible commodities, entities, and countries avail of the benefits, Customs has to thoroughly check the provenance of the cargo and the antecedents of the transacting parties.

The achievement of these objectives requires the exercise of considerable due diligence, as well as rigorous physical and documentary checks. This is done by establishing appropriate processes and comprehensive documentation requirements to verify the nature, composition, and origin of the commodities and confirm the applicability of the correct tariffs.

As a result, exporters, importers, and forwarders are obligated to keep abreast of the latest procedural and documentary requirements and ensure adherence and compliance. This involves considerable manual efforts and the need to expend significant effort and time, which adds to the complexity of the transport movement.

Challenges in the Customs Clearance and Documentation Process

Some of the common challenges in the customs clearance and documentation process are explained below:

1. Labor-intensive and time-consuming:

Given the number of documents required for customs clearance and the fact that the information is provided by various entities, the task of compiling all documents and verifying their accuracy and adherence to the appropriate format is extremely labor-intensive. Besides the manual labor involved, it also requires a lot of time.

2. Multiple formats, lack of standardization of contents, and diverse sources:

Documents are in different formats, ranging from Excel spreadsheets to Word documents to pdf files to plain emails. The information is neither standardized nor in the prescribed format. Given that the sources are multiple, there are added difficulties in obtaining documents on time.

3. Higher probability of errors:

Due to the variety of formats and disparate sources and formats, collating information and filing information is an arduous task, with a very high probability of error. Considering these requirements are statutory, any inadvertent errors can attract stiff penalties.

4. Delays in receiving documents

Having to wait for documents reduces the time that customs authoriries have to analyze and study documents for risk assesments. Getting information earlier allows for not only the better identification of risky shipments but also the correct duty and tax analytics. 

Consequences of Non-compliance with Customs Requirements

Apart from the consequences arising from the violation of legal provisions, incomplete or inaccurate documentation or other mistakes in following processes can result in detention and demurrage charges should the cargo be inordinately delayed and exceed the free time permitted.

For the importers, there are also potential revenue losses and missed sales to contend with.

In the case of perishable commodities, delays in customs could impact the shelf life of the product, which in turn will affect its value.

How Generative AI Can Assist in the Customs Clearance Process

The application of generative AI tools is proving to be a game-changer when it comes to customs clearance. Entities whose business or work involves customs clearance have to expend considerable resources to ensure adherence to all mandatory requirements, failing which they are exposed to the risk of penalties.

With advances in AI and the introduction of sophisticated Logitech solutions, the customs clearance and documentation process is streamlined to a great extent.

Functionalities like data ingestion automate the process of collating information from disparate sources, files, and formats and thereafter compile the data in the stipulated format. This reduces the manual and laborious element of the customs documentation process and eliminates the possibility of human errors.

The more advanced Logitech solutions infuse AI and ML to vastly enhance the utility of their software. Besides using real-life data, they also generate synthetic data, so the software has more data points to process while performing analysis. This, in turn, helps the predictive modeling functionality by improving the quality of predictions made.

Functionalities and benefits of KlearNow’s AI-powered platform

In the past few years, KlearNow has emerged as one of the prominent players in this industry, with its technological solutions being adopted by an increasing number of companies.

KlearNow’s software offers functionalities addressing the most common problems faced by the industry, such as:

1. Automating the Customs documentation process workflows

2. Ensuring complete and accurate documentation is gathered within correct timeframes

3. Pre-alerts in case of upcoming transportation milestones, which assists in advance planning

4. Real-time visibility to ensure timely action in case of contingencies

5. Highlighting possible issues with the shipment and in customs clearance, which enables users to avoid commonly occurring mistakes

Conclusion

Customs clearance has always been one of the more challenging aspects of international transport, and regardless of the amount of caution exercised by companies, the intensely manual process means that the possibility of errors was never completely ruled out.

In recent years, however, using technological solutions such as the ones provided by KlearNow, importers and forwarders can automate the customs clearance process, pre-empt possible issues, and leverage predictive modeling techniques.

This will ease overall planning and make the customer’s supply chain more robust and reliable, thereby reducing costs and enabling goods to reach the market faster.

For more information on how KlearNow can help your business, please click here. 

 

How reinforcement learning is helping streamline Customs Clearance

In the complex world of international trade, a paramount need arises to establish a robust mechanism that can effectively monitor imports, ensure compliance with all applicable rules, and accurately levy tariffs based on the nature of the commodities involved. This mechanism plays a crucial role in facilitating fair and transparent trade practices while safeguarding the interests of all parties involved.

As the volume and diversity of internationally traded goods and services continue to grow exponentially, governments around the world have responded by implementing a complex web of regulations, policies, and laws to govern international trade. This regulatory landscape has become increasingly intricate, with multiple jurisdictions involved and varying tariff rates for individual products.

In an effort to foster economic cooperation and exploit complementarity, countries have formed closer economic ties through bilateral or multilateral agreements and the creation of regional trading blocs. These economic partnerships confer significant advantages upon member countries, including priority market access and preferential tariffs for their exports.

The formation of regional trading blocs, such as the European Union and ASEAN, has been instrumental in eliminating trade barriers and promoting the seamless movement of goods within their respective regions. This has led to a substantial boost in intra-regional trade, enhancing economic growth and collaboration among member countries.

However, the dynamics of international trade also encompass challenges such as widening fiscal deficits, geopolitical tensions, and the rise of protectionist measures. Countries, driven by the desire to protect their domestic businesses, have increasingly resorted to imposing sanctions, levying higher tariffs and duties on imports, and implementing trade restrictions.

A notable example is the trade war between the United States and China, where the United States imposed higher tariffs on certain Chinese products to address trade imbalances. In response, China implemented retaliatory measures, escalating the conflict and significantly impacting global trade patterns.

Countries may impose sanctions on specific entities or restrict trade with nations involved in geopolitical conflicts or non-compliance with international norms. These measures serve as instruments to address political concerns and influence the behavior of targeted countries.

Amidst this intricate landscape, it is crucial to establish an effective and robust mechanism for customs clearance. This mechanism ensures the monitoring of imports, compliance with applicable rules, and accurate levying of tariffs based on the nature of the commodities involved. By doing so, fair and transparent trade practices are facilitated, protecting the interests of all stakeholders in the global trade ecosystem.

As the growth of international commerce continues unabated, Customs will play an increasingly important role in ensuring the implementation of government policies. 

Challenges in the current manual customs clearance process 

Given the overwhelming volume of work, Customs departments worldwide are necessarily somewhat bureaucratic in their processes and approach.

Physically inspecting goods, checking documents, and monitoring adherence to regulations and policies is extremely tedious.

Due to these factors, importers must expend considerable resources and time to ensure that the documentation is complete and accurate and that all laws are complied with. Any lapses in following the stipulated procedures could cause considerable delays in clearing the goods.

Besides the commercial impact of such delays, importers could also find themselves staring at higher detention and demurrage charges.

How Logic-based Solutions Help in Customs clearance 

Importers, forwarders, and other stakeholders in the international transport process are increasingly leveraging technology to improve their efficiency and streamline operations.

The intent is to reduce as much as possible the manual aspect of the customs clearance process by automating work streams and freeing up employees’ time, so they can focus on more value-adding activities.

The immediate benefits that accrue from using Logic-based solutions are an improvement in accuracy levels and better compliance with Customs requirements.

The usage of technology is not without its challenges, especially in the initial stages.

Some common challenges are explained below:

1. Logic-based solutions take time to accumulate sufficient amounts of data to be able to handle the documentation process

2. Need for extensive human intervention in the initial stages

3. Limitations of machine learning in understanding the context and background, making it difficult to decipher the contents of documents and emails and categorize them accordingly 

How Reinforcement Learning Improves the Quality of Work and Decisions 

Modern logic-based solutions now incorporate reinforcement learning to help improve the quality of work and decisions. This helps companies reap the envisaged advantages much faster than was possible previously.

Reinforcement learning is essentially a machine learning method that operates on the principle of rewards and punishments.

When the system starts handling customs processes, human validation is mandatory. If the human changes the decision taken by the system, then it is treated as a failure for the system, and data is updated accordingly. As the system handles more and more data and such failures are rectified, the system’s accuracy increases steadily. Gradually, as most mistakes are identified and rectified, the system reaches a stage where almost all possible mistakes and misinterpretations have been covered, eliminating the probability of errors.

Over time, the need for human validation comes down, and the task is completely automated. This results in the organization saving time, costs, and staffing and also significantly increasing accuracy and compliance levels.

The growing prevalence of logic-based solutions for optimizing customs clearance has helped ease what has traditionally been a labor-intensive and time-consuming process.

Notably, KlearNow, a leading provider of such solutions, has been leveraging sophisticated techniques like reinforcement learning and data ingestion since 2018. With the most advanced and experienced AI/ML system in the customs document processing industry, KlearNow’s proprietary AI-powered platform offers enhanced functionalities that have revolutionized importers’ and forwarders’ time and cost savings.

By leveraging the power of machine learning, KlearNow has revolutionized the customs clearance process, providing importers and forwarders with a comprehensive solution that maximizes time and cost savings. The innovative techniques employed, such as reinforcement learning and data ingestion, have significantly enhanced the capabilities of KlearNow’s platform. To discover how KlearNow can benefit your business and to learn more about their innovative solutions, please click here.

With KlearNow’s cutting-edge technology, businesses can streamline their customs clearance operations, optimizing efficiency, accuracy, and compliance. By harnessing the benefits of KlearNow’s proprietary AI-powered platform, importers and forwarders can unlock the full potential of customs clearance, achieving superior outcomes and gaining a competitive edge in the industry.

 

The Aerospace Sector: A Thriving Industry with Promising Growth

The aerospace sector comprises the production of civilian and military aircraft and components thereof. It is considered a hi-tech sector, and hence production is primarily located in a few select countries.

The US aerospace sector is the largest in the world for both military and civil aerospace hardware. Within the US, the aerospace sector is one of the largest industries, supplying five markets: military aircraft, missiles, space, commercial airliners, and general aviation.

The aerospace sector is rapidly evolving, with the expansion of subsectors such as unmanned aircraft systems (UAS), space systems, and aviation security.

According to the American Aerospace Industries Association (AIA), the US aerospace & defense industry’s turnover in 2021 was $892 billion, an increase of 2.1% over 2020.

The sector is also an important source of employment, with a workforce exceeding 2.1 million employees in 2021. Jobs supported by the A&D industry represent approximately 1.4% of the nation’s total employment base, with over 57% of employment coming from the shared A&D supply chain. 

The importance of the sector to the American economy can be gauged from the fact that even in 2020, when the Covid pandemic adversely impacted most industries, the A&D industry’s sales activity contributed 18.8% of all non-food manufacturing revenue in the nation. Additionally, the industry accounted for 1.8% of the total U.S. GDP, a figure of around $382 billion.

Aerospace equipment manufacturers anticipate global passenger traffic returning to pre-Covid levels as early as the end of 2023, which will positively influence aircraft production and ancillaries.

The outlook for the sector is bright, as the easing of travel restrictions and opening up of the global economy portend an increase in business and leisure travel, with the commercial aerospace sector witnessing increased orders for new aircraft. Additionally, non-traditional players such as shipping companies and global freight forwarders have made forays by investing in air capacity as they seek to position themselves as integrated logistics service providers (as a strategy to dilute sector-specific exposure and diversify into new verticals).

Deliveries of new large commercial aircraft in 2023 are forecast to increase by 20%, over 2022, with production rates remaining relatively stable during 1H 2023 and potentially increasing toward the end of 2023. 

Aerospace logistics market and international trade

The nature of the aerospace industry is such that a large proportion of the manufacturing output is export-oriented. The sector constitutes activities such as the manufacture of components, transport to plants, assembly of the final product, and delivery to the final destination.

The scale and scope of these activities have led to the creation of a burgeoning aerospace logistics sector, which plays a critical role in facilitating the rapid growth of aerospace and allied industries.

Designing aerospace supply chains requires considerable expertise and sectoral knowledge to ensure smooth, timely, and reliable deliveries.

In 2021, the value of American A&D exports surpassed $100 billion. America exported to 205 countries in 2021, indicating the geographically broad-based nature of the sector. 

Supply chain and logistical challenges faced by the Aerospace sector

The challenging macro-level environment and operational complexities have combined to present certain challenges for the aerospace sector, which are explained below:

1. Availability of raw materials and impact on production and revenues:

With major firms ramping up production, there is a race to procure raw materials. In time, companies who can obtain an adequate amount of raw materials and components gain a competitive edge, as they are well poised to meet market demand. Conversely, the inability to source the raw materials required to maintain stable production levels can result in revenue loss and market share erosion.

2. Supply chain disruptions and reliability:

Even when companies have raw materials in stock, deliveries thereof are delayed due to supply chain disruptions. To ensure production as per schedule, smoothly functioning and reliable supply chains are imperative.

3. Selecting logistics partners with aerospace expertise:

Considering the complexity of aerospace supply chains, it is vital to partner with logistics service providers with expertise in handling aerospace equipment. Finding a logistics provider with staff knowledgeable and trained in the transport of aerospace equipment can be quite difficult.

4. Real-time visibility:

Given the value and time-criticality of aerospace components, companies find it expedient to track shipment status and condition. This is for aircraft spare parts or for the componentry required in the complex manufacturing processes. Therefore, real-time visibility of components and parts (or lack thereof) is a critical concern for aerospace companies.

5. Compliance with customs procedures, documentary requirements, and trade policies:

Since most aerospace equipment has dual-use capabilities, i.e., it can be used for both civilian as well as military purposes. Countries generally impose restrictions on exports to hostile nations as well as to entities who might misuse such technology, besides laying down stringent customs and documentary requirements. Aerospace companies are legally obligated to ensure compliance with all relevant policies and laws, which implies thorough knowledge of applicable legislation. Aerospace supply chains, therefore, need to be designed with robust safeguards to mitigate the possibility of even unintentional violations, as the consequences in the form of monetary and non-monetary penalties can be severe. 

6. …As mentioned above, perhaps the biggest challenge is finding quality staff in a very tight labor market in the US. add a paragraph here on that and then segway into what we can do to help. 

What KlearNow can offer the Aerospace sector

KlearNow’s proprietary AI-powered platform helps the Aerospace sector overcome challenges and optimize supply chains by digitizing customs and logistics workflows.

This is achieved by:

1. Using technology to allow your existing staff to do more. We have proven to save logistics teams in the aerospace sector up to 72 minutes per shipment of administration time in gathering, collating and preparing customs declaration data sets. For teams that are handling multiple shipments per day this is a lifesaver, allowing them to leave work on time and bettering their productivity while at work. 

2. Simplifying documentation process and compliance with Customs requirements: KlearNow’s AI-powered data ingestion platform eases the task of collating and deciphering data from the plethora of documents involved in international transactions. This improves the accuracy of information submitted to Customs and eliminates the probability of human errors. Consequently, the company can ensure complete regulatory compliance.

3. Digital transformation: Digital capabilities are increasingly a source of competitive advantage and can help companies cater to existing customers and also secure new business. KlearNow’s sophisticated technological solutions facilitate such digital transformations by automating workflows and reducing customs compliance and transportation costs.

4. Providing real-time visibility: KlearNow has partnered with Project44 to offer real-time visibility. This enables companies to monitor shipment status and manage inventory more efficiently. These factors boost the quality of supply chain planning and help the management make faster and better-informed decisions.

Specific functionalities and benefits of the KlearNow product

Some of the more notable functionalities of the KlearNow product and associated benefits are explained below:

  1. Data ingestion:

This involves creating digital assets using artificial intelligence and machine learning to complete and deliver customs entry filings. Data can be captured from multiple unstructured sources, like emails, email attachments and even handwritten notes and transformed into structured data for use in other applications. This helps ensure that the documents and data filed are accurate, comply with all statutory requirements, and are filed with authorities within stipulated timelines. 

  1. End-to-End Supply Chain visibility:

This includes visibility on documentation and information sharing, shipment status and Customs milestones (regardless of carrier/ forwarder/ mode of transport), and terminal-level visibility and Port Intelligence.

This helps timely and accurate sharing of relevant information with all parties, makes it possible to plan onward cargo movements in advance, and reduces demurrage and detention charges.

  1. Smart Drayage for last-mile connectivity:

KlearNow also allows importers to select a drayage partner weeks in advance. 

This helps the cargo owner to control costs and receive live ETA’s, thus reducing the probability of being stuck in supply chain bottlenecks.

Conclusion

As the aerospace sector experiences rapid growth, companies have recognized the need to invest in technological solutions to deliver superior customer service and maximize internal efficiency.

Also, while extraneous factors influencing the industry cannot be controlled, the magnitude of their impact can be lessened by using supply chain software to improve the quality and pace of the decision-making process.

In this context, KlearNow has emerged as a pre-eminent player in this segment. Its AI-powered data ingestion platform includes features such as real-time visibility, drayage partner selection, and customs documentation processing, which helps automotive companies manage their supply chains much more effectively.

For more information on how KlearNow can help your business, click here.

 

How KlearNow.AI can facilitate the Automotive sector’s international logistics

The automotive industry is part of the consumer discretionary sector and includes the production of both passenger and commercial vehicles, as well as auto components.

Demand in the automotive sector can be separated into two categories: direct and derived. Direct demand represents finished vehicles, while derived demand is the demand for auto components that is derived and contingent upon the volume of vehicles sold.

Driven by rising consumerist sentiment and higher disposable incomes in most countries, the demand for automobiles has been steadily increasing over the years. Global auto sales exceeded 67 million units in 2022, with the growth expected to continue over the next decade at a CAGR of 7% between 2023 and 2033.

Globally, the Asia Pacific region is the biggest market, followed by North America and Europe.

It is anticipated that the electric vehicles segment will primarily drive the growth of the automotive sector in the forthcoming years. Even in the period from 2011 to 2021, the sales of electric vehicles in the US, as a proportion of total cars sold, have steadily expanded, from 0.2% in 2011 to 4.6% in 2021. The electric vehicles market is expected to reach $457.60 billion in 2023 and record a CAGR of 17% for the 2023-2027 period.

Automotive logistics market and international trade

The automotive sector is an example of a truly globalized industry. Since there is significant demand for automobiles and auto components in all regions across the globe, and with significant production capacity in Asia, North America, and Europe, multiple countries are involved in the export or import of automobiles and components thereof.

With each vehicle having 15,000 to 20,000 components and over 50% of car parts still sourced overseas, automotive components constitute a sizeable international trade segment.

This trend is expected to accelerate further as rising disposable incomes in emerging economies and a corresponding rise in discretionary spending have led to a commensurate increase in demand for passenger and commercial vehicles.

China’s emergence as the global leader in the electric vehicles segment will only accentuate the phenomenon, as it is now the world’s biggest producer and consumer of electric vehicles. Sales of electric vehicles have grown exponentially, from 1.3 million in 2020 to 6.8 million in 2022. China has been the largest electric vehicle market for eight consecutive years.

Trade wars and geo-political tensions too have played a key role in the geographical diversification of the automotive sector, with European car manufacturers looking to shift a part of their production to countries such as Vietnam and Indonesia.

It is thus safe to conclude that we will witness robust growth in the international transport of automobiles, with corresponding growth in automotive logistics. Globalization of the sector will intensify as new markets emerge and more countries develop automotive manufacturing capacity.

Supply chain and logistical challenges faced by the Automotive sector

With geographically stretched supply chains and a multitude of sourcing locations, it is inevitable that the automotive sector will face numerous logistical challenges, especially in the current scenario.

The top logistical and supply chain issues facing the automotive sector are explained below:

1. Tariff barriers: As protectionist tendencies take precedence over pragmatism, countries across the world have imposed tariffs on imports of various automotive components. This has devolved into a cycle of retaliatory tariffs and counter-sanctions by other countries, slowing world trade and hampering logistical activities. This, in turn, has affected the supply of raw materials to manufacturing centers and the transport of assembled automobiles to consumer markets.

2. Trade agreements: Governments are now trying to boost trade and exports by entering into free trade agreements, bilateral agreements, and forming regional trading blocs, all of which are aimed at increasing international trade amongst the signatories and to the exclusion of non-member countries. This has opened access to new markets while constricting existing markets. Automotive companies have therefore been constrained to redesign supply chains and logistics processes to account for altered trade relations and cargo flows.

3. Compliance with regulations: The automotive sector is subject to numerous regulations in which compliance is legally mandatory. These regulations might be with respect to various aspects such as the finished vehicle, individual components, souring locations, preferential tariffs, and trade quotas. Given the vast number of applicable laws, automotive manufacturers must not only keep themselves aware of all relevant rules but also exercise due diligence to ensure compliance therewith. Failure to comply with regulations can result in stiff penalties.

4. Inventory management and visibility: The sheer number of spare parts and components that go into the manufacturing of an automobile implies that inventory planning is a complex process. It is even more critical to ensure that there are adequate stocks of each component, depending on their criticality and the availability of substitutes. This requires robust inventory visibility and management policies.

5. Supply chain disruptions: The ubiquitous supply chain disruptions that have plagued global supply chains have affected automotive supply chains, as delayed deliveries, inadequate supplies, and unreliable transport schedules have added to direct and indirect costs in the transport process.

What KlearNow can offer the Automotive sector

KlearNow helps the automotive vertical overcome major industry-specific supply chain challenges by digitizing customs and logistics workflows.

KlearNow’s technological solutions facilitate this by:

1. Improving compliance: the KlearNow platform uses data ingestion to process customs documentation processes and notify all relevant parties in case the documentation is incomplete or inaccurate. With AI automating the process of tracking applicable regulations and ensuring compliance therewith, we reduce the risk of incurring penalties or supply chain disruptions.

2. Streamlining automotive supply chains: AI-based platforms can optimize customs processes, reduce lead times, and improve delivery accuracy, thus helping companies respond quickly to changes in demand, market dynamics, and regulatory framework.

3. Reducing costs:  using AI to automate manual processes helps reduce the cost of compliance, customs clearance, and supply chain management. This is especially beneficial to tier 2 and tier 3 automotive companies, which generally do not possess EDI infrastructure, but have multiple high-line items. KlearNow’s digitized platform offers all-inclusive pricing with unlimited lines, PGAs, and no ancillaries.

4. Providing visibility: The nature of the automotive business is such that companies need to place multiple and frequent orders for spare parts and components. Therefore, visibility is extremely important, which KlearNow’s platform enables through functionalities such as origin management, full end-to-end track, and trace with live ETAs, demurrage eliminator tools, and port intelligence.

5. Enhancing decision-making: AI-powered platforms provide real-time information on tariffs, trade agreements, and regulations, thereby enabling companies to make informed decisions that minimize risk and optimize operational efficiency.

Specific functionalities and benefits of the KlearNow product

Some of the more notable functionalities of the KlearNow product and associated benefits are explained below:

1) End-to-End Supply Chain visibility:

This includes visibility on documentation and information sharing, shipment status and Customs milestones (regardless of carrier/ forwarder/ mode of transport), and terminal-level visibility and Port Intelligence.

This helps timely and accurate sharing of relevant information with all parties, makes it possible to plan onward cargo movements in advance, and reduces demurrage and detention charges.

2) Smart Drayage for last-mile connectivity:

KlearNow also allows importers to select a drayage partner weeks in advance.

This helps the cargo owner to control costs and receive live ETA’s, thus reducing the probability of being stuck in supply chain bottlenecks.

3) Data ingestion:

This involves creating digital assets using artificial intelligence and machine learning to complete and deliver customs entry filings.

This helps ensure that the documents and data filed are accurate, comply with all statutory requirements, and are filed with authorities within stipulated timelines.

Conclusion

The automotive sector’s requirements necessitate an intricately designed supply chain to cater to the sector’s unique requirements. Technology is fast becoming an indispensable adjunct in supply chain and transport planning, which is where KlearNow has emerged as a frontrunner in providing cutting-edge software solutions.

KlearNow’s AI-powered data ingestion platform includes features such as real-time visibility, drayage partner selection, and customs documentation processing, which helps automotive companies manage their supply chains much more effectively.

The improved quality of decision-making and supply chain reliability can be a distinctive competitive differentiator, paving the way for superior customer experience.

Utilizing KlearNow has helped customers improve day-to-day logistics management by 80%, reduce document processing time by 70%, and helped improve global customs compliance by 95%.For more information on how KlearNow can help your business, please click here.

 

Transforming trade management through AI-powered Customs clearance

In today’s interconnected world, global trade plays a vital role in the success of businesses around the globe. However, managing international trade operations can be a complex and daunting task involving various stages such as order management, logistics, and settlement activities. To navigate this intricate landscape and achieve operational excellence, companies are increasingly turning to the practice of global trade management.

UNLOCKING EFFICIENCY AND BOOSTING CASH FLOW: THE POWER OF GLOBAL TRADE MANAGEMENT

As the global economy becomes more interconnected and transport connectivity improves, larger quantities of goods are being imported and exported yearly. Leveraging the benefits of cheap labor and abundant availability of raw materials and natural resources, countries specialize in producing goods where they have a natural advantage while simultaneously importing goods where other countries have a cost advantage. Consequently, world trade by volume and value has consistently expanded at 4% and 6%, respectively, since 1995.

In an effort to boost international and cross border trade, countries enter into bilateral and free trade agreements with developed countries or major markets to ensure priority and preferential access to their products. Besides, groups of countries also align to form regional trading blocs based on the anticipation of mutual benefits that could accrue from such alliances. Examples include the United States-Mexico-Canada Agreement (USMCA), the EU (European Union), and ASEAN (Association of South East Asia Nations). The UN estimates that as of 2022, the world’s MFN-applied tariffs stand at an average of 9%.

The growth in international trade inevitably gives rise to the need for having in place rules to govern the burgeoning trade, with adequate safeguards to protect the commercial and strategic interests of countries involved, as well as setting up government agencies vested with the appropriate levels of authority and covering the relevant jurisdictions, to monitor trade and ensure compliance with applicable rules.

In this scenario, trade management has assumed greater importance, and companies involved in the international trade of goods and services have dedicated trade management departments.

IMPORTANCE OF TRADE MANAGEMENT IN INTERNATIONAL TRADE AND LOGISTICS

The trade management function has gained importance over the last few years as companies expand their markets overseas, and therefore increasingly need to be cognizant of the relevant rules and procedures across all their markets and design robust processes to ensure compliance.

While trade management is a very broad term, and the precise scope of activities covered thereunder can vary depending on the organization, its corporate structure, industry, and countries involved, as per the commonly accepted definition, trade management broadly incorporates all the activities and tasks that are concomitant to the sale and transport of goods and services. This would prima facie include not just sales and advertising initiatives but also handling the export and import process, including transportation, customs clearance, and associated documentary requirements.

Thus, the trade management function is responsible for international trade and concomitant logistics and supply chain activities.  

CHALLENGES FACED WITHIN GLOBAL TRADE MANAGEMENT

In their quest to ensure due diligence and compliance with customs and documentary requirements, the trade management function is confronted by several challenges, the most prominent of which are explained below:

1. Numerous regulations and multiple jurisdictions:

The diversification of and linkages in modern-day supply chains means that even in bilateral trade in any product between 2 countries, other countries will be indirectly involved (as components for the product could be sourced from or manufactured in other countries).

This means that in a single transaction, there will be multiple jurisdictions and numerous regulations involved, adding significantly to the complexity of the transport and customs process.

2. Comprehensive documentary requirements and the penalties in case of non-compliance

As a result of the applicability of diverse jurisdictions and regulations, the documentation and regulatory compliance requirements are equally multifold, covering various countries and in multiple formats and languages. The need to consolidate, comprehend and compile customs documentation is thus rendered even more difficult. The ramifications in case of irregularities or inadvertent omissions in documentary procedures can be severe, with penalties ranging from monetary fines to the imposition of trading restrictions.

3. Manual and time-consuming process:

The entire customs clearance process is extremely manual. Adhering to the established processes by customs authorities, will, in many cases, require considerable labor, time, and effort, which can impede workflows and compromise the stability and reliability of the supply chain.

4. Human errors might impact or delay the process:

Considering the manual customs processes, the probability of human errors and lapses is high, exposing the importer to risks arising from delays in clearing cargo. This, in turn, could lead to the incurrence of detention and demurrage charges, compromise the safety of cargo, and increase the probability of potential claims for damages.

5. Confidentiality of data:

With the number of documents floating around, maintaining the confidentiality of data can be difficult. Also, with the increasing incidences of cyberattacks and malware infestations, companies and customers have seen their confidential data being leaked and misused.  

HOW AI-POWERED CUSTOMS CLEARANCE CAN TRANSFORM TRADE MANAGEMENT

In recent years, we have seen a proliferation of technological solutions designed specifically for the supply chain and transportation industry. These solutions intend to solve problems at various stages of the supply chain.

Advancements in AI have made it possible to streamline and automate even complex tasks such as customs clearance and documentation, facilitating better compliance for these supply chains.

AI and machine learning-powered platforms offer a wide range of functionalities, such as data ingestion, automating workflows, optical character recognition, and real-time visibility, that have the potential to transform trade management, making it much more efficient and effective.

The use of AI to gather critical data elements from a wide range of documentary sources means onboarding with such providers is simple, easy and with a no-code integration process. It allows for a more harmonized system in the logistics process.

Organizations are increasingly adopting such systems for time and cost savings, besides reducing workforce requirements and streamlining the hiring process.

FUNCTIONALITIES AND BENEFITS OF KLEARNOW’S AI-POWERED PLATFORM

KlearNow’s AI-powered data ingestion platform helps importers and forwarders address a number of challenges that have traditionally afflicted the trade management process.

The more prominent functionalities and associated benefits are:

1. Mistake-proofing to prevent inadvertent errors:

The system is designed to not accept inaccurate or illogical data entry. Examples range from users not being able to update shipment arrival date if the date is prior to the shipment departure date or where a user tries to update alphanumeric characters in the field for the number of packages, or validating HTS codes to ensure the digits for the country match.

2. Visibility into the status of all on-the-water shipments:

Users have real-time visibility of their shipments and can thus monitor the status and condition of all shipments. This enhances the quality of supply chain planning and helps maintain inventory levels at optimal levels, besides facilitating advance planning and proactive transport arrangements.

3. Generate actionable summary and insights from historical data:

KlearNow uses AI and ML to create an iterative learning process, which generates an actionable summary and insights from historical data. This is useful when the system analyzes historical data for the time Commercial Invoices are received and then generates an alert warning the user if the commercial invoice for any shipment is not received within the normal timeframe.

Analyzing data for past shipments, the system can identify and highlight trends and common issues, thus enabling users to take remedial action and avoid the issues from occurring in the future.

5. The ease of integration

Using a no-code integration approach, AI can be seamlessly used in any organization without a complex or lengthy onboarding. Simply copying the AI tags into critical documents or email chains allows any company to start reaping the benefits of this cutting-edge technology.

CONCLUSION

As companies emphasize sales, the scope of trade management has increased exponentially, in tandem with the spread of globalization, bringing with it new challenges and increasing operational complexity.

Using technology to optimize and automate trade management tasks can smoothen the process, improve customs clearance times, and develop robust supply chains.

KlearNow offers solutions that transform the trade management function through AI-powered customs clearance.

Customers using KlearNow have reported a 70% reduction in document processing time and an 80% improvement in day-to-day logistics management. This has helped improve global customs compliance by 95% and reduced operational costs by 90%.For more information on how KlearNow can help your business, please click here.

 

Stay ahead of the game: How KlearNow AI enhances Food & Beverage logistics

Overview of the Food and Beverages Sector

The food and beverages sector has grown exponentially over the years, driven by growing consumerist tendencies and a post pandemic move back to spending on outside entertainment and services. With growing transport connectivity and decreasing unit slot costs, transporting consumables internationally is becoming more and more viable, resulting in a burgeoning international market for food and beverages.

Increasing prosperity levels in most countries and growing awareness of exotic cuisines have created a demand for imported goods facilitated by sophisticated and reliable supply chains. Consequently, countries with predominantly agrarian economies or which produce large quantities of fruits, vegetables, and meat have found exporting food and beverages a lucrative source of forex earnings and therefore have started focusing extensively on export-oriented production of food items.

Examples include bananas from the Philippines and India exporting Alphonso and other indigenous varieties of mango. A vast market for meat also exists, with items like premium-quality beef exported from Australia to various countries in Europe and Asia.

Developed countries also have a thriving export trade involving packaged food items and beverages such as wines and spirits. France exported wine and spirits worth USD 18.42 billion in 2022, while Scotch whisky exports exceeded USD 6 billion in 2022.

The spread of fast food chains across the world has also contributed to the international trade in food and beverages, as F&B giants such as McDonald’s and Subway transport huge amounts of food items to the various countries where they operate.

The global food and beverages market was estimated to be approximately USD 5,817.4 billion in 2021.

Supply Chain and Logistical Challenges Faced by the Food and Beverages Sector

The expansion of the global F&B industry has led to the rise of a niche logistics segment to cater to the unique requirements of the sector, known as the cold or reefer supply chain, which essentially involves creating adequate logistical infrastructure to facilitate the efficient storage and movement of perishables from the country of origin to the final destination.

Designing a cold supply chain is considerably more complex than it is for dry cargo, primarily due to the limited shelf life of the cargo and the need to ensure that the quality of the cargo is preserved at optimal levels throughout its journey across multiple modes of transportation.

This requires extensive knowledge about the appropriate temperatures and humidity levels for each commodity and constant monitoring to ensure that the right atmospheric conditions are maintained throughout the journey.

Further, such relevant information must be shared with all stakeholders in the transport process to ensure that the cargo is handled correctly and reaches its destination in the intended state of freshness and quality.

Some of the major supply chain and logistical challenges faced by the F&B sector are:

1) Ongoing produce, fertilizer, and agriculture shortages: Over the last three years, the global economy has been beset by Covid, trade wars, and geo-political tensions. The supply chain disruptions have led to shortages of produce, fertilizers, and other agricultural products. Apart from the unavailability of food items, the unreliability of cold chains and the unpredictability of delivery schedules have compounded matters for importers and buyers.

2) Increase in cost of food items: Food shortages have been exacerbated by the ongoing Russia-Ukraine conflict and growing inflationary pressures, which have resulted in spiralling prices. It is estimated that these headwinds have accounted for a 22% increase in average food prices.

3) Real-time visibility to ensure quality is maintained during transport and storage: For food and beverages, real-time visibility is vital to ensure that the temperature, humidity, and other technical specifications are always maintained while transporting the cargo. This is crucial to ensure that the cargo is not spoiled and is fit for human consumption when delivered to the end consumer.

4) Given health implications, Customs formalities and documentation requirements are a lot more stringent: Given the obvious health and safety concerns, Government and Customs regulations are extremely stringent when it comes to the import of food and beverages. The documentary requirements are far more detailed, and the checks are rigorous. Therefore, importers must ensure compliance with all documentary requirements and ensure that the quality has not deteriorated.

What KlearNow can offer the Food and Beverages Sector

KlearNow helps importers bridge the food & beverage–Customs gap by easing Customs formalities and procedures.

KlearNow utilizes patented artificial intelligence and machine learning technology to deliver process digitalization and automated workflows through the entire customs documentation and entry filing process, all while providing complete transparency to stakeholders.

KlearNow makes logistics smarter, faster, and more efficient by providing a patented digitized logistics solution for importers to streamline the complex  food & beverage documentation  process.

KlearNow facilitates End-to-End Supply chain visibility in partnership with project44, thus minimizing the probability of cargo damage and loss in value during transit.

Specific Functionalities and Benefits of KlearNow

Some of the more notable functionalities of the KlearNow product and associated benefits are explained below:

1) Data ingestion: This involves creating digital assets using artificial intelligence and machine learning to complete and deliver customs entry filings. This helps ensure that the documents and data filed are accurate, comply with all statutory requirements, and are filed with authorities within stipulated timelines.

2) End-to-End Supply Chain visibility: This includes visibility on documentation and information sharing, shipment status and Customs milestones (regardless of carrier/ forwarder/ mode of transport), and terminal-level visibility.

This helps timely and accurate sharing of relevant information with all parties, makes it possible to plan onward cargo movements in advance, and reduces demurrage and detention charges.

3) Smart Drayage for last-mile connectivity: KlearNow also allows importers to select a drayage partner weeks in advance. This helps the cargo owner to control costs and receive live ETA’s, thus reducing the probability of being stuck in supply chain bottlenecks.

Conclusion

The inherent complexities in the F&B supply chain present formidable challenges in the international transport of such cargo. The additional and often stringent Customs requirements and the constant need for real-time visibility of cargo status further compound these risks.

Importers and forwarders have to allocate significant resources to ensure adherence to relevant regulations and also monitor the cargo throughout the transport process.

This effectively leaves importers with lesser time to focus on their core commercial and customer service activities.

It is in this situation that importers can leverage technological solutions, such as KlearNow, to optimize Customs clearance and related processes. Additional functionalities, like real-time tracking and selecting drayage partners, greatly enhance the efficiency of supply chain planning and smoothen business flows allowing F&B companies to focus on their growth ambitions.

 

Pursuing Industry 4.0 as a strategy to build an efficient (and resilient) logistics business

Amid the aftermath of the pandemic, supply chains are gradually recovering and adapting. The pandemic highlighted the pivotal role of logistics in sustaining business operations. Industry stakeholders struggled with unprecedented challenges, pushing supply chain managers, accustomed to routine procedures, to recognize the far-reaching consequences of their decisions in maintaining business health during volatile times. This evolving landscape is embracing Industry 4.0, where advanced technologies, big data analytics, and artificial intelligence are optimizing logistics operations.

For an industry considered lagging in technology adoption, sustained market uncertainties helped pique interest amongst logistics companies, resulting in widespread digitalization and adoption of tech-forward solutions. Gaining visibility and transparency into operations was a welcome change, enabling companies to monitor and keep track of their shipment.

From the freight-tech perspective, the rise of venture capital activity in the logistics market was a godsend. As startups in the space grew to impressive valuations, so did the likelihood of logistics businesses striving to be more tech-forward. Companies became increasingly focused on digitalizing workflows in pursuit of more efficiency and building resilient operations.

This inevitably saw companies invest a chunk of their budget into buying and licensing technology solutions. While such tools predictably gave companies better visibility into their operations, it was still challenging to effectively translate these insights into actual value. Companies saw a considerable gap between gaining insights and successfully utilizing them.

The lack of integration continues to be a cause for concern. Companies that worked with several tech providers soon found their platforms inundated with solutions that could not talk to each other. Considering the high cost of technology adoption, businesses are now wary — pushing the need for operational context and technology interoperability to greater relevance across the freight-tech ecosystem.

Enter Industry 4.0, a term coined to describe the fourth industrial revolution. Industry 4.0 applies advanced digital technologies like the Internet of Things (IoT), big data analytics, and artificial intelligence (AI) to transform and optimize logistics operations. Unlike its predecessor, interoperability is a foundational element of Industry 4.0, as it seeks to enable seamless communication between different technologies and systems, sharing data and insights effectively.

To illustrate, take the customs function within logistics. Customs clearances have been traditional bottlenecks, thanks to the number of documents that need submission and the consequences of any compliance irregularities. Companies like KlearNow.AI are combating these complexities by leveraging Industry 4.0 to automate and streamline Customs processes.

Generative AI can accurately and efficiently extract data from customs documents, regardless of the data format — including unstructured data like emails, chat messages, and scanned paper bills. Companies can dump customs documents like invoices, bills of lading, and packing lists onto the KlearNow platform, which identifies patterns and compile customs data sets quickly and accurately, saving work hours and eliminating errors.

Generative AI can identify inconsistencies in documents by intelligently detecting potential anomalies. In case of such issues, the system can flag the records and bring them to the attention of human operators for manual review and correction.

With customs procedures being complex and quite rigid, extensive use of reinforcement learning (RL) models can help. RL can improve customs document processing by training AI algorithms to learn and make decisions based on a fixed set of rules in an environment. Rigorously trained RL models can help extract information more accurately and detect anomalies.

Ultimately, customs brokers and logistics providers can reduce costs and save time with their customs procedures, optimizing operations and improving resource allocation. Industry 4.0 helps companies gain an operational edge over their competition, as it truly impacts the way a business is run. It automates repetitive manual tasks, only needing intervention as a part of exception management. Businesses see improved retention with their customers, as efficient interactions improve customer satisfaction.

In essence, Industry 4.0 is a transition that represents a significant shift in how businesses operate and how technology is used to optimize processes and create value. It is more interconnected, intelligent, and autonomous than previous industrial revolutions, enabling companies to stay ahead of the curve in a rapidly evolving market.

 

‘Generational change’ to customs broker regulations for US imports aims to improve compliance

The US Customs and Border Protection (CBP) has implemented a major regulatory change to how customs brokers conduct their business — in a reform that they believe will help modernize the current environment. The changes came into effect on December 19, 2022, placing the onus of working with a customs broker on the importer, taking away the flexibility they had with relegating a third-party company — like a freight forwarder or other supply chain intermediary — to select the customs broker on the importer’s behalf.

These “Modernized Broker Regs” are a once-in-a-career transition for most US import businesses, with the last significant change dating back to 1994 when the Customs Modernization Act (Mod Act) was implemented. While the Mod Act was heavily lauded and helped kickstart customs reforms around the world, it is now dated and does not quite capture an import economy that has outgrown these regulations.

The Modernized Broker Regs seek to plug the gap in voluntary compliance — a concept the Mod Act banked on, while modernizing the system to ensure importers and customs brokers agree and understand the imported goods and comply with the federal regulations.

In the past, a US importer could sign a power of attorney (POA) with a third-party service provider, who would empower a customs broker via sub-POA on behalf of the importer. This led to instances where the importer was not signing a direct POA with the customs broker, unwinding into potential blind spots. Importers with no control over selecting their customs brokers can be stuck working with brokers with little understanding of the type of freight they are facilitating for import.

This becomes increasingly common when an importer enters a variety of freight into the US and employs different freight forwarders to move their freight. When service providers with minimal insight into the cargo control the communication with the customs broker, there is an increased risk of rule infractions. The Modernized Broker Regs reduces this risk by mandating customs brokers to document their communication with importers concerning POAs and other matters of “Customs Business.”

To generate widespread awareness, CBP held several webinars in the run-up to the Modernized Broker Regs implementation, explaining to trade stakeholders the impact these reforms will have on their business. Clearly, this was an attempt by the CBP to ensure a certain level of education in the highly fragmented import market. Importers without a handle on their customs processes and their “Reasonable Care” obligations tend to be unaware of third-party customs brokers or mistake their freight forwarders to double up as their customs broker. This is especially true of small and mid-sized businesses lacking in-house customs compliance departments.

With the regulatory changes in place, CBP can be reassured importers know who they are working with and are directly interacting with their customs broker. Fostering such direct relationships will mean importers can gravitate toward brokers who understand their business. For instance, a food importer can look to stitch a relationship with a customs broker with significant experience with the Food and Drug Administration (FDA), the US Department of Agriculture (USDA), and so forth.

For CBP, revising regulations is a stance taken to uphold the spirit of the law. The law has always been clear: the importer is ultimately responsible for following customs regulations that govern the freight they bring into the country. However, with third-party intermediaries in the picture, importers can end up on the wrong side of the law due to a lack of oversight. Getting importers to work directly with customs brokers can greatly help improve compliance.

On the flip side, customs brokers and other supply chain partners, such as freight forwarders, can improve transparency and communication by facilitating direct relationships between the customs broker and the importer. This helps improve the accuracy and completeness of customs entry filings.

This way, the CBP can audit customs brokers whenever needed and be assured they receive information straight from the importers and/or audit importers. It also eliminates instances of confusion where the freight forwarder is mistaken for the customs broker. Brokers are now required to keep records of their communication with importers, identifying freight forwarders inadvertently conducting Customs Business without a license, and flagging requests that could be outside of the law for reporting to CBP.

For importers looking for answers now, it would make sense to familiarize the material available on the CBP site, to ensure the correct interpretation of regulations. Reaching out to trusted advisors would be the next step — companies like KlearNow.ai have an in-depth understanding of the changes, and can facilitate introductions and proper empowerment between importers, customs brokers, and freight forwarders alike.

“We have been collaborating with KlearNow.ai for a while now. The KlearNow.ai platform ensures information is transmitted from the customs broker to the importer without dilution. Importers have the transparency to look at all their documents, the ones that were submitted to customs, and can employ their own due diligence at that point,” said Steve Fodor, founder and head of Customs Services & Solutions, a KlearNow.ai customer. 

In the end, due diligence will help importers stay on the right side of the regulatory line. “If an importer uses a service provider, it’s crucial to focus on the information and ensure it makes sense. In case of large import volumes, spot audits on a few of them will help make sure things are in order,” said Fodor. “KlearNow.ai is definitely one such platform that sits above other market solutions by providing comprehensive visibility through customs operations.”

KlearNow’s customs clearance platform acts as a bridge for importers, customs brokers, and freight forwarders to interact. They may all log into their own individualized view of KlearNow.ai’s platform and access information on every shipment to which the importer has nominated their access, including the broker’s name, contact information, and freight status on a per-shipment basis. The KlearNow platform also triangulates the storage of all records and interactions on US-based servers, allowing quick access during customs and other audits in compliance with Modernized Broker Regs standards.

CBP had offered a grace period through February 17, 2023, to allow importers and customs brokers already acting under third-party coordinated POAs to ease into the new direct relationship process. As this period has now lapsed, all importer/customs broker relationships must have a POA directly signed by the importer.  CBP has been clear with their intent to scrutinize customs brokers, checking to see if they are taking steps and measures to get a POA directly signed with the importer as a matter of enforcement. 

Ultimately, this regulatory revamp ensures importers stay informed of their customs procedures and that customs brokers directly communicate with their clients to import freight. This move can mitigate wrongful customs filings and, by large, protects importers, considering the industry is littered with cases of importers held accountable for the mistaken actions of their third-party agents.

 

‘Generational change’ to customs broker regulations for US imports aims to improve compliance

The US Customs and Border Protection (CBP) has implemented a major regulatory change to how customs brokers conduct their business — in a reform that they believe will help modernize the current environment. The changes came into effect on December 19, 2022, placing the onus of working with a customs broker on the importer, taking away the flexibility they had with relegating a third-party company — like a freight forwarder or other supply chain intermediary — to select the customs broker on the importer’s behalf.

These “Modernized Broker Regs” are a once-in-a-career transition for most US import businesses, with the last significant change dating back to 1994 when the Customs Modernization Act (Mod Act) was implemented. While the Mod Act was heavily lauded and helped kickstart customs reforms around the world, it is now dated and does not quite capture an import economy that has outgrown these regulations.

The Modernized Broker Regs seek to plug the gap in voluntary compliance — a concept the Mod Act banked on, while modernizing the system to ensure importers and customs brokers agree and understand the imported goods and comply with the federal regulations.

In the past, a US importer could sign a power of attorney (POA) with a third-party service provider, who would empower a customs broker via sub-POA on behalf of the importer. This led to instances where the importer was not signing a direct POA with the customs broker, unwinding into potential blind spots. Importers with no control over selecting their customs brokers can be stuck working with brokers with little understanding of the type of freight they are facilitating for import.

This becomes increasingly common when an importer enters a variety of freight into the US and employs different freight forwarders to move their freight. When service providers with minimal insight into the cargo control the communication with the customs broker, there is an increased risk of rule infractions. The Modernized Broker Regs reduces this risk by mandating customs brokers to document their communication with importers concerning POAs and other matters of “Customs Business.”

To generate widespread awareness, CBP held several webinars in the run-up to the Modernized Broker Regs implementation, explaining to trade stakeholders the impact these reforms will have on their business. Clearly, this was an attempt by the CBP to ensure a certain level of education in the highly fragmented import market. Importers without a handle on their customs processes and their “Reasonable Care” obligations tend to be unaware of third-party customs brokers or mistake their freight forwarders to double up as their customs broker. This is especially true of small and mid-sized businesses lacking in-house customs compliance departments.

With the regulatory changes in place, CBP can be reassured importers know who they are working with and are directly interacting with their customs broker. Fostering such direct relationships will mean importers can gravitate toward brokers who understand their business. For instance, a food importer can look to stitch a relationship with a customs broker with significant experience with the Food and Drug Administration (FDA), the US Department of Agriculture (USDA), and so forth.

For CBP, revising regulations is a stance taken to uphold the spirit of the law. The law has always been clear: the importer is ultimately responsible for following customs regulations that govern the freight they bring into the country. However, with third-party intermediaries in the picture, importers can end up on the wrong side of the law due to a lack of oversight. Getting importers to work directly with customs brokers can greatly help improve compliance.

On the flip side, customs brokers and other supply chain partners, such as freight forwarders, can improve transparency and communication by facilitating direct relationships between the customs broker and the importer. This helps improve the accuracy and completeness of customs entry filings.

This way, the CBP can audit customs brokers whenever needed and be assured they receive information straight from the importers and/or audit importers. It also eliminates instances of confusion where the freight forwarder is mistaken for the customs broker. Brokers are now required to keep records of their communication with importers, identifying freight forwarders inadvertently conducting Customs Business without a license, and flagging requests that could be outside of the law for reporting to CBP.

For importers looking for answers now, it would make sense to familiarize the material available on the CBP site, to ensure the correct interpretation of regulations. Reaching out to trusted advisors would be the next step — companies like KlearNow.ai have an in-depth understanding of the changes, and can facilitate introductions and proper empowerment between importers, customs brokers, and freight forwarders alike.

“We have been collaborating with KlearNow.ai for a while now. The KlearNow.ai platform ensures information is transmitted from the customs broker to the importer without dilution. Importers have the transparency to look at all their documents, the ones that were submitted to customs, and can employ their own due diligence at that point,” said Steve Fodor, founder and head of Customs Services & Solutions, a KlearNow.ai customer. 

In the end, due diligence will help importers stay on the right side of the regulatory line. “If an importer uses a service provider, it’s crucial to focus on the information and ensure it makes sense. In case of large import volumes, spot audits on a few of them will help make sure things are in order,” said Fodor. “KlearNow.ai is definitely one such platform that sits above other market solutions by providing comprehensive visibility through customs operations.”

KlearNow’s customs clearance platform acts as a bridge for importers, customs brokers, and freight forwarders to interact. They may all log into their own individualized view of KlearNow.ai’s platform and access information on every shipment to which the importer has nominated their access, including the broker’s name, contact information, and freight status on a per-shipment basis. The KlearNow platform also triangulates the storage of all records and interactions on US-based servers, allowing quick access during customs and other audits in compliance with Modernized Broker Regs standards.

CBP had offered a grace period through February 17, 2023, to allow importers and customs brokers already acting under third-party coordinated POAs to ease into the new direct relationship process. As this period has now lapsed, all importer/customs broker relationships must have a POA directly signed by the importer.  CBP has been clear with their intent to scrutinize customs brokers, checking to see if they are taking steps and measures to get a POA directly signed with the importer as a matter of enforcement. 

Ultimately, this regulatory revamp ensures importers stay informed of their customs procedures and that customs brokers directly communicate with their clients to import freight. This move can mitigate wrongful customs filings and, by large, protects importers, considering the industry is littered with cases of importers held accountable for the mistaken actions of their third-party agents.

 

Smart Logistics as a Service: Visibility, Technology, and Customs Clearance

“Supply chain simplicity” sounds like a utopia, doesn’t it? And, like a utopia, it sounds out of reach in 2022.

But supply chain simplicity is already here. Smart logistics as a service, or Smart LaaS, can ease your supply chain struggles, and it can start today.

Simplicity and visibility

“Visibility” is a buzzword in the logistics community, but not all visibility is created equal. Maybe you know your shipment has arrived, but you don’t know when it will be ready for pickup. Or maybe your customers want to know exactly when to expect a delivery, but your “visibility” only provides rough estimates.

True visibility is next-generation, real-time knowledge delivered with transparency, precision, and simplicity. Next-generation visibility is knowing exactly where your shipments are in real time and knowing everyone who needs access to that data already has it.

This level of precision and access comes with extraordinary benefits, including:

  • Cost savings. With the right technology and transparency at every stage of the supply chain, companies can save up to 80% in costs.
  • Operational efficiency. You shouldn’t pay to wait around. Next-generation visibility cuts down on wasted time and demurrage fees, speeds up shipping and customs entry, and improves communication and customer happiness.
  • Reduced risk. You should know exactly what risks your shipments might encounter along the way and get real-time updates, so you can prevent them or mitigate the impact.

Each of these benefits simplifies and streamlines your shipping process and puts the power in your hands.

Leveraging AI and cloud-based technology

This level of simplicity is possible with an AI-enhanced Smart LaaS platform that prioritizes an easy, user-friendly experience.

Smart LaaS technology cuts through the chaos of the current global supply chain, disrupts the status quo, and leverages the power of a connected world to remake logistics.

A Smart LaaS platform makes your life easier because:

  • AI-powered automation doesn’t make mistakes.
  • Cloud-based, streamlined processes put everyone on the same page at the same time.
  • Digitized transactions unify all your documentation.
  • Real-time, precision tracking and communication.

If you’re considering a logistics platform, look for solutions leveraging next-generation technology, including AI, real-time tracking, enhanced communication, and data-driven problem solving.

The future of logistics must be data-driven, digital, and sustainable — and a Smart LaaS platform makes it all possible.

Revolutionizing customs clearance

Even with the promise of advanced technology, most logistics pros are probably thinking about one thing: customs clearance. What can you do within your own company to address the behemoth that is global customs clearance?

Customs involves a lot of outdated, inefficient, complex, manual processes that require deep expertise. Meanwhile, shipping companies are left scrambling for solutions when the customs process throws up uncontrollable obstacles. In short, customs clearance is a frequent choke point for import and export activity.

And supply chain simplicity would be an empty promise without support for more efficient customs clearance. A Smart LaaS platform, developed with an AI engine that uses smart document classification, visual deep learning, and natural language processing simplifies customs entry, improves accuracy, and exponentially increases efficiency.

In fact, with the right Smart LaaS platform, companies can save 50% to 80% in time and/or money through:

  • AI-enabled data entry to increase speed and correct errors.
  • Automated data transfer to customs authorities.
  • Centralized, connected views of multi-leg shipments regardless of carrier.
  • Elimination of fees with a demurrage clock.
  • Real-time alerts to help avoid delays and resulting fees.

With the right technology powering your logistics, you can complete customs entry in minutes instead of hours.

Supply chain simplicity is here now. An AI-empowered, cloud-based logistics platform allows you to see state-of-the-art technology revolutionizing the supply chain from end to end. KlearNow’s Smart LaaS platform puts every part of the logistics journey into the palm of your hand.

Smart LaaS disrupts the status quo with groundbreaking simplicity, true visibility, advanced technology, and streamlined customs clearance. Learn more at klearnow.com.

 

5 Tips for Importers’ Success in Dealing with Customs Bonds

Did you know that US importers are required to obtain a customs bond for every shipment with a value of $2500 or more, even if the imported goods are duty-free? While the concept of a customs bond might seem complicated, it is actually pretty straightforward. A customs bond, or an importer’s bond, is a binding agreement between the three parties: importer, bond surety company, and the US Customs and Border Protection (CBP), the Principal, Surety, and Obligee, respectively. Essentially, a customs bond serves as a guarantee that customs duties and other import-related fees are paid to CBP even in case the importer defaults on payments for one reason or another.

Two basic types of CBP bonds used by importers are single entry bonds and continuous bonds. A single-entry bond, also called a single transaction bond (STB), can be used for importing a single shipment and must be filed directly at the port of entry. Continuous bonds (CB), unlike single transaction bonds, cover multiple entries regardless of their frequency or value and can be used for entering goods at multiple US ports. They are effective for one year and may be renewed numerous times.

The importer is ultimately responsible for placing the bond, but it is CBP that determines the required bond amount. For a single-entry bond, it is calculated based on the value of an individual shipment, with a minimum of $100. However, if imported goods are regulated by partner government agencies, such as FDA, the required bond amount might be set much higher, up to three times thevalue. In case with continuous customs bonds, the bond amount is determined based on the estimate of total duties, taxes, and fees paid by the importer yearly. This number is then multiplied by 10% and rounded to the nearest $10,000 for bonds up to $100,000, or to the nearest $100,000 for bonds over $100,000, with minimum set by the CBP at $50,000.

The KlearNow.AI team understands that navigating the world of customs bonds might be challenging for both beginners and already established importers. This is why we are sharing our 5 tips to importers which will help with success for your business when dealing with customs import bonds.

1. Choose the type of customs bond wisely

Deciding which type of customs bond to obtain is ultimately up to the importer, and it should reflect the needs of each individual’s circumstances. While single entry bonds may work well for importers with a few low value customs entries per year, a continuous bond may save the importer both money and time if yearly import volume is more significant and/or includes entries with high values at multiple ports. Another thing to remember is that all US ocean imports require Importer Security Filing (ISF). While continuous customs bonds already include ISF bonds, single transaction bonds do not, and in this case ISF bonds will need to be purchased separately.

2. Forecast your imports carefully

In order to correctly determine the amount of the continuous customs bond, the importer is required to forecast its import activity for the next 12 months. The CBP conducts periodic bond sufficiency reviews which could result in a letter of insufficiency with a request to increase the bond amount. It may happen at any point after the bond has been opened until the bond’s termination if CBP finds the volume of imports to be higher than initially forecasted and thus not fully covered by the bond. Importers should also keep in mind that additional tariffs applied to certain goods and active antidumping and countervailing cases may significantly increase the amount of duty they owe to the CBP, and, as a consequence, increase the required bond amount.

3. Prevent stacking of liability

It should be noted that a bond insufficiency letter contains the minimum required bond increase amount. The importer actually needs to re-assess its import activity and base the new bond amount on the accurate forecast rather than assume the bare minimum proposed will continue to be sufficient. In case if the new bond also turns out to be insufficient, customs will require yet another bond increase. This scenario often leads to so-called bond stacking, or stacking of liability, a situation when the tail of liability on a single bond remains open over multiple years. It might happen, for instance, when there are unliquidated import entries. When possible, the importer should avoid bond stacking as it may cause some undesirable side effects, such as a request for collateral from the surety company when applying for the new bond.

4. Renew the continuous customs bond timely

If you chose a continuous customs bond for your imports, be aware of when the bond expires and understand requirements for its renewal. We recommend importers to initiate the bond renewal process at least 15 calendar days before the bond expiration date. However, if the increase in bond amount is required, the bond renewal process can be started as early as 60 days prior to bond expiration. Keep in mind that requirements for customs bond renewal are not uniform across the industry. Surety companies often base their decisions on subjective reviews which take into consideration the principal’s history and aggregate liability, and some might require placement of collateral and/or indemnity.

5. Use trusted bond providers

Customs bonds may be purchased by importers from the surety companies directly or through customs brokers and freight forwarders. The great news is that KlearNow.AI can help you obtain both single entry and continuous customs bonds. We work with reputable and experienced sureties to make sure that our customers can purchase customs bonds quickly, avoid potential issues with bond renewals, and prevent lapses in coverage. Email us at sales@klearnow.com if you need to purchase a customs bond or need more information!

Material prepared by Natalia Bailey, KlearNow.AI Compliance Analyst

 

Brexit’s customs crunch – mental health fears revealed

A study of 1,177 UK workers has found that the majority of UK adults are worried about the impact of Brexit on the mental health of frontline transport and travel sector workers.

17% of workers in those sectors expect their jobs to become significantly more difficult and 22% of them are concerned about the mental health of themselves and their colleagues.

The study, conducted on behalf of KlearNow, also found that 45% of those working on the transport and travel frontline believe that the UK’s customs infrastructure will struggle with the increased import and export paperwork, a worry shared by a third (33%) of the population as a whole.

Mental Health, Job Cuts & Workload: Post Brexit Statistics

  • More than a third (37%) of UK workers expect their jobs to become more difficult once the UK leaves the European Union.
  • Men (42%) are more likely than women (32%) to hold this opinion.
  • 17% of travel and transport industry workers expect their jobs to become “significantly more difficult”, this is the highest of any industry sector.
  • 22% of transport workers are “very concerned” about the mental health impact of Brexit complications on their colleagues.
  • 45% of those working in the sector believe “The UK’s customs infrastructure will struggle with the increased import and export paperwork”.
  • 28% of those who voted in favour of Brexit are anticipating that their jobs will become more difficult as a result of Brexit.
  • 6 in 10 of us are concerned about the mental health impact on frontline logistics workers of Brexit.
  • 20% of UK workers agree with the statement “It’s unacceptable in 2021 for a nation’s customs processes to rely on manual data entry methods such as email”.
  • HALF of Brexit voters are concerned about the mental health impact on frontline logistics workers of Brexit.
  • One in ten Brexit voters would have voted Remain had they understood the logistical impact of leaving the EU.
  • 86% of Leave voters don’t believe Brexit negotiations have improved perceptions of the UK’s business.

Brexit perceptions by industry sector

The study exposed what Brexit means for different sectors of the economy — and how jobs are going to be affected.

 Workers in the arts & culture sector (75%) are most likely to expect their jobs to become harder as a result of Brexit, closely followed by workers in finance (52%), travel and transport (51%), architecture, engineering and building (44%) and manufacturing and utilities.

Industry sectors most likely to expect their jobs to become harder as a result of Brexit

Arts & culture – 75%
Finance – 52%
Travel & transport – 51%
Architecture, engineering & building – 44%
Manufacturing & utilities – 42%

Sam Tyagi, CEO of KlearNow, fears the extra post-Brexit customs workload will lead to a productivity crisis that will penalise consumers and small businesses.

“It’s abundantly obvious that as of right now, there simply aren’t enough staff employed at UK borders to handle the increase in workload brought about by Brexit.”

“UK borders are short-handed to the tune of about 50,000 staff and there will be an anticipated five-fold increase in customs entries with Brexit leading to as many 200 million extra customs entries.”

“Our study demonstrates quite clearly that UK logistics workers are concerned for the mental wellbeing of themselves and their colleagues; a concern shared by almost two thirds of the population. This is especially pronounced given the newfound appreciation consumers found for these workers who kept the UK running during the pandemic.”

“Our fear is that this will quickly lead to a two-tier system with priority given to larger importers who spend more on landing their goods at the expense of smaller business and their customers.”

“Without the rapid implementation of technology to make customs clearance easier, faster and cheaper, this trend will continue and UK consumers will suffer as a result”

“Customs clearance is so often the bottleneck in international supply chains. It’s a critical function but it has failed to keep apace with technological innovation. An alarming percentage of customs entries are still processed with manual data entry staff. As a result, customs clearance is already slow, opaque and prone to error. It’s only going to get worse.

 

From NAFTA to USMCA: what changed?

On July 1, 2020, the United States-Mexico-Canada Agreement (USMCA), a new trade deal between the three countries, entered into force. This agreement effectively replaced the North American Free Trade Agreement (NAFTA) existing since 1994 and aimed at eliminating tariff and non-tariff trade barriers between the United States, Canada and Mexico. While both international treaties sought to liberalize the trade between the three North American nations, it is important to understand what changes the USMCA brought to the supply chain and how USMCA potentially benefits North American traders.

One of these changes concerned the de minimis shipment value level, or, in other words, the threshold set by countries under which no customs duties or taxes are applied to imported goods. De minimis provisions are specifically aimed at benefiting small and medium enterprises (SMEs) and promoting e-commerce between the neighboring economies. Within the new trade framework set by the USMCA:

  • Canada raised its de minimis from 20 to 40 CAD for taxes and allowed for shipments to enter duty free if the total value of goods did not exceed 150 CAD;
  • Mexico continued its 50 USD tax free de minimis threshold and allowed for goods with up to 117 USD in value to enter duty free while significantly simplifying customs procedures for such shipments;
  • The United States agreed to a $100 de minimis threshold aiming to benefit importers that did not otherwise qualify for the much higher personal allowance of $800 for a single importer on a single day.

Under the USMCA the three participating nations also agreed to stronger rules of origin, both general and product specific. For instance, new rules of origin replaced the previous requirements for vehicles and automotive parts that were set under the NAFTA, including the Regional Value Content (RVC) calculations and thresholds. As of July 1, 2020, 66% of the content within passenger vehicles and lights trucks was required to meet North America origin definitions in order to qualify for the USMCA’s preferential treatment, with this percentage expected to increase up to 75% (from NAFTA’s previous 62.5%) over the coming years. The RVC for heavy trucks was similarly set to increase from 60% to 70% (previously 50% under the NAFTA) by 2027. In addition to this, auto producers became expected to submit three new certifications not previously required under the NAFTA: Labor Value Content (LVC) certification, Steel certification, and Aluminum certification. These measures were aimed at incentivizing higher-wage jobs in the industry across the borders and encouraging more research and development investment by automotive companies in the region.

The USMCA likewise brought changes to origin procedures and rules of origin. In particular, the USMCA introduced a new method for origin certification. NAFTA required exporters or manufacturers to provide a specific Certificate of Origin in order to certify that imported goods in fact qualified for preferential tariff treatment. The USMCA effectively replaced the Certificate of Origin with a certification which may be included on a commercial invoice and need not follow a prescribed format as long as the certification contains nine “minimum data elements” specified in Chapter 5 of the USMCA. These enhancements aimed to improve and simplify the origin/eligibility requirements and record keeping procedures for importers in participating countries.

Many North American companies have faced challenges while transitioning from the NAFTA to the USMCA. In most cases, this transformation involved changes in business processes and international trade practices; however some have also experienced full-scale re-structuring of supply chains. Nonetheless, we at KlearNow.AI recognize USMCA’s potential to greatly benefit businesses of all sizes in the participating countries and create various opportunities for cooperation. We have been working to extend our geographic reach to include imports into Canada, and we are very excited about our soon-to-be launched US-Canada-Mexico cross-border product. Stay tuned and follow our blog for more updates coming soon!

Sources:

https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets
https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/04-Rules-of-Origin.pdf
https://www.cbp.gov/sites/default/files/assets/documents/2020-Jun/USMCA%20Implementing%20Instructions%20-%202020%20Jun%2030%20%28Finalv1%29.pdf

 

Customs Brokerage Industry due for Digital Transformation?

In the midst of the unprecedented COVID-19 crisis, the global economy is undergoing a long-term transformation. Industries are adapting to new demands, and digital transformation is now a necessity, not an option. KlearNow.AI helps you streamline customs brokerage with our free digital platform, simplifying customs clearance, ensuring import visibility, and saving you time and money.

For business in the shipping and freight industries, it has been incredibly difficult to navigate the supply and demand side needs of their clients. We are observing industries experiencing mass increases in demand who are struggling with finding matching capacity and product to meet the surge. Air cargo right now is incredibly constrained with much of the capacity being cancelled as companies are limiting long-haul flights, putting remaining capacity at a premium.

Right now, the biggest culture shift and transformation we are collectively witnessing is how well the industry is utilizing technology and digital solutions to smartly adapt to this unprecedented situation.

Those that have left digital transformation on the back burner are scrambling today. On top, customs administrations and other government departments may start to request health or quarantine certificates for the products that has never previously required this type of documentation. In some bulkier cargoes, health, sanitary, fumigation and phytosanitary certificates may be required to necessary shipment documents moving forward adding steps to the process.

The current situation is putting an increased pressure on the entire logistics industry to modernize their practices to ensure competitiveness during this momentary and unforeseen disruption in the market.

Becoming digital is no longer a choice, it’s a necessity.

Customs brokers in particular are experiencing a race towards their own digital transformation and how to harness the efficiencies and transparency it offers to better cater to their customers’ needs. When global commerce re-emerges, there will be explosive and immediate demand for customs brokerage services. Those that have digital tools, will be in a better position to service this rapid inflow of demand.

With this in mind, having the right tools and technology solutions is key. KlearNow.AI can help:

  • Our web-based customs clearance and document management platform is applicable to all shipments regardless of carrier/forwarder and can be accessed from any smartphone, computer or tablet anytime and from anywhere.
  • For those that find themselves transitioning to alternative shelter in place arrangements, our digital solutionfacilitates customs clearance processing remotely, quickly and with little notice. There is no longer a need to physically access paper files or forms.
  • Our platform matches new customers to customs brokers to help grow your business.
  • There is zero cost to custom brokers to access and use the platform. We also facilitate collections from importers as a passive intermediary, so you don’t have to.
  • We provide full visibility of all your customers imports, allowing them to maintain the control of their shipments instead of relying on a third party and without having to call the broker, providing unbeatable customer experience.
  • Our platform results in a minimum 30% cost savings for importers.

Let us help you navigate the present with a simple, digital, no cost platform that will save you much needed time and money today. Contact us today!

 

Corona Virus Impact on International Trade: Thinking Ahead

Country by country from Italy to the US, everyday there are new reports of widening infections, travel bans and trade being on indefinite hold.  In addition, many depend greatly on exported goods from the Chinese market, and with the escalating corona virus concerns placing multiple factories on virtual standstill, what does this mean for international trade?

Like all of you, we are hopeful that the corona virus will be arrested, and are taking every necessary precaution to do our part and keep our employees safe.  Thinking ahead, once international trade starts to recuperate, we believe there will be a sudden influx of import activity which could create a “pig in the python” scenario, causing delays in clearing. Without the help of automation, it will be difficult to cope with this sudden inflow of declarations.

KlearNow invites you to start thinking ahead for this scenario and how to proactively prepare.  The typical customs broker has a maximum capacity of throughput for entries per day. This will present a significant bottleneck and trickle-down effect of delays, demurrage, per diem when shipments begin entering the USA requiring customs clearance entries well beyond the max capacity a customs broker can handle per day.  

As an importer, you can mitigate your risk with our digital solution. At KlearNow.AI we are here to help you navigate this uncertain period with proven technology that does not operate with the same limits of yesterday. We give you the fastest way to clear your shipments and with our digital tool you can rest assured your goods will not be “pending” entry. Stay ahead, clear your goods now with KlearNow.AI.

 

Key Takeaways from 301 Federal Register notice

We are only a few days into February, and already so much has happened in the world of international trade. In this first post we wanted to start with recent developments in the US and China trade agreements and how this affects imports coming into the US.

Seems that the US Government has decided to show importers some love effective on February 14th, 2020! That’s right LOVE by allowing for exemptions to recent tariffs starting Valentine’s Day. However, if your commodity is listed on the upcoming 301 CBP Exemption list, simply look up the secondary tariff code for the exclusion and include it on your Entry. With this listing you would then be eligible for the tariff exclusion. Several industries are highlighted, but we have decided to cover the exclusions within the furniture industry as a main example.

Section 301 Tariff Exclusions: Furniture Industry:

The Federal Register notice provides an exclusion from the 25% tariff assessed on imports from China classified in 9401.61.4011 if they meet a specific description, such as “upholstered dining chairs with wood frames other than teak”. Importers that meet the description can seek retroactive refunds on the tariffs paid for these products back to when the tariffs began in September 2018 and can also file the exclusion for future imports as well. The secondary HTS code that needs to go on file to be exempt from this 25% is number 9903.88.36.

The Federal Register notice also provides an exclusion classified in 9401.79.0015. described as folding chairs with aluminum frames, each comprising a seat of polyester rib stop fabric and polyester netting and an aluminum frame, weighing not more than 600grams. These are now on the exclusion list under the secondary HTS code 9903.88.35.

The Federal Register notice also provides an exclusion classified in 9401.61.6011. described as Upholstered seats with wooden frames other than chairs, not of cane, osier, bamboo or similar materials, each measuring at least 144 cm but not more than 214 cm in width, at least 81 cm but not more than 163 cm in depth.

For brokers and importers, just remember that in order to claim the exclusion your commodity must fit the criteria perfectly. To find out if your commodity qualifies, we at KlearNow.AI are happy to provide the necessary tools for claiming your exclusion. One of the features of our product, is that you won’t have to worry about commodity codes ever again. We got you covered.

Sources: https://ustr.gov/sites/default/files/enforcement/301Investigations/%24200_Billion_Exclusions_Granted_January_31.pdf

 

Brexit, now what? How to prepare your trade plan

International Trade has proven to evolve very quickly and change rapidly with fluctuations in the political environment. Of particular interest is in the United Kingdom, where the Brexit saga has been recently resolved and been approved by the EU. In result the UK has left the EU on January 31st 2020, but will be in transition mode throughout the year.

What will this mean for importers and exporters?

What will happen now after 31 January 2020?

As of 1 February, the UK is no longer a member of the EU and they have now entered a transition period that lasts until 31 December 2020. During this time there will be no changes to the terms for trading with the EU or the rest of the world, unless the rules change for the whole of the EU. This means EU rules for customs, VAT and excise will continue to apply to the movement of goods and trade for this limited time. There will be no new customs procedures at present but one should start preparing for the changes to come.

And what happens after 31 December 2020?

Starting 1 January 2021, businesses who trade with the EU will need to prepare for new customs arrangements. For example, for trade between Great Britain (GB) and the EU, businesses will need to make customs declarations to import and export goods once the UK is outside of the EU’s customs territory. Looking at solutions such as KlearNow.AI is a great options as you prepare for the changes to come.

How will Trade between Northern Ireland and the EU be affected?

The UK government’s approach for moving goods between Northern Ireland and Ireland if the UK had left the EU without a deal no longer applies.

New arrangements will replace this and ensure that there is no hard border on the island of Ireland and that Northern Ireland remains in the UK’s customs territory.

Here below we are mentioning some other changes to be aware of…

Transitional Simplified Procedures (TSP) and VAT

Registration and use of Transitional Simplified Procedures (TSP) for imports from the EU is currently suspended. Traders will not need to use TSP between February and December 2020.

Postponed VAT Accounting is also currently not available during the transition period.

The UK Government has recently issued a letter to UK businesses that trade with the EU and Rest of World countries and this is available to view on GOV.UK. The letter contains details on customs declarations and the importance of a UK Economic Operator Registrations and Identification (EORI number). One has to register itself as a UK Company with HMRC before being able to apply for an EORI number.

In essence if you are currently exporting from the US or any non-EU country into the UK then Brexit should not affect you apart from possible delays in customs bandwidth. However, if you are currently importing via the EU or from the EU then you will need to start preparing so that the possible disruption to your supply chain is as minimum as possible.

We will be in touch throughout the transition period with further details of how we at KlearNow.AI will be there to support you throughout this process. Stay tuned or reach out to us directly, we look forward to becoming your customs guide!

Sources: https://www.gov.uk/world/brexit-ireland

 
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