The Future of Customs: Changing the language of customs

Key takeaways from the virtual Maersk event

Black swan events such as the COVID-19 pandemic, the six days blockage of the Suez Canal, and, most recently, the war in Ukraine have disrupted supply chains around the world. These events have highlighted the globalised world’s dependency on the ability to securely and effectively move goods across borders – proving customs to be more crucial than ever before.

Technological developments, global partnerships, and new systems are also affecting global trade, enabling organizations to leverage the business opportunities of customs. But there is room for improvement as barriers are disrupting businesses and keeping them from seizing the opportunities and strategic advantages within customs.

Gaining strategic advantages, lowering complexity and looking at the future possibilities was the focal point of the virtual event, ‘The Future of Customs’ carried out on November 22nd, 2022, live from Maersk’s headquarters in Copenhagen, Denmark.

Nearly 250 business professionals in Europe and globally joined the broadcast to get updated on the potential of customs by leading experts representing Maersk, Volvo Group Trucks Operations, The Global Alliance for Trade Facilitation and The World Customs Organization.

Proving the baseline

Björn Höglund, Head of Growth Europe, Customs & Trade Services at Maersk, gave his perspective on how organizations can leverage business opportunities within the industry. To become more commercially relevant, customs need to prove a monetary baseline, Björn Höglund stated, stressing the importance of looking at customs from a strategic perspective.

So, how do we monetarise customs? According to Björn Höglund, data access is part of the answer: “We must gain full data access. Today too many companies have silos of data that do not support the business. With data, we gain a firm understanding of what we are operating, how we are operating and the impact we have.”

The Volvo Puzzle

Switching to the client perspective, Joakim Ryber, Director of Customs & Trade EMEA at Volvo Group Trucks Operations, talked about how Volvo has changed its customs strategy in the last few years. Joakim Ryber used a metaphor to describe how Volvo is working with customs:

“To me, using customs as a competitive edge is like laying a puzzle. You have certain pieces that you know are important as enablers – but the challenge is that you don’t know how they fit together neither do you have the full picture of the puzzle. But you still need to try.”

Joakim Ryber listed the five pieces of the puzzle that have been central to Volvo's new and improved approach to customs:

• Data visualization, which provides a foundation of facts to act from.
• Awareness of the importance of trade and customs throughout the organization.
• Layers of competence that can analyze and make decisions based on data.
• Flexible IT solutions that can adapt to the changes driven by data and decisions.
• Quality of master data, specifically HS classification.

A member of the highly engaged audience asked Joakim Ryber about the importance of Volvo’s internal HS classification centre – which was mentioned as one of Volvo’s main customs initiatives. Elaborating on the concept, he said:
“With an internal classification system, we can generate our own data. This secures the long-term competence at Volvo, while we are also able to analyse the data much more effectively.”

The Greening of Customs

Being the only organization in the world dedicated one hundred per cent to customs, Ricardo Treviño Chapa represented the voice of the World Customs Organisation at the event. The mission of the organization is to develop international standards, foster cooperation and facilitate legitimate trade. Part of this work focuses on one of the unavoidable topics of today:
“A key aspect of our strategy is the greening of customs and how the customs community can contribute to the sustainability of our planet,” Ricardo Treviño Chapa said.

To touch upon custom’s responsibility, Ricardo Treviño Chapa explained what could be key drivers to customs' role in creating a more sustainable future:
“Sustainability accompanies the use of automation and data as customs administrations need transparency and supply chain data to know if a product is actually environmentally friendly.”

Data is gold – but how do we manage it?

For the panel debate focusing on the status quo and the future of customs, Ricardo Treviño Chapa was joined by Lars Karlsson, Global Head of Trade & Customs Consulting at Maersk, as well as Philippe Isler, Executive Director of the Global Alliance for Trade Facilitation, and Joakim Ryber from Volvo.

Lars Karlsson emphasised how the definition of borders has changed over the years, leading to new opportunities: “38 years ago, when I started in customs, the border was a point which you could pass physically and where we collected all the customs data. Today, the border starts when you pick up your smartphone and buy a ticket or a product. Now, we are looking at developing systems that can collect this data as well.”

All the participants, representing several actors within customs, agreed that digitization within customs is crucial and needs to be further developed. Philippe Isler offered an explanation as to why customs is behind other industries when it comes to the use of data and digitization: “Let’s face it, whatever people say digitization is a very difficult thing to do correctly. In trade, there are so many different actors that need to exchange data. Government and the private sector act very differently from each other. And there is also a huge gap between developed and less developed countries. But progress is being made.”

Another topic was how the COVID-19 pandemic – which took a toll on many industries – proved to be a catalyst for development within the customs industry.

On this, Lars Karlsson commented: “The pandemic has been an accelerator for advancing infrastructure and technology in customs. It also passed the test of the pandemic, as vaccines, medicine and medical equipment all passed the borders through the pandemic. It showed that coordinated border management actually works when it is necessary. Now, we just need to find the drivers to keep accelerating instead of slowing down. “

One of these drivers could be the 553 current trade agreements. But as it is today, a survey found that 200 of them are unknown to most companies. According to Philippe Isler, huge potential lies in changing the way they are developed: “More involvement of the private sector at the initial stages of the negotiations would be helpful. And it is true, we do have hundreds of trade agreements which are complex and underused, in particular by SMEs who need them most."

Luckily, there are lots of tools for companies who want to utilize the trade agreements, states Lars Karlsson: “Digital solutions and systems gathering the necessary documentation to use trade agreements do exist on the market. The problem is that very few companies use these solutions. But there is hope. Today, when I speak with our clients at Maersk, they are aware of these opportunities. Now it is just a question of investing in putting it to use.”

After the panel discussion, hosts Lars Karlsson and Björn Höglund rounded off the event. Lars Karlsson concluded: “There was a lot of good food for thought today, and we need to keep going with these types of discussions. Thank you to the amazing speakers who joined us today, and thank you to all the people watching for participating. Remember that customs have never been more important than now. But it will be more important tomorrow.”

If you want to find out more about how Maersk can help your organization with customs, you can get in touch with us here: Maersk Customs Services Europe