July 05, 2016
Something to Declare: Digital Disruption Comes to Customs
By: James Canham

New digitally-enabled business models and insights gained from big data analytics are making international trade more efficient and convenient. However, customs agencies have yet to make the move to digital and as a result are not as effective as they could be. As nations vie for their share of global trade there is a clear opportunity for customs agencies to embrace digital as a competitive differentiator.

So how can customs agencies affect this change? The key lies in applying lessons from digital transformation in the private sector.

Trade flow analysis

Let’s take big data analytics as a starting point. Traders use big data for a number of reasons, including understanding their customers better in order to deliver enhanced experiences. In a similar way, customs agencies could look to leverage big data insights into trade flows to understand and support their nation’s trade interests.

For example, data analysis could help agencies identify high-value/low-risk traders whose activities chime with the national growth strategy. Predictive analytics could then be used to detect patterns and behaviours to help agencies deliver bespoke services that make it easier for such traders to do business in that territory.

Knowing the client

While big data analytics technology might be new, the principle behind what it enables is as old as the hills: It’s all about understanding the client and making their lives easier. To grow or even maintain trade volumes and revenue, customs agencies must recognise they can no longer afford to ignore the dynamics of global trade and be concerned only with enforcing compliance or collecting tariffs. Agencies must invest in understanding trade supply chains if they are to innovate, differentiate themselves and attract trade.

Customs agencies can once again learn from the private sector in meeting this aim. Businesses realise that to understand the customer experience you have to live it yourself. Agencies should take a similar approach; putting themselves in traders’ shoes to understand trade supply chains first-hand. For example, agencies could self-serve a potential trade, or even just try out the experience of their own websites to discover where points of friction might lie.

The "uberisation" of trade

Finally, customs agencies need to recognise that the traders’ expectations are much higher than in the past. New digital services such as Flexe and Fleet are "uberising" trade and companies are now used to highly-convenient, personalised services where their needs are put front and centre. Modern customs agencies should be able to offer a similar level of user-centricity and convenience.

For instance, agencies could offer integrated services for large traders to reduce clearance times and cut costs. For smaller traders meanwhile agencies could provide digital services that deliver personalised guidance, advice on completing customs forms and mobile-enabled solutions. The reduced friction experienced by traders will also help to boost compliance, reduce agency errors and minimise trading costs.

Customs agencies are standing on the threshold of a new digital age. Agencies that take lessons from the private sector and deploy big data analytics and client-centric digital services will be able to transform into engines of growth; capable of facilitating smoother and more profitable trade flows. This evolution will translate into a huge competitive advantage for the nations these agencies serve.

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