In early March 2020, as COVID-19 was spreading across the world, the BBIN countries – Bangladesh, Bhutan India, and Nepal – imposed restrictions on the movement of freight and people across their land borders. According to the World Bank , trade flows were heavily impacted, with thousands of trucks stranded at the border between Bangladesh and India’s north-eastern state of Assam.
This isn’t the only region where land ports have been hit by the pandemic. In many other parts of the world, the costs and time involved in shipping goods across borders have increased sharply due to additional inspections, reduced operating hours and even border closures.
What’s more, the challenges for ports worldwide go well beyond the effects of the pandemic. Take the move by several GCC economic zone countries to become logistics hubs. This will trigger a dramatic rise in trade volumes crossing the region’s borders – putting costs and throughput under pressure just when governments are striving to do “more with less”.
Time to get smart…
When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative.
All of this underlines why employing armies of people to try and inspect every item crossing a border is no longer a viable, scalable or sustainable approach. Instead, the only way for land ports to increase the inspection hit rate while maintaining a flowless border movement and strike the right balance between cost, speed and security is to operate in smarter ways – by applying industry-leading customs and informed targeting based on risk management practices that enable smart segmentation of goods passing through.
Many of these leading practices are enabled and underpinned by technology. Indeed, we hear a lot these days about the use of advanced capabilities like AI and predictive analytics to improve customs processes. However, until you have the basics in place in terms of leading practices, there’s little point even considering applying these technologies.
…starting with data
The first step? As in so many other areas of business and life, it all starts with data. And for land ports specifically, with getting earlier and fuller access to pre-arrival data – especially on cargoes – by tapping into all the information that exists around any journey being made by goods or people.
Three types of data are particularly important,
- compliance data – harnessing data that traders have been required to supply to customs authorities to populate the pre-departure declaration or manifest.
- end-to-end “data pipelines” – moving away from individual border transactions and tapping into data generated end-to-end along any cargo or traveller journey.
- trusted trader/traveller programmes, incentivising regular users of the border to provide their data early by offering lighter-touch processing and a more seamless experience.
Intelligent risk management…
With the basics in place in terms of a solid foundation of data, the land port can overlay and optimize it with intelligent risk management. This means implementing a new data-driven risk framework that works in three iterative stages.
First, risk indicators that correlate to a higher likelihood of fraud or smuggling are applied to incoming consignments and people. Then the findings are fed into a risk assessment engine powered by AI and machine learning to calculate the specific level of risk. Finally, the output is translated into a “traffic light” indicator of the action needed, ranging from direct clearance to documentary or physical inspection to stop-and-seize. The results of these actions are then checked by being fed back into the risk engine via a feedback loop.
...enabling a targeted inspection strategy
The greatest benefit of an intelligent risk management framework is that it empowers the port to move away from a “flat” security strategy. Rather than every consignment or traveller being regarded as suspicious and subjected to the same type of inspection, the port can use risk insights to target its inspections.
This process works as a funnel, starting with pre-analysis of advance information on 100% of goods and people arriving at the border. Based on that risk assessment, about 30% might typically be subjected to detection technology such as X-ray scanning, with about 10% proceeding to physical inspection. Finally, about 5% of shipments are unloaded and unpacked for detailed inspection, with entry denied to any found to be non-compliant.
Such a process requires strict coordination – all the way from data collection and assessment to execution – between the central operations centre where policies and risk thresholds are set, and the operational ports where they’re applied. Two especially important aspects of the targeted inspection system are scanning and dynamic lane management. We’ll do deeper dives into each of these in future blog posts.
Realising the segmentation opportunity
Championing smart segmentation guarantees more challenging — and more strategic — debate about what segmentation means for government agencies, land ports, suppliers, and customers. Those segmentation discussions and disagreements, in turn, lead to more rigorous definitions of targeting. Meaningful targeting — the ability to weigh measurable trade-offs — requires clearly delineated parameters. Greater clarity invites greater insight into options and opportunities. Greater insight ensures better and more timely decision-making.
With intelligent risk management in place and the targeted inspection strategy up and running, the port can implement best-practice segmentation of all traffic. This means using the advance data on traders and travellers to position them on a “compliance spectrum” running from a small number of unknown, non-compliant consignments and people at one end to a much larger number of known, trusted traders/travellers at the other.
Different treatments are applied – and a different experience provided – at each stage on the spectrum. Under the “80/20 rule”, the bulk of the inspection effort is focused on the small proportion of traders and travellers that are seriously non-compliant and pose a security threat or fraud risk.
As mentioned above, scanning is a vital aspect of a targeted inspective strategy for any land port. But what scanning techniques and technologies are most effective? I’ll answer that question in my next blog post. In the meantime, if you have any feedback or comments, feel free to reach out. I’d love to hear from you.
Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors.
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