Adopting technology towards a virtual Customs experience

By Pascal Minvielle, Chief Operating Officer of Webb Fontaine

The mission of customs has constantly been to collect duties and taxes at the borders and safeguard national interests by preventing the dispatching on the local market of prohibited good; combat smuggling and carry out investigations. In addition, it is the main source of foreign trade statistics.

Its importance is capital, especially since in many countries, it is the main provider of revenue and in this, plays a valuable role in keeping these countries economically afloat, hence the need for a strong and rigorous Customs administration in the collection of taxes.

Over the past 50 years, it has followed an evolution marked in particular by the increase in import and export volumes, the strengthening of security, the development of Customs Unions which has had an impact on human resources (ex . European Union), and the application of new international standards to harmonize and simplify the processes of Customs clearance operations. The role of the World Customs Organization (WCO) has been crucial in this regard, particularly through the adoption of universal declaration forms and appropriate international codification.

As with other government departments, the assimilation of technological developments has been gradual and has helped to absorb increased volumes, strengthen adherence to regulations and reduce bureaucracy, thanks to the introduction of computerization of procedures.

Customs computerization has always proved to be a more complex process than that of other administrations such as taxes or VAT, due to the multiplicity of business domains to be integrated within the same automated platform, such as units responsible for cargo manifest (inventory of goods on board the plane or boat), inspections, investigation, offences, collection, management of tariff and Customs value, bonded warehouses, etc.

Before 1980 in most countries, computerization was confined to the use of the calculating machine for the determination of duties and taxes, the paper declaration and its carbon copies were generalized as well as the use of manual registers for recording the list of Customs declarations and their processing from one counter to another. The Customs tariff which records the tax rates according to the type of goods sat on each work table. Declarants followed a specific walkthrough from counter to counter after depositing the documentary bundle.

The period after 1980 saw the rise of automation and the capture by Customs itself of Customs declarations on computer, same with manifests, as well as the digitization of tariff book. Customs clearance times are reduced. Customs is then the provider of increasingly reliable foreign trade statistics.

From 1990 to the year 2000, in the absence of the Internet, we saw the blooming of Direct Trader Input premises for entering declarations by the declarants themselves using a Customs network. Manual registers are being phased out, payments are made at the bank which in some countries is setting up a branch in Customs offices, and software includes a rudimentary risk system based on static selectivity criteria for directing the transaction towards documentary, physical, scanning or simply to exit without control.

The control of the Customs value, the purpose of which is to verify that the declared price has not been undervalued or overvalued, is essentially based on the physical compilation of invoices from previous declarations allowing prices comparisons.

The beginning of the 2000s marked a turning point with the arrival of the Internet and made it possible to evolve towards self-assessment, which is the entry of declarations by the declarant remotely, a development which is assorted with legal provisions, making the paper declaration obsolete in favor of the electronic declaration. The dematerialization of attached documents (Invoice, Bill of Lading etc.), the proliferation of scanners and the start of electronic payment are the highlights. This period constitutes a revolution with the end of the need to physically go to customs for the declarant, at least to declare his goods and pay duties and taxes.

Post-2010 sees the digitization of licenses, permits and exemptions, the generalization of electronic payment and the arrival of dynamic risk assessment systems based on econometrics.

Mobile technology is emerging, along with the adoption of the use of Internet of Things (IoT) and GPS tracking of trucks which ensures that goods bound for neighboring countries are not dumped on the domestic market without having paid taxes.

Customs then no longer operates in standalone mode, and interfacing facilities with other ministries are legion, such as with the Ministry of Transport for vehicles, the Ministry of Commerce for the registration of companies and freight forwarders.

Finally, the last ten years have seen the emergence of Artificial Intelligence in Customs systems, not as a tool governing the management of processes of course, but as an essential complement to detect fraud thanks to machine learning, using historical occurrences of proven fraud, then the development of automatic product classification systems, avoiding tedious searches in the electronic tariff directory.

Then the take-off of e-commerce until its peak during the COVID crisis, which pushes the systems to total or almost total dematerialization, the inspection of goods remaining a resolutely physical operation, at least as long as remote inspection remains a confidential process.

Due to the multiplicity of functionalities of a Customs Computer System, it turns out that the time required for its manufacturing is so long that the technology used to develop it is very often already obsolete when it is installed for its adaptation to the country specific needs.

It is then economically unthinkable to recreate it each time a new technology comes along and this is the problem encountered by most countries, even among the most advanced, which use technologically limited systems, 15 or 20 years old whose they continue to enrich the functionalities while trying to keep it technologically acceptable, such as adding a mobile interface, for example, when the system technology does not lend itself to it.

The problem comes from the fact that these systems have been designed in a monolithic way, in a single piece with all the components grouped together in a single package, so that any modification of a module such as the accounting function, for example, can cause instability on the whole system.

To solve this problem, the company Webb Fontaine has developed a Customs system which is not presented as a monobloc system but as many independent coexisting systems, one per domain (e.g., Inspection), which communicate with each other through an exchange of secure messages, which facilitates maintenance and promotes high availability and above all allows continuous scalability.

But above all, the company has endeavored to develop a generic system that meets the requirements of WCO in terms of clearance processes and standardization of codification, which makes the task easier when a country decides to use it, even if certain countries wish to incorporate their practices into it, such as the use of the Delivery Note as the starting point for Customs clearance, which transfers responsibility for the goods from the carrier to the declarant.

In fact, the evolution of the Customs system necessarily incurs the progressive involvement of additional stakeholders involved in the release chain, such as the integration of terminal operators.

Finally, after the advent of the A.I., the ultimate evolution of Customs will go through the integration of a universal blockchain which will make it possible to establish a secure and unalterable direct link between the data of the exporting freight forwarder wherever he is to the Customs system of the importer of any country.

In short, if the progress of Customs over the past decades has contributed to protecting the economic, commercial and security interests of the population, and has facilitated trade and travel, it is nevertheless essential that it acquires tools that are extremely responsive to technological leaps and that it relies on service providers such as Webb Fontaine who set up systems that almost never get old.


About Webb Fontaine:

Webb Fontaine is an AI company re-shaping the future of trade. Trusted  by governments globally, Webb Fontaine provides industry wide solutions to accelerate trade development and modernization. The company uses unique technology including Artificial Intelligence to enable countries to emerge as leaders in the future of trade.

Knowledge transfer  is at the core of Webb Fontaine; comprising a team of experts who work across the world, empowering local communities and governments.

As an industry leader with the largest R&D centres in the industry, Webb Fontaine is constantly developing international trade practices connecting countries, borders and people.