Four trends that will keep customs teams busy in 2024

Astonishing fact: in 2022, customs professionals across Europe handled around 957 million declarations.* A new record!

Brexit might be the most infamous, modern-day culprit of increasing complexity in customs. Yet, the ‘new’ border is by far not the only contributor as the playbook of global trade comes with more and more rules. In some cases (like with Free Trade Agreements) companies can use those to their advantage, while in other cases they lead to financial and administrative burdens. 

In either case businesses should be vigilant about what’s moving in customs, says Camilla Poulsen, European Business Development Manager Customs at Kuehne+Nagel. She believes that customs will gain even more strategic importance in the future. Gone are the days that customs was a purely operational formality. 

For International Customs Day, we spoke with her to get insights in customs trends that keep customs professionals and businesses on their toes. 

Trend 1: multinationals centralise their customs departments

This trend is another proof point that customs is moving out of the ‘operational’ bucket, straight into the ‘strategic’ one. It mainly pertains to big multinationals and conglomerates. They have many import and export markets and a broad product portfolio, which means they need to consider many different customs and trade regulations.  

Camilla: “Take the example of a retailer exporting from Europe to the UK. Chicken nuggets are products of animal origin which requires a specific health certificate. A bottle of Chianti classifies as alcohol which demands an entirely different customs procedure (with excise duties). This is the reality if you want to fill your supermarket shelves in different countries with a variety of products.” 

If customs operations are fragmented, an already complex challenge becomes even more difficult. “One multinational we helped get Brexit-ready, received different SOPs from each of its 15+ logistics partners. Imagine that: Brexit times fifteen. Something  else we see is businesses overspending on duties or facing supply chain risks because of improper data exchange in a fragmented landscape,” Camilla explains.   

There are many ways to streamline customs procedures, like automating repetitive tasks, using digital tools… but the starting point is centralising the customs governance to ensure an appropriate level of control around the operations. Take ‘preferential origin’ as an example. Companies can really benefit from Free Trade Agreements and enjoy tariff exemptions, and do so consistently. Someone within the company needs to keep an oversight to make sure that such FTAs are taken into account,” says Camilla. 

A centralised approach also makes it easier to capture useful data. That brings us to the second trend. 

Trend 2: Capturing data gains importance as the digital era of customs draws closer 

Have you heard of the EU Customs Reform? This EU proposal from May 17, 2023, is all about digitising customs to cut down on cumbersome customs procedures through electronic data exchange and artificial intelligence. The EU Commission’s website states: “A new EU Customs Authority will oversee an EU Customs Data Hub which will act as the engine of the new system. Over time, the Data Hub will replace the existing customs IT infrastructure in EU Member States, saving them up to €2 billion a year in operating costs.” 

For companies, this means that they need to gear up on their ability to submit customs data electronically. Those with e-commerce shipments can already test the envisioned benefits of the system as of 2028. Other importers would be able to test as of 2032. Still a while from now, you probably think. According to Camilla, though, the time is now to prepare for this digital customs era. 

Camilla: “Many companies still handle their customs quite manually. Today, the majority of our customers send their declaration requests by email. Now is the time for businesses to start building their digital customs management blueprint. Anything business can do right now in this space, will undoubtedly create an advantage for them on the long-term.  

That data capturing is becoming more and more important, is also felt on the sustainability and ESG front. 

Trend 3: ESG-driven customs adds another data layer to supply chains 

A hot topic in 2023 is the Carbon Border Adjustment Mechanism in Europe which will oblige EU-based companies to declare the carbon emissions embedded in the manufacturing of the goods they import. It triggered a lot of questions from our customers, some of which are answered here. In December, the UK followed suit with the announcement that they will also adopt a Carbon Border Adjustment Mechanism, albeit with differing scopes and rules. 

Next to carbon-reducing customs initiatives, there is also a movement to prevent forced labour. This is something that the US already has in place with its Forced Labor Prevention Act. It prohibits goods from being imported into the United States unless the importer can prove that the goods were not produced with forced labour.  The EU Commission has now made a similar proposal.   

Camilla: “While those are positive developments, they put further pressure on companies’ abilities to report on their activities. The requirement to control suppliers means they need to capture yet another layer of data from their supply chains. Companies should continue to monitor developments in this area and build robust processes to ensure that potential human rights (including forced labour) and environmental risks in their supply chains are identified and addressed.” 

In addition to these transformative changes, there are also shorter-term updates to the rulebook of customs and trade that must be followed, as explained in Trend 4.  

Trend 4: Sanctions from geopolitics create a minefield to navigate 

The EU has imposed massive and unprecedented sanctions against Russia in response to the war against Ukraine. In addition, the EU has adopted restrictive measures to curb trade with Iran as part of an integrated policy approach to persuade Iran to comply with its international obligations. Other countries targeted with trade sanctions include Myanmar and Belarus. 

Camilla: “The list of sanctions develops fast. There is a strong emphasis on where goods are sourced, and one must be able to deliver proof of their origins. Traders are no longer ‘allowed’ to trade in the way they were used to – they need to be on top of these developments to ensure compliance.” 

Be strategic about your customs approach 

Every day, Kuehne+Nagel’s customs professionals help businesses, small and large, navigate the ever-evolving customs landscape. Don’t hesitate to reach out via our website.

*Source: https://www.wcoomd.org/-/media/wco/public/global/pdf/about-us/annual-reports/annual-report-2022_2023.pdf

The images used in this article are generated with Artificial Intelligence.