Air cargo companies have to deal with a lot of rules and issues when transporting goods between countries. One of the big challenges is customs compliance – adhering to the trade regulations of the countries to which you are exporting and importing. Being compliant includes understanding and adhering to the laws, regulations, and procedures put in place by national governments and multinational authorities to govern international trade.
Meeting certain documentation requirements, making sure goods are correctly measured, labeled, and shipped, paying the correct duties and taxes, and providing appropriate customs documentation for entry into other countries are all part of the equation. Customs compliance also means that you have to understand the regulations for each country to which goods are being shipped or imported.
In this article, we’ll explore why customs compliance is extremely important for air cargo carriers. We’ll also take a closer look at some of the challenges that air cargo companies face in meeting customs compliance requirements and tell you how the International Trade and Transport Compliance Solution (ITTS) from Be Informed can help you achieve customs compliance. Read on to find out more!
Non-compliance and air cargo companies: what can happen
Customs compliance is of the utmost importance for air cargo companies because non-compliance can result in hefty fines, trade sanctions, the seizure of goods, loss of business, cost increases, legal action and court proceedings, and serious reputational damage.
An example: in 2018, Air New Zealand was fined $15 million AUD ($11 million USD) by an Australian court for its part in a global air cargo cartel involving major international airlines. The illegal price-fixing agreements unfairly reduced transport costs for goods flown into Australia and broke Australian and international rules on fair trade. Several other air cargo companies also received heavy fines for their involvement in the scheme.
Meeting customs compliance requirements: the major challenges
Air cargo companies face several challenges when it comes to meeting customs compliance requirements.
Let’s take a look at the most important ones.
The world of customs compliance is a complex one. You have to deal with a myriad of globally applicable, national, and regional rules and regulations. And to make things even more difficult, these rules are often subject to change. Staying up-to-date with the ever-changing regulations and staying compliant in the long run can be a time-consuming and expensive task, especially if you have to carry out the process manually.
Many air cargo companies can only dedicate limited resources and personnel to customs compliance. This is especially true for many small or new companies without a lot of capital or limited experience with customs compliance practices. Brexit provides a good example of such a situation and required the recruitment of thousands of new officials.
Manual and error-prone processes
For many companies, customs compliance involves manual processes that are prone to errors. Data entry, record keeping, and security screening are prime examples. These manual processes are often time-consuming and labor-intensive, increasing the risk of errors and non-compliance.
Language and cultural barriers
Due to the international character of modern trade, customs compliance requirements are often accompanied by complex language and cultural considerations. Language barriers have the potential to create misunderstandings, while cultural differences often leave room for different interpretations of certain regulations.
Supply chain complexity
Air cargo companies have to deal with multiple parties throughout the supply chain. Manufacturers, traders, shippers, freight forwarders, customs brokers – all these parties are involved in the process of getting products from A to B. Tracking every step of the process and ensuring customs compliance can be a challenging task when you are dealing with complex supply chains and a wide variety of different companies and organizations. Lack of transparency and coordination throughout the supply chain can create compliance risks and increase the likelihood of errors and delays.
Not every customs authority interprets regulations in exactly the same way. We often see varying degrees of enforcement, making it difficult for air cargo companies to predict potential compliance issues. This inconsistency can lead to delays, additional costs, and, in worst-case scenarios, even legal issues.
Reduce complexity, improve compliance
The International Trade and Transport Compliance Solution (ITTS) from Be Informed is a dedicated tool that helps you automate and structure customs compliance, allowing you to overcome the aforementioned challenges. It is a comprehensive software platform designed to help organizations in the aviation industry achieve their goals and tackle their daily challenges. ITTS allows all involved parties to automatically check international trade and transportation transactions for potential compliance issues. It also assists staff members in resolving problematic transactions and establishes a thorough audit trail to demonstrate compliance to regulators.
ITTS also allows air cargo companies to analyze hundreds of thousands of documents and establish the right connections between all these parcels of information. This enables the system to recognize abnormal or suspicious behavior, giving the airline the opportunity to highlight potentially illicit incidents or changes in the behavior of freight forwarders, carriers, or shippers.
Discover the possibilities!
Speak to our experts about international trade and transport compliance.