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CSCB Report

Customs Brokers as Partnership Builders

by Carol West

Perhaps the single most important lesson for business today is this: no single player can succeed if they go it alone. Partnerships are the name of the game in a networked economy.

New partnerships and strategic alliances are constantly forming and reshaping in the marketplace. In fact, a recent New York Times article calls the sound of new alliances forming the background “white noise” of business today – the sound of the networked economy’s hard drive revving up to speed. Business strategists increasingly focus their attention on a company’s ability to form business webs – Internet-worked, fluid sets of relationships with other companies that complement each other and create value for their customers.

And as these business webs become more important, it becomes essential to find a way to orchestrate information. You need a way to bring all the players together, to build these partnerships, and secure the technical expertise that makes it all work.

In the business of transportation and logistics, that role increasingly falls on the customs broker.

Consider, for example, the impact that the government’s Customs Action Plan will have on the industry in the next few years. Under this plan, the Canada Customs and Revenue Agency (CCRA) will implement major initiatives that require a new level of collaboration between importers, their customers, carriers, freight forwarders and suppliers. Customs brokers are often the only players in this network who can make such collaboration possible.

Under the Customs Self-Assessment initiative, the importers will be able to move away from a transaction-by-transaction clearance process. Shipments of approved goods from the United States will be processed immediately at the border with minimal information – provided that the importer qualifies. To qualify, the importer must – among other things – sign a compliance agreement allowing the CCRA to perform post-clearance audits, and they must maintain clear audit trails linking information about goods, suppliers, costs, classifications, carriers and customers. This information must be maintained in an electronic environment, requiring clear linkages not only to the importer’s financial and business operations, but to all of the players in the supply chain.

Under the Carrier Re-Engineering initiative, the role of carriers will change dramatically in the clearance of shipments. Cargo control processes will be modernized and more information will be required on a pre-arrival basis, including the Harmonized System (HS) code. Because this information is critical to Customs’ risk management processes, it is non-negotiable. Carriers will be looking to customs brokers to provide these mandatory data elements so that the movement of goods is not delayed.

To support compliance under these initiatives, the CCRA plans to implement a new Administrative Monetary Penalties System – a streamlined system for imposing penalties of up to $25,000 for customs infractions.

All of this may add up to a more streamlined clearance process, and real benefits for everyone involved in moving goods across the border. But it also imposes new responsibilities and new requirements to maintain the flow of accurate, timely information throughout the system.

The railways, for example, see Customs Self-Assessment and Carrier Re-engineering as a valuable opportunity to provide better and faster service to customers – but it is an opportunity that depends on tighter integration throughout the supply chain. As Mike Tamilia, Customs Manager at Canadian National, recently told me, CN looks to brokers to provide the interface with customers that will make streamlined service possible.

“CN needs to focus on its core competencies,” Tamilia says. “We’re in the business of moving freight. Customs brokers are the experts in pulling all the information needed to get that freight across the border. They know our customers. They have an established relationship with everyone involved. And they have a proven track record, which will be essential in maintaining the integrity of our relationship as a carrier with the CCRA.”

George McBurney at Canadian Pacific agrees. With a renewed emphasis on enforcement from the CCRA, carriers like CP will depend on the integrity of information supplied by a broad range of players in the business web. “As a railroad, we rely on brokers to keep everyone in the loop on track. Although we are highly automated and transmit our cargo information to CCRA, we look to brokers to gather, verify and maintain detailed commercial information on a transaction-by-transaction basis.”

Wherever you fit in the supply chain – as a carrier or importer, supplier or customer – it is more important than ever before to understand your role within an increasingly integrated, networked web of business relationships. Customs brokers are in a unique position to help you build those relationships, and keep them running smoothly. In a networked economy, customs brokers are partnership builders.