CAIE Report
Delays, Delays, Delays
Canadian traders are getting sick and tired of slipping schedules. Wherever you turn, time and time again time frame commitments made by government bodies are not being honored. Of course, there are always explanations and attempts made at rationalizing the situation.
But how long is this to go on? That proverbial carrot that is dangled in front of traders, encouraging them to move in a certain direction, keeps moving forward just enough to be beyond reach. Canadian companies are having a difficult enough time competing on the international scene as it stands now, never mind chasing some ever elusive benefit.
The latest round of Canada Customs and Revenue Agency (CCRA) commitments have been a definite letdown for many companies that have taken the CCRA at their word. Two much touted programs have been Customs Self Assessment (CSA) and the Administrative Monetary Penalty System (AMPS). Slippage has now occurred for both of these initiatives and the original implementation date of April 29, 2001, has now been moved to a “potential” implementation date of October 29, 2001. Also, the first phase of carrier re-engineering, with its threatened implementation of mandatory Harmonizations System for this fall, has now been resheduled well into 2002. Although these programs may not all be viewed by traders as beneficial to trade, companies have spent considerable time, effort and resources gearing up for the announced implementation dates, only to find out that delays have occurred once again.
Why are traders frustrated with CCRA delays? Perhaps it is an obvious question but one that might need some clarification nonetheless. First of all, let’s look at what impact delays in general have upon traders. Put simply, delays cost money. Delays impact a company’s bottom line. When a good or service isn’t received or delivered in the agreed upon timeframe, usually it ends up costing someone. This someone is typically the importer, the exporter, the affected service provider or any combination of them. Sometimes these costs can be transferred to the end customer, but in many cases these additional costs caused by delays end up being absorbed, subsequently impacting a company’s bottom line. In commercial dealings, companies can easily be penalized monetarily for not living up to their commitment and delivering their “goods” on time, and that is in addition to having their contract revoked or cancelled. When dealing with CCRA, though, costs absorbed by traders caused by delays have historically just faded into the background, without much vocal reaction from Canadian traders. This lack of speaking up is definitely changing now.
So what are the costs incurred by traders that were caused by the delay in implementation of CSA? Once again, money invested by companies in readying themselves for this program has potentially been lost, and further investments for CSA may have been jeopardized or may be seriously reconsidered when considering future investments. Although there appear to be apparent benefits for importers to get on this program, the ability to sell this concept internally has not been an easy feat.
For most companies, the customs, traffic or logistics departments are typically at the bottom of the pecking order. Trying to “sell” a concept upwards within a company is slow, painstaking and often costly. Therefore, the customs, traffic or logistics department must ensure that it knows what it is talking about and must have a strong degree of confidence in its plan before venturing ahead. Let’s say that the department has been successful in getting buy in and funding has been allocated for the CSA initiative. Any programming changes required for a company’s internal systems are put in queue amongst the myriad other changes already in the works. Processes, schedules and priorities are modified to accommodate the changes so that everything will be ready and in place by the given date. Then the word comes from CCRA that there have been delays and that there is now a new “most likely” implementation date.
Where do you think the blame will be placed? It is, of course, immediately shifted to the customs, traffic or logistics department as companies themselves know very little of CCRA. There are lost opportunity costs, which somebody has to account for. Changes in processes and systems are no longer done in isolation. Every modification has an effect on the supply chain itself and upon the company’s operation as a whole. Diverting resources in the modification or development of one area puts other areas on hold. Companies are struggling to remain competitive and opportunities that do not materialize on a timely basis are simply not worth it. Additionally, what do you think the confidence level in these logistics organizations will now be? I would venture to say not very high. Senior management may rethink the situation before they buy into something like this again. Certainly there may be a new implementation date, but business goes on and systems development continues. Projects get abandoned and valuable IT resources are channeled elsewhere. To reclaim these resources will not be easy and will now consume more time and money which is become scarce during this downturn in the economy.
What about AMPS you may ask? Isn’t a delay a “good thing” in this case? Let me pose the question another way. Is crying wolf a good thing? How often do you think it will work? The same principle applies as when trying to sell CSA within the company. You may get the attention of senior management initially. But when nothing happens you lose that attention very quickly. After all, there are more critical aspects in the day-to-day operation of the business that need to be considered. Companies are now saying more loudly, “When something is passed into law, then let us know. When things are implemented, then let us know. We don’t have time to waste on things that may never materialize or that may be so significantly altered that we won’t even have to worry about it anyway.” These are the everyday realities. “Mandatory HS for 2002? Let’s wait to see if anything happens and then we’ll worry about it.”
Delays are a part of life. But when delays cost companies money management quickly shifts their attention away from money losing propositions. If the CCRA wants to regain client confidence then they have to do a tremendous selling job in the next little while. They cannot expect that the customs, traffic or logistics employee will be able to change the minds of his or her senior management in the company towards a program that should have been delivered on time. When new program that requires the business community to make changes to benefit from it, then it behooves CCRA to meet the implementation target date!