CSCB Report
The Ties that Bind A staple for electronic data is key to global logistics
The Canadian government should act quickly to implement a Unique Consignment Reference (UCR) system for customs purposes. Like an electronic “staple” designed for e-commerce, a UCR binds information together – all the bits of data about a trade transaction, from initial order and consignment of goods by a supplier, to the movement of those goods and arrival at the border, through to their final delivery to the importer.
That electronic staple can have significant benefits for the logistics industry and will be an important step towards more efficient, automated customs procedures.
Today, customs brokers make every effort to get the right information to the right place before a shipment arrives at the border. This facilitates Customs’ targeting and risk assessment process. If the importer client is approved for Customs Self Assessment (CSA), the broker ensures that the right audit trails are in place to tie the correct information together in the way Customs demands.
This only works if the broker can stick the right bits of data together. Because data on any one shipment comes from many different sources, and at different times, it has to be matched up and tied in the correct package. If the pieces come unglued, the Customs release is delayed. This means extra costs, inconvenience, and the possibility of lost business for the importer.
That is where the UCR concept can make a big difference. The concept itself is not new; it has been tossed around in logistics circles since the early days of EDI. But it has started to receive a lot of attention, as the benefits and the need for such a system becomes more apparent.
For example, the need for a UCR system is raised in the second report of the new Coalition for a Secure and Trade-Efficient Border. Formed this past October to address heightened concerns about border security and trade, the coalition represents a broad cross-section of Canadian manufacturers, exporters, importers, small businesses, and the logistics and transportation sectors.
Here is how a simple form of the UCR would work. Let’s say an importer in Toronto places an order with a supplier in Chicago. The supplier prepares the order for dispatch, and assigns a UCR number to that consignment of goods. From that point forward, the UCR is linked to every stage in the movement of those goods.
For example, when a carrier agrees to move the goods to the port of export, the UCR is linked to the carrier’s reference number, and the UCR is included as a data element on the waybill for transporting the goods. The UCR data element is used by port authorities when acknowledging receipt of the goods, and by the forwarding carrier and customs brokers to invoke pre-arrival checks for Customs in Canada, as well as arrival procedures at the port of entry. The same UCR data element is linked to the movement of goods after clearance and to the receipt of the goods by the importer.
| “That electronic staple can have significant benefits for the logistics industry.” | ||
The key element being that while the UCR is linked to individual shipments of goods, the number applies to the entire consignment of goods – whether the consignment is shipped directly by one carrier, in multiple shipments by different carriers, or together with other goods in consolidated shipments. At any stage in the process, the UCR provides the unique link to all relevant details on the import transaction, binding information from the supplier, carrier, freight forwarder, and importer, to the actual movement of goods.
The UCR concept has few, if any, drawbacks for traders and their business partners. As a result the benefits in border efficiency are significant.
Because the UCR provides a unique audit trail, it supports greater efficiency in Custom’s move away from transaction based accounting to post-clearance audits. It facilitates the crucial reconciliation of customs transactions with importers’ records. It is also the missing element needed to move forward with automated pre-clearance Customs procedures.
The Canadian Society of Customs Brokers has been urging the Canadian government to implement the UCR since 1998, and encourages global development of a UCR system through the World Customs Organization (WCO). In the long run, it is a vital component for developing future electronic commerce strategies in the logistics field.
Look, for example, at the agenda of the high profile conference on “The New Customs Environment” coming up in Italy this May. Organized by the International Federation of Customs Brokers Associations, the conference will focus on global logistics partnerships, WCO’s electronic commerce strategy, the harmonization of customs data requirements, and best practices in the advance transmission of customs data. In each case, the UCR provides a key to unlock new efficiencies in the logistics process.
It is a key element that is missing today. For its part, Canada should put the key in place as soon as possible. Everyone — customs agencies, brokers, carriers, importers and exporters — will benefit.