Smart customs and customs warehouse management increases profitability

This article was originally published in Supply Chain Effect 4-23 (read the full magazine here).

Keeping equivalent items in customs and EU warehouses used to be cumbersome, sometimes even impossible, and the costs involved were a deterrent for many businesses. But now there are new opportunities to manage this effectively and get positive results at the bottom line.

At present, Swedish Customs uses electronic traceability with the help of customs solutions that are integrated with the business system of the goods owner at one end and Swedish Customs' own system at the other end. A controlled and tight integration creates the right conditions for having equivalent items in both customs warehouses and EU warehouses. This process opens up opportunities to control customer deliveries picked from the right type of warehouse. If the delivery is to enter the EU, the goods are picked from the EU warehouse; if the delivery is to leave the EU, the goods are picked from the customs warehouse first. This type of management or process is sometimes called "Best pick" and refers to the economically optimal use of the combination of customs warehouse and EU warehouse.

Better liquidity and smarter purchasing

For many businesses, their own customs warehouse is a convenient way to store goods that are not to be sold in the EU immediately upon entry. Storing goods in a customs warehouse improves liquidity and reduces payment peaks. Without a time limit, the goods are safely stored in the customs warehouse. Only when the goods are delivered do any taxes and duties need to be paid. Of course, this allows you to plan larger purchases at better prices. In addition, if the goods are leaving the EU, import duties do not have to be paid on entry into the EU.

Start with a feasibility study

A duty-free warehouse does not necessarily mean high costs and a poor ROI. Take a good look at what it would look like for your business now and in the future. If you're not sure what to do, there are several companies in the market that can help you - a feasibility study will give you a clear direction. For future warehouse and logistics solutions, a smooth and automated customs management is a very important part, where problems that arise are quickly identified and clearly visualized for the right functions in the companies. This reduces and, to a certain extent, eliminates negative consequences at the next stage, such as customer delivery.

Own staff or customs agents?

Should you hire your own staff or is there another way? Yes, this can be an important question to consider. Quite often, companies that have looked at a combined customs and EU warehouse solution say that the staffing costs for this handling are skyrocketing and that this cost cannot be justified. As with most things, there is an alternative way to manage this process, namely to have an agent handle the customs clearance. However, the owner of the goods can never "buy out" of the responsibility towards Swedish Customs by using a customs agent.

Can everyone use customs warehouses?

Can everyone use customs warehousing, or duty-free warehousing, as it is also called? The Easy answer is yes. In principle, it is possible for everyone with a process where products are delivered from countries outside the EU. In some industries, customs warehousing has been established for a long time, but I want to emphasize that there are currently more industries and thus companies that benefit from this solution. You might think; "We already looked at this 10 years ago and it's not for us". But a lot has happened since then. So, if you haven't looked into it, think about it and do a feasibility study on what a duty-free warehouse could do for your business in the future.

Big changes bring new opportunities

There have been major changes in both global trade agreements and the requirements of Swedish Customs over the last ten years. This opens the door for many new companies to take advantage of the benefits of customs warehouses. Swedish Customs has not lowered the requirements, 100 percent traceability is still required, but the conditions have changed to the benefit of more efficient customs management.

Let's look at the bigger picture and not just get bogged down in the regimented and somewhat rigid customs procedures. People have been selling and buying things for a long time. This behavior has not fundamentally changed over time, what has changed is how, where and what we buy. As long as we cannot teleport goods electronically, we have to do the next best thing and that is to have an optimized supply chain where both transport booking and customs management are key processes to get the goods with a single click.

So, finally, it is certainly worth exploring the possibilities of optimizing customs management. Correct and optimal management of customs and customs warehouses has a direct impact on the bottom line - and now the conditions are there!

Mats Nilsson is Key Account Manager at PipeChain SCM.

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