Happy International Customs Day
Customs Flash – Nr. 02 - 2017
Annually held on January 26, International Customs Day on the one hand recognizes the role of custom officials and agencies in maintaining border security. On the other hand, it puts the spotlights on a topical customs issue. The World Customs Organization declares 2017 to be the year of Data Analysis.
The Secretary General of the WCO announced this under the slogan: ‘Data Analysis for Effective Border Management’.
Why Data Analysis?
Data Analysis, better known as Data Analytics, is not only useful to Customs, but can also help your company gain clear insight into the company wide global duty bill. Such insight provides a solid basis for duty optimization and immediately images inconsistencies and irregularities.
A lot of companies are not aware of the opportunities of well thought-out Data Analytics. Nevertheless, each company has a substantial amount of data at its disposal, such as data submitted to Customs, broker data, ERP data and statistical reports. But collecting data is not enough; data only has value when it is used effectively and efficiently.
In a general sense Data Analytics is the process of obtaining data, reviewing the data, analyzing data and pulling insights out of that information to allow companies and organizations to make better, more effective business decisions and strategic business moves. Tasks that previously represented a huge investment of time and resources can now, through intelligent automation, easily be completed to produce effective and dynamic results.
Data Analytics is often broken down into two categories:
(i) descriptive analytics, and (ii) predictive analytics.
(i) Descriptive analytics
Descriptive analytics is about the (recent) past. Raw data files such as customs declarations or broker data are analyzed in depth to give insight into past transactions that have occurred over a certain time period. Such insight can facilitate and sustain future business improvements.
Our Global Trade Radar is an example of descriptive analytics: declaration data from the countries your company is active in are requested from Customs. Subsequently this data is presented on a dashboard in a way to gain insight, increase quality, reduce risk and generate cash.
Your company’s global customs duty position is presented in a convenient and flexible format and duty rate trends can be examined over time. Apart from insight, also savings such as unclaimed FTA’s or commodity code inconsistencies can easily be identified using this analytics tool. This identification can immediately benefit the global duty bill of your company.
In such scenario’s, the descriptive analytics project is a starting point in identifying risks and opportunities to further refine your company’s customs position and control while also cashing in on ‘low-hanging fruit’. In other words: even though descriptive analytics is about the past, it can impact the present and the future.
(ii) Predictive analytics
Predictive analytics is about the future. This next step analytics uses historical information available from ERP systems to predict and understand the future, based on probabilities.
The Brexit analysis part of our Customs Analytics offering is an example of well thought-out predictive analytics. With the UK leaving the EU customs union, movements of goods between the UK and the EU (and vice versa) will be considered as imports and exports which is likely to result in higher import duties, import VAT and excise duties for your business. Apart from the EU aspect, the UK will have to negotiate new FTA with other countries.
Using Data Analytics, the possible impact on your business can be assessed by calculating through a best case and worst case scenario.
The best case scenario covers the situation that the UK will manage to negotiate FTA’s under the same conditions as the EU. The worst case scenario covers the situation that the UK cannot negotiate FTA’s and will have to trade with the EU and other countries using Most Favorite Nation (WTO) tariffs. What the reality will be after a Brexit is unclear, but certainly within these two extremes.
In such scenario, the predictive analytics project is used to give insight into potential consequences of a specific event, while also enabling businesses to make smarter and better informed business decisions such as those on sourcing.
What to do?
We recommend companies to explore the possibilities of descriptive and predictive analytics. Not only while reflecting on the past, but for sure in their decision making process for the future.
Meer weten over World Customs Day?
Wilt u meer weten over de Wereld Douane Dag? Neem dan contact op met Klaas Winters via +31 (0)88 288 2125