Simon Clark, VP Business Development with WiseTech Global, helps you navigate along the safest route through the regulated world.
Milton Keynes, UK, April 14, 2015. Compliance hits the logistics sector at every turn, leaving an impact at both the macro and micro levels. From geo-political agreements and domestic industry standards, to government customs, taxation, security regimes, and even supplier demands and customer service level contracts, the ramifications of non-compliance are enough to kill your operation.
The resolutions designed to simplify trade compliance have instead created endless change, adding more and more complexities. The global initiatives to harmonize standards and reduce the friction on trade flows are forever revolving around the tables of bi-lateral and regional free trade agreements, the World Trade Organization, and the World Customs Organization.
How can you maneuver in this complex regulatory environment and keep your business on the path to success? Finding the best way forward is simpler than it seems. Keep your eyes forward and consider each area of compliance as they’re encountered.
The average global logistics operator needs to make significant investments just to keep up with the standardized procedures designed to bring efficiency. Having to rely on human brains alone to monitor, update, and comply with the countless regulations would put your entire business at risk.
Fortunately, you no longer have to.
Whether you operate in the air or on the ground, logistics application providers now source regulatory updates for things like tariff schemes from customs authorities around the world, and they automatically adjust their online solutions to help keep their customers on the clearest path forward.
Domestic Industry Standards
The journey has to start locally. One of your largest compliance interactions will always be with suppliers – the truckers, airlines, and shippers that actually move the goods. Because they dictate how you work with them, it’s vital that you conform to their standards and needs.
Germany presents an excellent example. Under systems like DAKOSY and BHT, forwarders, shipping lines, line agents, and customs brokers must have certain information exchange protocols in place in order to deal with the major sea ports, and if they can’t, they’re forced to find third parties who can, usually at extraordinary cost.
Growth and Compliance
As your business expands, so too do your responsibilities. From London to Amsterdam, Istanbul to New York, or Sydney to Sao Paulo, expansion takes away some of the control you have over compliance. Language is another consideration. To streamline how your branches communicate and collaborate, all documents and screens they share must be translated to the local languages along the chain.
To support this, today’s logistics applications have captured the standardized processes and documentation and created translations for each market. Language options also cover the 24-hour customer service cycle, whether it’s from teams that operate around the globe or back office workers hired in low-wage economies. A freight forwarding agent can work in English and still issue German ‘paperwork’ to a trucker in Germany.
Domestic Regulatory Strictures
Fiscal reporting is also a non-compliance threat. A tax invoice in Belgium, for example, must carry certain words or else it is not valid, while in China, invoices can only reach a certain value and a certain number of lines to reduce financial risk. Withholding taxes such as VAT and GST, can lead to enormous problems with clients, suppliers, and financial authorities if not calculated and reported correctly. ‘Working the wrong way’ can cause immense financial pain.
It’s difficult enough getting to know the domestic environment inside and out, but international expansion puts much at stake where Customs comes into play. I’ve seen so many companies beaten by service providers that can take on cross border work due to familiarity and experience.
Integrated customs and workflow tools empower growing operators to easily become both local and global at the same time. The more your structured system guides business activity, the more easily you can reduce the potential for huge penalties from authorities.
Saving the Best for Last
The industry is being regimented under Denied Parties rulings to blacklist all who fall under the shifting sands of security. Freight forwarders are liable if they don’t adhere to watch list notifications from various government agencies. The fines for non-compliance are so heavy they have brought logistics companies down.
To protect forwarders from these mistakes that could crush their businesses, software providers now pull constantly updated information from 150 current blacklists and test the nominated person, address, and company worked for.
It’s too easy to be caught. Why take the risk, anyway? The latest technologies can effectively manage compliance and give you the confidence that you’re operating legally and above board. Set your business up for the green lane through Customs and take the fear out of an audit.