Fear of non-compliance risks is common concern in international trade

Geopolitical disruptions, complex customs regulations, lack of in-house expertise and capacity, and the impact of AI are the main barriers to international trade for logistics companies and manufacturers worldwide. This is according to new research by the Customs Support Group (CSG) on key trends and challenges for international trade. John Wegman, CEO of CSG, sums it up as the ‘fear of non-compliance risks’.

The survey by CSG, a major European customs and trade solutions provider, was conducted among a wide range of customers representing logistics service providers and goods owners. They include global freight forwarders and manufacturers in the automotive, retail, consumer goods and FMCG industries.

‘We have identified three consistent trends in international trade,’ comments John Wegman, CEO of CSG. ‘The increasing regulatory complexity and associated risks, further intensified by recent geopolitical disruptions. Further, the expertise and knowledge gaps companies face in addressing these issues. And the high expectations placed on AI, combined with concerns about potential mistakes.’

Specialized expertise

The survey reveals that more than half of participating companies (51%) were affected by global disruptions, such as the Suez Canal blockade and the war in Ukraine. 45% also needed specialized expertise to ensure rapid response and compliance with local and international customs regulations, as well as to deal with stricter environmental regulations.

In terms of customs compliance, it also appears that large international companies are increasingly turning to external customs experts. This is because of a lack of specialized knowledge to deal with complex challenges and to mitigate financial and operational risks.

Another reason for this outsourcing is the opportunity to access more sophisticated digital solutions that improve data efficiency and accuracy, due to the often limited capacity to manage large amounts of documentation and to support repetitive tasks.

Outsourcing of customs tasks

All in all, nearly 60% of respondents choose to outsource customs tasks due to lack of capacity, while 45% rely on outsourcing to access specialized knowledge. Industry-specific knowledge is important to 48% of respondents.

Although customs clearance is traditionally paper-intensive, manual and error-prone, 42% of respondents stress the importance of new technological solutions. In this regard, many companies see AI as an important opportunity to improve automation and efficiency.

Non-compliance risks

Moreover, the complexity of regulations and documentation leads to uncertainty about how these technologies can be implemented effectively. There are concerns about potential compliance issues arising from automated, non-human interventions.

‘Ultimately, all three trends can be brought together into one common concern: the fear of non-compliance risks,’ the CSG CEO states. Such concerns, he says, underscore the vital role of customs knowledge and expertise. ‘This is the key to improving AI or navigating the complex and evolving regulatory landscape amid geopolitical disruptions,’ Wegman concludes.