Navigating the Complexity of Border Clearance  for Cargo Tracking Device

Navigating the Complexity of Border Clearance for Cargo Tracking Device

Enhance global supply chain reliability in the face of regulatory complexities
KC Chang by Kian Chuan CHANG 28/06/2022
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With the ever-increasing customer expectations on shipment visibility, more and more shippers are using multi-sensor tracking devices to monitor different attributes of their shipments in the entire cross-border logistics movement, including temperature, humidity, location or shock. There are a lot of challenges faced in the customs clearance of these electronic tracking devices when moving across different countries; oftentimes, the customs procedures and requirements for these tracking devices are very complicated that causing unnecessary delays and damages to the shipments.

A research project1 was carried out by the postgraduate students of TLI-AP (The Logistics Institute, Asia Pacific) in NUS (National University of Singapore) and supported by GEODIS to investigate the existing regulatory requirements on cargoes crossing border with electronic tracking devices. In this project, the research students focused on a few countries in Asia Pacific region to understand the current regulations on importing and exporting of cargo tracking devices. In addition, surveys also sent out to a few suppliers of tracking devices as well as end-users (both logistics companies and customers) to understand more about the existing challenges of shipment tracking in international shipping.

 

The challenges of international shipping with cargo tracking devices

(1) There is no universal regulatory procedure or guideline established in the handling of tracking devices in international shipping.

  • OGA (Other Government Agencies) approval is needed before these devices can be imported in some countries, this is mainly due to the control of telecommunication equipment as the electronic sensors require frequency bandwidth for GPS signals.
  • Some governments also regulate electronic items with lithium battery, due to the classification of such battery as hazardous material.
  • In some cases, the tracking device must be switched off during air transportation, this is to prevent the interference of signals with the aircraft’s systems.
  • For tracking devices that are worth more than the de-minimis value threshold, duty and tax will be levied upon importation. This has created added complications when the importer does not own the device as it is mandatory to have an IOR (Importer of Record) to make a customs declaration for the tracking device.
  • Similarly, many of such tracking devices will need to be returned or recycled in another country. There is no EOR (Exporter of Record) if a formal export declaration is required for the electronic gadget, as the cargo owner usually does not want to take up additional legal liability of the tracking device.

(2) When a logistics service provider wants to ship cargo with electronic tracking devices, customs declaration for the tracking devices is a challenge – as the tracking device is an add-on service to enhance the shipment visibility during transportation. If the additional customs requirement incurs costly customs processing charges and complicated procedures, this would greatly impact the business viability of such value-added service.

 

Anticipating the future of shipping: recommendations to overcome these challenges

The research team has proposed a few recommendations in order to mitigate the existing challenges in using electronic tracking device for cross-border shipping:

 

Advocating for global standard guidelines & procedure

International governing bodies such as WCO (World Customs Organization) or WTO (World Trade Organization) to issue clear guidelines on how to handle electronic tracking device used in international shipping. This is similar to the guidelines issued by WCO under “Customs Convention on Containers, 1972” (Container Convention) includes provision on the temporary admission of containers without the need for customs declaration. Likewise, WCO also published a set of guidelines in May 2021 on how to handle envirotainers for international vaccine transportation, these guidelines help to remove any un-necessary customs delay at the border.

 

Incorporating Harmonized customs procedures in regional trade agreements

Similar approach on issuing a universal operating guideline for electronic tracking device in cross-border shipping can also be accomplished via bilateral or regional FTA (Free Trade Agreement) such as RCEP (Regional Comprehensive Economic Partnership) or CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). Governments from multiple countries come together to establish simplified customs procedures for cross-border shipment tracking will greatly enhance the efficiency of supply chain flow for specialized products.

 

Apply for an ATA Carnet

ATA Carnet is an international customs document that permits the tax-free and duty-free temporary export and import of goods for up to six to twelve months. Established by the International ATA Convention and controlled both by the World Customs Organization (WCO) and International Chamber of Commerce (ICC), ATA Carnet could be used to simplify international shipping with electronic tracking device. However, ATA Carnet may still encounter similar issues in import and export of the sensor when:

  • The tracking device is considered as controlled item by OGA when special permit is required prior to importation.
  • As there is minimum processing fee of ATA Carnet (vary in different countries), this extra charge could outweigh the cost of tracking device, making the entire service to be expensive and uncompetitive.

 

Apply for Advance Customs Ruling

One practical and effective recommendation to mitigate the current situation of using tracking device in cross-border shipping is to apply for Advance Customs Ruling before cargo is shipped. Customs administrations in many countries provide advance ruling services to the traders offering binding decisions by the authority on specific particulars in relation to the intended importation or exportation of goods.

Under GEODIS global trade advisory service offering, we support our customers by presenting all the relevant details and supporting documents to local Customs department during advance ruling application. Customs dept. could provide a firm and official directive on how the electronic tracking device to be handled during importation with the cargo, as well as how to handle the recycling of the device upon exportation. For all multinational companies operating in different continents, it is absolutely useful to have clarity in customs requirements and procedures before cargo being shipped so as to avoid shipment get stuck at the customs due to clearance issues of tracking sensor, as well as to ensure full regulatory compliance for their customs reporting.

 

GEODIS – Your Trusted Global Partner in Customs & Trade Compliance

Due to the growing demand on the use of electronic tracking sensor in shipping over the last few years, complicated and additional customs procedures will result in some traders and logistics providers ignoring the regulatory requirements with no declaration and exposing themselves to potential customs violations. As the world’s leading customs brokerage service provider, GEODIS provides a full range of professional customs & trade compliance solutions to all our clients globally. We have more than 900 professional trade experts worldwide to support our customers in researching customs and trade regulations as well as providing effective solutions to ensure efficient cargo shipping and full customs compliance at all times.

Feel free to contact us if your company need any support at: [email protected].

 

 

1. Koh, W. L; Liu, Z. Y. and Lu, Yi. C. (2021) “Challenges in Customs Clearance for Cross-border Shipping with Multi-sensor Tracking Devices”, Master Thesis, National University of Singapore.

 

 

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Author
Kian Chuan
CHANG
Head of Customs Brokerage, Asia Pacific region for GEODIS Logistics
Dr. KC Chang is currently the Head of Customs Brokerage, Asia Pacific region for GEODIS Logistics, based in Singapore Regional Office. Dr. Chang is an experienced industry leader with a demonstrated history of working in the express transportation sector; he received his MBA from Imperial College London as well as Professional Doctorate from Central Queensland University and DBA from Skema Business School.
Dr. Chang started his long career in logistics industry in mid-1990 with more than 25 years of management experience with global express integrators when he involved in new operations setup of customs brokerage services in different cities within Asia Pacific, as well as implementation of innovative customs and trade solutions to meet regulatory requirements, service enhancement and cost optimization. Over the years, Dr. Chang was invited as guest speaker in numerous global conferences such as World Customs Organization (WCO), Asia-Pacific Economic Cooperation (APEC) and Annual Meeting of ASEAN Directors-General of Customs on topics pertaining to Public-Private Partnership (PPP), customs & trade compliance and supply chain excellence

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