The CEO of an American customs software company is calling for rapid digitalisation of the entire shipping sector, citing a ‘perfect storm’ of problems that threaten to hamper supply chains for years if left unresolved.
Sam Tyagi is a supply chain expert and founder and CEO of KlearNow. He has access to extremely detailed supply chain data that allows his team and his customers to plan their shipping activities meticulously and to identify potential bottlenecks in the global supply chain system.
A perfect storm of supply chain problems
Tyagi believes that, alongside issues such as slow turnaround due to the Covid-19 pandemic and legacy problems stemming from the Suez Canal blockage and Brexit, one of the biggest challenges facing the shipping sector is outdated and high friction customs processes.
“Demand for shipping containers has never been higher while supply is perilously low. And disruption to shipping caused by what I would classify as a ‘perfect storm’ of supply chain problems is making life extremely tough for businesses who rely on international shipping.”
“For example, our team processed more than a hundred thousand UK customs documents since January and they speak to hundreds of businesses every day. The word our customers keep using is “chaos.” Businesses are dealing with a growing list of supply chain problems, customs clearance is one thing the industry and governments could work together on to remove from that list.”
Paperless customs processes
Tyagi believes a paperless customs system is the way forward. “Customs clearance is the definitive supply chain bottleneck. It’s an essential part of global trade but the technology underpinning it is outdated. An unacceptable amount of customs entries are still manually processed, often with paper and pen. This means customs processes are already insufficiently transparent and error-prone.”
Tyagi is therefore advocating for a global consensus on how customs clearance interacts with the ever-changing needs of supply chains. Citing a recent shortage of summer retail merchandise, Tyagi explains.
“The Suez Canal blockage happened just as containers scheduled to land in the UK for summer had left their ports. At least nine containers of camping and outdoor equipment that we know of were held up in Egypt as a result of the Suez Canal blockage, but visibility of this situation was low because too many elements of the supply chain are siloed.”
A two-tier customs system
Without paperless customs, argues Tyagi, smaller businesses will lose out as larger firms with more clout and purchasing power are better placed to absorb the additional, unnecessary paperwork burden and adapt more quickly to the constraints of current customs processes. In effect, if shipping becomes more expensive due to these problems, larger organisations will survive while smaller outfits will struggle.
“Small businesses are now getting desperate and our company has been overwhelmed with demands for help from businesses in a range of sectors. They’ve spent millions preparing for things like Brexit and mitigating Covid. But the level of unpredictability is huge. They simply don’t have the resources or budgets in place to manage the extra admin and costs of outdated customs processes alongside all of the other challenges.”
Building a customs business network
Tyagi describes KlearNow as “the world’s first AI-driven, 100% digital customs business network platform.”
“KlearNow’s mission is to make global logistics simple and cost-effective and eliminate complex, manual, paper-based processes using technology. As a customs clearance and document management platform built for importers, exporters, customs agents, brokers, freight forwarders and hauliers, KlearNow makes customs clearance faster, cheaper and easier, providing end-to-end visibility for users.”
Customs processes and procedures are often isolated from other elements of the supply chain. By integrating them as part of a business network, Tyagi hopes his firm’s technology can help foster a change in how businesses of all size embrace new opportunities and overcome new challenges in the world of shipping.
