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Customs Broker in terms of their technical ker attributes broker function, at regular intervals
expertise and professional skills. However, 2. Review and evaluate the performance
in practice, the following challenges exist: of the current customs broker, whether ex- Benefits
• The technical knowledge and compe- ternal or internal, against defined require- The benefits of using a best-practice
tence levels of customs brokers varies ments: methodology include:
greatly, ranging from highly trained spe- • Use an external customs broker ques- • Confidence that the customs broker is
cialists to unskilled clerical assistants tionnaire competent to provide their services to
• The internal controls and standard op- • Use an in-house Customs Broker ques- the standard required and does not cre-
erating procedures of customs brokers tionnaire ate additional compliance risks
vary greatly, ranging from best-in-class Note: This step also includes the review • Best-practice procedures and key per-
to non-existent of current arrangements, to identify alter- formance indicators are added to the
• Key decisions may be taken by junior natives that may deliver efficiencies broker function and compliance costs
staff with insufficient knowl- are reduced
edge, with their focus being • The risk of serious potential
on minimizing clearance times
rather than compliance.
While enterprises
implications resulting from non-
compliance are mitigated
• So-called “informal solutions”
and “informal arrangements”
outsource customs
Case Studies
may exist
In practice, the importer/ex-
brokerage functions
Case #1
porter is normally held liable for
any actions undertaken by a Cus-
to a third party service
Description: A consumer prod-
uct manufacturing and distribu-
toms Broker on its behalf, since
it is assumed that actions are
provider, such as a
tion company has 7 factories and
2 regional distribution centers
undertaken at the direction of the
importer/exporter. In particular,
customs broker or
in China. The annual volume is
2,000 imported containers and
the importer/exporter typically
remains responsible for all import
freight forwarder or
8,000 export containers. There
were over 10 customs brokers
and export taxes, and any non-
compliance with Customs require-
a third-party logistics
used across 6 cities in China and
4 customs brokers were used in
ments. The potential implications
to a business of non-compliance
provider, in many
the Regional Distribution Center.
• Seizure of goods
instances, little or
Solution: By reviewing the de-
sired brokerage services, includ-
• Interruption to the supply chain
and consequent production de-
no monitoring is
ing compliance, competency and
technical expertise, the company
• Additional assessment duty, in-
standardized all Key Performance
Indicators (KPI) per the practice of
terest and financial penalty each local Customs jurisdiction.
• Clearance under cash deposit The number of service providers
• Negative publicity 3. Select a competent customs broker us- was reduced, which saved costs, improved
• Damage to company reputation ing a comprehensive process to test and clearance cycle times, and compliance
evaluate technical expertise in relation to levels. Consolidation of service providers
Customs Broker Evaluation the cross border movement of goods, pro- took place whilst sill acknowledging and
An outline of a best practice methodol- fessional skills and sound business prac- adhering to local requirements.
ogy for companies to select, appoint and tices and commitment to providing a high
evaluate the performance of their customs quality service: Case #2
brokers is as follows. The separate but • Use a customs broker selection package Description: A liquid-display system man-
inter-related steps that can be “mixed and (e.g, briefing paper, statement of com- ufacturer had more than 40 material sup-
matched” to meet particular needs. pany’s requirements and a broker selec- pliers around world. A Vendor Managed
1. Define exactly what is required from the tion questionnaire) Inventory (VMI) hub was considered as a
customs brokerage function: • Use a customs broker selection matrix supply-chain solution to improve cash flow,
• list customs broker compliance func- 4. Create a customs broker contract to minimize inventory levels, and enhance
tions best protect the company’s interests supply-chain efficiency and flexibility. To
• list essential and desirable Customs Bro- 5. Review the performance of the customs implement the VMI hub, the manufacturer JULY/AUGUST 2009 43
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