Everyone involved in international trade should know the different kinds of customs inspections and channels. However, due to the myriad national regulations, working with professional agents can help you save time and money.
Globalization and the development of international supply chains have led to a sizable growth of trade volumes. In the past few decades, that growth was so exponential that several countries were forced to deploy new methods to control imports and exports, developing various kinds of customs inspection processes.
After the major slowdown in foreign trade caused by the coronavirus pandemic in 2020, trade did not just rebound, but surpassed previous highs. ‘Global trade reached a record $28.5 trillion in 2021,’ points out a report from the United Nations Conference on Trade and Development, adding that ‘this is 25% higher than 2020 and 13% higher than 2019.’
This trend runs in parallel with downsizing at customs around the globe. ‘Therefore, physical inspections of shipments can take a long time and impact the operational flow of customs,’ explains the UN’s Trade Facilitation Implementation Guide.
International organizations and countries have come up with solutions to deal with this issue, deploying technology to perform the so-called Non-Intrusive Inspections (NII).
Customs inspections: Types and processes
Although each country has its own legislation regarding customs inspections, the international consensus is to establish adequate goods controls through quick, cheap procedures to provide greater incentives for companies investing in foreign trade.
In this context, the World Customs Organization has a framework with 15 global benchmarks based on the exchange of advanced electronic data to ensure efficient risk management. ‘We also support Authorized Economic Operators (AEO), NII technology, data analytics, and other cutting-edge technologies to provide secure sustainable cross-border trade,’ the WCO explained.
Currently, NII technology is a popular feature in customs all over the world. The most common examples are X- or gamma-ray machines that allow operators to inspect shipments without needing to physically enter the means of transport carrying the goods, thanks to the devices’ high image quality.
Combined with a coordinated intervention strategy, this approach can provide a significant reduction in unnecessary physical inspections and the time needed to perform them,’ the UN points out. ‘The main NII facilities are located on-site, have a high penetration rate, and allow means of transportation to go through them, accelerating the process.’ Although this technology is becoming more widespread, unfortunately, it is not equally available in all countries. Less developed countries still require physical handling of the merchandise when the inspection channel is so determined.
The customs traffic lights
The global standard for customs focuses on using NII technology for international trade inspections. However, this does not mean that intrusive techniques are no longer used in customs around the world – they are still deployed for the so-called ‘suspicious’ merchandise.
To obtain customs clearance for merchandise, a series of documents must be submitted to prove the product’s origin, value, and destination. The amount of paperwork may vary by country, but most nations use the same detection system. If the clearance process goes smoothly, the product is sent through the green or the yellow channel, while if there are issues, it goes through the orange or red channel, which is a problem. Other countries have provided alternative colors. Like Brazil, which established the gray channel.
Green channel
This is the most favorable channel for international traders. If the submitted documentation is correct, customs inspectors do not perform significant checks and the process does not waste time and money. Additional documentation may be requested and a NII may be performed, but always within regular operational standards.
Yellow channel
This channel is a recent creation for products with insufficient documentation/certifications. Usually, this can be solved by submitting the missing paperwork.
Orange channel
This channel causes bigger issues. Products on the orange channel undergo more detailed documentation inspections by customs authorities to check for any potential error or inconsistency. If the goods meet requirements, they are dispatched, but due to the time spent on this process, they will not reach their destination on time. In case there are doubts about a product’s value, origin, or destination, it will be subject to an intrusive inspection. It is important to note that not all countries use this channel.
Red channel
Merchandise on the red channel will be subject to full physical inspections from customs agents, a time- and money-consuming process for the dispatcher company, which may also be fined and subject to additional inspections in future shipments. If the data in the declaration is valid, the product will be cleared, but in any case, the red channel is a situation that companies want to avoid.
Gray channel
Some countries have similar kinds of channels. An example is Brazil, which created the gray channel, which is like the red channel, as it includes documentation checks and inventory checks due to suspected fraud, especially regarding the value declared before customs.
The advantages of working with global experts
Usually, a product arouses suspicion among customs authorities because of mistakes in the submitted documentation. Most intrusive inspections prove that the merchandise is not illicit or fraudulent. Therefore, the inconveniencies caused by these processes, such as the waste of time or money, are caused by red tape issues or a lack of knowledge of a country’s specific regulations.
In this context, hiring an experienced operator with professional staff in each region can provide a major advantage. According to a report from international consultancy firm Grand View Research, the business was worth 956 billion dollars in 2021, with a projected growth of 8.6% for the 2022-2030 period.
This growth is caused by rising demand from companies that need to handle their imports and exports with efficiency. Submitting documents in customs to ensure smooth shipments is a complex process, where any error can cause delays and therefore increase costs. Moreover, as on-time deliveries are increasingly important for customers, delays caused by customs hurdles can mean the loss of a customer for carriers.
An Aberdeen Group study on this issue estimated that ‘clients who hire professional providers in this industry may reduce operational costs by 90% while avoiding errors and fast-tracking the process.’
Aerodoc has specialized expertise and a proven track record in this field, with trained staff in every region of the world to submit documents correctly and efficiently, equipped with the technological tools to streamline procedures and cut costs when exporting or importing products. To maximize our efficiency, at Aeordoc we have our own work standards, adjusted to each country or region, with the aim of avoiding inspection channels and, if they occur, they are resolved quickly.
