A customs broker provides a vital service that allows importers and exporters to conduct business across borders. It is no small task to stay afloat amidst the onslaught of demands from customers, competition, and ever-changing global trade regulations; a customs broker must possess the aptitude to manage inventory and resource allocation, develop strategic growth plans, and overcome the numerous challenges that may arise without missing a beat.
Customs brokers need to understand their customers, the import process, and international trade legislation. It is essential to tailor your processes and tools to today’s importers, who are now more demanding, sophisticated, globalized, and tech-savvy. How do you incorporate efficient workflows in an increasingly digital world? Your EDI system can be a critical tool for building this competitive advantage.
Many Customs Brokers Still Rely on Manual and Paper-Based Processes
As a customs broker, you know that the decision to use EDI or not can have a significant impact on your organization's performance. Yet, EDI logistics platforms help you digitize your business processes and save you time and money in the long run.
As more organizations adopt EDI protocols, it is becoming increasingly crucial for customs brokers to integrate with them as soon as possible. Nonetheless, some customs brokers still rely on paper-based processes for certain transactions (for example, when a shipper sends paperwork declaring that their goods are "in bond" and should not be taxed).
EDI Software Has a Track Record of Success
The first implementation of EDI occurred in the airline industry when an electronic ticketing system was created at American Airlines in 1972 to replace paper-based ticketing processes. The Department of Defense (DoD) also began using EDI soon after its introduction, further developing standards for other industries such as finance, healthcare, and manufacturing companies that wanted to improve their data exchange processes with trading partners.
Currently, the customs brokerage industry is experiencing signs of disruption driven by the adoption of EDI, cloud computing, and mobile technologies. As companies across all industries continue to embrace digital transformation initiatives, they find that EDI provides a faster way to exchange information than paper and can be more secure than paper-based processes.
In addition to saving time and money, it's also accurate, cost-effective, and environmentally friendly. Further, EDI can enhance communication between importers/exporters and their customs brokers through automated data exchange capabilities such as a fully managed import/export solution or digital cargo processing applications, including:
- Automated Export Declaration (AED)
- Automated Manifest System (AMS)
- Automated Cargo Targeting System (ACTS)
Using EDI Software Can Significantly Impact Your Organization's Performance
Here are some of the immediate benefits:
- Reduce costs. Using EDI with your trading partners allows you to eliminate expensive manual processes like faxing and mailing. Instead, you'll be able to electronically transmit documents such as invoices and purchase orders in seconds—saving you time, money, and resources.
- Increase efficiency. Because of the ability for automation provided through an EDI system, your business will operate more efficiently by reducing errors in the transmission process between parties involved in a transaction (buyers, sellers, and their respective logistics providers). A streamlined approach means that delays are reduced—leading to faster order processing times for buyers and sellers. This translates into improved customer satisfaction as well as increased revenue due to higher sales volume achieved through shorter lead times on production schedules or delivery times
- Use EDI to speed up the process of importing goods into various countries around the world by reducing paperwork: A significant factor when dealing with complex international trade laws.
Complete Accurate Trade Data Faster
When it comes to trade data, the faster you can get all the information into your system and out to your customers, the better. Electronic Data Interchange (EDI) is one way you can reduce time spent on compiling and processing trade documents.
You'll have access to more accurate data, too—and that means less work for you in checking whether a shipment has been sent from A to B. It also reduces the chances of errors or fraud by eliminating the need for re-keying the same information multiple times between different systems (e.g., paper forms and online applications).
You may be wondering why EDI is so important for customs brokers: Let us explain. When it comes down to it, this technology helps keep everything running smoothly by making sure correct details are always available whenever needed — which means less chance of fines being issued due to incorrect information being submitted about shipments coming into or leaving various countries around the world each day.
Save Money on Software and Hardware
One of the best benefits of electronic data interchange is that it requires no software to install and no hardware to buy.
EDI is a cloud-based service that runs on the Internet. You don't have to worry about maintaining your computer server or buying expensive computers for your office. Instead, EDI is a subscription service that is paid monthly. This allows you to reduce costs significantly over time because no significant up-front investments are involved in using this technology.
Leverage a Better, Faster, Scalable IT Infrastructure
It is crucial to utilize an EDI system that offers scalability. That means the system can adapt to your needs, whether you have only one import or thousands of imports every month. Your broker has probably already mentioned this as something critical for their business.
A technology solution needs to be scalable because it ensures your data is safe and secure and allows for future growth without switching services or systems altogether. Some examples of non-scalable IT infrastructures are:
- An old website that was built back in 2000 and hasn't been updated since then (the site no longer looks good on mobile devices)
- A database with limited storage space or processing power (it slows down when there's too much data).
EDI software can enable customs brokers to better coordinate with different parties involved in goods movements. For instance, a customs broker may utilize an EDI logistics platform with ECU integration capabilities to automatically update the status of cargo from origin to destination and forward it through the chain of custody.
Offering ECU-compliant data elements is an essential part of any EDI system for customs brokers. These elements include:
- CUSIP number
- Transaction level identification numbers (TLINs)
- Origin information (country code and postal code)
Customs brokers who have been in business for some time know that they need a partner who understands how important it is to work efficiently across borders and how much experience they need when implementing new processes or upgrading existing ones.
Another advantage of an EDI platform is the ability to integrate with other software systems. To illustrate, listed below are several application types that you can integrate with your EDI system: that WebXion's EDI Logistics platform has been fully integrated with:
- e-invoicing solutions
- Payment processing
- Inventory management applications
- Scheduling
Your role as a customs broker is to ensure that all of your clients' trade data is complete and accurate. To do this, you need to integrate your systems with those of other parties in the supply chain, including carriers and shippers.
Additionally, integrating EDI into your existing processes will help ensure that all parties can communicate with each other promptly without needing any additional forms or paperwork. This can reduce the time required for processing shipments by up to 50%. It also allows customs brokers more time to focus on other duties such as preparing taxes or filing documents with government agencies like the Department of Homeland Security (DHS).
Comprehensive Audit Trails
An audit trail is a record of all activities that have been performed on your EDI data, including who had accessed it, when they accessed it, and what they did. Audit trails are crucial for compliance with customs regulations and for proving that you are following industry best practices. They can also help you spot fraudulent activity or missing information in your data. The types of information reviewed in an audit trail include:
- Date & time
- User ID
- Event code (such as "read" or "write")
- Action was taken (including document name)
- Message content
Leverage Data Access Controls (Authentication & Encryption)
EDI software for customs brokers allow you to leverage encryption and authentication technologies to safeguard your data across all four stages of the EDI lifecycle: In transit, at rest on your network, in use by your organization's business processes and applications, and when it comes time to transmit it via an EDI channel.
Authentication techniques ensure that only authorized parties have access to data. Also, encryption techniques protect the confidentiality of the information stored or transmitted over a network. The most common authentication protocols include:
- HTTP Basic Authentication (BASIC)
- Digest Authentication (DIGEST)
- Client Certificate Authentication (CERT)
- Mutual Transport Layer Security/Secure Sockets Layer (TLS/SSL)
- Protocol with client-side certificates issued by public key infrastructure (PKI).
The most common examples of TLS/SSL implementations, include:
- Secure Socket Layers (SSLs)
- Protocols such as SSLv3 (SSLv3)
- TLS 1.0 - 1.2
- Transport Layer Security 1 - 3c
An EDI System Can Help Your Customs Brokerage Retain Its Competitive Advantage
Invariably, EDI software simplifies customs' brokerage processes. It makes the job of tracking goods, importing them, and preparing paperwork for customers much easier than traditional approaches. Moreover, it links your system to your customers' systems, enabling you to get your transactions done in record time without the time-consuming tasks like spreadsheets and handwritten forms.
Whether you're looking for a way to streamline your internal order processing or boost efficiency with cross-border communication, EDI can reduce errors and costs, and enable new business opportunities. For more information, contact a Remedi expert today.
