The mission of Customs has always been to prevent the entry of prohibited goods into the local market and to collect duties and taxes at the borders. Its role is crucial, especially in many countries where it is the primary source of revenue, helping states maintain economic stability.

Over the past 50 years, customs administrations have had to evolve to cope with increased trade volumes, secure the supply chain, and support the emergence of customs unions.

The role of the World Customs Organization (WCO) has been pivotal in this evolution. By developing international standards, particularly the Revised Kyoto Convention adopted in 1999, and ensuring their implementation, the WCO has simplified and harmonized customs clearance operations across many countries.

However, the simplification of customs processes has been truly effective only when technological advancements have been able to support them, that is, when declarants have been able to submit their customs declaration and make the payment from their office. This article offers an overview of the evolution of IT solutions that have enabled Customs to absorb increased volumes, enhance compliance with regulations, and reduce bureaucracy.

Due to its complexity, the automation of customs processes differs from that of, for example, income tax or VAT processes. A great variety of domains must be integrated within a single platform: manifest processing (inventory of goods on the means of transport), inspections, investigations, dispute management, accounting, tariff and customs value management, bonded warehouse control, etc.

Before 1980, in most countries, automation was limited to the use of desk calculators for determining duties and taxes. Declarations were made on paper with six carbon copies, and manual registers were commonly used to record the list of customs declarations and their processing. The customs tariff, which lists customs duty rates based on the type of goods, was present on every desk. Declarants followed a precise route from counter to counter.

From 1985, mainframe computers appeared in many advanced countries, allowing customs personnel to enter declaration data. Then, gradually, with the advent of more affordable desktop computers, each customs administration was able to equip itself with workstations.

By the late 1980s, the customs tariff was digitized, and manifest data were entered manually. Customs managed to reduce clearance time and became a provider of increasingly reliable foreign trade statistics.

From 1990 to 2000, computers were made available to declarants within the customs offices, in Direct Trader Input (DTI) units, allowing them to enter their declarations themselves. Banks opened branches in customs offices to speed up payments. This evolution was accompanied by legal provisions making paper declarations obsolete in favour of electronic declarations.

In terms of risk management, a rudimentary system based on static criteria directed transactions towards various types of control (documentary inspection, physical inspection, non-intrusive inspection) or simply towards exit without control. Customs value control, aimed at verifying that the declared value was not undervalued or overvalued, relied mainly on a comparison with the prices indicated on previously submitted paper invoices. The compilation of these reference documents and comparison were done manually by officers.

The early 2000s marked a major turning point with the arrival of national networks and fiber optics. Thanks to the connectivity of remote border posts, it became possible to link all customs offices to a centralized server, facilitating, in particular, the consolidation of statistics, the use of a single manifest nationwide, and the centralization of credit accounts.

At border offices without infrastructure, declaration entry became possible using laptops connected to a solar panel and a simple VSAT antenna linked to the central server via satellite.

This period saw the emergence of One-Stop Border Posts (OSBP) created to facilitate passage at land entry and exit points.

Around 2005, with the rise of the Internet, any declarant with a connected computer could enter their customs declarations. Eliminating the need to physically go to customs, these developments led to a true revolution that also helped relieve congestion at customs offices. Specialized cybercafés also emerged, allowing informal declarants to complete their customs formalities.

At that time, documents accompanying the declaration (invoices, waybills, packing lists, etc.) were dematerialized, and electronic payment methods were introduced.

The management of transit operations also benefited from the automation and networking of border posts. One of Customs’ essential functions is to ensure that goods intended to cross the territory for clearance abroad are not diverted to the local market, thus avoiding considerable revenue loss, a common problem in many countries. To address this, in the absence of an electronic control solution, convoy escort to the border was often used and remains a solution for countries without adequate IT solutions.

Since the early 2000s, customs systems have adapted by associating a bank guarantee with the transit form. The guarantee amount is deducted from the declarant’s account in the customs system at the truck’s departure and is automatically restored at the border. This system has been particularly beneficial in Southern Africa, where it has been adopted by all COMESA countries.

This digitization process is accompanied by bilateral and regional initiatives aimed at connecting national customs systems to share data for transit operations through an interface, given that automated customs systems often differ from one country to another. Ethiopia and Djibouti customs thus exchange their transit declarations daily on a common platform so that each country can generate the necessary transit forms at the truck’s arrival from the information sent by the country of origin. The SIGMAT system allows West African countries to do the same, while Central American countries use a system called SIECA. Gulf countries have developed a similar system called Maqassa, which also consolidates the periodic repatriation of duties and taxes paid in the first transited country to the destination country.

Guarantee management does not prevent partial unloading during transit, especially for containers subject to unstuffing at the origin. To address this, many countries have adopted Internet of Things (IoT) technology for GPS truck tracking. This allows monitoring the speed of the truck, number, and duration of stops, and deviations from a strictly defined corridor on a map. In case of GPS tracker removal, the truck can be immobilized.

Customs also uses the same transit forms for controlled movement, mainly of used vehicles, from the port of arrival to hinterland countries.

After 2010, the first Trade Single Window systems were deployed, and other border regulatory processes such as license, permit, and exemption applications and issuance began to be digitized.

These new systems facilitate cooperation with various ministries and Other Government Agencies (OGAs), particularly in risk analysis and inspections. An electronic collaborative visit concept emerges. The systems allow evaluating declarations based on customs and OGA selectivity criteria and allow scheduling inspections involving inspectors from all organisations.

The Single Window concept has evolved to duplicate some customs IT system functions, such as manifest collection or declaration entry, sparking debates. This evolution was likely inspired by the European and American models, where declaration entry is entrusted to a private sector third party interfacing with the customs server. This is also the case in the Philippines, where Value Added Service Providers (VASP) retain declarants and offer training.

However, Single Window systems subsequently refocused on their initial functions, namely pre-clearance, with the Pre-Import Declaration (DPI) serving as a basis for automatically creating license applications for regulated products. The Pre-Import Declaration also serves for creating the electronic document used for domiciliation and exchange control in many countries. This application is validated by the central bank, treasury, or commercial bank supporting the commercial transaction and is written-off by the customs declaration at the end of the cycle.

The Single Window platform also manages the issuance of various certificates such as export Certificates of Origin (COO) derived from the export customs declaration, insurance certificates, and phytosanitary certificates (ePhyto).

It also enables a single electronic payment system for all types of transactions, including customs duties payment. Furthermore, many interfaces have been established with other ministries’ systems, such as the transport ministry after vehicle clearance or the trade ministry for company and declarant registration.

Thanks to the Single Window platform, customs no longer operate in isolation.

Every international cargo shipment involves various stakeholders such as carriers, freight forwarders, terminal operators, customs administration, and port authority. In recent years, Port Community Systems (PCS) have been introduced, interconnecting these actors’ IT systems to centralize goods release authorization procedures.

These systems exchange EDIFACT messages within the PCS, for the dispatch of the Delivery Order (DO) by the shipping line or airline local representative or for the terminals to send containers discharge/loading notices. The declarant must pay all port fees online (terminal handling, shipping agent, various beneficiaries including the port) and obtain customs clearance.

However, since the Port Community System concept is not generalized, customs systems have had to take on some of these functions. For example, systems are connected to port terminal systems to electronically confirm the loading or unloading of a vessel. Customs then receives the “discrepancy report,” a document detailing the differences between the initial manifest and the loaded or unloaded cargo. Furthermore, in many countries, shipping agents must enter the Delivery Order (DO) in the customs system to designate the importer associated with the waybill. The port announces the arrival and departure dates of ships, allowing verification if the manifest was recorded within regulatory deadlines.

In the most modern customs systems, shipping agents can amend waybills online and process transshipment requests, freight forwarders can manage degroupages, and terminal operators submit transfer requests. Customs only needs to approve these operations with a simple click.

However, in some countries, the Customs Act provisions still require customs to perform all these operations themselves, affecting clearance times. This highlights the importance of modernizing legislative frameworks to allow greater efficiency in goods processing by delegating certain tasks to appropriate stakeholders.

The years following 2010 saw the arrival of dynamic risk systems based on econometrics, highlighting actors’ compliance levels. Around 2015, the use of machine learning to identify fraud based on historical occurrences of proven fraud represented a major innovation.

These technological developments have demonstrated great efficiency in risk assessment. It is essential here that explanations of AI algorithm decisions are provided to customs inspectors when a fraud alert is triggered, particularly to build trust in automated systems. A branch of Artificial Intelligence (AI) specifically addresses this challenge: Explainable Artificial Intelligence.

Over the years, customs systems have integrated many new functionalities. In addition to core functions such as accounting, manifest, customs declarations, risk management, and goods release, functionalities have been added for bond management, transit, and offences. In some countries, customs systems also manage the control of inbound and outbound flows in manufacturing and free zones, excise declarations, and passenger customs declarations. Some functionalities, such as report and dashboard generation, have also been improved, leveraging Big Data technologies.

Due to the multiplicity of functionalities in a customs IT system, the development cycle is so long that the technology used to create it is often already obsolete when the system is deployed. Since it is economically unfeasible to recreate a system whenever a new technology emerges, existing systems are maintained and enriched by integrating new functionalities, for example, by adding a mobile interface even when the native technology does not allow it.

The problem lies in the fact that most systems were designed monolithically, with all components grouped into a single “package”. This is particularly true in the most developed countries, using systems 15 or 20 years old. Any modification of a module, such as the accounting function for example, can cause instabilities in the entire system.

To avoid such problems, it is necessary to develop a customs system in the form of co-existing and independent systems, each dedicated to a specific task (e.g., inspection) and communicating through secure message exchanges. Such an architecture facilitates system maintenance, promotes high availability, and allows technological scalability. Each module or microservice can be developed, tested, and deployed independently, reducing instability risks and accelerating the development cycle. Moreover, using secure communication protocols ensures the integrity and confidentiality of exchanged data.

Separating the backend (which manages logic and data) from the frontend (which manages the user interface) allows optimizing development time and modifying one without affecting the other. This flexibility is essential to meet users’ changing requirements and technological advancements, including mobile interfaces. User experience is paramount, especially when it concerns the needs of thousands of trade community users.

For governments deciding to acquire a new customs system, it is crucial to ensure it meets technical requirements for scalability. Besides meeting these criteria, the system must be generic enough to adapt to local regulations while complying with WCO requirements for customs procedures and data codification.

Technological evolution is constant, and Customs must be agile, leveraging it more than ever to continue protecting public safety and the state’s economic and commercial interests while facilitating trade and travel.

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Pascal.minvielle@webbfontaine.com