Security aspects were first introduced into European Union (EU) Customs legislation in 2005 and 2006, in the aftermath of the terrorist attacks in September 2001 in the United States, and the adoption in 2005 of the WCO SAFE Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework). The main changes were the requirement to submit electronic data before the arrival of goods in the EU (the  “Entry Summary Declaration” – ENS) and before their departure from the EU, the introduction of the Authorized Economic Operator (AEO) programme and the establishment of a common risk analysis system.

An information system called the Import Control System (ICS) was developed to lodge and process the ENS and exchange electronic messages between Customs administrations, economic operators and the European Commission. ICS ensures that operations starting in one EU Member State can be completed in another without resubmitting the ENS, ensures that risk assessment is undertaken, and that appropriate safety and security data is passed to the other Member State.

When the new regime first entered into force, new security threats emerged. In October 2010, a shipment containing improvised explosive devices was found on board an aeroplane arriving from Yemen and transiting the EU towards the United States. The focus of Customs security shifted towards improving air cargo security, with several countries considering the use of advance electronic data to identify high-risk cargo before it was loaded on board aeroplanes. Global standards for such advance data systems were developed by the WCO and added to its SAFE Framework in 2015, and the concept of “Pre-Loading Advance Cargo Information” (PLACI) was adopted to refer to the new data required.

The ICS and the entire risk management framework were reviewed at the EU level. The results of this work are reflected in the provisions of the Union Customs Code which entered into force in 2916, and the launch of ICS2 in March 2021.

ICS2 was operationalized in three releases, each release affecting different economic operators (EOs) and modes of transport:

• Release 1: As of 15 March 2021: express carriers and designated postal operators established in the EU are required to provide a subset of their ENS data (“PLACI” data) before goods are loaded on aircraft bound for the EU, Norway, Switzerland and Northern Ireland.
• Release 2: As of 1 March 2023: express carriers, designated postal operators, freight forwarders and air cargo carriers are required to provide a full set of advance electronic data before the arrival of goods loaded on aircraft bound for the EU, Norway, Switzerland and Northern Ireland.
• Release 3: As of 1 March 2024: express carriers, designated postal operators, freight forwarders, maritime, rail, and road carriers, and businesses receiving goods in the EU are required to provide a full set of advance electronic data before the goods arrive in the EU, Norway, Switzerland and Northern Ireland.

ICS2 also indirectly affects all manufacturers, exporters and individuals from outside the EU who send goods to or through the EU, Norway, Switzerland and Northern Ireland. These shippers must provide the necessary information to the directly affected economic operators (such as DHL), who then provide electronic data to EU Customs administrations.

The most significant change applicable with ICS2 Release 2 is that pre-arrival security filing messages must be submitted to EU country Customs administrations at a much more granular level. For example, the shipment security filing cannot be submitted without a detailed goods description per commodity (on a line-item level) and the respective Harmonized System (HS) code. The consignee’s Economic Operator Registration and Identification (EORI) number is also required.

Recognizing the multifaceted nature of ICS2, DHL Express embarked on a comprehensive preparatory journey, encompassing internal assessments, system upgrades, staff training and customer education/customer awareness campaigns. Leveraging its knowledge of other pre-loading and pre-arrival security data programmes, its global network and expertise, DHL Express engaged proactively with regulatory authorities and industry partners to address potential challenges and streamline implementation processes. In addition, it coordinated campaigns with shippers from all over the world to improve the data quality of the Commercial Invoice information submitted to DHL Express, which is used for the ICS2 filing.

DHL Express encountered several challenges during the preparation and implementation of ICS2, each requiring innovative solutions and concerted efforts in order to be overcome.

1. Meeting data requirements requires massive communication efforts vis-à-vis customers 

Obtaining some of the data required under the new system posed a significant challenge. Despite developing system solutions to support compliance, persuading DHL’s customers worldwide to provide complete line-item goods descriptions that are accurate, and to meet new ICS2 data requirements for air pre-arrival shipments/cargo (such as countries of routing and HS codes), involved a monumental communications effort and required tight ongoing monitoring.

Given that the DHL Express network offers customers flexible/dynamic routing of aeroplanes (to ensure the fastest possible transit time), aeroplanes may be routed at any time through a country that is part of the EU. Therefore, all shipments from any origin to any destination worldwide may be impacted by ICS2. Hence, the educative effort is aimed at all customers. Further to this point, the implementation of ICS2 provided some significant operational challenges and involved a change to DHL Express’ supply chains. For example, the new ICS2 regulations mandated the filing of shipment data to the entry Member State of the EU for shipments that had traditionally been routed from an EU Member State to another EU Member State via a third country (e.g. the Republic of Ireland to Germany via a UK hub). Therefore, this new requirement triggered changes to routings, with additional costs for businesses and consumers.

Besides obtaining customer data, DHL Express is committed to ensuring that the advance cargo information submitted to the ICS2 is both accurate and thorough. This requires staff to pay careful attention to detail and adhere to the system’s specific data fields and formats. Inaccurate or incomplete data could lead to delays or rejections, impacting the smooth flow of goods.

2. Timely submission

A further challenge faced by DHL was the submission of advance cargo information within the required timeframes. Once data was obtained from customers, DHL Express needed to gather and transmit it in a timely manner to allow Customs authorities to perform risk assessments and make informed decisions.

3. Collecting information and getting support from authorities 

Establishing effective communication with Customs administrations and getting their support was crucial for DHL Express during the implementation of ICS2. Clear guidelines, training materials, and communication channels for addressing queries or issues were essential for a smooth transition. Economic operators needed a reliable point of contact to seek assistance and clarification on system-related matters at the EU Commission and in each EU Member State.

4. Communication of ICS2 requirements to shippers was something that fell to operators 

Communication of ICS2 requirements to shippers and partners worldwide was crucial for ensuring compliance and minimizing disruptions. However, the responsibility for communication primarily fell on operators, leading to disparate interpretations and mixed messages. This confusion, particularly among customers who were accustomed to different service providers, resulted in delays and frustration. Better communication from the EU Commission and EU Member States Customs administrations (directly to shippers worldwide) would have positively contributed to these challenges by emphasizing the rationale behind mandatory data requirements and fostering better stakeholder understanding.

Moving forward, all parties concerned would benefit from authorities directly informing and educating customers/shippers about ICS2 and other regulatory changes, rather than relying on the logistics providers to do so.

5. Fallback procedures needed to be negotiated in each country in case of exceptions

The zero-tolerance policy for failed filings upon arrival into ICS2 territory created operational hurdles, exacerbated by unforeseen circumstances such as individual shipment routing changes and flight diversions. Negotiating fallback procedures in each country became imperative to address exceptions and prevent shipment delays. Despite these challenges, DHL Express remained steadfast in its commitment to compliance and customer satisfaction, implementing robust monitoring and intervention protocols to uphold service standards.

6. Deployment required constant adaptation and coordination

The initial plan to deploy ICS2 on a specific date posed significant risks, compounded by complex and insufficient clear test campaigns. The eventual shift to gradual deployment, albeit close to the legal deadline, allowed for more flexibility in planning and implementation. However, constant adaptation and coordination were required to ensure seamless integration into existing DHL operations. This experience underscored the importance of agility and collaboration between economic operators and the Customs administration in navigating complex regulatory frameworks.

7. Operational challenges of transiting ULDs

Identifying and stopping individual shipments which had missing pre-arrival data filing messages and which were loaded in Unit Load Devices (ULDs) emerged as a significant operational challenge. The potential for delays in thousands of compliant shipments due to a single missed filing message underscored the crucial nature of robust monitoring and intervention protocols.

8. Ensuring commercial carriers are compliant

DHL has its own means of conveyance but also uses commercial carriers. Ensuring that these other operators involved in moving express shipments adopted the same diligence as DHL was essential for establishing compliance and seamless processing. However, some commercial carriers’ lack of compliance imposed additional stress on DHL Express operations, highlighting the importance of industry-wide collaboration and adherence to regulatory requirements. Addressing these challenges necessitated proactive engagement and ongoing dialogue to promote alignment in work practices and streamlined operations.

9. System performance and reliability

DHL Express relied on the ICS2 system to be consistently available and responsive. However, system performance issues, technical glitches, or downtime can impact the platform’s smooth operation, causing delays – especially when time-sensitive shipments are involved.

Reflecting on the challenges encountered during ICS2 implementation, DHL Express gleaned invaluable lessons for Customs administrations. They are as follows:

• It is critical to adhere to the WCO pre-departure and pre-arrival standards, including the data sets, outlined in the WCO’s SAFE Framework when designing programmes, as this allows for predictability of data requirements, standardization and harmonization across Customs territories. This reduces the burden on economic operators, improves data quality over time, and thereby creates a stable environment for programme development.
• It is essential to pilot any new procedure/processes before fully implementing them or even legislating, to ensure the success of implementation, as this will help to mitigate unexpected situations that may not have been envisaged.
• It is necessary to establish early collaboration and partnership between Customs administrations and economic operators to enable smooth implementation.
• It is essential for this collaboration and partnership to involve a common understanding of where data elements become available in the supply chain. For example, consignee EORI numbers are generally unknown or unavailable before importation into the EU. Therefore, advance data sets should not only comply with the data sets in the WCO SAFE Framework, but also be based on commonly available data when filing advance information.
• There is a need to strengthen trust and transparency between Customs administrations and economic operators to ensure joint problem resolution.
• There is a need for an educational outreach programme that includes direct dialogue between Customs administrations and customers/shippers (originators of most of the shipment data required).
• Given the critical need to provide line-item data for risk analysis, Customs administrations should offer more training and assistance in this domain.
• It is essential for Customs administrations to demonstrate adaptability in navigating complex regulatory frameworks.
• It is important to set a transitional introduction period, allowing economic operators to migrate towards implementation without fear of penalties and fines, and giving Customs administrations sufficient time to ensure that all systems operate as foreseen.

DHL Express’ engagement with the European Commission on ICS2 implementation reflects a shared commitment to enhancing global trade security and efficiency. Despite the challenges encountered, DHL Express remains resolute in its commitment to compliance, supply chain security, operational excellence, and a relentless pursuit of customer satisfaction. Looking ahead, DHL Express is optimistic about continued collaboration with regulatory authorities and industry partners to navigate evolving regulatory landscapes, drive innovation in global logistics operations, and jointly educate shippers worldwide about the importance of complete and accurate data to ensure smooth security filing and Customs clearance processes.

The implementation of ICS2 has, once again, reinforced the importance of the WCO and its SAFE Framework of Standards. These standards, developed in collaboration between the WCO, Customs administrations and the private sector, provide all the necessary tools to develop successful pre-arrival and pre-departure programmes. Experience has shown that adhering to (not exceeding) the data standards in the SAFE Framework, together with the other standards, supports the key aims of the SAFE Framework, namely, improved supply chain security and cross-border trade facilitation.

More information
EXPcustoms@dhl.com