Traditional compliance approach

DHL Express is fully committed to ensuring its clients comply with existing regulations. At the global level, a Customs Compliance Team is working to enable sustainable business growth by providing a compliant and efficient cross-border trade experience to the company’s customers through collaboration with regulatory authorities.

Customs compliance is a core element of the company’s culture and value proposition to its customers, together with its ethical working remit. For many years, DHL Express has implemented proactive checks in its processes to avoid non-compliant shipments entering its delivery chain. These include:

• Screening of air freight shipments prior to departure of airplanes to ensure they do not pose security-related risks (e.g. X-ray inspections).
• Physical examinations, for example to proactively identify non-declared dangerous goods.
• Screening of consignor and consignee information using data analytics tools to deny services to those infringing regulations in the past.

In addition to these proactive checks and to strengthen them, DHL Express is launching the Global Customs Compliance Programme, with the goal of further improving shipment integrity and commercial invoice data quality provided by shippers.

Four risks are targeted here:

• Intellectual Property Rights (IPR) infringement.
• Undervaluation.
• Misdeclaration of information related to the goods.
• Misdeclaration of information related to the shipper and receiver.

The key theme running through the four risk areas above is data quality. DHL Express proactively continues to engage with its customers to educate and raise awareness of the importance of providing complete and accurate data, and of the fact that non-compliance has serious and tangible consequences.

In addition to educating its customers, DHL Express is also stepping up employee training and enhancing its internal risk management mitigation processes and tools in order to reduce the probability of non-compliant shipments entering the network. The initiatives include:

• Enhancing new account opening measures to avoid on-boarding known offenders.
• Piloting data analytics and machine learning tools to proactively identify and intercept potential non-compliant shipments at origin and departure countries.
• Enhancing shipment booking systems to guide shippers on how to provide complete and accurate goods descriptions.

One additional area of work where much can be done is related to the exchange of information with public authorities. Such a mechanism exists between DHL Express Hong Kong and Hong Kong Customs. Both entities work closely, especially on targeting IPR infringing goods, based on a joint Memorandum of Understanding which has been in place since 2015[1]. During 2020 and 2021, DHL Express Hong Kong physically intercepted over 28,000 outbound shipments to identify suspected IPR infringing goods, in recognition of which it was presented by the Customs Authority with a WCO Certificate of Merit in 2020. In October 2021, Hong Kong Customs also sent a Letter of Appreciation, praising DHL Express Hong Kong for its anti-smuggling efforts during the third quarter of 2021.

In the IPR area, Customs authorities, together with IPR Holders, could develop and maintain at the national level a central list of IPR infringers. It could be accessible to banks, e-retailers, transport providers and other stakeholders in the supply chain to allow them to deny services to anyone on the list. DHL Express would also use such a list to identify shipments to be inspected and to provide intelligence to Customs authorities, where legally permitted.

Another area where exchange of information between Customs and express couriers could yield results is related to undervaluation in the area of e-commerce. Customs authorities should share intelligence, where legally permitted, on shippers, commodities and trade-lanes which are to be subject to monitoring and scrutiny.

This is especially crucial in countries where all commercial import shipments – regardless of the value – must be declared with a formal Customs declaration. Since the 1 July 2021 Customs declarations are required for all consignment regardless of the value in the European Union. There has been an increase, in some European Union Member States, in the number of requests from Customs for additional documentation when undervaluation is suspected.  In order to play its part in combating undervaluation DHL has developed a “Risk Management Profiling Tool” to enable it to detect suspicious shipments that may be undervalued. When shipments are flagged by the Tool, DHL requests further information from its customers before dispatching their shipments. This is done when the shipments are still in the country of departure. In essence, the new procedure moves the mitigation measures up the supply chain and complement the analysis of the value of the goods done by the Customs administration.

DHL Express would be interested in discussing piloting this tool with Customs administrations.

Express operators cannot act as enforcement agencies, but can support them in fighting non-compliant behaviour. One of the prerequisites is that information has to be shared.

DHL Express is committed to fulfilling its legal obligations efficiently and even to going beyond them. This includes:

• Cooperating and providing accurate and timely electronic shipment data.
• Intercepting and handing over physical shipments flagged by Customs authorities.
• Acting against non-compliant shippers flagged by Customs authorities.
• Providing additional support and information on major investigations by Customs authorities (e.g. details on shippers/consignees, where legally permitted).
• Proactively cooperating with Customs authorities.
• Undertaking shipment checks at departure, on both physical goods and shipment data quality.
• Leveraging data analytics/machine learning to proactively identify non-compliance.
• Stopping suspected shipments in the network.
• Closing down accounts of non-compliant shippers and preventing them from re-opening new accounts.

DHL Express calls on Customs administrations to consider providing benefits to express carriers with a good compliance record. Such benefits could include:

• Reduced physical inspections and documentary at destination in recognition of proactive anti-illicit trade measures.
• Streamlined border controls, with reduced requests for the same data at destination.
• Recognition of companies’ internal risk assessment of the compliance of a shipment.
• Expansion of AEO programmes to include express operators and tangible benefits to be provided to AEOs.

In addition, it is important that Customs authorities ensure the same level playing field for all logistics service providers, to avoid non-compliant shippers simply switching their illicit trade activities from one provider to another.

DHL Express welcomes any ideas aimed at strengthening cooperation with Customs authorities and other industry players in tackling illicit trade, and we invite you to use the email address below to contact us.

More information
EXPcustoms@dhl.com

[1] See article published in the February 2020 edition of the magazine: https://mag.wcoomd.org/magazine/wco-news-91-february-2020/customs-partners-with-express-carriers-in-hong-kong/