Challenges and opportunities for Customs in Latam

Improving trade facilitation can have considerable effects on a country international competitiveness, intraregional trade, and overall exposure to security threats. For these reasons, it is more than ever crucial to implement strong measures for smarter and faster movements of goods.

To better understand the current challenges faced by Customs in Latin America (Latam) and the opportunities which arises from these challenges, we’ve asked our expert Pablo Ugarte VP, Contract Management & Development located in El Salvador, his views on this topic.

What are the main challenges faced by customs in the region?

Despite recognizing significant progress made by Latam countries in the recent years we know that some countries still face some challenges.

Customs and trade need simpler, standardized, and harmonized procedures across borders to close the gap, in terms of efficiency, with more developed economies, but they also need to reach improved paperless capabilities for cross border trade making it simpler to exchange electronic information and payments.

Although trade at ports and airports has improved due to advanced data collection capabilities, anticipated customs declarations and electronic data exchange at borders make cross border paperless trade indicators a significant challenge for several Customs in Latam.

We also must mention that complex and not yet vastly unified regulatory compliance legislation and procedures make customs processes still difficult for traders. In addition, the time to import/export is still significantly higher, which in turn has a direct effect on higher costs of trade, when compared to more developed economies.

Beyond this, Customs also face difficulties to implement full scale technological capabilities to secure trade, starting from more and anticipated data availability/collection, improved data usage, but also cargo identification-tracking capabilities and integrated technology oriented to cargo security.

How can Customs address these challenges?

There are three main topics Customs should focus on to address the challenges mentioned previously:

Accelerate digital transformation

Customs need strong political decisions to further accelerate their digital transformation and enhance the use of data to improve and speed up processes, and to be able to exchange digital information.

There is progress made by some Countries, for instance efficiently deployed Trade Single Windows and Port/Airport community systems are examples in that direction. When its implementation reaches all stakeholders, including traders, the results can be a game changer in trade competitiveness and customs logistics performance.

Take full advantage of smart solutions

Customs also need to employ available technological means to control cargo movements inside the country for internal and international transits. More Customs in the region need to monitor cargoes location to limit contraband, loss of cargo, and irregular cargo clearance. Several technologies are available, including GPS/GPRS solutions, RFID solutions, electronic seals, OCR readers, etc., which can be implemented with excellent results.

Using technology to enhance airport, port and border cargo security while facilitating trade is key. Non-intrusive inspection tools (X-ray scanners and similar technologies) across borders, ports and airports have proven to be a very efficient tool to enhance country’s security (against illegal weapons, illicit substances, contraband, illegal immigration, etc).

Better targeting of cargoes

Some Customs Administrations still use outdated and little sophisticated risk management solutions mainly based on selectivity rules and random allocation. Customs should shift towards advanced risk management system based on artificial intelligence to determine, with more accuracy, riskier cargo to be inspected and perform targeted inspections in very short time.

By better targeting high risk consignments, Customs not only reduce risk of fraud but also improve their overall operational efficiency.

How non-intrusive inspection (NII) technologies help Customs mitigate security threats?

NII technologies are one of the most efficient ways to mitigate security threats for borders, ports and airports trade. It is widely known that traffickers tend to use countries not equipped (or poorly equipped) with NII technologies as export points of illegal drugs, making those countries perceived as insecure for international trade. Few Customs have been able to implement this technology in a country wide scheme. Some other Customs have only implemented this technology at some locations, leaving those unequipped customs points weak to security threats.

By stopping illegal cargoes from transiting or entering a country using NII technologies, the country as a whole dissuades people involved in illegal trafficking, reduces resources available for illegal activities, therefore boosting internal security.

NII technologies, which today can be equipped with artificial intelligence and machine learning capabilities, are able to successfully detect weapons traffic, drugs, illicit substances, and even illegal immigration.
There are numerous examples where Customs administrations were able to detect containers with weapons, people, drugs and other dangerous goods with the efficient use of NII.

Case study: Successful Enhancement of Customs Revenues and border security in El Salvador

El Salvador has implemented, with Cotecna´s support, one of the most advanced multi border projects including a Central Command Center for image analysis and decision making. It has led authorities to numerous findings of illegal goods trafficking and contraband. Images and data obtained from NII technologies can also be shared with standardized formats with relevant authorities in other countries, where cooperation agreements exist. This allows enhanced security for exported cargo leading to faster clearing processes when cargo arrives at destination.

About Pablo:

Pablo is a senior executive with more than 20 years’ experience in diverse managerial positions, his broad vision of the business priorities and extensive knowledge of customs / international trade environment have allowed him to achieve successful results in various countries in different continents. Pablo has been working for Cotecna for almost ten years and has led the implementation of large-scale trade facilitation projects in El Salvador and Guatemala with Customs and Port Authorities.

For more than 45 years we have been working with customs administrations from around the world to bring together reliable and efficient solutions that meet the highest standards. Our added value lies in our capacity to seamlessly integrate our solutions into our clients’ environment. For more information about Customs solutions contact us at governments@cotecna.com