Learn more about the three key benefits of transit monitoring for customs authorities, transporters and the private sector.
One of the after effects of the growth of global trade is the increase of transit cargos, especially in regions where the dependence on road transport is important, as it is the case for many land-locked countries in Africa.
Consequently, with the increase of international trade, and ergo of transits, came the rise of illicit behaviours which aim at circumventing customs duties. It is important to note here that goods in transit are not subject to customs duties until they reach their final destination country. Therefore, people sometimes try to take advantage of these measures intended to facilitate trade, to avoid paying tax.
Transit monitoring has been wildly implemented worldwide to curb this phenomenon and help reduce dumping, prevent tax evasion, and secure cargo against theft. There are many benefits associated with the implementation of cargo monitoring solutions. In this article we have decided to list the top three that we’ve observed throughout our many years of experience with customs.
1. An efficient way to increase tax collection
For many countries’ customs duties represents the main sources of state revenue. Diversion of transit cargos can therefore have a disastrous repercussion on their economic development. For example, the Kenya Revenue Authority has estimated a loss of 12 billion KES (around 100 million euros) per year due to transit cargo being unloaded on its local market1.
Our experience, as well as several studies, have concluded that transit monitoring have an immediate positive impact on tax collection. Besides the securing and monitoring of trucks which ensure that goods in transit are not sold in the country, the use of tracking devices have a deterring effect that helps efficiently prevent fraud.
Additionally, an effective transit system can boost regional development through the increase of intra-regional trade offering new opportunities to expand towards new markets.
2. An advanced technology for modernisation
Electronic seals and tracking devices used to monitor trucks in transit rely on advanced RFID & GPRS technology and GPS solutions to track and collect real-time data about their location and security status. They offer an efficient mean to ensure the integrity of cargos in transit, determine responsibility in case of damage or theft, and to immediately react in case of fraud.
Along with the direct benefits of securing transits, this technology brings many other benefits. For instance, it allows to quickly process data from the field and combine them with other information, such as customs declarations and data collected by using different type of innovative embedded sensors. Therefore we are able to increase automation, reduce human errors, and retrieve useful KPIs to improve our processes, that ultimately bring value to both customs authorities and the private sector.
3. Improved efficiency through international requirements
The World Trade Organization (WTO) Trade Facilitation Agreement strengthens the need for Customs to reduce obstacles, whether it is physical barriers or documentation requirements, with the overall objective to allow a seamless flow of goods.
The implementation of a transit monitoring system is one way to move in that direction and comply with any necessary requirements. Additionally, it helps customs authorities better allocate their resources, reduce delays, and even prevent congestion at ports and borders by:
- Determining container loading and unloading points accurately.
- Providing accurate alerts and real-time information about movement, delays and disruptions.
- Accurately monitoring transit time and Estimated Time of Arrival (ETA), allowing better work planning and process coordination
Transit monitoring solution have also proven benefits for transporters who see a reduction in the risk of assault and a gain in efficiency through:
- Container dwell time reduction
- Simplified procedures
- Shortened clearance and transit time
Cotecna supports customs worldwide in their transit monitoring projects by sharing our expertise and valuable experience with them. Learn more about our Cotrack solution.
1. Effect of cargo tracking system on cross-border trade between Kenya and Uganda – Nicholas Mugambi (2017)