Shakeup!

August 14, 2011 — Leave a comment

Unpacking of the Customs draft Bills reveals more and more surprises – despite the fact that there is still no site of the subordinate rules. Without any shadow of doubt, the ‘clearing and forwarding industry’ will be hardest effected by the ‘change’.  Why is this? Well there are a number of factors.

Firstly, this industry has always faced the immediate brunt of the law. Customs historical focus on the goods declaration – to ensure optimum revenue collection – has always relied on a high degree of competence and compliance from this sector.  As mentioned before, ITC has made significant inroads in this industry to the extent that specialisation in qualified entry clerks (for instance) is no longer an attribute in this sector. Consequential developments, and in particular, the creation of an deferment scheme gave ‘clearing agents’ even more flexibility to manage cash flow and minimise administrative burden. Several clerks and runners either lost their jobs or were otherwise absorbed in the company.  The first round of accreditation also gave forwarding brokers some leverage to accrue their client base. This did however prove ineffective from a compliance point of view especially where shady shippers merely used brokers for their apparent accreditation. Many brokers did however institute due diligence mechanisms to vet existing and prospective clients to ensure their own credibility and compliance with SARS.

Secondly, the specialised skills in valuation, tariff and trade remedies became more difficult to hold onto. This expertise will be found now mostly in the big ‘audit firms’. Still, the larger forwarding houses have retained some of these skills as it is vital to their overall service offerings to local conglomerates and multi-national clients.

Thirdly, the emergence of ITC service providers has likewise created a niche industry that for all intents and purposes seeks increased business knowledge and understanding of the customs compliance regime. Growth in this sector can be attributed to an organic increase in the need to service a greater and more mechanised supply chain. This has been particularly beneficial to the Customs Modernisation Programme as these entities have been relied on to champion the ICT change externally for Customs.

Naturally, the ‘clearing and forwarding’ sector will bound to feel some pain, as there would appear to be no less emphasis of Customs’ pressure on them to maintain ‘seemingly impossible’ levels of compliance. Forwarders would also no doubt feel some level of grievance in that there is still no visibility of parity in the supply chain. By this I mean the allocation and expectation of binding agreements (legal obligations) by SARS on other supply chain operators – carriers, transit sheds, terminals, etc.  Truthfully, this is being done albeit slow and tedious.

Change, despite all the anxiety it creates, brings about opportunity. My wish is that all parties recognise this and make the best of the situation, irrespective of the challenges. In this latter regard challenges relate to the mercenary-like approach of some role-players versus, honesty and business acumen of others. In todays’ world, being scrupulous and morally right does not always translate into being successful or prosperous. Modernisation implies that everyone changes! Some casualties are inevitable.

Next up: We’ll discuss the attributes of the bills in terms of liability, compliance and punitive measures.

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