Solving the Customs Crunch – Tech Solutions to High Friction Borders

If businesses learn only one thing from 2020, it must be this; supply chains are brittle and anything we can do to introduce flexibility and reduce friction is a moral imperative.

One of the biggest sources of friction in the global supply chain is people. The need to have a person in a specific place at a specific time for supply chains to run smoothly is a deadly flaw. The pandemic proved that in no uncertain terms.

This is why smaller firms with an eye on remote solutions facilitated in the cloud thrived during the lockdown.

Fractory, a tech startup founded in Estonia, is one such example. They provide remote manufacturing services like tube cutting globally. This means a manufacturer in one country can order and have delivered a piece of precision engineered steel, laser cut to perfection, without leaving their own office. No site visits, no inspections and no collections.

During the pandemic, Fractory pushed its own capabilities to offer a world-first service; instant pricing and spec for precision-cut metals.

“Our focus is on alleviating the procurement burden of engineering companies. Over 20 local manufacturing partners from the UK have joined us to offer a wide range of capabilities. Pricing 3D models for both bent and cut sheet metal as well as cut tubes, we can cover for the needs of most engineering projects, significantly reducing the time spent on making the step from CAD files to ready-made parts,” says Fractory MD Martin Vares, explaining the reasoning behind the innovation.

Services like this are viewed as niche, or luxury, until an unanticipated global lockdown means that under-digitised supply chains threaten your entire business model.

The COVID-19 lockdown highlighted flaws in global supply chains that have been there for decades. Border processes are a good example.

Supply chain expert Sam Tyagi, CEO of customs clearance platform KlearNow, believes customs clearance at international borders is one the biggest impediments to frictionless global commerce.

“Customs clearance is the most outdated and high friction part of the global supply chain. A lot of customs entries are still completed with pen and paper. This is unacceptable for such an integral cog in the global supply chain system.

Tyagi’s Silicon Valley based startup KlearNow closed its most recent funding round at $16 million. So those in the know clearly anticipate meaningful growth from a company that can reliably solve customs clearance friction.

Techcrunch remarked at the time that “(KlearNow) is also betting that its platform will find new customers in this remote work era that was caused by the COVID-19 pandemic. Custom brokers, who might normally travel into central offices and manage physical paperwork, are now faced with completing that task from home.”

Tyagi has his sights set on post-Brexit Britain:

“KlearNow has been designed to remove friction from the customs clearance process. The platform provides end-to-end visibility for all parts of the customs clearance process and to date has helped  business in North America to export and import goods in a way faster, easier and cheaper.”

A screenshot of the KlearNow platform

“It’s abundantly obvious that as of right now, there simply aren’t enough staff employed at UK borders to handle the increase in workload brought about by Brexit. Our fear is that this will quickly lead to a two-tier system whereby larger importers spending more money on landing their goods are prioritised at the expense of smaller business and their customers.” 

Tyagi is concerned that legacy border processes, combined with the process of leaving the EU, will leave UK businesses exposed to a double-whammy of trade friction and is urging governments to modernise border processes now.

“Non UK businesses are already declaring their intention to stop importing to the UK as they discover the extra cost and workload required to land their goods. It is simply not going to be viable for a lot of smaller and medium sized businesses to land their goods in the UK. 

“Even Captain Kirk himself, William Shatner, has announced that he will no longer be exporting to the UK under the post-Brexit system given the increase in cost and time for his business” “Without the rapid implementation of technology to make customs clearance easier, faster and cheaper, this trend will continue and UK consumers will suffer as a result.”

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