The supply chain secret your business has been looking for

When it comes to supply chains, senior leaders often look for the ‘silver bullet’: the one strategic element that will make the biggest difference. Drive the biggest efficiencies. Free up the most capital. The revolution that will make you a superhero within your business.

As an end-to-end logistics integrator, you might think Maersk would say no such silver bullet exists – and that you should instead closely examine every element of your supply chain. But it does exist, and it’s often completely overlooked by big corporates: customs.

Customs is your game-changer

When procurement professionals are tasked with finding cost savings in a supply chain, they might start with transportation costs. How to move products from A to B to C in a smarter way. Directors may re-evaluate operating models to increase speed to market.

But implementing large-scale changes in your supply chain can take upwards of two years, and the impact of these changes can take even longer to be felt. Though the payoff is worth playing the long-game, it’s understandable that you may want quicker wins.

Customs could be the answer to saving considerable amounts of money in a shorter timeframe. By streamlining and standardising the customs process, you gain the necessary data and visibility to cut costs. For example, often only around 40% of applicable Free Trade Agreements (FTAs) are being made use of. But by correctly utilising these for both imports and exports, you realise the tax synergies this brings.

And commodity codes, determining whether you can take advantage of reduced VAT rates, are highly complex.

Additionally, while commodity codes can be highly complex, proper identification can determine whether you can take advantage of reduced VAT rates. Instead of using 15 different suppliers, centralising with a single supplier can be leveraged to achieve better costs, and give you better visibility over commodity codes. You’ll know which codes you’re using and whether they are correct, so you’ll understand whether you’re paying the right duty. By knowing what duties you should be paying, you’ll highlight any outliers where you’re overpaying – potentially due to a lack of FTA utilisation. By following this cost-efficiency process, Maersk helped one of our global clients fix their commodity codes and fully utilise applicable FTAs, saving them $15m.

Want more visibility over your operations? Many of our clients have complex supply chains with multiple moving parts across the globe, and it can be hard to see the entire picture. In one example, by examining the customs in Italy alone, we identified they were missing out on €4m in savings. Starting with just one trade lane can be transformative. When you have a handle on the data, you identify more opportunities for how and where trade can be monitored – and the more that is monitored, the more cost-saving decisions you can make.

Want to see greater return on investment and be a cost-cutting hero in your business? Maersk uniquely combines operational excellence, trade monetisation and regional alignment to give you that return via customs. For example, an FMCG client of Maersk’s was able to see 147% increase in returns every year: with 9% reduced software fees, 4% from no demurrage, 21% from digitised production modes, and 113% from duty optimisation.

Looking for the easiest way to de-risk your supply chain? Full customs compliance means no penalty payments, no loss of relief on future customs payments, and no future delays in clearance – which can impact working capital.

Don’t just aim for compliance

When it comes to customs, the bare minimum compliance isn’t enough. Interrogating the customs landscape helps to see what opportunities can be seized (like optimising your trade strategy or using more FTAs) to reduce fines, risk, administration and delays, and cut associated costs. This can help any professional make waves, even outside of their direct area of influence.

A blend of expertise and digital visibility will help create the predictable trade any business hopes for. That’s exactly why we created the Customs Control Tower, your own team of central customs experts armed with a suite of innovative tools that streamline data for monitoring and optimisation – revolutionising the way the world approaches customs.

One of our global clients, for example, had many stakeholders running different customs processes, like a broker to process exports and an agent to manage imports. They had low visibility of customs data and it was hard to understand the implications for their business and make the right corporate decisions. We implemented the Customs Control Tower, centralising their operations with just a $250k investment. The result? A $1.5m reduced spend on customs services annually and $15m in reduced duties paid in the first 12 months, for a total improvement to the cost of goods sold of $16m per year.

To outsource or not to outsource: that is the question

Customs can of course be handled in-house, and while many do so to a good standard, there are numerous reasons why only 30% of companies choose to keep customs in-house. Not only is it very costly, it’s also difficult to be consistent across every global market and to keep up with the changes across the customs landscape. A lack of local customs knowledge within each region can make it tough to utilise FTAs and consolidate the data needed to find new opportunities. It’s also hard to find the right people with the right competencies in every single area.

One of our clients decided to move to an external customs operation after tackling it in-house for 40 years. From day one with the Customs Control Tower, we cut operational costs by 40%, resulting in $2.2m of yearly savings.

The common factor in all these client success stories is treating customs as a priority, not an afterthought. Building customs considerations into your purchasing strategy can offer substantial business and financial benefits in 2024. Particularly when Maersk combines operational excellence, trade monetisation and regional alignment to provide a real return on investment for your business.

I like to say that customs has never been more important than it is today, but it will be even more important tomorrow. Gain a competitive advantage by considering it now.