Supply chain operations

Part 1

There are four main aspects how this part relates to customs and, therefore, the knowledge is important for you:

• Customs controls start at a very early stage in the supply chain; therefore, it is important to understand how the international supply chain functions and who are the actors. Some of the reasons for customs controls reaching from origin of raw materials to destination of final product:
  
  
  • Ensuring safety and security. 9/11 terrorist attacks shifted the global focus from how to secure cargo for international transportation to how to secure international supply chains from dangerous cargo. Customs policy priorities of revenue collection, antismuggling, and trade facilitation, added one more layer - supply chain security. Customs around the world develop an integrated Customs control chain reaching from origin to destination and addressing the key elements of supply chain security. In this regard, the major themes became data quality, advance cargo information, Authorized Economic Operator (AEO) programmes (see the WCO 'Customs Guidelines on Integrated Supply Chain Management' and WCO Research Paper No. 18 'The Customs Supply Chain Security Paradigm').
  • Combating forced labour. Learn more 'Commission moves to ban products made with forced labour on the EU market' and 'Conflict minerals regulation'. Tip: you might also be interested in watching the documentary about conflict minerals in the supply chain 'Blood in The Mobile'. 
  • Supporting the green transition. Learn more 'Supporting the green transition: challenges and way forward'.
    
    
• Terms of trade developed by the International Chamber of Commerce (ICC) set out who - the seller or the buyer - takes care of customs formalities and these terms are also to be provided in the customs declaration for customs valuation purposes.
  
  
  • About the rules from the ICC website: 'The Incoterms® rules are the world’s essential terms of trade for the sale of goods. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms® rules are there to guide you. The Incoterms® rules provide specific guidance to individuals participating in the import and export of global trade on a daily basis.' In terms of customs, these rules define: who takes care of customs formalities (the seller of the buyer) and they are used for customs valuation purposes. Tip: you can download Incoterms® 2020 practical free wallchart and purchase the book.
  • Customs value of the goods is the basis for calculation of customs duties and taxes. It is not the same as the purchase/ invoice price of the goods. It shall be determined in accordance with Articles 70 and 74 of the UCC. One of the rules of determination is that the price actually paid or payable for the imported goods shall be supplemented by the following costs if they are not included into that price - the cost of transport and insurance of the imported goods up to the place where goods are brought into the customs territory of the Union. The term of trade in SAD box 20 indicates to customs whether these costs are included into the price paid or payable for the imported goods or not. 

• Finally, along with commercial documents, transportation documents are a source of information for customs about the goods being transported. You will learn what these documents are depending on the means of transport.

Lessons

This part consists of three lessons:

1. Supply chain basics
2. Incoterms
3. Logistics and transportation

Outcome 

At the end of this part, you should:

• Understand what a supply chain is and how it works, who all the players are and the role of customs;
• Be familiar with the general use of Incoterms and the use of these rules for customs purposes;
• Know what logistics and transportation mean and what the cargo-related requirements are for international shipments; what transport documents are used depending on the type of transport.

Time

Please plan to dedicate around 2 hours to complete this part.

After completing the module, give some thought to what the future will look like:

We’ve seen the power of geographic context with spatial insights and when this is blended with AI, autonomous vehicles, blockchain and other disruptive tech we’re in for a disruptive revolution of the whole supply chain model. 

SourceDog