Digitalization enhances customs clearance

By Jeffrey I. Kim

During Jan. 20-23, the 2016 World Economic Forum was held in Davos, Switzerland. Its main theme was "Mastering the 4th Industrial Revolution." This revolution involves the fusion of technologies across the physical, digital, and biological worlds. It refers to the ongoing transformation of our society and economy propelled by advances in terms of smart homes, intelligent transportation, robotics, self-driven vehicles, drones, 3D printing, Internet of Things (IoT) and others. The IoT allows objects to be sensed and controlled remotely across existing network infrastructure.

"Digitization" is the keyword of the 4th industrial revolution. Digitization is to transform existing analog systems to digital systems. Digital technology refers to electronic technology that generates, stores, and processes data in terms of two states: positive and non-positive. Digitization makes possible person-to-person, person-to-machine and machine-to-machine communication. In this way communication and transportation will be faster. Economic efficiency and industrial productivity will be greater.

The Korean economy predominantly depends on trade. Along with an ever-increasing trade volume, the number of people visiting Korea has been also increasing. Every day about 150,000 travelers use Incheon Airport. Korea's exports and imports each rank seventh in the world. Against this background, Korea has gained a reputation for providing high-quality airport services. According to the Airport Service Quality Survey, Korea's Incheon International Airport is the best in the world.

All imports brought in by sea or air are subject to customs inspections. Contraband is often uncovered as it goes through X-ray detectors. These years, express commercial cargo is increasing rapidly. Express cargo includes commercial documents, high-value intermediate goods such as semiconductors, auto parts and precision equipment that need to be delivered across the border as soon as possible. There are a handful of express cargo companies which handle the delivery of express items on a door-to-door basis. These companies take care of bringing express cargo through the customs inspection process.

The Customs Administration Office has not increased the number of inspection officers in years. Instead, they decided to build their own express cargo inspection terminal, expected to start operation on June 1, 2016. According to the Notification on Conduct of Business of Customs Clearance for Express Shipment, Article 3 (Amended May 20, 2014) the Korea Customs Service (KSC) will suspend deploying customs officers to the inspection site run by the commercial express cargo operators. From the date as above, all shipments bound for physical inspection should come to this new terminal for inspection.

This has caused serious complaints made by the commercial express cargo operators. The essence of express cargo is fast delivery. This new rule will unnecessarily delay deliveries due to additional shipments from the original inspection site to the new inspection terminal. Not to mention the increased cost and risk of cargo loss! Some of the companies had a plan to expand their facilities and upgrade their existing inspection equipment to accommodate the increasing demand for express delivery services.

On the recommendation of the Ombudsman's Office, the KSC is considering changing the rule in such a way that the commercial express operators continue putting cargo through the inspection course in their own terminal if they meet new conditions. The conditions require the express operators to sufficiently upgrade their inspection equipment. They can also build a new inspection terminal of their own if they meet the equipment upgrade requirement.

Major express cargo companies have plans to install ambitious high-tech inspection equipment in the cargo terminal. They try to build a new terminal which will surprise their customers by digitizing the entire delivery process from door to door. In their inspection facilities, they install upgraded X-ray machines and an automatic sorting system. They also plan to install a reweighing system which links to the conveyor belt and a tracking number-linking CCTV.

Observing this episode, there is no doubt that digitization is expected to spur the express cargo industry not only in Korea but in the rest of the world as well.

Jeffrey I. Kim is a foreign investment ombudsman, a presidentially appointed troubleshooter for investors and entrepreneurs from overseas. He earned a Ph.D. in economics at the University of Chicago and taught at the University of Colorado, Boulder, and Sungkyunkwan University.

Link : http://www.koreatimes.co.kr/www/news/nation/2016/02/197_197631.html