A simulation approach to reconciling customs and trade risk associated with cross-border freight movements

South Africa - 21 November 2017

Southern Africa critically depends on increased exports to drive economic growth and job creation. Logistical inefficiencies, however, are hampering exports, with cross-border freight delays adding costs and unpredictability to the supply chain, which in turn make South Africa an unattractive partner in global just-in-time value chains. The detention of cargo consignments at border posts is intended to reduce the risk of customs duties not being paid and to prevent the smuggling of illegal contraband. These risks must be weighed against the effects of unpredictable delays on trade flows and thus the economy. The increased use of ICT has been proposed to create a more attractive compromise between customs and trade risks.

This study investigates the impact of the proposed new measures, including the use of technology, on the efficiency of cross-border freight movements. The research approach combines the analysis of historical electronic transaction data exchanged between customs and consignors with the simulation of different scenarios involving ICT-supported customs processes. The expected impact of the proposed measures on exports both within and from the SADC region, and the direct impact on corridor users, are estimated and compared against the estimated cost of the proposed measures. It is shown that implementing the proposed improvements should result in attractive investment prospects for the regional economy.

Available from: http://sajie.journals.ac.za/pub/article/view/1659

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