Australian Customs IT Fiasco put Logistics Companies Under Christmas Peak Season Pressure

“The Australian Customs Service’s New Integrated Cargo System is Considered a Colossal IT Failure”

Melbourne, Australia, December 1, 2005 - Melbourne based Bluefreight, an Aeroceanetwork member, is under the gun. With the recent Australian Customs fiasco still weighing heavily on his company Richard Dexter, a Bluefreight director, is very weary of the backlog. “We are so far behind the eight ball here,” said Dexter, “I have had to employ more staff and we are working longer hours.”

Santa might live in the North Pole but his helpers in Australia aren’t really elves and reindeer. They are freight forwarders, the majority of whom are independent operators who have since October 12th had their daily businesses disrupted by the Australian Customs IT problems.

Only recently, weeks after the troubles started, Australian Customs Service admitted it was warned its AUD 250 million computer project could not cope with the volume of cargo more than a month before the system crashed. As a result many forwarders are using paper to lodge their declarations with Customs six weeks after the launch of the system. With a backlog estimated by some that may take until January or even February to fully clear up, pushing along clearances for Christmas peak season is now more critical than ever.

“It takes four hours to do what we could do in 10 minutes for customs clearance,” says Dexter, “Customers understand but don't like it. Heads are starting to roll. Major retailers are angry because containers are in storage and the goods are not on their shelves. They [the retailers] are squeezing our industry and also the government.”

After weeks of denials from the agency, Customs chief information officer Murray Harrison has admitted that system design flaws caused chaos at the ports and airports. Harrison no longer speaks to the press about the situation, having earlier claimed the whole thing is a “media beat-up”. Until now nobody involved in the Customs debacle is prepared to take any blame. Last month Australian Customs even issued a statement blaming system users, the customs agents, freight forwarders, importers. Richard Dexter doesn’t agree. “No one can get it right because the whole system is wrong,” he says, “And very, very slow.”

This has been one of the most public failures of IT in Australia in recent years. It is also one of the most predictable as the deadline was continually pushed back, the budget was regularly expanded, and warnings were repeatedly made. Mr. Harrison admitted Customs was warned of a major capacity problem in a report before the system was launched. This admission could leave the agency vulnerable to claims for compensation from Customs brokers and importers.

Murray Harrison’s concession of the system’s flaws puts severe political pressure on Customs Minister Chris Ellison, with many calling for his resignation. Ellison, of course, takes no responsibility and claims he relied on the advice of "IT experts", who said the system would work.

Customs brokers were left out on a limb when the system crashed but only following the disaster did Customs boost the system's capacity. So what should have been a big jump forward for customs clearance procedures in Australia has sent logistics companies back to manual clearances, a huge step in the wrong direction. The entire economy is feeling the pinch at Christmas time as well. Dexter added that many forwarders are “getting caned” by their clients this Christmas season. But as all clearing agents are in the same boat the importers have nowhere else to go. And according to Richard Dexter it may mean that Santa will have fewer elves to work with as this has been the straw to break many forwarders’ backs. “Some are going broke, some retiring, and others are fed up and switching industries,” says Dexter.

Bluefreight, a member of Aeroceanetwork, is a Melbourne based independent professional international logistics company providing cost effective freight forwarding, customs house brokering and international trade solutions. Aeroceanetwork is a non-exclusive network for professional logistics companies and international freight forwarders.

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