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Australian Customs Disaster

A new Integrated Customs System (ICS) introduced last month by the Australian Customs Service, at a taxpayers cost of $A250 million (US$188 million), with the purpose of speeding up freight processing, has had the opposite effect.

ICS has been plagued with problems every since it was introduced. The system has led to shipments that used to be cleared within a day taking up to two weeks.

At press time, consignments were still stranded at Australian ports and airports after the new system started automatically rejecting en masse electronic clearance requests generated by shippers due to poor data quality.

While the Customs department has spent the better part of the last two years warning the industry that its new system would automatically reject any numerical variation in electronic clearance documentation, it appears that both Australian Customs and the Australian freight forwarding industry greatly underestimated just how strict the new data requirements would be.

“Debacle is a kind word in describing the past two weeks,” Scott Rofe, managing director of Flag Seawing in Sydney and a member of the Aeroceanetwork Group, was quoted as saying in a statement. “The general brokerage and freight community consensus is that the system should be shut down and we revert back to the old system, which is only about four years old anyway.”

The Aeroceanetwork statement further said that members throughout Australia had been pushing forward under “friendly fire” during the customs computer crisis, which for three weeks crippled Australian ports and airports. Although the situation slowly appeared to be easing, the backlog of freight is several days, maybe up to a month by some estimates, away from being cleared up and business returning to normality.

Meanwhile, the Australian Customs Service also blamed delays in arranging transport for contributing to freight congestion at the country’s sea ports. Cargo industry leaders also have been pleading with forwarders and consignees to help in clearing the backlog at their facilities as well.

“All four of our terminals (Perth, Brisbane, Melbourne and Sydney), are at critical capacity levels and delays in the collection of freight will have a major impact, particularly in Melbourne and Sydney,” said Robert Lugton, general manager of freight terminals for Qantas, in a statement to customers.

Earlier Lugton had asked Qantas customers to “use all options of clearance available to them, including the manual contingency under bond movement request option” especially in Sydney and Melbourne, as terminal space was at the critical level.

According to Federal Customs Minister Chris Ellison, much of the backlog was expected to be cleared by the end of October, though many forwarders and customs agents were skeptical about this assertion. In the meantime the old computer systems have been dusted off and worked alongside the Integrated Customs System until these problems are fixed.

Regarding any upcoming claims for damages against customs for the colossal backlog, the current situation in Australian ports and airports is a “user pays” system, so the end cost goes directly to the importer. This includes extra time spent trying to clear goods through the ICS/CMR systems.

Unfortunately, major costs for forwarders and their clients have been incurred. “We have paid out large sums on behalf of our clients,” said a CT Freight representative, “and will be passing this to our customers.”

Without pointing fingers, it might be an idea if Customs and the forwarding industry were to share some of these costs. It is clear that shippers have been poorly instructed how to use this critical new system.

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