Enabling Fast and Accurate B2C E-commerce Cross-Border Trade Compliance

The information in this statement is for the sole use of the challenge participants or other intended recipients. The contents are not to be reproduced, copied or distributed, in whole or in part, without the prior written consent of SATS Ltd. and/or its affiliates. SATS Ltd. and/or its affiliates makes no representation or warranty as to the accuracy or completeness of these information and shall not be responsible for any action based on the information contained in this statement and any supporting materials.

The absence of an end-to-end B2C logistics solution and need to navigate complex trade advisories have been identified as major pain-points for SME e-retailers looking to expand their business beyond the Singapore market. Tapping on our relationship with several logistics players, SATS has created a cross-border B2C e-commerce logistics eFulfilment solution to orchestrate logistics activities via our network partners and a web-based platform, with full track-and-trace of each parcel. Due to the complexity and lack of a unified global trade policy, cross-border B2C e-commerce trade compliance remains a challenge.

The approaches adopted by most of the e-commerce players today are as follows:

1. E-retailers will estimate the customs duties and taxes to price them into the goods’ value so that the end-consumer will pay all the associated customs duties and taxes up front. The e-retailers will bear the risk of error in their estimate, and this could result in them paying the difference.
2. Goods are sold DDU (Delivery Duty Unpaid), and the consumers will either have to pay the customs duties and taxes before the goods are delivered, or the 3PL provider will pay the customs duties and taxes on behalf of the e-retailer before re-charging the e-retailer. With such a practice in place, the consumer often does not have visibility of the associated customs duties and taxes at the point of purchase, and a billing burden will arise between the 3PL and e-retailer.

In addition, duties and taxes regimes are dynamic, which may result in costly errors if outdated information is used to estimate customs duties and taxes. Big e-commerce marketplace players have the resources to track and update changes in various duties and taxes regimes, but SME e-retailers may not have such resources, and risk being sidelined when participating in cross-border e-commerce.

A sustainable solution to overcome this challenge should not be labour-intensive, and be as close to achieving real time as possible, in order to keep pace with ever-changing duties and taxes regimes.

A reliable trade advisory solution is sought to provide a real-time automated computation of cross-border customs duties and taxes that can be integrated with a 3PL provider platform. The proposed solution can be offered via a SaaS model, to benefit the wider 3PL provider community who might be operating on different platforms.

During the pilot phase, there will be a need to integrate the proposed solution with SATS’ in-house developed eFulfilment platform, via its Application Programming Interfaces (APIs). The eFulfilment platform will orchestrate the B2C cross-border logistics flow, and rely on the proposed solution for trade compliance. SME e-retailers will be invited to inject their orders into this integrated platform for testing.

The solution provider is expected to independently acquire the necessary trade advisory information either through in-house capabilities or via a third-party trade advisor.

As an extension, the proposed solution should utilise artificial intelligence (AI) to check for errors in the declaration information from the shipper. For example, a 1 kg table associated with a value of $1 should be flagged out as an error to the declarant.

The proposed solution should also incorporate AI to ensure the correct implementation of the Harmonised System (HS) code regime throughout all countries. For example, to automatically assign the relevant HS code via the description included in the data.

The proposed solution should also be able to evolve intelligently with any significant trade compliance changes by incorporating some level of interactivity for the solution, so that it will improve the accuracy of the outcome whenever there is corrective feedback given (e.g., newly updated duties and taxes rates).

• Outcome 1: Automate the computation of applicable real-time customs duties and taxes accurately, and make the data available and accessible by 3PL through their IT platforms. The aim of such a system is to minimise the differences in the amount of customs duties and taxes quoted to buyers and the actual amount tax required to be paid. In this way, the buyers will know at the point of buying the correct amount of customs duties and taxes required, and e-retailers will not have to bear the risk of paying the difference due to their estimation errors.
• Outcome 2: Integrate the proposed solution onto SATS’ eFulfilment platform during the pilot phase. The proposed solution should be customisable and could be offered as a SaaS solution to other 3PL providers during the adoption phase.
• Outcome 3: Embed artificial intelligence to check for errors in declaration information from the shipper, assign HS codes automatically, and evolve easily and quickly to any significant trade compliance changes (not limited only to customs duties and taxes, but import restrictions on quantity and type of goods as well). In addition, upon receiving feedback on possible errors on the output from the proposed solution, there should be means to improve accuracy subsequently.

Minimum Required Technology Readiness Level (TRL)

Level 8

Expected Impact to Business

• The proposed solution will enable SME e-retailers to partake in cross-border B2C e-commerce with less risk of monetary loss due to errors in duties and taxes estimation
• Providing a SaaS model could help 3PL providers to increase their productivity and accuracy in offering trade compliance services
   

The proposed solution should be available no later than 6 months from the date of issuing this challenge statement, as there is an urgent need to accelerate the adoption of cross-border e-commerce as a sales channel for SME retailers during the COVID crisis.