Preparing for increased volumes

Customs’ technical infrastructure is under mounting pressure. The Customs Digital Highway programme should offer a solution.

The number of customs declarations is set to rise sharply in the years to come in response to Brexit, European customs legislation and the steady growth in world trade. Customs is working hard on its technical infrastructure and applications to cope with this increase. This is being done under the heading of the long-term programme Customs Digital Highway.

The growth in volume has not come out of the blue, says programme manager Albert de Wilde. “A reconnaissance in 2019 taught us that things could get very hot very quickly. We had completed the first Brexit tests, and were already seeing a significant increase in e-commerce traffic. Owing to the corona crisis, that stream of parcels has done nothing but rise in the past year. The number of online purchases and – accordingly – the number of declarations rose rapidly. A separate programme was needed to deal with this. After all, we as Customs have to guarantee the continuity of our processes in order to avoid unnecessary logistical delays. The programme was given the green light in July 2020, and that was when we could start building a team.”

Extra burden
Customs officer Janneke Wiersema (photo): “During the last quarter of last year, we started testing what the rising volumes meant for our IT systems. All our applications must be able to handle this growth. Some may do well, others less so. In the past, the focus was mainly on the functionality of our applications, but these days they are more heavily burdened. That is why we analyse and test the performance of the applications and adapt them where necessary. Also, the application landscape has changed throughout the years. Applications have become mutually dependent, which means we have to look at them in context. After all, the chain is only as strong as its weakest link. We go through all the systems step by step. One of them is ICS 2, the EU’s entry summary declaration system. This has been up and running since mid-March and is connected to about 15 applications. Data from the customer and other EU countries goes to Customs and back again. Meanwhile all sorts of things are happening in our own systems. They’re subjected to checks, calculations, risk analyses..."

Workload model
“Applications must be able to handle a peak load”, De Wilde explains. “At the same time, you can’t have them continuously working full out. They’re not built for that. We have therefore developed what we call a dynamic workload model, which will allow us to calculate what we can expect in the coming years. It will also directly calculate the implications of the various EU legislative changes. This model is continuously adapted to current needs, based on the latest figures from our own operations and data from the business world. The question is always: where are we approaching the limits, and where is additional infrastructure needed?”

Wiersema: “Especially with e-commerce, the numbers are extreme. What we normally get in a year, we recently had in a month. There are big players who can cause congestion by submitting millions of declarations in one go. That is why we try to make agreements with such companies: to take a smarter approach to this, and see if they can spread those declarations out a bit more. After all, you can file a declaration with us 24 hours a day.”

Idle hours
IT architect Lourens Riemens adds: “Not only do we need to estimate numbers and measure performance: we also need to optimise our systems and infrastructure. It helps to have the work come in as evenly distributed as possible. This can only be achieved by making sound agreements with the business community. Another way is to prioritise time-critical issues that are important to logistics. Examples include risk selection and the release of goods. Other, more administrative tasks can then be saved for the idle hours when far fewer declarations are received. The transmission of certain data to Brussels is not immediately necessary, for instance. Another example is the calculation and collection of amounts due. You can do that for each company’s declaration separately. Or you collect all the amounts at the end of the day, and then add them up. This also depends on a company’s business operations, and its customers and their ordering routines. Do you make separate declarations for each box of pencils you ship, or do you add up all shipments together?”

It has to stop somewhere
Additional smart solutions are needed either way, says Riemens. “The e-commerce flow is now heading towards 900,000 declarations a day. This represents about 350 million a year. By comparison: in 2018, we were still at 12 million. This is set to rise even higher because exemptions for shipments with a maximum value of 22 euros are being abolished. And as for our efforts: calculating the VAT on a parcel with a value of 1.20 euros is just as much work as on a declaration of 1 million euros. By 2027, we may have reached a billion declarations a year. Compare it to a highway you want to widen. You can go from 3-lane to 4-lane, then again to 6-lane. But it has to stop somewhere. We aren’t facing any problems for the time being, but cannot continue to scale up endlessly. Ultimately, we may have to go back to the legislature with the question: is it really necessary to monitor every transaction all the way through the process?”

New engine
Jan Polkerman, Chief Technology Officer of the Dutch Tax and Customs Administration, is also aware of the enormous challenges. “These are volumes that are likely to raise eyebrows even among the Chinese. The Tax and Customs Administration was already processing large quantities of data, but the growth is now exponential. This calls for proper preparation for future changes. Not least because I don’t believe we’ll be going back to the pre-corona situation. Once they have become ingrained, patterns such as the mass ordering of products online will not be easily dispelled.”

“The workload model helps us make reliable growth predictions”, Polkerman says. “But it is difficult to look further ahead than one or two years. I don’t foresee any bottlenecks for the next two years. For the time being, we can continue to scale up and increase our capacity in terms of software. Our hardware is prepared for this. Compare it to a car: you can make it perform better by fine-tuning it. You don’t need a new engine straight away. But you can’t keep doing that. Eventually you need to switch to a new model. Until that too reaches its maximum.”

Limits to growth
Ultimately, there is no escaping innovations or alternative approaches, Polkerman explains. “Leaving aside the question of whether our predictions are correct: with traditional IT we will eventually reach our limits. Capacity is finite, even though we don’t know exactly where the limit is. For example, one day we will have to move to the cloud and that will call for clear agreements. You need to have a clear idea of what you do and do not want to transfer to the cloud. And what the risks are.”

“You can also question whether we need to constantly drag data back and forth. Might it be better to keep it at the source or to ‘park’ it at another fixed location? That way, Customs can retrieve that data themselves when necessary. Further optimising the analysis could also be considered, with Customs checking, for example, every 25th declaration. And if that turns out well, perhaps 1 in 100 or 1,000 declarations. And we will come down hard on those who betray that trust.”

“Whatever the solution turns out to be, Customs is in close communication with its customers”, Polkerman concludes. “There is constant consultation with the business community about which interests are the most important and when. No doubt there will be clear agreements. About which service messages and declarations have priority, for example. The key to success is an ongoing dialogue.”

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