94% of organisations have faced delays in cross-border shipping due to incorrect item classification and documentation
Just 6% said that goods are never delayed in major industry survey, while 39% face frequent delays
The delays created by shipping goods internationally are the biggest issue for cross-border e-commerce operators says the new state of global cross-border e-commerce report 2023-24, which is free to download here.
The research, which draws on a major global industry survey, found that attaching correct documentation and achieving compliance with import regimes was the biggest driver of these delays. In the survey, 94% of those responsible for handling their organisation’s cross-border e-commerce operation said that they encounter delays as a result of incorrect classification and documentation. Within this, 39% said that they face frequent delays, while 55% only face occasional delays.
This has a major effect on the profitability and long-term sustainability of international e-commerce operations, as customers seek speed above almost any other factor when making digital purchases, but also dislike being surprised by sudden changes in delivery windows and are likely to carry over poor perceptions for a brand if it misses expectations.
“If you don't put a correct tariff code on [your shipments] … or if you don't give [authorities] full product descriptions, they are going to hold your good in customs. That's the biggest headache that comes with e-commerce,” says Evan Wright, Senior Director of Growth, Cross Border for report partner and taxation software provider Avalara.
Finding harmony in international shipping is tough
The research found that issues can arise across the entire purchase and shipment process. For example, even though the Harmonised System (HS) of codes used to classify international trade has been in use for 35 years, there remains considerable issues in selecting and applying accurate codes. A substantial 41% of respondents in the survey said that this is a challenge when shipping.
A remedy for these issues is simpler import-export regimes according to the research, with regions that have established and highly integrated trading blocs being easier places to conduct cross-border e-commerce within.
While just over 30% of respondents in Europe and North America said they experience frequent delays when moving goods through customs, this rises to 48% in Asia-Pacific, where trade rules and regulations are more fragmented and complex.
Furthermore, respondents in Europe, who largely benefit from the European Customs Union, were the least likely to cite issues with costs from tariffs and duties or additional supply chain costs associated with cross-border e-commerce.
Pay at purchase the future
The report says that a move towards a Delivery Duty Paid (DDP) structure, underpinned by automated systems, will also be a key enabler of smoother, and cheaper, trade. DDP is the process of collecting all fees at the point of purchase rather than calculating and applying these later. This creates more consistency and lowers the probability of a good failing to be classified correctly and held up at customs. Currently, 61% of organisations are able to present these fees at the checkout stage, showing how this practice is becoming the industry norm, but also that there is considerable room for more adoption.
For more on the challenges in cross-border e-commerce and how to tackle them click here to download the completely free research!