May 30, 2022

Major challenges in customs due to international sanctions

Russia's attack on Ukraine has also had a massive impact on the logistics sector. Transport by land has been severely restricted. Likewise, several shipping companies are no longer calling at ports and airspace has been closed. The sanctions imposed by Western countries against Russia as a result of the attack have also had a noticeable impact on the international movement of goods. Sophia Stirm, Head of Solutions Customs & Trade and Maja Kuhnt, Head of Competence Center Customs & Trade at Arvato Supply Chain Solutions explain the current situation.

Maja Kuhnt, Head of Competence Center Customs & Trade
Sophia Stirm, Head of Solutions Customs & Trade
What effects are felt in the international movement of goods?

Transports to and from Ukraine, Russia and Belarus have been massively affected. For example, carriers such as UPS and DHL have suspended their shipments. We are currently clarifying what is still possible by land with our transport management department, primarily for medical goods. At the moment, however, there are major clearance problems at the borders in western Ukraine. Many carriers have also stopped transporting shipments to Russia until further notice.

The situation is aggravated by the fact that there is a ban on the import and transit of Russian or Belarusian carriers in the EU. This further restricts the possibility of delivery to these countries. According to information from our staff in Russia, ports and airports in Russia are apparently also blocked.

In addition, there are reports that cyber attacks are currently also being carried out against Ukrainian, but also Russian, forwarding companies. I think this is where it pays off that we have invested so much in our IT security - and not just in transport management.

Which businesses are affected?

Many companies have stopped all deliveries for corporate policy reasons or have withdrawn completely from this market. Of course, this also has an impact on our logistics business.

What exactly is the situation - are goods already piling up?

There is no backlog of goods deliveries because our customers have now adapted to the situation and have partially stopped their deliveries.  For some customers who continue to deliver, the shipment check is carried out in close coordination with the customers. Each shipment delivery is a case-by-case decision. We also have to look very carefully at the choice of carrier, as the largest providers we use no longer deliver to the areas in question and Russian or Belarusian carriers are no longer allowed to drive into or through the European Union.

How have we been able to support customers?

Since the new sanctions came into force, the Customs & Trade department has constantly and consistently monitored them and checked the extent to which our businesses and customers are affected. In close exchange with customers, we always discuss the further course of action according to current circumstances. Thanks to our expertise, we have been able to assess the effects well so far and have created a condensed overview of the sanctions to be observed for our team, which is constantly updated. Our Customs & Trade department is highly specialised and takes care of all customs-related issues and foreign trade matters in its normal customer and day-to-day business. This also includes the control of foreign trade and compliance regulations. With our expertise, we were also able to enter the new regulations and sanctions lists into the system very quickly and match them with orders. This was a lot of work, but it is appreciated by the customers because we save companies from enormous damage. For customers worldwide, we are now the specialist who is not only exceptionally well versed in the two topics of logistics and customs, but who can also act in a customer-specific manner. Coupled with our experience and the know-how we have acquired over the years, this combination is unique and makes us indispensable for many companies. Therefore, we can also advise our customers very well on all further developments.

What happens if sanction rules are not observed?

Violations of foreign trade law always constitute a criminal offence - with considerable financial consequences up to and including imprisonment. Furthermore, in the case of intentional action, the respective company itself can be placed on a sanctions list. To counteract this, we carry out extremely strong monitoring in order to advise our clients and, in the worst case, to be able to protect them from penalties through a self-disclosure.

How are the new requirements implemented?

In order to be able to implement the new specifications and requirements quickly, all those involved are working closely together - Customs & Trade, the transport management, the account management of the respective customer as well as our IT. We have continued to use a country block for Russia, Belarus and Ukraine in our customs software as a precautionary measure, so that we can then check on a case-by-case basis. Each shipment to these areas is a case-by-case decision and is carefully checked by our trained trade staff for conformity with the sanctions.

How is the current information obtained and updated?

We continue to monitor the official EU pages and adhere to the official journals published there. In addition, we work together with consultancies that regularly provide a condensed update on the latest developments.

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