An idea that changed Customs clearing forever

It was a fiery South American temperament and impatience with ineptitude that brought a new era of electronic customs clearance to South Africa. In the early 1960s, when Compu-Clearing chairman Arnold Garber – an importer of computer software at the time – was confronted by the frustrations of tedious and error-prone customs procedures, he saw an opportunity and acted on it. And few will disagree that EDI (electronic data interchange) has been one of the biggest game-changers for the freight industry over the past 40 years. Garber has spent his entire working life in the computer industry, starting off as a programmer at the age of 17 when every programme was customdesigned. The advent of off-theshelf packages, pioneered in the US, presented an opportunity for the young Garber who began importing the packages – something that brought him face to face for the first time with an unknown quantity, Customs. “After ordering the package from the US, I told them to put two line items on the invoice – one for the computer programme that paid no duty, and one for the blank tape that paid 45% duty.” Garber appointed a clearing agent – but since no-one had ever imported computer software, no-one understood the tariff headings. “The entry clerk declared the entire R5000 value of the product as blank tape, which meant 45% on the entire amount – and that involved paying up and applying for a refund. “When exactly the same thing happened second time round, I lost my cool, went to the airport and decided to do my own clearing.” And this was where Garber was faced with a hall filled with people with the same form – a Customs bill of entry – all being processed manually. WTC Rand was the only company at the time that was computerised. And that’s what planted the seed that changed the industry. After writing the programme – which took a year – Garber hocked every last bit of equity that he owned and bought his first computer. Schenker was his first client, followed by Safcor – with many more following in quick succession. Customers were charged per customs entry – which remains the company’s business model 30 years later. Payment of penalties resulting from an incorrect declaration is another business model that has stood the test of time, said Garber. “If the duty is incorrect we pay the penalty – and if there’s demurrage involved we’ll pick that up too. And the amount we have paid out is a minimal percentage of our annual turnover.” But changing with the times is part and parcel of every company’s success strategy. With the customs clearing product firmly in place, Compu-Clearing has partnered with CargoWise, and through its ediEnterprise system is able to offer a complete single platform incorporating forwarding, breakbulk and de-groupage modules as well as online quoting and order management. And while computer systems may have simplified the clearance process beyond expectation, for the future Garber is convinced that there will always be a role for the clearing agent. “The Customs EDI process will continue, preclearance will continue, but importers are unlikely to take over the clearing process from their agents. It’s not happening now and won’t happen. Outsourcing will continue. Importers can save money doing their own clearing until something goes wrong.” For Compu-Clearing, says Garber, the future lies in diversification with synergies. “Our plan going forward is to look for acquisitions in allied areas – like a company that manages fuel consumption of vehicles. We see it as synergistic. We’re also looking at getting into other related fields like trade finance.” And for the 66-year-old Garber, slowing down is not an option. As technology changes and evolves he will continue to explore new ideas and new technologies to move the company – and the industry – forward. INSERT & CAPTION There will always be a role for the clearing agent. – Arnold Garber