The Hidden Costs of Customs: What Every CFO Needs to Know

Most companies underestimate the hidden costs of customs, but the right strategy can save millions and boost global competitiveness.

Import duties, sanctions and rules of origin. Customs declarations are becoming increasingly complex. What was once a relatively simple manual task has evolved into a highly intricate process that can either cost companies a great deal of money or help them save significant amounts. More than ever, customs declarations are an issue that concerns not only operational teams, but also the CFO and the wider executive leadership. 

When United States President Donald Trump announced new import tariffs, international trade was immediately disrupted. Import duties themselves are not new, but the speed and volatility of the recent measures are unprecedented.  

Nevertheless, the tariff war fits into a broader trend that has been developing for some time. Over recent years, customs declarations have become particularly complex, especially for companies with extensive supply chains operating internationally. When relevant data is also spread across organisational silos, managing customs activities effectively becomes even more challenging. 

Companies Underestimate the Financial Impact of Declarations 

Despite this complexity, a great deal is at stake for businesses. Research conducted by Boston Consulting Group in collaboration with Customs Support Group shows that companies tend to underestimate the economic importance of customs management. In Europe, customs clearance takes an average of two to three days.  

Around twenty to forty percent of delays are caused by classification and documentation errors that could be avoided through proactive and accurate processes. In addition, demurrage and detention costs are incurred per container, often amounting to thousands of euros. Furthermore, in the case of incorrect declarations, additional import duties and taxes can be imposed retroactively for up to ten years. 

In practice, organisations often pay too much when goods pass through customs. In some cases, this involves annual amounts reaching seven figures. Money that is effectively lost. Conversely, underpayment also occurs, which inevitably leads to costly penalties. The impact of customs activities is often not immediately visible, as fines may only be imposed months or even years later. As a result, customs declarations affect corporate profitability both in the short and the long term. 

Given the significant financial impact, customs activities have become a matter for senior management and particularly for the CFO. When customs declarations can account for up to ten percent of the total cost of a product, it is clearly worth paying close attention to them. The more effectively companies integrate customs processes into their overall business strategy, the greater the impact on their competitiveness and resilience in global trade. 

Ninety-Nine Percent Accuracy Is Not Enough 

Trade is global, but customs authorities remain largely local. Differences between countries add further complexity to risk management for businesses. Being correct ninety-nine percent of the time is no longer sufficient. As detection rates increase through the use of technology and penalties continue to rise sharply, declarations must be accurate and complete. 

Companies are advised to review their Harmonised System classifications. This system is used by customs authorities worldwide to classify goods entering a country and to determine applicable duties and taxes.  

For organisations, this creates opportunities to optimise duties and ensure they benefit from free trade agreements with other countries. In doing so, they can reduce costs and remain competitive in a constantly evolving global market. Data and insights into customs activities provide organisations with the tools they need to limit the impact of import duties on profitability as much as possible. 

Outsourcing to Specialised Partners 

That organisations are increasingly recognising the importance of this is evident from the growing trend to outsource customs activities to specialised partners. Customs as a Service provides access to deeper expertise, greater capacity and digital solutions that ensure accurate classification of goods and compliance with regulations. Just as an accountant supports strategic investment decisions, expert support in customs matters can help companies save substantial amounts when preparing and managing customs declarations. 

In the coming years, customs activities are unlikely to become any simpler. Geopolitical instability requires organisations to effectively incorporate risks, sanctions and export restrictions into their declarations. At the same time, increasingly strict rules are being introduced regarding product origin and carbon emissions. A clear example of this is CBAM, which applies to sectors such as the steel industry. 

In 2024, customs authorities worldwide collected between six hundred and nine hundred billion US dollars in customs duties, representing almost one percent of global economic activity. In that context, the tariff war and similar developments may serve as a necessary reminder for companies to consider more carefully the impact of customs on their overall profitability.