What is the problem with Transit customs?
Transit customs are the rules that govern moving goods under customs control from one country to another, with duties and taxes settled later. The core problem is that this system often creates friction, delays and higher costs for traders, especially when rules shift or border controls tighten. This article explains what transit customs are, why they matter, and where the biggest challenges lie in the current era.
What Transit Customs Are and How They Work
Transit is a border-crossing mechanism that allows goods to move from an origin to a destination under customs supervision, without paying duties at every border. The aim is to keep supply chains fluid while ensuring duties, taxes and compliance are properly accounted for when the goods reach their final destination. Most transit regimes rely on standardized documents, guarantees to cover potential duties, and electronic systems that track movement from start to finish.
Key elements of transit procedures
Below are the core components that enable a transit movement, and where problems often arise.
- Transit documents and declarations (for example, the common transit document used to identify the goods and their origin/destination).
- A financial guarantee to cover potential duties and taxes if the goods do not reach their intended destination or are misdeclared.
- Clearance and release at the border, including any checks or inspections required by customs authorities.
- Reliable information technology (IT) systems that share data between the origin, border authorities, and the destination.
- Carrier responsibilities and traceability, including timely presentation of goods and accurate routing data.
- Risk-based controls that determine when physical checks are needed versus documentary checks.
Collectively, these elements are meant to streamline movements across borders, but when any one component falters, entire supply chains can stall.
The Problems Transit Customs Face Today
Traders, freight forwarders and border authorities regularly identify a few persistent pain points in transit regimes. The dynamics vary by region and by the nature of goods, but several systemic issues recur across markets.
Major pain points in practice
The following factors frequently contribute to delays, higher costs, and uncertainty for transit movements.
- Delays at borders due to checks, inspections, and paperwork review, which can disrupt just-in-time supply chains.
- High costs associated with guarantees, security deposits, and complex compliance requirements.
- Administrative complexity and the need to maintain accurate, up-to-date documentation across multiple jurisdictions.
- Brexit- or post-Brexit-style frictions that create separate regimes for movements between regions that previously shared a single transit system, adding extra steps and checks.
- Risk of fraud or mis-declaration, including undervaluation, misclassification of goods, or use of transit to evade duties.
- IT system interoperability problems, outages, or insufficient automation that slow data exchange and increase manual processing.
These challenges can compound, especially for small businesses, companies with complex supply chains, or shipments involving multiple borders and customs authorities.
What Reforms and Best Practices Could Help
In response to these challenges, policymakers and industry groups are pursuing reforms aimed at reducing friction while preserving customs integrity. Progress varies by region, but several mainstream approaches are gaining ground.
Potential reforms and practical measures
- Continued digitalization of transit procedures, including robust use of electronic declarations and automated risk assessment (e.g., via the New Computerised Transit System and similar platforms).
- Greater interoperability and data-sharing across jurisdictions to enable a true “single window” for transit, reducing duplicated paperwork and data entry.
- Expansion of trusted trader schemes and simplified guarantees for approved economic operators, to lower financial barriers and speed clearance.
- Streamlined documentation requirements and standardized data formats to minimize errors and delays.
- Improved training and support for small and medium-sized enterprises (SMEs) to help them navigate transit rules and compliance obligations.
- Policy alignment and negotiation to reduce friction between closely connected markets (for example, post-Brexit arrangements and cross-border cooperation on risk management).
Together, these reforms aim to preserve border controls and revenue protection while making cross-border merchandise movement more predictable and cost-effective.
Why This Matters for Trade and Economy
Effective transit regimes are essential for supply chains that rely on just-in-time delivery, globalized manufacturing, and regional trade integration. When transit becomes a bottleneck, it raises costs, reduces competitiveness, and can push companies toward reshoring or alternative routes that may not be as efficient. Conversely, smarter transit systems with digital tools, clearer procedures, and trusted-trader incentives can accelerate cross-border commerce and support economic growth.
Summary
Transit customs serve a vital role in moving goods across borders while safeguarding revenue and security. The current problems—delays, costs, administrative burden, Brexit-related friction, fraud risk, and IT interoperability—are well documented, but reforms are underway. Digitalization, data sharing, simplified guarantees, and a stronger focus on trusted operators could substantially reduce friction. For traders, the practical takeaway is to invest in accurate documentation, seek eligible simplifications, and stay informed about evolving transit rules and digital tools across the regions where they operate.
