​Custom processes in the automotive industry
Jesús Otero, CEO at Europea Group

​Custom processes in the automotive industry

9th AutoRevista's Purchasing Conference
Jesús Otero, CEO at Europea Group. Foto: Utopia Filmmakers

Jesús Otero, CEO at Europea Group, explained that the group he leads is specialized "in processing and

customs advice, through its companies Europea Advisor, Europea Expeditions, European Automotive and European IT. The first is responsible for support and advice to our clients. In Expeditions, the service borrowed is 24/7. 

For the automotive sector, exclusively, we created the European Automotive division, which provides services to both large tractor companies as well as auxiliary companies and manufacturers of components at an international level. Lastly, Europea IT is our technological company that develops information systems. information, software and computer security”.

Otero raised the case of “a fictitious company, either an OEM or Tier 1, that is unaware of the customs process. A company that subcontracts, in a joint package, transportation and customs service management, treating the latter service as a residual commodity within the package. When talking about customs, it is essential to talk about globalisation, which, if I may use the expression, became almost diabolical because of the COVID health crisis. Macroglobalisation was already in process through a relocation process that allowed the development of countries with generalised systems of preferences to facilitate or minimise customs duties on imports. COVID and the Suez Canal crisis led to a reconsideration of this model in what I call surgical relocation, not just proximity, but to see what and where we relocate, with interesting countries such as Portugal and Morocco, from the point of view of customs point of view, it is not comparable to the relationship within the framework of the European Union”.

“From the point of view of the automotive sector, Morocco has undergone an extraordinary evolution since the arrival of Renault and later with that of Stellantis, with the development of a network that not only supplies vehicle factories in Morocco, but also has become for the EU, the equivalent of Mexico with respect to the United States”.

“In the recent evolution in the customs world in the EU, competition between member countries has gone from which dispatches the fastest to which inspects the most, a factor that worsened as a result of the attacks on the Twin Towers in New York in 2001 to protect logistics chains from possible terrorist attacks. Then, in the World Customs Organization, the figure of the Authorized Economic Operator appears, not for the customs sphere, but for the exporter, importer or representative, a figure that is focused on the security of the logistics chain. Taking into account that, for this reason, it has been found that parts from the automotive sector could cross the border between Mexico and the United States up to 20 times, the characteristics of the process could negatively affect manufacturing operations very intertwined between both countries”.

The current tension to which automotive logistics chains are subjected by known circumstances can be accentuated with the aforementioned security processes at customs, to which legislation such as those relating to plastics must be added. If they are part of the component or are reusable containers, they are not taxed, but if they are disposable covers, they are subject to payment at customs”.

“Continuing with the example of the fictitious company that we are imagining, our company may be carrying out customs in Morocco or be affected by Brexit in which the EORI [number of registration of economic operators assigned by the EU] is required to be able to export. Another required is the presentation of the tariff classification, the characteristics of the packaging that may have been provided by your customer and carry out a scan of the merchandise. During all these steps motivated by the customs process, the carrier's truck remains stopped with the consequent blocking of the product delivery flow. Our fictitious company understands that it cannot constantly live with this situation and resorts to an expert firm that accompanies and advises it in carrying out customs procedures”.

“Another possible example of our fictitious company could be that coming from Morocco, in the customs control of Algeciras, an unwanted content appears in the merchandise, such as drugs, something that, unfortunately, happens very frequently. Applying the regulations, customs certifies that this transport should have monitored and guaranteed its security logistics chain, which is why it becomes an unreliable carrier and the percentage of the so-called red circuits rises for this operator. Customs has many obligations in terms of security control and European citizens have that guarantee, but they must find a balance between controls and legitimate trade, which is reflected in customs regulations. For this, simplification methods and authorisations are articulated, but companies must keep in mind that customs exist, and it must be previously analysed taking into account the appropriate execution times. As part of the fundamental ideas, it is necessary to take into account the figure of the Authorized Economic Operator, that of the registered or authorised importer, and the appropriate places for the presentation of merchandise, which are set by customs”.

"Our advice for the Purchasing Departments of companies in the automotive industry is to contract the customs procedures service, as an element important in the supply chain, giving it the equivalent value of a blockade in border and not a commodity included in a global price”.

Presentation published in AutoRevista 2.375 issue

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