Why innovation and regulation go hand-in-hand


At Flexport, we combine the power of data-driven software and great customer service. But being built on cutting-edge technology doesn’t mean that we aren’t subject to the same rules as the traditional freight forwarders. In fact, in the freight industry, not playing by the rules can truly set you back – even put you out of business.

It’s been an exciting few months for us – we’ve just opened our second European office in Hamburg and are planning further growth. We’ve also been recognised by the EU as an Authorised Economic Operator (AEO-C) in only our second year in business. This has been a significant step for us in cementing our position as a hard-hitting competitor in the freight forwarder space.

Let me explain why regulation is important for start-ups, why innovation doesn’t hinder but help us be compliant, and why being AEO-C matters.

Striking the balance

Freight forwarding is a highly regulated industry, and for good reason – shipping goods across the world comes with a number of potential risks, which can be as extreme as terrorist attacks to drug smuggling.

This emphasis on regulation, however, has often led to a general mistrust of new innovators. This is partly because they’ve been saddled with a false reputation – there’s a perception that since these companies are so new and ‘digitised’, they have managed to avoid regulation to some extent.

On the other hand, however, this apparent freedom from strict regulation is exactly what attracts customers to these innovative companies in the first place. It’s clear that there needs to be a balance between stifling over-regulation and precarious danger. And that’s exactly what we’re trying to achieve at Flexport.

The truth is, our innovative nature makes us better at compliance, not worse. Unlike legacy forwarders, we benefit from being born in the age of technology: we have a single modern transport system, keep all our info in one place, have advanced document management and structure all data round a shipment. This visibility and efficiency means that we – and our customers – can be better at being fully compliant.

Becoming AEO-C

We’re proud that thanks to our proven track record, we have become a certified Authorised Economic Operator (AEO-C) – and in a relatively short amount of time. This certification reassures our customers that we’re not a startup, but an established freight forwarder that can deliver the best quality service. We also, however, can maintain the innovative edge that our unique platform provides.

In technical terms, an AEO is defined by the World Customs Organisation (WCO) SAFE Framework of Standards as a party involved in the international movement of goods, in whatever function, that has been approved by, or on behalf of, a national customs administration as complying with WCO or equivalent supply chain security standards.

In layman’s terms this means that we have become part of a programme that was started in order to facilitate safer, smoother trade. Companies involved in this programme are considered trusted trade partners, and together work hard to ensure that the proper steps are in place to protect their citizens against outside threats, by means of high security standards and compliance. And when the world is still sadly facing a spate of terrorist attacks, we’re happy to be part of a network that has as one of its goals a safer and more connected world.

What does this mean for business?

In business terms, being AEO-C certified means that we can help our customers move their goods much more quickly and increase general customer confidence. We’re subject to fewer physical and document inspections and receive priority when selected for an inspection. We can fast track the application process for customs authorisations, receive guaranteed waivers and ensure mutual recognition.

In return, we will do our part to secure the supply chain as it comes to appropriate record keeping, proven competence in customs matters, compliance with customs legislation and taxation rules. Receiving an AEO Certification is also the gateway to getting our customs clearing licences throughout Europe.

Disruptive companies like ours of course need enough freedom to be able to innovate – and to keep happy the customers who were drawn to us because we were different. But there’s a lot to be said, particularly in the freight industry, about the importance of sticking to the rules and embracing official certification. The fact that we have been awarded our AEO-C licence shows that we have established a safe and solid process and are serious about supply chain security and data control. As well as keeping everyone safe, it makes life easier for everyone involved.

Jan van Casteren is VP Europe, Flexport


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