Trade complexity is a commercial variable. Do you have a strategy for it?

Customs as a means to an outcome

Customs is often discussed as a function, a cost, or a compliance requirement. In reality, it is none of those things in isolation. Customs is a means to an outcome.

It enables uninterrupted market access, predictable landed cost, customer trust, and the protection of market share. When customs is treated purely as an operational necessity, its value potential is easily overlooked. Declarations may be correct and borders may be cleared, while upstream commercial and sourcing decisions continue to be made without full visibility of cost, risk, or opportunity.

Why trade strategy determines where value is won or lost

Most value leakage does not come from getting customs wrong. It comes from operating without a clear trade strategy and the insight to support it.

Across industries, the same patterns appear repeatedly. Sourcing decisions are made without full landed cost visibility. Commercial strategies do not account for origin, preference, or exposure. Mitigation actions are taken reactively rather than by design. Complexity is absorbed through margin instead of being managed deliberately.

Tariffs are a useful illustration of this dynamic. Not because they are the problem, but because they reveal how cost and risk fragment across the organisation when trade insight is missing.

Viewed individually, these effects often appear manageable. Viewed together, they create structural pressure on cost and margin.

An example: visualising value leakage and value creation

The cumulative impact of these patterns becomes clearer when they are viewed together. To make this more tangible, consider a simplified example of a trade exposed business operating across multiple markets, with complex sourcing and export exposure.

Individually, none of the trade related decisions involved appear critical. Together, they can create material structural impact.

A typical value leakage pattern looks like this:

• Classification and origin choices: Small differences in duty treatment or preference utilisation that compound over volume
• Sourcing and routing decisions: Choices optimised for speed or availability rather than total landed cost
• Export market exposure: Margin absorbed to remain competitive rather than reflected transparently in COGS (cost of goods sold)
• Reactive mitigation actions: Localisation, duplication, or workaround solutions introduced later, often at higher cost

When visualised as a waterfall, these effects stack. Not because any single decision was wrong, but because the system lacks a holistic view of how trade related decisions interact.

In large, globally integrated businesses, such as those with automotive style supply chains and export profiles, this accumulation can approach close to one percent of COGS or COGS equivalent margin pressure. At scale, that is not incremental. It is structural.

The purpose of this example is not to define a benchmark. It is to make visible what is otherwise fragmented.

The same waterfall can also be used to illustrate value creation. When trade insight is applied early, decisions shift. Preference utilisation improves. Sourcing choices change. Export exposure is managed consciously. Mitigation becomes deliberate rather than reactive.

Costs move upstream. Decisions become intentional. Value is protected rather than absorbed.

From complexity to competitive advantage

Every trade environment creates complexity. The differentiator is how that complexity is handled.

Organisations that succeed treat customs as a means to value creation rather than an end in itself. They integrate trade insight into sourcing, commercial strategy, and network design. They use scenario thinking to prepare for change without triggering defensive behaviour.

This is how complexity becomes manageable rather than threatening. And how value is created rather than lost.

What this means for your organisation

If trade and customs are still discussed primarily in terms of compliance or operational execution, there is a strong chance that value is being left on the table.

A practical first step is to translate trade complexity into decision insight. Whether through a COGS waterfall, scenario analysis, or a structured review, the objective is clarity about where value leaks and where it can be created.

If you would like to explore how this looks for your business or for your customers, you can get in touch with our team. A short, structured conversation is often enough to determine where complexity can be turned into advantage.

Because in today’s trade environment, value is not created by avoiding complexity. It is created by understanding it and acting on it.