10 part 2: The Impact of AI Technology with Global e-Commerce Shipping

Voiceover: 00:00:00

Welcome to Outside the Box with Asendia USA, a podcast educating US Based e tailers on international shipping topics and how they can expand their global e commerce footprint.

Nick Agnetti: 00:00:10

Welcome back to Outside the Box podcast with Asendia USA.

We're going to continue the conversation with our risk and compliance officer, Jason Roland, discussing AI technology's role in E commerce compliance.

Two things I kind of want to pivot and dive into is, you know, and it's going to continue to come up, you know, we oftentimes will record multiple podcasts at the same time. Some of the topics come up involves AI.

Jason Roland: 00:00:34

Right.

Nick Agnetti: 00:00:34

And I do want to cover that with you in terms of how we're utilizing AI to help with some of the things related to, you know, customs clearance, customs descriptions, HS codes, as we mentioned. And then also, you know, I want to just kind of pick your brain.

What is, you know, as Director of Compliance, you know, what are your biggest areas of focus, you know, to help us when it comes down to it, boil it down to it. I'm here to educate people and to help understand and describe how we can create a better customer delivery experience.

So how is everybody in terms of, in that pie doing that? Right, sure.

Jason Roland: 00:01:09

So first thing, AI, Right?

Nick Agnetti: 00:01:11

Yeah.

Jason Roland: 00:01:13

It is one of those areas that's changing every day. Right. The technology is getting better. Different things, different tools are coming online that are making specifically for HS codes. Sure.

Are making that process easier where now we have tools, tools where we can either on a, on an item level or on a bulk level. Right.

If you're talking about a catalog, send in item descriptions and have an AI kind of spit out an applicable code that it based on the country of destination or the country of origin. Hey, this is the best guess that the AI can come up with in terms of HS code accuracy.

And what it does is it allows you to start that conversation and says, hey, great, you have a 10,000 item catalog.

Rather than have you try and give your own guess for each one of those 10,000 things, let's bulk upload this into an AI and have it spit out its best guess.

And then we can look at them and say, all right, do we need to pivot or change a little bit for the codes in order to get more specific on what the item actually is.

Nick Agnetti: 00:02:18

So there's still a margin of error.

Jason Roland: 00:02:20

There, there is and there always is going to be.

In the end, it's always going to be up to some level of interpretation as to what the item in the box is and whose definition of it we're going to go with. But at the same time, tools are always evolving and they're always getting better.

And at Asendia, we use a couple of different tools to do those things. Some are proprietary, some are third party vendor tools.

And when we try to work with customers to make sure that their catalogs are current and their codes are up to date and AI is one of those things where, where it's not pervasive yet, but it's going to be and it's going to get there and eventually there'll be customer facing AIs where they can say, great, just plug your catalog in here, upload your Excel file with your custom subscriptions, and this tool will.

Nick Agnetti: 00:03:09

Spit out, which is pretty amazing because I don't know if anybody watching has ever tried to take the time to get online and search up, you know, search your own HS code.

Jason Roland: 00:03:19

Yeah, it is brutal. It's very dense.

Nick Agnetti: 00:03:22

I mean, oh my gosh, it's time consuming. It's. It's awful. So, so that's encouraging. So that's, that's really great. And then, yeah, talk a little bit.

I mean, what, what are some of the projects that you're working on, specifically AI?

Jason Roland: 00:03:35

We have an ongoing project right now where we're looking at developing an AI tool to help with this. Right, okay.

Nick Agnetti: 00:03:40

That's in addition to the proprietary or third party software that we may or may not be using.

Jason Roland: 00:03:45

Right, okay. And also legal, where all of these things kind of intersect with legality and the law and the regulators. Right. And there's this.

You can do your best to get the right codes and do everything properly, but in the end it's still going to be some regulator that's going to see these things and kind of have their own interpretation. So a big part of what I do is I work with the regulators themselves and say, all right, here's this item. Right.

And you guys are stopping and delaying it. But all right, so how do we move this item more efficiently? Well, what can we do as a shipper to avoid this in the future? Avoid it getting stopped.

So a lot of the conversations are with stakeholders in the logistics industry and also with regulators themselves in terms of how do we give Asendia the fastest route through this process?

Nick Agnetti: 00:04:36

That's fantastic.

Jason Roland: 00:04:37

That's great.

Anywhere that our company intersects with a law or rule or regulation, it falls through me and my team to make sure that we are always at the forefront. We always want to be compliant. We always want to be aware of what's coming down the pipe because these changes can happen.

Have large effects on even the smallest things. Right.

And so making sure that we're always up to date, we're always current, and then not only that, our customers material is protected through that process.

Sometimes it deals with loss prevention, those kinds of things, but for the most part, it's about protecting, making sure the customer is compliant with the law, making sure that their material gets where it's got to go. Right.

And then making sure that our company and our employees are always covered from a legal perspective, make sure that we're not, you know, asking anybody to do anything that we shouldn't be doing or anything like that. So legally, we protect our people, we protect our company, and then as a result, we also protect our clients.

Nick Agnetti: 00:05:31

This is why you haven't given me badge access into ORD yet.

Jason Roland: 00:05:34

We haven't. We have to talk.

Nick Agnetti: 00:05:36

Okay. I do have a. Sorry, John.

John Walsh: 00:05:41

So, Jason, in your experience, what's the biggest risk today that you have to mitigate?

Jason Roland: 00:05:49

Yeah. Undervaluing, I think, is probably one of the biggest ones. Right. It's one of the big ones. Right.

Nick Agnetti: 00:05:56

Ridiculously. And people still do it.

Jason Roland: 00:05:58

Yeah, it's. It's a big problem. And a little bit of why ICS2 was so important is because of that problem. Right.

So it's one of the major reasons that posts, international posts are starting to really take a look at this stuff because they know the amount of money that they've been losing. They know how the US has been muddying the waters with the upu, like, politically. Right. Lately. And it's one of those things where if.

If the US Is going to be the one to kind of lead that and say, all right, well, we're kind of sick of getting the short end of the stick financially on International Transactions.

Nick Agnetti: 00:06:33

U.S. right.

Jason Roland: 00:06:35

Right.

Nick Agnetti: 00:06:36

Yeah.

Jason Roland: 00:06:37

So we're kind of tired of that and we're kind of tired of other companies being able to send material into our country for free, basically. Right.

Nick Agnetti: 00:06:46

Yeah.

Jason Roland: 00:06:47

They undervalue and then they don't pay any. Anything for. To be able to move that into the US Once we started making a bigger deal out of that, other countries said, hey, well, guess what?

Now we want to know what. So it's our fault, right?

Nick Agnetti: 00:07:00

Okay.

Jason Roland: 00:07:01

Yeah.

Nick Agnetti: 00:07:01

No, no. And just for clarification, that's been going on forever.

Jason Roland: 00:07:04

So. Yeah. It's a game.

Nick Agnetti: 00:07:06

There's a long history. So UPU stands for Universal Postal Union. Just for anybody. Again, listening and watching.

John Walsh: 00:07:13

That was exciting.

Nick Agnetti: 00:07:14

Acronyms. Just try to.

John Walsh: 00:07:16

You had a lot of them today. You're on a roll.

Nick Agnetti: 00:07:18

No, I'm explaining everybody's. That's all I've been doing all day long.

John Walsh: 00:07:21

Just based on information.

Jason Roland: 00:07:22

Yeah.

Nick Agnetti: 00:07:23

I'm just trying to help here. I understand wealth of knowledge. Hey, you know what it is? Nuggets. Okay. It's all about those nuggets.

John Walsh: 00:07:29

That's head piece.

Jason Roland: 00:07:30

Get ready.

Nick Agnetti: 00:07:31

Coming.

John Walsh: 00:07:33

What do you think? I wrote something down here. What do you think the most common mistake people make that they should try to avoid.

Jason Roland: 00:07:39

Does that make sense to you in terms of a company moving their material internationally?

John Walsh: 00:07:44

Because some people don't think about this stuff.

Jason Roland: 00:07:46

Yeah.

John Walsh: 00:07:47

Think they want to start up like.

Nick Agnetti: 00:07:48

The under undervaluing is that Undervaluing is.

Jason Roland: 00:07:50

A big problem in terms of enforcing the law. Right. Because that means, you know, you have a company who is moving things with basically what amounts to be fraudulent data. Right? Because.

Yeah, right. It's something where you are perpetuating a crime against the company, against the country that you're sending material in.

Nick Agnetti: 00:08:08

For clarification, a declared value is based on the transactional value.

Jason Roland: 00:08:11

Correct.

Nick Agnetti: 00:08:12

It's not based off of the replacement cost or the cogs. Right. It has nothing to with that.

Jason Roland: 00:08:16

No.

Nick Agnetti: 00:08:17

It's what you sold it for to the end user.

Jason Roland: 00:08:19

Right.

Nick Agnetti: 00:08:19

Okay.

Jason Roland: 00:08:21

And for that to happen, I think that's a big area that people trip on. Right. Is they will either sometimes they'll over declare. Right.

Based on that kind of analysis where they'll say, hey, this was an item that retails for X amount but I sold it at a discount like a sale.

Nick Agnetti: 00:08:36

They had a sale. Okay.

Jason Roland: 00:08:38

And if they don't make that change, they can end up paying more on duties and tax than than they would normally have. But at the same time, undervaluing is probably a bigger problem.

Nick Agnetti: 00:08:48

I was going to say, I would take it the opposite. That's a much bigger issue.

Jason Roland: 00:08:51

Much bigger problem where they don't want it. They want to avoid any tax liability on moving an item.

Nick Agnetti: 00:08:55

Don't be a shyster. Don't. Don't be a shyster.

Jason Roland: 00:08:58

Item is worth ten grand in reality. But we're going to call it, you know, a toy and we're going to.

Nick Agnetti: 00:09:04

Send it in for 499 for 9 USD, right?

Jason Roland: 00:09:07

Yeah.

John Walsh: 00:09:07

I had a customer that was triple counting the value and putting one instead of four, I'm saying. So four pieces is for $40.

Nick Agnetti: 00:09:16

Four nuggets instead of what?

John Walsh: 00:09:17

Yeah, it was, it was. And it was you going back to trying to explain the situation like well no, it's $40. Yeah. But it was 10 items in there.

Jason Roland: 00:09:24

At $40 oh geez.

John Walsh: 00:09:27

Yeah, they were there getting this due to tax bills. Like I only ship like one piece. Okay, well you got to check your data, right? So that's another issue, Right? Data integrity.

Nick Agnetti: 00:09:36

Right.

Jason Roland: 00:09:37

Yeah. And then I think that one of the biggest hurdles too for people to get over is there just item descriptions. Right.

Because you're even if you're going to use an AI or something like that to get a code, it's only going to be as your tool is only going to be as good as your item description. Right.

So the first thing that companies need to do when they go down this road of, of editing their data is getting quality legitimate HS code descriptions, customs descriptions where an AI could take it and spit out an applicable code code. If your descriptions are no good, then it's like any other machine, right. Bad in bad stuff.

Nick Agnetti: 00:10:13

Right.

Jason Roland: 00:10:13

So the first step, the first hurdle that people trip on is getting quality good HS code descriptions that are descriptive enough to the level where the AI can apply the correct code. If you're just going to put gift or clothing or men's T shirt, it's not going to give you enough of a description in order to get a code. Proper code.

Yeah, you probably get a six digit code pretty regularly with. Pretty accurate.

Nick Agnetti: 00:10:36

Yeah.

Jason Roland: 00:10:36

But as countries begin demanding eight and ten digit codes, you, you could have a six digit code and be just as far away from getting your 10 digit code as you would have been if you had nothing to start with. Right?

Nick Agnetti: 00:10:52

It's that I'll see. It's, it's like it's two opposites, right? I'll see the ones that say shirt, just shirt, nothing else.

Doesn't say where it's from, doesn't say that it's cotton, doesn't say that it's polyester, it doesn't say that it's a man's shirt, woman's shirt, it just says shirt. And then I'll see one that says, you know, Hulk Hogan, red shirt, Egyptian cotton. And this is all in the custom description.

And sometimes it's just too much. Sometimes it's like, it's like it's overkill. And it just sent. And people can't, you know, they can't.

So it's like, okay, it's an unfortunate thing to get on here and say that there is a happy medium that has to be somewhat realized.

But it's true that you can't have, you know, 150 characters in a customs description and expect an AI spider to go along and just say, oh, I know exactly what that is a lot.

Jason Roland: 00:11:42

Of time those tools will have built in character stops. Right. And it'll say we only take the first hundred characters of Your item description 100%.

If it goes past that, your tool is going to spit out something that's not accurate.

Nick Agnetti: 00:11:55

What about challenges with airline partners?

Jason Roland: 00:11:59

We saw a lot of them during COVID Right. Uplift was limited and resources were limited, but a lot of that's passed. I think we do have beginning of increases of flight loads. Right.

Where we're starting to add flights. Right. Instead of.

And we were in this kind of phase of reduction for two or three years where airlines were kind of realigning and reducing costs and limiting lanes on flights.

And now we're kind of starting to see the big international carriers out of the US start to increase their flight loads a little bit as business comes back. Because there was this strange post Covid lull. Right. We're starting to pop out of that a little bit.

So yeah, we're starting to see more flights, more availability, more open space on planes, which is leading to lower costs. Right. For carriers like us, that's good. And it's also starting to make more availability for customers. Right.

So you're saying great, now instead of having a ready time and Monday morning at 8am I can now have until, you know, Tuesday or Wednesday to get that same material ready and loaded because now I have additional choice for where, where and when that stuff's starting to go. Yeah.

Nick Agnetti: 00:13:11

All positives, all positives.

John Walsh: 00:13:13

Do you see any thing on the horizon, 20, 25 that you can share, that you see in the market changing or anything in your arena that we're what you plan right now?

Jason Roland: 00:13:22

I would think the biggest thing that we're starting to see is the enforcement of the regulations that are kind of already existing.

John Walsh: 00:13:33

That's just going to continue.

Jason Roland: 00:13:34

It's just, it's going to continue through additional policing.

Nick Agnetti: 00:13:36

It's going to be current law, additional.

Jason Roland: 00:13:38

Eyes on the same things. I don't really think the laws or the rules themselves are going to change much in 25.

I think it's going to be a year of the industry finding its level. Right. Because those regulations are out. ISDS 2 is in place. Other countries are going to jump on the bandwagon. Right.

We saw it with, with other regulations also we saw it with data privacy regulations when GDPR came out across the EU and kind of, you know, raised the level of knowledge and acceptance across the industry in terms of a specific topic of data protection. We saw other countries jump on the same bandwagon the US is starting to do it.

It's a little different at the state level, so it's not really a national regulation. Okay. But other countries, Asia right now is going through a large influx of new data protection, privacy policies and things like.

John Walsh: 00:14:27

That because of the inbound China stuff.

Jason Roland: 00:14:29

For the inbound.

Nick Agnetti: 00:14:29

Yeah.

Jason Roland: 00:14:30

For the, for the data of the.

John Walsh: 00:14:32

World and those kind of companies in.

Jason Roland: 00:14:33

Order to kind of rein that in.

John Walsh: 00:14:36

Yeah.

Jason Roland: 00:14:36

I think regulatory.

From a regulatory mindset, there's a lot of raising to a new level that's happening right now as the industry and the e commerce paradigm has become the norm. Right. Instead of the exception. For a couple of years, there was the new wave doing. Now it's the norm. All those regulations have to catch up with it.

So we're kind of in a phase where the regulations are written, they're in place, and now it's kind of up to everybody to start enforcing them and get the industry used to what this regulation is going to look like in the future. Interesting.

Nick Agnetti: 00:15:11

How much more security you think the EU can get. Yeah, well, you know, I'm kidding because every.

I feel like every two years there's a new law that happens with shipments going into the eu and it's just like, man, you know, and it's always for the security of their citizens.

Jason Roland: 00:15:28

Sure.

Nick Agnetti: 00:15:29

And I mean. And that's. That's great.

ly nothing on the horizon for: 2025

Jason Roland: 00:15:52

Well, it's. Yeah, like I said, it's all going to be the industry finding that new level. Yeah.

Reaching of meeting the requirements that are already in place and then dealing with the aftermath of that. There's going to be some aftermath which is going to be costs. Right. It's going to be. Now we have to have develop an AI to spit out HS codes.

Now we have to find a partner who will do that or find that airline who's capable of ingesting that data. Right.

So there's going to be definitely some continued advancement in the technology that's going to help meet the new demand from a regulatory standpoint.

Nick Agnetti: 00:16:26

Very good. Well, Senior Jason, thank you for your time today.

John Walsh: 00:16:30

Did you ever think that risk and compliance would be that exciting?

Nick Agnetti: 00:16:33

No, I truly enjoyed this. I truly enjoyed this. I didn't think he would be boring. Good Lord, John. Yeah. I mean, yeah, no, I didn't think our guest would be boring at all.

But okay. Well, folks, anyway, until next time, so no, Jason, no, that was great. Thank you.

Thank you for, thank you for taking the time to come here and thank you for not being boring for John's sake. So I appreciate it.

John Walsh: 00:17:01

It's our pleasure. Yeah, no problem.

Nick Agnetti: 00:17:03

It's his pleasure. So. All right, if you want to support our podcast, the number one thing you can do is share it on your social media and tag Asendia.

John Walsh: 00:17:12

That helps us get the word out and we really appreciate it.

Voiceover: 00:17:14

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If you want to learn more about today's topic, email us at e commerce usaasendia.com and check back frequently for new discussions on ecommerce shipping to Canada and worldwide.