The Impact of the Global IT Outage on Trade Compliance

The global IT outage on July 19, 2024, has had a profound impact on various industries, including airlines and healthcare. However, one of the less discussed yet significantly affected areas is trade compliance. Here’s how the outage influenced trade compliance activities and what businesses should do in response.

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Disruption of Supply Chains

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The IT outage caused major disruptions in the airline industry, leading to thousands of flight cancellations and delays. Since air freight is a critical component of global supply chains, these disruptions inevitably affected the timely delivery of goods. Delays in shipping schedules can lead to missed deadlines for trade compliance filings and potential penalties for late submissions.

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According to Delta Air Lines' advisories, the outage impacted their entire flight operations, which would have included cargo services essential for transporting goods globally​ (Delta)​. Similarly, disruptions at major hubs like Toronto Pearson International Airport further compounded the delays​ (CTV News)​.

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Compliance Filing Delays

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Many companies rely on automated systems to manage their compliance filings, including import/export documentation, tariffs, and duties.The IT outage would have caused significant delays in these automated processes. Businesses that depend on real-time updates and electronic submissions faced challenges in ensuring timely and accurate compliance filings.

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Singapore Airlines, for instance, reported significant operational disruptions due to the IT outage, which likely affected their ability to handle cargo and related compliance documentation efficiently​ (Singapore Airlines)​.

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Increased Risk of Non-Compliance

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The inability to process compliance-related documentation on time increases the risk of non-compliance. Companies might face penalties for late filings, incorrect tariff applications, or missed duty payments. These risks are particularly high for industries that rely heavily on just-in-time inventory systems, where any delay can have a ripple effect throughout the supply chain.

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Response Strategies for Trade Compliance Teams

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To mitigate the impact of such IT outages on trade compliance, businesses should consider the following strategies:

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1. Implement Redundant Systems: Ensure that there are backup systems in place for critical compliance functions. This includes having manual processes ready to be deployed in case of system failures.

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2. Regularly Update Contingency Plans: Review and update contingency plans regularly to address potential IT outages. Ensure that all compliance staff are trained on these plans.

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3. Improve Communication: Maintain open lines of communication with suppliers, logistics partners, and compliance authorities. Prompt communication can help manage delays and reduce the risk of penalties.

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4. Invest in Cybersecurity: Enhance cybersecurity measures to protect against system failures and ensure that your IT infrastructure is resilient against potential attacks.

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Conclusion

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The global IT outage of July 19, 2024, serves as a stark reminder of the vulnerabilities in our interconnected world. For trade compliance professionals, this event highlights the importance of having robust contingency plans and backup systems to manage unforeseen disruptions. By taking proactive measures, businesses can better navigate the complexities of trade compliance and minimize the risk of non-compliance during such crises.

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For more detailed information on the impact of the outage, you can check the advisories from Delta Air Lines and Singapore Airlines.