By 2027, the global e-commerce market number will increase by 39% yearly. This means more people will buy online from different places, leading to increased operational pressure on customs points.
Implementing optical character recognition and AI in this sphere will change the game. Both markets have much in common: spending on artificial intelligence will increase from 250 billion USD in 2023 to almost two trillion USD in 2030, so it will be growing in line with international trade.
In this article, we shall discuss how OCR and AI automation can streamline processes and reduce manual labor in customs and compliance procedures so that customs checks do not become the bottlenecks of commercial growth.
Let’s get started!
The Growth of E-Commerce and Customs Regulations Challenges
According to statistics, in 2022, retail e-commerce sales were estimated to exceed 5.7 trillion US dollars worldwide. By the end of 2023, this figure achieved 6.3 trillion US dollars; by 2027, it is projected to surpass eight trillion dollars. The growth of e-commerce is tied to international trade, and such an increase in volume exerts additional pressure on customs operations.
Besides higher volumes, the changing character of trade creates an additional challenge.
Decades ago, customs mostly dealt with large international containerized shipments. Now, the number of small, just-in-time packages has increased considerably. According to the US Customs and Border Protection report, many small packages are especially difficult to process. They possess the same safety and economic risks as the usual products, yet the volume of papers to prepare per item has increased greatly.
Secondly, the small packages have become especially attractive for criminal organizations due to the perceived lower risk of interception. Also, new importers often lack literacy in US compliance procedures, which results in sending non-compliant packages.
This all creates a new landscape that is innovation-hungry, and the application of AI-powered OCR in customs will be a long-awaited solution.
The applications of conventional OCR in customs: Restrictions and Possibilities
Optical character recognition technology is strong in the customs business, yet it still has restrictions to consider.
First, adding documents to OCR scanners is a manual process that is prone to errors (a single sheet of paper can get omitted) and is very slow.
Secondly, customs freight faces numerous rejections from authorities like the British HMRC or the US Customs and Border Protection due to mere errors, like improperly rendered words. It is well known that conventional OCR software has issues reading rare fonts, like Nastaliq.
As imports and exports rise, the need to scale arises as well. Conventional tools lag behind the trade demands. Also, with manual operations, there is always a risk of fraud. The same risk remains with the implementation of conventional OCR.
These points prove one thing: the industry requires innovation. AI-powered OCR is called to change the customs document processing landscape, so there is a lot of space for novel ideas to get appreciated and merchandised.
If you have an idea for an AI-based OCR tool to implement, we can help you with advice for free!
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What is the difference between conventional OCR tools and AI-based optical character recognition?
OCR technology renders every character in the word as a separate image, recognizes it, and, after, puts a string of recognized characters together in the form of text. That’s how conventional OCR tools like Adobe or Kofax work.
Yet, it is sometimes unable to read unclear handwriting or fonts it wasn’t programmed for. There are still numerous rare alphabets in the world, incalculable human handwriting variations, or damaged images like stamps or dirty fingerprints marks, that are sometimes rendered as images.
Deep learning OCR uses machine learning algorithms to understand the context of the written or typed text. Thus, if one character is not properly read, the algorithm will read the whole word in the context. This way, the level of accuracy is increased considerably.
Moreover, AI-based OCR tools unearth intelligent document processing technology. IDP enables smart capture, extraction, and management of information from numerous customs-related papers.
So, what can OCR and IDP tools do to enhance customs procedures and compliance?
AI-Based OCR in Customs: Benefits and Examples
In this section, we shall review how the merge of OCR and AI can help streamline customs checks based on the existing industry solutions. So, here’s the main benefits:
Processing data at scale: traditionally, content is locked in numerous formats, like notes, inscriptions, printed text, and label symbols, like images. Intelligent document processing tools like Calibrai can capture differently structured data and collect it in one place. This is especially important considering the described earlier challenges.
Managing data with ease: a solution called Instabase uses conversational AI for cross-document reasoning. It allows one to find the needed information by asking free-form questions in regular language. No special comments are needed. This can be a great tool to have at hand when one needs, say, to find all the customs declarations by one shipper for some specific time period.
Preparing documentation: in case one needs a report or prepares a separate file with specific information, tools like Skwiz come in handy. This AI-based tool allows you to split or unite PDFs, extract selected documents from a group, or unite them in groups.
Custom AI training: Customs officers can train A.I.-based OCR tools to perform tasks unfamiliar to them, even if they don’t have enough training data. For example, in an IDP solution, Konfuzio is able to learn how to do a task from a single example.
What are the types of OCR used in customs?
Numerous technological appliances are used by customs officers in their jobs. Let’s review some of the handiest ones:
- Standard OCR is a type of optical character recognition software that can read from scanned documents. When not equipped with AI, it has numerous limitations. Besides the inability to read rare fonts or unclear handwriting, it is also not productive in reading texts from different angles, like checking an inscription on the box.
- Zonal OCR – unlike the previous type, this sort of OCR tools can read labels in different positions. Therefore, it can be used, for example, to scan the parcel for hazardous goods and pay special attention to the associated documentation.
- Mobile OCR is usually presented as a mobile app, which any customs officer can use since almost everyone today has a smartphone. Google Play Market offers several available OCR apps, like vFlat, which you may use to scan documents, books, and receipts daily. Yet, no widely used mobile solutions are created to apply the possibilities of OCR in customs.
- Deep-learning OCR – is smart, can read numerous texts and fonts, and understands texts from the context. It is, perhaps, the most promising of the types.
So, while standard and zonal OCR tools prevail in the industry now, the future belongs to specified deep-learning and mobile OCR. Apparently, this is the area that will attract the most interest and investment in the near future.
The future of the intelligent document processing and OCR market
So, what does the market tell about it?
According to the Intelligent Document Processing Market Size, Share & Trends Analysis Report, the interest in AI-based document processing, computer vision, and optical character recognition has been increasing in the last few years. This trend will definitely prevail by the end of the decade. The global intelligent document processing market size is predicted to grow by 30.1% every year. The technologies that drive the most interest are machine learning, optical character recognition, natural language processing, and computer vision. The market that is best developed so far is North America (currently takes 30% of the world’s market). Yet, Asia-Pacific is growing its own giants in IDP, like Datamatics Global Services Limited. As for clients interested in OCR and IDP solutions, SMEs will prevail in the niche. They are the main category of companies to express interest in the technology and drive traffic for the providers of AI-powered OCR solutions like eNest. Although different sub-scenarios of the market development may appear, the general trend clearly shows it’s wise to invest in AI-powered OCR and IDP now.
Summing things up
Due to the increased growth of online shopping and the growth of e-commerce internationally, customs offices in numerous countries face the same challenges: traditional tools and procedures can scale in accordance with the demands of new times. Thus, OCR tools and AI algorithms will find numerous applications in customs in the near future.
Interested in how the merger of OCR and AI can help you boost your business?
Contact eNest for a free consultation and advice. Our specialist will gladly share with you all the expensive expertise our company nurtures. Book a call now!
Have a question?
Speak to Data Scientist
Jagdeep ChawlaMS in Data Science
NorthWestern Univeristy, Illinois
MS in Data Science
NorthWestern Univeristy, Illinois
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