Customs agents in international trade

Non Technical Summary

International trade is often understood as transactions between firms across borders. In practice, much of this activity depends on intermediaries that help firms navigate regulatory and administrative requirements. Among these, customs agents play a central role by handling documentation, compliance, and border procedures. In the UK, they facilitate more than 85% of exports to non-EU countries, yet their role in shaping trade outcomes remains poorly understood.

This research examines how firms use customs agents and how these relationships respond to changes in trade conditions. Using detailed transaction-level data on UK exports between 2009 and 2019, the study provides new evidence on how firms form, manage, and adjust relationships with agents. It shows that these intermediaries are not simply service providers, but a key part of how firms organise their international activities and respond to uncertainty.

The study first documents the structure of relationships between firms and agents. Agent use is widespread, but highly concentrated. A relatively small number of agents and firm-agent relationships account for most of the total value of trade. At the same time, these relationships are often short-lived. Many last only one or two years, while a small number persist and account for a large share of trade. This combination of concentration and turnover suggests that firms actively manage a portfolio of agents rather than relying on a single long-term partner.

The analysis shows that firms use customs agents in two distinct ways. One is during expansion into new markets or products. When firms enter unfamiliar environments, they are more likely to rely on agents to manage regulatory complexity and reduce uncertainty. These relationships tend to involve smaller agents and lower trade values, which suggests that firms use them to test new opportunities before committing more resources.

The second use arises when firms operate in areas that match an agent’s established expertise. In these cases, relationships become deeper and more valuable, with larger volumes of trade flowing through specialised agents. This pattern indicates that firms rely on agents not only to reduce uncertainty, but also to support the efficient scaling of trade in established markets and products.

The study also examines how these relationships respond to trade policy uncertainty, focusing on the 2016 Brexit referendum. Firms with greater exposure to EU markets adjusted their use of agents following the vote. They reduced the number of agents they worked with, while increasing the size and value of their remaining relationships. This shift suggests that firms respond to uncertainty by consolidating their intermediary networks and relying more heavily on agents with greater capacity and expertise.

These findings highlight an important but often overlooked mechanism of adjustment in international trade. Firms do not respond to policy changes only by altering prices, quantities, or market participation. They also reorganise their relationships with intermediaries that help them manage regulatory requirements. Customs agents therefore form part of the institutional infrastructure that supports trade.

The results have several implications for policy. First, they show that trade facilitation depends not only on simplifying rules, but also on ensuring that firms can access the expertise needed to comply with them. Customs agents translate complex regulations into practical processes, making them essential for the functioning of modern trade systems.

Second, the concentration of the agent market suggests potential constraints in capacity and access. If a small number of agents handle a large share of trade, disruptions to these intermediaries could affect a wide range of firms. Smaller exporters may face particular challenges in accessing high-quality agents, especially when demand for their services increases.

Third, policies aimed at supporting exporters, particularly small and medium-sized enterprises, should consider the role of intermediaries. Improving access to customs expertise, supporting training and certification, and facilitating connections between firms and agents could help reduce barriers to trade participation.

In sum, this research shows that customs agents play a central role in how firms navigate international trade. By enabling firms to manage complexity and respond to uncertainty, they contribute to the resilience and adaptability of the trading system. Recognising this role can help policymakers design more effective trade and regulatory policies in an increasingly complex global environment.