Increase Import Compliance
Upcoming SlideShare
Loading in...5
×
 

Increase Import Compliance

on

  • 2,872 views

Every importer wants to increase US Customs compliance and decrease costs. Empire Research Group and TRG Direct teamed up to create this presenation on helping importers identify what resources can ...

Every importer wants to increase US Customs compliance and decrease costs. Empire Research Group and TRG Direct teamed up to create this presenation on helping importers identify what resources can help them to just that. The presentation also looks into direct filing of customs entries and how this solution could be very beneficial to importers of all sizes.

Statistics

Views

Total Views
2,872
Views on SlideShare
2,865
Embed Views
7

Actions

Likes
1
Downloads
72
Comments
0

2 Embeds 7

http://www.slideshare.net 6
https://www.linkedin.com 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Add white border around this picture

Increase Import Compliance Increase Import Compliance Presentation Transcript

    • Take control of your supply chain and its related costs or face the consequences.
    WILL CUSTOMS COMPLIANCE SINK YOUR SHIP?
    • “ The first thing you need to know is that importing is not a right. I own your import privileges. You follow the rules and regulations, or I will take those privileges away from you.”
    • – U.S. Customs Inspector
    ABSOLUTE POWER
  • WHAT EVERY IMPORTER WANTS
    • To MAXIMIZE the impact of imports on PROFITS through the integrity of its import practices including;
    • Compliance,
    • 2) Control of import process,
    • 3) Cost reduction.
  • HOW YOU WILL GET THERE
  • MAXIMIZE IMPORT COMPLIANCE
    • Demonstrating the “reasonable care” compliance expectations of the Mod Act.
    • Reducing errors and omissions while streamlining the entry filing process.
    • Implementing best practices for Customs record keeping and internal document review.
    COMPLIANCE
  • CONTROL YOUR IMPORT ENTRIES CONTROL
    • Increasing the visibility of shipments and clearance information in real time.
    • Establishing internal procedures to manage inventory control.
    • Developing internal controls and structure to avoid repeated entry errors which negatively impact your compliance rating.
  • MINIMIZE IMPORT-RELATED COSTS COST COST
    • Improving inventory turns and customer payment streams.
    • Reducing supply chain outsourcing costs.
    • Bringing processes in-house where feasible.
    • Complying with the ever-changing, complex rules and regulations enforced by U.S. Customs.
    • Controlling and reducing paperwork errors which can hold up entire shipments in demurrage.
    • Managing costs from unpredictable shipping delays, fuel surcharges and transportation expenses that negatively impact your profit margins.
    YOUR CHALLENGES SOURCE “THE CHANGING LANDSCAPE OF IMPORTING AND EXPORTING” BY FELIX PEKAR, FEBRUARY 2008
    • Transportation costs.
    • Costs of customs tariffs, duties and taxes.
    • Inventory carrying costs.
    • Costs of internal controls.
    • Selling, general and administrative expenses.
    TOTAL LANDED COSTS Understand your true landed import costs—both direct and indirect. The challenge is to understand total supply chain costs and devise better methods to manage and contain them.
    • The cost of shipping a standard 40-foot container from East Asia to the East Coast of the U.S. has tripled since 2000.
    • That cost will double again as oil prices reach US$150 per barrel.
    • Goods with the lowest value-to-freight ratio will be most affected (e.g. furniture and apparel).
    SHIPPING COSTS ARE SOARING SOURCE FURNITURE TODAY
    • As the dollar slumps, import costs rise.
    • In 2008, the dollar hit record lows against the Euro and the Canadian Dollar and slumped against all major currencies.
    • “ Looking forward, we project further dollar volatility in the quarters ahead.”
    DOLLAR VOLATILITY IMPACTS TRADE SOURCE WACHOVIA
    • Importers who want to keep their competitive edge must find ways to offset the rising costs of transportation and the negative effects of the devalued dollar.
    SKYROCKETING COSTS CAN KEEP YOUR SHIP IN PORT
  • SUPPLY CHAIN SECURITY A series of events reflect an increasingly complex global environment C-TPAT 10+2 ISF MOD Act ACE ISA 1990 2000 2005 1995 2015 2010 1985 9/11 Safe Harbor Act
    • Importers are expected to exercise reasonable care in
    THE MOD ACT OF 1993 “ Reasonable Care & Informed Compliance” SOURCE U.S. CUSTOMS AND BORDER PROTECTION “REASONABLE CARE” Importers are expected to familiarize themselves with the details of their supply chain.
    • Importing anything to the U.S.,
    • Customs entry filing,
    • Classifying imported items for duty purposes,
    • Record keeping.
  • 9/11 CHANGED IMPORTING SOURCE WORLD CUSTOMS JOURNAL
    • Collecting revenue,
    • Protecting U.S. trade interest,
    • Catching unscrupulous or criminal importers who didn’t play by the rules.
    Pre 9/11 U.S. Customs Focus Post 9/11 U.S. Customs Focus
    • Preventing terrorists and terrorist weapons from entering the U.S.,
    • Performing the priority mission without disrupting the flow of legitimate trade or the U.S. economy.
    • More than 8,300 companies are C-TPAT certified.
    • CBP has conducted 7,469 validations, including 830 revalidations, of member supply chains.
    • 252 companies have achieved Tier 3 (highest) status, further reducing their risk score for cargo exams.
    • Tier 3 companies consistently use best practices to manage their supply chain.
    C-TPAT SOURCE AMERICAN SHIPPER Customs - Trade Partnership Against Terrorism
    • There are 317 Points of Entry in the U.S.
    • 190,000 vessels dock in U.S. ports annually.
    • 31.4 million entries are cleared representing $2 trillion in imports.
    • Customs must track more than 10 million cargo containers and their contents each year.
    CUSTOMS CHALLENGES TODAY SOURCE U.S. CUSTOMS AND BORDER PROTECTION YEAR IN REVIEW 2007 Globalization has made importing more complex
    • Currently 5-6% of all containers are externally examined.
    • 2% are subject to full physical inspection.
    • 100% of shipping information for all containers is reviewed.
    CUSTOMS STILL KEEPS SCORE SOURCE LOGISTICS TODAY
    • The U.S. Census Bureau alone reports that 8% of all import transactions contain one or more errors, overall errors are even higher.
    REPORTING ERRORS ARE COMMON SOURCE U.S. CENSUS BUREAU IMPORT STATISTICS
    • Pentax, a large camera maker, imported $60 million worth of duty-free camera equipment that was incorrectly labeled “Made in Hong Kong” when in fact the equipment was made in China.
    • The camera maker settled with Customs out of court for a $20 million fine.
    A COSTLY MISTAKE 100% of shipping paperwork for ALL containers is reviewed THE PROBLEM $20 M FINE! SOURCE GLOBAL TRADE MANAGEMENT TEAM
  • CUSTOMS NIGHTMARES
    • Your shipment is held in demurrage, incurring daily storage fees.
    • You miss an important trade show or fail to deliver the goods to a client who is counting on you.
    • You lose time, customer goodwill and money.
    • You are subject to fines, penalties or even forfeiture of goods.
    • Your compliance rating takes a hit, threatening your next import.
    Your paperwork is incorrect or incomplete
  • CUSTOMS BROKERS ARE NOT LIABLE FOR ERRORS
    • Only 2.4% of corporations were 100% Customs compliant based on 1999-2001 government statistics.
    • CUSTOMS BROKERS
    SOURCE U.S CENSUS BUREAU IMPORT STATISTICS
    • Are not required to participate in continuing education or recertification,
    • Frequently migrate to new firms,
    • Do not know your product as well as you do.
    • You give your Customs broker the correct data.
    • You provide your Customs broker with specific instructions.
    • They can still get it wrong.
    YOU PAY FOR IT
    • Executone’s Customs broker failed to fill out duty-free forms for client merchandise.
    • Because of the Customs broker’s error, Executone was incorrectly assessed an 8.5% duty rate.
    • Customs agreed that the error was a mistake of fact, correctable under § 1520(c)(1).
    • But, because Executone could not explain why the broker failed to do his job, the duty rate was not reversed and the company had to add legal expenses to an already burdensome import duty.
    INCORRECT DUTY RATE CASE STUDY SOURCE EXECUTONE INFORMATION SYSTEMS V. UNITED STATES, 96 F.3D 1383 (SEPTEMBER 24, 1996)
    • The Customs broker for an importer of LCD screens assigned the wrong tariff number, resulting in a $6M penalty to the company.
    • CBP rejected the company’s “reasonable care” defense that reliance on a customs broker to classify merchandise correctly is sufficient to establish that an importer exercised reasonable care.
    INCORRECT TARIFF CLASSIFICATION CASE STUDY SOURCE UNITED STATES V. OPTREX AMERICA, INC. , (MAY 17, 2006), SLIP OP. 06-73 $6 M Penalty
    • The owners of PK Promotions Inc. were arraigned July 7, 2008 on a 16-count indictment alleging they conspired to commit Customs and wire fraud.
    • They are accused of filing fraudulent reports to avoid paying the full amount of duty tax required on imported goods.
    FRAUD CASE STUDY SOURCE U.S. VS. KOTASAKOS - INDICTMENT
    • Pillsbury Co. was raided by Customs while under investigation for fraud.
    • The company allegedly obtained duty refunds from fraudulent drawback entries.
    • 300,000 import documents were seized.
    • Employees were subpoenaed for depositions.
    • The case settled out of court for $3.9M.
    INCORRECT DRAWBACK ENTRY Pillsbury’s premises were raided by Customs SOURCE NEWSBANK INC, PILLSBURY V. UNITED STATES $3.9 M SETTLEMENT
  • $2.8 M FRAUD SETTLEMENT SOURCE THE CULLEN LAW FIRM, PLLC In 2008, Intertex Clothing agreed to pay nearly $2.8 M for fraudulently reporting to U.S. Customs that imported textiles were manufactured in Korea to evade quotas on goods that were actually made in China. The defendants imported the goods for domestic sale to retailers, including Wal-Mart, J.C. Penney, Family Dollar Stores, Kohls and Marshalls.
  • TRUTH & CONSEQUENCES
    • NEGLIGENCE Two times the value of duties, taxes and fees—hit to compliance rating making future imports more difficult.
    • GROSS NEGLIGENCE Four times the value of duties, taxes and fees.
    SOURCE 19 U.S.C 1618 & 1623 (c) FRAUD Entire domestic value of goods and possible jail time. Penalties for Errors
    • For the mere inability to produce documents, fines could be $10,000 per document.
    • Unlike IRS penalties (percentages), the civil penalty provision of Customs law results in multiples of the loss of revenue involved.
    • Just at the simple negligence level, it's possible to end up paying one or two times the duty loss per shipment.
    THE TRUTH HURTS SOURCE TRANSPORTATION AND DISTRIBUTION When U.S. Customs Comes Knocking
    • Despite current global market challenges, importers can take control of their supply chain and realize efficiencies through proactive management of their Customs entries.
    THERE IS HOPE
  • “ AUTOMATE OR PERISH” ~ William von Raab, Customs Commissioner Circa 1980’s You have the right to direct file your Customs entries. Any importer of record may file without a license or permit. CUSTOMS 19CFR Ch.1 111.2
    • Broker mistakes are NOT just part of the cost of doing business.
    • They can and DO affect your bottom line.
    • They can and DO affect your compliance rating.
    TAKE CONTROL
    • You already provide your broker with the data (i.e. value and country of origin).
    • The paperwork you collect for your Customs broker is all you need to direct-file in most cases.
    • Follow up audit of broker entry accuracy.
    YOU ALREADY DO THE WORK
    • Save broker fees,
    • Save time and prevent delays by self filing Customs entries,
    • Eliminate broker premiums for dock fees and transportation arrangements,
    • Establish and maintain a positive relationship with Customs.
    YOU SHOULD REAP THE REWARDS
    • A few of your import entries may be too complex for you to handle on your own—think 80/20.
    • A good relationship with a trustworthy broker is essential to your company’s success.
    • A phased approach can facilitate the transition more quickly.
    WHEN YOU NEED A BROKER The 80/20 Solution
  • FACE YOUR CHALLENGES & GET WHAT YOU WANT
    • Direct Filing your Customs entries allows you to:
      • Increase import compliance and control,
      • Decrease import costs.
    • Minneapolis-based Target Corporation is the 2 nd largest importer in the U.S.
    • Target decided to direct-file its Customs entries, using the 80/20 rule.
    • Target has achieved a 100% compliance rating for the past two years while saving money.
    • Target’s positive relationship with Customs enables it to manage its supply chain more efficiently.
    DIRECT FILING CASE STUDY TARGET CORPORATION SOURCE MICHAEL LADEN, FORMER DIRECTOR OF TARGET CORPORATION’S IMPORT OPERATIONS
  • INTRODUCING
    • TRG Direct employs a seasoned group of international trade experts whose depth of experience includes:
    TRG DIRECT IS YOUR ENTRY FILING SOLUTION
    • ABI development based on 25 years with U.S. Customs,
    • 17 years of underwriting U.S. Customs Bonds,
    • 30 years in supply chain management & security.
    • The ONLY web-based direct filing system available on the market today that allows you to pay as you go,
    • $20-$30 per entry, 80% below industry average,
    • No expensive software or upgrades,
    • State-of-the-art security,
    • On-site training that gets you up and running in less than one day,
    • 24-hour access to licensed Customs broker available,
    • File an entry in as little as four minutes.
    THE TURBO TAX™ OF DIRECT FILING TRG Direct makes it easy
    • In a post 9/11 world, TRG Direct safeguards and backs up our systems to ensure that you never experience an outage or inability to access the direct filing system.
    TRG DIRECT SYSTEMS INTEGRITY
    • Multiple fault tolerant storage systems,
    • Secured data center with encrypted off-site storage,
    • 24/7 on-site technician,
    • SSL encryption,
    • Customer records maintained for 7 years (per U.S. Customs mandate).
    Your data is safe with us
    • 10+2 Importer Security Filing is a proposed rule by Customs & Border Protection requiring importers and carriers to transmit these additional data elements 24 hours prior to vessel lading:
    TRG DIRECT IS YOUR 10+2 SOLUTION Importers (10) Carriers (2)
    • Manufacturer Name & Address,
    • Seller Name & Address,
    • Container Stuffing Location,
    • Consolidator Name & Address,
    • Buyer Name & Address,
    • Ship to Name & Address,
    • Importer of Record #,
    • Consignee #,
    • Country of Origin of the Goods,
    • 6 Digit Commodity #.
    • Vessel Stow Plan,
    • Container Status Message Data.
    • What are the true costs of your import practices?
    IMPORT PROFITABILITY QUOTIENT
    • Demurrage
    • Delays
    • Fines/Penalties
    • Supplemental Duties
    • Over Payment of Duties
    • Filing Costs
    • Legal Fees
    • Cost of Capital
    • Deciphering your broker’s bill requires a review of all charges associated with each entry.
    • You may think your base entry fee is only $75.
    • If your invoice contains any one of these charges, your entry rate is potentially much more than $75.
    WHAT DO YOU REALLY PAY YOUR BROKER? Ala Carte Pricing   Out- of-Pocket   Carriers $2.50 Truckers $2.50 Customs $2.50 Terminal $0.00 Total Out-of-Pocket $7.50 Administrative Items   Entry Fee $75.00 Additional Tariff #s $10.00 Additional Invoices $10.00 ABI Fee $0.00 Agency Fees $5.00 FTA   $5.00 Advance Fee $10.00 Handling Fee $5.00 Coordination $30.00 Messenger $12.50 Telephone $5.00 Total Revenue Items $167.50 Actual Per Entry Fee $175.00
  • HOW MUCH CAN YOU SAVE? TRG Direct is Priced 80% Below Industry Average
  • RESOURCES & STAFFING Assumptions: Hours needed based on 240 working days in one year Time needed to complete one entry = 20 minutes Broker fees = $100 per entry
  • IMPLEMENTATION IS EASY
    • Complete a simple application process.
    • 2) Train online and/or on-site.
    • 3) Begin filing your entries.
  • TAKE ACTION! Now is the time to control your compliance and costs Contact us today to schedule a free consultation. Phone: 847.756.7543 Fax: 847.756.7545 Email: [email_address] Website: www.TRGDirect.com