Logistics Service Providers• Freight Forwarder• Cargo/Marine Insurance Provider • Customhouse Broker/Licensed Customs Broker• Third Party Logistics Company (3PL)• Surety Company• Warehouse operator
Third Party Logistics Provider• To move your goods more quickly through the supply chain lifecycle you may outsource distribution and warehousing services to boost efficiency and cost‐effectiveness. This shortens shipping time and gets your products to your customers faster.• Expertise and scalability without extra overhead– Warehousing– Pick‐n‐pack– Pull: make product when ordered– Push: make inventory– Makes money on number of orders placed
Freight Forwarders• 3rdParty Logistic Provider. Acts on your behalf as negotiating agent to get your goods to the buyer by any mean of transportation. Tend to be specialized by regions of the world.• A "freight forwarder" is a person engaged in the business of assembling, collection, consolidating, shipping and distributing less than carload or less than truckload freight.• Is also an agent in the transshipping of freight to or from foreign countries and the clearing of freight through customs, including full preparation of documents, arranging for shipping, warehousing.
Customs Broker• An individual or company Licensed by the Government to conduct Customs Business on behalf of others– Customs Business is any activity regarding the entry, admissibility, classification, valuation, and payment of duties– Calculate duty payments and file entries on your behalf– Your advocate with Customs• Customs Brokers often are Freight Forwarders – Your local operational contact (coordinates service)– Arranges final delivery
Incoterms 2010* Risk does not follow cost1) Negotiated outside of the INCOTERMS. Buyer or seller may have additional “insurable interest” and prudence may indicate purchase of additional coverage.2) Terminal fee goes to seller, vessel loading to buyer.3) Item depends on named place.4) Terminal charge goes to seller if loaded at seller’s door, terminal charge goes to buyer if loaded at carrier’s terminal.5) Seller assists in obtaining consular work. International Chamber of Commerce (ICC) arbitration is available if noted as part of the contract between the seller and buyer.
Supply Chain Management• Chain Management (SCM) is the process of planning—and controlling—the supply chain to satisfy end‐state customer requirements as effectively as possible• SCM spans the movement of products and services from point‐of‐origin to point‐of‐consumption• SCM may also include outsourcing non‐value add processes to a supplier network• Waste‐reduction methodologies focus on production time, transportation, inventory , and customer satisfactionBuy Make Move Sell
Products & Services MovementBillofLadingNon-Value Add ServiceProductCreatedSupplierProductReceivedReceiptDeliveryCustomerProductShippedShipmentProductShippedShipmentProductConfiguredUtilizationFlow of ProductsRequest ForProposalMetricsControlsContractService LevelsFlow of Service
SCM Key Performance Indicators• KPIs must be measurable, objective, simple and manageable; align with company goals and objectives (about value)• Develop service level agreements in partnership with suppliers to gain buy‐in• Establish scheduled tracking periods and review results with suppliers in a timely fashion• Waste: Anything a customer doesn’t pay for, including defects and extra time
SCM Triple Threat• The objective is to measure the ability of the supplier to meet the needs of the customer Delivery TimeframesTotal Cost Reliability and Consistency Price Schedule Quality
Global Sourcing Advantages• Low cost• Diversify your risk• Learning how to do business in a potential market• Tapping into skills or resources unavailable domestically• Developing alternate supplier/vendor sources to stimulate competition• Increasing total supply capacity
Global Sourcing Vs. Low Cost Country Sourcing• Global Sourcing ‐ Approaching worldwide sourcing as a single objective, coordinated between local teams, to support corporate objectives for cost, quality and delivery– Objectives: • To achieve lower overall costs• To augment current supply options• To locate production close to growth markets• To comply with local regulations• LCCS ‐ Sourcing in developing countries to take advantage of lower cost structures without sacrificing quality or delivery– Objective: To achieve lower overall costs than what is available in domestic markets
Automated Export System (AES)• AES Direct, U.S. Census Bureau– Automated Export System– The electronic system for filing export information– USPPI or authorized agent can file• Electronic Export Information– Used to be the SED (Shippers Export Declaration)– Criminal / Civil Penalties for non‐compliance
International Trade DocumentsCOMMON EXPORT DOCUMENTS: Commercial Invoice; Export Packing List; Pro Forma InvoiceTRANSPORTATION DOCUMENTS: Airway Bill or Bill of Lading; Electronic Export Information Filing (formerly known as the Shipper’s Export Declaration)EXPORT COMPLIANCE DOCUMENTS: Export Licenses; Destination Control StatementCERTIFICATES OF ORGIN: Generic Certificate of Origin; Certificate of Origin for claiming benefits under Free Trade Agreements; Certificate of Origin for goods not manufactured in the United Stateshttp://export.gov/logistics/eg_main_018121.aspOTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODS: ATA CARNET/Temporary shipment certificate; Certificate of Analysis; Certificate of Free Sale; Dangerous Goods Certificate; Fisheries Certificate; Fumigation Certificate; Halal Certificate; Health Certificate; Ingredients Certificate; Inspection Certificate; Pre‐Shipment Inspections; Insurance Certificate; Phytosanitary Certificate; Radiation Certificate; Other (Product‐Specific) Certificates; Weight CertificateOTHER EXPORT‐RELATED DOCUMENTS: Consular Invoice; Canadian Customs Invoice; Dock Receipt and Warehouse Receipt; Import License; ISPM 15 (Wood Packaging) Marking; Shipper’s Letter of InstructionTEMPORARY SHIPMENT DOCUMENTS: ATA CARNET/Temporary shipment certificate; Customs Certificate of Registration; Transporting Goods by Truck to Canada
Data Fields for International Documentation• Shipper• Consignee• Net Weight • Gross Weight • Cube• Cubic Meter • Harmonized Code (HTS)• Country of Origin• Carrier• Notify Party • Incoterm• Currency• Forwarding agent• Quantity(QTY)• Unit Price • Port of Embarkation• Purchase Order Number • Dimensions• Initial Carriage (Mode)• Port of Discharge• Place of Receipt• Marks and Numbers
International Trade Documentation Order• Request for Quotation (RFQ)• Price Quotation • Pro Forma Invoice• Purchase Order• Commercial Invoice• Packing List• Other Required Documents• Bill of Lading• Entry Documents • Delivery Order
Certificate of Origin NAFTA Certificate of Origin
ATA Carnet• An international customs and export‐import document • Used to clear customs without paying duties and import taxes on merchandise that will be re‐exported within 12 months– Promotional Merchandise– Show Samples (must return home)– Temporary Use Equipment
Document Organization Tips By Ray Bowman• All documents must agree with the terms of the proforma invoice and/or purchase order• All transactional documents should be filed together in order to show the flow of the entire transaction• Use technology when ever possible to generate and check the accuracy of your documents• Develop a numbering system for all quotes and reference them on all related documents and paperwork
Modes of Transportation• Electronic• Terrestrial (truck and rail)• Air – higher cost, fast movement– higher value goods or less than a container load• Ocean – lower cost, slow movement– majority of international trade
Mode Comparison• Air – Best for smaller, time‐sensitive shipments– More expensive than ocean– Many service levels available– Good for regular, high‐value consignments– Size and weight limitations• Ocean – Very economical– Requires good planning– Longer transit– Variety of routing options: All‐water, multi‐modal, deferred– Variety of container sizes: 20, 40, 45 and high‐cube
Considerations When Considering Transportation Mode• Accessibility • Capacity • Consistency (delivery time variability) • Cost • Flexibility (adjustment to shippers needs) • Intermodal capability • Lead time for supplier • Loss and damage • Monitoring capability • Nature of Product / Cargo• Reliability• Safety • Speed (time in transit)
Warsaw Convention• International civil aviation agreement that establishes the legal framework for carriage of passengers, luggage (baggage), and goods (cargo)• Covers conditions of carriage that:– define liability of the carrier in case of loss, damage, injury or death due to accident on international flights– spell out procedures for claims and restitution– lays down out the requirements for format and content of air transport documents
Dimensional Weight• Air Freight• Ocean Freight
Ocean Freight Containers* Container specifications may vary slightly depending on the steamship line or manufacturer.** Tare weight differentiates within equipment series.*** Payload subject to legal road weight limitations. Equipment is subject to availability. Not all types of equipment are available in all trade lanes.
Ocean Freight Containers• Dimensions are standardized in ISO 20’–40’– Width 8’– Height: 8’6” or 9’6”• General Purpose; High Cube General Purpose• Hardtop Container; Open Top Container; Flat; Platform; Refrigerated container; Bulk Container; Tank container• Least expensive mode of transportation
General Purpose Container 20’• Suitable for any general cargo• Fork‐lift pockets, lashing devices on top and bottom• Lashing devices have a permissible load of 1,000 kg
High Cube Refrigerated Container 40’• Voluminous light‐weight cargoes• Temperatures above or below freezing point • Controlled fresh‐air supply is possible
Flat 20’• Heavy loads and over width cargo• Higher loadings possible • Strong bottom construction with fixed end‐walls
Open Top Container 20’• Over‐height cargo, crane loading from top or side• Door header can be swung out on all containers• If required, disposable tarpaulins can be provided
Platform 40’• Heavy loads and oversized cargo• Strong bottom construction• Gooseneck tunnel on both ends of all 40 platforms
Bulk Container 20’• Dry bulk cargos, e.g. malt• Three manholes for top loading of each container• One discharge opening in each door wing• Lashing devices on the top longitudinal rails
Tank Container 20’• Chemical Products, e.g.: Flammables, Oxidizing agents, Toxic substances • Foodstuffs, e.g.: Alcohols, Fruit juices, Edible oils, Food additives
High Cube General Purpose Container 40’• For light, voluminous and over‐height cargo• Lashing devices on the rails and the corner posts• Consider over‐height for inland transportation & note weight limits for road and rail transport.
Ventilated Container 40’• Natural ventilation is provided by openings in top and bottom rails• Numerous lashing devices on the top and bottom• Longitudinal rails and the corner posts. Lashing devices have a permissible load of 1,000 kg
Ocean Cargo Types• Less than a Container Load (LCL)• Containerized • Break Bulk • Bulk Cargo (dry and liquid)• HAZMAT• Roll‐on/Roll‐off (RoRo)• Refrigerated (Refer)
World Customs Organization• Develops standards and provides technical support for the harmonization of procedures governing the movement of people and commoditieshttp://www.wcoomd.org
U.S. Customs Clearance• Import– Informal entry is less that $2,000 in value per commodity (HTS classification)– excludes textiles and footwear• Export – Informal is less that $2,500 per commodity (Schedule B classification)– Formal export filing is mandatory with AES
U.S. Customs & Border Protection• Border Security• Revenue Collection• Fraud and Smuggling Enforcement• Trade Agreement Enforcement• Other Government Agency Enforcement• Statistics Collection• Public Outreach and Education• Special Programs: C‐TPAT, ISA, ISF “10+2”
U.S. Customs Entry• Entry: CF 3461– Form used to obtain the proper release from CBP– Documents required to be filed with CBP to secure the release of imported merchandise from CBP custody without payment of duties, taxes or fees• Entry Summary: CF 7501– Payment and Duties and Taxes– Consists of duties, taxes, and fees if applicable and any other documents necessary to enable CBP to assess duties, collect statistics and determine if regulations have been met.
CBP Security Initiatives• Customs‐Trade Partnership Against Terrorism (C‐TPAT)• Free and Secure Trade (FAST)• Automated Commercial Environment (ACE)• Pre‐Arrival Processing System (PAPS)• Pre‐Arrival Review System (PARS)• Automated Manifest System• Container Security Initiative (CSI)• Advance Manifest Rules (AMR) aka 24‐Hr Rule• Food Facility Registration• International Ship and Port Facility Security (ISPS) • Maritime Transportation Security Act• Importer Security Filing "10+2 Rule"
U.S. CBP/DHS Databases• CBP INFO Center (Help and FAQs) https://help.cbp.gov/app/home• Customs Rulings Online Search System (CROSS) http://rulings.cbp.gov• Intellectual Property Rights Search (IPRS) http://iprs.cbp.gov• Cargo Systems Messaging Service (CSMS) http://apps.cbp.gov/csms/csms.asp• Antidumping (ADD) and Countervailing Duties (CVD) http://addcvd.cbp.gov/index.asp
Foreign Trade Zone• Cost savings (tax relief, lower wage costs)• Tariff shifts can reduce customs duties• Add value to reach 51% domestic content• Defer customs fees• Restricted items may include flammable and explosive materials; however the FTZ Director has discretion.
Industry Codes• Standard Industry Classification (SIC)• North American Industrial Classification System (NAICS)• Harmonized Schedule (HS)• Schedule B—U.S. Export Code • Harmonized Tariff Schedule (HTS)—U.S. Import Code
HTS CodingElements Analogy #• Chapter Country 95• Heading State 95.06• Subheading City 95.06.62.80• Sub‐subheading Street 95.06.62• Statistical Number 95.06.62.80.20
Rates of Duty ExampleQ: What is “NESOI”? Not elsewhere specified or indicated (a “catch‐all”)
Tariff Engineering• Process of designing (or re‐designing) a product to minimize the rate of duty without substantially changing the performance of the product• When successful, tariff engineering can be an important part of an importer’s business strategy
Customs Bonds• Single Transaction Bond Vs. Continuous Bond Continuous: 1 year; $50,000+ or 10% of total duties paid in previous years)• Protects USG revenue and to guarantee compliance (“insurance” for CBP to get paid)• Surety bonds alleviate imports from tying up their liquidity
Insurance and Transportation Liability• Demurrage– Detention of a freight by a shipper beyond time permitted for loading or unloading– Extra charges for detaining freight• Law of General Averages– A loss that affects all cargo interests on board a vessel as well as the ship herself
Force Majeure• French for “Superior Force”; aka Act of God• Excuses liability or obligation when an extraordinary event or circumstance beyond the control of the parties occurs. Examples: war, strike, riot, crime, or an natural event (hurricane, flooding, earthquake, volcanic eruption, etc.)• Prevents one or both parties from fulfilling their obligations under the contract
Reasonable Care• The degree of care in which a person of ordinary prudence would exercise in the same or similar circumstances• Due care under all circumstances• Failure to exercise such care is ordinary negligence
Reasonable Care Checklist• Goods are clearly and accurately described• Properly classified in the HTSUS• Proper valuation• Goods properly marked with Country of Origin• Intellectual Property, Trademarks protected• Other Governmental Agency compliance• Special Duty Programs, ADD and CVD• Quota, visa restrictions• Filing procedures, record keeping
Not Practicing Reasonable Care• Negligence ($)– Failure to exercise Reasonable Care• Gross Negligence ($$)– Actual knowledge or with disregard• Fraud ($$$)– Voluntary and intentionally
Landed Cost• The total cost of a shipment delivered to a named location. Specifically, the cost of the goods plus the cost of transportation.• Commonly, the total cost of a landed shipment including purchase price, freight, insurance, and other costs up to the port of destination. In some instances, it may also include the customs duties and other taxes levied on the shipment.
Anti‐Dumping Duty/Countervailing Duty(ADD/CVD)• ADD – for items priced below fair market value• CVD – for items being subsidized domestically• Antidumping and Countervailing Duty Online Search System http://addcvd.cbp.gov
Duty Drawback• The refund of all or part of customs duties, or domestic tax paid on imported merchandise which was subsequently either manufactured into a different article or re‐exported or destroyed• Permitted on the exportation of imported merchandise (and the exchange, or tradeoff, of domestic merchandise) with unchanged condition (substitution) and not used in the U.S.• Categories of drawback– Manufacturing drawback– Unused merchandise drawback – Rejected merchandise drawback