How’s your customs bond these days?

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The China tariffs have resulted in customs continuous bond saturation or near saturation for importers. Continuous bond amounts are calculated using 10% of the total duties, taxes, and fees paid for the previous 12-month period. The minimum continuous bond allowable is $50,000 USD, which covers up to $500,000 USD in duties, taxes, and fees to US Customs and Border Protection(CBP).

If your bond begins to approach saturation, you will be notified by either CBP, your customs broker, or the surety company. Upon notification your company has fifteen days to increase the amount of the bond. If your company’s bond becomes saturated and rendered insufficient by CBP, your company will not be permitted to import goods into the United States until a new bond with a higher limit of liability is established.

The amount of the new bond is a management decision based on input from customs brokers, procurement staff, finance, and insurance carriers. Best to be proactive and check your bond sufficiency now.

The Square Root Rule

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Were you told there would be no math?


This technique is useful in determining the effect on total inventory levels when adding or reducing distribution centers.

The analysis assumes that total demand remains unchanged. The goal of this analysis is to approximate the aggregate inventory at multiple facilities by multiplying the square root of the number of facilities by the inventory previously stored at a single facility. X2= (X1) (Square root of n2/n1) where n1= number of existing facilities n2= number of future facilities where n2>n1 X1= total inventory in existing facilities X2= total inventory in future facilities

Example: A company distributes product to its customers in the southeastern US from a single facility in Atlanta, GA. It is considering opening a second facility in Nashville, TN to help serve the same market. Assume that average inventory levels at the Atlanta facility are 10,000 units. n1= 1 existing facility n2= 2 future facilities X1= 10,000 total units in the existing facility X2= total inventory in future facilities = (10,000) (Sq root of 2/1) = (10,000) (1.4142) = 14,142 units

Got Protocols?

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Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse, good customer service is essential. While information is almost always available at your fingertips, action requiring human intervention can be elusive. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. Developing a set of problem solving protocols for the most common issues in your supply chain will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing relevant operations contact info for the identified problem areas. Your account rep should welcome the opportunity as it will save them time as well. Update protocols as needed and make them part of your account review meetings. Finally, if your account rep says “Just call me” don’t accept this response.