All posts by mitch

South of the Border

From the archives….Good info from  a US Commercial Service webinar “How to Settle Disputes with Mexico Customs.” Exporters to Mexico often experience frustrating customs delays. More serious issues involve denial of entry, seizure of goods, or NAFTA violations. The webinar was very detailed so let me summarize my takeaways:

Mexican Importer of Record (IOR)

  • very rare for foreign company to be MX IOR
  • MX IOR is always liable for duties/taxes and compliance with non tariff barriers
  • MX brokers have significant liability, explaining their caution and due diligence which can become red tape and delays for the US exporter
  • MX IOR must have tax registration number and be listed on importer registry

Classification and Valuation

  • HTS code up to 6 digits same as other countries but subject to customs verification
  • MX uses 8 digit codes so last 2 digits are unique to MX
  • MX broker verifies or determines correct code and non tariff barriers
  • Valuation determines duty/tax according to MX law based on WTO rules (TV- Transaction Value, etc)
  • Non tariff barriers are regs not related to taxation such as trade agreements, anti dumping, etc
  • Binding rulings can be requested for classification, valuation or NAFTA rules of origin

When Are Goods Seized?

  • unauthorized port of entry used…mostly contraband
  • failure to comply with non tariff barriers
  • goods not declared on entry docs including errors
  • false name/address of IOR or false invoice
  • undervalued goods

Frequent Issues for MX Customs

  • Origin verification for US and CA companies claiming NAFTA preference
  • Failure of exporters  to respond to questionnaires from MX customs
  • Exporters address different from address on NAFTA cert
  • Exporters lack of knowledge about NAFTA rules of origin
  • Lack of original records

MX Customs Recommendations

  • Know your MX buyer and their customs broker
  • It is OK to contact MX customs for info…they will reply in English
  • Make sure NAFTA certificates of origin are accurate….many exporters simply guess
  • Keep original copies of documents….MX customs will only verify using original docs
  • Make sure to respond to questionnaires or requests from MX customs within 30 days
  • Communicate before goods are seized or litigation begins…best to use a MX attorney
  • Remember, prior notification to avoid liabilities does not exist in MX as it does in US

 

For help with exports contact mitch@52.91.45.227

Mitch’s Comments in International Trade Compliance Experts

Mitch Kostoulakos CTL,LCB

  • From LinkedIn post group discussion: International Trade Compliance Experts.

    Good tips, especially #3. I would add regularly scheduled contract/performance reviews for optimal results.

10 Tips for Outsourcing Logistics Services to a 3PL Provider

linkedin.comToday’s economy demands that a business be efficient in all manners of its operations. In order to compete with a rapidly growing market, a company must find ways to gain an edge over its competitors. Time and money must be spent to improve its…

Exporting to China

Ad Hoc Logistics recently assisted a New Hampshire manufacturer with a first-time export shipment to China. We advised the client the specific conditions requiring the importer of record to register with MOFCOM (Ministry of Commerce) and to obtain an import license.

For help with exports contact mitch@52.91.45.227

Classification Re-Visited

Export best practices includes checking and confirming commodity classifications at least annually. Here is some info from a previous post which may help:

  • Classification is subjective- tariff schedules do not necessarily keep up with technology
  • Customs definitions can differ from industry definitions
  • Different interpretations exist between countries and also between ports within the same country

 

The basic components of a best in class process are:

  1. Break down items from universe into groups
  2. Research- even if you think you know the correct classification    customsinfo.com is a good tool
  3. Identify necessary info needed for classification such as materials, dimensions, intended use, etc
  4. Documentation- needed to support your determination
  5. Automation- implementing a software classification tool will improve efficiency and productivity
  6. On-going maintenance and monitoring for changes in HTS binding rulings and in your products is essential

 

Supporting documentation includes

  • spec sheets, drawings, photos
  • info requests from engineers, scientists, chemists, etc
  • HTS chapter and section notes that apply to your product
  • explanatory notes
  • informed compliance publications
  • customs rulings that apply to your product
  • record keeping (5 years)

 

contact mitch@adhoclogisticsfor immediate assistance.

 

EAR 99 and ECCN Re-Visited

From the archives…Many exporters automatically enter EAR 99 on their shipping documents without really knowing what this designation means. EAR 99 is a basket category for items that are subject to the EAR (Export Administration Regulations) but not on the CCL (Commerce Control List).  The CCL lists “controlled” items which may require a license for export. The CCL is made up of a classification of items by ECCN (Export Control Classification Number).  So a basic export compliance step is to verify if your items are “controlled” needing an ECCN or if they can be shipped under EAR 99. If an ECCN is listed you then need to determine if a license is required by checking “Reasons for Control” and destination country lists. There are 3 ways to determine an ECCN: 1) Check with the manufacturer, producer, or developer. 2) Self classify using the CCL. 3) Official request to BIS (Bureau of Industry and Security) using the SNAP-R tool @ bis.gov   Contact mitch@52.91.45.227 for help in determining your ECCN.

So You Want To Start An Import/Export Business

At the end of the academic year this post from the archives is relevant…

In the years that I have taught Supply Chain courses, many students have expressed the desire to start their own importing or exporting business. In some cases they were motivated by an interest in a particular product they encountered on an international trip. Others wanted to turn a hobby into a business. In these early stages the nuts and bolts of international logistics are less important than the product, the markets, the financing, and realistic expectations on the part of the student. As an instructor I always want to provide guidance and assistance along with real world business facts. The attached Twenty Questions are a good way to start the process,

IS THIS BUSINESS FOR YOU

“Returns” or a Reverse Logistics Program?

From a previous post…

Reverse logistics programs are fast becoming a major requirement in 3PL and procurement contracts. Not long ago “returns” were considered a nuisance by manufacturers, retailers, and logistics providers. They were handled only as a courtesy to customers. Today, environmental legislation is forcing companies to take responsibility for waste. At the same time consumers expect clear and efficient returns programs when making purchases. The EU is leading the way on reverse logistics with strong legislation and policies. In the US reverse logistics is evolving as progressive companies realize the opportunities to enhance their public image, lower operating costs, and improve productivity. In other words reverse logistics is moving from an added cost “returns” program to a value add process. Here are some recovery options in reverse logistics*

  • Reuse– inspect, clean, and use again for identical or similar purpose, value add
  • Remanufacturing– dismantle and reassemble or use for parts, value add in remanufacturing w/improvements
  • Recycle– sorting process for scrap, no real value add but can recover some costs

While the above  is good business practice it is difficult to plan and execute from a logistics point of view. One reason for this is uncertainty in timing and quantity of returns. Product life cycle and rate of technological innovation play a big role in timing of returns.

Successful reverse logistics implementation involves both external and internal factors. External factors include legislation, customer demand, and incentive. Internal factors include environmental concerns, strategic cost/benefits, volume and quality of returns, resources utilized, and integration and coordination.

  • Customer demand– environmental responsibility is becoming a competitive necessity
  • Incentive– companies need to make returns worth it for end users
  • Environmental concerns– growing trend, not optional going forward
  • Strategic cost/benefit– can help increase sales and asset utilization but will increase costs. Benefit is mostly long run after initial investments in equipment, design, process, and labor.
  • Volume and quality– returns must be managed to avoid scrap as much as possible
  • Resources– use available resources and assets as much as possible
  • Integration and coordination– must use info systems to gain competencies in recovery so reverse logistics does not become a profit drain but a profit center
  • Performance measures– forward logistics measures are not adequate for return logistics. Need to develop different metrics for return logistics. Ex: time required for product recovery, % recyclable/reusable at end of product life, core return rate, % product weight or volume disposed in landfills

 

 

 

 

 

 

 

*Global Logistics and Supply Chain Mgt by Mangan, Lalwani, Butcher, and Javadpour, 2nd Ed, John Wiley & Sons, 2012

LSP’s Customer Service Re-Visited

In my SNHU class this week we discussed logistics KPI’s and customer service offered by logistics service providers. KPI’s are essential to the management of logistics providers as well as to their clients. Some customer service functions, however, are not as easy to measure. Clients of logistics providers include shippers, consignees, importers, and exporters. Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse company, you will need customer service assistance from time to time. Let’s differentiate:

Request for Information– shipment status, tracking and tracing, claims status, rate requests, invoice balance. This type of customer service is best obtained on line. Take the time to become familiar with your providers’ info systems so you don’t waste time on the phone or waiting for a call back. If your provider does not offer this type of info on line they are either inefficient or very small. To avoid frustration ask yourself if you just need information or action by your provider. Information is easier to get than action.

Action Needed- This level of customer service most likely requires human intervention. Examples include customs or regulatory delays, stopping or diverting shipments, credit issues, special pricing, or real emergencies. While no one likes calling an 800 number, it is a good idea to get your request into the provider’s system as soon as possible as a first step. The difficulty is in reaching the right contact and getting the action you need. If you use a 3PL you may be able to delegate the problem for their handling and have them provide timely updates. If you do not use a 3PL, then you need to manage the issue on your own. One mistake clients make is to rely on their  account rep for all customer service. Account reps are usually on the road and in meetings so this causes delays in action. Another mistake is to depend on the super efficient Mary, Debbie, Tom, or Bill in your provider’s office. Everyone takes vacations and sick days so don’t rely on one person for your customer service needs. A better way to get good customer service is to establish protocols with the help of your providers.

Protocols- Day to day logistics consists of planning, execution, and problem solving. Good planning is essential but not foolproof. 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. I suggest developing a set of problem solving protocols for the most common issues in your supply chain. This approach 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 resources. They should be willing and able to give you relevant operations contacts along with phone and e mail info for your identified problem areas. Your account rep may be surprised when you ask for help developing protocols but they should welcome the opportunity. This method can be a big time saver for them as well. Get commitment from your providers to respond to your requests in an agreed to amount of time. You can update the protocols as needed. Make protocols a part of your meetings with your account reps and you will get better customer service.

Finally, if your account rep says “Just call me”, don’t accept this response.

We help small and medium sized companies stay compliant with Customs and export regulations and manage logistics. Contact mitch@52.91.45.227

International Logistics Consulting; Licensed Customs Brokers