Posted 8/16/2019

Taking the Customs Broker exam ?

In a recent post I gave an example of a tricky question which sometimes appears in the exam. Here is the question and the correct answer (D).

Importations of switchblade knives is permissible by 15 U.S.C 1244 if:

D. The entry will contain, among other documents, a declaration in duplicate stating that the switchblade knife has a blade not exceeding 3 inches in length and is possessed by and is being transported on the person of an individual who has only one arm.

The exam is difficult, with normal passing rates of around 11%. For my prep strategies click here:

Customs Broker Exam Prep

Mitch’s comment on LinkedIn

Pete Mento • 2ndManaging Director Global Customs and Duties, Crowe LLC1dThe decision to split Section hashtag#301Tariff List 4 so that a portion doesn’t go into effect until well after the holidays was a major concession and a possible significant misstep by the hashtag#WhiteHouse. S

Mitch Kostoulakos, LCB   

I’m not an economist but how about this? Declare victory and call off the trade war. With interest rates at historic lows borrow money and invest in badly needed infrastructure. Maybe avoid recession.

LSPs, especially motor carriers, make extensive use of “customer entertainment” to gain and retain market share. Lunches, dinners, and sporting events are a big part of the job for carrier representatives. Developing client relationships makes the time and expense worthwhile for the rep even when business is not actually discussed. Access to decision makers, information to be used in negotiations, opportunity to present logistics solutions, and benefit of the doubt when problems arise are the result of good relationships for the LSP.

For the client the benefits can include good faith negotiations, competitive pricing, industry intelligence, and faster problem solving . It is best, however, to manage the relationship. Keep it professional and not personal.

Business lunches can be productive for both parties. Clients should have an agenda with a few discussion points. Remember, as with any meeting, if you don’t have an agenda you are subject to someone else’s. Mention your agenda when scheduling lunch and you will have your rep’s attention. Consider having lunch brought in so you are on your turf.

Expensive dinners and sporting events are much less productive from a business perspective. Food and drink becomes the main event. Business discussions are limited especially if spouses are in attendance. The game takes precedence at sporting events. Big ticket entertainment turns the relationship from professional to personal. It is best to limit your exposure and partake sparingly if at all.

In summary manage your carrier relationships, Don’t let your providers “reward” you for your business. It makes it much more difficult to change providers or negotiate new deals.

Posted on LinkedIn:

A recent client project involved research and advice about Schedule B codes used in AES (Automated Export System) filings. Shippers often use Schedule B or Harmonized codes they have been given without understanding what the codes mean. 

 As I usually explain to clients, Schedule B is for export from the US and Harmonized codes are for imports. Both are based on the HTS system in which the first 6 digits are universal.

https://lnkd.in/eVc

Importing countries can ( and do) use their own last 4 or 6 digits.  So, since a US export is another country’s import, the Schedule B used for export may not match up exactly to the importing country’s harmonized code. 

As noted in a previous post, codes are updated annually so it is a good business practice to check and verify your data. If you need help contact mitch@52.91.45.227T

Posted on LinkedIn today

Here is a question from a recent Customs Broker exam. Take a guess. Non brokers please.

Importations of switchblade knives is permissible by 15 U.S.C 1244 if:

A. The importation is pursuant to a contract with a branch of the State Militia.

B. The importation is destined for a specific member or employee in a branch of the Armed Forces of the United States specifically for personal pleasure off-duty use.

C. The importation of the switchblade knives have a blade not exceeding 6 inches in length.

D. The entry will contain, among other documents, a declaration in duplicate stating that the switchblade knife has a blade not exceeding 3 inches in length and is possessed by and is being transported on the person of an individual who has only one arm.

E. The entry will contain, among other documents, a declaration in duplicate stating that the switchblade knife has a blade not exceeding 6 inches in length.

Chad Wegscheider on LinkedIn

Why are trucking companies failing? Why is it so hard finding a reliable carrier in today’s world?

Great question Chad and your points are valid. I don’t think loyalty is really a factor though. Trucking became a commodity starting with deregulation in the 1980s. Carriers compete on price and yet must provide better service as demanded by the market. Raising their rates risks losing market share. Labor costs are the biggest input so wages are kept down and there are very few unionized carriers remaining to negotiate. Advantage shippers. 

Logistics and baseball have some common features. We play every day, errors can have a big impact , managers get criticized, and there are plenty of rules and regulations. Like sabermetrics in baseball, we can measure logistics performance in many different ways.

Measuring and managing logistics performance is a full time job for logistics professionals and the volume of data can be daunting. Managers in other functions such as finance, marketing, or manufacturing may need a quick view of logistics data as it relates to their responsibilities.

Here are a few general measures for the dashboard:

Absolute Performance- monitor absolute logistics failures rather than averages. For example, 99.5% on time performance appears very good. However, in a high volume operation, it could mean hundreds or thousands of late orders per day.

Inventory Turnover- common measurement in asset mgt.

Order Fill Rate- customer service and warehouse productivity measurement. Can also use item, line, or value fill rate.

Warehouse Utilization %- indicator of good asset mgt.

Warehouse Productivity- measure of units received, stored, picked, packed, and shipped per hour.

Order Cycle – reduced order cycle means less inventory in the system and greater customer satisfaction. Longer order cycle means more inventory in the system and reduced customer satisfaction.

Lost Sales- inverse relationship with inventory. Higher inventory costs, lower risk of lost sales. Lower inventory costs, higher risk of lost sales.

Transportation costs- always a trade off….bulk shipments can reduce transportation costs but leads to higher inventory levels in system. Higher transportation costs due to mode shift (air vs. ground or air vs. ocean) can reduce inventory in system by shortening the order cycle.

Commodity value- higher dollar value means increased transportation, inventory, and packaging costs.

Density of product- High density (lbs/ cubic ft or kgs/ cubic meter) means lower transportation and inventory costs since the product takes up less space in containers or warehouse.

Loss and Damage- greater susceptibility to loss or damage means higher transportation rates and higher warehousing costs due to special handling.

Location Decision- Distance from sources or markets = relative advantage or disadvantage vs. competitors. This is an upper mgt responsibility.

Need help? contact mitch@52.91.45.227

ECCN, CCL, NLR, EAR99, AES, HTS, SchedB, and these are just the basics…

When the ECCN (Export Control Classification Number) comes up on export documents many shippers automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default entry. While these may be the correct entries, it is a good business practice to check and confirm.   Logistics providers can offer expertise in these areas but the exporter bears primary responsibility for compliance.

As part of any Export Management Program, exporters need to make sure they are using correct commodity classifications and license exceptions. Your commodities may be listed on the  CCL (Commerce Control List) in which case EAR 99 is not valid.  If you are automatically using NLR and EAR 99 you may be at risk.  According to EAR part 732 “For items subject to EAR but not listed in CCL the proper classification is EAR 99. EAR 99 is a basket for items not specified under CCL and appears at the end of each Category on the CCL.”

Licensing is a function of both the ECCN and country of ultimate destination. If you determine that your commodity is listed on the CCL the next step is checking license requirements. Here is some info from the BIS (Bureau of Industry and Security) website:

Country Guidance

The country of ultimate destination is a key factor in determining license requirements administered by the Bureau of Industry and Security (BIS) pursuant to the Export Administration Regulations (EAR). BIS maintains the Commerce Country Chart to use in conjunction with other portions of the EAR to determine whether a license is required.  Please review Part 732 of the EAR for additional information on how to use the EAR, including the Commerce Country Chart.

For immediate assistance with exports contact mitch@52.91.45.227 .

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As we discussed in a previous post, duty rates on imports are determined by harmonized code, valuation of the commodity, and country of origin. While trade agreements such as NAFTA have specific and complex rules of origin, the basic COO elements are:

Country in which the commodity is made, mined, grown, manufactured, or underwent substantial transformation. The 3 way test for substantial transformation is new name, new character, new use.

Need help? contact mitch@52.91.45.227

During our initial consultations clients often tell me that their shipping departments are responsible for screening exports for red flags and denied parties/unverified parties. This is a mistake for several reasons.

• Pressure to get shipments out the door can get in the way of due diligence
• Shipping personnel may lack training in export compliance
• Shippers most likely do not have authority to stop orders when they spot red flags
• Time and money wasted in processing orders all the way through to packing and shipping only to be stopped or cancelled
• In the event of a mistake there is no final check when the truck backs up to the dock

Export compliance, list screening, and checking for red flags should be a front end process and not a last minute shipping function. Let your shippers do what they do best by moving the freight but don’t expect them to be regulatory experts.

Need help? Contact mitch@52.91.45.227 for a no obligation initial consultation.