A recent client project consisted of reviewing a number of entries to check harmonized codes and duty rates. This, of course, led to examination of the commercial invoices. As everyone involved in international trade knows, the commercial invoice is one of the primary documents of the transaction. While there is no universal standard format for commercial invoices, including the following key elements will help reduce customs delays and entry mistakes:

Invoice Number, Page Numbers – Avoids confusion for entries with multiple CIs or CIs with multiple pages.

Country of Origin– Best to use ISO country codes.

Related/Not Related parties

Incoterms and currency- these are elements of the sales contract. Indicate version of Incoterms (2010, 2020) as all parties may not be aware of updates.

Harmonized tariff # and duty rate if known

Description of goods – avoid trade names, brand names. What is it? What is it made of? What is it used for?

Summary of Value- must include IV Invoice Value. Can also include NDC Non Dutiable Charge (subtractions), AMMV Add to Make Market Value (additions), NEV Net Entered Value (bottom line- dutiable)

For immediate assistance contact mitch@52.91.45.227

Best of luck to applicants taking the Customs Broker Exam on October 17th. For anyone thinking about applying for a future exam here is a question from the April 2019 exam. I will post the answer next week and also respond to anyone who submits their answers.

10. Die cut steel plier levers were bolted together in China before having rubberized non-slip grips attached to each lever handle in Germany prior to being imported into the United States. What is the proper country of origin and marking method?

A. Made in Beijing printed on a hangtag

B. Made in China printed on a sticker attached to the pliers

C. Made in China die stamped into the pliers

D. Assembled in Germany printed on a sticker attached to the pliers

E. The pliers are exempt from marking in accordance with the J list

In previous posts we have reported on the World Bank Logistics Performance Index and how the United States ranks compared to other nations.

Another view of world trade is presented by the World Bank in their report Trading Across Borders- Doing Business. In the most recent report the US ranked 36th in trading across borders. Here is a link to the report along with some introductory info.

https://www.doingbusiness.org/en/data/exploretopics/trading-across-borders

 Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. 

We have discussed negotiating with LSPs in previous posts. Here is a quick summary which can help guide engagements with providers. The key takeaway is value before price.

The motor carrier and air freight industries are extremely competitive, giving shippers an advantage in carrier selection and negotiations. A common mistake made by small and medium sized clients is failing to prepare before meeting with carrier representatives. Another mistake is focusing on price. A better strategy is to emphasize value in your discussions with LSPs. If you determine that they have the capabilities to provide quality services, then you can move the discussion to price. Consider: if simply asking for lower rates can result in transportation savings, how much better would the result be with a little preparation? Here are some suggestions from someone who has spent many years on the carrier side of the table.

Determine your specific transportation needs and goals ….for example

• Price- compare net rates (not % off because base rates differ), minimums
• Transit Times/Reliability- including pick up and delivery, terminal services, linehaul
• Inventory Costs- reduced transit time = reduced inventory costs… how transportation adds value
• Product Differentiation- faster, better service as a marketing tool
• Capability/Access- carrier has right equipment in right place at right time
• Security- carriers claim ratio and loss/damage experience
• Relationship- responsiveness and problem solving protocols

Analysis Prior to Negotiation

There is not much advantage to withholding your shipping profile from LSPs. Because the industry is so competitive you will get a better deal if transportation providers know what volume they are bidding on and any specific service requirements. If this information is not available to them they will hedge their bets and be less aggressive in their offers. Gather some data and present it. This will give you professional status in the eyes of your carriers. Here is some minimum information needed. Most of it can be found in bill of lading or invoice files.

• Volume/Frequency- # of shipments per day, week, or month
• Weight- average weight per shipment
• Dimensions- standard dimensions, if any… palletized or non palletized…pictures are helpful
• Heaviest Shipping lanes- domestic and international
• Services- priority or economy, express or deferred
• Density- pounds per cubic foot ( for motor carriers)
• Classification- NMFC item numbers (for motor carriers)
• Dimensional Weight or Dim Factor (for air freight forwarders)
• Packaging type- transportation only, display, labeling
• Freight Payment Terms- prepaid, collect, third party
• Control- Who has authority to sign an agreement? Who makes routing decisions?

Request for Proposal/Request for Quotation

A formal RFP or RFQ is an effective way to both reduce transportation costs and gain the value that you need from your carriers. Ad Hoc Logistics can prepare your RFP/ RFQ, get it to the appropriate transportation providers, and even negotiate on your behalf. Get started by contacting Ad Hoc Logistics.

Andrea Jones • 2ndMarketing Communications Professional // Writer // Strategic Planner1wI am becoming increasingly frustrated with what LinkedIn is becoming — an avenue for what I will lovingly call “junk mail.” Almost all of the connection invitations I’ve received over the past few months have been from salespeople looking to prospect. What started as a business relationship-builder has become a direct-marketing vehicle. Am I the only one frustrated by this? hashtag#linkedi

Mitch Kostoulakos,

Agree, although you never know when a connection will lead to an opportunity. I usually ignore random requests unless I have met or done business with the requester. I  pay more attention to a request if it has a note attached. When I send a connection request I always add a note indicating why I would like to add them to my professional contacts. 

The logistics industry is heavily dependent on data and technology. The most successful LSPs (Logistics Service Providers) are innovative in their efforts to improve service and productivity to the benefit of both clients and providers. The nuts and bolts of logistics also involves people, so basic front line management skills can improve operations.

Here is a proven method for the toolbox. The links of the performance chain can help with day to day management and problem solving.

Expectations– Are goals and deliverables crystal clear? Don’t assume. Feedback– Information which is specific, timely, and relevant. Not just an annual review. Resources– Time, tools, and staffing to do the job right. Skills/Knowledge– Is training needed? Managers often point to training as the solution to problems. However, if employees know how to do the job training may not be the answer to performance issues. Look to the other links of the chain. Capacity– Does the person have the physical and mental ability to do the job with training? If not, reassign or terminate, and screen new hires more carefully. Incentives– What rewards are most meaningful to the workforce? These include money, benefits, flex time, etc. and will vary for individuals. Incentives are external and provided by the company. Motivation– Internal and personal to each employee. Top performers are self motivated. For others the idea is to bring out their motivation through incentives, training, or simply clearer expectations and feedback.

New to management? The performance chain is a good starting place. Experienced manager? Old dogs can learn new tricks.

Thanks to Jack Zigon for refreshing my memory.

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