Here is a link to my post about managing 3PLs.
Category Archives: Nuts & Bolts
Customs Purgatory
I often hear from frustrated importers or exporters about shipments “stuck” in customs. The shipments may include critical parts needed for an equipment or plant shutdown, expensive high tech components not generally carried in inventory, or medical instruments for hospitals. Delayed orders also mean delayed payments, which gets everyone’s attention.
In many cases the delay is compounded by simple communication issues. Importer of record (IOR) contact info is often lacking on the commercial invoice. Customs in the importing country will not contact the exporter if they have questions or concerns. If they are unable to contact the IOR the shipment will go into storage. Make sure you include recipient name, address, phone number, and e mail address on your CI.
The CI is the most critical document for customs purposes. The data used in customs entries comes directly from the commercial invoice for the transaction. All countries have different, and sometimes obscure, customs regulations. It is true, however, that most delays are caused by a few commercial invoice errors or omissions.
Commodity descriptions should answer the questions: What is it? What is it made of? What is it used for? Use plain language which can be understood by anyone. Avoid trade names, brand names, or part numbers in the description. These can be added below the description or to the packing list if needed. If using a harmonized code it is best to enter only the first 6 digits, which are universal. All countries apply their own last 4 or more digits.
Contact mitch@adhoclogistics.com for immediate assistance.
Value for customs may appear to be too low for the commodity being shipped. The customs agencies in the destination country need to make sure that duty rates are accurate and will hold up the shipment if in doubt. Make sure that your commercial invoice reflects the correct transaction value.
Logistics and Finance
While logistics managers excel in orchestrating the flow of goods from Point A to Point B, they typically tread on less certain ground when it comes to financial matters. Logistics managers with operations backgrounds and responsibilities typically leave finance to the accountants. But this gap in financial acumen can be a hindrance in the ever-evolving world of supply chain management. Logistics managers with at least a basic understanding of the financial aspects of the supply chain will be better positioned to improve their business operations.
Read the full post
LinkedIn Comment- ITAR
David Noah President at InterMart,
Your exports may not appear to have a military application, but they could still be controlled by the International Traffic in Arms Regulations due to ITAR’s “see-through” rule. Here’s what you need to know
Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Int’l Logistics Consultant/Licensed Customs Broker
Order of Review is a best practice and often overlooked
World Bank LPI 2023
The World Bank has published their Logistics Performance Index for the first time since 2018.
The LPI ranks countries on critical dimensions of trade including customs performance, infrastructure quality, and timeliness of shipments. The data used in the rankings are derived from a survey of logistics professionals answering questions about foreign countries with which they trade. Respondents are asked to identify their line of business (freight forwarder, transport operator, export/import trader, customs broker), typical freight mode utilized, and country in which they are working.
The index benchmarks six areas of performance and gives nations a score of 1-5 for each category. The categories are: 1) Efficiency of customs clearance process; measuring speed, simplicity, and predictability of formalities 2) Quality of trade related infrastructure; focusing on ports, railroads, and information technology 3) Ease of arranging competitive pricing for shipments; ability to compare rates and services on-line 4) Competence and quality of logistics services; in-country customs brokers, transport operators, and freight forwarders 5) Ability to track and trace shipments; transparency and availability of real time information and 6) Timeliness of shipments in reaching destination within scheduled time of arrival; Hardly Ever, Rarely, Sometimes, Often, Nearly Always.
The Global Rankings show the US at 17th (tied with Republic of Korea), down from 14th in 2018.
See the rankings here: https://lpi.worldbank.org/international/global
Click here to see the methodology used in the Global Rankings: https://lpi.worldbank.org/sites/default/files/2023-04/Methodology_LPI_survey.pdf
Let’s break down the US performance in 2023 vs 2018 by category:
LPI Score; 3.8 down from 3.89
Efficiency of Customs; 3.7 down from 3.78
Infrastructure; 3.9 down from 4.05
Ease of Arranging Intl Shipments; 3.4 down from 3.51
Logistics Competence; 3.9 up from 3.87
Tracking and Tracing; 4.2 up from 4.09
Timeliness of shipments: 3.8 down from 4.08
While most of the scores have dropped slightly, the US’ overall ranking has dropped steadily. Here are the LPI average US rankings for previous years.
2023 tied for 17th.
2018 14th
2016 11th
2014 9th
2012 9th
Readers have commented that the size and complexity of the US economy makes comparisons with smaller countries difficult. This is a fair point. However, there is no question that the US has room for improvement in all six LPI dimensions.
Here are the top ten countries by LPI score for 2023:
| Singapore | |
| Finland | |
| Denmark | |
| Germany | |
| Netherlands | |
| Switzerland | |
| Austria | |
| Belgium | |
| Canada | |
| Hong Kong SAR, China |
The full LPI 2023 Report includes more detail and suggestions for policy makers. Read the report here: https://lpi.worldbank.org/sites/default/files/2023-04/LPI_2023_report.pdf
- For the bottom performers, the most important improvements are in customs clearance and infrastructure.
- Mid-level logistics performers are showing progress with more countries clustered at an average score of 3 to 4.
- Logistics services are showing resilience. Even with Covid induced disruptions overall scores in 2023 are broadly the same as in 2018.
The report identifies four performance groups:
- Logistics Friendly- Top performing countries, most of which are high income (25)
- Consistent Performers- Countries performing better than most in their income group (25)
- Partial Performers- Indicates logistics constraints often seen in low and middle-income countries (46)
- Poor Logistics Performers- these are the least developed nations (43)
While comparisons among nations with diverse economies and levels of development will always be difficult, the LPI can be used by individual countries to identify opportunities to improve.
CBLE ID Requirements
If you are scheduled to sit for the October 25, 2023 CBLE (Customs Broker License Exam) make sure to bring proper identification. Best of luck but I’m sure you are not relying on luck.
Here is a link with all the details:
Who’s Responsible?
Compliance is becoming more important for importers and exporters as CBP and BIS ramp up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.
One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), bears ultimate responsibility for compliance.
Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Compliance must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.
In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP (Export Compliance Program), compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.
All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.
So once again; “Who’s responsible?”
Contact mitch@adhoclogistics.com for immediate assistance.
CBLE Non-Disclosure
I don’t remember this requirement when I took the CBLE more than 20 years ago. Here is a reminder for candidates to maintain radio silence about the exam until after midnight. Best of luck
Passages Blog Post
Here is a link to my latest Passages blog post
https://www.shippingsolutions.com/blog/how-to-determine-value-for-u.s.-customs
LinkedIn Comment-Customs Brokers
Connor Helm Ocean Procurement Manager – Indian Subcontinent | Licensed Customs Broker
Hey Pete – under 30 licensed customs broker chiming in 👋. The high cost of the training courses are a huge barrier. Luckily my company sponsored me to take the test and paid for all expenses while also providing a raise in pay. That is how you incentivize young people to become LCBs. Alternatively schools like our alma maters should have a full credit elective that ends with you taking the exam. Each maritime academy has a business program full of students eager to separate themselves from traditional business students.
I also challenge the common saying that the brokers exam is harder to pass than the bar.. lawyers study for 3 years to take that test while many people sit for the brokers exam with little prep and less formal education.
Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Int’l Logistics Consultant/Licensed Customs Broker
Connor Helm Excellent point about the bar exam. I have no doubt that it is difficult even after 3 years of law school. Passing rates are reasonable though. Maybe a better comparison would be other license exams such as CPA.