GLOBAL FORWARDING: BIGGEST, FASTEST SAVINGS FOR GLOBAL SUPPLY CHAINS

October 24th, 2019 C.H. Robinson Leave a comment

Increasingly complex omnichannel business models are resulting
in correspondingly complicated global supply chains. Maximizing
efficiencies for time and cost in moving freight around the world
is mission critical. This paper takes a high-level look at three
opportunities for optimization: cargo consolidation, cargo risk
management, and customs management.

The multichannel retail business model, along with increasing levels of global sourcing, have created staggering opportunities for importers and exporters around the world, whether huge multinationals or small companies shipping globally for the first time.

Global supply chains are becoming longer and more fragmented,
presenting significant new issues for logistics professionals. In one
survey, 104 global supply chain executives reported that visibility
(21.1%), fluctuating consumer demand (19.1%), and inventory
management (13.2%) were their biggest challenges (1).

Many factors add complexity to global supply chains, including longer lead times and lead-time variability and an increasing number of suppliers, partners, carriers, customers, countries, and logistics channels. Contrary to what you might think, global freight forwarding can offer relief for these concerns and when people, processes, and technology are leveraged, can even offer competitive advantages.

10 Approaches to Savings in the Global
Forwarding Supply Chain

EASY

1. Align shipping activities to leverage benefits of consolidation
services.

2. Minimize financial impact of cargo loss and damage by
purchasing marine cargo insurance.

3. Take advantage of transportation providers’ TMS to create
visibility and take control of the supply chain.

MODERATE

4. Develop strategies to match service modes with inventory
planning and sales forecasting.

5. Create a risk management strategy—identify and understand
risk types, probabilities, and potential costs.

6. Integrate with a single transportation provider’s TMS and
connect with suppliers and carriers globally.

DIFFICULT

7. Effectively use Incoterms® when negotiating with suppliers to
impact unit price, cash flow, inventory levels, and logistics costs.8. Actively engage with a customs professional to deploy best
practices in customs management.

9. Leverage transportation provider’s business intelligence
reporting and analytics to improve supply chain performance.

10. Utilize PO management to control the purchase order lifecycle;
go upstream to supplier order fulfillment logistics activities.

CARGO CONSOLIDATION

What it is
Few companies can fill an entire ocean or air container with their
own freight. Both ocean and air carriers require shippers to work
with freight consolidation services to accommodate small volume
shipping needs. These freight consolidators accept complementary
freight from multiple shippers, and consolidate freight all kinds
(FAK) containers for ocean shipping or unit load devices (ULD) for
air. This results in better freight rates and cargo security measures.

Why it’s important
One of the biggest areas for savings in a global supply chain is
taking advantage of space. Companies of any size can use freight
consolidation services, but it’s particularly useful if you have a lean
supply chain or operate in a just in time environment. Using logistics
efficiencies from freight forwarders, consolidators, and third party
logistics providers (3PLs), you can choose to move smaller quantities
of material more frequently. In doing so, you make a strategic
decision to spend more on consolidation shipping services and less
on inventory, storage, returns, and other costs.

Ocean versus air
Whether air or ocean consolidation is the right choice for you
depends on the required service level and transit time. Globally,
ocean is the less expensive transportation method. That cost
advantage must be carefully weighed against longer transit times, as
well as potential delays caused by adverse weather conditions, port
strikes, or other issues.

In addition, there are faster and slower ocean options. Some ocean
freight goes directly to the port of call. Other shipments can stop at
multiple ports of call, which is less expensive, but takes longer and
is more prone to unexpected disruption. Working with a reputable
freight forwarder can help reduce unexpected supply chain failures
and delays, and provide options if disruptions occur.

Air freight consolidation service is a faster, more expensive option
than ocean, but here, too, there are faster and slower options that
determine the cost. For example, if you don’t need direct service
(next flight out), choose a slower transit time at more favorable
pricing.

Best Practices for Cargo Consolidation

Choose a forwarder with:

-Sufficient freight volumes to effectively consolidate without delays and to aggressively negotiate rates with ocean and air carriers.

-Dedicated space allocations for capabilities when they are needed.

– Work in major markets with high flight capacity.

Generally, in any type of transportation, the more time there is between pickup and delivery, the less you pay. In air, for instance, use providers with gateways (vs. a hub and spoke approach)
to get cost-efficient options that meet your deadlines. Use consolidation schedules if you can for more savings.

CARGO RISK MANAGEMENT

What it is
Global shipments are exposed to risk from a wide range of human
and natural forces. Yet, global shipments are subject to a unique set
of international laws and/or treaties that limit the liability of carriers. Whether you import or export, you should understand the various types of risks that cargo could face and how you can help protect the value of the goods shipped globally.

Why it’s important
Even with proper packing, stowage, and securing of containers on
a container ship, severe weather and rough seas can cause rare but
catastrophic events like ship groundings, structural failures, even
collisions, any of which can result in loss of cargo. On average, the
World Shipping Council estimates that there were 1,582 containers
lost at sea per year between 2008 and 2016; 1,012 of these
containers (64 percent) were lost due to a catastrophic event.2 Theft, counterfeiting, hurricanes, floods, political unrest, labor disputes, documentation errors, or mechanical problems can also delay or ruin delivery of the most perfectly planned global shipment. Protecting the value of products while they are in transit across the globe can have a significant impact in protecting the bottom line.

Air and Ocean Carrier Liability

When events occur, companies are often dismayed to find that not
all risks or damages are covered by carrier liability.

Air carriers are not liable if damage was caused by:
-An inherent defect, quality, or vice of the cargo
-Defective or insufficient packing of the cargo
-An act of war or armed conflict
-An act of a public authority carried out in connection with the
entry, exit, or transit of the cargo

Even if an air carrier is held legally liable for damages, they pay the
value of the goods or 19 SDRs3 per kilogram, whichever is less.
If a ship experiences an extraordinary sacrifice or expenditure at sea,ship owners may declare general average. The concept of general average hearkens back to the days when a crew tossed cargo overboard to lighten the ship in a storm. During the emergency, there wasn’t time to figure out whose cargo should be jettisoned. After the fact, to avoid quarreling, merchants whose cargo landed safely would be called upon to contribute a share or percentage to the merchants whose goods were tossed overboard to avoid imminent peril. Today, general average declarations still mean that all the merchants with freight on the vessel are required to share in the cost of the expenditure before the goods are released.

General average is a growing risk and concern for many risk
managers and insurance experts. In recent times, there has been a
rise in the frequency and severity of extreme weather events that
have led many vessels to become grounded, causing container loss
and/or vessel damage. In addition, fires on container vessels are
more common now than in the past.

Today, when these events occur and general average is declared:

1. Ship owners have a lien on the ship’s cargo. At the time
the voyage is completed, the level of sacrificial losses will not
normally be known. Ship owners will usually call for security
from cargo interests, against which the assessed contributions
can be enforced. The amount of the claim is usually calculated
by average adjusters, appointed by ship owners. Each cargo
owner’s contribution is calculated on a percentage of the cargo
owner’s interest or commercial invoice value, ranging from
1 to 100 percent.

Ship owners have a lien on the cargo until each cargo owner’s
contribution or security is satisfied. Unless a shipment is secured
with all-risk marine cargo insurance, the cargo owner will be
required to post their contribution or security in cash before
their cargo will be released. As the frequency of general average
declarations has increased, so has the amount of the required
securities—from about 12% a year ago to about 50% today.

2. Ocean carriers are not automatically liable for loss or
damage to your cargo. The U.S. accepted the Hague Rules in
1936 through the passage of the Carriage of Goods by Sea Act
(COGSA). The rules expressly remove the ocean carrier’s liability
for loss or damage to cargo that arises from one of the 17 stated
liability exclusions. Legal liability claims are often met with
resistance by carriers.

Even if the ocean carrier is found liable at the end of a legal
process that can take months to settle, their limit of liability
under COGSA is $500 per package or customary shipping
unit, or the actual value of the goods, whichever is less. In other
words, the onus is on you to assess and minimize your
risk exposure.

Best Practices for Cargo Risk Management

-Buy the appropriate amount of marine cargo insurance for ocean or air shipments.

-Ensure the valuation clause for a given shipment defines the maximum amount an insurance company will pay for a loss. Most valuation clauses include the commercial invoice value and any prepaid charges associated with the shipment, such as freight, customs clearance, or duty. This clause can be modified to include other charges or profit margin—if requested and approved by underwriters.

-Choose an insurance intermediary with experience or specific training in international logistics and transportation insurance.

Calculating Costs to Determine Risk Exposure

The risk of lost cargo is real. Yet, without a crisis to motivate
action, most companies place risk management at the bottom of
the priority scale. The most common method used to protect the
value of goods from physical damage, theft, or other calamity is the
purchase of marine cargo insurance.

The first step you can take is to understand your risk exposure
by tying dollar values to varying types of risk. The challenge is
quantifying the potential cost. You can brainstorm to gather that
information, or can work with a logistics provider that has in-house
risk management professionals to help uncover potential liabilities
in the supply chain.

You can apply subjective probability to calculate possible losses. In
other words, you can estimate the chances of a risk event happening
and multiply it by the cost if it did happen (see below). Once the
dollar amount is calculated, the next step is to reduce the expected
loss by reducing the probability of the occurrence, or the cost of the
occurrence.

Armed with subjective probability estimates, you can effectively
buy the appropriate amount of insurance. While insurance is readily
available, it is your responsibility or the consignee’s to ensure the
coverage purchased best fits the unique exposure.

CUSTOMS MANAGEMENT

What it is
Most companies choose their customs broker for the long term.
That’s because the customs broker must truly understand your
company and products. They must also know how to navigate each
country’s compliance requirements with their own specific set of
customs rules, governmental regulations, VAT, duty rate calculations, and payment plans.

Why it’s important
Even simple trade-related mistakes, such as an incorrect spelling on
a declaration, can result in fines, penalties, or even cargo seizure.
Penalties for transgressions can be severe, depending on the
seriousness of the infraction.

For example, U.S. Customs and Border Protection (CBP) imposes
fines of up to $10,000 per entry for recordkeeping infractions.
Non-financial costs, such a shipment delays, the diversion of staff
resources to correct problems, and in rare instances, the loss of
trade privileges, can be detrimental to an importer’s business.
When you work with Trusted Advisor® experts in customs, you can
learn where the most common mistakes occur and implement best
practices to avoid them. In addition, CBP can conduct a customs
focused assessment—essentially, an audit—with any U.S. importer. A
customs expert can help your company prepare before, during, and
after a focused assessment to minimize risk exposure.

Compliance programs and options that are worth investigating
Not every compliance option will fit or resonate with every business.
Discuss specific issues with an attorney or Trusted Advisor® expert
in customs compliance and learn which elements might be the most
useful. Always seek out an expert opinion.

-Customs bond sufficiency. If you import into the U.S., you must
have a customs bond, generally 10% of the duties and taxes
you expect to pay to CBP for import transactions throughout
the year. CBP can shut down all imports if they discover you
have an insufficient customs bond. Since tariffs (and duties)
are increasing substantially, existing bonds may no longer
be sufficient. Bond insufficiency will lead to additional costs
and delays if not monitored or addressed in a timely manner.

Consider the increased duty amounts well before the bond
renewal period comes up. If the customs bond will need to be
significantly higher, the surety company may require additional
documentation—including financial statements and possibly
letters of credit—before they issue a new customs bond, all of
which will take time to get into place.

-Duty drawback programs. Duty drawback programs refund
99% of certain import duties, taxes, and fees for goods that are
subsequently exported; this supports both U.S. manufacturing
and foreign export sales. Before 2018, duties might only have
been in the 1% to 2% range, and since there is paperwork to file
to get the refund, many companies did not bother with it. Today,
those 1.2% duties have jumped up to 25% in some instances,
making duty drawback programs a potential game-changer for
your business. The downside: duties must be paid up front; your
company may wait for 1 to 2 years to receive the refund under
the current drawback environment, which can become a cash
flow issue for some companies.

-Foreign trade zones (FTZs). Foreign Trade Zones (FTZ) are
secure areas located in or near CBP ports of entry, and are under
CBP supervision. Unlike duty drawback programs, companies
don’t have to pay duties when goods enter an FTZ. Instead, FTZs
enable duty deferment; the duties are paid when the goods
enter CBP territory for domestic consumption. At that point, the
importer pays the duties at the rate of either the original foreign
materials or the finished product.

-Exclusion requests. If a company thinks their product should
be excluded from Section 232 and Section 301 tariffs, they can
request an exclusion. When filing an exclusion, make certain that
the classification used is the best classification for the product.
Also, work with a trade attorney; they can help you navigate
the law and apply it to a specific product so the exclusion isn’t
rejected on a technicality.

-Changing sourcing locations. It’s not always easy to change
suppliers, but some companies are looking at it in a new era of
tariffs. Yet, suppliers for some materials are only found in China,
and even if you locate a source in another country, there can be
issues. Can they supply at the necessary level? How long will it
take to test the new supplier against specifications? The more complicated the product, the more challenging a switch will be.
Also, keep in mind that if the cargo ships from Singapore but its
origin is China, U.S. tariffs may still apply.

-Incoterms®. Incoterms®, or International Commercial Terms,
are published by the International Chamber of Commerce.
They are the rules that define the responsibilities of sellers and
buyers for the delivery of goods under sales contracts, and
they establish where the transfer of risk takes place. However,
they vary from situation to situation. For example, if a container
being moved across the ocean from Shanghai to the United
States falls overboard, who is at risk? The Incoterms® tell the
story. If the U.S. buyer purchased the product FOB (free on
board), the importer took responsibility for the risk as soon as
the freight was loaded on the vessel in Shanghai. If the same
product was purchased DDP (delivered duty paid), the shipper
would be responsible until the product reached the purchaser’s
door in the United States. You can save money if you ensure
your purchasing team understands how Incoterms® rules will be
applied to freight.

Best practices in Customs Management

-Buyers are not transportation and compliance professionals who understand Incoterms®—they choose suppliers based on favorable pricing. You can establish internal structures or education to help buyers understand how Incoterms® impact risk management and pricing.

-Rely on a customs professional to leverage U.S. Customs data. They can combine a company’s unwieldy historical shipping data into usable trade reports to reveal whether an organization is taking proper advantage of free trade agreements around the world.

GLOBAL TECHNOLOGY CAN TIE IT ALL TOGETHER

As companies large and small continue to expand internationally,
they can no longer afford to single-handedly manage the countless
details and nuances of global freight forwarding. Shortened lead
times, the use of multiple transportation modes and carriers to
deliver product efficiently across continents, and an environment
fraught with risk requires both worldwide and regional management
of cargo flows.

Many companies rely on a transportation management system
(TMS), hoping to keep their fingers on the pulse of their global
supply chain providers. However, TMS products were developed
initially to track domestic or regional truck shipments and to
automate tedious, low-value processes performed by an enterprise’s
transportation staff. Today, few TMSs can enable global visibility to
every shipment, or can interconnect disparate systems on multiple
continents to provide the level of visibility to show where products
are at any given point in time.

A truly global supply chain network has a single TMS architecture
that spans all continents. Global visibility enables your organization
to clearly see the entire supply chain. Utilization reports for multiple
services and modes (air, ocean, rail, and road) on all continents
confers specific strategic advantages:

-Continuous improvement to supply chain logistics in real time

-Access to business intelligence, crossing all freight and spend.categories to strategically understand the impact of decisions

-Access to a centralized network of multiple providers–without
integrating individually with each provider

Work with a logistics provider that offers a full suite of services,
manages service performance, consistently communicates
performance metrics, and offers strategic optimization to gain
distinct advantages in the marketplace.

A case in point: purchase order management

-Purchase order management (POM) within a TMS delivers end to end visibility throughout the purchase order (PO) life cycle. POM enables you or your provider to manage shipment windows, work
with overseas vendors to coordinate bookings, manage exceptions,
collect and distribute documents, and provide reporting at the shipment and PO/line item level.

-POM options include PO tracking and visibility, reporting, online booking, document management, check and verification process, vendor self-service, vendor management, exception management,
and PO and shipment analytics.

5 Questions to Ask a Potential Global Freight Forwarder

IS YOUR TMS TRULY GLOBAL? There should be one system architecture that works across regions and covers all types of transportation.

CAN YOU PROVIDE CAPACITY OPTIONS?
They should ship goods by ocean, air, rail, and truck,
choosing the option that best aligns with the business
need. Ask about their consolidation programs to
optimize spend, routings, and transit time performance.

DO YOU HAVE “BOOTS ON THE GROUND” IN KEY
GEOGRAPHIC REGIONS?
Your global freight forwarder should think globally, act locally.
That is, they should know global transportation, but also
have deep knowledge of the local population, infrastructure,
languages, politics, economy, customs, currencies, tax laws,
and tariffs for each country your shipping routes touch.

CAN YOU HELP ASSESS CARGO RISK?
They must adequately help you assess and mitigate cargo
risk to help protect your bottom line.

DO YOU OFFER CUSTOMS ADVICE?
They should be experts in leveraging customs information
and programs to your company’s advantage.

_________________________________________________

1. “What is the biggest challenge you are facing in your supply
chain?” eft Supply Chain & Logistics Business Intelligence,
April 2018. Accessed at https://www.statista.com/
statistics/829634/biggest-challenges-supply-chain/.

2. “Containers Lost at Sea-2017 Update,” World Shipping
Council, 2017.

3. SDRs, or Special Drawing Rights, refers to a basket
of currencies designed to iron out currency exchange
fluctuations in International valuations, now used to express
the limitation under the Hague-Visby Rules and the MSA
Limitation Convention.

4. “Global Trade, Trade Statistics,” World Shipping Council,
2018. Accessed at http://www.worldshipping.org/about-theindustry/global-trade.

5. “Containers Lost at Sea-2017 Update,” World Shipping
Council, 2017.

6. Larry Kivett and Mark Pearson, “Understanding risk
management in the supply chain: Using supply chain data
analytics to drive performance,” Deloitte, 2018.

Archives, Global Logistics, Global Trade Daily

BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

July 28th, 2019 Christine McDaniel Leave a comment

This is the third in a three-part series by Christine McDaniel for TradeVistas on how blockchain technologies will play an increasing role in international trade.

What’s Even Better Than No Tariffs?

Smoother and faster customs procedures could boost global trade volumes and economic output even more than if governments were to eliminate the remaining tariffs throughout the world – up to six times according to an estimate by the World Bank.

Blockchain is a promising technology that, if widely adopted by shippers and customs agencies, could reduce the current mounds of paperwork and costs associated with import and export licenses, cargo and shipping documents, and customs declarations.

Below the Snazzy Surface of Trade Policy

Trade agreements work when the people who want to buy and sell across borders can use them. Engaging in international trade transactions requires diving into the rules and regulations of international customs processes. Businesses either have someone in-house to handle this or they hire companies whose business it is to manage these processes.

Moving goods through the customs process means preparing the relevant paperwork for import or export at each step in the process. The paperwork at each step must be confirmed and verified, sometimes separately by different people. These procedures — in rich and poor countries alike — can be complex, opaque and laden with inefficiencies that raise costs and cause delays at best. At worst, less automated processes can leave the door open to corruption and security breaches.

Trade policymakers have increasingly focused on simplifying and modernizing customs procedures — a policy approach commonly known as “trade facilitation.” Nearly all modern free trade agreements have a trade facilitation chapter and the World Trade Organization has an entire Trade Facilitation Agreement devoted to eliminating red tape at national borders to streamline the global movement of goods.

Too Much Paperwork

The international shipping industry carries 90 percent of the world’s trade in goods but is surprisingly dependent on paper documentation. In a New York Times article, Danish shipping company Maersk commented that tracking containers is straightforward. It’s the “mountains of paperwork that go with each container” that slow down the process.

A shipping container can spend significant time just waiting for someone to cross the t’s and dot the i’s on the paperwork. Delays pose real costs to traders and represent a deadweight loss of resources that could have been spent elsewhere in a more productive manner. The cost of handling documentation is so high that it can be even more expensive than the cost of transporting the actual shipping containers.

Beginning in 2014, Maersk began tracking specific goods such as avocados and cut flowers to determine the true weight of compliance costs and intermediation. The company discovered that a single container moving from Africa to Europe required nearly 200 communications and the verification and approval of more than 30 organizations involved in customs, tax and health-related matters. Maersk’s office in Kenya has storage rooms filled from floor to ceiling with paper records dating back to 2014.

Lost Opportunities

Inefficiencies in customs processes create chain reactions, extending the costs and inefficiencies throughout the transportation industry and all the way to the consumer. In just one example, as many as 1,500 trucks might be lined up on a given day on both sides of the critical border crossing between Bangladesh and India. Many trucks wait up to five days before crossing. Examples like this are not hard to find in developing countries.

Delays for perishable items are painfully costly for traders, but also for consumers. Economist Lan Liu and economist and horticultural scientist Chengyan Yue examinedlettuce and apple imports in 183 countries. They determined that reducing delays from two days to one would increase lettuce imports in those countries by around 35 percent, or an additional 504,714 tons of lettuce, increasing in world consumer welfare by $2.1 billion. The same improvement would increase apple imports by 15 percent, enabling shipment of an additional 731,937 tons and increasing consumer welfare by around $1.1 billion.

Complexity Makes Corruption Easier

Fraud constitutes a major threat to the customs process. Fraudulent behavior can involve the forgery of bills of lading and other export documentation such as certifications of origin. A fraudulent shipper could claim “lost” goods, underreport the cargo, and steal the difference. Or a shipper could misrepresent the amount or quality of shipped goods and pay less than the required amount for their imports.

Fraud can be perpetrated by a shipper, by the receiver of goods, a customs official, or an interloping third party. The greater the complexity of customs procedures and the more discretion granted to customs officials, the more likely corruption will be present at the border, creating both risk and costs for companies working to avoid corruption.

Indeed, corruption acts as a “hidden tariff” for companies and reduces legitimate customs revenue for governments. The World Customs Organization estimates the loss of revenue caused by customs-related corruption to be at least $2 billion.

Blockchain Makes Corruption Harder

Blockchain is a digital distributed ledger that is secure by design. Each transaction in the shipping process is uploaded to the chain if (and only if) it is agreed upon by the other users. It is nearly impossible to make a fraudulent claim or edit past transactions without the approval of the other users in the network.

Blockchain could discourage corruption by simplifying procedures and reducing the number of government offices and officials involved in each transaction. Each transaction can also be audited in real time, allowing users to see exactly when and where disputes arise and exactly what the discrepancies are.

This level of transparency enables participants in the network to hold each other accountable for mistakes or purposeful deception. Though blockchain does not prevent false information from being entered into the system, it does reduce opportunities for the original information to be corrupted by intermediaries involved in the shipping process. Rather than parties relying on the good faith of shippers and customs agents, blockchain greater assurance of the integrity of each transactional record.

Blockchain technology in customs and border-crossing procedures could also be used to prevent circumvention and transshipment—that is, when shippers send goods to a neighboring country before the destination country in an attempt to avoid tariffs on goods from the real country of origin. The importer ends up liable for duties and penalties. (For example, some exporters from China are now sending finished products through Vietnam to avoid new U.S. tariffs on goods from China.)

All In on Blockchain?

The use of blockchain in customs processing is still nascent. An advisory group for U.S. Customs and Border Protection is broadly exploring the role of emerging technologies like blockchain.

IBM and Maersk have partnered to demonstrate how blockchain can simplify shipping. Their plan would allow all parties involved in a container’s shipment to observe and track the container from inception to endpoint. For example, after a customs agent verifies the contents of a container, they can immediately upload information to the blockchain with a unique digital fingerprint that visible to all other users. The ease of access to information throughout the blockchain system reduces time-consuming correspondence among the parties.

For all this to work, customs agencies, shippers and suppliers will have to cooperate to integrate blockchain technology along the supply chain and across borders. By reducing time and cost, blockchain could be a boon to the majority of honest global shippers. By providing greater accuracy and transparency, blockchain would be a bust for dishonest brokers who manipulate the current inefficiencies in customs procedures to commit fraud or gain from corruption.

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

This article originally appeared on TradeVistas.org. Republished with permission.

Archives, Global Trade Daily, International Trade

Realign Your Trade Compliance Program with a Midyear Review

May 8th, 2019 Ben Bidwell Leave a comment

The complexities of importing and exporting goods in the United States means it’s easy to overlook process changes and forget to make updates in a timely manner. However, if not caught quickly, outdated information or imprecise processes can add unnecessary fees and penalties. If left to accrue over the course of a full year, these costs can be staggering.

That’s why I recommend a midyear customs review. If something is off base with your customs compliance program you can rapidly realign as needed. Use C.H. Robinson’s comprehensive checklist to guide your own midyear customs process review.

Midyear customs clearance checklist

1. Review customs broker powers of attorney

Revisit powers of attorney (POAs) and revoke any from U.S. customs brokers with whom you no longer wish to work. Remember, any POA you extend should have an expiration period, providing a natural time to review. If you aren’t sure of existing POAs, you can see all U.S. customs brokers transacting business on your behalf by requesting your Importer Trade Activity (ITRAC) data (see #11)

2. Update names and addresses on file with U.S. Customs

U.S. Customs and Border Protection (CBP) uses contact information from CBP Form 5106 to communicate with Importers of Record. If you have recently moved, or have not reviewed the information listed on CBP Form 5106 in a while, re-validate the information you have on file so you will receive all pertinent and time-sensitive correspondences the CBP sends.

3. Ensure bond amount is sufficient

If your import activity has changed, or you anticipate a large increase in activity during the remaining half of the year, your bond may need updating. CBP can determine your bond is insufficient and may require you to increase your bond amount. A midyear review and update is a proactive move.

4. Consider changing listing multiple principals on the same bond

Having multiple entities on one bond can bring cost savings. But be sure to decide if the risks are worth the reward. When sharing a bond, each entity shares liability if CBP issues a demand against the bond. In addition, if any entities terminate the bond, this can disrupt the other entities within the bond.

5. Check customs broker instructions

Review and document any customs broker instructions you send to U.S. customs brokers regularly—from Harmonized Tariff Schedule (HTS) classification rules and related party verification instructions to anti-dumping/countervailing duty instructions—to ensure your customs broker declares entities to the CBP according to your wishes.

6. Request updated certificates of origin

Be proactive with foreign suppliers and obtain updated annual blanket certificates of origin (COO) for any program in which you’d like to claim preference. And provide any updated COOs to your U.S. customs broker. Not obtaining COOs in a timely fashion may lead to unnecessary annual duty costs.

7. Update free trade agreement instructions

Revise any instructions pertaining to free trade agreements (FTAs) so your U.S. customs broker has proper direction about how you would like to file entries that may be eligible for FTAs.

8. Obtain your manufacturer’s affidavits

If you utilize a U.S. goods return program, found under Heading 9801, be sure you have obtained your manufacturer’s affidavits for the rest of the year. Share these affidavits with your U.S. customs broker and record them within any customs broker instructions.

9. Review anti-dumping/countervailing duties products

The CBP can investigate any potential anti-dumping/countervailing duties (AD/CVD) evasion allegations. Accurate case numbers, rates, etc. are critical for reporting upon entry. Even if you are disclaiming AD/CVD, document your product details internally, explaining why your product does not fall within the scope of the order.

10. Provide reconciliation flagging instructions to U.S. customs broker

If you are a reconciliation participant, approved by CBP, flagging of entries is the responsibility of the importer. Now is the time to send your U.S. customs broker written direction with any flagging instructions you would like established or changed.

11. Request import activity records from CBP

ITRAC provides a wealth of information you can use to create or improve your import compliance program. Likely, you’ll need tools, like C.H. Robinson’s Global Trade Reports®, to transform the raw ITRAC data into user-friendly dashboards and reports.

12. Sign up for the ACE Portal

The ACE Secure Data Portal is a powerful way to manage trade compliance programs. This powerful tool enables you to receive paperless notifications from CBP, monitor your brokers, audit entries in real time, and much more.

13. Request export activity data

Similar to ITRAC data for import activity, request your Electronic Export Information (EEI) from the Census Bureau, Foreign Trade Division. If you are the filer in the Automated Export System (AES) using the ACE Export Portal, you can review your EEI on a regular basis.

14. Check U.S. Import HTS Classification and Export Classification

Review and communicate any updates to your HTS Classification Database and your Export Schedule B Number to proper stakeholders—both internally and externally.

15. Reduce liability with marine cargo insurance

Steamship lines and air cargo providers have limited legal and financial responsibility for international cargo. Marine cargo insurance plans can reduce your company’s financial exposure and bring new efficiencies.

16. Protect trademark and trade names

Make sure the CBP has any and all of your trademarks and trade names protected and recorded. This allows CBP to help you combat potential counterfeit products or infringement.

17. Request manifest confidential treatment

You can request confidential treatment of inward and outward manifest information. However, note that there are mandatory biannual renewal requirements. In addition, account for all possible variations of names within your request.

18. Review your denied party screening program

Look at which parties you are screening, and how often. This can ensure your program is appropriate for your current business model and bring potential risks to your attention.

19. Perform internal and external training

Regularly schedule time to ensure adequate training is happening with appropriate stakeholders. This keeps all parties, especially new employees, up to date with changes.

20. Address priority trade issues

Be sure that your compliance program addresses each one of the CBP’s initiatives to mitigate the risks of priority trade issues.

Smooth customs clearance doesn’t just happen

Careful planning and regular reviews of your customs processes are critical components to a strong trade compliance program.

If a midyear review seems unfeasible or this list seems daunting to conduct all at once, consider bringing in an outside expert like C.H. Robinson to guide you through the process. The most important part is to ensure you review, update, and communicate any changes to these areas of your compliance program on a consistent basis.