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Understanding Customs Bonds

customs bonds

Understanding Customs Bonds

When you’re constantly plagued by bureaucracy and inventory management in the world of shipping, there’s one moment that makes it all worth it: importing the goods. However, that process has one extra step before it’s finalized — obtaining a customs bond. But what does this actually entail? Why must you even have a customs bond? And which one should you get? Don’t worry — we’ll help you with understanding customs bonds right here!

Bonds, Customs Bonds

First of all, we should note that all information found here is valid for the ocean ports and other import points in the United States. The notion of a customs bond originated here. To define it in the simplest possible terms, a customs bond is something like an insurance policy during the import process. But not for you — for the government of the United States. It’s a guarantee that all import taxes and duties will be paid. In the professional world of shipping between leading ports, this is simply called a “bond”.

But why must importers have one in the first place? To paraphrase Benjamin Franklin’s famous quote, the only two things that are sure in the world of importing and exporting are taxes and duties. If you have a customs bond, the government has a solid guarantee that it will receive its taxes and duties; even in a force majeure event that leaves your logistics company helpless to pay.

In other words, if an import company goes bankrupt, this bond will cover the air and/or ocean shipments in terms of duties and taxes. This is something that you’ll simply be required to have if you want to import anything into the United States; it’s all within the price of doing business. And bear in mind that these bonds expire as well, so don’t expect to hold onto the same one forever.

Bond Requirements

So, when do you need a customs bond? Mainly, when you’re trying to import goods for commercial purposes with an estimated value of more than $2,500. Apart from this, there may be other requirements for particular goods posed by different agencies of the United States government.

As an example — if you’re importing food items, you will be required to obtain a customs bond regardless of the amount or value of the items. You will also need to comply with other FDA regulations.

When it comes to the different types of bonds that you can have as an importer, there are two primary ones. There are continuous bonds and single-entry bonds. Their names are pretty self-explanatory — the latter only covers a single import shipment, while the former is valid for multiple shipments in a certain time period. Usually, we’re talking about twelve months.

So, which one should you get? This largely depends on the nature of your business. If you’re someone who only imports goods on a rare occasion, like a couple of times a year, you may not need anything more than a single-entry bond.

Obviously, a continuous bond represents a far better option if you’re going to be shipping regularly. And this type of bond has another benefit; when you’re completing the Importer Security Filing information, you won’t have to buy additional bonds. This is data that you need to submit in advance before you load any goods on a ship in a country of origin that’s headed for the United States. Having this information allows the CBP enough time to judge if your cargo poses any security or safety risks.

Bond Expenses

Now that we’ve explained the nature of customs bonds, the question that must be on your minds is — how much do they actually cost? Well, you need to look at customs bonds like any other kind of insurance policy. In the sense that, when you purchase a bond, it’s valid for a specific level of coverage. And naturally, the cost of continuous and single-entry bonds differs.

Single-entry ones can be quite tricky. The minimum amount that you’ll pay for the bond can’t be lower than the estimated monetary worth of the goods plus the taxes that you’d have to pay for their import.

And if these goods have to comply with other agency regulations as well, the initial value is raised to three times their estimated value; that would be the case with the above-mentioned food items, for instance.

When it comes to continuous bonds, the situation is far simpler. The minimal amount is $50,000 — alternatively, it can be ten percent of all the fees and taxes for imports that you’ve paid during the previous fiscal year. That means that the expenses for the bonds can vary, but they’re still far more cost-effective if you’re someone who regularly ships things between ports.

And finally — how do you actually obtain a bond in practice? The easiest method is going through a freight forwarder or a customs broker, that will deal with all of the assorted paperwork. On the other hand, if you’re going to do so yourself — the Treasury Department issues licenses to sureties that will sell you a bond.

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Samwell Stein is a freelance author and logistics advisor. He frequently cooperates with professional shipping and moving companies like Transparent International and advises them on the best industry practices.

shipping process

How to Improve Your Company’s Shipping Process

Having international shipping capabilities has practically become a must for any serious online store. At the very least, you need to have a solid shipping service within your country if your company is going to grow and properly sell your product. So, it stands to reason that having an overall efficient shipping service is something you really ought to invest in. Luckily, we are here to give you a couple of ideas on how to improve your company’s shipping process.

Why is it important to have an efficient shipping process

The shipping process is, in essence, delivering goods from point A to point B. So, why should you spend your time and money on improving this basic service? Well, to put it simply, it is because people have grown to expect efficient shipping. Now, you can opt for outsourcing your shipping, but this is often the more expensive, less efficient way. With a bit of research and investment, you can organize your own e-commerce shipping process, and therefore have the necessary freedom to improve it.

Ways to improve your company’s shipping process

There are literally thousands of different ways to improve your company’s shipping process. Depending on where your shipping services are at now, you can be looking at smaller improvements like boosting your navigation process, to larger ones like implementing a major overhaul of your logistics equipment. So, before you decide on any of these upgrades, we suggest that you take a closer look at your company. More often then not, there is at least one improvement that will give you huge value for your investment. So, plan long and hard before you implement anything.

Streamline shipping orders

A surprising number of shipping issues have nothing to do with bad navigation or poor equipment. Most of them are due to poor internal communication and bad optimization of the beginning of the shipping process. So, if there is one place we suggest you start, it’s at the beginning. Try to pick up on the little details that make the shipping process needlessly long. These details may look insignificant on their own, but once they pile up and combine, they can easily take up a lot of time and energy. Go through the whole process both as a shipping coordinator and a customer. If you don’t have much experience with shipping, you can always hire a professional to go over your process and give you tips on how to improve.

Improve communication

In order to have an efficient shipping service, you need to have a top-notch communication system within your company. This means that your workers need to be able to communicate with each other whenever, wherever. If this is not the case currently, make it so. There are a ton of mobile apps that can make communication easier. Among the ones we can recommend are:

-Slack

-Chanty

-Troop Messenger

-Brosix

Be sure to try out a couple and to read reviews before you opt for one. To make communication more efficient, you can even look into digitalizing your shipping process as much as possible. Recent events with COVID-19 have certainly incentivized shipping companies to adopt digital shipping solutions.

Use tracking technology

One of the ways to both improve your company’s shipping process and keep your customers happy is to utilize tracking technology. Being able to have a live feed of where your shipments are will make the whole process much easier to handle. And, if you can give that info to your customers, you will effectively make them happier. In fact, most customers have grown to expect shipment tracking. This is why, sooner or later, you will probably have to implement it within your shipping process.

Be aware of courier services

When it comes to international shipping, you can rarely afford to work on your own. More often than not, you will have to coordinate with other shipping companies and courier services in order to ship efficiently. So, our advice is to prepare for your international shipments and look for local courier companies in advance. While you may have an easy time finding a shipping company in the U.S., finding one in Europe or Asia can prove to be a time-consuming process. Especially if you have to overcome the language barrier in order to set up a shipping agreement. So, do yourself a favor and prepare the groundwork for different areas before you start shipping internationally.

Prepare for customs clearance

Another way to make international shipping more efficient is to prepare for customs clearance. Keep in mind that your shipments will spend a lot of time at customs, especially if you don’t have the necessary paperwork and you don’t follow the strict guidelines. So, before you ship off your goods, ensure that the person in charge of them has everything necessary for smooth customs clearance.

Keep your customers informed

The final way in which you can better your shipping process is to always keep your customers informed. Issues and hiccups do happen, even with the most efficient shipping companies. So, while you should do all that is possible to improve your company’s shipping process, don’t expect to have a full-proof system. If and when a delay does happen, you shouldn’t shy away from informing your customers. In the long run, this act will ensure that you have better reviews.

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Jonas Myers has worked as a professional shipping coordinator for over 20 years. During that time he helped companies like U. Santini Moving and Storage improve their shipping capabilities and increase their travel efficiency. He now focuses on raising his daughters, woodworking, and on writing helpful articles about shipping.

shipping services

Guide to Freight Shipping Services

Freight shipping has become an integral part of most companies’ customer service. Americans have become accustomed to having a wide choice of products available at any time and having those products delivered to their address, no matter where they live. Some of the major industries that require freight shipping to send goods to customers and other businesses include e-commerce stores, pharmaceutical companies, medical clinics and hospitals, manufacturing and industrial support, etc. If the process of freight shipping is still new to you and you want to learn more about it, here’s a brief guide to freight shipping services that will help you gain a deeper understanding of how freight shipping works.

First of all, what are freight shipping services?

Freight (often synonymous with cargo) are goods transported in bulk by land, sea or air. Freight shipping services are a part of the process of transporting goods from point A to point B by land, air or sea. Freight services can be customized depending on the type of cargo in question and the shipper’s needs. These goods are usually packed in boxes, crates and containers and transported by different means of transportation. Freight rates are mostly based on the distance, the size of the shipment, and the method of shipping.

Crates and pallets are used for stability, protection, and easy loading when shipping goods by truck, and if the goods are perishable, the truck must be refrigerated. When shipped by sea, goods are usually transported in shipping containers. When shipping goods by air, special air freight pallets are used. There is also additional protection against extreme temperatures, humidity, pressure, and vibrations up to 500 Hz.

Is there a difference between freight and parcel shipping?

Many people confuse freight shipping and parcel delivery. The main difference between the two is weight. Parcels are individual shipments that are much lighter compared to standard freight pallets. They are handled by common US carriers like the USPS, UPS, and FedEx. Shippers can take a parcel to a local drop-off point and have it shipped in a box or envelope. A package that exceeds the maximum parcel weight is classified and shipped as freight. Parcel shipping is usually done via a small truck or van, while larger packages categorized as freight require larger vehicles.

Modes of freight transportation

Shippers can choose between different freight services. Each shipment can be customized to meet the shipper’s specific needs. Factors such as the shipper’s budget, the nature of goods that are being shipped, and the speed of delivery can determine which freight shipping service is the best fit.

Ground freight shipping services

Less Than Truckload (LTL)

Sometimes, a single truck is large enough to fit several loads of shipment. Less Than Truckload is your best option if you don’t need to use the whole truck. Since one load of shipment only occupies a portion of a trailer, more than one customer can be served at a time. LTL shipping has several benefits. It is not only cost-efficient but also eco-friendly, as it helps reduce the carbon footprint on Earth.

Full Truck Load (FTL)

If the goods you are shipping require a whole truck, FTL is a valid option. Full truckload is a convenient choice when a company is shipping enough goods to fill a truck or it needs a dedicated vehicle for a partial load. The standard size of each load ranges between 10,000 and 45,000 lbs. FTLs use dry van, flatbeds, and refrigerated trailers.

Rail shipping

Freight shipping by rail is the most affordable mode of transportation for large and heavy goods. Automobiles, stone, grain, coal, ethanol, and petroleum are some of the goods commonly transported by rail. One of its biggest drawbacks is that the arrival destination is connected to the railway. Additional modes of transportation may be necessary to have your goods delivered which may involve additional costs. Still, if you can cut costs and your customers don’t mind waiting a little longer, rail shipping is the way to go.

Ocean freight shipping services

If we compare airfreight and sea freight, air freight is generally preferred for international shipping, but that doesn’t mean sea freight has no perks. The downside is that ocean freight takes weeks while air freight takes days for the same distance.

There are two types of ocean freight – Share a Container and Full Container.

Share a Container (LCL)

Similar to Less Than Truckload, sharing a container helps you save money by splitting the cost of shipping with another company. You are not paying for a whole container, plus, you can more easily restock and manage seasonal inventory in different shipments.

Full Container (FCL)

If you need to use a whole container, Full container shipping allows just that. You are paying for the entire container, whether you fill it up or not. If you opt for FCL, there is no standby time for filling out the container and there is no risk of damage caused by someone else’s cargo. Therefore, you can expect a quicker and safer delivery.

Air freight shipping services

Air freight is widely used all over the world. This is a safe, quick, and reliable way to ship your products. Smaller shipments belong to a service called express freight. They are handled by one central company (DHL, UPS, or FedEx). The second category is international air freight. This service is used to transport larger goods that require larger planes and one trip can involve multiple companies. If you need to ship products urgently, have in mind that air freight is much faster than the other freight shipping services. Moreover, products transported by air are less likely to suffer any damage. Although more expensive than other modes of transport, air freight is the best choice for high-value and urgent-delivery goods.

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Hillary Jones is a freelance writer born and raised in San Francisco. She currently lives in Los Angeles and writes for losangelestransfer.com. Over the past few years, she has collaborated with several moving and storage companies writing helpful how-to blogs and promoting their services. Her main hobby and second source of income is making handmade jewelry.

The World Moving Forward

At the beginning of 2020, the world was upended with changes to its economics and social life by the arrival of COVID-19 – a virus that spread to countries like wild-fire that most were unprepared for. Fear and confusion led the way. Just like the early 2000s during the early stages of e-commerce, many of us stood still and watched certain industries use e-commerce to generate business and eat away at the expense of more traditional companies.

COVID-19 drastically changed the directions of normal activities. Social meetings, shopping habits, and business settings have now been reduced to online platforms. People are now forced to understand the role that internet technology will play in daily life.  Larger numbers of people working and shopping from home than ever before. There is so much difference in activities such as buying hot food or buying canned food from an online store. As a result, two key industries are expected to be extremely important aspects in supporting future daily life for many years to come: express last-mile delivery and logistics supply chain.

Express last-mile delivery has really been an important industry that we all have come to rely greatly upon lately. They deliver our hot-food order and all of our anticipated goods, sometimes even arriving at our front doors in less than an hour while the logistics business is taking a back doors approach in supplying a necessity to increase the productivity of many industries. Many independent logistics companies also help move a country’s raw materials, semi-finished goods, and finished goods into the domestic and international markets. This industry plays a key role in increasing the competitive power of corporations and revitalizing improvements in a country’s economics scales. However, competition in the logistics industry is extremely high. For it to survive and provide better services, companies should seek to consolidate and migrate their data into a cloud computing platform service.

With the adaptations into a cloud logistics platform, the traditional logistics roles can begin to expand, minimizing office and operating expenses, and reducing business risks. Imagine the number of logistics companies who have committed blocks of space to transporters but end up being unable to fulfill 12-24 hours before departure or a shipper who is looking to move shipments on a weekend due to a critical shortage in one of their key customers.

There are high penalty prices to be absorbed by all parties when shipment capacity is unable to be fulfilled due to a lack of communication and coordination among the companies. These unnecessary risks and wastes of business opportunities can be minimized if the information was cleverly integrated-communicated-distributed to its partners in a cloud logistics platform.

New trade and logistics solutions running through a cloud platform have begun with 4 billion smartphone global users. The notion for a business to have only one dedicated trade or logistics partner serving them for many years will need to be re-adjusted in order to provide transparency and better monitoring systems. People and business communities are now demanding convenience in purchasing items from their comfortable homes rather than calling to place an order. We are surrounded by technological inventions all around, created for the benefit of people, to improve our life by increasing productivity and efficiency. With 5G not too far away at a connection 100 times speedier than 4G, our social and business lives will be impacted even furthermore.

Almost all businesses will eventually need to operate on a cloud technology platform to make operations and decision making much more efficient. When trade and logistics are blended into a cloud technology platform, magical moments will definitely happen, with industries moving together with the same interest, we are seeing new ways of getting the job done.

supply chain

In the New Normal Supply Chain, Firms Must Pivot Quickly

What will our supply chains look like after the impact of the pandemic has turned from an all-hands-on-deck crisis to some sort of new normal? Will either demand or supply patterns return to pre-COVID-19 levels? And should that happen, will it be in carefully managed phases, or more rapidly?

Many consumer-market experts speculate that we may find some of the changes in consumer buying—such as increased adoption of food home delivery or stocking cupboards with monthly visits to large-format stores—habit-forming, even after restaurants, hotels and fast-food outlets are once again operating at max capacity.

To imagine the future, we can look at what’s happening in the present crisis—astonishing, even heroic acts of supply chain flexibility.

-An industrial gases company pivoted so it was able to deliver a month’s worth of desperately needed medical oxygen in three days.

-A chain of currently shuttered department stores has loaned its distribution facilities and assets to a supermarket chain under pressure to keep food shelves full, as far more of us than usual eat three meals a day at home.

-A plastics molding company designed, developed and distributed a foldable, portable intubation shield within weeks.

These businesses have something in common—they have been able to use data and industry-specific software solutions to quickly adapt to shifting fulfilment and delivery operations, often over and over.

The need for flexibility in making and distributing goods is and will be, most obviously on show at the delivery end, where goods and services reach the point of purchase or consumption. Today’s newly responsive, efficient supply chain needs to stretch all the way to the supermarket shelf or patient’s bedside.

That won’t be possible without the ability to access and analyze extraordinarily detailed data about delivery operations. For distribution companies, this will be the key to competing and winning in a post-COVID-19 business landscape, where the ability to pivot quickly will be most prized.

What’s absolutely crucial is that companies can quickly model multiple potential new distribution strategies before they make actual changes. When granular-level information about what was delivered where and when yesterday is fed into delivery-planning software, it can help supply chain executives run myriad what-if scenarios to determine what resources to deploy tomorrow. What inventory, trucks and drivers would be required if sales volume dropped 50 percent, or doubled? What if orders are fulfilled out of a different distribution center?

Purpose-built route planning software like Aptean’s answers these and other questions in a matter of minutes—a superpower we are all going to need in the future. For example, it means a retailer can pivot quickly and easily, back and forth between replenishing outlets and delivering to homes, or rapidly increase service to demand hotspots. Regarding the “new normal” in delivery operations, the only certainty will be uncertainty. The ability to deftly manage this unpredictability will be a huge competitive advantage.

And yet, for a large number of businesses, delivery operations remain hampered by a lack of visibility or fine-tuned control. Too many rely on rudimentary distribution planning tools, or even paper-based systems to plan and assess their delivery operations. This means they are caught flat-footed when circumstances demand rapid change. Worse, the critical information about particular customer needs and demands too often resides in the head or heads of delivery planning staff, and becomes unavailable when those workers go sick or leave.

We need to pay heed to the lessons we’re learning during this challenge. The supply chain, like the virus, is global, but its effects are ultimately felt in individual businesses and homes. For companies reliant on delivery operations, if management of the final mile wasn’t a strategic imperative before COVID-19, it is now. It’s time to wake up to that reality and build delivery capabilities that are more flexible, more collaborative and, above all, data-smart.

To learn more about how to automate your route planning, contact info@aptean.com.

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Nicole O’Rourke has 25 years of success in building strategic marketing organizations and is responsible for leading Aptean’s global marketing and communications efforts as Chief Marketing Officer. She previously held the position of Senior Vice President and CMO for Manhattan Associates. Before that, she served as CMO at Covance Inc., and in senior strategic marketing roles at Aetna and Johnson & Johnson. O’Rourke holds a Master of Business Administration from Northwestern University’s J.L. Kellogg Graduate School of Management and a Bachelor of Arts in English Literature from Cornell University. She resides in Atlanta, Georgia, near Aptean’s global headquarters. Nicole can be contacted directly on LinkedIn or via info@aptean.com.

shipments

Best Ways to Keep Track of Your Freight Shipments

When shipments are late, so much becomes inconvenienced. Production stops, work gets backed up, further shipments are delayed. Then, the phone calls arrive with customers wanting to know the status. If you have ever had to ask “Where is my freight?” then, it’s time to learn about the best ways to keep track of it.

Fortunately, there are plenty of options that are helpful for tracking freight from the moment it leaves the original location all the way to the final destination. Many of them are under your control. If you follow best practices and meet the needs of shipping company regulations, you shouldn’t have to worry too much about where your freight is, as it should arrive on time.

Tip #1: Accuracy Matters with Time and Cost

When you ship freight, the accuracy of the information improves your shipping speed. Your shipments need to have accurate measurements of length, width, height, and weight. If you have fractions, they should be rounded up.

When your measurements are inaccurate, the shipping company has to make adjustments which can be costly in both time and money. Shipping companies do not set their own freight weight regulations; the Department of Transportation does. Companies have to comply with the DOT rules. If you give the shipping company inaccurate dimensions, they have to make adjustments that could cause your shipment to be delayed.

Tip #2: Package Properly for Pallets

Another reason your items could be delayed is another one that is under your control. When you ship freight, you should expect that it will sit on a typical 40” x 48” pallet. Your best bet for timely shipping is to package your freight to fit on a standard pallet. If you cannot do that, then you should take time to talk to your freight company for the best advice. If the freight company has to take care of poorly packaged items, they are slowed.

Tip #3: Learn About AEI Tags

Shipping companies of all types rely on Automatic Equipment Identification (AEI) tags. These passive tags help shipping companies see where their rail cars and semi-trucks are when they are in transit. With various types of AEI readers, real-time information about the location of the freight cars and the items they are carrying can be shared with shipping companies and their customers. AEI tags can help you not only see where your freight is in real-time, but they can also provide you with alerts when the shipment is expected to be delayed.

Tip #4: Use a Transportation Management System

Freight or transportation management systems help you keep track of what you are shipping, where it is, and when it arrived. They are designed to create helpful reports in real-time, and they can help you manage all of your freight to optimize your business. Some systems can be connected with AEI readers to create timelines for arrivals and to show what is happening when shipments are delayed.

Tip #5: Put Your Smartphone to Use

Along with a transportation management system, mobile apps can help you track your freight. Businesses rely on apps that provide GPS tracking and confirmation. Delivery logs are helpful, too. Some freight companies offer their own branded, specific apps to follow shipments. Some apps even get down to fuel efficiency and how to save money that way. When you are able to see all the data regarding your freight and shipping, you will be able to save more money in the long run.

Tip #6: Know Where Your Freight is Going

Sometimes, when things go too well, it can be too good to be true. Imagine the freight that is packaged perfectly and arrives on time to the destination without any hitches along the way. But, once the freight arrives, no one is there to meet it and assist in unpacking. Then, there’s no loading dock. It is just as important to know where your freight is going, so there aren’t any unexpected delays at the arrival end.

Tip #7: Watch the Road Conditions

There are times and places where road conditions become impossible to maneuver. When the weather is bad or traffic is at a stand-still, freight companies cannot do anything about it. But, when they use apps or tracking software, you can find out where your freight is and realize the problem.

If you require shipments to arrive on time and weather could affect your production, then you should do what you can to plan your shipments in advance. For example, it can be tough to trust the road conditions in the northern United States in the middle of January. So, planning for delays should be part of your production design.

global

How to Take Your Business Global

Companies around the world have increased their comfort level and ability to participate in international trade. Thanks to significant improvements in communication technology, infrastructure, and more numerous and adept service providers to support companies engaging in global business, the opportunity for U.S. companies to expand beyond our borders has never been better.

If you are considering taking your business global, the infographic below, Are You Ready for International Business Expansion? is a superb reference. It presents a concise overview of how to get started and the pitfalls to look out for when marketing products and services in other countries and cultures. The infographic is sufficiently broad to help businesses pursuing anything from straight exporting to local-market manufacturing, and yet it zeroes in on all the key issues to consider.

Preparation and planning make all the difference in any new enterprise, but for international business expansion, danger lurks in unexpected places. For instance, even sophisticated, Fortune 100 companies have gotten tripped up by using product names that appeal to U.S. customers — but repel customers in the foreign markets they were aiming at.* Language and cultural differences from one country to another, or even one region within a country to another, can create unintended consequences for every aspect of your sales, branding, marketing, operations and financial management.

Despite the challenges, companies can get plenty of help to overcome the hurdles and create new revenue streams from customers in faraway places. On the customer service side, companies have overcome language barriers by partnering with customer support organizations with multilingual skills — much more cost-effective and far faster than trying to build a multilingual internal team from scratch. Along similar lines, U.S. companies wishing to export can work with any number of experienced export firms with the knowledge to navigate the confusing and complex issues of local trade regulations.

Given the complexity of global operations, along with the increased costs and risks, it’s natural to ask, is going global worth it? Many organizations have correctly concluded that it is. Establishing positions in foreign markets enables companies to establish new and potentially vast revenue streams. It allows a company to shift focus from slowing markets to growing markets and maintain dynamic growth, rather than being anchored to the fate of a single national market. It enlarges the company’s talent pool, facilitates new product development, and establishes a competitive advantage over companies doing business locally or nationally. To learn more about what it takes to go global, continue reading below.

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Author Bio: Anita Lee is Marketing and Sales Director for Callnovo, an outsourced contact center service provider specializing in customer services and technical support. She has five years of experience in the industry, and focuses on e-commerce customer service and call center operation. 

*Source: https://www.inc.com/geoffrey-james/the-20-worst-brand-translations-of-all-time.html

delivery

Is your Ecommerce Caught Between Delivery Delays and Voided Service Guarantees? Strategies to Survive this Situation.

The pandemic has disrupted ecommerce businesses in unique ways. While a few ecommerce stores went bust, others doubled their revenue overnight. Regardless the parcel volumes continue to soar. The parcel volumes are so high that even major shipping carriers like FedEx and UPS are overwhelmed. For example, FedEx alone saw a 35%-40% increase in B2C deliveries. An unprecedented rise in shipments has forced both the carriers to resort to undertaking stringent actions.

Carriers Suspend Service Guarantees

FedEx and UPS have suspended money-back guarantee for ground and priority services. Let’s take a minute to understand what this means for merchants. An escalation in order volumes directly impacts the carrier’s on-time delivery performance. It is almost a given that merchants will experience a minimum of 20% increase in delays. An explosion in sales, impatient customers, and shoddy delivery experience. Add to it, COVID uncertainty and unaccountability resulting from voided service guarantees. Sounds like a disaster in the making?

When delays are imminent

With the growing volume of residential deliveries clogging their network, carriers may redirect traffic to relieve congestion. Suspension of guarantees also means that FedEx or UPS can switch your priority shipments to lower-cost ground mode without notice. Expect more delays for overnight and priority shipments. While you pay for a premium service there is no way you can hold carriers accountable.

Watch out for COVID-19 Surcharges

In order to mitigate the strain on their delivery network, UPS followed by FedEx has come up with peak volume surcharges. A $30 surcharge as additional handling charges and $0.40 for services like FedEx SmartPost or UPS surepost. But the surcharge that retailers must be most concerned about is the residential area surcharge. A surcharge of $0.30 will be levied on all orders that are to be delivered to residences.

Strategies to survive

The disastrous combination of delivery delays and rising shipping costs can ruin your sales revenue. It is crucial to take steps to mitigate the impact of COVID on your shipping costs as well as customer experience.

Here are a few strategies to follow:

1. Re-negotiate your shipping contract: UPS or FedEx can’t spring a surprise charge. Especially during these trying times. Work through your shipping profile to figure out the impact of these charges on your costs. Negotiate with your FedEx or UPS rep and draw up a special contract for the COVID situation.

2. Consider charging for order delivery: Free and fast delivery has been your brand’s USP. However, if including a shipping fee helps your business stay afloat, don’t shy away. Don’t let the additional surcharge eat into your profit margin.

3. Delays should not deter you: Factor in for delays while revisiting the estimated date of shipments on your shipping page.  Communicate well in advance to your customer support team. Mention the changes to delivery times due to COVID On your home page.

4. Over-communicate with your customers: Let your customers know at all times where their package is. Stay on top of your orders at all times. Act quickly in case of a delivery exception.

5. Audit your invoices: Businesses are slashing all the excess spending. As for ecommerce, you should start by auditing your shipping invoice. It is more critical than ever to examine each and every line item on your invoice. This can help you save 10%-12% of your shipping costs.

The peak volume surcharges and service guarantee suspension are supposedly temporary. When things go back to normal, FedEx and UPS are likely to reinstate these service guarantees. However, with no clear timeline in businesses must prepare to navigate the status-quo as long as it lasts.

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Simon Perkins is a Shipping Cost Management expert at AuditShipment.com, a real-time parcel monitoring and AI-powered audit service that provides businesses with deep shipping intelligence and actionable cost recovery insights.

tariff exclusions

What Your Business Needs to Know and Do About Tariff Exclusions

As COVID-19 continues to wreak havoc on the world economy, it’s prudent to find ways to keep your shipping business afloat by finding economic relief if and whenever possible. First off, being aware of the changing complexities of the China-U.S. trade war is essential. According to the Census Bureau’s Foreign Trade Statistics, China is one of our country’s largest trading partners, which means companies large and small are likely affected by the trade situation. Last year, the U.S. imported $452 billion from China, which made up about 14% of overall U.S. imports by value.

Section 301 of the Trade Act of 1974 allows the U.S. to impose trade sanctions as recourse for unfair foreign trade practices. In 2017, China was under investigation for issues regarding innovation practices, intellectual property rights, and technology transfer. Since then, retaliation measures have been put in place for the past couple of years and remain in effect for an indefinite amount of time. While the USTR recently announced reductions on some tariff measures and a suspension of others, about two-thirds of U.S. imports from China are still taxed an additional 7.5% to 25%, covering about $350 billion worth of product. Keep in mind, the average duty rate for U.S. imports is only 2%; thus, China’s products are incurring additional costs on top of that.

The current tariffs are extremely broad and cover many industries including food/beverage, industrial supplies, transport equipment, consumption goods, and fuels and lubricants. As of this month, the U.S. Customs and Border Protection (CBP) reports collecting $52 billion in Section 301 duties since the trade remedies took effect.

This is a hot issue for importers and we’re currently seeing more industry associations and companies pushing for relief from these measures. While the period to request exclusions from the Section 301 tariffs is now closed, it is a great time to confirm that you are doing all you can to potentially recover duties previously paid, and potentially apply on a go-forward basis the exclusions that the USTR has been granting against certain products.

How to seek relief now and in the future

Cost savings and refunds are top of mind for all, so to help provide some relief, the USTR has released many tariff exclusions shippers can apply for. The important thing to keep in mind here is that ample work is involved. It’s not just a one-time process, because you’ll likely need to continuously apply for new exemptions where applicable. Some of the exclusions being granted are product-specific whereas some are granted at the HTS classification. You’ll also want to be ready in case CBP asks for proof of eligibility. Staying organized is paramount to identify the opportunities and defend against CBP scrutiny.

Each exclusion round also has a validity period, and many of those expiration dates are coming up fast! We’re seeing the USTR opening several new short-window comment periods to consider extending previously granted tariff exclusions. This could be your chance to drop commentary to protect and extend your granted exclusions or to oppose competitors, if applicable and necessary so that your company is not left at a disadvantage.

What are the eligibility requirements?

Eligibility is simple – companies affected by the China 301 tariffs.

Exclusions can be granted based on sourcing, impact on U.S. jobs and product type and need. Producers of goods used to combat COVID-19 can also be eligible for exclusions.

Also, tariff exclusions are retroactive to the date the tariffs were first applied, and exclusions generally expire after one year from the date of publication of the granted exclusion.

Important Reminder for Process

The customs entry and liquidation process is complicated, spanning a lengthy period. It can take up to 480 days and is broken down into these windows of time:

1. Day 1: Customs entry is filed

2. Day 1 – 300: Post Summary Correction (PSC) – can be filed to request refund prior to the entry liquidating

3. Day 300: PSC no longer eligible as entry is deemed liquidated (importer may request suspension or extension of liquidation prior to this point).

4. Day 301 – 480: Entry is liquidated, and protest must be filed to request a refund

5. Day 480+: Entry may be past protest period and is no longer eligible for a refund request via PSC or protest.

Since the process is lengthy, make sure you consider these tips when conducting your duty recovery analysis:

-Know your product (10-digit HTS codes and know the barcodes toward the products)

-Apply their qualifications

-Narrow down lists of products impacted by tariffs

-Identify which ones have exclusions granted – work with that list

-Run a report and gather import activity

-Start looking at validity dates

-Make sure brokers are applying it to the new shipments of the products

-File petitions if you want to continue to take advantage of it

Insights for the future

The trade war is not ending soon and it’s hard to unravel, but we know it’s an important issue that we can expect to see in the spotlight for the foreseeable future. Customers are advised to stay close to this and to pay attention to the advisories from C.H. Robinson and USTR.

To check for exclusion status against your products click the resources here:

1. $34 Billion Trade Action (List 1),

2.  $16 Billion Trade Action (List 2),

3. $200 Billion Trade Action (List 3)

4. $300 Billion Trade Action (List 4)

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shippers'

Shippers’ New 2020 Priorities

While cities and states are slowly reopening, there is still significant uncertainty surrounding the global economy and when we’ll head towards recovery. Shippers are experiencing never-before-seen challenges and, in maneuvering them, realize it’s vital to understand the change in consumer behavior and how it impacts the supply chain.

A recent Consumer Brands’ Association Coronavirus Survey found 68% of Americans are optimistic about the next 6 months and the United States’ ability to reopen the economy. Despite consumer mentality improving, shippers’ concerns on COVID-19’s impact on the supply chain remain top of mind.

While some industries experienced a surge in demand, including healthcare, grocery and consumer packaged goods (CPG), this hasn’t been the case across the board. Some faced a reduction or, in some cases, a complete halt in business. These new challenges and concerns have led shippers to shift their strategies and develop new priorities for the rest of 2020 and beyond.

Shippers’ Top Priorities

As reported in the recent Q2 2020 Coyote Curve Market Forecast, the truckload market has likely already hit the bottom in Q2 at a -9% spot rate, and contract and spot rates should more or less converge from here. Due to the circumstances, the rate environment will most likely be more forgiving than usual, but it will definitely be volatile; and, with rates regularly fluctuating, shippers must keep their key priorities top of mind.

First and foremost, shippers’ top priority is keeping their people safe during this unprecedented time. They’re also focusing on keeping team members productive despite disruption, making necessary strategic shifts in production, managing rapid and frequent shifts in demand, and maintaining operational efficiency.

The priorities for those experiencing an influx of demand are quite different from those seeing a decrease. Shippers in surging markets are focused on supporting frontline employees by ensuring their facilities have necessary crucial safety items like personal protective equipment (PPE), testing kits, and sanitization products.

The industries experiencing a downturn, such as durable goods, have been focused on keeping their businesses operating and their people productive. They’ve had to prioritize repurposing available capacity to streamline operations, while others have turned to private fleets to haul less-than-truckload or full truckload shipments. To support COVID-19 relief efforts, some industries even shifted their production lines completely, like automotive manufacturers producing ventilators or clothing manufacturers making masks and scrubs.

Other shipper priorities include managing increased production output, despite lower processing rates. These lower rates come from new facility regulations mandating safety procedures, social distancing, and fewer employees per shift, resulting in less efficiency. Shippers are also dealing with a less frequent transportation schedule and imbalanced inventory, adding to the struggle of keeping supply chains running smoothly.

A new 2020 for shippers

Regardless of the industry a shipper operates within, the outlook for the remainder of 2020 is much different than originally planned. The entire supply chain realizes the importance of developing new strategies to adhere to the current situation and prepare for future disruptions.

Shipping processes will inevitably change to improve supply chain visibility and automation and update future inventory and warehousing procedures. These new plans and strategies focus less on short-term, cost-based decisions, and more on proactivity, flexibility, and efficiency.

Shippers have rewritten their 2020 plans to address these new priorities. While some tactics have higher initial costs, investing now will allow shippers to better recover from future disruptions. Other new strategies include:

-Collaborating with other shippers to garner insights and best practices

-Creating pop-up fleets at surging origin points

-Focusing productions on the lines making the most, the fastest

-Working with 3PL providers that offer flexible, instant capacity to haul freight

-Moving live-load pick-ups and deliveries into temporary drop trailers

-Reducing number of SKUs to eliminate unnecessary variety

What comes next

 Some shippers have found it easy to identify ways to better prepare their businesses for future disruption and have established new processes to do so. However, this doesn’t mean they have avoided uncertainty altogether. Shippers are asking themselves three key questions:

-How do I keep my employees healthy and safe?

-How do I keep my facilities up and running efficiently?

-How do I limit disruption to my supply chain?

Since COVID-19, shippers immediately made shifts to maneuver the unthinkable. Unfortunately, there is no clear answer as to when or how shippers will see less market volatility, and they may even see more complexities in the meantime. This brings additional geographic and industry disparities.

As the economy moves towards recovery, we anticipate a surge in demand and a corresponding increase in volume. Industries, especially those whose shippers slowed down, will have lean inventories and, when demand rises, need to increase production. While shippers’ results may differ from their original 2020 goals, we believe a recovery in consumer demand will be here soon.

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Nick Shroeger is the Chief Network Solutions Officer at Coyote, a leading global third-party logistics provider headquartered in Chicago. Since joining the Coyote team in July 2009, Nick has been a key leader in identifying challenges of the supply chain industry and developing and scaling solutions. In his current role, Nick leads Coyote’s research and innovation efforts for both shipper and carrier solutions as well as network connectivity with Coyote’s parent company, UPS.