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Crowdsourcing, Drones and Why I’ll Never Buy a Bugatti

crowdsourcing

Crowdsourcing, Drones and Why I’ll Never Buy a Bugatti

Amazon has taught me I don’t have to wait for my next two-pack of ravioli cutter stamps, so if you can’t get them to me in under two hours, I know someone else who can. It’s 2019, and customers want what they want, when they want it. According to a recent report, the global last-mile market is now expected to hit $55.2 billion by 2025, up from $30.2 billion today – and it’s no wonder. Amazon’s deep investments in delivery continue to fuel a surge in e-commerce; meanwhile, customer expectations and the entire supply chain have been completely upended.

The good news is that the more retailers invest in delivery, the more their e-commerce revenue grows. For businesses who’ve made supply chain a top priority, it’s huge validation.

So where does that leave us in the race to the doorstep? Companies are throwing cash at everything, from drones to self-driving robots to crowdsourcing. Who’s got the best chance of success? How can each one lower costs, increase speed and mitigate risks? Can they disrupt the industry without being, well… disruptive?

Drones: The droids you’re looking for?

Drones entered the mainstream about five years ago as a cool photography gadget. Thanks to falling prices, they’re a hot item on every kid’s Christmas list this year, but they’ve also generated a lot of buzz about their potential applications for logistics.

In rural areas, drones have huge promise for parcel delivery. They’re already supplementing human workers in large warehouses – flying to far-flung corners to pick goods on high-up shelves. And they’re working out in the freight yard, too, helping to track and manage trucks, trailers and containers.

Companies like UPS, Amazon, Google and even Dominos are experimenting with drones in the last mile. One popular model uses a carrier van on the highway as a hub for an armada of drones that fly out of the back to deliver small parcels to nearby homes. It’s an impressive, futuristic version of hub and spoke. Can it work? At what cost?

Just like commercial aviation and the automobile, drones have major hurdles to navigate, especially when we think about how they’ll work at scale. We’ll need major regulatory oversight to address safety, noise and privacy concerns. We’ll need to build control towers, write better algorithms, improve GPS, and figure out what to do about the weather. But these challenges will likely all be worked out, given enough in time and investment.

Autonomous vehicles and robots: Bots with brains.

What about autonomous cars and robots? Are they more viable in the near term?

McKinsey predicts autonomous vehicles could slash last-mile delivery costs in urban areas by as much as 40 percent. And companies from FedEx to Bosch have made bets on sidewalk delivery bots, deploying prototypes in San Francisco office parks, where they’re tightly controlled.  Long-term, the potential is clear, and companies with the deep pockets to make early bets could save a lot of money in the long run.

Both autonomous cars and bots cost thousands of dollars per unit to manufacture, though, and depend heavily on human supervision and maintenance. When it comes to flexibility and scalability, is a sidewalk droid really that different from a truck? Both are rigid, asset-heavy systems that require a big capex investment upfront with even higher maintenance and upgrade costs over time.

Think of it this way: earlier this year, actor and comedian Tracy Morgan from Saturday Night Live and 30 Rock bought himself a sweet new supercar: a Bugatti. He forked out a cool $2 million for it. But later that day, he was sideswiped by a driver in a Honda CR-V. It was just a minor fender-bender, but it turns out fixing a scratch on a Bugatti costs more than the entire value of the car that hit him – somewhere to the tune of $32,000.

The truth is, even if I had the cash to buy a Bugatti, I could never afford to maintain it. Will a fleet of delivery droids be the same?

Whether it’s drones or robots or some other yet-to-emerge autonomous technology, asset-heavy logistics strategies will always suffer from the same Achilles heel: whether it’s changing wiper blades or switching from lithium batteries to solar – hardware is expensive. And if a new hardware solution can’t solve for the demands of flexibility in the last mile, there will still be a need for something that can.

This doesn’t even take into account all the regulatory hurdles, infrastructure dependencies and real-world obstacles from bikes to baby strollers, pranksters to potholes, larcenists to labor unions.

But what folks aren’t talking about, and what I find most interesting, is the inherent limitations that come with any fixed-asset system.

Drones and robots may well be efficient, and hopefully one day safer. But what happens when a last-minute order comes in and the customer needs delivery now? How do you adjust a pre-planned droid route at the last minute – when the droid has already left the store?

Crowdsourcing: Using an infrastructure that’s already there.

Robots may well be our future, but how do we solve the delivery challenges we have today? That’s where crowdsourcing comes in.

Crowdsourcing lets retailers leverage existing resources already on the road to make delivery faster, more efficient and more flexible. While others are making big bets on drones, our Roadie drivers are delivering gigantic garden gnomes. We’re delivering temperature-controlled medicine that won’t be ready for pickup until 9 p.m. We’re working with Walmart to save busy parents a trip to buy groceries. We’re returning your lost luggage from the airport, and bringing you the ladder you bought online at The Home Depot this morning.

Some of the biggest brands in retail are investing in crowdsourcing. Today, we’re partnering with SMBs and Fortune 100 retailers to deliver everything from makeup to mattresses, paint to puppy food. Businesses across virtually every industry are solving today’s delivery challenges with an asset-light strategy that allows them to experiment and learn. They’re addressing delivery demand today, without making new capital investments or locking themselves into a futures bet with complex hardware systems. And most importantly, they’re not disrupting their existing supply chain in a way that can’t be undone without a huge cost if and when the autonomous tech winners begin to emerge over the next decade or two.

And that’s really the point. Retailers need optionality. Customers want to personalize their delivery for each and every purchase at the point of sale. A great customer experience means having a delivery solution for every customer delivery problem, whether you’re scheduling a sofa delivery on Sunday or sending a rescue inhaler right now. Making that work in the real world means having an arsenal of tools in your delivery toolkit.

We’re solving the problems retailers are having today, at scale – not iterating on solutions that may work at a required scale years in the future. Crowdsourcing is a sustainable solution that ensures we’ll all be around to see what delivery looks like in the future.

______________________________________________________________

Don Pancho_University for Peace Visit

Marc Gorlin is the Founder and CEO of Roadie, a crowdsourced delivery service that works with consumers, small businesses and national companies across virtually every industry to provide a faster, cheaper, more scalable solution for scheduled, same-day and urgent delivery. With over 150,000 verified drivers, Roadie covers 89% of U.S. households — the largest local same-day delivery footprint in the nation.

trade

Trade and the Impact on Imports and Exports in 2020

Significant and sustained increases in the world trade index (an index measuring the number of times the word uncertainty or its variants are mentioned in Economist Intelligence Unit (EIU) reports at a country level) should be a worry for many as “the increase in trade uncertainty observed in the first quarter could be enough to reduce global growth by up to 0.75 percentage points in 2019”[1]

In August, the US Institute for supply management[2] latest report shows a contraction in production, purchasing, and employment indices.

Ahir, H, N Bloom, and D Furceri (2019), “The global economy hit by higher uncertainty”, VoxEU.org. https://voxeu.org/article/trade-uncertainty-rising-and-can-harm-global-economy

 

Uncertainty generated from Brexit, the US-China trade war, Japan – South Korea trade wars, and general discontentment with global trend towards widening income inequality is creating a toxic mix for politicians to deal with. The irony is the conventional approach of blaming your trading partners for your problems is only likely to exacerbate a general lack of confidence and increase further uncertainty.

The current round of the G7 summit in Biarritz concluded with support “to overhaul the WTO to improve effectiveness with regard to intellectual property protection, to settle disputes more swiftly and to eliminate unfair trade practices.” In essence, it’s signaling a need to strengthen the capabilities of the WTO to act faster and more decisively in resolving disputes that are even more political than structural in nature, requiring a more multi-faceted engagement approach. Whilst this may help in the long-run, in reality, companies will have to contend with uncertainty in global trade for some time to come as well as the impacts on the real economy from these disputes.

And all of this is happening as IMO 2020 approaches, the January 1, 2020, date by which the International Maritime Organization mandates a switch to lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions leading to significant cost increases in the shipping goods via ocean freight (initial estimates between 180USD – 420 USD per TEU dependent on routing, base fuel costs, carrier).

So given the significant uncertainty around global trade agreements, the increasing use of trade as a political football, the increasing costs to trade and the shortening of product lifecycles as customers want faster, newer more differentiated offerings. Is it still worth it?

Of course this is very much dependent on what industry you are in. Whether you’re a global manufacturer or a wholesaler sourcing goods, your perspectives may be different based on investments made, sensitivity to current trade/tariff measures, customer demands, your markets, and the degree to which you are exposed to political debate and targeting.

However, I would offer that the benefits of specialization, economies of scale and unique factors of production that have underpinned global trade still exist as Adam Smith put it in 1776:

“By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?”[1]

Today this simple analogy still holds true in skills, competences, capabilities, and access to markets and insights so that over time the expectation is that trade will prevail.

While the recent outlook has been gloomy, opportunities for 2020 include a resolution to a number of ongoing disputes and a final settlement on Brexit (we hope). Additionally, the maturation in technologies such as blockchain, process automation, forecasting and demand management solutions can also offset costs associated with IMO and support greater agility in the uncertain supply-chain world that we currently live in.

Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative year in our ability to execute global trade.

Partnering with an experienced supply chain leader will be essential to minimizing cost increases while ensuring the efficient flow of your company’s goods and services.

_____________________________________________________

[1] World Economic Forum:https://www.weforum.org/agenda/2019/07/how-trade-uncertainty-is-impacting-the-global-economy/

[2]https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1

[3]Adam Smith: Wealth of nations 1776

Neil Wheeldon is the Vice Presidents Solutions, BDP International.

expert logistics

The Benefits of Hiring an Expert Logistics Company

When it comes to running a business, it’s extremely important to always keep economic efficiency in mind; that’s the only way to expand your business while maintaining a profit. And in many situations, that means making sacrifices. However, if you work smart instead of hard, you can avoid most of that.

For example, it’s crucial to know when your company needs to do something on its own, and when to hire a third-party to do the job for you. If you need goods transported across vast distances, hiring an expert logistics company is probably better than doing it on your own. There are many benefits to such a move, and we’re here to lay them out clearly!

Saving Time

You probably know the old adage “time is money”. Well, there’s no field in which that’s truer than in business. At the end of the day, no matter your managerial capacity, you’ve only got so much time to deal with the important details of running a business. That’s why it’s important to have professional staff and third-party companies who will handle crucial parts of the job for you, so you’re not stretched too thin.

 To give you an example – most businesses are aware that there are many advantages to maritime shipping. However, it’s also incredibly complicated, which warrants the hiring of an expert logistics company to deal with the goods transportation for you. After all, if you were to do it in-house, that would mean tons of research, a lot of new staff, not to mention all of the compliance issues. But if you hire a logistics company to take care of this instead, you’ll be able to reap the benefits of international shipping and trade without dealing with the pesky minutiae.

Consider Cost Efficiency

If we’ve established that time is money and that hiring an expert logistics company saves time, let’s take a look at the former side of that coin. In other words – the money part of the equation. Naturally, many companies around the world have in-house logistics departments. But bear in mind, these are usually large, multi-national conglomerates – companies that can afford to avoid hiring an expert logistics company and bear the costs of transportation themselves.

 On the other hand, if you’re a medium-sized business (and on a global scale, most companies are), you should keep in mind that this will be very costly. And why do it in the first place, really? Outsourcing some of these tasks means not dealing with all of the doing-business costs of a full-fledged logistics department in a large company.

High Standard of Service

Bear in mind that, if you’re thinking of hiring an expert logistics company, you should go with a reputable one. Logically, renowned logistics companies have a brand image to uphold, just like any other firm. And that means that they have well-trained staff and tight schedules – everything you need in order to make sure that your logistics are handled the right way! If you want your end-users and consumers to have a product in their hands without delay, building an in-house logistics team just wouldn’t cut it.

 Also, if your company needs some international transportation, the details of that are definitely something you don’t want to handle on your own. There are plenty of US custom clearance issues and pesky bureaucratic procedures. And while these could seem arcane to you, expert logistics companies handle that kind of stuff on a daily basis.

Latest Technology

When it comes to delivery services and things like freight forwarding, believe us – not hiring an expert logistics company would be a huge mistake. While this might seem like purely menial labor on the outside, shipping involves far more than the loading and unloading of crates. In reality, especially in the contemporary world of global interconnected trade, any kind of concerted transport involves the usage of highly advanced software and technology.

And that kind of modern transport tech is more expensive than you might think; adding a further reason to not bother with logistics on your own. If you hire a specialized company to do it for you, there will be no further investment in logistics that you’d have to make. And that’s definitely important from the cost-efficiency side of things. That’s right, you’re beginning to see why even the biggest product-oriented companies in the world opt for using external logistics experts. At the end of the day, if you’re not a company solely focused on logistics, they’re complicated enough to warrant leaving them to a company that does. 

So, what can you take away from this small outlook into the world of transport logistics? There’s really no other conclusion you could reach, save for the fact that it’s best to leave logistics to the experts. In other words – hiring an expert logistics company to handle all of it for you. That gives you ample time to focus on issues that deserve your attention more, like growing your business and improving the revenue streams.

And that’s something you’ll be able to do if you don’t spend your valuable time on logistical details. More specifically, it would also be fiscally irresponsible to spend money on managing and developing an in-house logistics team, when outsourcing is a much cheaper option. Sure, outsourcing isn’t always the obvious solution, but if you ask us, in this case, it’s a no-brainer.

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 James Greene is a freelance journalist, most often providing insights into topics related to international commerce. He also advises people on topics ranging from global shipping solutions to how to transport your vehicle in no time from Saudi Arabia. When he’s not writing articles on trade, he likes playing chess and hiking on Appalachian trails.

a&r logistics

OmniTRAX Joins with A&R Logistics at Atlanta Waterfront Terminal

OmniTRAX, Inc., one of the largest privately held transportation service companies in North America and an affiliate of Denver-based The Broe Group, and A&R Logistics, North America’s largest provider of integrated dry bulk logistics solutions for the chemical and plastic industries, are opening a new transload facility in Atlanta.

The Atlanta Waterfront Terminal, located adjacent to the Fulton County Railway (FCR) tracks southwest of downtown, will initially enable the contents of 10 rail hopper cars to be simultaneously offloaded to trailers, with expansion expected. A&R will use the depot to transfer plastic pellets shipped by rail from resin producers across the country onto specialized pneumatic trailers and then transport the product to extruders throughout Georgia and neighboring states.

“The new Atlanta Waterfront Terminal is a great location for A&R, complete with access to the interstate system and great opportunities for growth,” says OmniTrax CEO Kevin Shuba. “We look forward to working with the A&R team to ensure the facility safely reaches its full potential.”

“The key to the Atlanta Waterfront Terminal is flexibility,” adds Dan Jaworski, chief commercial officer at A&R, which provides a comprehensive suite of services including transportation, warehousing, packaging and fully outsourced logistics management. “The location allows our trucks to get anywhere in the metro Atlanta area quickly and efficiently, plus the site is expandable to fit our growing needs.”

Customs

Common U.S. Customs Clearance Issues & Overcoming Them

For people who are not intimately familiar with the international freight industry, it can appear to be dauntingly complex. After all, dabbling in international trade means dealing with a host of different entities, each of which has its own regulations and rules that you have to follow. And US customs are just one large piece in an ever-increasing puzzle.

However, understanding common US customs clearance issues and anticipating them is crucial for a successful global trading endeavor. That’s why we’re going to delve into some of them, and propose ways to of solving them.

Customs Exams

If you want to deal with common US customs clearance issues, be prepared for customs exams. Naturally, you probably know that random checks at customs aren’t that rare of an event in the world of maritime shipping. And sure, only up to 10% of global shipments are inspected in reality. While that may be a small fraction of the overall volume of shipping; you need to be prepared. And that goes for any customs in the world, including the US.

Issues with US Customs Clearance

The first thing you need to understand regarding US customs clearance issues is – they are different in each country and port. So, some things you read about the priorities of Dutch customs won’t necessarily be true when the US is concerned. Generally, U.S. customs tend to have frequent random inspections.

Know that there are separate, country-specific inspections that they conduct, depending on what country your shipment is coming from. That’s the sort of information that importers regularly provide to freight forwarders. So, that sort of logistical information is important, as any misleading information can lead to long-term distrust; not a good thing for trading efforts. If complete information flows both ways, your freight transport will be a smooth process. And in the case of the contrary, you’ll be dealing with another issue: delays.

Delay Expenses

One of the most common US customs clearance issues is delays. And these happen precisely because of different exams and holds. These, in turn, lead to fees and charges that are a consequence of delays. Which can happen for an entire slate of different reasons. However, not all delay charges are the same. Generally, they are divided into per diem, detention, and demurrage. So, make sure you familiarize yourself with the terms, before negotiating with a shipping company.

Missing Documentation

When it comes to your shipping process, know that the original copy of your Bill of Lading is the most crucial document. And its misplacement is a surprisingly common problem that happens to shippers. If the Bill of Lading is missing, be sure that you will face issues regarding your shipment’s release. And that will result in additional delays. That’s why you need to be sure that the Bill of Lading will be carried through a channel you can rely on. That’s where the aforementioned trustworthiness comes into play.

If you’ve got a supplier with whom you have a fairly trusting relationship, you can opt for an Express Release or a Telex Release. Though, you may require more particular paperwork, depending on the type of cargo and the port of destination. Uncertainty and trade volatility is something that all shippers face; being familiar with all the details will go a long way towards reducing them to the minimum.

Missing Taxes and Duties

As we’ve mentioned just now, you may need some specific sort of paperwork, depending on where the shipment is going and the sort of cargo you’re shipping. And not abiding by this is one of the common US customs clearance issues, but you want to avoid that. After all, this additional paperwork is there to protect the interests of the country’s residents and the economy. Thus, some commodities may be forbidden, while others are allowed, but only with special permits.

To give an example – auto-shipments are among those which require specific documentation. Before the shipping is done, have a look at the HS Code of the cargo that you’re transporting. You may encounter extra taxes and duties in order to clear your shipment. So, if you want your shipment to go through smoothly, be certain that you have all of the particular documentation that all the different ports require.

Cargo Damage

Unfortunately, cargo damage is something that happens often in the world of shipping. That’s why you want to make sure your cargo is safely secured in its container at the port of origin. Statistics show that 90% of cargo damage actually happens due to improper storage and packing. Plus, bear in mind that the loading process in your origin point should be perfect. Take care of all the details, like remembering how many pallets you can actually fit into the container.

Because in reality, cargo damage rarely happens due to terminal or carrier mishandling. But if that does happen, do not forgo filing an insurance claim. And while doing that, take great care to go through all the proper procedures step by step, if you want to be certain that you will be compensated for the losses. Still, though; we recommend safely securing your cargo, and you won’t have to go through any of this.

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Nathan Smith is a freelance author, mostly writing analyses of the maritime and air shipping industries. When he’s not writing about moving companies like Four Winds Saudi Arabia, he likes reading crime fiction and watching science fiction movies.

uae

The UAE Foreign Direct Investment (FDI) Law

For a great many years, global businesses have viewed the United Arab Emirates as an attractive global investment market. With a strong presence of high-net-worth consumers and a geographically strategic location from which to distribute throughout the Middle East and North Africa, the UAE is rife with opportunity.

Yet, many international corporations could not own companies outright in the UAE and were restricted to a maximum ownership of 49%. Ownership laws, however, are now being revisited to diversify the country’s economy beyond the energy sector, which has been the source of UAE wealth for decades. But precisely the degree to which economic liberalization is taking place is very much based on one’s perspective.

Background

The United Arab Emirates (UAE), a federation of seven Emirates (member states), has served as a global centre for trade for centuries. However, most global businesses had often expressed discomfort with the country’s investment laws which, despite allowing 100 percent foreign ownership of businesses in the country’s Free Trade Zones (FTZs), stipulated that at least 51 percent of a company established  within the UAE, and outside a Free Trade Zone, must be owned by UAE citizens, or companies wholly owned by UAE citizens.

In addition, agency and distributor laws require that only a local commercial agent could sell products in the UAE market; and only UAE citizens or companies wholly owned by UAE citizens could register with the Ministry of Economy as commercial agents. Regulations also prevent the termination, or non-renewal, of a commercial agency contract unless the principal has a material reason to justify the termination or non-renewal; and the principal must often approach a court to terminate a contract.

Legislating Economic Diversification

The most recent Trade Policy Statement issued by the UAE through the World Trade Organization’s Trade Policy Review mechanism in 2016 stated the country aims to drive towards economic diversification by being less reliant on the oil sector and to increase its attractiveness to foreign investment.

The UAE enacted Federal Law No. 19, the Foreign Direct Investment Law (FDI Law) in November 2018. To promote and develop the investment environment and attract foreign direct investment in line with the developmental policies of the country, the Law established a framework for the country’s Cabinet to mandate which sectors and activities of the economy would be eligible for 100 percent foreign ownership. However, a list of eligible economic sectors and activities was not published by the UAE Cabinet until July 2019.

The list comprised of 122 economic activities across 13 sectors that would be eligible for up to 100 percent foreign ownership. The decision simultaneously conveyed that each emirate (member state of the UAE) could determine the percentage of foreign ownership under each activity suggesting that foreign ownership levels could vary from emirate to emirate. It was also clarified that oil & gas production and exploration sectors, air transport, and security and military sectors would be excluded from the purview of the FDI Law.

A Method of Recourse

It is also of interest that news reports indicate that for activities that are not included in the list of activities/sectors eligible for 100 percent foreign ownership, companies could approach the government for permission for a higher level of ownership; and that approvals may be granted on a case-by-case basis. The sectors that would allow 100 percent foreign ownership include:

-Space

-Renewable Energy

-Agriculture

Manufacturing

-Road Transport & Storage

-Hospitality and Food Services

-Information and Communication Services

-Professional, Scientific and Technical activities

-Administration and Support Services

-Education

-Healthcare

-Art & Entertainment; and

-Construction

For those businesses that do qualify under the FDI law, their products will be treated as being of UAE origin and therefore, eligible for such treatment under international agreements to which the UAE is a party. This is a privilege that is not available to goods manufactured by foreign-owned companies based in UAE Free Trade Zones. In addition, they can transfer abroad operating profits and proceeds from sale of investment or other assets.

Measuring Success

The Emirate of Dubai has reported that it has attracted US $12.7 billion in foreign direct investment (FDI) in the first half of 2019 thereby ranking the emirate third globally in FDI capital flows into Greenfield Projects. Also, in October 2019, Dubai assumed the presidency of the World Association of Investment Promotion Agencies (WAIPA), a global entity that works for the smooth flow of cross-border investments.

Although it is still too early to gauge the impact of the FDI Law and other developments, the consensus is that the UAE has taken steps to accelerate foreign direct investment into the country. It remains to be seen whether further steps such as changes to the agency and distributor laws, and changes to regulations related to the termination of agency contracts will be implemented to enhance the attractiveness of the UAE to foreign investors.

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JC Pachakkil is a senior consultant in Global Trade Management at trade services firm Livingston International.

pyle

Duie Pyle Partners with Oak Harbor Freight Lines to Expand Service to West Coast

West Chester, Pennsylvania-based A. Duie Pyle, a premier provider of asset and non-asset based transportation and supply chain solutions in the Northeast, recently partnered with Oak Harbor Freight Lines to expand its coverage area to the West Coast for the first time.

Founded in 1916, Oak Harbor has a footprint covering Washington, Oregon, Idaho, California and Nevada and just celebrated its 103rd year anniversary, while Pyle just celebrated its 95th anniversary. This is Pyle’s first foray into providing West Coast service and will improve transit times while reducing dock congestion and cost impacts upon customers, as the partnership opens up new opportunities to reduce service providers. Both companies share similar core values and are family-owned and operated, making the move an ideal match for providing coast-to-coast service.

“Being able to work with another family-owned and operated company who shares similar core values and service standards is something that is important to all of us at Pyle,” said John Luciani, COO of LTL Solutions at A. Duie Pyle. “With our similar business model and combined strength in the market, we are confident adding Oak Harbor Freight Lines to our elite partnership network is going to prove valuable for customers across the U.S.”

“At Oak Harbor Freight, we strive to invest in valued relationships that will continue to meet our customers’ needs,” says David Vander Pol, co-president and co-owner of Oak Harbor Freight. “This partnership with A. Duie Pyle reflects our company goals by gaining strategic partnerships that will allow our customer base to have a simple and uniform source for their transportation needs. We are excited to expand our services coast-to-coast and provide the best customer service possible.”

plantain

Africa’s Plantain Market to Reach Over 30M Tonnes by 2025

IndexBox has just published a new report: ‘Africa – Plantains – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Consumption By Country in Africa

The countries with the highest volumes of plantain consumption in 2018 were Democratic Republic of the Congo (5.5M tonnes), Cameroon (4.8M tonnes) and Ghana (4.1M tonnes), together comprising 59% of total consumption.

From 2007 to 2018, the most notable rate of growth in terms of plantain consumption, amongst the main consuming countries, was attained by Democratic Republic of the Congo, while the other leaders experienced more modest paces of growth.

The countries with the highest levels of plantain per capita consumption in 2018 were Cameroon (197 kg per person), Ghana (141 kg per person) and Uganda (68 kg per person).

From 2007 to 2018, the most notable rate of growth in terms of plantain per capita consumption, amongst the main consuming countries, was attained by Democratic Republic of the Congo, while the other leaders experienced mixed trends in the per capita consumption figures.

Market Forecast 2019-2025

Driven by increasing demand for plantain in Africa, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +2.9% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 30M tonnes by the end of 2025.

Production in Africa

The plantain production stood at 25M tonnes in 2018, picking up by 3.6% against the previous year. The total output volume increased at an average annual rate of +3.0% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2010 when production volume increased by 12% against the previous year. Over the period under review, plantain production attained its peak figure volume in 2018 and is likely to see steady growth in the near future. The general positive trend in terms of plantain output was largely conditioned by a conspicuous increase of the harvested area and a relatively flat trend pattern in yield figures.

Production By Country in Africa

The countries with the highest volumes of plantain production in 2018 were Democratic Republic of the Congo (5.5M tonnes), Cameroon (4.8M tonnes) and Ghana (4.1M tonnes), together comprising 59% of total production.

From 2007 to 2018, the most notable rate of growth in terms of plantain production, amongst the main producing countries, was attained by Democratic Republic of the Congo, while the other leaders experienced more modest paces of growth.

Harvested Area in Africa

The plantain harvested area amounted to 4.2M ha in 2018, growing by 3.7% against the previous year. The harvested area increased at an average annual rate of +2.9% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2010 with an increase of 14% against the previous year. Over the period under review, the harvested area dedicated to plantain production reached its peak figure at 4.3M ha in 2015; however, from 2016 to 2018, harvested area stood at a somewhat lower figure.

Yield in Africa

The average plantain yield amounted to 5.8 tonne per ha in 2018, approximately equating the previous year. In general, the plantain yield, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2016 when yield increased by 1.6% y-o-y. The level of plantain yield peaked at 5.8 tonne per ha in 2009; however, from 2010 to 2018, yield stood at a somewhat lower figure.

Exports in Africa

The exports totaled 99K tonnes in 2018, dropping by -5.8% against the previous year. Overall, plantain exports continue to indicate an abrupt decrease. The growth pace was the most rapid in 2013 when exports increased by 27% year-to-year. The volume of exports peaked at 181K tonnes in 2007; however, from 2008 to 2018, exports remained at a lower figure.

In value terms, plantain exports amounted to $45M (IndexBox estimates) in 2018. Over the period under review, plantain exports continue to indicate a drastic descent. The pace of growth appeared the most rapid in 2014 when exports increased by 13% year-to-year. The level of exports peaked at $85M in 2007; however, from 2008 to 2018, exports failed to regain their momentum.

Exports by Country

In 2018, Mozambique (38K tonnes) and Cote d’Ivoire (26K tonnes) were the main exporters of plantains in Africa, together making up 65% of total exports. It was distantly followed by Sudan (14K tonnes) and South Africa (12K tonnes), together committing a 27% share of total exports. The following exporters – Cameroon (3.2K tonnes) and Ghana (2.9K tonnes) – each accounted for a 6.1% share of total exports.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Cote d’Ivoire, while the other leaders experienced more modest paces of growth.

In value terms, the largest plantain markets in Africa were Cote d’Ivoire ($12M), Sudan ($11M) and Mozambique ($11M), together accounting for 76% of total exports.

Sudan experienced the highest rates of growth with regard to exports, among the main exporting countries over the last eleven-year period, while the other leaders experienced mixed trends in the exports figures.

Export Prices by Country

In 2018, the plantain export price in Africa amounted to $454 per tonne, growing by 4.8% against the previous year. Overall, the plantain export price, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2015 an increase of 11% year-to-year. Over the period under review, the export prices for plantains attained their maximum at $485 per tonne in 2012; however, from 2013 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of origin; the country with the highest price was Cameroon ($850 per tonne), while Ghana ($203 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Cameroon, while the other leaders experienced mixed trends in the export price figures.

Imports in Africa

The imports totaled 179K tonnes in 2018, picking up by 11% against the previous year. The total imports indicated a prominent expansion from 2007 to 2018: its volume increased at an average annual rate of +5.5% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, plantain imports increased by +20.7% against 2014 indices. The pace of growth appeared the most rapid in 2013 with an increase of 19% year-to-year. Over the period under review, plantain imports reached their peak figure in 2018 and are likely to continue its growth in the immediate term.

In value terms, plantain imports totaled $51M (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +1.8% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The pace of growth was the most pronounced in 2017 with an increase of 11% y-o-y. Over the period under review, plantain imports reached their maximum in 2018 and are expected to retain its growth in the near future.

Imports by Country

South Africa was the key importing country with an import of about 119K tonnes, which resulted at 66% of total imports. Senegal (29K tonnes) held the second position in the ranking, followed by Mali (17K tonnes). All these countries together took approx. 26% share of total imports. Botswana (5.1K tonnes) and Algeria (3.1K tonnes) occupied a little share of total imports.

Imports into South Africa increased at an average annual rate of +11.5% from 2007 to 2018. At the same time, Senegal (+19.5%) and Mali (+6.1%) displayed positive paces of growth. Moreover, Senegal emerged as the fastest-growing importer in Africa, with a CAGR of +19.5% from 2007-2018. By contrast, Botswana (-2.5%) and Algeria (-16.8%) illustrated a downward trend over the same period. From 2007 to 2018, the share of South Africa, Senegal and Mali increased by +46%, +14% and +4.6% percentage points, while Algeria (-11.4 p.p.) saw their share reduced. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, South Africa ($27M) constitutes the largest market for imported plantains in Africa, comprising 53% of total plantain imports. The second position in the ranking was occupied by Senegal ($13M), with a 25% share of total imports. It was followed by Botswana, with a 6.4% share.

From 2007 to 2018, the average annual rate of growth in terms of value in South Africa totaled +9.2%. The remaining importing countries recorded the following average annual rates of imports growth: Senegal (+22.9% per year) and Botswana (-3.2% per year).

Import Prices by Country

In 2018, the plantain import price in Africa amounted to $284 per tonne, coming down by -1.9% against the previous year. Overall, the plantain import price continues to indicate a perceptible setback. The growth pace was the most rapid in 2015 when the import price increased by 12% year-to-year. The level of import price peaked at $421 per tonne in 2007; however, from 2008 to 2018, import prices failed to regain their momentum.

Prices varied noticeably by the country of destination; the country with the highest price was Algeria ($1,017 per tonne), while Mali ($64 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Algeria, while the other leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform

DRIVER SHORTAGE & TRUCKING-CAPACITY: WHY THEY’RE NOT GOING AWAY

In the busy and demanding world of trucking, industry players are inevitably reminded of two significant challenges that show no signs of lessening now and in the near future: trucking capacity and the driver shortage. Neither issue will solve itself with current approaches. Companies are now faced with the reality that change must be embraced through improving training standards and the utilization of advanced technology solutions. 

This might not come as a surprise to some, but for others still operating with outdated practices, reality presents its own set of challenges. To look at the numbers the industry is dealing with, a report released by Insurance Journal confirmed the driver shortage figure has reached 51,000–up from 36,000 in 2016.

Some industry leaders, such as Advanced Training Systems CEO John Kearney, are confronting these issues at every angle–from a legislative, cultural, educational, and technological positions. 

“The issue is that the existing workforce is aging,” Kearney maintains. “The truck is a different piece of equipment from what it was a few years ago–it’s very sophisticated. The technology advances are significant and the regulations are outdated. Simulators are really emerging as a major change to the training field. A lot of companies are now going to simulators because there are some things they can do that are not possible to train any other way.”

Advanced Training Systems (ATS) has spent more than a decade developing cost-effective training simulators and preparing aspiring truck drivers across the United States through many of the training schools in the country. These driver training schools offer students unmatched training experiences that have propelled ATS in a leading position in the driver training field. 

“In 2008 we started the process of developing simulators because we know they are an excellent part of the training process,” Kearney says. “Today, we have simulators in a number of places around the U.S. and Mexico with operations in California where we do manufacturing and technology development while our corporate offices are in Florida.”

Among the scenarios truckers are faced with at a moment’s notice that traditional training methods can’t address include sudden road obstructions, aggressive drivers, inclement weather and truck malfunctions. These unavoidable situations present some of the most challenges in preparing the next generation of truck drivers

“Let’s take the example of a front tire blowout,” Kearney suggests. “If someone does that in a real truck, they could kill someone. There’s also the risk of something coming out on the road all of sudden and if the driver swerves, they could create an accident. These types of scenarios can be taught in a simulator.” 

He continues, “Ice is another example. If a driver is sliding on ice, what do they do? They don’t want to slide in a real truck, so what we do is have simulators that train properly so drivers know how to react if that happens. The reaction time is improved through the process of repetitive proper actions needed to teach muscle memory in the training process.”

Earlier this year, 28 vehicles were involved in a devastating truck collision in Lakewood, Colorado, that claimed the lives of four people. Since then, conversations surrounding improved training methods have taken priority among industry players, with simulators leading the position of potential solutions. 

“Technology is a big part of the answer,” Kearney maintains. “If we use technology, we use better methods of training and we’re not sending someone to sit in a classroom for too long. Change in technology expands on the number of people who can become interested in the field. The methodology of training using simulation and various other training methods available today—such as virtual reality—will provide the industry with better drivers and more people interested in a career in the field.”

Beyond technology, Kearney urges legislators to consider how current age restrictions limit the industry’s growth. Current laws only permit young adults over the age of 21 to drive a truck over state lines, limiting both driver populations and proactive education efforts. The desire to learn is there, but current laws restrict motivated and qualified students to begin training, leaving high schools with little reason to further pursue efforts in education. 

“High schools are not teaching students to drive in a truck. What’s beginning to happen is we are realizing young people are very qualified, they’re very used to working with things like simulation, and we need to allow the young driver to enter into the profession from the time they leave high school, between ages 18-21 once properly trained.”

The trucking industry is sometimes generalized as an exhaustive, demanding and less-than-glamorous profession. It’s time for a refresh of trucking culture to mirror what a career in the industry really looks like, beyond long hours and demanding schedules, according to Kearney. 

“The other part of the issue is we must educate young people to think about truck drivers differently. A truck driver today has much more involvement than just being a truck driver. The industry needs to change the name of what truck drivers are to something that better indicates what they do and what they are. The current trucking condo is actually a very nice place to live and travel around the country.”

The first step in creating reliable and effective solutions for the trucking industry begins with expanded training for existing and future drivers and elevation to a professional level. The technology available in today’s markets enable companies across the nation to improve operations and prepare the next generation of drivers for fulfilling careers. The reality is, trucking is not what it used to be both operationally and professionally. 

“The driver of today has become a manager of multimillion dollars’ worth of freight, managing the technology with careful compliance to the delivery schedule, serious regulations and changes in the method of operating a $100,000-plus vehicle and the method of driving as it develops. The driver of today can move up in the company they work for. Many drivers will be moving up in the industry from driving a truck.”

Opportunities now exist that weren’t fathomable in previous decades. The challenge now is to overcome antiquated mindsets and operation patterns to boost productivity, driver satisfaction and safety. It’s up to industry leaders to step up and initiate change. 

global

GLOBAL FORWARDING: BIGGEST, FASTEST SAVINGS FOR GLOBAL SUPPLY CHAINS

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.