logistics information and tips

Logistics 101 – Part 1

At first glance, logistics management might seem as simple as ensuring an order gets from point A to point B. In reality, handling logistics is much more complex, since many details are not necessarily intuitive – they are learned through trial and error (which can quickly become costly).

Below is some helpful information and insider tips for managing shipments – especially when they are coming from overseas.

  • When shipping from Europe, pallets that have previously been approved by Custom and Border Protection (CBP) must be used.
  • 24 hours before a vessel leaves a foreign port, it must file an ISF (Importer Security Filing, also known as a “10+2”) to CPB. This provides 10 data elements (like the name and address of the manufacturer, the name and address of the seller, etc.) as well as 2 more data documents (Container Status Messages and the vessel’s Stow Plan). Failure to complete an ISF can result in penalties starting at $5,000.
  • All items in a freight shipment must have an HTS (Harmonized Tariff Schedule), which is a specific code. Every part needs its own code, and not a generic one (i.e. a spin-on filter cannot have the HTS for a generic “filter” but rather the HTS specifically for a spin-on filter). When Customs checks the packing list and invoices in the container, failure to have proper HTS codes can result in hefty penalties. (Note that this HTS is different from the HS code that many other countries use.)
  • If the exporter prepares the documentation for shipping, the importer cannot make any changes. The entity that organized the shipment is the only one that can make changes on a shipment, including change of address, change of invoice, etc.
  • When an American company imports goods from another country, it pays the Customs fees. But if the goods are not used in the U.S. and are shipped out of the country, the company can retrieve those fees. This is called a drawback. Several documents are required to prove it, but pursuing it can save the importer thousands of dollars.
  • Sometimes, your company may want to do what is called a Triangle shipment – which is when a vendor abroad sends the goods directly to the final customer, using their invoice to pay the Customs fee, but using the importer’s invoice when it is presented to the customer. This saves money on Customs fees (as the importer is paying less for the goods than they are ultimately charging the end user) but prevents the end user from seeing what the markup on the goods are. For example, your American entity buys the goods from your parent company in Europe, but the parent company is shipping the product directly to the American entity’s customer. The American entity only wants their customer to see their sales price, not what the American entity purchased the product for. Any carrier, like FedEx or UPS, can perform a triangle shipment with proper notice and documentation.

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