Logistics 101 – Part 1
- October 16, 2020
- Posted by: Management inSites
- Categories: Industrial, Insites, International, Logistics
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.
Logistics 101 – Part 1
- October 16, 2020
- Posted by: Management inSites
- Categories: Industrial, Insites, International, Logistics
In our previous post on the topic, we covered some important things to remember when setting up your company in the U.S. market. Beyond operations, sales, and marketing, a manager would be remiss not to focus on how cultural differences might impact the success of a subsidiary.
The U.S. is not homogenous
Unlike several other countries, the U.S. is vast – and not just in its size. Americans tend to break up the country into its East and West coasts, and the Midwest. But there are even more segments, like the South, Pacific Northwest, the Northeast, Florida, and Texas – all of which differ greatly from each other. There are several big cities, countless medium-sized markets, and even more rural or suburban areas. Interacting with people living in big cities will differ greatly from interacting with people in smaller towns. While it would be unwise to generalize, it is best to understand the culture of the part of the U.S. in which you are doing business before having expectations.
Patience is not always a strength among Americans
When in negotiations or conducting business, Americans tend to want to just get the deal done. While many other cultures take their time, get to know everyone involved, and move along at a comfortable pace, those in the U.S. do not always see a need to drag things out. Get ready for what looks like impatience, when in reality it is just a desire to be efficient and effective.
Don’t plan on in-person meetings
At least not all the time. The tendency for Europeans and Asians to conduct most business in person is not the same in the U.S. Phone calls, emails, and now even video conference calls are the norm. Businesspeople like to work efficiently, and don’t gather in person unless it is necessary. First meetings, larger negotiations, and important topics are generally discussed in-person. Otherwise, don’t be offended or surprised if many of your interactions are taking place remotely.
Open-minded over traditions
A positive aspect of Americans in general is their ability to have an open mind. Many other cultures rely heavily on traditions, and act in certain ways because history dictates that they should. That is not the case in the U.S. Americans tend to welcome new ideas and concepts perhaps more freely than their foreign counterparts.
That being said, Europeans tend to rely on strongly forged bonds in which trust is paramount. Loyalty is key. Americans tend to be looser and more pragmatic when it comes to doing business. They don’t necessarily need to have known someone for years to begin working with them. At the end of the day, it’s about getting the deal done.