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About the Author

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

January 15, 2014



Small & Midsize Companies – Exploiting Growth Potential Outside USA Borders

What Shippers can do to Expedite the Border Crossing Process


Holste Says:

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Given the important role that small and mid-sized companies play in the U.S. economy, there are considerable incentives for those who are willing to reach beyond its borders.
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Previous Columns by Cliff Holste

Sorting It Out : Depending On Size, Shippers Think Differently About Order Fulfillment Operations

Sorting It Out: Conveyor System Capacity Constraints Impact Productivity

Sorting It Out: Project Planning Ideas

Logistics News : Managing Security Risks

Logistics News : Maintaining Workplace Safety During Peak Shipping Season

More

Researching various U.S. government reports reveals that small companies create two-thirds of the new jobs in an economic recovery. Yet they often lack the internal resources, sales force and cross-cultural knowledge to mine foreign markets, says Mark Zandi, chief economist of Moody's Analytics https://www.economy.com/mark-zandi/. According to Dr. Zandi, small and midsized companies produce half the nation's economic output but account for just 30% of exports. It’s a surprising fact that overall just 1% of the nations company’s export, and 58% of those that do ship to only one country.

According to commerce surveys, small businesses biggest concern is they simply don't know how to identify and sell to overseas customers. That's followed by worries that they won't be able to get financing and won't be paid by foreign buyers. Myriad other concerns include language and cultural barriers, shipping costs, theft of intellectual property, cross-border tax differences, and burdensome red tape.

The U.S. Department of Commercial (DOC) has long had officers in dozens of foreign countries who hunt for potential customers for U.S. exporters. Meanwhile, DOC centers across the USA do market research and shepherd businesses through a thicket of rules and paperwork.

As part of the export initiative, the DOC is working with carriers such as Federal Express and United Parcel Service to identify shippers that have potential to expand overseas. DOC representatives are also traversing the USA to educate small firms in day-long sessions. The DOC is also working to remove trade barriers and crack down on tariff violations.

Small firms seeking working capital for exports can now get a Small Business Administration loan while the Export-Import Bank provides additional loans for small business exports.

Because products with the ‘Made in the USA’ label are in high demand both domestically and internationally, U.S. manufacturers looking to exploit international markets need to know how to expedite the border crossing process. According to DOC statistics, the most common reasons for a border delay are incomplete documentation and the consignee has not paid all of the duties.

Understanding the following will reduce delays and smooth out the process:

 

 

Before shipping a product for the first time, provide all available information about the product, its components and manufacturing process to the customs broker.

 
The process of classifying some products can be time consuming, depending on the complexity and types of materials in the products. Advance classification can prevent unnecessary delays at the border.

 

Prepay all fees and duties.

 
Documents required for clearance by relevant agencies include: government ministries, customs, port authorities and other control agencies.

 
Since payment is by letter of credit, all documents required by banks for the issuance or securing of a letter of credit must be included.


The following byline article entitled “The Five Commandments for Moving Goods Across Borders” was provided to Supply Chain Digest by Bob Farrell, CEO, Kewill http://www.kewill.com



"The Five Commandments for Moving Goods Across Borders"

The growth of global trade is creating greater prospects for organizations to do business globally. Companies today have an increasing number of opportunities to benefit from low-cost manufacturing locations and develop new markets for their products. However, this is also generating greater complexity in the supply chain, particularly when companies have to move goods across multiple borders. The following “Five Commandments” provide a guideline for multi-country customs and tips for ensuring that the supply chain stays in motion.

1. There is No Single Standard

When it comes to customs and compliance procedures, despite high-level global agreements to standardize, countries still control their own borders, make their own localized regulations and apply their own systems and processes. Even harmonized procedures within the EU are not implemented in a common way across the board, and individual member states each have their own electronic systems.

2. Don’t Underestimate the Risks

Moving goods across borders requires compliance with a multitude of regulations. Non-compliance, even due to an administrative oversight, will ultimately cause delays and incur sanctions. Sanctions are not only financial – goods can be refused entry. Even worse, non-compliance with Japan’s upcoming 24-hour advance filing rules for ocean freight could be punished with a year’s jail time with hard labor.

3. The Future’s Electronic

Electronic customs and compliance will soon be mandatory. In order to file the correct declarations, it’s important that companies either maintain links with customs authorities in each country they import to/export from, or retain the services of a partner who can do this for them. Security initiatives such as the EU Export Control System (ECS) & Import Control System (ICS) and the US Import Security Filing requirements concentrate on collecting data before goods are moved. Companies should also ensure that they are able to receive confirmations and queries electronically.

4. Efficiency is Key

Today, it not only costs more to handle operational data manually (i.e. re-keying data into several systems), but the increased risk of error has a much greater potential impact for compliance. Regardless of whether compliance is handled in-house or outsourced, a significant volume of data is required, which differs by country or type of declaration. It is therefore essential to be able to use and rely on data held in operational systems.

5. Compliance is a Moving Target

Don’t underestimate the level of domain knowledge that is required to maintain compliance. This area is ever-changing. Often, customs officers struggle to keep up even though their knowledge is country-specific. Changes are made at a local, regional and global level, with pilot phases and different implementation dates, which often change. New regulations may be phased in or made mandatory from day one.

As global trade continues to grow, it’s become increasingly difficult to adhere to rules and regulations, especially when goods are crossing international borders. By following these “Five Commandments” organizations can ensure that their supply chain keeps moving, increasing overall productivity while reducing time and money spent.



You can download a free eBook on
The Five Commandments for Moving Goods Across Borders” at:
http://info.kewill.com/5-commandments-ebook.html?source=PR


Final Thoughts

There appears to be lots of government and Supply Chain industry help available for companies who are considering expanding into international markets. Given the important role that small and mid-sized companies play in the U.S. economy, there are considerable incentives for those who are willing to reach beyond its borders.

Recent Feedback

Thanks! A good summary of what it takes to ship abroad, be it from the US or any other country, like France, Australia or Nigeria.  The best help you can get is actually having a trustworthy contact in the destination country who is able to supply your company with the BEST procedures (these are not always written down!).

PS: the author may be disappointed to know that "Made in the USA" would be pretty low down on consumer priorities in countries I have lived in - UK, France, Australia)


Nicholas Cram
Solution architect
Prodware
Jan, 18 2014
 
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