All posts by mitch

Export Compliance

Implementing a formal Export Management Compliance Program can be quite intimidating especially for small and medium sized companies. An EMCP requires a significant commitment of time  on the part of management and usually involves hiring an outside consultant for the initial set up. There is no question that a written EMCP is a good investment for any company to make. An EMCP establishes clear accountability, written instructions, and reduces risk of non compliance. If the exporter has not experienced problems or incurred any fines it is easy to make an EMCP a “back burner” issue. If your company has not implemented an EMCP it is still good business practice to take some basic compliance steps. While these steps cannot take the place of a written EMCP they will help reduce risk of non compliance.  To get started I suggest the following:

  • Review and confirm correct Harmonized and Schedule B codes
  • Check EAR regulations for correct exemption codes and license or NLR designations
  • If exporting under ITAR you need a responsible trained officer
  • Check common “Red Flags” such as denied parties lists, entities lists, and unverified lists
  • Review export documentation for possible improvements

 

Contact Mitch at Ad Hoc Logistics to get started.

emcp_guidelines

 

 

Logistics Consulting Comments

Mitch Kostoulakos commented on a discussion in Logistics Consulting.

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  • Mitch KostoulakosMitch Kostoulakos When considering overall costs the tradeoff between transportation and inventory has big impact. Reducing transportation costs can lead to increased inventory in the pipeline. 24s ago

Logistics Performance Index (Part 2)

In a recent post I discussed the World Bank Logistics Performance Index for 2014. Here is a follow up which includes the index for the years 2007, 2010, 2012 and 2014. The rankings indicate that the US lags behind EU trading partners as well as Hong Kong, Singapore, and Japan. Lowest scores are in the areas of  Customs Clearance and Ease of International Shipments. US ranks fairly high in Infrastructure which is surprising.

The category Ease of Shipments refers to the ease of arranging international shipments.  Ad Hoc Logistics can handle the quoting, documentation, and follow up of international shipments  for your company. Contact mitch@52.91.45.227 for a free initial consultation.

International_LPI_from_2007_to_2014

Wicked Problems

I came across the term “wicked problem” in the text that I am using for my SNHU course International Supply Chain Management.* A wicked problem involves multiple stakeholders, each with different interests and values. As a result there is no single common goal , no clear mission, and no universal solution. Any solution, after being implemented, will generate waves of consequences and can result in making the problem worse.  A suggested framework for tackling a wicked problem consists of 4 levels of increasing complexity:

Level 1- Process Engineering and inventory management– This is the engineering approach focusing on what is being carried (work, cash, information) and process design within and between organizations. Risk management is about improved visibility and control.
Level 2- Assets and Infrastructure- This is the insurance and financial approach. Nodes and links are examined and strengthened to avoid disruptions along the supply chain.
Level 3- Organizations and Inter-organizational networks– this is strategic level problem solving involving outsourcing, partnering, and offshoring.

Level 4- the Macro Environment- This level uses PEST  (Political, Economic, Social, and Technological) analysis of environmental changes. Issues include green and legal/regulatory as well as geo political factors.

Fortunately, not all logistics problems are wicked problems. If you need help with international logistics contact Ad Hoc Logistics.

*Global Logistics & Supply Chain Management by John Mangan, Chandra Lalwani, Tim Butcher, and Roya Javadpour

World Bank Logistics Performance Index

The World Bank has posted their Logistics Performance Index for 2014. The index benchmarks 6 areas of performance and gives nations a score from 1-5 for each area. The benchmarks are 1) Efficiency of customs clearance process, 2) Quality of trade related infrastructure,  3) Ease of arranging competitive pricing for shipments,  4) Competence and quality of logistics services,  5) Ability to track and trace shipments,  and 6) Timeliness of shipments in reaching destination within scheduled time of arrival.

For 2014 the US ranks 9th overall with an average score of 3.92 for the 6 benchmarks. Surprisingly, the highest US score is 4.18 for infrastructure, and the lowest is 3.73 for customs clearance.

The 8 nations ranking higher than the US are:

Germany

Netherlands

Belgium

United Kingdom

Singapore

Sweden

Norway

Luxembourg

 

Details @

http://lpi.worldbank.org/international/global/2014

 

Need help with logistics? Contact mitch@52.91.45.227 for a complementary consultation.

Is Importing/Exporting For You?

In the years that I have taught Supply Chain courses, many students have expressed the desire to start their own importing or exporting business. In some cases they were motivated by an interest in a particular product they encountered on an international trip. Others wanted to turn a hobby into a business. In these early stages the nuts and bolts of international logistics are less important than the product, the markets, and realistic expectations on the part of the student. As an instructor I always want to provide guidance and assistance along with real world business facts. The attached Twenty Questions are a good way to start the process,

IS THIS BUSINESS FOR YOU

US Customs Brokers info

Mitch Kostoulakos

Mitch Kostoulakos commented on a discussion in U S Customs Brokers.

 

  • Mitch KostoulakosMitch Kostoulakos Raul, I had the same question for the port of Boston a few months ago. You can apply for a permit as an individual license holder. If you have an individual license but want a permit in a company name you first need to apply for a license as a corp, partnership, or association. You need to complete CF314 License App, and supply articles of incorporation, credit report, and fingerprints. You should check with your port but hope this helps.

Book Review of Full Upright and Locked Position

Book Review Published in Transportation Journal, Spring 2014.

 

Full Upright and Locked Position: Not So Comfortable Truths about Air Travel Today

Mark Gerchick

W.W. Norton & Company, Inc.

500 Fifth Avenue

New York, NY 10110

2013, 331 pp.

ISBN 978-0-393-08110-7

$24.95

 

 

 

As any air traveler knows, flying today bears no resemblance to the relatively luxurious experience of the 1960’s and 1970’s. In fact, air travel in the 21st century is deeply unpopular from the passenger viewpoint. The reasons why are explained by Mark Gerchick, aviation consultant and former FAA and DOT executive, in “Full Upright and Locked Position: Not So Comfortable Truths about Air Travel Today”.

The book consists of ten chapters and an extensive bibliography. The first three chapters provide an overview of the current state of the airline industry. The reader is reminded that pre-deregulation air travel was not unpleasant, if not as glamorous as sometimes portrayed. While acknowledging the major upheavals in aviation between 1978 and 2001, the author points out that even bigger changes have occurred post 2001. Examples are the commoditization or air travel, the reduction of supply to meet demand instead of competing to offer more flights, and the unbundling of services adding fees to the basic fare. The contradictions are striking. Air travel has never been safer nor more dehumanizing. The technology is amazing yet airlines are now mass transit bound by strict rules and rigid processes. The goals are tight schedules, operating efficiency, and revenue maximization to the detriment of customer service.

The airlines’ safety record is thoroughly examined with ample supporting statistics. According to Gerchick, more than three billion people flew on US airlines from 2007 through 2011 with 50 fatalities, all in a single regional airline crash. In spite of this record, 30 million Americans admit that they are anxious flyers. Chapter 4 describes the aura of airline pilots, the “disembodied voice behind the steel door”. The pilot’s reassuring messages from the cockpit about “a little turbulence” are designed to calm passengers while giving minimal information. An inside the cockpit view portrays the boredom of flying, struggles against sleep, and constant complaining about schedules. Indeed, pilots are sometimes seen by their employers as angry whiners.

Chapter 5, “Fares, Fees, and Other Games”, probably the least readable chapter in the book, attempts to explain the myriad pricing schemes faced by passengers shopping for fares on the internet. After dropping from 1995-2011, air fares are now rising 4-8% per year and the FAA predicts continued rising fares for the next 20 years. In addition, baggage fees and other charges have created new revenue streams for airlines. This chapter does shed light on fare codes and “fare buckets” which allow airlines to maximize revenue and load factor.

Some of the most disturbing aspects of air travel are included in Chapters 6 and 7. There is no question that being a passenger for hours in a flying tube can be unhealthy. The hazards include respiratory issues from stale air, bacteria in close quarters, and blood clots resulting from inactivity. This list is followed by horror stories about planes sitting for hours on the tarmac and the effect on passengers and crews. In most cases there is no real DOT investigation of these incidents. DOT simply collects data about these delays and passes it along to the airlines. There is much opportunity to improve regulations and enforcement of consumer rights in our air travel system. Regulators have historically been charged with both promoting civil aviation and regulating safety with no real oversight of customer service. Further consolidation means less competition so a little more regulation may be in order.

The last three chapters of the book cover the pleasures of 1st Class and Business Class and a look into the future. The author describes Business Class as “the absence of pain” with the seat as the biggest differentiator. In other words we are not going back to the glamorous days of air travel unless you can afford a private flight or a ticket on Emirates Airline. Thanks to 9/11 and the TSA there are no more “daddy moments” for weary arriving travelers. Surges in jet fuel will continue to lead to new fees, reduced capacity and full flights. The rise of low cost carriers such as Southwest threatening the existence of legacy carriers leads to consolidations and mergers.

Analysts predict an industry on the brink of stability if not big profits. It may be said that we are approaching a 3+3+3 air system. Three huge network carriers, three nationwide low cost carriers, and three global alliances.

According to Mark Gerchick, these changes can be good for both the airlines and their passengers. Airlines are managing their businesses smarter when they control costs and match supply with demand. Revenue management and fees are important tools but unpopular with consumers. However, if airlines can achieve stability and sustained profitability the hope is that they will begin to compete on customer service as well as price.

This is a highly informative and entertaining book.

 

Mitch Kostoulakos, CTL

Ad Hoc Logistics, LLC

26 Heath Road

Merrimac MA 01860

 

 

Transportation Carrier Matrix

Transportation mode and carrier selection always involves tradeoffs between cost and service. It is helpful to understand the relationship between variable costs and rates. Here is a link to a Transportation Carrier Matrix that I have used in supply chain classes. It is a snapshot view of the various modes by industry type, operating costs, rates, services, and markets.

 

TRANSPORTATION CARRIER MATRIX