Logistics and compliance professionals have always understood the complexity of 21st Century supply chains. The last couple of years have certainly raised this awareness with C-level executives and owners of smaller businesses as well. LinkedIn contacts and outreach from search firms tell me that logistics and compliance expertise is in demand.

You may be looking to add a logistics or compliance pro to your staff and, understandably, want to make a good selection. In the meantime let me suggest training your shippers in some export compliance basics. I have always warned that compliance should not be left to a busy shipping department. However, a few hours of training is a good investment as it will enable shippers to spot possible export violations before shipments leave your dock. It will also allow your new professional to focus on more strategic matters and hit the ground running.

BIS (Bureau of Industry and Security) offers basic on-line export training at no cost. Why not improve the skills of your existing staff (on company time of course)?

Ad Hoc Logistics can also help with specific training at your site. Contact mitch@52.91.45.227.

Congratulations to those applicants who have passed the October 2021 CBLE (Customs Broker License Exam). The exam is very challenging with typical pass rates in the 10-15% range, although the October rate has not yet been posted. If you came up short consider taking it again in April 2022 now that you have some testing experience. You also have the option of appealing your answers to specific questions. Here is some info from the CBP website about how to appeal. Check the link for details.

How To Appeal

Appeal Instructions

Who can appeal?

Anyone who takes a Customs Broker License Examination and does not achieve a passing score may appeal questions on that examination.

When must an Appeal be submitted?

Any appeal must be submitted within 60 days of the date of the letter notifying the applicant of his or her score.

What is the basis for an Appeal?

The applicant must submit a compelling argument why his or her answer is better than the official answer for a specific question, or why the appealed question has no possible correct answer.

https://www.cbp.gov/trade/programs-administration/customs-brokers/how-appeal

The October 2021 CBLE (Customs Broker License Exam) has been posted to the CBP website. The answer key and pass rate have not yet been posted. Here is one of the easier questions from the Broker Compliance category.

76. Below are the basic requirements to obtain an individual broker’s license EXCEPT:
    A. Be a citizen of the United States
    B. Not be an employee of the Unites States government
    C. Be at least 18 years old at the time of submission of license application
    D. Be of good moral character
    E. Obtain a passing grade of 75% on the Customs Broker License Exam (CBLE)

The correct answer is C as applicants must be at least 21 years of age. It is well known that the exam is difficult to pass. How does CBP judge moral character? An extensive background investigation as noted by CBP:

Q:	What does the background investigation include?
A:	Each broker license applicant must undergo a background investigation that includes a fingerprint analysis and a review of character references, credit reports, and any arrest record. Arrests or convictions do not necessarily preclude the issuance of a license.

Factors to consider when selecting a freight forwarder

jamaica-gleaner.com • 

https://jamaica-gleaner.com/article/shipping/20211102/factors-consider-when-selecting-freight-forwarder

Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

The article covers most of the factors in choosing a forwarder. I would add the ability to advise on export compliance. While exporters bear the primary responsibility for compliance, forwarders can be a valuable resource in this area.

As a TRB committee member I know that this webinar will be worth attending.

A reminder that TRB is hosting a FREE webinar on Wednesday, November 3rd from 2:00 to 3:30 PM Eastern that will identify how to keep cargo moving.

More details and registration information can be found here:

https://lnkd.in/d7sB8vgc

Assisting clients with export compliance is a big part of my consulting practice as well as a steady topic of blog posts. As logistics and compliance managers know, there are plenty of regulations on the export side of international transactions. However, this only brings us to the waters edge (or land borders with Canada and Mexico). US exports are other countries’ imports and they all have different regulations.

Some of the recent challenges overcome by a very diligent client included:

How to be Importer of Record (IOR) in the UK without a physical presence.

How to engage an Indirect Representative.

How to defer VAT. How to bill duties.

Are EORI (Economic Operators Registration and Identification) and VAT numbers in place for both UK and EU? Remember UK is no longer in the EU.

Is one EORI number sufficient for all EU countries?

Is a VAT number needed for individual EU destination countries?

Can EU customs broker also act as freight forwarder or make recommendations for movement within EU?

Are last mile and delivery arrangements in place?

It is not easy to obtain all these answers in advance but a little planning goes a long way. Contact mitch@52.91.45.227 for assistance.

The topic of last week’s post was diversification of the nodes and links in supply chains. A daunting task to say the least. In the current turbulent environment traders are looking for alternatives to help solve their logistics problems. This is a good idea. However, when discussing rates and services with a Logistics Service Provider (LSP), don’t forget compliance. While exporters bear primary responsibility for compliance, LSPs are a valuable resource. If you have already implemented an Export Compliance Program (ECP) congratulations! This will reduce the risk of changing LSPs.

Export compliance is good risk management. While risk management always gets C level attention, export compliance is often a mid-management or lower level function. Fines and penalties for violations should make export compliance a basic part of risk management.

If you are relying on your logistics service providers, or your busy shipping department, for export compliance you may be at risk. Both upper management commitment and front line training are essential parts of an ECP.

BIS (Bureau of Industry and Security) offers a number of on-line courses at no cost. Check them out under the Compliance and Training tab and get started!

Under the EAR (Export Administration Regulations) criminal penalties can reach 20 years imprisonment and $1 million per violation. A denial of export privileges prohibits a person from participating in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

contact mitch@52.91.45.227 for help with export compliance

A recent LinkedIn post by Kristen Morneau is an informative and timely reminder that diversifying supply chains can help mitigate disruptions. This is certainly a long term strategy which must be driven by upper management. Consider the complexities of finding new suppliers that can meet your standards, offer competitive pricing, and then smoothly integrate into your supply chain.

Logistics is tactical in support of supply chain strategy, so must be able to adapt to the planned diversification. The textbook terms nodes and links are descriptive in logistics and supply chain discussions. Nodes are fixed locations such as factories and distribution centers. Links are Logistics Service Providers (LSPs) which connect the nodes from pick up (first mile), through line-haul operations (middle mile), to end user delivery (last mile). The links include ocean and air carriers, freight forwarders, truck lines, integrated parcel systems, customs brokers, and possibly 3PLs. It is easier to change links than nodes. However, if diversification is to reduce supply chain disruptions, both nodes and links must be strengthened.

New suppliers should be evaluated for their export compliance and ability to perform first mile tasks. Vague or incomplete commercial invoice descriptions, for example, can cause customs delays. New LSPs can make or break supply chain strategy. Consider their services as “value adds” rather than just cost. Consistent performance is more important than rates when new links are utilized in your supply chain.

Diversifying any supply chain requires time, a complete project plan, upper management commitment, and attention to detail.

We can help you work with the links. Contact mitch@52.91.45.227

In several previous posts we have noted the reasons why many companies postpone or ignore establishing an ECP (Export Compliance Program). If you are the CEO, COO, or CFO of one of these companies we advise starting to manage the risk of non-compliance. In the meantime here is a list from the Bureau of Industry and Security (BIS) website of things to look for in an export transaction. Make sure you are not doing business with the bad guys. A little due diligence up front saves a lot of trouble later on.

The customer or its address is similar to one of the parties found on the Commerce Department’s [BIS’] list of denied persons.

The customer or purchasing agent is reluctant to offer information about the end-use of the item.

The product’s capabilities do not fit the buyer’s line of business, such as an order for sophisticated computers for a small bakery.

The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry.

The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.

The customer is unfamiliar with the product’s performance characteristics but still wants the product.

The customer has little or no business background.

Routine installation, training, or maintenance services are declined by the customer.

Delivery dates are vague, or deliveries are planned for out of the way destinations.

A freight forwarding firm is listed as the product’s final destination.

The shipping route is abnormal for the product and destination.

Packaging is inconsistent with the stated method of shipment or destination.

When questioned, the buyer is evasive and especially unclear about whether the purchased product is for domestic use, for export, or for reexport.

For help contact mitch@52.91.45.227

Outward Bound AlumniMark Brown, ME, CPCC

Let’s Make Some Magic

Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Mitch Kostoulakos, LCB 

Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Lifelong memories and lessons….writing as an alum of Course #4 in Colorado when OB was unknown in the US…