As we discussed in a previous post, duty rates on imports are determined by harmonized code, valuation of the commodity, and country of origin. While trade agreements such as NAFTA have specific and complex rules of origin, the basic COO elements are:
Country in which the commodity is made, mined, grown, manufactured, or underwent substantial transformation. The 3 way test for substantial transformation is new name, new character, new use.
Need help? contact mitch@52.91.45.227
During our initial consultations clients often tell me that their shipping departments are responsible for screening exports for red flags and denied parties/unverified parties. This is a mistake for several reasons.
Export compliance, list screening, and checking for red flags should be a front end process and not a last minute shipping function. Let your shippers do what they do best by moving the freight but don’t expect them to be regulatory experts.
Need help? Contact mitch@52.91.45.227 for a no obligation initial consultation.
In a recent post we discussed the World Bank Logistics Performance Index (LPI) for 2018. Mexico ranks 51st overall with customs clearance as the lowest category. As Mexico is the US’s 3rd largest trading partner, this can cause delays and frustration for traders.
Here are some takeaways from a US Commercial Service webinar that may be helpful in understanding the process.
Mexican Importer of Record (IOR)
Classification and Valuation
When Are Goods Seized?
Frequent Issues for MX Customs
MX Customs Recommendations
Posted on LinkedIn
Surprised? Check out these logistics rankings… The World Bank has posted their Logistics Performance Index for 2018. 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 2018 the US ranks 14th overall, down from 10th in 2016, with an average score of 3.89 for the 6 benchmarks. The highest US score is 4.09 for tracking and tracing, and the lowest is 3.51 for ease of arranging international shipments. This may be due to the wide variety of services available to US traders which can make comparisons more complex.
Germany ranks highest in overall LPI rank.
Founder/CEO ICC Logistics Services
Hi Tony, these are good tips. I would add share your shipping profile (volume, frequencies, lanes, freight characteristics) with prospective carriers. Holding back this info won’t get you a better deal.
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Most logistics service providers (LSPs) present clients with monthly reports touting their on time delivery percentage. It is easy to become complacent when LSPs routinely report 97-99% on time service after taking exceptions for weather and other factors.
Why not challenge them to measure absolute performance failures instead of percentages? In a high volume operation even a small percentage can mean a lot of late shipments and unhappy customers. In a smaller operation with fewer customers every shipment is critical. If LSPs can track and report percentages they should be able to do the same for absolute numbers of shipments.
Finally, if you are an LSP, remember that you have a client on both ends of the shipment so service failures have twice the impact. Different metrics are like fresh eyes on an operation.
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Were you told there would be no math?
INVENTORY AT MULTIPLE LOCATIONS: THE SQUARE ROOT RULE
This technique is useful in determining the effect on total inventory levels when adding or reducing distribution centers.
The analysis assumes that total demand remains unchanged. The goal of this analysis is to approximate the aggregate inventory at multiple facilities by multiplying the square root of the number of facilities by the inventory previously stored at a single facility. X2= (X1) (Square root of n2/n1) where n1= number of existing facilities n2= number of future facilities where n2>n1 X1= total inventory in existing facilities X2= total inventory in future facilities
Example: A company distributes product to its customers in the southeastern US from a single facility in Atlanta, GA. It is considering opening a second facility in Nashville, TN to help serve the same market. Assume that average inventory levels at the Atlanta facility are 10,000 units. n1= 1 existing facility n2= 2 future facilities X1= 10,000 total units in the existing facility X2= total inventory in future facilities = (10,000) (Sq root of 2/1) = (10,000) (1.4142) = 14,142 units
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Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse, good customer service is essential. While information is almost always available at your fingertips, action requiring human intervention can be elusive. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. Developing a set of problem solving protocols for the most common issues in your supply chain will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing relevant operations contact info for the identified problem areas. Your account rep should welcome the opportunity as it will save them time as well. Update protocols as needed and make them part of your account review meetings. Finally, if your account rep says “Just call me” don’t accept this response.
Best wishes to my former FedEx colleagues who are accepting the buyout. You have earned it!
Posted on LinkedIn today:
I came across the term “wicked problem” in the text for an International Supply Chain Management course. 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. Level 2- Assets and Infrastructure. Level 3- Organizations and Inter-organizational networks. Level 4- the Macro Environment- PEST (Political, Economic, Social, and Tech). Fortunately, not all logistics problems are wicked problems. In most cases logistics problems are tactical and can be solved using Level 1 and 2 solutions. Supply chain issues are strategic and more complex so best suited to Levels 3 and 4. *Global Logistics & Supply Chain Management