David Noah President at InterMart,
Your exports may not appear to have a military application, but they could still be controlled by the International Traffic in Arms Regulations due to ITAR’s “see-through” rule. Here’s what you need to know
Order of Review is a best practice and often overlooked
The World Bank has published their Logistics Performance Index for the first time since 2018.
The LPI ranks countries on critical dimensions of trade including customs performance, infrastructure quality, and timeliness of shipments. The data used in the rankings are derived from a survey of logistics professionals answering questions about foreign countries with which they trade. Respondents are asked to identify their line of business (freight forwarder, transport operator, export/import trader, customs broker), typical freight mode utilized, and country in which they are working.
The index benchmarks six areas of performance and gives nations a score of 1-5 for each category. The categories are: 1) Efficiency of customs clearance process; measuring speed, simplicity, and predictability of formalities 2) Quality of trade related infrastructure; focusing on ports, railroads, and information technology 3) Ease of arranging competitive pricing for shipments; ability to compare rates and services on-line 4) Competence and quality of logistics services; in-country customs brokers, transport operators, and freight forwarders 5) Ability to track and trace shipments; transparency and availability of real time information and 6) Timeliness of shipments in reaching destination within scheduled time of arrival; Hardly Ever, Rarely, Sometimes, Often, Nearly Always.
The Global Rankings show the US at 17th (tied with Republic of Korea), down from 14th in 2018.
See the rankings here: https://lpi.worldbank.org/international/global
Click here to see the methodology used in the Global Rankings: https://lpi.worldbank.org/sites/default/files/2023-04/Methodology_LPI_survey.pdf
Let’s break down the US performance in 2023 vs 2018 by category:
LPI Score; 3.8 down from 3.89
Efficiency of Customs; 3.7 down from 3.78
Infrastructure; 3.9 down from 4.05
Ease of Arranging Intl Shipments; 3.4 down from 3.51
Logistics Competence; 3.9 up from 3.87
Tracking and Tracing; 4.2 up from 4.09
Timeliness of shipments: 3.8 down from 4.08
While most of the scores have dropped slightly, the US’ overall ranking has dropped steadily. Here are the LPI average US rankings for previous years.
2023 tied for 17th.
2018 14th
2016 11th
2014 9th
2012 9th
Readers have commented that the size and complexity of the US economy makes comparisons with smaller countries difficult. This is a fair point. However, there is no question that the US has room for improvement in all six LPI dimensions.
Here are the top ten countries by LPI score for 2023:
| Singapore | |
| Finland | |
| Denmark | |
| Germany | |
| Netherlands | |
| Switzerland | |
| Austria | |
| Belgium | |
| Canada | |
| Hong Kong SAR, China |
The full LPI 2023 Report includes more detail and suggestions for policy makers. Read the report here: https://lpi.worldbank.org/sites/default/files/2023-04/LPI_2023_report.pdf
The report identifies four performance groups:
While comparisons among nations with diverse economies and levels of development will always be difficult, the LPI can be used by individual countries to identify opportunities to improve.
If you are scheduled to sit for the October 25, 2023 CBLE (Customs Broker License Exam) make sure to bring proper identification. Best of luck but I’m sure you are not relying on luck.
Here is a link with all the details:
Compliance is becoming more important for importers and exporters as CBP and BIS ramp up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.
One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), bears ultimate responsibility for compliance.
Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Compliance must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.
In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP (Export Compliance Program), compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.
All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.
So once again; “Who’s responsible?”
Contact mitch@adhoclogistics.com for immediate assistance.
I don’t remember this requirement when I took the CBLE more than 20 years ago. Here is a reminder for candidates to maintain radio silence about the exam until after midnight. Best of luck
Here is a link to my latest Passages blog post
https://www.shippingsolutions.com/blog/how-to-determine-value-for-u.s.-customs
Hey Pete – under 30 licensed customs broker chiming in 👋. The high cost of the training courses are a huge barrier. Luckily my company sponsored me to take the test and paid for all expenses while also providing a raise in pay. That is how you incentivize young people to become LCBs. Alternatively schools like our alma maters should have a full credit elective that ends with you taking the exam. Each maritime academy has a business program full of students eager to separate themselves from traditional business students.
I also challenge the common saying that the brokers exam is harder to pass than the bar.. lawyers study for 3 years to take that test while many people sit for the brokers exam with little prep and less formal education.
Connor Helm Excellent point about the bar exam. I have no doubt that it is difficult even after 3 years of law school. Passing rates are reasonable though. Maybe a better comparison would be other license exams such as CPA.
Mitch Kostoulakos, LCB commented on this
Pete Mento•Commercial Director @ DSV | US Licensed Customs
Been a while since I poked the bear, but I’m fresh from a trip from DC and annoyed. We have a Customs Broker crisis. It’s only getting worse because of demographics. I’d like to challenge U.S. Customs and Border Protection to release some simple age statistics in tiers. What are the breakdown, by age of current license holders in the US? Assuming there are ACTUALLY around 13,000 still kicking around (I question the validity of that number), Then tell us how many are over 70, between 50 and 69, between 35 and 49 and under 34. You have that data since you have our SSNs. I’ll do some Good Will Hunting math with actuary tables and tell you, roughly how many are probably retiring and leaving this earthy plane (I love math and I have no life) Then I’ll make assumptions on the number not actually working on thier license (that number will disgust you). THEN – we look at how many take the test a year, pass it and pass the background check and get the ticket. I’m willing to bet it’s an upside down number. Want to fix it? It’s so easy…Apprenticship programs under the guidance of brokers and a system that requires time working in areas of the industry to learn the trade/Trade – then a test based more on practical knoweldge and less on repetitive questions. Being a Customs Broker is a financially and intellectually rewarding career. Stop making it so ridiculously hard to be one with your poorly conceived test. I’d also like to challenge our professional associations to help us bring more people into our tribe instead of looking for ways to monetize the new mandatory training hours. Unless we do something about this there won’t be anyone to train. Thanks for coming to my TED talk. I’ll be selling merch on your way out….#morebrokers…see more
Excellent post Pete… I am in favor of continuing ed for LCBs. My thoughts on the CBLE:
1) Can anyone name another licensing exam with such low pass rates? I doubt it. Its is easier to pass the bar exam.
2) LCBs take a look at the April 2023 exam and see if you think you could pass it.
Here is one of the easier questions from the April 2023 CBLE (Customs Broker License Exam). What’s your answer?
Customs Brokers are often asked for “quick classifications”. In fact, it may be possible to quickly find plausible codes for clients’ commodities; but that can be malpractice by the broker. Compliance adds value through attention to detail, established protocols, oversight, and documentation. HTS classification is the first step in both export and import compliance.
Proper classification includes HTS lookup, GRI (General Rules of Interpretation) review, checking both chapter and additional notes, as well as CROSS (Customs Rulings Online Search System). For some commodities it may be necessary to consult with a subject matter expert in engineering, purchasing, or manufacturing for details about the item.
This is the procedural aspect of classification, but there is more. Most listings require interpretation of the tariff language based on experience. Finally, the process needs to be documented for future reference and parts lists updated.
Here is an example of an easy classification with no research or interpretation needed:
9506.69.2040 Baseballs
Here is one which is more challenging and time consuming:
8532.10.0000 Fixed capacitors designed for use in 50/60 Hz circuits and having a reactive power handling capacity of not less than 0.5 kvar (power capacitors).
For accurate classification help contact mitch@adhoclogistics.com.
