Clients often say “we’ve used the same harmonized codes for years” and “our products are duty free“. As a Licensed Customs Broker and consultant this tells me that I need to do some checking on the client’s behalf. Using obsolete or invalid HTS (Harmonized Tariff Schedule) codes is a sign of an amateurish operation. The risks are customs delays, fines and penalties, or surprise duty/tax bills. It is likely that, for these clients, commercial invoice descriptions need updating. If they are also an exporter we should check ECCNs, License Exceptions, Countries of Origin, and Schedule B numbers as well.

The tariff archives show that the 2022 HTS was revised 15 times. The 2023 version already lists 8 revisions. Schedule B codes change frequently too. Here are the links to the changes:

https://hts.usitc.gov/download/archive

https://www.census.gov/foreign-trade/schedules/b/index.html

Don’t assume that your codes are valid. A little due diligence helps avoid problems down the road. Contact mitch@adhoclogistics.com for a review of your HTS codes.

Geek: “a person who has excessive enthusiasm for and some expertise about a specialized subject or activity”. Compliance folks sometimes refer to themselves as Geeks.

Demand for compliance professionals has never been higher, as LinkedIn users can readily see. Companies of all sizes and in all industries realize that being in compliance means fewer supply chain disruptions. At the very least compliance is good risk management. Think of it as insurance.

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; the factors are complex and need to begin early in the order cycle. However, a few hours of training is a good investment, enabling 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.

Our copyrighted presentation “Exporting for Smart People” will provide your staff with upgraded skills and knowledge.

Contact mitch@adhoclogistics.com for more info.

Logistics Service Providers are quick to point out their technological enhancements and service improvements in order to differentiate themselves from their competitors. In the sales arena account executives work diligently to develop client relationships.

Many LSPs, especially motor carriers, make extensive use of “customer entertainment” to gain and retain market share. Lunches, dinners, and sporting events are part of the job for carrier representatives. Developing client relationships makes the time and expense worthwhile for the rep even when business is not actually discussed. Access to decision makers, information to be used in negotiations, opportunity to present logistics solutions, and benefit of the doubt when problems arise are the result of good relationships for the LSP.

For the client the benefits can include good faith negotiations, competitive pricing, industry intelligence, and faster problem solving . It is best, however, to manage the relationship. Keep it professional and not personal.

Business lunches can be productive for both parties. Clients should have an agenda with a few discussion points. Remember, as with any meeting, if you don’t have an agenda you are subject to someone else’s. Mention your agenda when scheduling lunch and you will have your rep’s attention. Consider having lunch brought in so you are on your turf.

Expensive dinners and sporting events are much less productive from a business perspective. Food and drink becomes the main event. Business discussions are limited, especially if spouses are in attendance. The game takes precedence at sporting events. Big ticket entertainment turns the relationship from professional to personal. It is best to limit your exposure and partake sparingly, if at all.

In summary manage your carrier relationships, Don’t let your providers “reward” you for your business. It makes it much more difficult to change providers or negotiate new deals.

Engineering firms, software companies, researchers, manufacturers, and universities need to be aware of the “deemed export” rules. They may be engaged in export transactions without even knowing it. Here is some info from the BIS website:

The obligation to obtain an export license from BIS before “releasing” controlled technology to a foreign person is informally referred to as a deemed export. Releases of controlled technology to foreign persons in the U.S. are “deemed” to be an export to the person’s country or countries of nationality. “Deemed” exports are described in 734.13(b) of the EAR. Typical organizations using “deemed” export licenses include universities, high technology research and development institutions, bio-chemical firms, as well as the medical and computer sectors. Note that those organizations having persons with permanent residence status, U.S. citizenship, and persons granted status as “protected individuals” are exempt from the “deemed” export rule.

Many of the licenses for ”deemed” exports involve those conducting scientific research. Note that under section 734.8 of the EAR, fundamental research is defined as “basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community” and, as such, is exempt from EAR licensing requirements. Research conducted using publically available information is also exempt from any license requirements.

The EAR defines a “release” of “technology” or source code in section 734.15 of the EAR, and defines activities that are not “deemed” reexports in section 734.20 of the EAR.

For help with exports contact mitch@adhoclogistics.com

As all logistics professionals know, problem solving is a big part of the job. My clients are mostly small or medium sized firms working with minimal staffs, so I frequently assist them in resolving service issues.

We engage with a variety of LSPs (Logistics Service Providers) including freight forwarders, carriers, integrators, and customs brokers. Most have automated systems for efficiency and cost control purposes. LSPs invest heavily in technological solutions and this is a major determinant in selecting a provider. When looking for a status update or answer to a simple question these systems are fine. Self service can be frustrating, though, when the problem is not easily described, and is of no use for more complex issues. Examples are customs delays, re-routing of shipments, special pricing, or real emergencies. Information is easier to get than action.

Solving problems on the spot is what defines great customer service. Reaching a human being requires patience and many times that person is simply reading from a script. If I haven’t been able to solve the problem on-line then I need someone with the ability and authority to resolve the issue. It seems that as logistics providers invest in technology they are disinvesting in human customer service.

LSPs, don’t force your clients to dump problems on their account rep or e mail the CEO. A few key people in customer service roles with the authority to fix problems on the spot will earn you a lot of customer loyalty.

Congratulations to all who passed the April 2023 Customs Broker License Exam! You are now eligible to go through the application process, background check, and fingerprinting to obtain your license.

It may come as a surprise that the entire process can take months before you receive your license. In addition to a passing grade on the CBLE, eligibility to become a customs broker requires applicants to be a US citizen at least 21 years of age, not be a current Federal Government employee, and possess good moral character.

Character is determined by an extensive background investigation:

“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.“

Licensed Customs Brokers, via their entry filings, are responsible for the assessment of revenue for the United States in the form of duties and taxes. They must also ensure that they, and their clients, comply with the laws and regulations in all transactions. So the background check is more than a mere formality. Be patient applicants!

The April 2023 CBLE (Customs Broker License Exam) resulted in a 5.5% pass rate prior to appeal decisions. This rate is much lower that the previous two exams (11.1% in October 2022 and 39.6% in April 2022). I continue to wonder if low pass rates are what CBP wants. The exam and answer key are posted on the CBP website.

Congratulations to all who passed ! You are now eligible to go through the application process, background check, and fingerprinting to obtain your license.

Many brokers have needed more than one try, so don’t be discouraged if you came up short. If you want to challenge any of the questions here is the link explaining how to appeal.

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

Importers, if you have been relying on your suppliers for HTS classifications of your products check this September 2022 CBP ruling. Briefly, it states that suppliers are not qualified to provide HTS classifications unless they employ LCBs, even with a disclaimer that the information is advisory.

Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. Pursuant to 19 U.S.C. § 1641(b)(1), “[n]o person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license . . . .”

H290535: Customs business and broker rules; HTSUS classification recommendations; disclaimers

https://rulings.cbp.gov/ruling/H290535

(ICPA INC) International Compliance Professionals Association, Inc.Ned Blinick

A while ago I participated in a webinar with Dan Gardner about whether the Customs Broker was, or would soon be obsolete. Dan argued the negative that the Customs Broker is like a spouse, and only under extreme circumstances and duress would an #importer divorce its Customs Broker. I argued the positive. Dan won the debate. https://lnkd.in/ehWcbxzQ

Mitch Kostoulakos, Ad Hoc Logistics LLC, Int’l Logistics Consultant/Licensed Customs Broker

As Dan points out in the article LCBs do more than file entries. The value is in having a qualified, credentialed advisor. When I have a legal question I ask a lawyer. For a tax issue I want a CPA.

Consultants often receive “Just a quick question?” queries from clients or others and everyone responds differently. Most likely the questioner believes that their question is an easy one and may be looking for pro bono service. In fact, while it is easy to ask a quick question, an accurate response is not always quick.

As a solo practitioner I know that I need to remain flexible while making sure that I am compensated for my time and expertise. Based on trial and error, here is how I handle “quick questions”.

Active clients– I truly value my long-term clients who are the foundation of my business. It is easier to keep clients than to gain new ones. So, if I can help a client on the spot, I will do so as a part of my service. This usually involves something simple like identifying a resource for them. If time and/or research is required I let the client know how I will handle the request and what I will charge. Most clients understand this approach because I have added value for them in the past. If they have frequent quick questions I may suggest my retainer service which allows them to prepay for brief consultations by choosing a set number of hours.

Prospective clients– Quick questions can lead to new business and I am happy to get them. I know my worth, however, so I am more selective in my responses. If the question is a simple one which I can answer on the spot I may choose do so as a “free sample”. If time and research is required I will propose the retainer option or quote a minimum charge. I will always try to learn about the potential client’s business so that I can determine their real needs and follow up at a later date.

Former colleagues– One of the benefits of being a FedEx alum is having excellent contacts all over the world. I appreciate referrals by former colleagues and I will always try to help them. Their referrals are my compensation. If they have a project requiring time and research I may ask them to connect me to the client if possible. I’m always happy to hear from former colleagues so don’t hesitate to reach out.

Friends and family- This is rare as I try not to mix personal with professional and I don’t want to charge friends or family. I will accommodate a minor request and give them a referral for anything more complex.

This method is not perfect but works well enough for me in my growing practice. I would be interested in hearing how other consultants handle “quick questions”

Contact mitch@adhoclogistics.com