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LinkedIn Comment- LTL Costs
Hitting the Links?
No, I’m not referring to golf, but using links as a logistics term. Exporters tend to become comfortable with their LSPs (Logistics Service Providers) and may be overly reliant on a single provider. Supply chain audits and best practices make it clear that diversifying LSPs can help mitigate disruptions, improve service, and possibly reduce costs.
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 LSPs must be evaluated for their export compliance and ability to perform first mile, middle mile, and last mile operations. Details matter. Failure to review documentation, 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@adhoclogistics.com for assistance.
A Little Service Please?
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. I have shared my thoughts about customer service in previous posts. AI is adding a new way of interacting with supply chain partners and can be an efficient way to transmit info. However, for me, transmitting info is not the issue. Ultimately, clients of LSPs need someone to take responsibility and actually solve the problem without passing the buck.
We engage with a variety of providers including freight forwarders, carriers, integrators, and customs brokers. Most have automated systems for efficiency and cost control purposes. 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. Information is easier to get than action.
The ability/authority to solve problems is what defines great customer service. Reaching a human being in customer service 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.
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.
Agree?
What is a Customs Broker?
Clients often ask me to train new employees on the basics of international trade and customs clearance. This includes the roles of LSPs (Logistics Service Providers). Shippers are usually familiar with Freight Forwarders but may be unclear about Customs Brokers. Here is some info from the CBP website for reference:
Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.
Customs broker. “Customs broker” means a person who is licensed under this part to transact customs business on behalf of others.
Customs business. “Customs business” means those activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges. “Customs business” also includes the preparation, and activities relating to the preparation, of documents in any format and the electronic transmission of documents and parts of documents intended to be filed with CBP in furtherance of any other customs business activity, whether or not signed or filed by the preparer. However, “customs business” does not include the mere electronic transmission of data received for transmission to CBP and does not include a corporate compliance activity.
Contact mitch@adhoclogistics.com for info about our copyrighted presentation “Exporting for Smart People”.
Checked EEI Lately?
Electronic Export Information (EEI) filing has become routine for exporters and it is easy to “file it and forget it” once the submission has gone through.
Auditing EEI ((also referred to as AES) filings is a good business practice. If you are a self filer is anyone checking the accuracy of your submissions? Does your freight forwarder have an audit procedure in place if they are filing for you? Here is the risk:
§ 30.71 False or fraudulent reporting on or misuse of the Automated Export System.
(1) Failure to file; submission of false or misleading information. Any person, including USPPIs, authorized agents or carriers, who knowingly fails to file or knowingly submits, directly or indirectly, to the U.S. Government, false or misleading export information through the AES, shall be subject to a fine not to exceed $10,000 or imprisonment for not more than five years, or both, for each violation.
Are you aware of this potential filing error?
A common misconception is that EEI and Commercial Invoice value should match. However, inland freight and insurance charges must be accounted for in the EEI filing whether or not they are on the commercial invoice.
Contact mitch@adhoclogistics.com for assistance.
New Year Due Diligence
I frequently conduct no fee discussions (phone or Zoom) with new clients to determine if I can help them. They may be unsure about their HTS codes or a specific regulation. Codes change frequently so it is a good business practice to verify your data.
Exporters quite often assure me that their commodities fall under EAR 99 and NLR (No License Required). While this may be true, due diligence requires verification, which starts with checking ECCN (Export Control Classification Number). BIS (Bureau of Industry and Security) spells out the specific procedures for checking ECCN and licensing requirements. The CCL (Commerce Control List) Index is a good place to start.
https://www.bis.doc.gov/index.php/documents/regulations-docs/13-commerce-control-list-index/file
EAR99 Does Not Always Mean NLR
If your item falls under U.S. Department of Commerce jurisdiction and is not listed on the CCL, it is designated as EAR99. EAR99 items generally consist of low-technology consumer goods and do not require a license in most situations. However, if your proposed export of an EAR99 item is to an embargoed country, to an end-user of concern, or in support of a prohibited end-use, you may be required to obtain a license.
Don’t assume- verify!
Contact mitch@adhoclogistics.com for immediate assistance.
Reading the CCL
BIS (Bureau of Industry and Security) has recently revised their website making it a little easier to navigate. This is helpful. However, in my opinion, the CCL (Commerce Control List) remains difficult to use. The CCL Index is a good starting place but from there the reader is quickly in the weeds.
I’m reviewing and updating a Master Parts List for a client and am easily able to check HTS and Schedule B codes. ECCN (Export Control Classification Number) verification is a much longer process. Here is a link to Category 5- Telecommunications and Information Security as an example:
https://www.bis.doc.gov/index.php/documents/regulations-docs/2336-ccl5-pt1-3/file
The entire CCL consists of this type of incomprehensible documentation. BIS, how about revising the CCL to make it more user friendly? Anyone else agree with me?
Heads Up- Tariff Updates
The HTS (Harmonized Tariff Schedule) and Schedule B have been updated for 2024. Both publications show multiple pages of code changes. Due diligence in checking your codes at least annually is a best practice for importers and exporters. Make sure that you are not using obsolete codes to avoid customs delays and possible penalties.
Here are the HTS and Schedule B links. You can check individual codes or review the change records.
https://www.census.gov/foreign-trade/schedules/b/2024/index.html
As a reminder HTS codes can be used for AES filing, with some exceptions, per the following:
NOTICE TO EXPORTERS
For reporting electronic export information in the Automated Export System (AES), the statistical reporting numbers in the HTS (with their respective descriptions and units of quantity) for articles falling in chapters 1 through 97 may be used in place of those in the Schedule B, except as noted below.
Contact mitch@adhoclogistics.com for assistance.
LinkedIn Comment- LTL Quotes
Let me guess:
You’ve received an LTL quote and you’re wondering why the prices seem high.
Here’s what’s probably happening:
Behind the scenes, carriers are factoring in so many variables beyond just mileage, incorporating things like:
*** Facility Accessibility ***
Mitch Kostoulakos, LCB • Ad Hoc Logistics LLC, Int’l Logistics Consultant/Licensed Customs Broker
I agree with all of these points. Also don’t withhold info about your shipping profile. In the absence of complete data carriers will hedge their bets.