Trade Talk | Exploring Customs Brokerage and the Supply Chain
Back in 2013 it was reported by Canadian National (CN) that Six million goods and raw materials cross international borders every single day. Now imagine what is involved in clearing these goods through customs in different countries.
This is where Customs Brokers come into the Supply Chain. Customs Brokers are your translators. We communicate with customs and participating government agencies, vendors, carriers and all other participating parties. throughout the shipping process, ensuring that all of the proper procedures have been followed.
From televisions and home appliances to custom machinery for large construction projects, we clear thousands of shipments every day. Seven days per week, 24 hours per day, 365 days a year, regardless of the port of entry or mode of transport. It is the Customs Brokers duty to ensure that your shipments in and out of the U.S., Canada, Mexico or any other country are being cleared and managed efficiently.
Trade between the United States and Canada is huge and growing. In 2013, our two-way trade was $606 billion. To put that into context, that’s $1.7 billion a day — or $1.2 million every single minute.
What we know for sure:
According to WX1130 a popular radio news channel, it is expected that aside from the bi-lateral negotiations with the US on NAFTA, Canadian parties will likely address some of the points in debate at the State level rather than the Federal level. This means that those who are representing impacted interests are getting focus by those who have the ability to ensure minimal negative impact and/or even improved experiences across the Supply Chain.
There are 9 million U.S. based jobs that exist because of NAFTA being in place. If Monday’s meetings between Canada and the U.S. indicate anything, it is that there is willingness and there are channels open to ensuring that those 9 million jobs across the Supply Chain remain unaffected and that more jobs can be created with the incoming infrastructure goals of both these countries.
What we are talking about:
Where does your Broker fit in the supply chain? Well the supply chain in truth can actually starts with either the buyer or the seller – it will also ultimately end with either the buyer or the seller. What is determined at either position will impact the activity and costs within the supply chain.
What most people have traditionally considered “supply chain” actually happens in between these two points, your broker is your asset at each end of the supply chain. So do we extend supply chain to incorporate Customs Brokerage?
When we look at past clients cases our experience would suggest YES to this.
Something as seemingly simple, can create extremely complex issues and unnecessary expense, because at the outset it seems so very simple. Take HS Tariffs or even Incoterms, reclassification or reassignment of one of these codes has saved over 50M for just one of our clients on a mere 5 international shipments.
Incoterms if they are new to you were issued updated in 2010. You can see them here
What are Incoterms®:
Modern-day Incoterms, date back to the creation of the first FOB term in 1812.
Here is a basic explanation of what Incoterms are below and if you want to see the updates made in 2010 you can view those HERE
“A series of three-letter trade terms related to common contractual sales practices, the Incoterms® rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. Incoterms inform sales contract defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer. However, it does not constitute contract or govern law. Also it does not define where titles transfer and does not address the price payable, currency or credit items.
The Incoterms® rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.” ~
As you can see here, supply chain is much more than freight forwarding and logistics – because these actions take place in between the buyer buying and the seller selling. For many years now we have been working to expand our client’s understanding of where to best access our value as customs brokers – the customs brokers value is best seen on either end of the supply chain for the buyer or the seller before activating the supply chain in the delivery process.
What we think:
We are thinking about ensuring our readers and customers understand IncoTerms and HS Tariff Codes. Earlier this month we shared an article on HS Tariffs you can review it here, and next week we will sharing a powerful article on Incoterms.
What we advise:
Engage your customs broker early in the sales process, or early in the buying process to ensure that all parties experience the best trade compliance results both top line and bottom line.
Getting this right is money in your pocket – getting it wrong, well that is a loss we don’t want you to experience!
What we are reading:
Forbes: As an analyst who covers supply chain management (SCM) and procurement practice across industry, I tend to keep my keyboard focused on the disruptive themes that continue to re-define it. That said, if you’re expecting me go on about the unprecedented growth of the SCM solution markets, the accelerated pace of innovation, tech adoption, social change, etc., don’t hold your breath. I can’t, as the data argue otherwise. Too many of us conflate diversification with acceleration. There’s a difference.
Wall Street Journal: Leave it to California growers to find a new way to eliminate the shipping from farm to warehouse. A startup operation near the San Francisco International Airport is trying to turn the warehouse itself into a farm, the WSJ’s Jacob Bunge and Eliot Brown report, eliminating the timing, transportation and preservation strategies that are critical to modern agriculture distribution. Backed by a group of tech entrepreneurs and investors, Plenty United Inc. hopes to begin selling produce soon that they say is bred for local tables rather than for shipping durability. The operation is part of the expanding field of indoor farming made possible by new lighting and other growing technology. Several startups are trying to marry that technology to the consumer push for local goods, and make it economically palatable by slashing logistics costs. Warehouse space isn’t cheap, however, particularly close to urban consumers, and Plenty United will have to nurture more funding to meet its goal of running 60 farms outside major U.S. cities.
Have our team put a quote together for your projects below:
When topics as broad as free trade re-negotiations, tariff amendments, any type of international border barriers to business are being discussed many of us want to be the fly on the wall that hears the discussion. We try to be that fly on the wall for you, our valued readers.
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