SME Supply Chain Management. Robert Krieger President. What’s important to being & staying competitive?. What is a Customs Broker?. Licensed by CBP Part of the Dept. of Homeland Security Corporate License & Permit Individual License Holders What is import when choosing one.
SME Supply Chain Management Robert Krieger President What’s important to being & staying competitive?
What is a Customs Broker? • Licensed by CBP • Part of the Dept. of Homeland Security • Corporate License & Permit • Individual License Holders • What is import when choosing one
Licensed by FMC NVOCC tariffs published Anti-rebate policy Confusing terminology Not licensed Most CNS (IATA) members TSA regulation What is an International Freight Forwarder?
US Focus on Security • National Threat Center • Increased examinations • Voluntary C-TPAT program • Stepped up TSA enforcement
Krieger Worldwide • Customs Brokerage & Forwarding in USA, Mexico and Hong Kong • Warehouse & Distribution Services • Domestic Transportation • Logistics Consulting Services • Insurance • Duty Drawback programs • Importer Security Filings
What do you need to know? Concerns Opportunities
Customs Regulations • Regulated by 19CFR • “Informed Compliance & Reasonable Care” • Importers required to submit Entry • Most importers use brokers • Entries filed electronically • Includes data about manufacturer, importer, classification, conveyance, and valuation
Importers Responsibility • Verify accuracy of entry • Prior to submission • Marking of Goods • Description • Country of Origin • Manufacturer • Piece Count
Entry Review • Government retains right to review entry • Review final upon liquidation • Importer retains right to review entry • Strict time limitations apply
Examination • Government retains right to inspect cargo • Based on entry criteria • Based on risk management • Depending on product & statutes up to 6 months after importation • Failure to redeliver results in penalty • Regardless of examination importer responsible to be comply
Non-Compliance • If CBP believes importer in violation • Likely investigation • Possible civil penalties • Possible criminal penalties
Related Party • Most brokers don’t ask • Most importers answer incorrectly when asked • Significance?
Valuation • Transaction value is implied (TV) • TV of identical merchandise • TV of similar merchandise • Deductive value • Computed value • Sec 152.107 value if other values cannot be determined
Transaction Value • Additions to arrive at dutiable value • Royalties • Licensing fees • Packing costs • Selling commissions • Apportioned value of any assists • Penalties for omissions & wrong valuation
Classification • How to determine correct rate of duty? • Harmonized Tariff over 215,000 classifications • Modified by chapter notes • Modified by GRI’s • Effected by Binding Rulings • Effected by court decisions
Wheel Chairs Custom’s view Importer’s view Our view Verdict Radio Watches Custom’s view Importer’s view Our view Verdict Examples
Freight Issues • When can we get the freight? • How much will it cost? What is the real cost? • Individual shipment bids—wasteful • Tendency to focus on lowest bidder • What is the real cost of cheap rates & poor service to your business?
Case Study in Freight • Audited 36 random transactions • Poor carrier selection • Vessels too slow (China-DC = 26-31 days) • Unreliable service • Over dependence on airfreight when speed needed • Airfreight issues • Dimension on AWB 12% above packing list • Transit time, factory to door, 12 days!
Findings in the Case Study • Problems identified: • Customs broker different from Forwarder • Did not coordinate well together • Customs broker coordinated poorly with trucker • Forwarder used cheapest airline, charged premium rates and overcharged on dimension
Additional Findings • Freight shipped to wrong port • Paid freight on CFR shipments • Paid insurance twice • Did not consolidate freight • Paid extremely high export freight rates
Visit to Distribution Center • Measured 40 different cartons • Most had incorrect measurements printed on the cartons
Case Study Conclusion $2,000,000.00 to $3,000,000.00 Possible savings if international freight properly managed.
Export Issues • Duty Drawback • Goods imported then re-exported • Fungible items • Complex—may not be worth the effort • Export Controls • Controversial • Difficult to understand Export Licenses
Hot Topics • Import Compliance • Free-Trade Agreements • Foreign Trade Zones (FTZ) • Security
Import Compliance • Focused Assessments • Increased Audits • Smuggling & Illegal Transshipments • Importers must take steps to verify origin • Detentions & seizures have increased
FTZ – Free Trade Zone • Goods outside Customs Territory of US • Tariff shifts possible • Delays duty payment • Export without drawback headaches • Fix problematic goods • Reduce MPF
Conclusion • Importing is extremely complex • Regulated by Customs & other agencies • Easy to make mistakes • Importer needs to be compliant • Importer’s best friend = Broker/Forwarder