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Category Archives: Logistics

OVER THE ROAD WEIGHT LIMITS

FOR CONTAINERS ON WHEELS

Accident damage risks faced by the cargo can be insurance wrapped, but not when weight of the Container trucks exceeds the maximum stipulated by the State authorities in the United States. When the loaded truck’s weight exceeds the maximum allowed, there will not be just fines but also delays and costs for the shipper.

Introduction

The following are the major parts of regulations for on-the-road, container loaded trucks in the USA:

  • Restrictions on maximum (A) load weight of the container truck
  • Restrictions on maximum (B) Gross Weight of the truck, including the weight of container
  • Restrictions on maximum (C) weight Per Axle and per Tandem-Axles of the container loaded truck

This blog is on the first element, but let us understand what is meant by A, B and C above with a pictorial example:

In the above case, A = 34,000 + 34,000 = 68,000 lbs, which is the total load weight of the container truck. It is easy to notice that total load weight includes the weight of the truck’s chasses and tires.

B = 80,000 lbs, which is the total weight of the whole truck, which includes both the load (68,000 lbs) and the prime mover (12,000 lbs).

and C = 34,000lbs, which is the weight on Tandem Axle 2+3, which is also equal to the weight on Tandem Axle 4+5.  If the two weights are equal, it means the weight inside the container has been evenly distributed.

To be sure, this blog is about the maximum weight of the load on the truck, as depicted by “A” and also the maximum weight on any axle or tandem axle, as shown in “C”.

Why It Is Important?

It is worth a mention here that these weight restrictions are meant to avoid both accidents and road damage. When the imported or an export-bound container is on road in the United States, the shipper must know its risk exposure to accident damages and State fines related with excess weight of the container truck’s load. Accident damage risks faced by the cargo can be insurance wrapped by the shipper, but not when weight of the load exceeds the maximum stipulated by the State authorities.

Ultimate Onus

When a trucking company is called in to pick a loaded container from the port or the warehouse, an experienced freight forwarder expects the trucker to ask and verify two factors; the total weight of the container and its even distribution. If the trucking company does not bother asking and/or verifying about it, it is probably best to avoid engaging this trucker. Next, if your freight forwarder does not ask you about it, then it is best to avoid this freight forwarder too.

The whole responsibility, and ensuing costs, belong to the shipper to ensure that the container is evenly loaded and the container weight does not make the truck’s load exceed the maximum weight limit allowed by the States through which the truck will travel. Having said that, generally all shipments moving in and out of terminals are weighed, interchange reports are issued at respective times. All truckers notify their freight forwarders at particular time if shipment is over-weight.

Container Weight Restrictions

First, the reader must know that a valid Container Safety Convention (CSC) plate on the container specifies the maximum weight of the loaded container and if exceeded, the containers will likely not be accepted by the shipping line. This loaded container’s max weight mentioned on the CSC is not the same as on-the-road maximum allowed weight of the container-on-wheels, in both the origin and destination countries. Another important thing, , it is not mentioned on the CSC plate that the cargo weight is to be evenly distributed inside the container.

In the United States, there are maximum load limits for container trucks. Along with these weight limits, there are bridge laws which restrict the spacing and maximum weight on axle groupings.

The Tables

Here are two tables on max container-on-wheels weights as allowed in different States of USA, with glossary of terms used at the end, but contact TEU Global (www.teuinc.com) at info@teuinc.com, or call us at +1 732-515-9040; if there is any specific query or more information is sought.

United States – ZONE A

Zone A Includes Arizona – Iowa – Nebraska – Oregon – Arkansas – Kansas – Nevada – Rhode Island – California – Kentucky – New Hampshire – South Dakota – Colorado – Maine – New Jersey – Texas – Connecticut – Massachusetts – New Mexico – Utah – District of Columbia – Michigan – New York – Vermont – Idaho – Minnesota – North Dakota – Washington – Illinois – Missouri – Ohio – Wisconsin – Indiana – Montana – Oklahoma – Wyoming – West Virginia

Load Type Length Truck Type Weight Limits Weight Limit Exceptions Weight Limit Exceptions Weight Limit Exceptions Weight Limit Exceptions
DC/HC/OT/FR 20 Feet Without Tri-Axle 38,000lbs Illinois 34,000lbs California 36,500lbs
20 Feet With Tri-Axle 44,000lbs
40 Feet 44,000lbs Missouri 43,000lbs Illinois 43,000lbs
RF/RH 20 Feet Without Tri-Axle 34,000lbs California 32,000lbs Illinois 32,000lbs Indiana 32,000lbs Wisconsin 32,000lbs
20 Feet With Tri-Axle 41,000lbs California 38,000lbs Illinois 38,000lbs Indiana 38,000lbs Wisconsin 38,000lbs
40 Feet 41,000lbs California 39,000lbs Illinois 39,000lbs Indiana 39,000lbs Wisconsin 39,000lbs

United States – ZONE B

Zone B Includes Includes Alabama – Maryland – Tennessee – Delaware – Mississippi – Virginia – Florida – North Carolina – Georgia – Pennsylvania – Louisiana – South Carolina

Load Type Length Truck Type Weight Limits With Permits Weight Limit Exceptions Weight Limit Exceptions
DC/HC/OT/FR 20 Feet Without Tri-Axle 38,000lbs
20 Feet With Tri-Axle 44,000lbs 46,000lbs South Carolina 43,000lbs, with Permit 45,000lbs Tennessee 42,000lbs, with Permit 45,000lbs
40 Feet 44,000lbs 51,000lbs
RF/RH 20 Feet Without Tri-Axle 34,000lbs
20 Feet With Tri-Axle 40,000lbs 34,000lbs
40 Feet 41,000lbs 43,000lbs

In the first column of both tables, following abbreviations were used:
DC = Dry Cargo, the standard shipping container used for dry cargo. Made from steel, it is predominantly in 20′ or 40′ lengths and has loading doors at one end.
HC = High Cube, a container that is 9’6″ high instead of the standard 8’6″ high
OT = Open Top, a dry cargo container without a solid roof. Over-height cargo and heavy machinery can be loaded from above and a weatherproof tarpaulin is fitted over the top FR = Flat Rack, a heavy-duty container “base” used for carrying bulky or heavy cargoes. Fitted with end frames which are either fixed or folding and which constitute the corner posts for lifting and stacking
RF = Refrigerated container, normal
RH = Refrigerated container, High Cube

Important Notes

3rd and 4th Columns: They show which truck is more suitable for the 20 feet container. A tri-axle truck is more costly but the shipper might need it, considering the slightly excessive container weight.

5th and remaining columns: These show the States that have different max weight restrictions and permits.

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FDA PROCESS – ENTRY REVIEWS AND EXAMS

The products imported into United States that require FDA compliance include human and animal food and medicines, medical devices, tobacco products, cosmetics and electronic products that emit radiations. When the import entries are filed by the CBP authorized customs broker, the FDA staff might select the cargo for examination and sampling.

The US Government’s Food & Drugs Administration collects samples and conducts examinations to verify if certain imported products are compliant with the FDA regulations and laws. The imported products that require FDA compliance include human and animal food and medicines, medical devices, tobacco products, cosmetics and electronic products that emit radiations.

FDA REVIEW PROCESS

During the review of the import entries filed by the authorized customs brokers, FDA may decide to inspect the cargo and an FDA exam is notified to the importer so the latter could share the cargo location for FDA inspectors to visit and examine. This is where the recommended reasonable distance from port of entry comes in (ON EXPECTING DELAYS FROM FDA REVIEW) as FDA staff of that area must physically come to the location to examine. If the cargo has been stored further away, FDA may ask for its relocation closer to or at the port.

FDA examination can be of different kinds such as:

  • Label Examination
  • Field Examination
  • Sample Collection

Label Examination:

In label examination, a member of FDA’s compliance staff reviews the labels or labelling of the products to see if it complies with the labeling requirements. Labeling requirements vary based on whether the product is a cosmetic, drug, food product or a medical device. The Shippers importing into United States goods that are subject to FDA approval must follow the labeling regulations that are specific to the product.

Field Examination:

Savvy importers keep these possible delays and costs in mind when chalking out their schedules, so they have more time before an order is due and arrangements made for storage if need be. Another good practice is to not only be aware of these possibilities but communicate them with your buyers in advance so they can plan accordingly as well.

During a field exam, physical inspection is performed on the imported product and is used to determine various things including but not limited to:

  • Quantity observed does not match the quantity declared on shipping documents
  • In transit or storage damage
  • Inadequate storage temperature conditions
  • Rodent or insect activity
  • Field tests for lead in ceramic ware
  • Non-permitted food and color additives
  • Product integrity, uncharacteristic odors, or spoilage
  • Other questionable conditions/practices

 

Sample Collection:

During the Field Examination, FDA can collect samples of the product to determine whether it meets public health standards. FDA investigators are trained in sampling strategies and techniques to collect samples that are representative of the product being imported and can support a final admissibility determination. The samples are sent to an FDA laboratory for analysis. The results can and do take time (sometimes months) and the product cannot be distributed or sold until results have been reviewed and final admissibility has been determined.

Product Selection for Examination & Sampling

Not every FDA regulated imported product is selected for examination and sampling. Some of the reasons for FDA selecting a cargo for examination and sampling include risk associated with the product; past violations in that product category; past violations by the manufacturer, shipper, importer; and routine surveillance.

When FDA selects the imported cargo for examination and sampling, it will notify why the shipment is being held, what needs to be done and who to contact.

If you want to learn more or have specific queries related to FDA processes, drop TEU Global (www.teuinc.com) an email at import@teuinc.com , or call us at +1 732-515-9040.

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ON EXPECTING DELAYS FROM FDA REVIEW

One of the last things a US based importer wants to hear is that the goods they have spent so much time, effort and money on importing would not be available at the expected time and that really throws spanner in the works. Savvy importers keep the FDA process in mind and manage their delivery schedules with the buyers.

One of the last things a US based importer wants to hear is that the goods they have spent so much time, effort and money on importing would not be available at the expected time and that really throws spanner in the works. If not planned for before starting the import process, Food and Drug Administration (FDA) review and exams cause one such unexpected delay.

FDA Process – Make Your Peace

This lack of planning is a lot more of a common occurrence for new importers than one would expect. This is especially true in this new pandemic age when a lot of importers, previously importing non FDA goods, have branched out and started importing PPEs and sanitary products to help cope with the increased demands and fill up the drained stockpiles. As most of these products are regulated by the FDA, importers need to keep in mind that these would need clearance from the FDA as well as US Customs – a fact that gets overlooked and can cause problems with timely order fulfillment.

While a shipment can be Customs cleared in minutes or you are notified that an exam would take place, FDA review takes time. Unlike Customs hold/exam, you can pick up the cargo and take it to your warehouse as long as it is within reasonable distance from port of entry. Even though the cargo is in your possession sitting in your warehouse, goods are not allowed to be distributed until they have been cleared by FDA.

Ignored FDA Process? All Bets Are Off

It can take anything between one day or five business days or even more to see release or notification of an FDA exam, depending upon multiple factors such as FDA staff’s workload, availability of compliance review staff, shipment’s paperwork review etc. Until that happens your shipment is in a state of limbo. It cannot be sold on the market shelves or distributed to the final buyers, a factor that if not taken into account well in advance, could lead to order cancellations, demands for discounts or buyer frustration at the very least.

This can become even more of an issue when shipments are moving in-land or further away from the entry port. As mentioned earlier, it is recommended that the cargo should stay within reasonable distance from port in case FDA staff has to physically examine the cargo. In such situations, importers have to hire a warehouse or a storage facility close to the port so the cargo can stay there till release has been notified. It can sit there for days, weeks even. That does not only mean more delays but more importantly – additional costs.

Preempt the Uncertainty

Savvy importers keep these possible delays and costs in mind when chalking out their schedules, so they have more time before an order is due and arrangements made for storage if need be. Another good practice is to not only be aware of these possibilities but communicate them with your buyers in advance so they can plan accordingly as well.

If you want to learn more or have specific queries relating to FDA processes, drop TEU Global (www.teuinc.com) an email at import@teuinc.com , or call us at +1 732-515-9040.

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CARGO INSURANCE –Take The Best Advice For Free

Cargo insurance is a complex subject that requires specialist knowledge. The Cargo is prone to being totally or partially damaged and it can happen at any time at the country of origin, during the journey or at the destination country. Statistics are nerve-jangling.

Cargo insurance is a necessary cost of business, including international trade, where cargo damages can cause colossal amounts. Lloyds of London has reported that on an average, one ship sinks every day.

Why Insure The Cargo

A container delivered by TEU Global, got damaged on the road; it was beyond repair and was covered under trucker’s insurance.

The Cargo inside the containers is prone to being totally or partially damaged and it can happen at any time at the country of origin, during the journey or at the destination country. Statistics are spine chilling. Every year, between 2,500 to 10,000 containers are lost in the Ocean. Inside the United States, 
thousands of container trucks are involved in road accidents every year, causing deaths and damage to cargo and other property. At US Ports too, cargo damage is hardly a rare incident.

The ocean, air, road and rail carriers almost always have sound insurance coverages to protect the cargo against any damages, but these insurances exclude the shippers’ packing and labelling negligence, apart from the Acts of God, terrorism and war. It is not unusual with the shippers discovering to their horror that the carrier’s insurance company “found out” that the cargo damage was due to shippers’ negligence and hence excluded from the final settlement of the claim.

Take the Advice & Save Dollars

Businesses doing international trade may think that their logistics professionals know well the risk of cargo losses and damages, so they are relied upon to buy the cargos’ insurance wrap. But one needs to start winning every single time, and the right way forward is to get a smart 3 rd Party Logistics outfit, to provide free advice. While an expert 3PL company always maintains the utmost care in handling their clients’ cargo, there are inherent risks involved in transportation that may cause losses beyond their control.

 

A container delivered by TEU Global, got damaged on the road; it was beyond repair and was covered under trucker’s insurance.

Here are a few reasons for getting the best insurance advice from an  experienced and professionally managed 3 rd Party Logistics company:

  1. They are the transportation experts and are in the best position of understanding the transportation process and how to minimize the transit risks. Should damage occur, they will have most of the relevant information needed to file a claim, which makes the process easier on their clients.
  2. Because of the volume of insurance handled, they can offer very competitive rates and coverage for most shipments. Additionally, because they work with a transportation insurance broker, they often have access to markets willing to provide coverage on “higher risk” commodities.
  3. The Importers or shippers will not have to handle any administrative issues dealing with insurance. The 3PL companies will take care of preparing certificates of insurance, mailing reports to the insurance company, and filing claims on their clients’ behalf. Their clients can concentrate on buying or selling their goods.
  4. Carriers limit their liability in the event of a loss. In fact, no carrier is obligated to pay for a loss that occurs beyond their control and is not directly caused by their negligence. Exporters and Importers can remove the burden of proof from the equation and insure their cargo against physical loss or damage, with the help of a specialist and efficiently managed 3PL company.
  5. The 3PL outfits help their client choose between the type of insurance coverages available, ranging from All-Risks to Specific-Risks coverages.
  6. The best for the last – all the above comes at a cost saving for their clients.

Drop TEU Global an email at pricing@teuinc.com , or call us at +1 732-515-9040.

We will support you to determine your cargo damage risks and guide you to the best insurance solution at the most competitive rates.

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INCOTERMS 2020 – Risk Responsibility Transfer Between Exporters and Importers

“There are 11 Incoterms currently in use for the international trade, and each Incoterm has its own unique risk-responsibility framework.  Here is a Table that describes the sellers and buyers’ risk and responsibility for each Incoterm.”

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Real Cost Benefits Of C-TPAT Membership

There has been debate on whether the Dollar investment in C-TPAT membership exceeds the Dollar benefits of US importers and exporters, as well as those businesses who serve in their supply chains. The benefits, as this piece will show are not just feel-good, help-save-America types but real benefits that boost profitability and save your business from disaster. Those who were and are complaining are missing the point. Structured Security Measures to protect against terrorism and illegal goods are like pulling out an insurance cover, albeit a different one that pays a claim on each shipment. Here is a good blog to read on this subject.

Launched in 2001, C-TPAT program has grown and a lot of teeth added to its security risk assessment guidelines and minimum security criteria.

C-TPAT Membership – Better Than Insurance Cover!

Normal insurance policies pay back when something bad happens, a claim is filed and paid on by the insurance company. C-TPAT membership pays back a part of investment on every shipment, except that only the wiser can see this pay-back, while others will keep complaining about the C-TPAT membership costs. They will also be a reluctant partner of CBP that the latter does not want in the program in the first place. Let’s see how this works.

Cost Savings – Both Over & Underlying

First, the exporters to and importers in the United States need to know that C-TPAT is about the change in the mindset embedded in what we call “tone at the top”. Smart Boardrooms and CEO’s know well about the three types of C-TPAT related Dollar returns; evident to the front line managers, not so evident and the latent ones.

Evident to the front line managers are the benefits linked with comparatively faster CBP clearance of the ocean, air and road shipments in and out of USA. Other clear benefits is they get top of the line service providers in their supply chains at better rates than others. Not-so-evident benefits of C-TPAT partnership are those known to the marketing and sales people, who know large and reputable customers prefer C-TPAT members for doing business with. And the simplest of the latent benefits of C-TPAT memberships relate with avoiding the opportunity cost of the consignments getting stuck deep in the line waiting for CBP inspections. This opportunity cost is actually the cost of capital stuck in the waiting shipments, daily costs of the waiting employees and equipment, the lost business opportunities for non C-TPAT partners.

The single biggest latent benefit of C-TPAT membership is associated with the disasters that the businesses were and are able to largely avoid simply because they were trustworthy C-TPAT partners. This is about the various vulnerabilities to avoid something as small as theft
and as large as conveyance of illegal goods inside the shipments.

At TEU Global, we are in the frontline, witnessing a significant number of US importers having adopted the C-TPAT mindset, and they are truly interested in getting all C-TPAT membership benefits. Many of them are now Tier 3 partner, and like to keep most, if not all, of their supply chain service providers as partners of C-TPAT and C-TPAT comparable programs. We can clearly see how important their security management systems and procedures, and CBP recognizes their efforts loud and clear in terms of benefits. Needless to mention, they get
preferred rates all along their supply chains.

The Reluctant & The Credulous

But then, there are those reluctant C-TPAT partners who are gunning for the benefits from CBP by masquerading as lower risk components of the international supply chain of US based importers and exporters. For them, C-TPAT program compliance is a mere unwelcome cost, which would rather be avoided. They seldom advance from their C-TPAT program applicant status as they fail to see that their CBP assigned Supply Chain Security Specialists can see their infra-par interest in making C-TPAT program a part of their organizational souls.

And there are a few among members within the international trade community in the USA who complain about having made a big investment in C-TPAT membership but not getting the desired benefits from CBP. Quite a few of these complainers have been actually a victim of not paying enough attention to Participating Government Agencies (there are 41 of them, including Food and Drug Administration and Department of Agriculture), which have their own safety checks. Not following their procedures can hold up the release of imports, even for the most compliant importer of the C-TPAT program.

Utilize Your Free Expert

While there are many outfits providing consulting on C-TPAT measures, the best and free resource by a clear margin is the CBP Assigned Supply Chain Specialist to (SCSS) every C-TPAT program’s applicant. This guy has in-depth C-TPAT program knowledge about the particular business type, which includes the program’s Minimum Security Criteria and how it can be best adopted and governed through procedures and regular risk audits.

Voluntary Yet Compulsory

There is one area, however, where the C-TPAT program complainers may have a point. These are the thousands of Freight Forwarders, Customs Brokers, consolidators, carriers, trucking companies, warehouses, suppliers, etc. for whom the C-TPAT program compliance is no more voluntary as mentioned in the C-TPAT program’s source documents. That’s because most of the large exporters and importers have become C-TPAT program Tier II and III members and to reduce their own program compliance costs and supply chain risks, they demand that their service providers in the supply chain, become compliant of the C-TPAT and comparable programs of their host countries. They have even encouraged their foreign manufacturers and suppliers to adopt best security practices.

Please Take Note

In the end, it merits to be mentioned that from the start of 2019, all C-TPAT members are expected to comply with the updated Minimum Security Criteria. However, because many C-TPAT partners in their 4-year validation cycle will not undergo a validation based on the updated MSC, it will be better for them to implement their operations to the updated MSC to maximize their supply chain security profile and stay ahead of the curve.

For details on C-TPAT program requirements and how to apply for membership, please visit TEU Global website (www.teuinc.com); or email info@teuinc.com, or call +1 732-515-9040 or toll free 877-414-8381. Let the expert guide you through the process.

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USA Customs Holds and Examinations

When a cargo imported into the United States is under the Customs Clearance process, the Customs and Border Protection (CBP) will sometimes notify the Importer of Record that the cargo has been put on Customs Hold for some documental deficiency, which can be rectified within a few days by the Importer. However, sometimes the Importer of Record is notified that the cargo has been put on Customs Hold for Examination. Here is a good blog to help understand Customs Hold and Customs Examination.

For the importers into the United States, Customs Hold and Examination can be the worst news to spoil his day, but a professionally managed, customs broker can help reduce the chances of these distressing news. First thing to know is that Customs Hold does not always result in an Examination. Let us first describe Customs Hold and then take up Customs Examination, briefly.

Customs Hold

These holds could be of the following types:

  • ISF Hold for late importer security filing
  • Manifest Hold for deficient manifest of the importing carrier
  • Commercial Enforcement Hold for suspicions of shipment carrying illegal or contraband cargo
  • Statistical Validation Hold when the shipment’s weight and/or value are not according to the goods listed on the manifest
  • PGA Hold for shipments suspected to be breaching the regulations of US Government Agencies like United States Department of Agriculture, Federal Drugs Authority, Office of Foreign Assets Control, etc.

Once shipment gets flagged for Customs Hold, the importer of record (for definition of Importer of Record, click here) may have to get the deficiency rectified or the Cargo is tagged for Customs Examination depending on the nature of Hold. If Customs Hold does not lead to Examination, the cargo may remain stuck for a few days, costing the Importer of Record a few hundred dollars (different types of fees, including storage and container detention).

If the Customs Hold leads to an Examination, the Importer of Record must know what it means. So, here is a brief description.

Customs Examination

This Examination could be for any reason, suspected security, or commercial issues like counterfeit products, misdeclaration, observations by FDA, USDA, OFAC or other participating government agencies, etc. Or the cargo could be randomly selected by CBP. The following are the levels of Examination:

  • The X-Ray (VACIS) Exam: The Container is X-Ray examined at the Terminal, and depending on the findings, the container will either be released or tagged for an additional Examination.
  • The Tail-Gate Exam: At the pier, a designated Customs Officer breaks the seal and physically examines the contents. Depending on the findings, the container will either be released or tagged for Intensive Examination.
  • The Intensive Examination: An authorized Customs Agent completely empties the container at the Customs Exam Site (CES). A Customs Officer makes a detailed inspection of all the boxes.

Depending on the results of the Examination, the cargo may get released after a delay that can last a few weeks and cost the Importer of Record up to a few thousand dollars. Or even after this long delay and significant costs to the Importer of Record, the cargo’s entry to USA may be refused altogether, in which case either the Importer of Record is notified to reexport the cargo or (worst case scenario) the cargo is notified for destruction in US at the Importer of Record’s cost.

Having a competent customs broker and logistics partner on US importer’s side would be helpful in tackling the Customs Hold and Examination issues in appropriate manners that includes documentation and coordination with concerned agencies. If you want to know more details, or have specific queries, please contact TEU Global; import@teuinc.com or +1 732-515-9040. Let the expert guide you through the process.

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Efficiency in International Trade Logistics

Logistical efficiency is important for international trade and can be defined as a continuous process of reducing the journey costs and time, while improving reliability, consistency, and the informational flow. It is always a continuous process because to achieve the best logistical efficiency is well-nigh impossible.

 

There are many ways by which exporters and importers can save (more) costs and time to move the cargo across international borders, while reaching higher levels of consistency, reliability and information flow. Let us briefly analyze these 4 components – costs, time delays, reliability/consistency
and information flow.

Costs & Time Costs

First, it is easy to understand that cost efficiency in logistics covers the time duration aspect as well. Important to know is that the cost efficiency must be applied on holistic basis to the entire route – from the origin to the destination. Sometimes it requires sacrificing costs and time efficiency of individual component of the journey, to get to the optimum cost efficiency level of the journey. It calls for looking at the whole lot of trees as woods and not as individual trees. For example, some importers/shippers adopt transloading option with extra costs and the additional time consumed in the process, to improve total cost and time duration of the overall in-land journey.

Inventory Stuck in Transit

Now consider this; if each shipment is taking a long time to reach its destination, it means the total amount stuck in the inventory-in-transit is high. The origin is seeing, for example, 25 containers leaving for destination each day, and the destination is also getting 25 containers daily, but the in-transit containers could be 300. That means 300 containers worth of cost has been invested in the logistics either by the shipper or the consignee, depending on incoterms. This is a non-earning, stuck investment and if it could be cut down to, say, 200 containers, overall payment cycle will reduce by 4 days (100 reduced in-transit containers divided by 25 containers shipped daily), which is great.

But often the transit cost has a positive correlation with consistency and reliability, meaning that if cost is reduced, consistency and reliability may go down too.

Consistency & Reliability

Let us discuss what consistency and reliability means in this context. Sidestepping semantic details, if the entire journey from the origin to destination has reliable and consistent logistics, it means it takes just about the same time and costs, for every shipment, every time. A poor level of reliability and consistency often means the importer must maintain a large inventory of the imported cargo to avoid stockouts; higher inventory means higher costs.

And Information Efficiency

To complete the understanding of logistical efficiency, there is information management. From the point origin to destination, exact geographical and process location of each cargo must be known to the managers at all the times. Process location means the cargo is undergoing which process in the supply route. Now let us define the concept of logistical efficiency.

Total logistical efficiency could now be defined as a continuous process of reducing the journey costs and time, while improving reliability, consistency, and the informational flow. It is always a continuous process because to achieve a perfect logistical efficiency is well-nigh impossible.

About Getting Help From Experts!

Well managed importers often outsource the expertise of logistical efficiency to a 3 rd Party Logistic (3PL) company that has all the required licenses to deal with the government agencies, is resourceful, and handles everything in-house. Such a 3PL partner company knows how to keep improving logistical efficiency.

Please contact TEU Global to know how you can build and maintain reliability and consistency in your exports to and imports from USA, yet reducing the cost and time; drop us an email at import@teuinc.com or export@teuinc.com, or call us toll free at 877-414-8381, or phone +1 732-515-9040.

 

 

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Claiming Refunds For Section 301 China Punitive Tariffs

TEU Global has its knowledge resource available to assist its customers and others to apply for Section 301 Tariff refund for excluded items, track their applications status, and get all updates in a timely manner. There may be some confusion and perceived lack of information out there, but one can rest assured that our teams are quite aware of the latest developments and trends regarding additional duties imposed on Chinese products.

 

The Backdrop

Since July 2018, the US Government announced extra tariffs (Invoking Section 301 of Trade Act) on some 550 billion dollar worth of Chinese imports in 4 lists, so far the last of which was announced on September 1, 2019. From December 2018; the United States Trade Representative department started announcing Section 301 tariffs’ exemptions retrospectively from the date these tariffs were imposed on specific Chinese products to protect stakeholders facing extreme hardships due to the higher tariffs and so far a total of 24 exclusion lists have been issued, with the last one coming on March 6, 2020.  More exemptions might be coming.  Each exclusion list is valid up to one year from the issuance date and may get extended.

US Customs and Border Patrol (CBP) issued guidelines in February 2019 for the importers to obtain the refunds in line with the USTR exclusion lists. TEU GLOBAL with experience and knowledge is following up on each update to facilitate customers and determine how much they stand to lose if they do not apply for tariff refunds.

 

The Challenges Faced by US Importers

Those who are calling TEU Global have raised the following major queries, with our short reply under each:

 

  • Section 301 Tariffs exemptions relate with tariffs payments in which years?

The exclusions relate with Section 301 Tariffs paid by importers in the years 2018 and 2019.

 

  • Are these USTR exclusion lists clear to understand?

Yes, these are clear to understand for TEU Global and we can explain.

 

  • Are my products included in the exclusion list, and is there a timeframe to apply for tariffs refunds?

Give us the descriptions of your products that you have imported from China in 2018 and 2019 and we will tell you if these have been granted exemptions along with the initiation dates and timeframe to apply.  Your product entries made before the initiation dates are not eligible for refund.  Please note, many exemption requests are still pending review by USTR and you must remain in touch with us for new exemption lists.

 

  • How can we apply for tariff refunds, if we still have time to apply, and we will need which documents to apply?

You will need to gather and submit entry documentations, which will include entry summaries, packing lists, pictures of the products you imported, etc.  Call us and we will assist you with all the documents that you are going to need to submit your refund application.

 

  • Same product was imported from different ports of entry into United States. Do we need to file just one refund claim for the product?

You will have to submit a refund claim for each port.

 

  • What happens if we have missed the opportunity to apply for refunds?

Call us and we will suggest the options available to you.

 

  • What happens when the exemption period is over?

The Section 301 Tariffs that were granted exemptions by USTR may or may not get extended by USTR.  We cannot say for sure.

 

  • Are more exclusion lists coming?

Yes but it is not certain what exemption requests are closer to being granted.

 

The Final Words

It is interesting to note that while USTR is being approached by large size (hence more affected in Dollar terms) companies importing from China, the exclusion lists being issued by USTR will benefit many smaller importers as well.

But ultimately the most important thing to remember is that when the granted exemptions’ time limit is over and no extensions are granted by USTR, the Section 301 Tariffs will be back.  Importers must not wait for the extensions of exemptions granted by USTR, and actively look for supply sources away from China.

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EXW or FCA, Which One Seems Better & Why

Experienced importers, exporters and logistics companies are well aware that EXW (Ex Works) is at the extreme end in terms of risk and responsibility transfers.  For EXW, the exporter’s risk and responsibilities are supposed to be the smallest and for the importer, the highest.  The price of the goods is adjusted to reflect these risk-responsibility factors.

That said, at the time of signing the Agreement between an importer and exporter if one of these two parties is not cautious, it might end up facing unintended risks and paying for the downsides.  It is mostly when things go wrong when the parties hurriedly go through the signed Agreement, only to discover the cost horror.

Let’s look at EXW wherein the exporter is required to make the goods available at its warehouse or some other mutually agreed place inside the (exporting) country.  The Agreement might specify that the exporter will load the goods and process the export formalities too but according to the Incoterms, EXW absolves the exporter of the risks beyond the exporter warehouse or any other nominated place. So the importer bears all the risks and must absorb all the consequent costs, from the time goods are ready at the exporter’s warehouse.

So why not sign an agreement based on FCA? 

For FCA (Free Carrier) shipping, the exporter arranges most or all of the export country stages (e.g. customs, trucking within the export country). The importer arranges all other stages to the cargo’s ultimate destination.  ICC recommends it for the containerized freight.

The exporter is liable and responsible for all tasks in their country up until the goods are delivered to the carrier at the named place, usually the terminal or a warehouse (e.g. consolidation center). Unless the named place is the terminal, the importer will be liable and responsible for some tasks in the export country.

FCA overcomes the disadvantages of EXW, where the importer is in a worse position than the exporter for arranging local transport and customs.

If the named place is the exporter’s warehouse or some other terminal that is not the seaport or airport, the exporter remains liable and responsible for loading the truck at their premises, with the carrier responsible for unloading the truck at the named place. The importer is therefore liable and responsible for some tasks in the export country (transportation and terminal charges).

The named place can also be the supplier’s factory, making it similar to EXW, excepting the supplier is responsible for loading the truck. The importer is therefore liable and responsible for some tasks in the export country (transportation and terminal charges).

Irrespective of where the named place is, the exporter is still responsible for all export and documentation tasks. There’s one exception, which is relevant only for letter of credit payments: the importer can now instruct the carrier to add the word “aboard” onto the Bill of Lading.

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