Category Archives: Logistics

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.

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.

“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.”

Risk-Responsibility-Transfer

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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.

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.