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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.

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.

On September 10, 2019; the International Chamber of Commerce (ICC) has launched the Incoterms® 2020, which is providing a degree of certainty and clarity to the exporters and importers, as well as the logistics firms.  The Incoterms®2020 shall be effective from January 1, 2020.

The ICC states that “Incoterms® 2020 includes more detailed explanatory notes with enhanced graphics to illustrate the responsibilities of importers and exporters for each Incoterms® rule. The introduction to Incoterms® 2020 also includes a more detailed explanation on how to choose the most appropriate Incoterms® rule for a given transaction, or how a sales contract interacts with ancillary contracts.”

There are six key areas where Incoterms® 2020 have been amended. These are as follows:

Bill of Lading

Previously under the Incoterms 2010, in case of FCA (Free Carrier), it was not certain that the exporter could obtain an On-Board-Bill-of-Lading from the carrier.  This carrier is likely, under its contract of carriage, bounded and entitled to issue an on-board Bill-of-Lading only once the goods are actually on-board.  Incoterms® 2020 now provides a clarity. Under FCA the buyer/importer and the seller/exporter can now agree that the buyer will instruct its carrier to issue an on-board B/L to the seller after the loading of the goods.

Insurance

There are 3 Marine Cargo Insurance Clauses; A, B and C. The C Clause provides insurance against Fire/Explosion, Stranding/Sinking, Barratry/Jettison, Collision and General Average/Sacrifice.  On the other hand, Clause A insurance covers 10 more risks; Earthquakes, Washing On Board, Theft, Malicious damage, shortage, contamination, etc.   According to Incoterms 2020®, it has been decided to provide for two minimum coverage options within CIP and CIF, either Clause A or Clause C. When opted for the default “Clause C” coverage, the term maritime term CIF should be used. Outside the maritime world, the default coverage will be “Clause A”, reflected in the rule CIP.

Own Means of Transport

Previously, In Incoterms® 2010, it was assumed that in respect of FCA, DAP, DPU and DDP based Agreements, a third party contractor was engaged for carrying the goods.  According to the Incoterms® 2020, the wordings have been changed to include not just the third party contractor, but also own means of carrying the goods, “…  the buyer/seller must contract or arrange at its own cost for the carriage of goods to the named place of destination or to the agreed point …”

DPU Replaces DAT

In the previous Incoterms® 2010, the main difference between DAP (Delivered At Place – Loaded) and DAT (Delivered At Terminal – Unloaded), the main difference was loaded or unloaded, respectively. DAT has now been renamed as DPU that stands for Delivered At Place Unloaded, signifying that it could be any place other than the Terminal.

Cost Related Requirements

In a further attempt to increase transparency and to enable a comparative understanding of the parties’ cost obligations, the new costs articles A9/B9 – previously A6/B6 under Incoterms®2010 – collate under a single heading all of the parties’ respective costs obligations.

Security Related Requirements

In recognition of the increase in security-related concerns in the trade and shipping sectors over the past decade, article A4 (“Carriage”) of each Incoterm now requires the seller, where applicable, to comply with any transport-related security requirements, up to the point of delivery, and/or to provide the buyer, at the buyer’s request, risk and cost, with any information concerning transport-related security requirements, that the buyer needs for arranging carriage.