Insights to help make going global easier.
Global logistics has a complex language all its own. Sourcing and distribution, ever-changing regulations, fluctuating valuations – it's a daunting lexicon even for veteran exporters. But fluency means entering new markets flawlessly (and penalty-free).
UPS has a range of technology tools to simplify international logistics.
Even the most experienced exporters can make mistakes. Greg Maddaleni, UPS Customs Brokerage marketing manager, says the three most common errors are:
- Misclassifying goods
- Assigning the incorrect value to goods
- Misstating the country of origin on a product shipment
For example, suppose you classify an optical instrument that's something other than a binocular as a binocular. The binocular is duty-free, whereas the other item has duties of 6 percent. Misclassification could mean that you may have circumvented export control regulations (which cover strategically important technology, services or information). At the very least, you have to pay back duty plus interest.
"If customs alerts you, the penalties involved will be based upon whether the agency thinks you did it by accident (negligence), were irresponsible (gross negligence) or did it on purpose (fraud)," Maddaleni says. Penalties can quickly equal or exceed the value of the goods shipped.
It's easy to assign the incorrect value to goods since different countries have different definitions of value. Companies sometimes think that a different value can be used for shipping goods to a subsidiary as opposed to a customer, but the predominant rule is that the same value should be applied, Maddaleni points out. To further complicate matters, different countries also have different rules on whether the cost of packaging and transportation should be included in the valuation.
Country of origin
Declaring a country of origin sounds simple, but in today's global manufacturing environment, it can be tricky. A technology manufacturer, for instance, may source components from multiple countries and assemble those components in yet another country. Is the point of assembly the country of origin? It depends. In some cases, 50 percent of what makes up the product typically determines the country of origin. "Otherwise, where the ‘essential character' of the product is substantially formed dictates its origin," Maddaleni says.
The more frequently your company exports or the more mistakes you make while exporting, the greater the likelihood that customs officials will closely scrutinize your shipments. To avoid these common mistakes, fine-tune your export processes.
Assess your processes
Start by assessing your export problem areas. Maddaleni also recommends studying how your competition handles imports and exports. You may decide not to export to a region because of cost considerations – or it might illuminate opportunities to ship your own goods better and faster.
Consider UPS's Trade Management Services to get a customized assessment of regulatory requirements and compliance issues affecting your company's global reach. UPS can help redesign your processes so that your company more easily adapts to changing regulations and tariffs.
No matter where you cross borders, UPS can help you navigate country-specific customs processes and leverage trade agreements such as those within the Asia-Pacific Economic Cooperation region, the North American Free Trade Agreement or the U.S. Generalized System of Preferences. UPS can outline how to take advantage of country-of-origin and preferential-treatment qualifications and help you manage import/export licenses and restrictions.
Tools of the trade
UPS has a range of technology tools to simplify international logistics, including these free solutions: UPS TradeAbility®, WorldShip® and Quantum View Manage®. UPS TradeAbility is a suite of web-based tools that provides harmonized tariff codes, landed cost estimates, compliance information, denied party screening and much more. With it, you can enroll in UPS Paperless® Invoice and transmit customs documents electronically. You can also integrate UPS TradeAbility tools into your own website or back-end systems.
You're probably already using WorldShip technology for shipping, but you also can create customs documents and upload your own trade documents for customs clearance, estimate duties and taxes, and search for and validate tariff codes. For smooth sailing through final delivery, pair WorldShip and UPS TradeAbility tools with Quantum View Manage, an online tracking solution. Quantum View Manage provides a dashboard view into how shipments are progressing and includes an imports view for visibility into brokerage and customs compliance information. You can access 365 days of brokerage data, request archived document images and contact customs brokerage.
Combine knowledge with UPS technology, and you have a winning combination for fine-tuning your export processes.