Suppliers Products CAD Drawings Product News Certifications
Search By: Category Company Name Brand UNSPSC Commodity
Promote Your Business | MyThomas
Saturday, August 30, 2014

Minding Your Regulations: Importing Non-Compliance Can Impact Total Landed Cost

[Editor's Note: This is the third article in a series covering topics related to total landed cost by contributing writer Marilyn Gettinger. See links to her first two articles at the end of this article.]

cargo1The U.S. government, U.S. Customs Border and Protection (CBP), and various federal agencies have established many regulations that the importer of record must know and follow. Compliance costs are part of the total landed cost calculation. An importer that does not stay current on regulations or pushes the limits will incur fines, extra charges, delayed deliveries, and even confiscated shipments, all of which add significantly to total landed costs.

A buyer comparing onshore versus offshore purchases needs to consider how to meet regulations as well as the overall cost of compliance and responsibility.

Often organizations purchasing goods directly from tier-one suppliers located in the United States do not give much thought to the importing process. Even though the buying organization is not involved in this process, its supply professionals are responsible for selecting and managing suppliers and ensuring the right product at the right delivery time. Therefore, it is important to evaluate a tier-one supplier’s compliance process to prevent potential disruptions in supply.

Knowledge of regulations, estimated costs, and information resources is critical if supply staff or the tier-one supplier deals directly with overseas suppliers. There are regulations in place for the various phases of a product.

Phase 1

The U.S. Code of Federal Regulations Title 19 offers information on the following:

  • Products not permitted into the United States
  • Restricted products that must be registered with one or more of the over 40 federal agencies
  • Quotas or how much of a product will be allowed into the United States at one time
  • Required product and packaging markings and labeling
  • Country of origin requirements.

Each agency may also have its own compliance requirements that must be known and met. Also, the Office of Foreign Asset Control provides a list of countries from which it does not permit purchases or transport by U.S. businesses.

The U.S. International Trade Commission maintains the Harmonized Tariff Schedule of the United States. This schedule identifies the specific coding for the goods being imported, as well as the duties or import tax due on the goods upon arrival into the country. The importer of record is required to correctly note the tariff code and duties due on import documents.

The Harmonized Schedule includes, under “General Provisions,” various regulations and guidelines for the importing of goods of special types, such as automobiles, as well as regulations and guidelines under the various trade agreements the United States has with other countries.

Phase 2

The CBP requires the importer of record to purchase a customs bond; that bond covers the incoming shipment and possible non-payment of duties.

The CBP requires that all wooden pallets and/or wooden packaging be fumigated using a required process and completed by a source certified by the agency. The wood must be stamped as fumigated, and necessary documentation should be provided. If the goods are held up for any time in another port, where infestation may occur, the CBP requires a second fumigation process.

The list of certifications is growing as the United States enlists importers of record to ensure environmental safety and human and animal rights. Importers are being asked to certify that their payments for materials such as diamonds, metals, and even avocados are not being used to fund wars in the countries of origin. The Lacey Act requires a certificate for all products with wood as a component, in attempts to prevent rain forest destruction.

A bill of lading, customs invoice, commercial invoice, country of origin, entry summary, and packing list are the main documents required electronically by the CBP prior to the arrival of the goods into one of the many U.S. seaports. There may other certificates and forms required by agencies with whom the goods were registered.

The shipping line is responsible for the “24-hour rule.” This regulation requires the shipping line to forward its manifest of all booked containers 24 hours prior to loading. CBP reviews that list and may send a “do not load” request back to the shipping line, or it may ask customs in those countries with which the United States has collaborative agreements to open and inspect the goods.

CBP recently implemented the Importer Security Filing (ISF), or “10+2″ regulation. It requires importers and vessel carriers to provide data electronically to CBP for in-bound ocean shipments. The U.S. importer is responsible for providing the following information on one document:

  • Ship to name and address
  • Importer of record number
  • Consignee number
  • Six-digit Harmonized Tariff code
  • Manufacturer name and address
  • Seller name and address
  • Container stuffing location
  • Consolidator name and address.

The importer of record should file the above 24 hours prior to lading, but it should file the following as soon as possible and no later than 24 hours prior to arrival of goods:

  • Buyer name and address
  • Country of Origin of the goods.

The carrier is responsible for providing:

  • Vessel stow plan — no later than 48 hours after departure
  • Container status message data – Detailed information on the movement and status changes of a container as it travels through certain parts of the supply chain, which must be transmitted no later than 24 hours after messages are entered into the carrier’s system.

The ISF improves CBP’s ability to recognize high-risk shipments in advance, in order to ensure the safety of American borders. CBP levies up to a $5,000 fine per ISF filing for non-compliance or errors.

It is ultimately the responsibility of the importer of record to ensure there is compliance with all existing regulations, a capability to identify changes to those regulations, and an ability to know about any forthcoming regulations. It must also have processes in place to quickly communicate and implement new requirements.

Every importer of record needs to frequently review its compliance management measures and those of its critical tier-one and tier-two suppliers. Non-compliance will have a greater impact on total landed cost than compliance.

SEE ALSO: Everything You Need to Know About C-TPAT and Total Landed Cost 

PLUS: Total Landed Cost: Just How Much Is That?

 

Marilyn Gettinger is owner and principal of New Directions Consulting Group, which works with organizations on improving their supply chains through process streamlining and reengineering. New Directions Consulting Group offers workshops and consulting to companies from 30 employees to multinational corporations to upgrade purchasing, inventory, and supply chain processes. Gettinger, who earned her MBA from Fairleigh Dickinson University, teaches total quality management, supply chain management, and international trade at several post-secondary schools. She holds a C.P.M. and is a member of the Institute for Supply Management and the American Production and Inventory Control Society. She can be reached at (908) 709-0656. 

Advertisements
Add Comment Register



Speak Your Mind

*

Copyright© 2014 Thomas Publishing Company. All Rights Reserved. See Terms and Conditions or Privacy Statement. Website Last Modified August 30, 2014.

Thomas Register® and Thomas Regional® are part of ThomasNet.com.

ThomasNet Is A Registered Trademark Of Thomas Publishing Company.