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INTERNATIONAL PARCEL SHIPPING & DELIVERY

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PARCELindustry.com

BY THE

NUMBERS: A Look at the Facts and Figures Characterizing the Parcel Industry PAGE 22

KEY ELEMENTS OF A GLOBAL SHIPPING STRATEGY.

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DON’T LET YOUR SHIPMENTS BE

DELAYED AT THE BORDER. P.20

WHAT COULD THE NEW DE MINIMIS CHANGES MEAN FOR YOU?

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CONTENTS /// Volume 25 | Issue 6

06 EDITOR’S NOTE Capitalizing on International Growth By Amanda Armendariz

08 TODAY’S LEADING TARGET MARKET: PLANT EARTH If you’ve been wanting to take the leap into global shipping, here’s a handy primer to get you started. By Matt Mullen

10 WHAT IF GLOBAL TRADE ENDED? The recent rumblings in the political arena could signal big changes ahead for trade. By John Haber

12 4 TIPS TO HELP SMALL BUSINESSES CONQUER INTERNATIONAL E-COMMERCE By using gradual expansion, geographic expertise, and international shipping best practices, sellers can minimize their risk and reap the rewards of new markets. By Rafael Zimberoff

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8 10 20 22 26 16 KEY ELEMENTS OF A GLOBAL SHIPPING STRATEGY

While every shipper’s strategy will differ, there are some basic elements on which all merchants should be well-versed. By Tim Sailor

18 TESTING THE INTERNATIONAL WATERS: HOW TO SUCCEED WITH GLOBAL E-COMMERCE Here are four factors to consider when getting your global strategy off the ground. By Greg Hewitt

20 AVOIDING DELAYS AT THE BORDER Don’t let a customs snafu delay your Canada- or Mexico-bound e-commerce shipments. By John Costanzo

22 AN EXPLOSIVE GROWTH

A look at the facts and figures characterizing today’s parcel shipping industry. By Amanda Armendariz

26 THE LATEST DE MINIMIS CHANGES AND THEIR IMPACT ON SHIPPERS Don’t be left in the dark when it comes to the latest changes in international regulations; their impact on your shipping strategy could be far-reaching. By Krish Iyer

28 GLOBAL E-COMMERCE: A CUSTOMS AFFAIR Customs clearance is a hurdle that any international shipper must overcome. Here are some tips to make global shipping as simple as possible. By Michael J. Ryan

30 TO SUM UP


PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ amanda.c@rbpub.com ]

EDITORIAL DIRECTOR ALLISON LLOYD [ allison.l@rbpub.com ]

AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ rachel@rbpub.com ]

CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ ken.w@rbpub.com ]

PARCEL PARCEL (ISSN 1081-4035) is published 7 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2018 © by RB Publishing Inc. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, RB Publishing Inc. or its staff becomes the property of RB Publishing, Inc. The articles in this magazine represent the views of the authors and not those of RB Publishing Inc. or PARCEL. RB Publishing Inc. and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine. SUBSCRIPTIONS: Free to qualified recipients: $12 per year to all others in the United States. Subscription rate for Canada or Mexico is $35 for one year and for elsewhere outside of the United States is $55. Back-issue rate is $5. Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098 Allow six weeks for new subscriptions or address changes. REPRINTS: For high-quality reprints, please contact our exclusive reprint provider, ReprintPros, 949.702.5390, www.ReprintPros.com.

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EDITOR’SNOTE

CAPITALIZING ON INTERNATIONAL GROWTH By Amanda Armendariz

T

he world as we know it seems to be getting smaller and smaller, year after year. After all, the level of global connectedness is at an all-time high, thanks to the constant growth and innovation in the technological sector. Human beings are able to interact with businesses and each other on a scale never before seen — one that was likely never even imagined until a few decades ago. This growth and connectivity present huge opportunities for businesses to extend their reach out of the domestic market and into international waters, boosting their bottom lines and customer bases in the process. However, if you’re a shipper who is new to international e-commerce, the world might not feel small at all; it might seem downright insurmountable. After all, anyone who is in the logistics profession generally knows the nuts and

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bolts of American shipping and e-commerce. But when you’re attempting to expand into the global market, it’s easy to feel like a fish out of water. Each country has their own regulations and laws regarding customs, duties, and taxes. Not to mention the fact that there are language and cultural differences to take into account. It’s no wonder that international e-commerce can seem rather daunting when first attempted. But it would be a mistake to ignore this market. The world is open for business, and it’s up to you to take advantage of the opportunities. New customers are waiting, and you don’t want to disappoint them. That’s why we are proud to offer our second-ever international issue, in which we focus solely on the challenges facing the global sector. We have insight from a variety of experts, detailing their opinions on the best ways to ease into this market no matter what your business size, as well as a look at the common terms and regulations that characterize international shipping. We hope you find it helpful as you venture into these increasingly successful global waters. As always, thanks for reading PARCEL.

EDITOR’S PICK

Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!

UPS Implements New Fee Type By Keegan Leisz

When Less Is More: How to Avoid Profit-Eating Accessorial Fees By Brad McBride

Handling the Holidays with a Peak Season Plan By Mark Sibley


ARE YOUR COLLEAGUES There are undoubtedly people in your organization who need this information as much as you do. So if they are not already a subscriber, have them sign up for a FREE subscription today!

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TODAY’S LEADING TARGET MARKET: PLANET EARTH If you’ve been wanting to take the leap into global shipping, here’s a handy primer to get you started.

By Matt Mullen

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nline shopping has dramatically transformed the retail industry. The days of brick and mortar stores are dwindling, as retailers are emphasizing e-commerce to reach a larger customer base. No longer can retailers solely focus on creating unique shopping experiences for customers across the nation — it is time to think global. In today’s retail environment, the location of a retailer around the globe makes little to no difference to shoppers. According to PayPal’s 2018 Cross-Border Consumer Research Report, customers are shopping globally due to better prices, access to items not available in their own countries, and to discover new and interesting products. Because of this, it is vital that retailers begin to emphasize international shipping and create shipping strategies that provide great customer experiences across all corners of the globe.


BENEFITS OF INTERNATIONAL SHIPPING While international shipping can be intimidating, the benefits are endless. Not only will expanding shipping capabilities to a global level aid business growth, it can increase company margins by selling in more markets. This new, expanded customer base will also create more demand for products and minimize domestic competition, as few retailers are ready to push their products worldwide. The starting point for retailers exploring international shipping is typically the United Kingdom, due to its similarities to the United States. The English-speaking market has been exposed — and also responds well — to American advertising, promotional activities, and product aesthetics. The UK market is also ranked number three in the world in overall e-commerce attractiveness, making it one of the best markets to enter and try a new global shipping strategy.

INTERNATIONAL SHIPPING BARRIERS Not all markets will share such close comparisons as the US and UK. Before entering other global markets, it is important to understand the most common operational barriers retailers experience with global shipping. Shipping Costs: Shipping costs are the number one reason for foreign shopping cart abandonment. In PayPal’s report, 25% of respondents said delivery shipping costs are a reason they choose not to order from international retailers. Limited Tracking and Fulfillment Concerns: Scams are a major deterrent, and customers who have fallen victim to such unfortunate incidents become far less comfortable ordering from international retailers. There is also limited tracking information available for global shipments, which is not conducive to a quality customer experience. Customs, Duties, Fees, and Taxes: These extra fees have proven problematic for international retail growth. The likelihood of a repeat customer decreases exponentially after international shoppers receive notice that they can’t receive their order until they pay more in fees, which is often the case if you send your shipments as Deliver Duty Unpaid (DDU). Slow Delivery Time: Due to Amazon Prime’s popular two-day shipping, today’s customers expect fast delivery. This is an issue as international shipping has been known to take weeks for an order to finally arrive on a customer’s doorstep. CONQUER CROSS-BORDER SHIPPING Identifying the common barriers to cross-border shipping is the first step. However, how well a retailer addresses and overcomes these issues will determine the success of its international shipping strategy. To conquer cross-border shipping barriers, retailers need to ask the following questions: What is the average time it takes to ship a package cross-border? Does our shipping software have

international tracking capabilities? What is our average cost for shipping a package cross-border? What is our strategy for tax and duty collection? Is the customer responsible for paying? Are there multiple shipping options available for global customers? Only once these questions have been answered can a retailer begin to develop and implement a shipping strategy. Like domestic shipping, it is important to offer customers a wide range of shipping options. Customers want choices, and this is the best way to make both domestic and international customers feel involved in the shipping experience. Next, it is important to identify which global shipping software will be used and the features it offers. Does this system offer tracking capabilities or insurance? Will it create an accurate custom shipping label for international orders? Can it get orders to international customers within four to seven days? The more capabilities shipping software offers, the more streamlined the global shipping will be. And don’t forget about reverse logistics — especially for international shipments in which orders can return to the warehouse in a timely and efficient manner. Shipping is already a complicated and sometimes thankless job for retailers. Customers only remember the bad delivery issues, as they expect an easy shipping experience. In order to take your business to the next level and reach and retain an entire world of customers, be sure you have a strong cross-border shipping strategy to meet these expectations. Not only will this improve your domestic shipping methods, but the world will now become your market.

Matt Mullen is Senior Vice President and Managing Director at ProShip, Inc., a Neopost company, and a global provider of logistics software and product solutions, including enterprise-wide, multi-carrier shipping and manifesting software, automated packing solutions, and intelligent parcel lockers. For more information, please visit www.proshipinc.com. FALL 2018  PARCELindustry.com 9


WHAT IF GLOBAL TRADE ENDED?

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rade makes the world go around, and with friendly trade agreements, healthy economies, and the advancement of technology, global trade has become simpler, faster, and demanded by consumers across the globe. Trade agreements such as NAFTA, economic blocs including the European Union and the Association of Southeast Asian Nations (ASEAN), and international global organizations like the World Trade Organization have helped advanced global trade. Healthy

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BY JOHN HABER economies have led to the demand for imports from emerging markets and between developed countries while the advancement of technology has resulted in shipment visibility, enhanced booking capabilities, as well as much easier carrier, rate, and mode of transport comparisons. In 2017, global merchandise trade, in terms of volume, grew at a 4.7% growth rate, which was the strongest rate since 2011. Benefiting from a rising demand for imports around the world, globalization reached its zenith.

Political rumbles pointing toward protectionism have put the future growth of global trade into question. The UK’s vote for Brexit and the US’ exit from the Trans-Pacific Partnership (TPP), renegotiation of NAFTA, and the implementation of tariffs have all set off alarms. However, in the midst of this concern is a trend that will be difficult to stop regardless of added protectionist measures — the transformation of business-to-business (B2B) and business-to-consumer (B2C) to online transactions. Global B2B and B2C e-commerce, combined, are valued at well over $1 trillion. Supply chains are adapting to this phenomenon with technology investments and implementations for


efficiency gains as well as quicker fulfillment and faster last-mile delivery times. For example, the realization that physical stores do matter in the new retail environment has resulted in unique supply chains for both pureplay e-commerce providers including Amazon, Alibaba, and others as well as traditional players including Macy’s, Target, and Walmart. CROSS-BORDER TRADE FLOURISHES Among the fastest growing segments of e-commerce is cross-border. According to Forrester Research, cross-border will make up 20% of e-commerce by 2022. The market research firm notes that consumers want to shop across borders so they can find cheaper products and buy goods that are not available in their market. Retailers see cross-border commerce as a way to enter new markets with low upfront investment. Marketplaces are driving this demand for cross-border demand, with cross-border sales accounting for nearly 25% of third-party units sold on Amazon. Carriers, 3PLs, forwarders, and others have responded to this demand by creating specialized solutions to aid cross-border growth. UPS and FedEx, for example, have made acquisitions of niche solution providers, i-parcel and Bongo, respectively, as well as to expand their international networks. As protectionism takes hold around the world, global trade will continue but probably at a slower pace. Avoidance or

reduced dependence on trade partners that practice protectionism will likely occur and, as a result, an emphasis on regional trade could emerge. This could take the shape of Europe trading among itself or with Asia while the US primarily trades within North America. In 2013, China introduced its Silk Road, or One Belt, One Road, initiative. The goal has been to resurrect and modernize Marco Polo’s thirteenth century trade route between Europe, the Middle East, and China. Rail routes, warehousing, ocean ports, and more have been established in the modern-day version, thus economically linking China, the Middle East, and Europe. Since this is an extremely expensive investment, some political experts question China’s ultimate reasons behind this endeavor. According to the state-owned China Rail Company, by 2027, 21 daily trains traveling between China and Europe, or about 636,000 twenty-foot equivalent units (TEU), are expected. WHAT LIES AHEAD? Protectionism will result in the development of new trade lane patterns and, once again, carriers, 3PLs, and forwarders will adjust with new solutions and services. As part of their ongoing services, logistics and transportation providers often serve as trusted advisors to their clients, monitoring changes in rate, capacity, customs duties, risks, or new markets and trade. As protectionist measures grip global

trade, shippers could be faced with higher costs that may ultimately be passed down to consumers. Indeed, we here in the US have seen this already. The price of washing machines in the US, for example, increased 20% following tariffs on metal imports. A bigger shift towards marketplaces may occur as businesses and consumers alike search for lower-priced goods. As noted by Forrester, one reason that consumers shop cross-border is so they can find cheaper goods. The same will probably occur between businesses. Amazon’s B2B marketplace, Amazon Business, has already recorded $10 billion in revenue in just the two years it has been running. Furthermore, it’s not just small- to medium-sized businesses that are utilizing the marketplace. According to Amazon, 55 of the Fortune 100 companies, are as well. Global trade will not end, but with the increasing number of tariffs implemented, trade agreements can disband and political tensions mount. Instead, trade will evolve and adapt to the environment. Higher shipping costs may occur, but as long as shippers have a trusted logistics/ transportation partner, they should be able to ride the wave of uncertainty.

John Haber is the Founder and CEO of Spend Management Experts. Contact John at solutions@spendmgmt.com.

In Globalization 1.0, which began around 1492, the world went from size large to size medium. In Globalization 2.0, the era that introduced us to multinational companies, it went from size medium to size small. And then around 2000 came Globalization 3.0, in which the world went from being small to tiny.” -Thomas Friedman, New York Times columnist and Pulitzer Prize winning author

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4 TIPS

TO HELP SMALL BUSINESSES CONQUER INTERNATIONAL E-COMMERCE By using gradual expansion, geographic expertise, and international shipping best practices, sellers can minimize their risk and reap the rewards of new markets.

S

elling internationally is a real opportunity for small e-commerce merchants. According to Statistica, from 2014 to 2021, worldwide e-commerce sales will grow almost 246%, from $1.3 to $4.5 trillion. By opening up your business to new markets in other countries, you are able to experience some of that growth. On average, selling products internationally can boost a merchant’s sales by between 10 and 25%. However, it’s not necessarily all smooth sailing; there are many unexpected snags you can hit when selling globally. There are also many new challenges that must be addressed, including China’s dominance in the international e-commerce space, emerging cross-border issues, and last-mile challenges created by the

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increasing parcel volume. According to an International Parcel Corporation (IPC) survey, more than two-thirds of all international consumer e-commerce purchases are sent via parcel post. Your success depends on making smart choices on what to sell, which markets to sell into, the customer experience, and cost control. It’s not all that unusual for even those with thriving online businesses, including successful international sales, to run into new roadblocks as the global e-commerce marketplace evolves. To be successful, merchants need to fill in the gaps in their regional knowledge and build new international shipping skills. Here are four tips to help merchants dip their toes in internationally, while avoiding some common pitfalls, in order to start taking advantage of the booming international e-commerce market.

1

Know what products and business models are traditionally more successful internationally. There are many significant factors to consider, including whether there is a regional demand for a given product, a product’s profit margin, and if the expected demand per location will be enough to make your efforts worthwhile. Sellers need to: Try to avoid products that are challenging to sell in a global setting. For example, competing directly with China by selling low-price electronics with no brand recognition is a bad idea. Low margin, low-cost items of $25 or less or a low sales volume (10 items a week or less for sales out of North America) are usually not worthwhile. Profit is thin to begin with, and shipping is often too large a percentage of the total buyer-facing price.


By Rafael Zimberoff

When selecting products to sell internationally, look for good cross-border selling opportunities. As Amazon expands into more markets internationally, many e-commerce retailers will no longer be able to compete on price. Instead, they need to create satisfying brand experiences and an engaging community built around their brands. Generally speaking, products that retail for $50-$200 in US dollars are the sweet spot for cross-border selling. This range gives merchants more room to absorb shipping costs and other cross-border expenses. Top international sellers include high-end items, self-branded products, and products unique to North America that are in demand abroad. Use your carrier’s expertise in international shipping. Asking carriers

for advice is one straightforward way to do some initial research on selling products internationally. Carriers have customs brokers available that can help answer questions about products in different countries, duties, and customs issues, and they can suggest the most efficient shipping methods. Carriers can also help you determine what items are legal to sell internationally and where; 98% of items are able to be sold cross-border, but some forms of electronics and drones, for example, are restricted in certain countries.

2

Be cautious and gradually expand sales internationally to minimize your risk. Taking an incremental approach where markets are tested before expanding efforts makes sense for most small-

to medium-sized businesses (SMB). First steps include: Using online marketplaces to expand internationally. Smaller e-commerce companies often turn to marketplaces like Amazon and eBay to support selling abroad. Marketplaces like these allow customers to make international purchases in a safe, familiar environment. Marketplaces can help solve currency conversion issues, localization, and provide international exposure to a large number of customers. Supplementing these efforts with search engine optimization (SEO) of your own branded site(s) and online social media/marketing can also help drive demand. Incrementally testing product demand in different countries. When testing sales in new countries,

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choose a small number of product stock keeping units (SKUs) and offer items in small amounts to different markets. This allows merchants to see whether a natural demand for a product exists in different target countries before making any significant inventory and warehousing investments.

3

Take advantage of the many new shipping and fulfillment services to scale new international delivery efforts. Most companies don’t wake up with high worldwide demand. It builds over time. A merchant needs to plan how to fulfill orders based on sales volume while addressing each country’s delivery challenges. Do your research. Different providers excel in specific geographic regions and offer different services. Sellers need to:

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Expand fulfillment capabilities and inventory to each country incrementally. Deciding whether to keep product in a warehouse locally in each country or to ship product from the US depends on a company’s product values, business model, and sales volume. In early stages, SMBs often fulfill cross-border shipments for test countries in-house from the US. As sales grow, it might make sense to maintain inventory in warehouses locally in your target country and outsource all the fulfillment. For example, warehousing and outsourced fulfillment can be supplied by Fulfillment by Amazon (FBA). Working with Amazon is an investment, however, and merchants need to keep a deep SKU of products and maintain steady sales to have regularly stocking a warehouse make sense.

4

If you are processing your own orders, use shipping automation software to create a more predictable international buying experience for customers. International couriers can charge for delivery re-attempts, address correction fees, and return fees. Sellers need to provide valid and accurate contact and address information from customers. Shipping automation software eliminates input errors by allowing users to automatically import orders from marketplaces, such as eBay, Amazon, and others. Sellers can also purchase discounted postage, accurately and automatically print labels, and quickly locate orders and track shipments from a centralized dashboard. This is invaluable for immediately dealing with customs issues. Other features found in cloud-based shipping solutions that offer international shipping efficiencies include:


Side-by-side carrier rate shopping, which provides more accurate shipping estimates and controls costs. Different international shipping carriers and parcel consolidators serve specific countries and customers better depending on their needs. Using shipping software with a side-by-side rate shopping feature allows merchants to search all of the international options available and see complete shipping estimates. According to the IPC survey, 93% of shoppers that buy international won’t purchase unless they know the full cost — including delivery and duties — before they buy. The ability to send packages DDP rather than DDU by accurately estimating the full cost of a shipment, including duties, taxes, and fees. Advanced shipping automation solutions simplify the process by allowing sellers to search premium customs content as

part of their international shipping options and to see total landed cost estimates, including duties. This allows merchants to send packages Deliver Duty Paid (DDP) rather than Deliver Duty Unpaid (DDU). Sending DDP decreases the chance that the parcel will be held up in customs and reduces unpleasant surprises for your customers (“$50 due before I can receive my package?”). The ability to offer Electronic Trade Documentation (ETD) and paperless invoices, which is a big time-saver at customs. Many countries require five printed copies of each invoice attached to the outside of the shipping container. By submitting customs documentation electronically, you no longer need to print multiple copies. Customers all over the world want the same things. Focus on fundamentals:

quality products with a strong brand, reasonable/predictable shipping costs, reliable delivery, excellent customer service, and a simple, clear return policy. With careful planning and incremental expansion, the world is your e-commerce oyster. Know the regional preferences, rules, and regulations of your target countries; address cross-border shipping challenges; take advantage of localized marketplaces; and get ready to grow your customer base.

Rafael Zimberoff is the founder of ShipRush, acquired by Descartes Systems Group, which provides on-demand, software-as-a-service solutions focused on improving the productivity, performance, and security of logistics-intensive businesses. The cloud-based ShipRush software solution helps small-to-medium e-commerce businesses and omnichannel retailers ship parcels efficiently and cost-effectively.

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KEY ELEMENTS OF A GLOBAL SHIPPING STRATEGY

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here are many reasons to focus on international marketing and distribution, and if you ignore this segment, your business could be missing out. Ninety-five percent of all consumers live outside the US, and, in comparison to a domestic order, the average order value of an international shipment is

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17% higher, meaning that you get more revenue for each order. In spite of these opportunities, shippers feel that there are significant obstacles to international shipping, with high shipping costs, additional fees at delivery, and lengthy delivery times being among the most cited. But, as with many things in our industry, these concerns can be mitigated with careful planning.

IMPLEMENTING A STRATEGY AND REDUCING COMMON CONCERNS The centerpiece of your strategy starts with the fact that customers like shipping options. Given that fact, any international shipping programs must include options. Primarily, the most important options for customers are choosing between higher or lower shipping charges, faster or slower delivery times, more or less


By Tim Sailor

shipment visibility, and how to pay the duties and taxes. When working with your carriers, make sure that they offer you both an international express service as well as a deferred global postal consolidation option. The cost between these services is staggering, with the express option costing two to three times more than a deferred solution. The main reason for these cost differences is that the express option is a doorto-door pick-up and delivery with expedited, formal customs clearance in the local country. Consolidation, on the other hand, is an option where your package is picked up, grouped together with other packages, forwarded to the local country, and injected into their local postal system for delivery to your customer.

These cost differences and forwarding processes also mean very different transit and delivery times to your customers. When utilizing an express service, you can expect delivery to your customer within one to three days. With consolidation, delivery times are usually four to seven days, depending on the service you select. Transit times also differ greatly by destination country, so you will want to work with your carrier on which lanes and countries provide the best deliveries. When evaluating these different shipping options, also consider that they offer very different tracking and shipping visibility for your customers. International express shipping provides your customers with frequent updates, including a pick-up scan, in-transit scan, customs, out for delivery, and proof of delivery. With a postal consolidation option, you will have very limited visibility that may or may not include proof of delivery. When offering these choices to your customers, it is crucial that you fully explain the many differences in service between express shipping and consolidated shipping thorough your website, at check out, and with your customer service. Most surveys show that if you set customer expectations up front, they are willing to accept longer transit times for significantly lower shipping costs. Offering your customers choices in shipping costs and deliveries will have a major impact on your overall growth, as the order volume usually grows significantly when less expensive shipping options are offered.

and taxes at point of shipping. However, the downside is that the carriers may charge extra fees for collection of the duties and taxes, and the customer may refuse the shipment when they see the additional costs. Collecting duties and taxes at delivery can often lead to longer delivery times. Another approach which is becoming more common is for shippers to utilize a Deliver Duty Paid (DDP) service where the duties and taxes are prepaid and charged to the customer at point of sale. In order to do this, shippers must calculate real-time duty and taxes for their products based on a number of factors, including country of origin, a harmonized code, and the fully landed cost of the total order value. While this may sound overwhelming for shippers, there are many carriers and services that can facilitate this, including DHL ICart, UPS i-parcel, and FedEx Cross Border, as well as many others. Most surveys have shown that utilizing a DDP service leads to better customer satisfaction and a smoother delivery. Keep in mind that whatever approach you take, you, as the shipper, are responsible for accurate duties and taxes collection. There are many ways that you can take advantage of global growth and reach new customers. As we have discussed, the key is to plan and communicate your international strategy before you start shipping. Partner with your carriers to come up with the right shipping strategies that offer your customers choices and cost-effective ways to get your products to your international customers.

DUTIES AND TAXES The last area of concern for most international shippers is how to handle duties and taxes for your customers. Primarily, most shippers have utilized a Deliver Duty Unpaid (DDU) option, which means that duties and taxes are paid by the customer at time of delivery and determined by the destination country. This approach does eliminate the need for shippers to calculate duties

Tim Sailor, DLP is the founder of Navigo Consulting Group, which specializes in contract optimization, distribution analytics, and strategic sourcing. Since 1995, Navigo has reduced its clients’ shipping costs by 20%30%. Tim has contributed to the transportation industry for over 30 years. You can reach Tim at 562.621.0830 or Tim@NavigoInc.com. FALL 2018  PARCELindustry.com 17


TESTING THE INTERNATIONAL WATERS: HOW TO SUCCEED WITH GLOBAL E-COMMERCE Here are four factors to consider when getting your global strategy off the ground.

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By Greg Hewitt hen the history of e-commerce is written by scholars in the future, it will be first and foremost a global story. Beyond the technology that has fueled it —

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and the convenience it has created for consumers and companies alike — e-commerce has fundamentally altered the global economy, along with preconceptions about the limits of international trade, and even ideas about the world’s social fabric. So,

for those US businesses that have invested heavily in domestic online sales, it’s time to consider the real power behind the internet: its ability to connect the entire world, while at the same time making its merchants and citizens more powerful. It is time to forge a global e-commerce strategy. Of course, cross-border e-commerce would not be where it is today without the advances in logistics and transportation that have defined the last two decades. Dedicated international shipping strategies, forged by experts who know complex customs laws and regulations inside out, and new efficiencies in express delivery have made it possible for even the smallest corner store in Minneapolis to sell goods in Madrid, seamlessly and quickly. Again, technology and web-based programs have moved the logistics revolution


into hyper-drive. Think of advanced tracking, warehousing boosted by the Internet of Things, and online tools that help retailers arrange their shipping quickly and easily. The numbers tell the global story very clearly: 2017 saw the strongest year-over-year growth in US domestic e-commerce since 2011, with consumers spending almost $454 billion online. And yet, that impressive figure pales in comparison to the global data: $2.3 trillion in retail e-commerce worldwide last year alone. Consider also that, according to a DHL study, international e-commerce can boost sales by at least 10 to 15%, while increasing average shopping cart values by 70% (compared to domestic e-sales). The potential audience of customers beyond our borders is simply too large to ignore. To get your global strategy off the ground, or to expand your existing e-commerce marketplace international footprint, here are some key factors to consider: PREPAREDNESS TO GO GLOBAL The sheer size of the international marketplace might suggest that you should simply launch your products in new overseas markets tomorrow, with no further questions asked. The reality is that you need to be ready to communicate effectively, ship safely across borders, and ensure your products align with the needs and desires of your new target markets. You need to assess if audiences in new international markets will find value in your products; if your goods are unique enough to prevent imitation from competitors in the market you are entering; and if you can sell and deliver without having to spend excessively to reach the end-consumer. THE GROUNDWORK Success in new international markets is directly related to the amount of work

you do before you begin selling and shipping across the border. It is critical to research market data, including key information provided by the International Trade Administration and Export. gov. Research should drive your creation of an export plan, which should be frequently updated with assessments of your international markets. Your export plan should include sales and marketing tactics, budgets, implementation schedules, and logistic procedures.

DUTIES, TAXES, AND PAPERWORK The border clearance process is often cited as one of the biggest challenges to successful global e-commerce. Your international customers want speed and efficiency in delivery; after all, you will probably be competing against businesses in-country that face fewer obstacles to quick order fulfillment. As a result, you need to understand how to estimate duties and taxes levied by destination countries and how to present this to customers up front in the shopping process. Your shipping partner should have tools and experience to make the process easier. Did you know that 80% of delayed cross-border shipments can be linked to paperwork problems? To get your products moving quickly to your international customers, it is critical that all of your shipping documents are accurate and complete. Goods must be described fully; for example, if you are shipping “computer parts,” you must use those exact words in the description and the brand name, model, and serial numbers of the parts. Using terms such as “gift” or “parts” is not sufficient and will cause delays. Your shipper and consignee information must be complete and accurate, and you must also properly value the products being shipped. At the end of the day, e-commerce is all about breaking down barriers. Why should the transactional borders between nations not be one of the barriers that we break?

Success in new international markets is directly related to the amount of work you do before you begin selling and shipping across the border. GLOBAL-FRIENDLY SALES AND MARKETING To truly engage with customers, you must speak their language — culturally and literally. You need to understand their cultural interests and preferences, and your website, mobile website, social media presence, and marketing materials should reflect your understanding and sensitivity. Many companies turn to online translation services for assistance, but you may want to enlist the help of an experienced translation agency instead. The wrong words might be ineffective in reaching customers in South America or Asia, and they could even be offensive.

Greg Hewitt is CEO of DHL Express U.S., where he is responsible for all aspects of the International Express business. FALL 2018  PARCELindustry.com 19


AVOIDING DELAYS AT THE BORDER Don’t let a customs snafu delay your Canada- or Mexico-bound e-commerce shipments.

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ou wouldn’t really know it from recent media headlines, but cross-border trade between the United States, Mexico, and Canada continues to thrive, with US goods exports to Mexico up by more than 10% over 2017 levels, and exports to Canada up by more than eight percent. A good chunk of that volume is due to the surge of e-commerce shipments crossing the border, as Mexican and Canadian consumers are increasingly drawn to high-quality American goods, easily accessible from US retailers’ websites. The US Department of Commerce reports that while 64% of Mexican online shoppers reported making a purchase from an international

20 PARCELindustry.com  FALL 2018

BY JOHN COSTANZO

retailer, two-thirds were from US sites. The numbers are similar among Canadian shoppers. Almost 70% of online purchases made by Canadian shoppers during 2016 were from non-Canadian websites, with about one-third coming from US retailers, and the rest from Asia and Europe. As US businesses look to Canada and Mexico to expand online sales, it’s essential to remember that these are international transactions, and that every shipment requires careful compliance with numerous customs mandates. Understanding and navigating the customs process can be confusing and time-consuming, so be prepared to either expend the required resources, or to enlist the services of

a qualified third party to manage the process on your behalf. The good news, though, is the process has become significantly less onerous. For one thing, systems are now automated, which has essentially eliminated the need to rely on cumbersome, error-prone manual procedures. In addition, each government has taken steps to facilitate the clearance process and to encourage cross-border sales. WHAT DO I NEED TO KNOW AS AN INTERNATIONAL SHIPPER? The first step is to understand the nuances of moving goods across the border, with regard to key requirements and common mistakes. Here’s an overview of some considerations that apply to shipments heading to either Canada or Mexico: NAFTA eligibility. The North American Free Trade Agreement (NAFTA) elimi-


eliminates tariffs on qualified goods traded between the US, Canada, and Mexico, but determining eligibility can be highly confusing. A product must meet very specific requirements for domestic content as outlined in NAFTA’s rules of origin. Once you have determined that a product is eligible for NAFTA benefits, a NAFTA Certificate of Origin must be completed and submitted with shipment paperwork. Customs agents will not automatically assign NAFTA benefits; you must apply and submit required documentation. Tariff Classification. Every shipment must be assigned a tariff classification code, which is used to assess rates of duty, determine eligibility for free trade agreement benefits, and help monitor the types of goods entering a country. While Canada, the United States, and Mexico use the internationally-recognized Harmonized System as the basis of their tariff classification systems, each country maintains a unique coding system that must be understood and applied to all imports. However, determining the precise code can be difficult, since slight variations can distinguish one code from another. But, since incorrect classification codes are a top reason for border clearance delays, it’s important to prioritize this part of the process. De Minimis Threshold. Each government has in place a de minimis threshold that exempts shipments valued at less than that amount from duties and taxes. In the United States, the level is $800,

which means goods entering the US can avoid taxes if they fall under that level. But Canada and Mexico maintain less generous thresholds, with current levels set at $16 and $50, respectively. Not surprisingly, this disparity has been a source of concern for US businesses, and the de minimis threshold is among the issues currently under consideration. (Mexico has recently agreed to raise its threshold to $100, however.) Expedited Clearance for Low Value Shipments. A tremendous boost for e-commerce shipments are the special considerations the Canadian and Mexican governments make for low value shipments. Through these initiatives — Canada’s Courier Low Value Shipment program and Mexico’s simplified clearance regime, qualified shipments benefit from expedited clearance with minimal time spent waiting at the border. Trusted Trader Programs. Each government has in place “trusted trader programs” that provide important clearance benefits to qualified participants. In exchange for certifying the security of their supply chains and undergoing a rigorous application process, program participants receive benefits including minimized risk of inspections, access to expedited clearance lanes, and direct access to customs personnel. Canada’s program is called Partners in Protection, the US offers its Customs-Trade Partnership Against Terrorism, while Mexico administers the NEEC (New Scheme of Certified Companies) program.

Sales Taxes. Canada and Mexico maintain distinct sales tax structures that affect US retailers shipping goods into those countries. In Mexico, most goods entering the country are subject to a 16% value added tax, known as the IVA. Canada imposes a five percent federal goods and services tax (GST) on virtually every product sold within its borders. Some provinces add their own tax, and that combined tax is called the harmonized sales tax (HST). Other provinces impose their own tax — a provincial sales tax (PST) — but keep it separate from the GST. Rules vary from province to province with regard to exceptions for small suppliers, so a business will need to determine its liability in each province to which goods are shipped. US retailers can look to our North American neighbors and see a combined total of more than 165 million potential customers. But with the promise of new business comes the responsibility of customs compliance, which is why the right processes and resources must be in place before the first international sale is made.

John Costanzo is president of Purolator International, the US subsidiary of Purolator Inc., a leading integrated freight, package, and logistics solutions provider in Canada. He leads the company’s third-party logistics business and the development and execution of Purolator’s strategic growth plan for markets outside of Canada.

US retailers can look to our North American neighbors and see a combined total of more than 165 million potential customers. But with the promise of new business comes the responsibility of customs compliance before the first international sale is made. FALL 2018  PARCELindustry.com 21


AN EXPLOSIVE GROWTH:

A LOOK AT THE FACTS AND FIGURES CHARACTERIZING TODAY’S PARCEL SHIPPING INDUSTRY

The recently released Pitney Bowes Parcel Shipping Index reveals some interesting trends taking place in the global arena, and if shippers want to remain competitive, it is crucial that they adapt their business models to these changes. I sat down with Manish Choudhary, SVP, Global SMB Products & Strategy at Pitney Bowes, to discuss the findings of this study and what steps shippers can take to ensure that international shipping is a boon to their business, not a loss.

22 PARCELindustry.com  FALL 2018

Q:

The Parcel Shipping Index reported that parcel volume globally grew 17% in 2017. With such growth occurring, are there any challenges that shippers are facing that perhaps were not as much of an issue previously?

A:

The growth of 17% translates into 74.4 billion parcels, with 2,300 parcels shipped every second. Managing this growing volume of parcels is a challenge, with some companies still sending parcels manually. Research shows that high shipping costs are the primary reason consumers abandon their online shopping cart at checkout, so the ability to offer choice of shipping is crucial.

Large, multinational e-commerce companies have raised the bar when it comes to shipping. “Fast or free” are now consumer expectations, regardless of the size of business they’re shopping with. Smaller firms must compete with these larger firms when it comes to meeting consumers’ shipping requirements. This isn’t easy when they don’t have the advantage of economies of scale and brand negotiating power that larger companies possess. Cross-border shipping also poses new challenges and extra complexity, such as: Sixty-four percent of consumers now shop online outside their own domestic market, and they’re doing so with increasing frequency. Shippers face a complex web of regulations, taxes, and duties, which differ from region to region. There is also the issue of fluctuating


By Amanda Armendariz

currencies; consumers are knowledgeable of the strength or weakness of domestic currencies and look overseas for product value. Shippers must stay on top of these currencies, offering best value — but not at a cost to their own business. An added challenge is the management of multiple carriers. Eighty-three percent of high-growth retailers now use three or more carriers. They do this to help reduce risk and address the issue of shipping being too slow. However, managing multiple carriers can be time-intensive and complex, particularly if you add language to the mix.

Q:

What are some concrete steps shippers can take to capitalize on this growth in international e-commerce?

A:

Shippers can capitalize on growth in international e-commerce through replacing manual processes with automation wherever possible, as this helps merchants manage higher volumes of shipments, at scale, and helps a business confidently prepare for growth. This is particularly important during the holiday shopping season, with some retailers taking in the bulk of their revenue during just a few weeks of the year. Businesses need to also make sure they are taking advantage of industry innovation, which has been a game-changer for e-commerce companies looking to deliver an improved customer experience, while keeping costs down. Shipping platforms based on software as a service (SaaS) simplify cross-border

shipping through APIs, which allow two applications or different websites to talk to each other. Think of it like a waiter in a restaurant relaying your order to the kitchen, then bringing it back to your table. For small- and medium-sized businesses (SMBs), it’s all about simplicity and speed to value. In order for SMBs to take complexity out of shipping, it is crucial they invest in cloud-based, multi-location, multi-carrier software products, which will give them full control and visibility into their shipping operations. This makes it fast and efficient for shippers to source information from multiple carriers, calculate shipping costs, pay the correct postage, manage tracking, and make the customer experience as seamless as possible.

FALL 2018  PARCELindustry.com 23


TOPLINE TRENDS ACROSS COUNTRIES CHINA’S PARCEL VOLUME TRIPLES UNITED STATES’ China (40.1 billion), the United States (11.9 billion), and Japan (9.6 billion) represented the top three countries for parcel shipping volume in 2017. China’s parcel shipments represent 53% of the total shipments in the Pitney Bowes Parcel Shipping Index.

KEY FINDINGS BY REGION AMERICAS (BRAZIL, CANADA, UNITED STATES) Brazil’s parcel volume grew six percent YOY in 2017, with volume reaching 664 million parcels and three parcels shipped per person. Canada’s parcel volume grew by five percent YOY to 1.1 billion parcels, or 30 parcels per person. United States shipped 11.9 billion parcels, up eight percent YOY. This represents an average of 37 parcels shipped per person for the year.

$

UNITED STATES TOPS SHIPPING REVENUE The United States ranks highest in parcel shipping revenue at $107 billion, generating 38% of the total revenue of the 13 countries. China ($73 billion) and Japan ($25 billion) follow. The average shipping price of a parcel is $8.95 in the US, compared to $1.83 in China and $2.64 in Japan.

EUROPE (FRANCE, GERMANY, ITALY, NORWAY, SWEDEN, UNITED KINGDOM) France grew five percent YOY, shipping 18 parcels per person with a total volume of 1.2 billion parcels shipped in 2017. Germany shipped an average of 41 parcels per person, reaching a total of 3.4 billion parcels. Parcel volume grew six percent YOY. Italy shipped a total of 759 million parcels, growing at five percent YOY and 12 parcels shipped per person. Norway’s parcel shipping dipped one percent YOY, with a total volume of 56 million parcels shipped at 11 parcels per person in 2017. Sweden grew nine percent YOY, with a total volume of 113 million parcels and 11 parcels shipped per person in 2017.

CHINA’S PARCEL GROWTH CONTINUED TO SOAR Despite slower parcel volume growth from the previous four years, China represents the largest market in parcel volume growth at 28% YOY. India (11%) and Sweden (nine percent) followed.

United Kingdom shipped a total of 3.2 billion parcels in 2017, growing eight percent YOY, which represented 48 parcels shipped per person.

ASIA PACIFIC (AUSTRALIA, CHINA, INDIA, JAPAN) Australia shipped 841 million parcels at 34 parcels per person, an eight percent increase YOY.

JAPANESE RESIDENTS RECEIVE THE MOST PACKAGES Japan tops per capita shipping with 76 parcels shipped per person in 2017. The UK follows at 48 parcels shipped per person, and then Germany at 41 parcels. 24 PARCELindustry.com  FALL 2018

China’s parcel volume reached 40.1 billion in 2017, or 1,270 parcels shipped each second. With the highest parcel volume in the study, China is up 28% YOY, shipping 29 parcels per person in 2017. India shipped just one parcel per person in 2017, yet grew 15% YOY, reaching a total of 1.5 billion parcels shipped. Japan shipped 76 parcels per person in 2017, with YOY growth at two percent and a total parcel volume shipped at 9.6 billion.


Q:

What would you advise shippers to educate themselves on regarding the various rules and regulations that will inevitably present themselves as businesses expand into the international market?

A:

Regulations, duties, and taxes can vary widely from country to country. Added to this are the “Do Not Ship” lists which, again, vary across markets. Shippers also need to consider differences in the structure and format of addresses. Any errors can lead to items being undelivered, delayed at customs, or being turned away on the doorstep if extra costs are passed on to the consumer. Shipping is now a crucial part of the customer experience journey — it’s a major differentiator for businesses, with many consumers choosing to buy from one company over another based on their shipping preferences. Any inconvenience

to the consumer has to be avoided, and the experience must be seamless.

Q:

It’s interesting to note that there are some significant differences in the cost to ship a package, depending on the country. For example, I noticed that the cost to ship a package in the US was roughly nine dollars, compared to not even two dollars in China. I’m curious as to the reason for that, especially since I’m sure some shippers will alter their strategies based on cost differences in the countries in which they are doing business.

A:

There are several reasons for these discrepancies. Some postal companies charge higher rates for remote deliveries, but China Post has a flat fee per gram, so that’s likely to be one reason. There is also the ePacket agreement, which, under a contract signed between the USPS and Hong Kong Post, merchants

are allowed to ship small parcels faster and with greater visibility through tracking, making it more cost-effective for both the sender and the recipient. Infrastructure is certainly another reason. China has invested vast amounts of money in its infrastructure, from highways and railways to ports. Economies of scale also have an impact, as a shipment is likely to be sharing cargo space with millions of others — air freight, for example — which drives costs down. Taken together, these factors create a landscape in which, domestically, costs are lower to ship in China than in other markets. Source: The Pitney Bowes Parcel Shipping Index The Pitney Bowes Parcel Shipping Index measures parcel volume and spend for business-to-business, business-to-consumer, consumer-to-business and consumer consigned shipments with weight up to 31.5kg (70 pounds) across Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom and the United States. Population data points were sourced from the International Monetary Fund, World Economic Outlook Database published in October 2017. The Pitney Bowes Parcel Shipping Index spans 13 countries and represents the parcel shipping activity of 3.7 billion people.

FALL 2018  PARCELindustry.com 25


THE LATEST DE MINIMIS CHANGES AND THEIR IMPACT ON SHIPPERS Don’t be left in the dark when it comes to the latest changes in international regulations; their impact on your shipping strategy could be far-reaching.

By Krish Iyer 26 PARCELindustry.com  FALL 2018

S

everal new international regulation changes have flown under the radar this past summer. These changes could potentially have a profound effect on US exporters and importers, especially as these shippers plan their inventory for the holidays and 2019. Mexico De Minimis Changes: The US and Mexico recently reached a bilateral agreement that will increase the minimum duty-free shipment threshold from $50 to $100 for shipments that can be imported into Mexico. According to Euromonitor, the online market in Mexico is expected to be worth around $7 billion in 2018 and increase to $14 billion by 2022. As Mexico is Latin America’s second-largest economy, a change to


A change in import policy for a large economy such as Mexico is always noteworthy, but the change in importation limit for Mexican consumers, coupled with ground transportation options improving between the US, Canada, and Mexico creates a perfect storm of opportunity for US and Canadian e-commerce merchants, in particular, to sell and ship their products to Mexican consumers.

the de minimis value is significant. Australia De Minimis Changes: Australia recently instituted a 10% Goods and Services Tax (GST) legislation enforcement on products imported into Australia. This charge went into effect July 1, 2018. Previously, Australian de minimis laws allowed goods valued around $1,000 USD to be imported into Australia without duties and taxes, while domestic products could be subject to the 10% GST when sold domestically. The new law is aimed at making domestic Australian retailers more competitive. WHAT IS DE MINIMIS? De minimis refers to the value below which goods can be imported into a

country before duties and taxes are assessed by an in-market customs authority. A high de minimis value means there is a high threshold by which goods can be imported into a market. A higher de minimis is typically preferable, as it means higher-value items can be imported into a market without the burden of duties and taxes. It is important to note that Canada typically imposes import duties on shipments valued over $20, while the United States typically assesses a duty on goods over $800. WHAT IS THE IMPACT ON ME AS A SHIPPER? A change in import policy for a large economy such as Mexico is always noteworthy, but the change in importation limit for Mexican consumers, coupled with improvements in ground transportation options between the US, Canada, and Mexico, creates a perfect opportunity for US and Canadian e-commerce merchants to sell and ship their products to Mexican consumers.

As for Australia, it means that many cross-border e-commerce retailers are increasing their prices on products shipped to Australia. Still, Australia is a strong market for US cross-border sales, as the customer base shares shopping habits and product interests similar to US consumers. WHERE TO LEARN MORE? Websites such as Export.gov can help US businesses as they navigate tax and de minimis changes. It’s also a good idea to work with a reputable, licensed customhouse broker (CHB) who is knowledgeable about preferential tax treatments on goods and services globally.

Krish Iyer is Director, Strategic Partnerships at ShipStation. He is an industry leader in cross-border trade and logistics software with more than 16 years of Fortune 100/500 global product marketing/product development, sales, supply chain technology, and integrated marketing experience. He can be contacted at krish.iyer@shipstation.com. FALL 2018  PARCELindustry.com 27


By Michael J. Ryan

GLOBAL E-COMMERCE: A CUSTOMS AFFAIR Customs clearance is a hurdle that any international shipper must overcome. Here are some tips to make global shipping as simple as possible.

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he world is truly getting smaller, and more and more merchants from around the globe are entering the global e-commerce arena as technology has enabled merchants to expand their reach beyond their own borders. However, the process of shipping across borders is not as simple as a domestic distribution model. The one major difference is that these parcels need to pass through the local country’s Customs channels. This is where the real challenge begins for novice shippers — and even some very experienced merchants. There are over 220 countries in the world and, yes, there are over 220 rules and regulations to go

28 PARCELindustry.com  FALL 2018

along with them. Let’s take a look at some of the areas that impact a global parcel shipment. GLOBAL DELIVERY CHALLENGES The global consumer is looking for fast and cheap delivery, which is not a simple task in any case, but especially not when you’re talking about global shipments. In many instances, there are long distances between the merchant and the consumer, multiple time zones, different languages, and various delivery expectations. The global e-commerce world never stops: On one side of the globe, you have someone ordering something, and on the other side, you have a merchant fulfilling the order.

Global e-commerce is now a 24 hours a day, seven days a week, 365 days a year business. In addition to these challenges, each global e-commerce parcel needs to pass through Customs in either a private express mode or a postal solution (which deals with 220 country rules and regulations). LOCAL CUSTOMS AUTHORITY What is the purpose of Customs in each country? Their primary responsibility is to govern what is allowed into the country and to manage the duty and tax process. They are primarily looking for contrabands, illegal products, banned items, and smuggling. Many global merchants view them as an obstruction to smooth


Causes of Customs Delay

Inaccurate Description 16%

Country of Origin/Reason for Export Missing 9%

Value & Description Discrepancies 21%

e-commerce. However, they are just doing what their country has asked them to do, which is to protect their homeland. It is imperative for global merchants to understand each country’s rules and regulations and to abide by them. If done correctly, global e-commerce can pass through Customs very efficiently. CUSTOMS CONCERNS One of the best ways to expedite the customer’s clearance process is to prepare the shipment in accordance with each country’s rules and regulations. It starts with having accurate documentation (shipping label, commercial invoice, and any other required documents). About 75% of the time, delays in Customs are caused by the following: commercial invoice error, missing information, Harmonized Tariff Schedule (HTS) code error, value discrepancies, and description errors. These are all items that can be controlled by the shipper (see chart above).

Customs Invoice Error or Missing Info 32%

HTS Code Error 22%

It is critical to have a detailed description of a product and the correct HTS code. As an example, a pair of brown shoes can be classified very differently by Customs than brown leather shoes, and may be subject to higher taxes based on the description. The HTS code system is a global system that is used by most countries in defining a product. It is best to give the HTS code that most closely describes your product versus having a Customs official do it on your behalf. They will declare it based on the information that has been provided to them, which may make your product less competitive because of higher duties and taxes. You also need to be aware of any products that are restricted or banned by that country (for example, radar detectors are restricted in the United Arab Emirates). EXPRESS CARRIERS VS. POSTAL SOLUTION As many of you know, most postal authorities around the world do not have

the resources to fully inspect all items entering their country. This has created a gap in the Customs clearance process where many e-commerce shipments do not get the same scrutiny as the express operators. This has been a nice benefit for many global e-commerce merchants, but this is changing as we speak. There is a global initiative by most postal authorities to obtain the shipper and consignee information in an electronic format on all postal shipments. This will have two significant enhancements for countries: better control of what is entering their country via postal solution and the ability to collect duties and taxes from the recipient or the shipper (via Deliver Duty Paid (DDP) process). OPTIMIZED GLOBAL SOLUTION As the postal authorities move forward with their global initiative, it is best to prepare for this process now. Here are some ways to be a progressive leader in the global e-commerce world: Provide accurate information about your product (detailed description, correct value, correct HTS code) Optimize the de minimis value guidelines by country Shift to a DDP model and collect duties/taxes up front with a duty/tax calculator in your shopping cart Understand the value, commodity, and quantity guidelines by country and develop a shipping strategy that utilizes multiple carriers/partners Customs officials around the world are preparing for this explosion in global e-commerce. It is up to the merchants to make their jobs easier by providing accurate and complete information, which will provide a quicker Customs clearance. At the end of the day, it is all about a positive customer experience, since that is what will keep consumers coming back, time and time again.

Michael J. Ryan is the Executive Vice President at Preferred Parcel Solutions and has over 25 years of experience in the parcel industry. He can be reached at 708.224.1498 or michael. ryan@preferredship.com. FALL 2018  PARCELindustry.com 29


TO SUM UP The border clearance process is often cited as one of the biggest challenges to successful global e-commerce. — GREG HEWITT

The starting point for retailers exploring international shipping is typically the United Kingdom, due to its similarities to the United States. The English-speaking market has been exposed — and also responds well — to American advertising, promotional activities, and product aesthetics. The UK market is also ranked number three in the world in overall e-commerce attractiveness. — MATT MULLEN

As protectionist measures grip global trade, shippers could be faced with higher costs that may ultimately be passed down to consumers. Indeed, we here in the US have seen this already. — JOHN HABER

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When working with your carriers, make sure that they offer you both an international express service as well as a deferred global postal consolidation option. The cost between these services is staggering, with the express option costing two to three times more than a deferred solution. — TIM SAILOR YOUR SUCCESS DEPENDS ON MAKING SMART CHOICES ON WHAT TO SELL, WHICH MARKETS TO SELL INTO, THE CUSTOMER EXPERIENCE, AND COST CONTROL. IT’S NOT ALL THAT UNUSUAL FOR EVEN THOSE WITH THRIVING ONLINE BUSINESSES, INCLUDING SUCCESSFUL INTERNATIONAL SALES, TO RUN INTO NEW ROADBLOCKS AS THE GLOBAL E-COMMERCE MARKETPLACE EVOLVES.

— RAFAEL ZIMBEROFF

Every shipment must be assigned a tariff classification code, which is used to assess rates of duty, determine eligibility for free trade agreement benefits, and help monitor the types of goods entering a country. — JOHN COSTANZO

The US and Mexico recently reached a bilateral agreement that will increase the minimum duty-free shipment threshold from $50 to $100 for shipments that can be imported into Mexico. — KRISH IYER


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