SPECIAL ISSUE on GLOBAL PARCEL SHIPPING
TECHNOLOGICAL ADVANCEMENTS, TRACKING, AND INCREASED SCRUTINY: What international shippers can expect in 2022 and beyond. P. 16
INTERNATIONAL 2021 PARCELindustry.com
BEST PRACTICES TO DESIGNING AN EFFECTIVE GLOBAL SUPPLY CHAIN. P. 10 CRITICAL LEGAL CONSIDERATIONS FOR CROSS-BORDER SHIPPERS. P. 22
CONTENTS /// Volume 28 | Issue 6
10 12 16 22 24 06 EDITOR’S NOTE With Growth Comes Challenges By Amanda Armendariz
08 THE RAPIDLY EVOLVING POSTAL RETAIL NETWORK Helping shape the future of global e-commerce By Brody Buhler
10 DESIGNING AN EFFECTIVE GLOBAL SUPPLY CHAIN By Nate Rosier
12 BARRIERS TO CROSSBORDER SHIPPING FOR ONLINE RETAILERS… And how to overcome them By Jarrett Streebin
14 2021 SURVEY Our readers’ international parcel shipping habits By Amanda Armendariz
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16 WHAT TO EXPECT IN INTERNATIONAL MAILING AND SHIPPING IN 2022… AND BEYOND By Merry Law
28 A RAPID RISE IN GLOBAL PARCEL VOLUMES SHOWS NO SIGNS OF SLOWING A look at the data from the most recent Pitney Bowes Parcel Shipping Index By Jason Dies
22 CRITICAL LEGAL CONSIDERATIONS FOR INTERNATIONAL PARCEL SHIPPING
30 MONEY, TIME, AND RISK
24 INNOVATION IS GOING TO BE A KEY FORCE IN THE GROWTH OF INTERNATIONAL COMMERCE
By Brent Wm. Primus, JD
By Jill Sloand
26 ENSURING THE GLOBAL SHIPPING PROCESS IS A SUCCESS… FROM START TO FINISH By Michael J. Ryan
The balancing act to unlocking global marketplace success By Kenny Tsang
07 5 STEPS TO ADAPTIVE GLOBAL LOGISTICS 18 WANT TO IMPROVE YOUR GLOBAL SHIPPING? THESE 11 COMPANIES CAN HELP.
PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ firstname.lastname@example.org ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ email@example.com ]
PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2021 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 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. P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com
EDITOR’S PICK EDITOR’SNOTE
WITH GROWTH COMES CHALLENGES By Amanda Armendariz
or years now, cross-border and global e-commerce volume has been skyrocketing. The world is truly shrinking for consumers by allowing them to purchase almost any product, from almost any company, no matter where the company or the consumer are based. This phenomenon provides a plethora of opportunity for businesses to grow their consumer bases and increase their profits, but as we all know, with this opportunity also comes a host of issues — many of which can derail a business’s global strategy if not avoided.
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Global shippers already have to navigate challenging waters (no pun intended) in terms of customs dos and don’ts, forms and declarations, and duties and taxes — just to name a few. Add to that the recent material and product shortages, plus the backups in many ports (which are causing cargo containers to have to wait for days and sometimes weeks to be unloaded), and one can see that although this is a profitable time to be a global shipper, it can also be an incredibly stressful one. This year is our fifth time putting together this special international-focused issue, and as I look back on the previous editions, it’s clear that while cross-border commerce has always shown promising growth, no one could have predicted just how much it would skyrocket, and it will only continue to make up a larger and larger share of many organizations’ customer bases and profits. We at PARCEL are committed to being your industry partner as you expand your business into new territories, maintain a loyal customer base in your current ones, and stay one step ahead of the issues that can hamper an international shipping strategy. If there’s a topic you’d like to see us cover more in depth, please drop me a note at firstname.lastname@example.org. As always, thanks for reading PARCEL.
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!
FedEx 2022 General Rate Increase: 6 Key Takeaways By Keith Myers
The Cost of Online Shopping: How Returns Management System Solutions Can Mitigate Return Overloads and Increase Profitability in E-Commerce Sales By Guarav Saran
The Pandemic Brought You Customers, but What Now? By Greg Brown
5 Steps To Adaptive Global Logistics We are living in a time of growing cross-border parcel shipments. Global e-commerce is both an opportunity and a challenge. You can access more potential customers, but you are competing against both domestic rivals and foreign ones. To win market share, retain customer loyalty and control costs, your global parcel delivery strategy should be adaptable, leveraging digitization, hyper-automation and 360° visibility. Step 1: Automate Compliance Checks When you ship internationally you must screen your customers. Governments and international bodies publish “denied party lists” (DPLs) of people and groups with whom it is illegal to do business. These lists change frequently. Manually screening against DPLs is time-consuming, if not impossible, for high volume shippers. This process can be easily automated to ensure ongoing compliance. Depending on what and where you sell, your goods may require licenses or permits for export. Again, you can automate license checks as part of the shipping workflow. Your global parcel shipping solution should be able to identify line items that have license requirements, as well as manage licenses by date, quantity, value and so forth. Step 2: Automate Documentation and Reporting When goods travel across borders, they do so with a lot of paperwork — more often these days, electronic. When goods get “stuck in customs”, 80% of the time it is because of missing or incomplete documentation. Missing documentation means delayed deliveries and unhappy customers. Automating documentation and electronically connecting to customs authorities reduces the possibility of hold-ups. Step 3: Hyper-Automate Multi Carrier Global Parcel Shipping In order to reach global customers, you will need a network of reliable carriers. It is of course possible to use a global carrier, but this can result in higher prices and less capacity.
If you ship to customers in Europe or Asia you should add some of the many regional and domestic carriers into your transportation network, particularly for last mile deliveries. With more carriers in your global network, you are better positioned to deal with delivery bottlenecks, such as weather events and lack of capacity. Most importantly, high volume shippers should automate carrier selection and routing. Using automated routing, along with your business rules, your solution will direct parcels to the lowest cost carrier service that will meet the delivery requirements. Step 4: Automate Consolidation If you send high volumes of small parcels to international destinations, consolidation can mean serious savings. Using the zone-skip functionality of a global multi carrier software solution, shippers can use one carrier to move the consolidated shipment across borders. Once the shipment arrives, parcels can then be injected into a local carrier’s network for last mile delivery. A second, significant benefit is that a consolidated shipment requires a single customs declaration. Sent separately, each parcel would need an individual declaration. Step 5: Track Everything, Manage By Exception Your global customers want clear communications regarding the status of their orders. Your parcel shipping solution should allow you to track any package, with any carrier, anywhere in the world. This 360° visibility into in-transit goods should be shared with customer support teams. Visibility by itself is not enough. Your solution should offer automated exception alerts for parcels that are at risk of delay. As a result, personnel can take proactive measures to resolve delivery issues. In the history of global trade, few CEOs ever declared it was their intention to sell fewer products to a smaller number of people — although the UK department store John Lewis is a notable exception. To meet the opportunities of global parcel shipping you need the flexibility, agility and technology to win against the competition.
www.qadprecision.com email@example.com Americas: + 1 (312) 239 1630 EMEA/Asia Pacific: + 353 (1) 406 0700
THE RAPIDLY EVOLVING POSTAL RETAIL NETWORK: HELPING SHAPE THE FUTURE OF GLOBAL E-COMMERCE By Brody Buhler
e recently released our fourth annual Future of Posts report, which highlights trends and the current state of the postal industry. The survey is based on responses from over 151 respondents from 70 posts around the world. The data from this survey provides us with tremendous insight into some of the strategies and priorities postal operators are implementing now and in the near future. Over the past four years that we’ve conducted this survey, we have witnessed the role of the traditional post evolve, as postal operators expand to higher growth areas like parcels, financial services, government services, identity services, and more. In fact, this year, 77% of posts indicated that e-commerce parcels are the top growth opportunity. This isn’t surprising, considering the pandemic-induced surge in online shopping. But even with the pandemic (somewhat) in the rearview mirror, it’s clear that parcels will remain a key driver of growth moving forward. Are Posts Profiting from Parcels? But are posts profiting from parcels? In our survey, we asked about the
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impact of the pandemic on revenue and profitability. Interestingly, from a profitability standpoint, 66% of posts said the pandemic had a negative impact on profitability, and only 24% indicated the pandemic had a positive impact on their profitability. This was an intriguing finding and raises several questions. Were the majority of posts unprepared for the surge in parcel volumes and unable to fully benefit from a profitability standpoint? Why didn’t profits rise alongside rapidly rising volumes? One potential explanation for this could be the swift shift in focus to delivery in order to accommodate the rapid increase in parcel volumes in an effort to avoid bottlenecks. In fact, during the pandemic, 38% of posts accelerated their delivery network expansion strategies in an attempt to alleviate bottlenecks. In this regard, these challenges have provided incredible clarity for posts on the delivery side of the business. However, there seems to be more ambiguity on the retail side of the business, with 35% of posts re-thinking their retail network expansion. In light of these findings, what is the best path forward? Here are five key strategies that will help posts not just
profit from parcels but truly thrive in this current environment. Realize Delivery and Retail Network Synergies Because posts consider e-commerce parcels their biggest source of potential growth over the next five years, it’s not surprising they also feel it will have the biggest impact on their business. This certainly explains why 53% of posts indicated they are planning to reorganize and adopt new strategies to handle the influx of parcels. But another way posts can begin to increase efficiency and improve profitability is to realize the synergies between their retail and delivery networks. Posts that can leverage their large, nationwide, retail networks will be able to actually expand delivery capacity too. A larger, more integrated retail network — made possible through pick up, drop off (PUDO) and third-party partnerships — will enable posts to deliver more parcels because they now have more pickup locations, more return options, fewer delivery stops, and more efficient routes. Increase Access Similarly, posts should offer customers
more convenient and accessible postal service locations through third-party partnerships with convenience stores, petrol stations, supermarkets, paketshops, and more. Using the PUDO model, a post can transform a heavy fixed-cost retail network into one that has a more variable cost structure. Our survey shows that 54% of posts expect to leverage more third-party agencies over the next three years, while 38% of posts expect to use PUDO. Change The Cost Profile Another important lesson we can take from our experiences during the pandemic is that customers are embracing mobile and self-serve options more than ever, which offers benefits on both sides of the counter. For posts, incorporating self-service into the postal retail network improves customer service, reduces lines and wait times, and is far more cost-efficient. For customers, it offers contactless options and convenience. To that end, many posts say they are planning to implement self-service kiosks, smart lockers, and new retail
point-of-service systems over the next one to three years. Mobile Postal Services From our Future of Posts survey, posts overwhelmingly indicated the likelihood of a very mobile future. Three-fourths of respondents said they plan to develop mobile apps over the next one to three years. Other mobile postal services may include a mobile postal delivery person, the ability to ship or return a parcel via mobile app, print a shipping label, or scan a QR code. Real-Time Data Analytics Ninety-two percent of posts said that either they are already using real-time data analytics or plan to in the near future, because they know it will add value on both the retail and delivery sides of the business. And whether it’s to improve customer service, to reduce customer wait times, or to better understand the customer, data analytics will enhance and support each of these key areas. For instance, 67% of posts indicated that improving
the customer experience is the primary reason for expanding POS channels. Data analytics can be used to inform posts which specific POS channels, locations, and features will drive the best customer experience outcomes. This year’s Future of Posts report shows how resilient postal operators are in such a rapidly changing world. Posts are clearly taking decisive steps to set themselves up for success, especially with regards to e-commerce parcels. Strategies to trim costs and boost operational efficiencies are also evident with a heavy focus on automation and route optimization, which will help posts improve parcel operations.
Brody Buhler is the CEO of Escher. With more than two decades of experience, he joined the Escher team at the start of 2021. He oversees all departments at Escher and is responsible for driving the company’s growth, strategy, product, operations, and culture. You can download the full Future of Posts 2021 report at https://www.eschergroup.com/resources/ the-future-of-posts-2021/
INTERNATIONAL 2021 PARCELindustry.com 9
DESIGNING AN EFFECTIVE GLOBAL SUPPLY CHAIN
BY NATE ROSIER
lobal supply chains have seen incredible amounts of disruption in the last couple of years. Supply chain leaders have been left to pick up the pieces of inconsistent supply and demand patterns, unforeseen natural disasters, and blocked ports, all while maintaining business as usual, and success has not been guaranteed. Responding to disruption as it occurs is one important aspect of managing a successful supply chain, but what would it look like to design your global supply chain in a way that proactively prepares for disruption before it happens?
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What Makes an Effective Global Supply Chain? Global supply chains are incredibly complex, with variables such as differing holidays and weather conditions likely to impact service levels throughout the year. The key to creating an effective global supply chain is starting with the right people, processes, and technology so your operations are prepared as best as possible for any unforeseen disruption. In order to operate a successful global supply chain, leaders should focus on three main areas: efficiency, resilience, and simplicity.
Efficiency in the Global Supply Chain Having efficient processes baked into your operations will not only increase
service levels but will also reduce cost in the process. Since one main goal of a successful supply chain network is to optimize service levels and cost, this is a really important starting point for supply chain leaders. Efficiency is especially important in regard to cycle times, transportation, operations, and forecasting and planning. Cycle times – Analyze the time it will take to move your product and what the cost of that movement will be. Factors to consider are cost and location of inventory and potential missed sales. Transportation – Transportation is one of the largest costs for supply chain leaders, so increasing efficiency to reduce that cost will be critical to managing a successful global supply chain.
Operations – Leveraging automation, especially within the distribution center, is a surefire way to increase efficiency and reduce cost while improving service levels. Forecasting and planning – Effective planning should rapidly adjust to changing conditions and shift the business to greater cost and customer satisfaction.
Resilience in the Global Supply Chain Creating resilience in your global supply chain will foster a sense of flexibility in your operations. Parsing out the weak spots in your supply chain during the design process will allow you to either proactively resolve them or create contingency plans so they don’t become more dire problems down the line. When designing resilience and flexibility into your global supply chain, focus on these key points: Adaptability to disruption – Enable your supply chain to adapt to unforeseen disruption. This could mean being able to reroute through different ports, leverage different modes, or modify shipments. Flexible inventory positioning – Strategically position your inventory based on supply and demand patterns, but also create flexibility in how and when you can pull from it in case of drastic supply and demand changes or extreme weather events. Flexible capacity – Capacity is tight, so leverage it strategically. Enable your capacity to change with the seasons and adapt to carrier availability. Focus your fixed costs in areas to be more efficient and enable variable costs to adjust to supply and demand variations.
Simplicity in the Global Supply Chain Global supply chains are complex enough by nature; your supply chain design
should not add to that complexity. Having strategic, yet simple, processes embedded into your design will keep things running smoothly with less overhead cost and manpower required on your end. Design for the core – Simplify the primary volume of your network to make it easier to manage and adjust your supply and demand variations around it. Continuous improvement program – A supply chain made too complex cannot be improved. Creating simple processes will allow for continuous audit and improvement. Partner management process – Be strategic in partner selections and ensure they can work collaboratively and cohesively. Visibility – With a simple supply chain design, you can see more clearly what is happening on the inside in order to anticipate and correct potential disruption before it occurs. Pitfalls to Avoid in a Global Supply Chain With efficiency, resilience, and simplicity baked into your global supply chain design, you will have much more success in reaching your service level and cost goals. However, even with this leg up, you still need to remain vigilant against certain hurdles to maximize the success and adaptability of your operations. Fluctuating demand – If you are in a significantly consumer-driven industry where demand can change often, make sure that your operations can foreshadow and manage that fluctuation. Cycle times – With overseas shipping, cycle times can often be exacerbated. Being unprepared for this can be detrimental to service levels and cost. Keep in mind port schedules and the differing cycle times and inventory needs of long tail vs. short tail products. Future-focused approach – Labor and logistics availability are constantly
fluctuating, so basing supply chain decisions on outdated statistics will give you an outdated supply chain. Implement technology and leverage data that will allow you to anticipate future trends and plan resources accordingly. Key Takeaways for Your Global Supply Chain Every supply chain is unique, especially when comparing global and domestic supply chains. While both require immense planning and strategy, there are a few extra areas that global supply chain leaders need to focus on in order to be successful in optimizing service levels and cost. Port strategy – Every global supply chain needs a port strategy. This includes understanding port schedules, cycle times, carrier availability, and more. Trade zones – Global supply chains will have to deal with tariffs at free trade zones. This should be planned into the budget in advance. Container shipping – International shipping often involves containers. Integrate containers into your port strategy to augment your overall supply chain design. Conclusion Global supply chains are growing more complex by the year, as supply and demand patterns continue to change, the climate becomes more unpredictable, and service level requirements increase. With a focus on efficiency, flexibility, and simplicity, you can design a global supply chain that not only optimizes service level and cost, but is also able to remain resilient to disruption.
Nate Rosier is senior vice president and consulting group leader at enVista. Nate has worked with over 200 companies to develop strategies to increase profitability, reduce expenses, and improve their competitive position.
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By Jarrett Streebin
BARRIERS TO CROSS-BORDER SHIPPING FOR ONLINE RETAILERS… AND HOW TO OVERCOME THEM
rom the moment consumers click “complete purchase,” they are eagerly awaiting the arrival of their package. There’s no denying that speed is of the essence when it comes to today’s shipping and logistics landscape, something that is even more difficult to achieve with cross-border sales and shipping. In reality, your consumers don’t care where your business is based; they only care about receiving their package as quickly and affordably as possible. As more than 80% of US imports are goods, there is a massive demand for overseas products and purchases. For example, more than 67% of apparel shoppers have completed a cross-border purchase in a 12-month period, while 62% of international buyers still expect free shipping. Let’s not forget about tech giants like Amazon, eBay, AliExpress, and even Facebook (Instagram) that are transforming online marketplaces as we know them. Smaller companies may use these marketplaces to gain an international reach, while other more established companies prefer to sell directly to consumers to maximize profit margins. With an international market comes an international customer base. By and large, the main benefit of cross-border sales is gaining access to more customers. Cross-border e-commerce strategies can also give your brand more control over branding and pricing while solidifying your company as an international force. However, the rapid growth of international shipping markets is equal parts exciting and challenging for businesses of all sizes. Here are only a few examples of pain points that may accompany cross-border shipping strategies — and what you can do to combat them.
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Excess Fees & Costs Cost is at the forefront of many shipping-related decisions, and it’s no different for the international market. You’ll want to consider cross-border e-commerce sales as a separate entity of your business with a separate budget and resource allocation. Many countries implement a Value-Added Tax (VAT), General Sales Tax (GST), customs, tariffs, and other fees that quickly rack up. Some customers may be happy to pay a premium to receive your products internationally, while others refuse to purchase anything without free shipping. Decide whether or not to pass along these costs to your customer. To keep fees and costs to a minimum, consider diversifying your carrier mix by utilizing the four major national carriers in addition to local, regional parcel carriers whenever possible. You can also negotiate shipping rates with carriers and optimize your package item dimensions and weight to ensure the cheapest possible shipping options. Slow Onboarding of New Carriers “Carrier onboarding” refers to the process of adding a new carrier to your mix. If your business is integrating with carriers individually, this means your developers will spend precious resources integrating and maintaining the necessary connections. The more carriers you add to your mix, the more time this will take. This means that customers in certain regions will feel the effects of a slow integration process if you don’t already have an established carrier in this region. How is it possible to both diversify your carrier mix and ensure the carrier onboarding process doesn’t slow your international packages down? Modern shipping technology such as multi-carrier shipping APIs can give you access to handfuls
(even hundreds) of carriers through a single integration. APIs are a one-stop solution to help overcome multiple pain points in cross-border shipping. Difficult Returns Your international customers may feel hesitant to order a product from overseas if the returns process is a nightmare. Imagine waiting seven business days for your overseas order to arrive only to realize it doesn’t fit properly, it wasn’t what you expected, or you received the wrong item. You’ll now have to repackage the box and coordinate a return by going to the post office or scheduling a pickup. As a business, you have two choices: cover the costs of the return or let the consumer be responsible to pay for the return. If you sell low-value items, you can consider writing off the item and refunding the customer before you have the returned item back in your hands. Other businesses don’t have the luxury to do this and instead utilize parcel forwarding services despite the vast majority of them being slow and costly. You should also consider including a prepaid shipping label for your customers to simplify the returns process and prove that you value a streamlined customer experience. Slow Delivery Times International deliveries can be as fast as one to three business days and as long as 10 business days, depending on specifics. These timeframes were undoubtedly extended during COVID19 and will likely remain skewed until after peak shipping season has subsided. The sole addition of customs can mean border delays, complicated paperwork, additional costs, and overall delays. All of these additional factors have the potential to directly impact customers’ perceptions of your brand. It’s essential that your operations team is fully aware of all processes and requirements in cross-border shipping to keep delivery times reasonable. If necessary, consider establishing a dedicated department to navigate regulations and compliance. As an additional takeaway, always add parcel insurance to your international shipments to cover your bases in the case that packages become damaged or lost. The Takeaway: Cross-Border Shipping Is Here to Stay International shipping can be a huge asset to your business as long as you conduct the necessary research, plan ahead of time, and temper your customers’ expectations. Utilizing technologies such as third-party logistics (3PLs), transportation management systems (TMS), and APIs can help your business thrive in the international shipping arena. Shipping is incredibly dynamic and you should constantly be evaluating and re-evaluating strategies, operational procedures, operational capacity, and consumer demand as we head into another peak shipping season — and beyond.
Jarrett Streebin is CEO and Founder of EasyPost. INTERNATIONAL 2021 PARCELindustry.com 13
2021 SURVEY: OUR READERS’ INTERNATIONAL PARCEL SHIPPING HABITS By Amanda Armendariz
I’d like to start by saying “thank you” to everyone who completed our survey for this issue. It’s always interesting to see what our readers’ global shipping profiles look like, and how they can change from year to year. We invite you to take a look at the results below and see how your experience lines up with those of your fellow shippers. As always, I’d love to hear from you, so feel free to contact me about your thoughts on these trends at firstname.lastname@example.org.
Do you ship internationally?
What percentage of your shipments are international?
1-10% 11-25% 26-50% 51-75%
0% 0% 0
90% of our respondents reported that they do ship internationally, a slight decrease from the 92% reported last year. For those who do not, the majority reported that it is due to the fact that there is likely not a market for their products92.59% overseas.
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When it comes to global shipping, the overwhelming majority of respondents this year report only sending 1-10% of their shipments cross-border, and no one reported sending more than half of their shipments globally. This is a marked change from last year, when almost 10% of respondents reported sending 51-75% of their shipments internationally, and almost five percent said that more than three-quarters of their shipments were destined for an international address.
If you are a US-based company, is the final destination for the majority of your international shipments (more than 50%) within North America (Canada and/or Mexico)?
Do you work with an international 3PL?
This is quite a change from last year, when almost 60% responded in the affirmative.
Is there a specific region to which the majority of your international shipments are sent (regardless of whether it is in North America or not)?
Not right now, but we have in the past Not right now, but we plan to in the future
Has the COVID-19 pandemic impacted your international shipping?
Yes, we send more shipments internationally now Yes, we send fewer shipments internationally now
What is your biggest challenge when shipping internationally?
No, our global shipping is about the same as it was pre-COVID Other 5%
Have you found it beneficial to establish a distribution center in a different country, in order to reduce the distance your orders have to travel to consumers?
Understanding local laws/regulations regarding duties and taxes Keeping costs down when sending shipments cross-border Understanding cultural nuances/local customs with respect to packaging/marketing/etc. Choosing the right carrier Other Last year, 50% of respondents reported that keeping costs down was their biggest challenge, but this year, that concern slipped to the number-two spot.
No No, but we are considering it
While the number of respondents who have established a DC elsewhere to be closer to their global consumers has increased, the number of people who are considering this as an option has greatly decreased compared to last year. INTERNATIONAL 2021 PARCELindustry.com 15
WHAT TO EXPECT IN INTERNATIONAL MAILING AND SHIPPING IN 2022… AND BEYOND
BY MERRY LAW
ith more than 220 countries and territories across the globe, changes are inevitable. Laws and regulations constantly change, and new ones are often enacted. The last few years brought many changes, and the changes will continue. Technology will continue to create other advancements. As we look at what is, and might be, coming in the next few years, keep in mind that each country and territory has its own unique laws and regulations, even within trade blocks like the EU. Technological Advancements in Addressing and Routing Logistics Technology is creating changes in addressing and in routing logistics as Geographic Information Systems (GIS) link a unique identifier to an individual and to one or more geographic locations for delivery. Recently, mobile telephone numbers and numeric personal postal IDs have
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been introduced as postal addresses in sub-Saharan African and other countries. Other countries are interested in this development. The complete address is the addressee’s name and the town of the local post office. Mailers should prepare for these, and other unusual, addresses. Whether the US and other countries will accept these addresses as sufficient to meet requirements for “know your customer” and export compliance regulations is untested, and current or future privacy regulation conflicts are unknown. PUDO (pick up, drop off) points and parcel locker IDs used as addresses can present the same challenges. The same GIS-enabled database can be used for routing with precise and up-to-date maps. That allows for more dynamic routes, which are more timeand fuel-efficient. The disadvantage of dynamic routes is they are not familiar to the person making the deliveries, an advantage of fixed routes. The solution between the dynamic and fixed routes may lie with autonomous vehicles, with the route (and “driving”) being handled by the technological side, and a person
handling the actual deliveries. More autonomous vehicles will be on the roads in the middle mile, but not in populated areas. Arial drones are unlikely to be used in populated areas, but are already being used in the middle mile and in deliveries to sparsely populated areas. More of this will be seen going forward, but will require changes to laws. Gig delivery is being tested for the final mile in many areas. It’s likely to work well in some places but fail in others. Gig delivery is used in some developing countries for the middle mile where, for example, a trucker will take packages for local residents to be picked up at a general store along with a delivery of goods. That model of sending packages closer to their final destinations may have some applications for moving packages internationally into the destination country or region when sending smaller volumes. Tracking, Returns, and Increased Scrutiny International tracking and returns remain problematic. Both are currently dependent on people — delivery agents or customers. Tracking is not yet fully automated, and
may depend on satellite access, battery power, and potentially fallible human scanning. International returns have all the problems of domestic ones, and then you have to add in the paperwork and regulations involved in crossing borders. Cross-border commerce is subject to increasing inbound and outbound scrutiny, requiring more and more information. (The US has mandated increased inspection or certification of items on non-passenger flights.) This increase may again lead to privacy issues and to challenges for companies to store and document the information. Some countries have declined to provide all the AED information within the postal network because it is not required by a treaty or other inter-governmental agreement. Private carriers must meet the laws and requirements of both the sending country and the receiving country. This increased scrutiny has two effects. First, entry ports and customs officials have challenges with storage space and staffing, leading to delays. This will resolve itself as agencies and systems adjust to the new reality. Second, more scrutiny seems to be leading to more tax assessments and to more returns. Any country has the right to open any item for customs inspection and to re-value the contents. (Downward is unlikely.) With inspections of all items because of duties and taxes for any non-zero value, more
reassessments are likely. In EU countries, postal operators are charging fees for processing and delivery when customs duty and value-added tax (VAT) are due on an item. Consumers, unwilling to pay higher taxes and fees, are more likely to return items. The requirement by some EU countries that the EU Import One Stop Shop (IOSS) identification number appear on paper customs forms led to some fraudulent use of IOSS tax numbers. Companies should monitor their accounts carefully and be prepared to challenge fraudulent charges. Whether countries are motivated by protectionism, security, or revenue production, or some combination of them, matters as these regulations are enforced. The reasons behind and the objectives of these policies will dictate how strictly they will be enforced and whether there will be modifications easing or tightening them over time. Other Important Considerations Third-party logistic providers (3PLs) and other service providers can help mitigate the problems companies face with processing, paying, and tracking taxes. While 3PLs can provide assistance, the owner of the package has ultimate responsibility for the information provided to US and other government authorities — USPS, US Customs and Border Protection, foreign customs, and tax agencies — and can face legal sanctions for non-compliance. Carriers — express companies, airlines, shipping companies — face sanctions for non-compliance. (Postal operators are in a different situation because of treaties regulating them.) Accepting non-banked payments can also expose companies to legal problems. Banked payments are those that go through banks — credit cards, bank transfers, checks (or cheques), etc. Nonbanked payments do not use traditional banks and include payment processing companies (e.g., PayPal), cryptocurrencies, etc. The use of non-banked payment methods has been increasing for the last decade, particularly in less developed regions with less bank access and among those avoiding taxes, committing fraud, or laundering money. These types of payments will continue to increase, as will the increase in digital
currencies and the move away from cash. The legalities vary from country to country. A decision on whether to accept, or make, non-banked payments, and which ones, should be discussed with your firm’s accountants and attorneys. International commerce is subject to a number of multilateral treaties and agreements originating from international organizations. All has not been smooth lately: the World Trade Organization (WTO) has had no successful trade negotiations in about 20 years, and the Universal Postal Union remains unable to move forward on basic reforms. Trust between countries, especially the US as a reliable partner, has gone down over the last five years. While the international organizations have had some rocky years recently, the agreements affecting international package shipping, particularly the IATA regulations and customs agreements, will continue to be accepted and adhered to widely. Worldwide, with an overall vaccination rate of less than 20%, COVID will continue to be a problem into at least 2024 with continuing disruptions of transit and delivery. An increase in general restiveness, from demonstrations to increases in crime to coups d’état that have occurred recently worldwide, show little sign of decreasing, and may well increase due to continued dissatisfaction with COVID issues and economic troubles. The dependability of all those grids for electricity, for Wi-Fi, for telephone communications, and other services is increasingly fragile. Awareness of the issues and contingency planning are needed along with backups and security precautions.
Merry Law, President of WorldVu LLC, consults with organizations on international addressing and databases as well as on postal and delivery issues. She is editor of the authoritative Guide to Worldwide Postal-Code and Address Formats and author of Best Practices for International Mailings. Merry is a member U.S. International Postal and Delivery Services Federal Advisory Committee and the USPS Mailers Technical Advisory Committee (MTAC) and participates with the Universal Postal Union Addressing Work Group associations. INTERNATIONAL 2021 PARCELindustry.com 17
Want to Improve Your Global Shipping? These 11 Companies Can Help. International parcel shipping continues to increase at an amazing pace, and forecasts show that this will only continue. It is important for every business that ships cross-border or across the ocean to make constant improvements and preparations for this ongoing increase. To help, please take a look at and read about the following 11 companies, each with their own product or service designed to improve a company’s cross-border and/or global parcel shipping logistics.
Not sure how to optimize your intra-EU, intra-Asia, or intra-Canada parcel agreements? We can help. Shippers with a significant offshore parcel spend can find themselves feeling unsure of how to maximize their global parcel agreements. Some shippers find that they feel comfortable negotiating in the US; however, when it comes to parcel expenses that originate from Europe, Asia, or Canada, that level of comfort can be harder to achieve. And with good reason — global parcel negotiations are considerably more complex than those in the US. Factors to conside in offshore negotiations include: a larger selection of carriers, different service types in different regions, multiple currencies, currency exchange rates, new surcharges, cultural considerations, in-country personnel impact on the contracting process, local country carrier impact on the contracting process, mid-year rate
cap changes, and even continent size or configuration. Additionally, offshore carrier agreements can look very different from those in the US, and it is important to understand how they work and how they control the pricing. It’s also critical to consider if a regional, multi-regional, or mostly global approach is right for the tender process. At Alexandretta, we drive a comprehensive process for mid-market and enterprise-sized companies to optimize their parcel and trucking agreements within EMEA, ASPAC, and Canada. We take the guesswork out of global transportation, bringing experience, peace of mind, and results. www.alexandrettaconsulting.com 714.777.3377 email@example.com
Paperwork in, label applied, parcel loaded — automatically For decades now, the best way to load parcels into a truck has been to use a Caljan Telescopic Conveyor. We’ve helped you optimize the working environment, whilst getting parcels out to your customers as quickly as possible. Then came e-commerce. You now have customers from all corners of the globe, demanding shorter delivery times. The volume of parcels has exploded. It’s proving difficult to recruit. Making a profit has become a challenge. Cutting corners is not the answer. Trimming processes is. In recent years, Caljan has expanded our focus, so we are now able to help you optimize the whole dispatch process, regardless of whether your customers are in the next state or on another continent. Print consumer paperwork, inserting delivery notes, return labels etc., as the consignment speeds along the conveyor. Wrap the consignment in space saving packaging, then print the carrier-specific label, applying each one to exactly the right polybag, padded envelope, or parcel. Loading the truck — or ULD — and you’re set to go. All elements are precisely matched throughout the process. You can be sure the right items are received by the right customer, with the right paperwork for return goods. See how Caljan can help you optimize your dispatch process. 800.338.1751 caljan.com/wp-us
SPONSORED CONTENT At ePost Global, our flexible, reliable, and cost-effective shipping solutions ensure that your packages arrive quickly and efficiently, no matter where in the world they’re going. With services to over 220 countries and territories, we have the largest network of last-mile carriers to give you the best rates and service. We have over 25 years' experience in the ever-changing world of international shipping and logistics. Our teams have a track record of success developing customized, end-to-end solutions that fit your specific needs. Our extensive knowledge of US and foreign customs clearance help ensure that your packages arrive on time and without damage. Our experts can help you navigate Brexit changes and the new EU VAT regulations, helping you ship seamlessly and with more confidence. And because technology is at the heart of every e-commerce business,
our proprietary software is customized to provide the optimal customer experience. We develop enhancements that leverage existing internal and external technological solutions, seamlessly integrating our platform with a variety of technology providers to optimize delivery. We also provide transparent tracking for the entire delivery path, so you have complete visibility into your packages at all times. With more options, better service, and tailored solutions that help you reach more customers with confidence, see how ePost Global gives you the total package for international e-commerce shipping.
International shipping rates sinking your business? We can help. Firstmile has the versatility to handle both your domestic and international shipments. Our unique technology provides one simple interface, one simple invoice, and one consolidated pick up by our Firstmile trucks. We have regional facilities around the country, which means you will see scan events more quickly with Firstmile than other international shippers. Firstmile has you covered for your international shipping needs. We have international mail services and small parcel shipping solutions to 220 countries. We provide both DDP and DDU delivery options, and we even have services that can help estimate duties and taxes for you. Whether you are looking for a low cost mail solution with less
visibility or a parcel service with door to door in country tracking, we can help. Xparcel is our unique shipping platform that connects regional and national carriers into one consolidated API location. Xparcel will shop across all of these carriers for the best combination of price and service on every single rate call. Oh, and of course our international services, like our domestic services, seamlessly integrate with popular shipping software applications like ShipStation, ShipRush, OrderCup, and many more.
www.firstmile.com firstname.lastname@example.org 888.993.8594
GEODIS MyParcel Domestic brands dream of becoming internationally recognized household names. E-commerce can make those dreams a reality. While international expansion creates plenty of growth opportunities, international e-commerce also presents a host of new cross-border shipping challenges. GEODIS MyParcel can help. GEODIS MyParcel is a cross-border international small parcel shipping service that currently ships to 27 European countries, Great Britain, and Canada, with guaranteed delivery in 4-6 days. GEODIS leverages its parcel expertise, e-commerce experience, deep understanding of global customs clearance processes, and integrated technologies to help brands strike the balance between speed of delivery and total landed cost. GEODIS MyParcel provides sellers with address validation, delivery visibility, and returns management, all while preserving both brand identity and the customer relationship. Our customers get a clear, all-inclusive picture of shipping costs, parcel tracking, delivery flexibility, and easy returns. Let GEODIS MyParcel help you achieve international excellence this peak season and contact us today. 866.443.6347 geodis.com/us email@example.com
GlobalPost offers a range of domestic and international shipping solutions that simplifies parcel shipping while saving you money. By combining our world-class customer service, easy-to-use technology, and seamless integrations with the world’s top shipping platforms, we help e-commerce and warehouse sellers succeed domestically and around the world. GlobalPost ships to over 220 countries and has a network of last-mile carriers that allows us to optimize delivery times. Our partnerships with global postal carriers and our software-based network allow flexibility, ensuring you get the best service at the lowest rates with every shipment. Whether you ship one or hundreds of packages a day, GlobalPost has a solution to simplify your shipping operations while you take advantage of our competitive, low rates. Our portfolio of products ensures you can find the best service for your needs,
whether you need to prepay duties on behalf of your customer, get advanced tracking options, or are looking for the best mix of value and speed. Take advantage of free coverage, an easy claims process, no hassle of printing customs forms, free phone and email support, and more. GlobalPost is part of the Stamps. com family, the leading USPS shipping provider with over 700,000 customers. Our dedicated team has 25+ years of shipping industry experience and are experts in e-commerce and fulfillment. Call 1.888.899.1255 or visit www. goglobalpost.com for more information.
OnTrac International utilizes an extensive network of last-mile carriers to arrange mail and parcel delivery to over 200 countries and territories. Customers benefit from more economical mail processing, pre-negotiated shipping discounts, and the expertise of a team of professionals who understand the latest in international delivery — that means more savings, more sales, and satisfied customers. OnTrac International is a USPS Postal Qualified Wholesaler, is SOC 2 compliant, and the company can support integration with over a dozen different multi-carrier software pro-
viders. The OnTrac Logistics Network includes three divisions based on service offerings: overnight, messenger, and international. For more information about OnTrac International, visit ontracinternational.com or call 800.628.4868.
www.GoGlobalPost.com firstname.lastname@example.org 888.899.1255
In today’s e-commerce world, selling globally is essential to maximize revenue and reach new customers. With OSM Worldwide, our dependable international shipping solutions provide a strategic complement to our domestic shipping services that support your global shipping needs. Our worldwide network ensures your packages arrive quickly and efficiently — no matter where in the world they’re going. We ship to more than 180 countries and territories, and even offer DDP options to numerous countries for added peace of mind. Because we maintain close relationships with international postal authorities, our team can identify the most effective routings to optimize the delivery and minimize your costs. And with our proprietary OSMART tracking platform, you can track, trace, and manage any shipment 24/7. Providing solutions tailored to your specific needs, our dedicated customer service team will be a true partner for your business — going above and beyond to support you at every step. Our experts help you navigate customs clearance, cargo screenings, and enhanced security and quality checks — so your packages arrive on time and without damage. With our extensive expertise in international delivery, OSM has everything you need to provide exceptional service to your international customers. To learn more how OSM Worldwide can help optimize every aspect of your international shipping operations, contact Rob Glover, Vice President of Sales, using the information below: osmworldwide.com email@example.com 847.233.9999
Many shippers are experiencing an unusually high volume of lost or damaged international parcels in the past year. These losses are impacted by customs backlogs, closed borders, and labor shortages. Parcel Insurance Plan can insure your international packages for being lost or damaged while in transit. We offer low rates, fast and efficient claim processing, and convenient integration with most manifest software. If you ship internationally, consider PIP for your shipping insurance partner.
We insure companies shipping at least 5-10 packages per day. Request a quote at www.pipinsure. com/parcelmedia/ to see how much you can save.
E-commerce has reshaped almost every industry, compressing the distance between sellers and customers. Companies are no longer fighting for market share with local rivals, but with global digital competitors that can target and win previously loyal customers. Global shipping has significantly more challenges than domestic deliveries. QAD Precision’s integrated global trade and transportation solution simplifies this process, by automating export management, global documentation production, customs reporting, and multi-carrier shipping. Goods glide through customs — the right information is presented to the right people, in the right format and language, at the right time. Shippers can screen their trading partners, and ensure all export licenses and permits are included. With QAD Precision, shippers leverage a multi-carrier network of over 5,500 carrier services covering
every corner of the world. Our global multi-carrier shipping solution also allows for consolidations, reducing transportation costs and regulatory headaches. Plus, we offer a centralized portal for tracking all deliveries, with any carrier, anywhere in the world with expectation alerts if something goes wrong. It is no wonder that QAD Precision is deployed in more than 4,000 sites across 100 countries. Our solution is multilingual, multi-currency, and supports multi-date formats. And, of course, we offer global, 24/7 follow the sun support.
www.pipinsure.com/parcelmedia/ firstname.lastname@example.org 800.325.7390
www.qadprecision.com email@example.com Americas: + 1 (312) 239 1630 EMEA/Asia Pacific: + 353 (1) 406 0700
Global transportation is quite complex — from additional carriers to currency and tax nuances to intricate location-specific requirements. You need an expert to help handle and easily navigate the challenges. Trax illuminates a roadmap to success and provides end-to-end visibility into what is driving your performance and your transportation costs. Having multiple office locations and experts in region throughout the world means we’re experienced working with any carrier, any currency, and any language. A combination of industry-leading cloud-based technology and the industry’s most global services elevate traditional freight audit to deliver enterprise-wide value and customer satisfaction. Our clients represent the world’s most complex supply chains, and they choose Trax to achieve better visibility and control of their global transportation costs, improve transportation data quality, and advise on logistics management optimization strategies. Our stature at Trax as the leading partner in Transportation Spend Management, as well as our truly global presence, makes us the perfect partner to help you take your supply chain to the next level. Trax’s Transportation Spend Management Maturity Model is the leading framework for companies to fully optimize their supply chains and become dominant global leaders within their industries. To partner with Trax to optimize your Transportation Spend Management, contact us today. traxtech.com 800.755.0110 firstname.lastname@example.org
CRITICAL LEGAL CONSIDERATIONS FOR INTERNATIONAL PARCEL SHIPPING
By Brent Wm. Primus, JD
n the last installment of my PARCEL Counsel column, we took a look at four critical points relating to shipping parcels. In this international edition of PARCEL, we will delve deeper into some of those points as they relate to international shipments. First will be the additional laws and regulations that come into play when shipping beyond the borders of the United States. Second will be the development of a compliance program. Additional Laws and Regulations As with domestic shipments, any parcel shipper shipping goods internationally must know the rules and regulations governing their shipments. For these shipments, both United States and foreign laws will apply. This is true for transportation providers as well as shippers. International transportation service providers will have different regulatory standards and legal liability rules governing their services.
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Contracting. Contracts relating to international shipments may also be governed by different standards. For instance, for international shipments, most people prefer to use the terms of sale found in INCOTERMS as opposed to the terms of sale based upon the Uniform Commercial Code (UCC). Also, the United Nations Convention on Contracts for the International Sale of Goods (CISG), sometimes known as the Vienna Convention, is a multilateral treaty that establishes a uniform framework for international commerce. It has been ratified by 94 countries, including the United States. Cargo Liability. Another very significant area of difference is the laws governing a carrier’s liability for loss and damage to goods. Generally speaking, in the United States, the provisions of the federal statute known as the Carmack Amendment (49 USC § 14706) will apply to ground shipments by motor carrier. However, for international shipments by ocean carriers, their
liability is governed by the Carriage of Goods by Sea Act (COGSA). The gist of it is to set the limit of liability at $500 per package or customary freight unit as well as establishing 17 defenses and other terms and conditions. Usually, but not always, international air shipments will be governed by a treaty known as the Montreal Convention. The Montreal Convention establishes liability at 22 Standard Drawing Rights (SDRs) per kilogram. The value of an SDR fluctuates; however, it was set by the International Monetary Fund (IMF) at $1.41 as of October 1, 2021. This makes the limit $14.10 per pound. Furthermore, the inland or surface leg of the shipment occurring in a foreign country will be governed by the laws of that country. HazMat. The shipment of hazardous materials (HazMat), which are usually referred to as “dangerous goods” in international shipping, are subject to additional rules to those of the United States. For these shipments the following could apply: The International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions) The International Maritime Dangerous Goods Code (IMDG Code) Transport Canada’s Transportation of Dangerous Goods Regulations International Atomic Energy Agency Regulations for the Safe Transport of Radioactive Material The International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions) Customs and Trade Laws. Yet another area of concern relates to customs and laws regulating trade between countries. All international shipments entering into the commerce of another country will be subject to laws governing their importation, including their classification and valuation; any duties (taxes) imposed upon them; and any restrictions on their importation. This includes, but is not limited to, restrictions required by regulatory, health and safety, trade quotas, and intellectual property rights laws.
Under US law, a US importer of record is responsible for using “reasonable care” in importing goods into the United States (19 U.S.C. § 1484). Under the concept of “informed compliance,” US Customs and Border Protection (CBP) has published guidelines as to the responsibilities of the trade community in importing goods. It is the responsibility of the importer of record to ensure that reasonable care has been used in providing accurate information to CBP. US export licenses; export control laws; and sanctions. Many countries have export licensing and control laws. These are generally aimed at either limiting or prohibiting from export goods that are controlled due to technology or other strategic or sensitive characteristics. In the United States, there are three main government agencies involved in export regulation: The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce The Directorate of Defense Trade
Controls (DDTC) of the U.S. Department of State The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury While a description of these various rules, or even a summary of them, is far beyond the scope of this column, the compliance with them is extremely important, since a violation of these laws can result in significant monetary and criminal penalties. Development of a Compliance Program Did reading, or even just skimming through, the first part of this column give you a headache? That is not surprising. This is a very complicated area with lots of nuances and exceptions. However, I would hope that if nothing else, you come away with an understanding of why it is critically important to have a robust compliance program in place. There are many ways that such a program can be established. The most important first step is for senior
management to be fully committed to the development and implementation of a compliance program. The second step is to designate a specific person to be in charge. It is difficult to know all of the legal ins and outs of international parcel shipping. However, the websites of the US government agencies regulating international trade often have guidelines for compliance programs for companies doing business in those trades. Parcel shippers doing business internationally can also use business consultants or attorneys familiar with this area to develop the compliance program and related training programs.
Brent Wm. Primus, J.D., is the CEO of Primus Law Ofﬁce, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found on the PARCEL website (PARCELindustry. com). Your questions are welcome at brent@ primuslawofﬁce.com. This article was based on the presentation given by Brent’s colleague, attorney Andrew Danas, at PARCEL Forum ‘21.
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INNOVATION IS GOING TO BE A KEY FORCE IN THE GROWTH OF INTERNATIONAL COMMERCE
By Jill Sloand
t is truer today, more than ever, that innovation is necessary for businesses to survive. Traditionally, companies would plan for growth based on past performance, utilizing historical data to influence future forecasting. While there used to be some reasonable level of accuracy with these growth projections in the past, the pandemic has now shown us how growth can drastically change, ranging from stifled demand on one extreme to a rapid escalation of demand on the other extreme. Not only can the magnitude of growth change, but customers’ buying behaviors can also change, either transitioning order profiles from a higher volume of smaller orders to a lower volume of large orders or vice versa. The level of uncertainty in today’s world requires companies to embrace innovation to meet these constantly changing demands.
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Innovation Within the “Four Walls” The COVID-19 pandemic has changed what solutions are commonly implemented in facility expansions and retrofits. For example, constructing a mezzanine with extended operations on the upper level used to be a popular solution to maximize space utilization. However, with the currently high price of steel today, constructing a mezzanine is much more expensive than it was a few years ago. Therefore, companies must be creative and innovative and explore alternative solutions that are financially practical. Considering how it is also difficult to attract and retain employees today, companies are turning to automation as a form of innovation. Solutions like autonomous mobile robots (AMRs) are great for increasing efficiency, productivity, and quality, while decreasing labor costs, but the right automation must also be flexible and scalable to adapt with changing needs of the company. Coping with Additional Capacity and Multiple Carriers Another direct result of the pandemic is the accelerated growth of e-commerce. As a result, parcel shipment volumes have grown much more than other modes, while the capacity of current carriers has not been able to increase at the same rate as these volumes. Carriers today simply can’t keep up. Labor can only increase capacity up until the point of maxed out truck inventory — either way, it is not enough. Companies can explore working with multiple different carriers to obtain the capacity they need, but this comes with its own set of challenges — one of the biggest being how to manage these carriers from a systems standpoint. In order to successfully manage multiple carriers, the company’s ware-
house systems must be able to effectively integrate with each carrier’s systems, all of which are likely not the same and can vary drastically on the level of system innovation and flexibility. Sharing these large and complex data sets across different platforms can pose additional challenges for all parties. Achieving this level of system integration requires a methodical, phased approach, but also requires a tight implementation timeline if businesses want to thrive during the peak holiday seasons. After completing a successful system integration, companies must develop processes to track their performance on each carrier to ensure they are fulfilling the contracted capacity to minimize costs. Globally, this kind of information sharing is difficult to achieve, especially due to differing trade agreements worldwide. There is very little visibility into international shipping, so companies may not know when shipments arrive at and flow through customs and ports of entry, or they might experience delays due to congestion or other issues that may arise. Companies that work closely with their carriers to innovate and integrate their systems can help improve this data and information sharing and better serve their customers. Additional Challenges for Carriers It is well known that the trucking industry is suffering globally, and this has been a problem since before the pandemic. Carriers are dealing with a driver shortage, due to both the decrease in the current number of drivers and the limited backfill of these positions. Current drivers are aging and retiring, and filling these vacancies has been very difficult for carriers. Two large groups of potential drivers that could be called upon include the younger generations and women. Across the globe, the minimum age to drive freight is typically 21, not 18. If policy can change this age by three years, there is a greater opportunity to attract younger drivers before they enter another profession. Women are also gravitating toward more attractive jobs with better work-life balance and safer conditions. The industry should increase recruitment efforts for these populations to help close the labor gap. While the pandemic can be credited with compounding the driver shortage, the trucking industry has been facing additional challenges internationally. For example, when the UK left the European Union, there was a population shift that resulted in many drivers leaving the UK and moving back to EU states, creating more shortages. Further, it is transactionally more difficult to ship across these borders since Brexit. Worldwide, these difficulties are forcing businesses to innovate in order to maintain their level of service to customers. That innovation may come in the form of increased deployment of robotic solutions and development of safe, driverless technologies, or even businesses moving to company-owned fleets. Either way, only those companies that can innovate both inside and outside the facility will survive in the new normal and beyond.
Jill Sloand is a Project Consultant at Tompkins Solutions. She can be reached at email@example.com. INTERNATIONAL 2021 PARCELindustry.com 25
ENSURING THE GLOBAL SHIPPING PROCESS IS A SUCCESS… FROM START TO FINISH
BY MICHAEL J. RYAN
he world of global e-commerce is growing at more than 27% each year, with over 131 billion parcels traversing the globe in 2020. This equates to 4,160 parcels shipped per second. Since 95% of the world’s population lives outside the US, this is a great opportunity for all US-based merchants. As the global supply chain networks continue to have constant disruption, the world will rely on parcel shipping to quench its thirst
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for consumer goods. This will translate into people all over the globe ordering items from anywhere on the map. Most consumers don’t care where the item comes from, but they do care about the price, quality, and speed of delivery. Challenges and Opportunities for Merchants The top 10 e-commerce markets from the US represent about 80% of all e-commerce orders. Here is a list of the top 10 countries (in rank order): 1. Canada 2. United Kingdom 3. France
4. Australia 5. Germany 6. Japan 7. Mexico 8. South Korea 9. Israel 10. China In developing your strategy to go global, it is imperative to analyze your products in each respective market and ascertain the selling opportunity. There are many variables that enter into this equation, which could include market size, price competitiveness, duty and tax impact, returns, and delivery expectation.
The top 10 product categories and their growth rates in 2020 are as follows: 1. Toys/hobbies: 27.3% 2. Consumer electronics: 26% 3. Jewelry: 19.9% 4. Health/beauty: 18.5% 5. Apparel/accessories: 14.5% 6. Specialty: 12.7% 7. Office supplies: 11.8% 8. Sporting goods: 11.4% 9. Automotive parts: 10.7% 10. Housewares: 9.5% If you take a close look at this list, you will notice that the COVID-19 pandemic had an influence on what people were ordering. As we come out of the pandemic, the buying behavior of global consumers has not changed. They are now buying items that they traditionally bought at a retail store, and they are willing to purchase these items from anywhere. So, what is important to global consumers and what influences their purchases? Factors such as a lower price, the product or brand not being available domestically, inexpensive delivery cost, trust in the foreign country of purchase, fast delivery, and an understanding of the language of the foreign website all have an impact. Now that we know what global consumers are looking for, let’s take a look at some of the challenges that merchants encounter with international orders: 1. Navigating customs compliance 2. Tracking deliveries across borders 3. Managing delivery expectations 4. Creating a seamless experience 5. International returns 6. Delivered duty paid (DDP) vs. Delivered duty unpaid (DDU) The e-commerce world has become very fast and efficient in the US. We can thank Amazon for setting the delivery bar at two days
(and, in many cases, next-day or same-day). This is a very difficult expectation to manage when shipping to another country. There are many ways to achieve this goal but they need to be aligned to the profitability of your product. Ensuring a Successful International Delivery A successful global delivery all starts with a clear and concise description of the product and its reason for importation. The main purpose of Customs in each country is to protect their country from items that they do not want within their borders and to collect the respective duties and taxes that are assessed. Using the correct Harmonized Tariff Schedule (HTS) code is one of the easiest ways to manage customs compliance. The HTS code is a 10-digit code that provides an accurate description of the product. This eliminates all the “guessing” in the clearance process. This can have a significant impact on the overall margin of your business. An excellent resource to help you in this process is https://www.trade.gov/ harmonized-system-hs-codes. In addition to having the correct HTS code, it is important to understand any rules and regulations of the product you are shipping. Many products can get reduced duties and taxes, and some have limitations to quantity (i.e., supplements) and may be restricted from entering the country. There have also been some major changes in the best practice of DDP vs DDU. Most countries are moving towards a DDP standard, which makes the delivery experience seamless for the consumer. However, in order to accomplish this, you will need to add a duty/tax calculator to your website. Once you have your front-end order process completed, you need to select a carrier. There are three ways to do
this: postal, package consolidation, and express carrier. Here are some things to consider with each of these: 1. USPS International: This is an easy way to ship but can be expensive. The First-Class International Package service is cost-effective but slower in terms of delivery time. The Priority Mail International (PMI) service is faster but tends to be expensive. 2. Package Consolidators: This is a great way to ship, but you usually need at least 25 packages or more per pick-up. For large merchants, this is a good way to go, and these providers offer trackable services. 3. Express Carriers: All the major carriers offer fast and reliable service. However, for smaller merchants, it can be expensive, so you may want to look at one of their resellers to get a better price. DHL Express is one of the market leaders in this area. Once you have an understanding of the HTS codes and developed strong relationships with the carriers who will deliver your international packages, you are well on your way to ensuring the success of your global parcel operation. There are still many other factors to keep in mind (such as the returns process) that are beyond the scope of this article, but the overarching message is that for global shippers, the world is becoming smaller and smaller — and that’s a good thing. There are many opportunities for merchants that are big or small. It is just a matter of seeking the unknown.
Michael J. Ryan is the Vice President-Parcel Solutions for Flat World Global Solutions and has over 25 years in the parcel industry. He can be reached at 708.224.1498 or mryan@ flatworldgs.com.
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A Rapid Rise in Global Parcel Volumes Shows No Signs of Slowing A look at the data from the most recent Pitney Bowes Parcel Shipping Index By Jason Dies
Some Key Findings from the Shipping Index: Parcel volume reached 131.2 billion in 2020, up 27% from 103.2 billion Parcel revenue reached $429.5 billion, up 22% since 2019
This year’s Parcel Shipping Index results revealed just how staggering 2020 was for the shipping and logistics industries. Notably, consumers continue to shift to make e-commerce the default method of shopping, which we anticipate will continue to pressure the industry in the coming years. With our forecast of global parcel volume doubling to 266 billion parcels in 2026, it’s clear there’s a lot to do across the industry to prepare for continued, exponential growth in the next few years. 2020 was an unprecedented year, and naturally some findings were surprising. One stat that stood out to me was that 2020 was the first year US parcel volume increased at a faster rate than China since the inception of the Shipping Index six years ago. It will be interesting to see how the future plays out, as we expect China to be the first country to reach 100 billion parcels by volume. The Parcel Shipping Index has never been more relevant, and it’s an exciting time to be in such a fast moving and changing industry that is being challenged by demand across the globe.
Jason Dies is EVP and President, Pitney Bowes Sending Technology Solutions.
These are just some of the key findings from this year’s index. To download the full Pitney Bowes Parcel Shipping Index ebook and view the video, infographic, and interactive map, please visit https://www.pitneybowes.com/us/shipping-index.html.
Highest CAGR 2014-20 for parcel volume was generated by China at 35%, followed by Brazil at 18% and India at 15% Highest CAGR 2014-20 for parcel revenue was generated by China at 27%, followed by India at 16% and US and UK, both with 11% The top three markets by revenue – US at $171.4 billion, China at $127.5 billion, and Japan at $33.3 billion – represented 77% of global parcel revenue in 2020 United States remained the market with the highest carrier revenue, reaching $171.4 billion, an increase of 29% year over year
Parcel Shipping Index Findings by Region
BRAZIL’S INCREASE IN PARCEL VOLUME WAS THE HIGHEST ACROSS THE STUDY, EXCEEDING ONE BILLION FOR THE FIRST TIME, REACHING 1.2 BILLION IN 2020 – A 46% INCREASE FROM 0.85 BILLION IN 2019.
Europe FRANCE GENERATED THE HIGHEST REVENUE PER PARCEL IN THE INDEX AT $9.3.
IN GERMANY, ALL LARGER CARRIERS (INCLUDING DPD, DHL, AND GLS) REPORTED REVENUE GROWTH, WHILE SMALLER CARRIERS COMPRISING ‘OTHERS’ SAW THEIR GROWTH DECLINE.
ITALY SAW PARCEL VOLUMES EXCEED 1 BILLION FOR THE FIRST TIME, REACHING 1.3 BILLION, UP 31% FROM 2019.
UK GENERATED THE HIGHEST INCREASE IN CARRIER REVENUE ACROSS THE INDEX, UP 37% TO $22.2 BILLION FROM $16.1 IN 2019. REVENUE PER PARCEL INCREASED – FOR THE FIRST TIME SINCE 2016 – TO $4.4.
Asia Pacific 29% CANADA’S INCREASE IN REVENUE WAS ONE OF THE HIGHEST IN THE STUDY AT 29%, REACHING $11.5 BILLION, UP FROM $8.9 BILLION. VOLUME REACHED 1.6 BILLION, UP 29%.
37% IN THE UNITED STATES, PARCEL VOLUME ROSE BY 37% TO REACH 20.2 BILLION. PARCELS PER CAPITA REACHED 61 IN 2020, UP FROM 45 IN THE PREVIOUS YEAR.
AUSTRALIA GENERATED THE THIRD HIGHEST REVENUE PER PARCEL ACROSS THE INDEX, AT $7.6 AFTER FRANCE AT $9.3 AND THE US AT $8.5, ALTHOUGH THIS HAS FALLEN SINCE IT REACHED $9.8 IN 2014.
100 billion CHINA REACHED 83.4 BILLION IN PARCEL VOLUME, UP FROM 63.5 BILLION IN 2019, THE LARGEST OF ALL MARKETS BY VOLUME AND THE FIRST COUNTRY IN THE INDEX FORECAST TO REACH 100 BILLION IN 2021, WHICH IT IS EXPECTED TO REACH IN 2021.
INDIA WAS THE ONLY COUNTRY TO SEE A DECLINE IN PARCEL VOLUME IN 2020, DOWN 16% TO 2.4 BILLION PARCELS FROM 2.9 BILLION IN 2019. THIS IS LIKELY TO BE A RESULT OF PANDEMIC-RELATED EXCEPTIONAL CIRCUMSTANCES AND NOT CONSIDERED A TREND.
JAPAN’S PARCEL VOLUME REACHED 9.1 BILLION, UP FROM 9 BILLION IN 2019. REVENUE INCREASED BY SIX PERCENT TO $33.3 BILLION. INTERNATIONAL 2021 PARCELindustry.com 29
MONEY, TIME, AND RISK: THE BALANCING ACT TO UNLOCKING GLOBAL MARKETPLACE SUCCESS By Kenny Tsang
f the pandemic proves one thing, it’s that e-commerce has truly and irrevocably taken hold of the global marketplace. Amazon’s Q2 2021 results alone show this, with the online shopping giant reporting a 16% operating cash flow increase to a total of $59.3 billion for the previous twelve months, in comparison to $51.2 billion reported at the end of June 2020. Going global is no longer a choice; customers all over the world can access products thousands of miles away at the click of a button, and forward-thinking sellers must remain visible, efficient, and agile to keep up. Given the prevalence of online aggregators like Amazon and eBay (which also recently reported a successful second quarter, with revenue up 14% to $2.7 billion), it makes sense that sellers prioritize global expansion via these (and other) online marketplaces. However, businesses can face unique hurdles as they attempt to diversify online.
Cross-Border Sales Challenges Although diversifying avenues to access sales across international borders is an essential strategy for any forward-thinking business, there are challenges in the process. For example, many sellers paying Chinese suppliers in USD do not have a comprehensive understanding of the inner workings of conversion rates. Moreover, how conversion rates can alter the pricing of goods isn’t always common knowledge and can fall into the minutiae of deals that could be much more economical, had attention been paid to the differences between international currencies. Sellers also come up against seemingly unavoidable hurdles like transfer errors — or delays — as funds move slowly through traditional methods, involving multiple parties. In the most severe instances, international payments can fall victim to money laundering and wire transfer scams, leading to a need for increased importance placed upon validation and security. In 2019, the Federal Trade Commission (FTC) stated that a total of $423 million was lost in wire transfer
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scams in the previous year, and this has only increased. The FTC received more than 2.2 million reports of fraud in 2020; reports of losses totaled nearly $3.3 billion. Three Key Areas: Money, Time, and Risk Online sellers need to maximize financial resources and economize on time while maintaining the security required to avoid scams and fraud seen over the last few years. When growing a network of suppliers, ensuring that they are trusted and vetted is paramount in preventing and protecting against risks. Of course, there are red flags that businesses should look out for: a supplier changing the payment recipient at the last second, for example, or requesting payment to a personal account. But even for a business with plenty of manpower, checking suppliers individually to verify their honesty is not efficient. Safety and success boil down to truly knowing the customer and a relationship with a global payment partner that can support sellers in verifying their suppliers. As a result, sellers growing and expanding their businesses garner trust and validation in their supplier relationships, limiting their risk and exposure to scams while strengthening their supply chain. Another critical facet of this three-pronged approach to successful international e-commerce is to ensure secure and fast payments wherever a supplier is in the world. Shockingly, right now, the average amount of time it takes for a company to pay a supplier is 66 days, based on global data. Moreover,
experts even predict that this figure for days that sales are outstanding (DSOs) is likely to increase as the year continues. There is a solution: paying suppliers in their local currency, in an international (yet local) approach, saves time and money. Adopting this strategy enables sellers and suppliers alike to sidestep foreign exchange and application fees and complete cross-border transactions with agility. An intelligent payments partner understands how the global supply chain impacts both suppliers and sellers and will validate both ends of the chain to provide the support needed to help businesses grow. It is no secret that capital management is a crucial area of focus for any business in today’s economy, and controlling costs when it comes to supplier payment is no mean feat. Traditional payment rails no longer keep up with the pace required of globalized online businesses. Accessing real-time payments delivered in local currencies cuts time and costs. Instead, a forward-thinking merchant will apply automated payment methods and direct-to-supplier transfers. The best payment partners enable brands to do this without heavy exchange fees or security risks. Only by monitoring a payment from point to point, carefully managing a supply chain from seller to supplier, can this be achieved.
Kenny Tsang is Managing Director of FinTech Unicorn PingPong Payments. Visit https://usa. pingpongx.com/index for more information.
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