Commonly Overlooked Costs in International Shipping
For many companies shipping internationally can be a huge step. There are so many variables to get exactly right that it can seem overwhelming. Having great partners to help you manage the process is imperative to do it right.
If you’re already working with a 3PL for domestic fulfillment, they may also be able to help you transition into international sales. A good 3PL will either have the infrastructure in-house to execute your international plans, or great partners that can work seamlessly with your 3PL to manage the process.
Here are some of the most commonly overlooked aspects of international shipping and how an experienced 3PL can help you sort them out.
Flawless Shipping Execution Doesn’t Mean it’s Priced Correctly
One of the biggest missteps companies make is paying too much in transportation costs. If you’re a high-growth brand, you’re focused on getting products out and gaining market share. You’re probably a lot more concerned with creating a brand image than worrying about your supply chain and logistics. While shipping and logistics may not seem very important, it has a huge impact on your bottom line and your customer satisfaction. And just because your products are going out smoothly, doesn’t mean you’re not overpaying for the service.
This is where a 3PL will have experience and expertise—they’ll have the tools to analyze your shipping costs and figure out which rates can be improved. There are so many places along the supply chain that costs can be negotiated and a 3PL or its international partners will know them.
Chances are if you’re shipping internationally, your biggest spend will be on freight costs, international air and ocean freight. If your 3PL supports international shipping, they should be able to help manage your freight account, and source the best transportation and rates for you. Even if you start out with a pretty simple supply chain—bringing products to the US from a single manufacturing country and shipping into Europe or Canada—that doesn’t mean there’s a fixed freight rate that you just have to pay. Experts spend time reassessing those rates on a regular basis. An experience 3PL will help you negotiate your rates so that you don’t get stuck at a fixed rate when you don’t have to.
Understand Trade Relationships and How They Affect Your Products
Any shifts in global trade can impact on your customs documentation and import/export fees. Even if the repercussions of a new trade deal aren’t huge for your particular products, or countries you interact with, it’s an administrative strain on your team to research the changes, understand how you’re affected, and process the correct changes in the right timing so that your supply chain doesn’t have any hiccups.
For example, in July of 2020 the US, Mexico and Canada struck a new trade deal (an update from the NAFTA Agreement now called USMCA) that drastically affected the de minimis fees. Understanding how your company is affected is crucial and a 3PL can help guide you through the changes you need to make.
A good 3PL may also offer procurement services as a value added service so that any components parts and assembly will always be optimized for you. This is particularly important when importing and assembling products in multiple countries along your supply chain. When there are import/export changes based on new trade deals, you can be assured that your 3PL will always be getting you the best freight.
Set Up The Right Kind of IOR
In most countries, companies are required to set up an Importer of Record (IOR) to act as the physical presence in the country of import. The IOR is responsible for all import obligations, including customs documentation, product classification, and any duty or tax fees.
There are many nuances and variations to setting up an IOR that a small company might not know about. For example, in Canada, things are a little different. Companies can either set up an IOR as a physical entity like they would in any European country, or they can work with the Non-Resident Importer (NRI) program, which has slightly different obligations.
A 3PL will be able to help you figure out the best way to import your products into a new market. They will optimize how you get set up in any particular country, so that you don’t get hit with surprise fees or issues when you launch.
Alternatively they can also find a third-party company to be your IOR and with the local trading company to ensure your products are imported efficiently. A 3PL will have a wide network of global partners to rely on and be your best advocate.
Establish a Foreign Trade Zone for Lower Import Fees
If you are bringing manufactured goods or component parts into the US and then exporting them to other countries, you should consider working with a 3PL who can set up a Foreign Trade Zone.
This can significantly reduce the duties and taxes for inbound goods. A Foreign Trade Zone is an area set up outside of the Customs and Border Protection for goods to be stored, assembled, manufactured, or processed. Goods are not subject to duty and tax fees while in the zone, and they may also be exported from the zone free of duty and excise tax.
If you work with a 3PL who can set this up for your company, they will become an important distribution point for your products along the supply chain, and you will reduce your overall cost to import.
Ensure The Ultimate Customer Satisfaction
All of these tips are in pursuit of your end-customer’s satisfaction. What you want when shipping into a new country is to increase revenue and demand for your product, and the fastest way to mess that up is unhappy customers.
Getting you international shipping correct ultimately ensures that your end-customer gets your product in a timely, simple, and low cost way. Getting your documentation, fees, and processes right will mean there are no hiccups at customs, and no surprise fees for you or your customer.
It’s so important to work with customs experts who are knowledgeable in the countries that matter to you the most. If not, you’ll need to branch out and find the right fit for the specific countries you’re looking to ship to. The best advice, especially if your 3PL doesn’t offer international shipping support, is to talk with a trade broker and trade attorney who specialize in the country you are looking to ship into.
At DCL Logistics, we can help fulfill your product, we can help with transportation and export, and we can help smooth out any international shipping issues you may have. We work with a great network of partners who help our clients navigate these important steps in their supply chain growth. If you’re looking for any of these services, get in touch, we’d love to hear from you.