Among its variations, the surrender bill of lading stands out as a unique instrument, facilitating international trade transactions without the physical exchange of the original document. 

This guide will explore the intricacies of the surrender bill of lading, offering comprehensive insights into its uses, benefits, and crucial role in streamlining ownership transfer in global commerce.

Understanding the Surrender Bill of Lading

A Surrender Bill of Lading marks a pivotal shift in the shipping process, distinguishing itself from traditional bills of lading by its method of transferring ownership. 

Unlike the standard version, which requires the physical handover of the document to transfer legal ownership, a surrender bill allows for the ownership rights to change hands through a telex release or electronic communication, often facilitated by a local bank or shipping agent. 

This legal document is instrumental in scenarios where speed and efficiency are paramount. It enables importers and exporters to expedite the shipping goods process without delaying physical document exchange.

Essential characteristics include:

• Electronic transfer of ownership.
• No need for an original bill handover.
• Telex release for quick processing.
• Legal problems avoidance by ensuring ownership clarity.

Typically employed when:

• Quick cargo release at the destination port is needed.
• Importers pay for goods and require immediate ownership transfer.
• International trade transactions demand speed and efficiency.

The Role of the Surrender Bill of Lading in Shipping

The Surrender Bill of Lading is essential in modern shipping. It streamlines the transfer of ownership and facilitates smoother global trade operations.

Here’s a closer look at its role across different shipping facets:

Facilitating Trade Transactions

The surrender bill of lading makes international trade more efficient by eliminating the need for physical document exchanges. This document allows exporters and importers to agree on payment terms and transfer ownership quickly, keeping goods moving swiftly across international borders and thereby enhancing trade fluidity.

Impact on Cargo Release

The Surrender Bill of Lading speeds up the cargo release process at the destination port. Without the necessity for an original bill to claim ownership, importers can access their shipped goods more rapidly. This efficiency is crucial for maintaining the momentum of international logistics operations and meeting delivery deadlines.

Advantages in Shipping Logistics

Employing a Surrender Bill of Lading brings unparalleled efficiency and security to shipping logistics. It minimizes legal problems related to ownership claims and ensures timely release of shipped items to their rightful owners. This document is a cornerstone for reliable and swift international shipping, reducing delays and enhancing trust among trading partners.

Information and Documentation Included

A Surrender Bill of Lading includes critical information such as payment details, parties involved, and descriptions of the shipped goods. It acts as a legal document that underpins trustworthy relationships between exporters and importers, providing a clear record of the transaction and the items being transported.

Format and Legal Considerations

The format of a Surrender Bill of Lading is designed to meet international legal considerations, ensuring its global acceptance. It specifies conditions for telex release and express BL, key for the official closure of shipping transactions, and the smooth transfer of legal ownership. 

This standardization is vital for preventing disputes and facilitating a clear understanding between all parties involved in the shipping process.

Practical Applications of a Surrender Bill of Lading

Understanding the practical applications of a Surrender Bill of Lading reveals its versatility and efficiency in modern shipping. Here is a closer look:

Ideal Situations for Its Use

A Surrender Bill of Lading is instrumental in transactions requiring rapid transfer of ownership and cargo release. It’s ideal for high-speed international trade where exporters surrender the document in favor of a telex release, ensuring importers receive goods without delay. 

This process is beneficial in maintaining a trustworthy relationship between trading partners, especially when payment has been secured and both parties seek an expedited shipping process.

Guidelines for Shippers and Carriers

The Surrender Bill of Lading offers a streamlined approach to handling documentation for shippers and carriers. It’s crucial when the importer’s bank has confirmed payment, and legal ownership needs to be transferred swiftly. 

Shippers should ensure all surrender bills are accurately completed and submitted to the carrier or local bank promptly. This facilitates a smooth telex release or express BL, minimizing the risk of legal problems and ensuring the cargo reaches the importer efficiently.

Conclusion

Understanding the complexities of global shipping demands a thorough understanding of documents like the surrender bill of lading. This guide has illuminated its role in transferring legal ownership, streamlining the shipping process, and minimizing legal problems. 

By leveraging telex release and surrendered BL mechanisms, businesses can expedite cargo release and claims ownership, fostering a smoother logistical process. The involvement of local banks in submitting documents and confirming payments underscores the surrender bill’s importance in international trade.

As you step forward, armed with knowledge about the surrender bill of lading, you’re now better equipped to understand the shipping and logistics landscape more effectively. This prepares you to handle legal ownership with confidence and ensures you can utilize surrender bills to optimize your shipping operations.

There are several reasons for the sharp year-over-year increase that could overstate this February’s results. Leap year occurred in 2024, adding one day of capacity in February. In addition, Chinese Lunar New Year occurred on February 11 this year versus January 22 in 2023, so February 2024 saw no impact on U.S. imports from China while February 2023 did. 

To gain more clarity on the year-over-year performance, Descartes analyzed TEU volume for the first 15 days in February of both years where there would be no impact from Chinese Lunar New Year. During this timeframe, the growth in container imports was 13.3%, which is much more representative.

Overall, Figure 1 shows that the first two months of 2024 are more in line with the consumer-fueled pandemic growth.

Figure 1: U.S. Container Import Volume Year-over-Year Comparison; Source: Descartes Datamyne™

February port transit times decreased on all coasts with East and Gulf Coast ports still experiencing the longest delays. The economy is still exceeding expectations, which indicates healthy import volumes; however, challenges with the Panama drought, Middle East conflict, and pending ILA contract negotiations at South Atlantic and Gulf Coast ports point to further trade flow disruptions in global shipping.

As a result, corporate supply chain and risk mitigation planners have also been receiving unprecedented attention within the C-suites of trade-dependent companies. And while one could certainly argue these instances were once-in-a-lifetime events, as the saying goes: “Once-in-a-lifetime events happen every day.”

It also doesn’t take a pandemic to bring your supply chain to its knees as there’s a broad array of factors that can also do the job quite nicely. As a result, corporate risk mitigation planners need to be including these when vetting either a new foreign supplier or a new foreign production site.

These factors include geopolitical tension, business/government crime and corruption, financial stability, power grid stability, natural resources, available labor pool and stability, and even the risk of disruption due to weather and geological events.

In addition, companies are now also faced with a growing set of challenges and risks associated with environmental, social, and corporate governance (ESG) requirements—from a company’s efforts to reduce climate change and carbon emissions, to its demonstrated support of inclusiveness and human rights. 

And it’s the latter, in the form of forced labor, that has now quickly grown into a major issue with real risk for trade-dependent companies.

The Shocking Reality of Forced Labor 

At face value, just the term “forced labor” alone and the images that it conjures generates overwhelming public abhorrence to this practice even without fully understanding its true magnitude, or how deeply it’s embedded in the complex production and movement of goods around the world. 

For example, the International Labour Organization estimates nearly 50 million persons are living in modern slavery, with 28 million of those working under forced labor conditions, including more than 3.3 million children.

It’s a problem found at every stage of the supply chain—from workers made to harvest fields or mine metals at the raw material level, to those forced to manufacture parts or assemble finished products on the factory floor—making it highly difficult to spot, much less eradicate. Exploitation even extends to the warehousing and shipping operations that connect each point in a supply chain network. 

While these human rights violations exist nearly everywhere in the world, they are particularly prevalent in Asia and the Pacific region where more than 11 million people are in forced working conditions. Unfortunately, the problem doesn’t stay confined there. Materials and goods produced across this region eventually make their way into the global marketplace. Other businesses and consumers unknowingly (and sometimes knowingly) end up making purchases tainted by slave labor or child labor—which only fuels the vicious cycle. 

Atrocities in Xinjiang Spur Action 

In recent years, the Chinese government has committed crimes against humanity, such as imprisonment, torture, surveillance, and forced sterilization. These horrific acts target the Uyghur people, a predominantly Muslim ethnic minority, as well as members of other mostly Muslim minorities in Xinjiang. 

Since 2017, the Chinese government has involuntarily detained more than one million Uyghurs in forced labor camps, while separating families and sending others to work in factories throughout China. With forced labor so prevalent, it’s highly likely that any goods coming from the region are products of the severe exploitation of the Uyghur people. 

What will it take to eradicate human rights violations in the supply chain? There is no easy answer, but it will certainly require the combined efforts of governments around the world, as well as the cooperation and political will of businesses who import materials and goods originating from high-risk areas. 

The United States government has recently taken strong steps with the Uyghur Forced Labor Prevention Act (UFLPA). Signed into law by President Biden on December 23, 2021, the ULFPA is designed to prevent goods made wholly or in part with forced labor in the Xinjiang region of China from entering the United States. 

Located in Northwest China, the Xinjiang Uygur Autonomous Region is a massive territory that’s rich in natural resources. The area supplies global supply chains with significant amounts of important industrial materials, as well as agricultural products—like the polysilicon used in solar panels and the cotton for Western apparel.

And the target list continues to grow as evidence is collected from third-party sources, which now includes products made with aluminum or PVC. However, the region is also fraught with state-sponsored oppression and human rights abuses. 

The Complexities of UFLPA Compliance

The United States officially condemned China’s actions, and on June 21, 2022, the U.S. Customs and Border Protection (CBP) began enforcing the UFLPA. As part of the act, the Forced Labor Enforcement Task Force (FLETF) developed and published the UFLPA Entity List which currently identifies 31 companies affiliated with forced labor in Xinjiang, and is organized by the following four groups: 

• Entities in Xinjiang that mine, produce, or manufacture wholly or in part any goods, wares, articles, and merchandise with forced labor
• Entities that work with the government of Xinjiang to recruit, transport, transfer, harbor, or receive forced labor
• Entities that export products made by the groups listed above from China into the United States
• Facilities and entities that source material from Xinjiang or from persons working with the government of Xinjiang for the purposes of any government-labor scheme 

So based on the above, complying with the UFLPA may appear pretty straightforward in that all I need to do is screen against any of the identified companies, or a Xinjiang address, right? Wrong—and this is where it gets incredibly complex.

For instance, some of China’s largest nickel, copper, and lithium producers, which are used in the production of electronic components, have been accused of using forced labor in XinJiang. As a result, any company that sources electronic components is at risk of having their shipments detained under UFLPA’s application of ‘rebuttable presumption,’ regardless of where sourced. In other words, guilty until proven innocent. 

If a company feels that their detained goods are not subject to the UFLPA, they must request an ‘applicability review’ with CBP and supply CBP with sufficient documentation to support their rebuttable.

Per CBP: “To demonstrate that the UFLPA does not apply to a shipment identified for examination under the law, importers will need to provide documentation produced in the ordinary course of business that details the order, purchase, manufacture, and transportation of inputs throughout their supply chain.” 

One can quickly see that, while in support of a worthy cause, how this will place substantial time, cost, risk, and complexity to corporate supply chains.

As of this writing, CBP has already detained 3,327 shipments linked to industries associated with Forced Labor in XinJiang—which include industrial metals, clothing and apparel, industrial electronics, polysilicon, automotive components, construction and building materials, and consumer electronics—resulting in 424 seizures worth $806 million.  

Best Practices for UFLPA Compliance

Although CBP acts as the government’s UFLPA watchdog for shipments arriving at a port of entry, a company’s screening activities need to be taking place far in advance of a purchase order being issued. As a result, every company will need to review their potential exposure to this risk, and then, as applicable, develop new policies, procedures, and controls to help mitigate that risk.  

Here are some emerging best practices for importers to consider, based on people, processes, and supporting solutions, that could help ensure an effective program for complying with the UFLPA.

People: Understanding the rules 

Given the UFLPA’s potential to add substantial operational cost to corporate supply chains—not to mention CBP’s ability to seize entire shipments—companies need dedicated expertise that can follow the ever-changing list of targeted entities and products. 

• Hire or assign personnel that can serve as the company’s point-of-contact and subject-matter-expert on forced labor and related ESG issues. Depending on a company’s level of potential exposure, this could be headed by a corporate ESG compliance officer 
• Create a corporate ESG council with representation from all key business operations; Include third-party service providers, as applicable
• Join ESG industry groups to gain awareness to best practices
• Conduct regular education and awareness training sessions

Processes: Proactive vetting of suppliers and products 

• Perform an initial review of your company’s products to establish a risk baseline
• Perform proactive vetting of your suppliers and products before a purchase order can be issued. (This exercise should also include the other risk factors that were mentioned at the beginning of the article)
• Ensure sourcing, procurement, and trade & customs departments are aligned and working together 
• Implement supplier questionnaires/sourcing affidavits as an important part of your documentation  
• Develop documented policies and procedures and post them on your company’s internal website
• Have legal counsel review your procedures to ensure that they meet CBP’s definition of ‘reasonable care’
• Publish your company’s ESG-related activities and achievements to support market brand reputation and consumer trust

Supporting solutions: How technology can help

• Supplier relationship management (SRM) tools make it easy to improve supplier selection, monitor performance, and organize all supplier compliance documentation
• Supplier portals to help facilitate, manage, and collect supporting data and documentation
• System screening tools, such as those used for denied party lists, to identify UFLPA entities and products
• Since importers often only have visibility into their direct suppliers, these connections are not always obvious. For instance, an importer may know what country its direct suppliers source goods from, but not how or where that supplier obtained its materials. As a result, companies should explore systems which specialize in risk mitigation, capable of performing deep reviews of supplier relationships (CBP has announced its own plans to adopt enhanced supply-chain tracing technologies that support UFLPA enforcement)
• While the above recommendations are specific to complying with the UFLPA, automated trade management solutions in general will help drive process efficiencies, ensure goods clear quickly through CBP, and can capture missed savings through duty/tax minimization strategies

Through heightened due diligence, a strong understanding of their supply chains, and the right supporting technology, importers can do their part in the fight to help eradicate human rights violations around the globe.

Consumer demand, which continues to defy predictions, drives many of the delays and higher costs that importers continue to confront, says Chris Jones, Descartes executive vice president of industry and services.

As volumes surge, so does importing complexity. “Imports used to happen relatively simply, with a nice handoff from overseas to the domestic part of the supply chain,” says Brett Parker, chief commercial officer with EDRAY, which offers a managed services platform for international shippers.

He compares the previous process to a relay race. Now, however, more steps happen in unison and importers must decide between a growing number of ports and carriers. “Processes that were cobbled together over the past 20 years don’t work,” he adds.

Importers need some new strategies to address today’s global logistics challenges, Parker recommends. While no single solution meets all challenges, the following strategies can be key components of a comprehensive approach.

1. Gain Visibility to Your Shipments

When you know where your goods and shipments are, you can make more informed decisions. And given advances in visibility technology, it’s possible to access shipment locations in real time, or near real time.

Of course, it’s generally not possible to shift goods while they’re on the ocean. However, knowledge lets you intelligently adjust deployment decisions.

2. Assemble a Triage Team Across Functions

To operate in an ever-changing geopolitical environment, companies need to have triage teams at the ready. These teams are cross-functional groups that can evaluate supply chain, logistics, and other operational challenges from multiple perspectives and then move quickly, explains Cari N. Stinebower, partner and member of the regulatory defense and investigations practice with Winston & Strawn LLP, an international law firm based in Chicago.

Say a company has a robust joint venture with Russia and the political environment there deteriorates. Shutting or moving operations may be difficult, due to Russian restrictions on divestments and moving funds, Stinebower says. An established triage team can intelligently assess the situation and then act.

Latin America is another area where a triage team may be useful. In particular, the closer ties between Colombia and Venezuela have prompted concerns, Stinebower says.

Many companies had viewed Colombia as a stable trading partner. In contrast, the U.S. State Department has expressed concerns about corruption, a volatile regulatory environment, and the difficulty companies face repatriating earnings out of Venezuela.

“This shift is triggering a pause for many companies that had been considering taking advantage of Colombia’s free trade zone,” Stinebower adds.

3. Engage Your Trade Associations

Trade associations can help businesses collectively discuss with the U.S. government the challenges that arise when engaging in cross-border trade, Stinebower says. They also can assist companies in crafting programs to address these challenges.

For example, the Footwear Distributors and Retailers of America, noting that 99% of shoes sold in America are imported, has developed sourcing and compliance programs for its members. It also offers training to help industry leaders understand shifts and trends, and how best to address challenges.

4. Try New Approaches to Secure Inventory

In their efforts to minimize lost sales, many businesses have been pulling forward, or placing inventory orders ever further in advance. This practice will likely persist for a while, as it provides more leeway to identify optimal points of origin and destination, says Judah Levine, head of research with Freightos, a digital booking platform for international shipping.

To control costs while reducing the risk of delays, importers can prioritize some shipments, and then allocate the rest over time and/or between carriers, suppliers, and freight forwarders. If demand abruptly changes, importers that order early may need to mark down their goods or hold them over to the following season, Levine notes.

Another approach is to commit money to factories to secure production time. “It’s similar to a retainer, but working in partnership so that you can be nimble and pivot,” says Karl Hatt, vice president with global supply chain services firm Tompkins Solutions.

Component parts and raw materials become less flexible the more value-add that’s put into them, so committing resources to a finished product limits an importer’s ability to change them back to raw materials that can be reassigned to another product.

“Committing to production capacity without fully committing to the finished product allows the materials to be held longer in a flexible state,” Hatt says.

5. Work With Your Carriers

Until recently, when the spot shipping market proved more favorable, some shippers tried to renegotiate their carrier contracts or simply ignored them and moved to the spot market.

“That’s not happening now,” Levine says. Shippers are sticking with their carriers, preferring to strengthen these relationships and gain stability in their ability to access capacity.

At the same time, importers should ensure their carrier and supplier agreements allow for flexibility, recommends Spencer Shute, senior consultant with Proxima, a procurement and supply chain consultancy. Service-level agreements (SLAs) should include actionable, corrective plans that can help eliminate or reduce risk.

6. Continually Assess Trade Lanes and Ports

Given ongoing shifts in port delays, it makes sense to regularly review trade lanes and ports. While the shortest ocean route from Asia to North America is to the West Coast, congestion at these ports had meant some shipments languished for weeks.

Timely information needs to guide decisions to change ports. When numerous importers shifted to East Coast ports to avoid congestion, wait times jumped at the ports in Savannah, Georgia, Charleston, South Carolina, and New York/New Jersey. Trends in port delays are more dynamic than in the past.

It’s also worth monitoring the labor situation on the West Coast. The contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired in July 2022. However, as of early fall, business was proceeding pretty much as normal.

Another concern is California’s Assembly Bill 5 (AB5), which limits the ability of owner-operator truckers, as well as those in other industries, to operate as independent contractors. While the law faces legal challenges, it has generated confusion.

“With AB5 now set to go into effect, thousands of owner-operators driving in California face an uncertain future,” said Todd Spencer, president of the Owner-Operator Independent Drivers Association, in a recent interview. “Truckers will be at the mercy of the courts to interpret how the law will be applied.”

7. Actively Manage Data and Processes

The complexity of importing today requires an active, hands-on approach. For instance, if the vessel arrives, but the fees associated with a shipment haven’t been paid on time, the goods won’t make it into the terminal. “It all has to be micromanaged,” Parker says.

The same holds true when returning containers. Steamship lines often charge a per-diem if a container isn’t returned on time. However, one might charge $300 and another, $100. Without monitoring the data, an importer might not know about the differences. “Clean, actionable data is big,” Parker says.

Technology and analytics are key, allowing importers to “dig into the granularity of their data,” says Ben Bidwell, director of North American customs and compliance with logistics company C.H. Robinson. These tools enable importers to determine total landed cost, points of origin, and where duties are highest, among other information.

Particularly when dealing with large numbers of stock-keeping units (SKUs), supply chain leaders need to shift manual work to artificial intelligence-based systems that can forecast most orders.

“Modern systems today are able to combine scheduling orders based on constantly updated forecasts,” says Inna Kuznetsova, CEO of ToolsGroup, a supply chain optimization firm.

8. Look for Innovation and Incremental Wins

Supply chain and logistics professionals can find themselves spending inordinate amounts of time simply getting through the day—perhaps searching for a single container or SKU. It’s inefficient and leaves no time to innovate and improve.

With today’s challenging environment, supply chain managers need to identify ways to improve processes. One example is a “peel-off program,” in which containers belonging to participating cargo owners and trucking companies are positioned in separate stacks in the terminal. The trucker takes delivery from the grouped containers on a last-in, first-out basis—essentially “peeling” the containers from the top of the stack, eliminating the need to locate specific containers.

The reduction in congestion, waiting time, and turn times improves terminal service for all users, according to the West Coast MTO Agreement.

To ensure priority freight is moved first, importers can leverage deconsolidation services at the ports. Inland port intermodal (IPI) and reverse inland point intermodal (RIPI) are other ways to minimize delays by moving work away from port congestion.

9. Pay Attention to Customs Priorities

Among U.S. Customs and Border Protection’s priority issues is forced labor.

“Companies have to know if they’re using forced labor,” says Jo-Anne Daniels, president and founder of Trade Resources & Associates.

Products found to have been manufactured with the use of forced labor anywhere in the supply chain could be seized and/or not be allowed to enter the United States, she says.

Checking for forced labor in supply chains often requires mobilizing “boots on the ground” to examine operations, Stinebower says.

10. Know Your Products Thoroughly

Thorough knowledge of your products is essential to “successful and compliant customs transactions,” says Adam Lewis, co-founder and president of Clearit USA, a customs compliance company.

This includes knowing, among other facts, the country of manufacture, the product’s end use, its composition, and, in some cases, the manufacturing process.

“All play a role in identifying, classifying, and assessing the rate of duty for any given product,” Lewis says.

By understanding these details, importers can work with a customs professional to identify the relevant Harmonized Tariff Schedule (HTS) commodity classifications.

Allowing ample time to understand import requirements is similarly critical. “Seemingly straightforward products may require permits and additional documentation, or may be subject to anti-dumping duties,” Lewis says. Determining whether this is the case takes time.

11. Audit and Update Your Compliance Program

To ensure trade compliance programs remain up to date, importers should complete annual self-audits to review customs brokers’ powers of attorney, check names and addresses on file with U.S. Customs, review instructions for customs brokers, and request updated certificates of origin.

Bidwell recommends importers, if they haven’t already done so, determine if they qualify for Section 301 tariff refunds. In early 2022, the Office of the U.S. Trade Representative reinstated 352 previously expired Section 301 tariff exclusions. This opens about $1 billion in potential savings through the end of 2022.

12. Remember People and strong partners

Technology is critical to an effective importing operation. Yet, “no software or technology alone can prevent issues or problems in any company’s supply chain,” says Brian Bourke, chief growth officer with SEKO Logistics.

Solid logistics partners can provide options such as different routings or help convert ocean shipments to air when necessary. They also can offer transload and other warehousing and temporary storage solutions.

Strong partners, along with solid insight, software, and technology “can be the best hedge against increased volatility, uncertainty, ambiguity, and complexity,” Bourke says.

Inflation Reduction Act

Few expect the Inflation Reduction Act of 2022 to have an immediate impact on supply chain operations. Most of the incentives require materials to be sourced and manufacturing to take place within the United States, and are geared to clean energy.

The United States is currently not competitive in this market and has a limited appetite to mine raw materials, notes Spencer Shute, senior consultant with Proxima.

Brian Bourke of SEKO Logistics also anticipates little short-term impact on imports. Yet incentives to decarbonize materials handling equipment at ports, and for electric vehicles and charging infrastructure, could be tipping points for those in the logistics sector who are looking to decarbonize by 2050.

The incentives and investments could reduce the costs to convert to electric and other renewable energy sources.

Chips Ahoy

As products from cars to home appliances become smarter, demand for computer chips has spiked. The median inventory of semiconductor products dropped from 40 days in 2019 to fewer than five in 2021. And from mid-2020 and through 2021, semiconductor fabs, or foundries, operated at greater than 90% capacity, reports the U.S. Department of Commerce.

Automotive companies have experienced the brunt of the shortage, due to their just-in-time manufacturing operations, the complexity of their products, and safety regulations that require the use of specific semiconductors and production facilities.

How can auto and other companies navigate the shortage? Diversifying sourcing could be one solution, but it requires time and may not always be possible due to the availability of labor, materials, energy, and the ability to quickly establish quality controls.

“Implementing a more robust inventory management system that prioritizes fulfillment toward best orders, optimizing replenishment across all company locations and deploying AI-based solutions to reduce waste may be the best ways to preserve profitability,” says Inna Kuznetsova, CEO of ToolsGroup.

TapRm: Expanding to New States? Hold my Beer

Despite these challenges, some import/export professionals have not only survived, but thrived. Their strategies include working hard and smart, and being open to experimenting. The recent trials presented “an opportunity to evolve,” says Bruce Lancaster, CEO of Wilson Electronics, a manufacturer of cellular signal booster technology.

Other traits that have proved critical include a willingness to go above and beyond, and to build productive collaborations. “Having strong, trusting relationships with customers and suppliers” has been critical for North American Meats & More, says owner Justin Marx. His company supplies restaurants and food service operators with premium meat, seafood, and other products.

The ingenuity, grit, and hard work of the supply chain leaders profiled here continue to help them succeed.

Wilson Electronics: Plugged Into Domestic Suppliers

From its base in Utah, Wilson Electronics has prospered over the past few years by making greater use of domestic suppliers and beefing up its forecasting function, among other steps.

Many of its products come from a factory in southern Utah, where they’re assembled, programmed, and tested. At the same time, Wilson’s extended supply chains reach across the globe. Like many companies, Wilson has had to navigate freight costs that quadrupled—or more—even as delivery timelines fluctuated. Given the company’s location, the Port of Los Angeles has been the best option for receiving goods, despite recent congestion.

To address these challenges, Wilson moved some business to local suppliers, including a packaging supplier that’s a three-hour drive away and a large supplier of assemblies that’s about six hours away. “It helped to eliminate the variability,” Lancaster says.

Every two weeks, Lancaster and his team analyzed demand and customer input to adjust the forecast for every stockkeeping unit (SKU) Wilson offers. They also extended their forecast timeframe by an additional six months, going out to between 12 and 18 months.

“This helped to ensure the company’s place in line with key suppliers,” he notes.

Wilson’s sophisticated API connections with key suppliers enabled the company to readily communicate any demand adjustments, helping to mitigate problems.

For instance, if demand fell for parts that were in short supply, Lancaster would let the supplier know so they could supply what Wilson actually needed. This also helped to manage inventory levels from a capital allocation stance.

The team at Wilson Electronics also worked with its suppliers’ suppliers to resolve component and material issues. “We went down as far as we could to book materials and give visibility to our orders to ensure our suppliers could meet demands,” Lancaster says.

Lancaster began booking shipping containers further in advance, reserving capacity even before Wilson had material to fill them. “This ensured availability when parts were available,” he says.

There was a risk: If Wilson couldn’t fill the containers, it still would have to pay for them. As far as Lancaster recalled, that didn’t happen, likely in part because Wilson is large enough that it can consolidate orders from suppliers to fill the containers.

CarParts.com: Driving Strong partnerships

Over the past 20 years, CarParts.com, a leader in the e-commerce automotive aftermarket, has delivered more than 50 million parts. Several moves made prior to the pandemic bore fruit over the past few years, says Sherry Liu, vice president of international supply chain.

A largely new leadership team came on board several years ago, when the company was struggling. Team members recognized Carparts.com wouldn’t be successful entirely on its own. So, they worked to develop strategic relationships with a range of partners, including the company’s ocean carriers.

As congestion intensified at the Los Angeles and Long Beach ports, Liu’s team asked CarParts.com’s ocean carrier to instead send products to the Port of Houston, which is near one of their warehouses. The carrier did.

“The main takeaway is to maintain good relationships with external vendors,” Liu says, noting that when CarParts.com asked for additional support, their partners were willing to work with them.

Historically, many agreements between shippers and carriers are non-binding. In another move that proved fortuitous, CarParts.com agreed to a binding contract. It reserved a set amount of space with its ocean carrier, at a locked rate, and then placed funds in escrow to hold it. “Looking back, it was one of the best investments we made,” Liu says, as it went into effect about the time the pandemic hit, offering CarParts.com secured space while other companies struggled to find capacity.

Liu also worked with some of CarParts.com’s smaller vendors who were having trouble getting shipments from Asia. Instead of “pounding on them,” Liu says, she worked directly with these suppliers’ Asian operations, and then used its carrier partnerships to move items to the United States more quickly than many other companies could.

To further connect with vendors in Asia, Liu traveled to Taiwan for several months. After quarantining for two weeks, she was able to visit vendors and engage with them face-to-face. “It was key to keeping strong relationships,” she says.

BioCareSD: Multiple Suppliers and Employee Expertise are Lifesavers

Even when a company can access raw materials and components, it can be hamstrung by a shortage in packaging. Just ask BioCareSD, a specialty distributor of life-saving medications that often require refrigeration.

Before any products are shipped, the packaging and liners in which they will be transported must complete an extensive validation process, says Andrew Kirk, chief revenue officer.

In spring 2021, a supplier of lining material was unable to source material, which delayed its shipment of liners to BioCare. The reason? The Ever Given ship blocking the Suez Canal.

BioCare’s warehouse manager went to work, contacting multiple vendors until locating a suitable replacement made from the same materials. Instead of insisting on its full order right away, BioCare communicated its exact shipping needs. The supplier was able to send one-third of the original order, which was enough to last until the remainder arrived.

“The important takeaway was to share honest, realistic needs so we could manage through the problem,” Kirk says.

BioCare also leased an inexpensive shipping container to store supplies, such as packaging materials, on its premises without eating into valuable warehouse space.

As they met these challenges, Kirk and his team learned several lessons. When validating packaging, it’s critical to consider the availability of related supplies, including inexpensive materials such as liners. They also worked even more diligently to maintain strong relationships and communicate with suppliers on all items.

At the same time, BioCare focused on sourcing from multiple suppliers. When the cost of a material or supply is negligible, sourcing from only one supplier to capture volume discounts can leave an organization vulnerable to shortages and delays, Kirk notes.

Also key was leveraging the experience of BioCare’s entire team, some of whom came from other industries and brought new contacts and insight to solve these challenges. “Don’t take supply chain people for granted,” Kirk advises.

North American Meats & More: An Appetite For Partnerships

One decision that proved fortuitous for North American Meats & More, particularly over the past few years, was to truly partner with Silver Fern Farms, a producer and exporter of grass-fed meat based in New Zealand. Together, the two companies improved the butchery and distribution processes, boosting yields of various cuts of meat by between about one-quarter and one-third. That’s key, given the price pressures bearing down on many restaurants.

North American Meats also regularly travels to New Zealand and has worked with Silver Fern to help them provide ready-to-portion cuts. These produce less waste and require less labor in the kitchen.

This has been significant, particularly recently, as many restaurants struggle to attract workers, often paying higher salaries for individuals with little experience. “Working with them on fabrication and butchery has been powerful,” says owner Justin Marx.

And as shipping delays intensified, Silver Fern, possibly working with other companies, began chartering ships from New Zealand to the United States. That helps ensure North American Meats can fill its clients’ orders on time.

“Logistics involves physical constraints—trucks, containers, warehouses, time and space,” Marx says. “Often overlooked are the communication and relationships that take time to build and that you can lean on in difficult times.”

TapRm: Expanding to New States? Hold my Beer

In the early days of the pandemic, orders at TapRm.com, a platform for everything beer, jumped from about 10 to 800 per day, says Jason Sherman, founder and chief executive officer. A positive development, but not without challenges. Alcohol distribution in the United States is both highly regulated and inordinately complicated, a lingering consequence of prohibition. TapRm operates within a three-tier distribution system that separates producers, distributors, and retailers.

In 2018, Sherman decided to build a platform that would enable beer brands to work within the system to sell online, and with a degree of accuracy that would rival Amazon. More than 98% of TapRm’s orders are delivered on time, intact, and accurately, Sherman says. Some competitors’ accuracy rates are in the 50-60% range, he adds.

Initially, TapRm shipped only within New York state. As it considered expanding to other states, freight rates were exploding. “That led us toward a micro-fulfillment center model,” Sherman says, which would offer faster delivery, lower freight costs and greater regional variety.

TapRm began partnering with beer retailers around the country, essentially creating dozens of smaller fulfillment centers, keeping freight costs down and speeding delivery times. The company’s partners receive fulfillment software, information on best practices, exclusive brands, and a network of couriers, among other solutions, that can “turn them into one of the largest alcohol e-commerce delivery centers in a given city,” says Sherman. TapRm currently covers about 40 cities in 34 states.

Along with multiple locations, the ability to take a deep dive into sales and inventory data helps ensure TapRm has the right products in the right places, and can dispatch items to customers at the right time.

Also important? “The number one thing that saved us has been hard work,” Sherman says. Especially when expanding to a new city, he and his team are comfortable showing up, packing boxes, and handling other functions, working into the night when needed. “You get great operations when people at the top see the challenges in real life,” he adds.

Whether it’s the shortage of drivers, trucks, containers, warehouse space, ocean carrier capacity, terminal capacity, air cargo service—it’s really affecting us all.

Those who import have particular challenges as their cargo often arrives at congested terminals. In addition, importers often have no control over the routing or timing resulting in storage, demurrage, and/or detention charges.

While ocean carriers, ports, airlines, and air terminals have reduced their allowed “free time,” congestion and domestic/inland transport shortages delay the pick-up from the terminals, increasing the cost of goods to the merchants and consumers.

Taking the Reins

Importers can combat/mitigate this escalation of costs by taking control of their shipments at origin and moving their goods more strategically. For instance:

1. Air shipments arriving on Friday evening or on Saturday will incur storage charges. Importers who ensure their air shipments arrive at the destination airport on Sunday through Thursday and see to it that they are picked up within 24 hours will avoid additional costs.

2. Routing ocean shipments to a seaport that is not congested, has plenty of chassis available, and readily available drayage service will avoid delays and demurrage. It’s often better to have a longer dray from port to destination than to have containers sit offshore for days or, worse, on a pier awaiting pick-up and gathering demurrage.

Setting the Terms

The buyer/importer owns the goods and is paying for the inbound transport even when the cost of transport is included in the cost of the goods. Taking control of how the goods move may mean changing the terms of purchase from FOB, DAT, CFR, or CIF to EXW or FCA.

Such a change gives the buyer control over the routing, enabling the buyer/importer to take U.S. port/airport circumstances into consideration and providing them the opportunity to avoid additional expenses at destination.

In inflationary times, reducing transport costs becomes even more important and effective in reducing the cost of goods sold, and doing so takes some creativity and much effort. It takes requiring suppliers to change their procedures and it requires buyers to change the way they think about how they manage getting their goods to their distribution facilities. Yes, it’s quite challenging these days.

Importers should discuss these transport issues with their customs broker and explore avenues to cost and time savings.

AIRSCHOTT
AIRSCHOTT provides a full complement of customs brokerage, international air, rail, and motor-freight services. SEASCHOTT, its ocean freight division, is an ocean transport intermediary providing national and worldwide service from its headquarters in Baltimore. www.airschott.com

Duty-free shipping made easy

We can thank Section 321 for duty-free shipping; the statute from the U.S. Customs and Border Protection agency allows merchandise valued at under $800 to enter the United States completely exempt from taxes and customs duties. That’s it. No catch.

You can bring your goods over the border and not pay a dime to the government for the privilege. Buy in bulk from anywhere in the world, break down the goods into smaller shipments, and take them directly into the U.S. market. Of course, doing that work yourself takes time, and more importantly, money. That’s why you rely on Canadian fulfillment services.

How much money can you save at the border?

That answer differs, as it depends on what you’re bringing into the United States. And how much. But one thing is certain—conventional importing isn’t cheap. Outside of Section 321-protected goods, the U.S. Customs and Border Protection agency collects taxes and fees for a host of other government agencies. Beyond tariffs and customs fees, state sales taxes can even get tacked on to some goods entering the United States. And it all adds up—the U.S. government collects tens of billions of dollars in import duties each year.

For the average importer, these border costs can sometimes go as high as 20% of the value of their shipments. So why lose a full fifth of the worth of your goods in transportation? You don’t have to; you can opt to pay considerably less with the help of Canadian fulfillment services.

How do Canadian fulfillment services work?

It’s right there in the name—Canada fulfills the shipment. Importers buy large quantities of goods overseas, oftentimes from China, and have them sent to a Canadian fulfillment center located near the U.S. border. Shipping experts at that center break down the goods into allotments worth $800 or less, and bring them into the United States. From there, importers can arrange to have the goods handed over to U.S. carriers for a wide range of delivery options.

The savings don’t stop at tariffs

While the prospect of bringing tariff-free goods into the United States is enough to entice most importers, the cost-saving considerations of using Canadian fulfillment services go well beyond there. As most people in the importing business know, warehousing costs can take big bites out of profits, from storage and packing to insurance and more.

But those expenses can be considerably mitigated by taking advantage of existing warehouse facilities with shippers who are expert at receiving goods for fast turnarounds. You can store goods and incrementally bring them into the United States for a fraction of the cost of trying to do it on your own.

A saving grace for e-commerce

While the brick-and-mortar retail sector has long enjoyed the benefits of Section 321, e-commerce has seen a boom with the recent surge in online shopping prompted by the pandemic. With e-commerce fulfillment, online businesses turn to on-the-ground shipping pros to handle their orders, from bulk shipments and inventory management to customer delivery, and even taking care of returns.

Are you ready to stop paying unnecessary costs at the U.S. border? Have you had enough of bearing the brunt of transportation expenses by yourself? If so, you can look to Canadian fulfillment services and the money they’ll save you.

CBP is required to advise the importer and its customs broker of the reason for the examination; however, CBP officers often will not do so or the Notice of Detention is vague. The importer only learns that the cargo detention has become a seizure when CBP’s Fines, Penalties and Forfeitures Office provides a formal Notice of Seizure letter by describing the date, place, and legal basis for the seizure.

U.S. Customs removes the contents of the container into a seized property warehouse, and returns the container to the port of entry. The owner of the seized merchandise can then file a Petition for Relief with CBP to attempt to regain possession of the merchandise.

For shippers and importers of merchandise into the United States, it is best to be prepared to answer any questions if CBP examines your imported cargo. Believe it or not, even after the cargo has customs clearance and is delivered to a private warehouse, it is common for CBP to issue a Request for Redelivery of the container back to CBP for examination.

Finally, a CBP import specialist may issue a Request for Information about the shipment up to five years after the arrival of the cargo into the United States.

The most common reasons CBP seizes a shipment are:

1. False country origin. For example, to avoid anti-dumping or countervailing duties, CBP will seize imported cargo declared as country of origin Vietnam, Thailand, South Korea, or Malaysia when it is believed to have been made in China. This is what CBP would call an illegal transshipment.

In this situation, the importer should have a complete set of production and transportation documentation from the overseas supplier available upon request.

2. Suspected counterfeit merchandise. It is common for a foreign supplier to use an American trademark, such as HP, Apple, or Bluetooth, without the trademark owner’s authorization. In this situation, the importer should have, in advance, a digital sample of the product and its packaging, and identify and obtain written trademark license approval from the trademark owner or its representative before paying for any merchandise. Have those documents ready upon CBP request.

3. Unmanifested or undeclared merchandise. If a shipment has narcotics combined with it, the entire shipment will be seized, even if the remaining shipment is legitimate. For an incorrect or false tariff classification or undervaluation, it is more common for CBP to assess a monetary penalty against the importer than to seize the shipment.

Waiting for CBP to examine the contents of a container before getting it released is frustrating. Promptly getting a customs broker and attorney who specialize in these matters is recommended. It may be that communication with CBP will result in an understanding of why the cargo is being detained, and what information is required to get it released promptly. Promptly initiating contact with CBP after it selects a shipment for examination is critical.

Moreover, CBP may have selected the container based on a request from another federal agency, so learning which agency made the request will help the importer focus on the potential concern to be addressed.

Understand the macro view of the global economy. As a young professional in logistics, I remember being educated on the timing of when I needed product to land in the United States. I almost launched a promotion right after the Chinese New Year, but thankfully I worked with great partners who helped me understand that the product would never arrive by the date I needed. Understanding the global economy, tariffs, etc., could truly save you significant time and money.

—Aaron Galer
SVP, Strategic Partners, Arrive Logistics

Have a plan to export your product:

• People. Can someone from your team drive this program?
• Capacity. Do you have enough capacity to meet the market’s demands?
• Packaging. Is there a legal requirement for labeling, or does the label need to be translated?
• Knowledge. Know your customer and market.

—Bryan Blalock
Chief Operating Officer
Container Maintenance Corporation

When establishing a compliance program, it’s easy to get overwhelmed with what you have left to do. Take a moment to remember where you have been and how much you have accomplished. Progress takes time; every step forward is a step in the right direction.

—Michelle Frennier
Director, Solution Consulting
BluJay Solutions

The best advice I received around exporting and importing is sometimes it’s best to stick with the tried-and-true technologies, such as barcoding.

Barcode technology is 69 years old, but it’s capable of creating a single digital environment to generate more efficiencies when it’s integrated with ERP, and it provides improved inventory visibility and accuracy while reducing costs.

This is not an argument against new, emerging technologies; it is a reminder for organizations to investigate all available options to make their operations more efficient. Barcoding is a great example of "old-fashioned" tech that remains a reliable, staple tool in warehouse and inventory management.

—Scott Deakins
COO, Deacom

Only promise the customer what you know you can do well. This advice not only ensures the quality of service you can offer, but is also a gold standard to safeguarding your customer base during uncertain times.

—Eduardo Rey
Managing Director, Air & Sea Logistics
Dachser Peru

The best advice I’ve ever received is the simplest: Always adhere to and comply with import and export trade regulations. Some shippers have historically won business by using non-compliant, "creative" ways to import or export goods. Ultimately, these shippers have lost the business and their reputation in those markets.

—Ronald Kleijwegt
VP Global Sales & Managing Director, EMEA, Blume Global

As a management trainee at APL (now a CMA CGM subsidiary), I was told to anticipate and plan for things going wrong because they always will. Pay attention to cargo loading and delivery; they are critical and complicated parts of the journey.

Focus on the three most important elements for successful shipping execution: 1) planning, 2) planning, 3) planning.

—Greg Tuthill
CCO, SeaCube Containers

Compliance that operates at a granular level pays dividends. To be able to focus on raw productivity, compliance should be automated with technology. Digital workplace platforms that create training, communication, and task audit trails help enterprises manage compliance efficiently, boosting productivity.

—Steven Kramer
CEO, WorkJam

Identify and leverage strong partners who know the daily challenges of this business. From origin pickup to customs and duties to drayage, the import logistics process is extremely complicated. Identifying the correct partners and freight forwarders can turn a very complicated process into a task that feels almost effortless.

—Sean Mueller
VP of Business Development
Symbia Logistics

As we face 2021 after an especially turbulent year, my best advice is to plan in advance and plan for delays. The variables we regularly face for international in-transit shipments are many, not only on the sea but also once it arrives on land. Work with someone who is experienced and proactive in all modes to execute your shipments even when things don’t go as planned.

—Liberty Baugher
Manager, International Department
Sunset Transportation

My best advice: Get insurance. Crazy things happen that are outside of your control and you want to be protected.

—Sarah Scudder
President & Chief Revenue Officer
Real Sourcing Network

There’s no barcode on a barrel of crude. It’s going to take a combination of systems and data to really cover all cargoes that are imported and exported globally; containers are pretty mature but bulk cargoes are still a vast source of opportunity in logistics.

—William Fox
Chief Product Officer
Data Gumbo

Always be proactive. Operate like you’re playing chess: Think and act multiple steps ahead in the supply chain, coordinating all related parties to the transaction to ensure minimal disruption and focus on customer requirements and committed service.

—Mollie Bailey
Vice President, International
Transplace

If you are importing products from overseas and relying on the manufacturer to pick the freight provider you lose control. You pay high import costs at destination but, more importantly, if the freight charges are included in the cost of the products and not broken out on the commercial invoice, you are paying taxes and duties on freight.

So always make sure the freight costs are a separate line item on the invoice from the company you are buying your products or raw materials from.

—Sarah Barnes-Humphrey
Host, Let’s Talk Supply Chain

Have a good contact that has direct contact with the customs office and can give you real updates to what is happening at the ports. Then my next advice would be: Make sure you always know the latest anti-dumping lawsuits.

—Rachel Liaw
Co-founder & CEO
Fuse Inventory

Pay attention to terms of sale. While working as a young manager of transportation for an industrial shipper, we found our sales team offering delivered costs to clients, while we were only paying CIF (cost, insurance, and freight) port of destination. A mentor-suggested deep dive unveiled the significance of training your sales team on Incoterms.

—Russ Romine
VP of Transportation,
LEGACY Supply Chain Services

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