When it comes to global sourcing, logistics refers to the process of getting materials or products from the producer to the buyer (you), including packing, insuring, transporting and inspecting the goods. Clearly, this is a complex process, with the potential for communication problems, cultural barriers, unexpected delays and red tape. Here’s a look at the basics you need to know about global sourcing logistics to ensure the process goes smoothly.
Know the laws
Understand the regulations of the country you are sourcing from, as well as U.S. regulations affecting imports from that country. Some countries restrict or prohibit exporting certain types of products. By the same token, the U.S. may restrict imports of some products because they don’t meet safety or quality standards or because there is a quota on that type of product or imports from that country.
Assess costs
What may seem like the cheapest product at first glance is not always the cheapest when you factor in the costs of transportation. Aside from the price of the actual product, you’ll need to consider other factors that can bump up shipping costs, such as tariffs (see below), trade restrictions, insurance and packing.
Calculate tariffs
A tariff or duty is a tax governments charge on the value of imported products. Tariffs will vary depending on the product you are importing and the country you’re importing it from; they can be as much as 100 percent of the product’s value. In addition, you may also have to pay state and federal taxes and customs fees. All these will be collected when your shipment clears customs.
Licenses and permits
You may need licenses or permits to import some types of products. The Small Business Administration (SBA)’s Exporting/Importing Specific Goods page lists products whose import is restricted and explains how to get the necessary licenses and permits.
Pack it up
It’s important that your imports are packaged correctly, not only to prevent damage to the products, but also to meet customs guidelines. The port of entry can provide details on how the shipment must be packaged so it can get through customs quickly instead of being pulled aside. It’s important to communicate with the seller to make sure they understand U.S. customs requirements for how your shipment should be packed and marked.
Time it right
Your overseas source should be able to give you a timeline for how long it will take to receive your products, but keep in mind that delays can occur for a variety of reasons, from weather to civil unrest, from transportation strikes to improperly formatted paperwork. Consider the chances that the product may be held up at customs, either here or in the country of origin. Determine how much inventory you need to keep in reserve to cushion yourself against possible delays. Finally, figure out a middle ground between shipping too early (in which case you’ll incur extra costs to hold or store the inventory) or too late (in which case you risk not getting the product on time or paying extra fees to expedite the shipment).
Processing the shipment
When your shipment arrives at the port or airport, who will be there to take charge of it and handle documentation? If you don’t want to do this yourself, look into using a third-party provider. Customs brokers handle red tape such as obtaining licenses; completing documentation; calculating duties, taxes and fees; and facilitating communication between you and the government of the country you’re sourcing from. A licensed customs broker can take a lot of the headaches of logistics off your hands so you’ll be free to focus on the rest of your business. The National Customs Brokers and Forwarders Association of America can help you find licensed customs brokers to work with.
Logistics is complex. You can learn more about global sourcing logistics from the International Trade Administration and your local SBA District Office, through industry associations and by attending international trade shows.
