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Blockchain Technology in Global Trade Management – Part 1: An Overview of Blockchain

Global Trade Management (GTM) solutions facilitate the timely and compliant movement of goods from point of origination to point of destination, across borders anywhere in the world. Because of GTM, importers, exporters, freight forwarders and customs brokers are able to ensure a seamless, secure and cost-effective flow of goods, data and payments.

GTM introduces the complexities of multiple languages, time zones, currencies and modes of transport. Moreover, there can be more than a dozen parties involved in a single international shipment. And not to mention, the numerous laws governing global trade are exceptionally multifaceted and ever changing, making compliance a top priority.

In this blog series, we will take a deeper dive into how blockchain technology is being applied to GTM to provide more efficient and secure methods for global trade processes. To kick things off, let’s review blockchain and its potential in GTM.

What is Blockchain?

Blockchain is best known for being the technology behind the cryptocurrency Bitcoin. However, Blockchain is much more than an instrument of finance.

A blockchain is an append-only distributed digital ledger that consists of a continuously growing chain of linked blocks, where each block contains a cryptographic hash of the previous block, a timestamp and batches of verified transactions. This iterative process ensures the integrity of the previous block, all the way back to the original genesis block. The blocks cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network.

In mid-2018, Zion Market Research reported that global “blockchain technology in supply chain management market was valued at around $40.99 million in 2017 and is expected to reach approximately $666.61 million by 2024, growing at a CAGR of 49.16 percent between 2017 and 2024” (globalnewswire.com 2018).

Applying Blockchain Technology in Global Trade Management

A blockchain is secure by design, making it profoundly suitable for the recording of GTM events and processing of transactions related to GTM activities.

Using blockchain technology driven by GTM applications, a GTM blockchain can reveal previously hidden information and enable users to make informed, automated decisions related to import and export compliance as it affects all areas of international supply chains, from sourcing, to deliveries, to financials. Blockchain’s ability to attach digital tokens (digital assets) to GTM smart contracts gives businesses greater flexibility and extended financial security in finding markets and pricing risks. It creates more efficient dynamic demand chains instead of rigid supply chains with pre-defined participants and fixed long-term contracts.

Now that we have established a foundation of knowledge, stay tuned for the next installment in our blog series where we address and assess the roadblocks associated with blockchain in GTM technology.

Meet Our 2019 Supply Chain Pro to Know: Eric Dalby

We are extremely proud to celebrate Eric Dalby’s recent recognition as a 2019 Provider to Know by Supply & Demand Chain Executive magazine. Because of this recognition, we wanted to put Eric in the spotlight and give our customers the opportunity to get to know him.

With nearly 20 years of experience in the global trade arena, with special emphasis on technology and compliance, it is obvious that Eric understands the challenges importers, exporters, brokers and forwarders face daily in navigating the regulatory environment. With previous experience as a licensed Customs broker and certified Customs specialist working for major apparel firms, Eric acquired an in-depth understanding of both Customs’ requirements and the internal processes needed to satisfy them. Leveraging his knowledge, Eric helped lead efforts to automate global trade and transition to the Automated Commercial Environment (ACE).

Here at QuestaWeb, Eric applies his considerable knowledge to our Foreign Trade Zone practice as our Director of Foreign Trade Zone and Global Trade Management Implementations. He assists major corporations in leveraging the economic benefits FTZs confer by designing automated compliance solutions with our advanced, web-native technology. Additionally, Eric is an Accredited Zone Specialist, a designation that is based on meeting the criteria of employment in the FTZ field, involvement at NAFTZ seminars and conferences, and active participation both in the NAFTZ community and FTZ field.

In addition to his extensive knowledge of FTZ and GTM, Eric is a gifted speaker and writer, having served as a panel moderator, webinar leader, panelist, presenter and blog contributor on numerous occasions. He holds a B.S. in financial management and an M.B.A. from Clemson University.

What do you believe are the key challenges Questaweb’s customers and their supply chains will face in 2019?

Eric – In 2019, the key challenge our customers and their supply chains will face is uncertainty. Supply chains have many inflection points where any unplanned event can have cascading effects: natural disasters, labor disputes, regulatory surprises and variability in resource prices (e.g. an increase in the cost of aluminum imports) can change the price of a landed good overnight. When the price of materials used in the production of other goods goes up, like steel and aluminum because of recent tariffs, it affects the landed cost of goods in a major way. Not only that, but every product that uses those materials sees an associated price increase. When clients don’t predict and compensate for cost spikes, they have two choices: absorb the difference, or pass those price increases onto their consumers – neither of which is very appealing.

How is Questaweb working with its customers to meet these challenges?

Eric – Import and compliance teams are now being asked by executives to help with decisions based on sourcing, cost and risk analysis. However, these teams don’t have the necessary tools to provide these answers. For instance, the U.S. subsidiary of a $6 billion multinational electronics and electrical equipment company imported products from its Japanese headquarters using manual processes. Beyond the inefficiencies of using paper documentation and having brokers manually key data, the post-import reconciliation of broker documents for correctness and compliance was labor intensive. QuestaWeb’s Global Trade Management tool has allowed this client to project logistics costs, duties, fees and taxes, while ensuring adherence to compliance regulations and reducing exposure to fines and penalties.

How can a supply chain better align with a company’s broader strategy?

Eric – All companies are in business to make money. When a company experiences a 25 percent increase in its cost, it has entirely lost its margins. For this reason, it is important for a company to make decisions early on in the supply chain. Early and effective supply chain management enables companies to track the movement of the raw materials needed to create products, optimize inventory levels to reduce costs and synchronize supply with customer demand. Furthermore, supply chain management enables companies to maintain visibility over their logistics to ensure availability of materials and delivery of products to customers.

We hope you enjoyed getting to know our Pro to Know. If you would like to request more information, you may do so here: http://questaweb.com/contact-us/

Eric Dalby Earns Accredited Zone Specialist Designation

We would like to congratulate Eric Dalby on his recent Accredited Zone Specialist (AZS) designation!

The reputable program was created to elevate professional standards and distinguish Foreign Trade Zone (FTZ) professionals who have demonstrated knowledge of the FTZ program and can easily adapt to change in today’s challenging environment. The designation is based on meeting the criteria of employment in the FTZ field, involvement at NAFTZ seminars and conferences, and active participation both in the NAFTZ community and FTZ field. Currently fewer than 75 individuals hold this certification.

Accredited by the National Association of Foreign-Trade Zones (NAFTZ), the program was created with the intention to help individuals connect with the association and its resources. The NAFTZ has been implementing professional development programs, like its AZS designation, for the last 40 years in support of its mission to serve as the FTZ program’s principal educator.

With nearly 20 years’ experience in the global trade arena, with special emphasis on technology and compliance, Dalby understands well the challenges importers, exporters, brokers and forwarders face daily in navigating the regulatory environment. As a licensed Customs broker and certified Customs specialist working for major apparel firms, Dalby acquired an in-depth understanding of both Customs’ requirements and the internal processes needed to satisfy them. In that regard, he helped lead efforts to automate global trade and transition to the Automated Commercial Environment (ACE).

As the current Director of FTZ Implementations at QuestaWeb, he is applying his considerable knowledge to our Foreign Trade Zone practice. He assists major corporations in leveraging the economic benefits FTZs confer by designing automated compliance solutions with QuestaWeb’s advanced, web-native technology.

A gifted speaker and writer, Eric has served as a panel moderator, webinar leader, panelist, presenter and blog contributor on numerous occasions. He holds a B.S. in financial management and an M.B.A. from Clemson University.

Congratulations, Eric!

Eric Dalby to Moderate Panel at 46th Annual NAFTZ Conference and Expo

NAFTZ’s 46th Annual Conference and Exposition will be held in Atlanta, Georgia, Sept. 16-19, 2018. This year’s theme, “FTZs: A public private partnership for the U.S. Economy,” will reflect on the expanding opportunities of the FTZ program as well as the ever-changing landscape of being on the cusp of an impactful year.

With trade policy currently a hot political topic, the U.S. Foreign Trade Zones program plays an even more important role in promoting trade, investment and job creation. As more and more U.S.-based companies import and export, the FTZ program has become a critical tool for companies competing in the global economy. The FTZ program also empowers local communities across the United States to attract foreign and domestic investment, and to retain manufacturing activity and jobs on U.S. soil.

This year’s conference program offers both a broad perspective on the role of the FTZ program in promoting economic development and competitiveness, as well as the practical knowledge that grantees and operator/users need to benefit fully from the program. Along with general sessions on “FTZs: In the News: Trade Cases, Current  Affairs  &  Foreign  Investment,” the conference will offer specialized tracks for Grantees and Operator/Users, as well as an Advanced and Fundamentals  track for those with various expertise in the FTZ program.

Our Director of FTZ and GTM Implementations, Eric Dalby, will be moderating the session titled, “Managing & Validating Partner Government Agency (PGA) Data.” Slated for Tuesday, Sept. 18 at 9:35 a.m. ET, the session will dive into real world scenarios and solutions of how to best manage the information that is required to file with partner government agencies. Christopher Smith from IKEA and Karen Aulbach from BMW will join Eric on stage.

This 4-day event is one you will not want to miss. In addition to attending Eric’s session, stop by QuestaWeb’s booth to gain a lifetime of resources, relationships and industry updates. For more information, contact us.

Details

Managing & Validating Partner Government Agency (PGA) Data

Tuesday, Sept. 18 at 9:35 a.m.

Speakers

  • Christopher Smith, IKEA
  • Karen Aulbach, BMW

Moderator

  • Eric Dalby, QuestaWeb, Inc.

Women in Today’s Supply Chain

Women in all aspects of business are making major strides for our current and future generations when
it comes to equality in pay they receive and positions held within the corporate structure. My unique
environment of supply chain management as well as technology, where the gender gap of both
management positions and pay is vastly large, allows me the opportunity to see this issue from an
interesting perspective.

The statistics say it all. According to ISM’s median salary data, women in the supply-chain sector earned
81 cents for every dollar that men did in 2017, with the median salary for women being $88,000,
compared to $108,000 for men. While there is a clear difference in pay, I am proud to note that
statistics are also showing a general positive movement each year to decrease the gap between men
and women for logistics, specifically. In the technology sector we are beginning to notice a difference in
the gap as well.

My History With The Supply Chain Industry

I was raised in the industry with family members (both men and women) being involved in different
aspects of supply chain management. I remember being told that even in the nineties the majority of
women in the industry were still considered “entry clerks” although they took the responsibility of
management – meaning they did not receive the proper title or a respectable pay due to the stigma of
women in business. As a young teen it was difficult to understand why this was the stigma since we
were being taught that females could do anything males could do. Entering the workforce in the early
2000s gave me a wake-up call that the stigma was alive and well and unfortunately continues today. But
this has not stopped women.

A Male Dominated Industry

A workplace that is predominately male orientated is intimidating to say the least. Many conference
tables are lined with males, so being the minority at a table to discuss industry topics does take a
certain tenacity to maintain your credibility. At times, women may also be dismissed as the assistant to
take meeting notes or as the secretary to answer the phone. If we were to sit down with the women in
business today and hear how many times they were advised not to be so forward thinking, aggressive,
sensitive to pay structure, or too soft when dealing with a particular issue we could write an entire book
of these quotes.

As women this does not mean we have to accept this as the norm from our society. It does mean
however we have to work harder than our counterparts for respect, authority and overall fairness.

Women In The Supply Chain

There are many female leaders within the industry who have been in the business for many years and
have witnessed the evolution of women in the workforce. We as females have utmost respect for those
women since we understand what they endured to achieve this goal, not only for themselves but for the
women of the future. This also applies to women that are in the field working in warehouses, container
terminals, shipping agents and all other positions that might take them out of the typical office setting.
At times we focus on the jobs within an office setting so much that we tend to forget the other positions within our industry that women are taking the lead on. It is important that we do not discredit these
positions when discussing the the gender gap.

Coincidentally I recently had a conversation about a female leader in an industrial setting. My ears
instantly perked up when I heard, “You never see a female leader on the line doing grunt work.”
Meanwhile, the woman that was being referred to was out on the line with her crew just like a man
would be, as that is a requirement for the position she holds. In this situation, the female worker was
being discredited because of her gender. In hindsight the female worker is truly an excellent leader for
her team and does any amount of work that her counterparts complete as well.

My Personal Experience In The Supply Chain

When I first joined QuestaWeb, I was the only female team member. Just like many other women in the
supply chain industry, I too had to prove myself. However, I did not take this personally as I understood
the nature of the business. My Operation Director at QuestaWeb provided me with an immense amount
of support and helped me make it over this hurdle. In fact I have had many mentors throughout my
career, both male and female, who have instilled in me that with the right attitude and persistence you
can do anything you want to do. Having the support of management within your organization is critical
to becoming successful and reaching the goals that you would like to accomplish.

I am proud to work for an organization like QuestaWeb that realizes women’s strengths, such as the
ability to adapt to the situation at hand, provide a different perspective and apply a soft understanding
tone when needed. At the end of the day, we work in a diverse industry. So it only makes sense to
diversify our company with different opinions, team work and ideas.

Moving Forward, Together

Countless amounts of time and money go into conducting studies on the gender gap. We need to utilize
this research to better structure our businesses and provide equal opportunity for all employees. We as
a society need to stop thinking that because it has been done this way for so many years that it must be
the right way. Women are pioneering their way through supply chain management and technology like
never before and should not be afraid of being a natural leader in her position. After all, just because we
raise our children to be CEO’s doesn’t mean we can’t be one either.

 

Brooke Helton is the Senior Account Implementation & Support Representative of QuestaWeb, Inc., a
New Jersey–based provider of web-native Global Trade Management solutions for importers, exporters,
brokers and forwarders.

Meet Our Supply Chain Pro to Know: Chris Springer

We’re extremely proud to celebrate Chris Springer’s recent recognition as a 2018 Pro to Know by Supply & Demand Chain Executive magazine. We thought it was only fitting to put Chris in the spotlight and let our customers truly get to know him.

With over 20 years of supply chain experience, primarily focusing on global trade compliance, it is safe to say Chris understands how to address complex issues such as how best to automate business processes and how to make existing supply chain processes more efficient. Chris daily applies his triad of experience – regulatory knowledge, programming ability and integration expertise – to elevate the advice he gives to QuestaWeb customers. He takes pride in not only delivering the best solutions possible but also in assuring that the ultimate users can extract maximum value from them.

Chris also is very involved in the compliance community, offering his insights, most recently on the ACE implementation effort. He works with ABI reps, U.S. Customs and Border Protection (CBP) officials, attorneys and individuals at the various ports, as well as clients, to assure that QuestaWeb software is as efficient and as transparent as possible.

So, Chris, what is the best part about working for QuestaWeb?

The best part about working for QuestaWeb is the flexibility that it offers in allowing me to try different things. I’ve done a lot of traveling and talked to people in all different walks of life. I have the unique ability to work with and understand challenges of Fortune 500 companies all the way to individuals who are starting a customs brokerage.

If there is one thing I have learned, it is that at the end of the day, all of these companies are a culmination of people and ideas. I am inspired by the different approaches each company takes to overcome challenges with technology and am truly humbled to help support their initiatives.

In late 2017/early 2018, some of the final transactions transitioned to ACE (those related to foreign trade zones and revenue collection), leaving just revenue collection and a few others to complete the implementation effort. How do you see this affecting the trade community and their supply chains?

In 2018, the trade community will have to accept the normalization of the new electronic environment. In addition, there will be related programmatic and operational changes affecting both the import and export worlds. There will be a period of tweaking the system to extract even more capabilities out of the ACE system.

In particular, one focus will be identifying ways to share data, especially among the numerous federal agencies involved. Another will be the issue of being more transparent across the supply chain as a whole, offering as much information in as simple a package as possible. Then, of course, there will be the task of overhauling the regulatory environment.

A likely outcome may well involve the development of key regulatory changes responsive to the needs of larger companies. Relative to revenue collection, for example, larger importers that are already concerned about their cash flow may well look for ways to hold onto their money longer through regulatory relief. There may be a move to more simplified reporting and filing summaries on a monthly basis, rather than a weekly one, which could have a ripple effect across the supply chain.

Effective March 23, 2018, President Trump issued Proclamations 9704 and 9705 on Adjusting Imports of Steel and Aluminum into the United States, providing for additional import duties for steel mill and aluminum articles. What does this mean and how do you see this affecting U.S. consumers?

Steel made in another country and shipped to the United States will be subject to a 25 percent tax. And imported aluminum will be hit with a 10 percent tax at the U.S. border. This decision has been made to incentivize U.S. companies to buy steel and aluminum from U.S. producers so the domestic metal industry gets stronger. However, many U.S. industry leaders agree that consumers will most likely face higher costs for cars and trucks, beer and soft drinks, canned goods and more steel/aluminum products because of these tariffs.

On top that, the United States Trade Representative (USTR) published a proposed list of Chinese goods targeted for assessment of an additional 25 percent duty upon importation into the United States. The USTR Notice explains that the proposed list was designed to minimize impact on U.S. consumers and largely excludes several types of consumer goods such as apparel, footwear and cell phones. Further, many of the items identified for the tariff are also exported to the U.S. from other countries, providing alternative sourcing options to importers.

How can a supply chain better align with a company’s broader strategy?

Being able to communicate accurate data across the supply chain is uppermost. From an importer’s perspective, it’s about assuring brokers and freight forwarders have correct information about their commodities so they can provide optimal information to governments, whether the United States or foreign governments. For exporters, it’s about getting denied party screening, licensing and other matters right the first time. Finally, it is about limiting overhead expenses as much as possible.

Automation, especially for QuestaWeb customers, gives companies the ability to manage their global trade with minimal resources. Our solutions make it possible to intervene only when exceptions arise, allowing staff to focus on those broader corporate strategies.

Let’s get to know you a little bit more. What do you like to do outside of work?

I have recently gotten myself involved in the sport of Curling. Participating in team and individual sports has taught me so much about working with others to accomplish goals. How to win or lose gracefully, build up my teammates and how to work others.

It may look like four adults yelling at each other but in reality we are communicating information about the stone or instructing what to do. From when the stone begins moving to when it comes to a rest, the movement and communication of a good team is constant.

It is like international trade in a way, though the point of moving goods is not to run into other goods and knock them out, getting to the destination as planned is a job well done. Every day that passes, technology we create brings us closer to the day that information about the current status of all goods are conveyed just as quickly as it is on the ice.

 

We hope you enjoyed getting to know our Pro to Know. If you would like to request more information, you may do so here: http://questaweb.com/contact-us/

Web-Native Systems: The Hidden Cost Savings For Brokers and Forwarders

by Dean Gionis

Web-native platforms designed for brokers and forwarders are a great tool as they facilitate the timely and compliant movement of goods from point of origination to point of destination, across borders, anywhere in the world. Furthermore, these solutions provide even deeper benefits by helping brokers and forwarders increase financial and supply chain efficiencies, improve customer satisfaction, reduce risk of noncompliance and better control costs. In this blog post, we are going to dive into the financial benefits of web-native platforms, specifically, and how they can put more money into your company’s pocket.

Reduced Costs

Web-native platforms enable all employees to access their main system via the cloud. Having this option means that employees are able to work remotely from home whenever it is necessary. When it comes to minimizing expenses, operating in the cloud is a key factor because the less physical office space needed, the lower monthly rent will be. In fact, studies show that if a typical business allowed employees to work from home just half the time, they would save, on average, $11,000 per year. In terms of cash savings for employees, telecommunication has proven to save workers between $2,000 and $7,000 a year.

It is also very common for brokers and freight forwarders to expand into different cities as a way to increase revenue streams. While oftentimes necessary, it is an expensive task to undertake due to the added mortgage or lease, utilities, janitorial services, and office supplies and equipment. However, web-native platforms eliminate the need for that physical space in pricey cities since employees can work remotely instead of out of an office.

Increased Productivity

The phenomenon of working from home is rapidly increasing as technology has evolved. According to Global Workplace Analytics, 3.7 million employees (2.8 percent of the workforce) now work from home at least half the time. And, according to those remote workers, about 91 percent feel that they’re more productive than when they are in an office. This is because there are fewer distractions while working in a home office, employees are perceived as more valued and trusted, and thus feel obligated to exceed expectations as a way to prove themselves.

In addition, having remote employees tends to result in less missed days of work. So, in the instance that there is a terrible snow storm, hurricane or other natural disaster, productivity will not be lost that day. For example, Federal employees in Washington who worked from home during four official snow days saved the government an estimated $32 million, according to Global Workplace Analytics and its research arm Telework Research Network.

The same principle applies to executives who routinely travel for business and trade shows. Even though they are out of the office, they can get a live update on what is going on via the cloud. By no longer having to continuously call the office for updates, they can spend their valued time on other important tasks at hand.

Better Recruitment

When companies have the freedom to hire from anywhere in the world, the talent pool grows. Being able to pick from the most qualified in the industry, regardless of where they are located, is a huge competitive advantage when trying to grow a business. On top of that, when employees are spread out all over the country or even the globe, brokers and freight forwarders are able to operate in more time zones, meaning that there are more hours in the day.

Moreover, 56 percent of hiring managers have reported that Gen Y’ers are more difficult to recruit, with 64 percent stating that they are even harder to retain. This is because the younger generation is particularly attracted to flexible work arrangements. By offering remote capabilities, organizations are more likely to entice the younger, technological-advanced generation, which helps build a competitive edge.

*   *   *

QuestaWeb has been serving mid to large sized brokers and forwarders for over 30 years. In fact, the company was the first to offer a web-native solution in its industry. If you require cost savings, higher productivity and a better talent pool, talk to QuestaWeb today.

News Flash: Your ERP System and Excel Spreadsheets Are NOT Global Trade Management Solutions

by Dean Gionis

With so many moving parts, global trade management (GTM) is a daunting task for compliance professionals in companies large and small. GTM software offers significant benefits. It can

  • Increase profits.
  • Reduce risk and the potential for fines.
  • Expedite product delivery.
  • Reduce costs.
  • Improve visibility.
  • Reduce delays.
  • Free up company resources.
  • Automatically alert users in different departments (sales, warehouse, purchasing, compliance, legal) of problems.
  • Assist in making strategic supply chain decisions.

Despite its tremendous value, GTM software is still overlooked by many companies. Why?

  • A false sense of security or being forced to do things manually – It is a misnomer to believe that an ERP system plus multiple spreadsheets is adequate for GTM. While some companies operate this way, they are missing out on tremendous value. Under their spreadsheet scenario, they are merely collecting data manually. With a single integrated GTM platform, companies can not only store data in a centralized database but also benefit from the automated reporting of serious exceptions and/or potential opportunities such as sourcing changes, free trade agreements, bill of material changes, special duty programs, denied party hits or discrepancies of reported values via comparisons of the purchase order, commercial invoice, 7501, vendor check and more.
  • Fear and/or cost – The fear that the GTM software implementation will fail or the budget will be grossly exceeded.
  • Lack of resources – The belief that the firm lacks the staff resources to devote to overseeing a GTM implementation or developing a justification that the C-suite will approve to designate the required funds.

So what is the secret to getting GTM in a cost-effective manner while ensuring a successful implementation? Here’s a low-risk/high-reward option to move to GTM software.

  • Select a software provider whose core competency is GTM. Some corporate leaders aspire to the corporate ideal of “one-stop shopping” and either look to their existing vendors or (make sure you are sitting down for this one) try to develop a homegrown GTM solution. However, providers of general business software – or internal IT professionals – are not specialists in GTM. As a result, such pseudo-solutions do not work “out of the box.” They will need infinite customizations since there are no defined instructions to follow for development and implementation. The effort is essentially a science project.

Either approach commonly leads to millions of dollars wasted on efforts that are completed late – or not at all – and never truly perform all the required functions.

In contrast, true GTM vendors, like QuestaWeb, have one core competency 24 x 7 x 365: GTM software solutions. They can supply complete GTM software solutions with all the functionality and compliance content needed to quickly reap the benefits of automation. Choosing an established specialist will deliver a cost-effective solution, backed by a proven implementation process, and it will perform all the required functions out of the box.

  • Identify the greatest area of need and phase in the needed functionality without a full-scale GTM implementation. Some providers offer GTM solutions in modules, which can be very advantageous. As an example, consider the importer that sources in several countries and uses several HTS chapters. That importer would need to quickly compare free trade agreements (FTAs) to determine the most cost-effective source of components or raw materials. Implementing a modular FTA solution is neither complex nor time consuming. And, the importer could implement the FTA solution now and add a full import compliance solution later.

Modular solutions provide the framework whereby it is possible to simply plug in an additional module that shares the same single database. Thus, the subsequent implementation – and associated learning curve – would be minimal. Other modular add-ons could easily address export compliance, denied party screening, global visibility, license determinations, self-filing and more.

Compliance professionals, for some reason, always face a hurdle that other departments don’t: Convincing C-level decision-makers that they need software just as much as finance, purchasing, manufacturing, sales, distribution and human resources. Our earlier blog “Getting the Green Light for a GTM System Acquisition” provides some strategies to use to garner executive approval. Once you get the green light, avoid the science project, go with a GTM specialist and employ the low-risk/high-reward option, especially if your company is not ready to embrace a full GTM solution today.

Brokers and Forwarders: Here’s a Trend Worth Noting

by Wayne Slossberg

 

Currently, there are over 270 foreign trade zones (FTZs) in operation across the United States and its territories. And, the numbers are steadily climbing. Why? There are two primary answers. First, FTZs offer advantages when it comes to importing and exporting, especially

  • Deferred payment of duty and federal excise tax, with monies due only when goods leave the FTZ for consumption.
  • Exemption from state and local ad valorem taxes while products are within the FTZ.
  • Elimination of duty and excise tax on merchandise exported from the FTZ.
  • Ability to maintain goods within an FTZ indefinitely.
  • Freedom to select the most advantageous duty rate, that is, either the rate applicable when the goods entered the zone or the rate applicable on the finished goods leaving the FTZ.
  • Ability to place merchandise imported under bond within an FTZ to satisfy a legal requirement to export it.

Second, U.S. manufacturing is on an upswing thanks to the “Made in America” movement and the priorities of the Trump Administration. Companies want to take advantage of this new business environment, and FTZs present a viable means to decrease costs and be more competitive in both domestic and foreign markets.

The prospect of establishing an FTZ can be daunting for many importers. Often, they don’t have the bandwidth or an understanding of how to approach the process – or how to complete and submit an application to the Foreign Trade Zones Board. Clearly, the dynamics of the approval process aren’t necessarily difficult but can be somewhat challenging. And, of course, affordability is a concern for smaller importers that don’t want to take on the costs of acquiring a facility, staffing it and operating it.

This “dilemma” has created a business opening – and new revenue streams – for medium to large brokers and forwarders and even 3PLs. Many are looking for additional services to offer clients, and FTZ management and operation fit the bill. In many instances, offering these services and transitioning to a 3PL model solidifies brokers’ and forwarders’ overall business relationship with importers and adds an element of business security to their customer base. If a company is using their FTZ services, then they are less likely to lose that firm to a competitor.

Familiarity with the nature of the business – and the availability of technology developed specifically for FTZs – allows brokers and forwarders to enter the 3PL space and manage or run FTZ operations for one or more importers. And, the transition is a relatively straightforward leap regardless of whether the FTZ is created for manufacturing or distribution purposes. The key requirement is being compliant with the strict rules CBP has instituted to govern FTZ operations, especially the tracking of inventory movement and the filing of scheduled reports on time. That’s where FTZ technology integrated with brokerage and forwarding solutions comes into play.

For QuestaWeb customers, addition of the FTZ solution to their broker and freight forwarder solutions is easy. For brokers and forwarders with other solutions, QuestaWeb’s FTZ solution can be integrated with virtually any other technology. Notably, QuestaWeb approaches the licensing of its FTZ technology in two different ways. Knowing that some firms will want to handle FTZ operations for multiple clients, we offer a system with a block of transactions that the 3PL can divide in any manner desired. 3PLs also can acquire standalone FTZ technology, especially for those customers that want the 3PL to manage its FTZ for them and integrate the FTZ solution with their ERP system. QuestaWeb can handle that integration or the 3PL can, as desired. Whatever business model brokers and forwarders select, QuestaWeb can accommodate.

Adopting the role of a 3PL enables brokers and forwarders to play a more strategic role in the supply chain. No longer are they merely handling individual shipments. They become supply chain managers able to offer recommendations to optimize processes, save money and address issues before they become challenges.

In an industry where the numbers of brokers, forwarders and even 3PLs are shrinking due to a marketplace highlighted by closures, sales and consolidations, it’s important to be aware of emerging trends and add versatility to your service offerings and revenue stream. Operating, managing and even offering consultation services regarding FTZs is a noteworthy movement for brokers and forwarders.

It All Starts With Your FTZ

 

by Wayne Slossberg 

We’ve all done it. You start a small home project like hanging a new picture in your living room. Once it’s up on the wall, the piece looks beautiful but it makes the painted wall look dirty and faded. You paint the wall, but it emphasizes the carpet wear. You replace the carpet but now the sofa looks dingy in comparison. By the time you’ve finished, the simple act of hanging a picture has resulted in a completely redecorated living room. It wasn’t something you anticipated, but the end result is a more beautiful interior space that you can enjoy with friends and family.

So it is with many companies that opt to create a foreign trade zone (FTZ) to help lower tariffs, duties and taxes. They obtain approval, select an FTZ technology vendor and set up an FTZ. After a while, the savings start to mount and everyone is more than pleased. However, this realization makes company officials aware that the importing/exporting operations conducted via the FTZ are just one small part of the overall trade it conducts. How about the distribution centers located on the West Coast? Or what about the importing/exporting another corporate division conducts globally on a daily basis? Are we leaving savings on the table? Are there opportunities to strengthen trade compliance elsewhere? Are there ways to improve other business processes, just like the FTZ technology helped the company do?

The original FTZ footprint is about to yield a larger footprint, trade management compliance on a more expansive scale. Think about all the opportunities for greater efficiency and economy that automating importing/exporting processes and managing by exception can hold. Think, too, about what global visibility will mean to your supply chain.

This “snowball effect” is most definitely a positive thing unless, of course, you did not contemplate expanding compliance beyond a single FTZ when you obtained your technology. It could resemble the home decorating scenario described earlier if your company selected a vendor that only offers an FTZ solution. You’ll need to acquire the technology in a piecemeal fashion, likely through a variety of vendors and potentially facing costly integration issues. Worse, the final result might not be the beautiful new living room. It could be a variety of systems that never really “talk to one another” in the proper way. Interoperability can be a huge challenge.

In our experience, many companies do just that. They start with an FTZ and the benefits experienced cause them to expand their vision and contemplate the possibilities across all their importing and exporting activities. Or, taking a severe hit for noncompliance from U.S. Customs and Border Protection (CBP) elsewhere in the organization might be the catalyst to expand compliance concerns beyond the FTZ and move from spreadsheets to global trade management technology.

That is why at the beginning of the FTZ technology sales cycle, we counsel prospects to be mindful of trade compliance beyond the FTZ, even though the focus today is establishing a CBP-compliant FTZ. We recommend that they select a vendor that offers a suite of global trade compliance solutions that can build on the initial FTZ solution. We know it is entirely possible – and very likely – they will want to introduce automated trade compliance to all their importing/exporting activities eventually.

In the QuestaWeb world, if you have the compliance database that lies at the heart of our FTZ solution, then this “next world of compliance” is open to you. You posses the database with all your products, vendors and more that lays the groundwork for global trade compliance activity elsewhere in your firm.

The number one thing: No matter where you start – FTZ, import/export or self-filing – always look for a provider that can satisfy that next step in your global trade management vision. If you do, it will be easier and less expensive and the final result will be even better than you imagined.

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