Assessing Your Competitive Advantage
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If you’re looking to start your own business, importing and/or exporting might be an option for you. However, before you jump the gun one thing you need to determine is what makes your business better than the competition. What is your competitive advantage? Today we are going to give you tips on how to find your competitive advantage and how to use it properly.
One of the most impactful things you can do is talk to your customers. Both your existing customers and prospective customers. Customer feedback offers a wealth of information that will help you understand your current positioning in the market and industry as a whole. They will give you insights into potential new offerings and could very well give you the answer you’re looking for: what your competitive advantage should be.
Another thing you can do is perform a competitive audit. Marketing audits track the marketing tactics your competitors use. Does your competitor publish content marketing? Do they use Google Adwords? What social media channels do they post to and are they affective? Take tactics that work and implement them into your business. The ones that don’t work, make them better and use them to your advantage.
Lastly, once you’ve found your competitive advantage, don’t make it a secret! Communicate your advantage to your customers and make sure it is backed by proven facts. This is called a value proposition and will become the defining statement of your company. The goal is to not only hook your customers on your value proposition but to also engage in a “tell me more” conversation.
Nailing your competitive advantage is only one of the critical elements in a strategic business plan but one of the most important. The competitive advantage is what can make or break your business so invest time in figuring out what the right answer is before doing anything else.
Increasing Fuel Costs Continue
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From high tech companies like Apple and Samsung to local mom and pop shops, everyone continues to struggle with sourcing product. The COVID-19 pandemic started it and the conflicts between Ukraine and Russia only made things more difficult. Things like increased shipping costs and freight shortages play a role in the global supply chain struggle.
We have all seen the gas prices recently and unfortunately it is not looking like they will be going down any time soon. The national average for a gallon of gas is now over $4.25 according to AAA. Some experts say that we might see a slight decline after May but the national average is still expected to remain over $4 until the end of the year. Not only is it more expensive to fill up your car’s gas tank but that also means it is more expensive to fill up freight trucks and air cargo jets.
Climbing oil prices translate directly to higher diesel prices. The United States diesel prices are up significantly from last year and are expected to go higher as sanctions are mounted against Russia, the third-largest oil producer in the world. Higher fuel costs from climbing oil prices caused by the hostilities will continue to be felt by shippers across the globe. Ocean carriers who continue to serve ports in the region have introduced War Risk Surcharges for these shipments. This translates to an additional $40-$50/TEU. Similar to gasoline prices, while a temporary dip in available supply of exports could explain the slight easing in freight costs, all signs point to continued elevated volumes in the coming months.
Expect prices to continue to increase and when they do decrease it will be very minimal. Hopefully by the beginning of next year we will see prices return back to what they once were.
International Trade With Russia
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Russia invaded Ukraine about a month ago and since then the U.S. and allies have pursued a series of economic sanctions against Russia in retaliation for the invasion. On Friday March 11, President Biden said that the U.S. and other G-7 nations will deny Russia from a favored nation status. This meaning that the U.S. and allies will revoke Russia’s most-favored nation trade status. How will this impact the U.S.? Today we will break down some of the numbers.
According to the Census Bureau, Russia was the U.S.’ 23rd largest trading partner, totaling $36.1 billion in two-way goods trade in 2021. $29.1 billion of which account for Russian products into the U.S.
60% of what the U.S. imports from Russia is in energy, including oil, coal, and natural. In 2021 the U.S. imported an average of 209,000 barrels per day of crude oil from Russia. Russian oil accounts for about 3% of what the U.S. imports each year, but that is still enough of a jump to drive up gasoline prices for all of us.
Energy aside, other goods imported from Russia will see an increase as well if they have not already. The move to revoke Russia’s most-favored nation trade status will cause the U.S. tariff rate on Russia caviar to jump from 15% to 30% and levies on plywood will increase from 0 to 30%, according to the Wall Street Journal. Vodka will also be subject to a tariff of $1.78 per liter.
As the war continues the U.S. and allies will continue to do what they can to support Ukraine, even if it is just an economic blow. However, doing so will likely lead to more inflation not just in the U.S. but globally.
For more information on import and export news please stay tuned here on our monthly blog.
Movement At The Ports
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Last October the Los Angeles Harbor Commission implemented a “Container Excess Dwell Fee” that was directed at ocean carriers to improve cargo movement on container terminals. This fee charges carriers $100 a day per container left on the dock. Carriers have a maximum of nine days to move containers by truck before the fines start accruing and six days if transporting by rail. At the time of implementation, this fee was set to last until the end of January.
Since October, there has been significant improvement at both the Long Beach port and Los Angeles port. In November, Mario Cordero who is the executive director of the Port of Long Beach reported that since the announcement of the new fees both ports have seen lingering cargo containers reduce by about 33%. To date, Gene Seroka who is the executive director of the Port of Los Angeles reported that import cargo lingering nine days or more has declined by 60% at the Port of Los Angeles. There are still more containers than normal but the fee has definitely helped move things along. The ports are pleased with the progress and employees at both are hoping that this is just the start. Because of the proven success of the Container Excess Dwell Fee, the Los Angeles Harbor Commission voted 5-0 to extend the fee.
Although there has been progress in logistics at the ports, Cordero believes that there are still national supply chain issues that need to be addressed. Things like truckers, marine terminal operators, warehouses, railroads, port authorities, etc. all need to be prioritized just like the ports were. Sure, it will take time but the good news is that there is at least a conversation happening with regard to the need to have a transformational change.
Cordero is absolutely right. The fact that we are moving things at the port is great. But there needs to be changes to the entire supply chain to really make a lasting impact.
For more information on import news please reach out to us.
Mitigating Risk
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Doing business and mitigating risk internationally can be tricky, especially if you import and export. There is so much to know about the import and export business and if you do not know all of the rules and regulations then your business can fail very quickly. One way to ensure that your business succeeds when importing and exporting is to mitigate risks where you can. Today we are going to go over ways you and your business can mitigate risk when importing and exporting.
Pay attention to the details and do not take short cuts. Do this by developing formal import and export policies and standard operating procedures. This is like business 101. Create a customs manual specific to your operation. A document like this will be an overview of your business. You will articulate where you import from and export to. You will state any customs programs you participate in and outline your key international processes. This will ensure that no step is overlooked when doing business. All employees need to have a good understanding of this document.
Be organized and document everything. This is important because Customs can review your previous five years’ worth of import transactions. If there is anything that looks odd or if Customs thinks you are breaking the law then your business is in big trouble. The best way to record keep is to do it electronically through the cloud or outsource it to a trade partner such as a customs broker.
Invest time in and prioritize self-audits. Again, this is to avoid problems with Customs. You need to make sure that your trade processes are current with things like the classification of your goods or parts database, any required customs or government agency documentation, or maybe a NAFTA Certificate of Origin. Self-audit annually at the very least. To be safe it is always recommended to do a mid-year or quarterly review as well.
Doing these things from the get go is the best way to mitigate all risks when it comes to importing and exporting. Working with a customs broker is never a bad idea but if you have a good foundation, a broker is not always necessary. Do the right things up front so your business can survive the tricky import and export industry.
Import and Export Job Opportunities
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There is so much opportunity in the import and export industry. According to the U.S. Department of Commerce, imports account for about $1.2 trillion in goods while American companies export about $772 billion worth of goods to over one hundred countries overseas. With that said, that means that there are plenty of job opportunities in this industry. The demand is there and is not looking like it is going to slow down. Today we are going to look at three job opportunities within the import and export industry that you might want to consider!
Consider becoming a product sourcing agent. A product sourcing agent conveniently plugs into the export value chain. It requires little financial investment to start and does not require previous experience in the field to get started. This job entails constantly making contact and maintaining relationships with exporters. You will deal with farmers, local buying agents, and commodity merchants.
Another area you can consider is becoming an import and export broker. A trade agent or customs broker is someone who sends and receives goods to and from different countries. You will work with both importers and exporters by helping them prepare necessary documents for moving their products. This job requires working with clients and establishing connections in foreign companies.
If you are specialized in a certain industry, you can go overseas and ask to be a manufacturer representative. You will have the edge because you are the expert in the industry or a certain market. Foreign companies are constantly looking for experts to market their product in countries with a lot of potential opportunity. This might require a lot of travel and regional work but it is a job that is rewarding and fun at the same time.
If the import and export industry is one that interests you consider these job opportunities as there is high demand for workers during this time!
For more information on the import and export industry please reach out to us here at Duty Calc.
Importing and Exporting Done Right: Part 2
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A couple of months ago we outlined some helpful tips on how to import and export the right way. Today we are going to continue that conversation by giving you three more tips. Let us get started!
Having the right logistics strategy and even making changes can yield savings on tariffs. For example, Donald Hoffman who is the president of Harmony Logistics Group in Oakdale, New York, and chairman of the Long Island Import Export Association (LIIEA) once helped a company that used to move product from Morocco to France for repackaging, and then shipped it to the U.S. This logistics move helped save the company a lot of money because they took advantage of the Morocco Free Trade Agreement. This agreement allowed the company to direct-ship their product from Morocco and come in duty-free. This logistics strategy seemed like a big move at the time but ended up helping the company save a good amount of money.
In addition to this, creating a formal operation run by an expert is crucial to having success whether you are an importer or exporter. You must develop a formal program to manage functions, with written policies and processes. Ideally, a company that imports or exports significant volumes will put a staff member in charge of meeting all applicable tax and regulatory obligations, even when the company also uses a customs broker or other provider. The last thing you want is to lose money because a product was misclassified, someone failed to file a declaration, or because a product was exported to a person on the U.S. government’s denied parties list. Put someone in charge of the operation to avoid such problems.
The third thing you can do to put yourself in the best position in this industry is to understand requirements on both sides of the border. There are different regulations in terms of time frames, hours of service, and ways that you can load freight into certain types of equipment. For example, if you are exporting to Mexico, you will need a government-authorized trading partner south of the border. Not every company in Mexico can legally import cargo. Similarly, if you are exporting to Mexico from the U.S. you must be carful about where in Mexico you plan to ship. This is because big cities might have the industrial parks with sufficient infrastructure to receive all kinds of shipments. However, some less-developed areas, tractor-trailers sometimes require special permits. If you understand rules on both sides of the border you will be fine. It is just a matter of doing your homework.
Use these tips to help you nail importing and exporting. It can be a hard and daunting task to get everything in place but if you do it right you can have great success. For more information on importing and exporting stay updated here on our monthly blog.
Importing and Exporting Done Right
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The import and export industry is huge. There is so much to learn and understand especially if you are new. If you want to get into this booming industry but do not know where to start, you are in luck. Today we are going to give you some helpful tips on how to import and export the right way.
The first thing you need to do is get into the habit of staying updated on industry news. Monitor rule, tariff, and status changes. For example, keep an eye on overseas suppliers in case they make changes that affect your tariff obligations. Similarly, watch for tariffs themselves, in government regulations, and in the status of customers. A good example of this is what happened when the U.K. officially left the EU at the end of last year. This move changed the industry drastically. So, stay updated and keep your eye on international news because one single move could influence the entire industry.
The second thing you need to learn is how to leverage programs that reduce tariffs. Gaining a tariff advantage is not an easy task as it requires initial vetting and having appropriate controls in place with the foreign supplier. However, doing so could save you a lot of money. For example, even when a product is made in a country with good tariff opportunities, it might not qualify if the manufacturer imported some of its components. Also, a product that meets the bar for tariff advantages today might not qualify tomorrow if your supplier starts to buy materials in another country. Be careful and be proactive in leveraging programs that help you stay away from those high-tariff loopholes.
Lastly, pay attention to design. A products design can influence tariff obligations just as much as its origin. For example, whether a jacket is lined or not lined, or has zippers or stitches, could impact the tariff. Depending on the case, it could cost less in tariffs to import components and assemble them in the U.S. than to import the finished product. Think strategically when it comes to design and you could save your company loads of money.
There is so much to know about the import and export business. These three tips are only the tip of the iceberg. For more tips and information stay updated here on our monthly blog.
Duty Drawback 101
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If you are new to the import and export business then it can be hard to understand what duty drawback is. Duty drawback is similar to how you are refunded sales tax when you return an item to a store. You essentially claim a duty refund when you export an item that was previously imported. It is a refund of duties, fees and taxes paid on goods imported into the U.S. that are subsequently exported from the U.S. With that said there are three major types of drawback. Unused merchandise drawback, manufacturing drawback, and rejected merchandise drawback.
Unused merchandise duty drawback is when you import something and then export it in the same, unused condition. For example, you import 50 generators paying Customs duties of $500 or $10 per generator. You come to realize that you only need 30 generators and you want to export the remaining 20 to a foreign customer. The unused merchandise can then be exported and you will qualify for a refund for the duty you originally paid.
Manufacturing drawback is slightly different. This type of drawback applies when you import an item that is then manufactured into a different item. For example, if you imported bicycle tires and export finished bicycles, then you can get the duty you paid for the bicycle tires refunded when you export the finished product.
Rejected merchandise drawback is when imported merchandise does not conform to sample or specifications, shipped without consent, or determined to be defective at the time of import. For example, if one of those generators or a few of those bicycle tires arrive in bad condition or are simply the wrong model that you ordered then you qualify for rejected merchandise drawback. You qualify to get a duty refund on all of the defective products.
Understanding duty drawback can be challenging especially if you are new to the import and export industry. If you have any questions please do not hesitate to reach out to us here at DutyCalc.
