1. SME Supply Chain Management Robert Krieger President What’s important to being & staying competitive?

2. What is a Customs Broker? Licensed by CBP Part of the Dept. of Homeland Security Corporate License & Permit Individual License Holders What is import when choosing one

3. What is an International Freight Forwarder? Licensed by FMC NVOCC tariffs published Anti-rebate policy Confusing terminology Not licensed Most CNS (IATA) members TSA regulation

4. US Focus on Security National Threat Center Increased examinations Voluntary C-TPAT program Stepped up TSA enforcement

5. Krieger Worldwide Customs Brokerage & Forwarding in USA, Mexico and Hong Kong Warehouse & Distribution Services Domestic Transportation Logistics Consulting Services Insurance Duty Drawback programs Importer Security Filings

6. What do you need to know? Concerns Opportunities

7. Customs Regulations Regulated by 19CFR –“Informed Compliance & Reasonable Care” –Importers required to submit Entry Most importers use brokers Entries filed electronically –Includes data about manufacturer, importer, classification, conveyance, and valuation

8. Importers Responsibility Verify accuracy of entry –Prior to submission –Marking of Goods –Description –Country of Origin –Manufacturer –Piece Count

9. Entry Review Government retains right to review entry –Review final upon liquidation Importer retains right to review entry –Strict time limitations apply

10. Examination Government retains right to inspect cargo –Based on entry criteria –Based on risk management –Depending on product & statutes up to 6 months after importation Failure to redeliver results in penalty Regardless of examination importer responsible to be comply

11. Non-Compliance If CBP believes importer in violation –Likely investigation –Possible civil penalties –Possible criminal penalties

12. Related Party Most brokers don’t ask Most importers answer incorrectly when asked Significance?

13. Valuation Transaction value is implied (TV) TV of identical merchandise TV of similar merchandise Deductive value Computed value Sec 152.107 value if other values cannot be determined

14. Transaction Value Additions to arrive at dutiable value –Royalties –Licensing fees –Packing costs –Selling commissions –Apportioned value of any assists Penalties for omissions & wrong valuation

15. Classification How to determine correct rate of duty? –Harmonized Tariff over 215,000 classifications –Modified by chapter notes –Modified by GRI’s –Effected by Binding Rulings –Effected by court decisions

16. Examples Wheel Chairs –Custom’s view –Importer’s view –Our view –Verdict Radio Watches –Custom’s view –Importer’s view –Our view –Verdict

17. Freight Issues When can we get the freight? How much will it cost? What is the real cost? Individual shipment bids—wasteful Tendency to focus on lowest bidder What is the real cost of cheap rates & poor service to your business?

18. Case Study in Freight Audited 36 random transactions –Poor carrier selection Vessels too slow (China-DC = 26-31 days) Unreliable service Over dependence on airfreight when speed needed –Airfreight issues Dimension on AWB 12% above packing list Transit time, factory to door, 12 days!

19. Findings in the Case Study Problems identified: –Customs broker different from Forwarder Did not coordinate well together –Customs broker coordinated poorly with trucker –Forwarder used cheapest airline, charged premium rates and overcharged on dimension

20. Additional Findings Freight shipped to wrong port Paid freight on CFR shipments Paid insurance twice Did not consolidate freight Paid extremely high export freight rates

21. Visit to Distribution Center Measured 40 different cartons –Most had incorrect measurements printed on the cartons

22. Case Study Conclusion $2,000,000.00 to $3,000,000.00 Possible savings if international freight properly managed.

23. Export Issues Duty Drawback –Goods imported then re-exported –Fungible items –Complex—may not be worth the effort Export Controls –Controversial –Difficult to understand

24. Hot Topics Import Compliance Free-Trade Agreements Foreign Trade Zones (FTZ) Security

25. Import Compliance Focused Assessments Increased Audits Smuggling & Illegal Transshipments –Importers must take steps to verify origin –Detentions & seizures have increased

26. FTZ – Free Trade Zone Goods outside Customs Territory of US Tariff shifts possible Delays duty payment Export without drawback headaches Fix problematic goods Reduce MPF

27. Conclusion Importing is extremely complex –Regulated by Customs & other agencies –Easy to make mistakes –Importer needs to be compliant Importer’s best friend = Broker/Forwarder

28. Thank You