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Why Harmonized Tariff Schedule is Important?
The Harmonized Tariff Schedule (HTS) came into play on January 1, 1989, thanks to Congress, to streamline the way tariffs were handled. The World Customs Organization (WCO) took charge of putting it into action. Using the Harmonized Commodity Description and Coding System (HS), the WCO assigns codes to different commodities. The HTS builds on this system, creating unique identifiers for each category of goods. This makes it easier for importers to classify shipments and quickly figure out the duties and tariffs that apply, simplifying the whole process.
Why Use Harmonized Tariff Schedule (HTS)?
No matter what shippers prefer, the HTS plays a crucial role in assessing and collecting duties on imports. It builds on the HS system, which is widely used in international trade, to ensure that everyone involved is paying the necessary fees to customs authorities. For instance, while the HTS is mainly focused on U.S. imports, the HS helps accurately assess tariffs and duties on exports. Together, the HTS and HS work to prevent illegal trade activities, making sure everything stays above board.
Why Is HTS Important? – Primary Purpose of HTS
Compliance
Compliance becomes problematic for shippers. Importers who attempt to avoid the HTS face additional inspections, penalties, fines, or other corrective measures. The punishment could involve a ban on importing and an increase in the frequency of audits of the given importer.
Competitive Advantage
The HTS ensures a level playing field for all importers. If a company does not correctly assess the relevant duties, by the HTS, it can import the goods without properly paying the CBP. This is subsequently interpreted as smuggling. The company would then be able to sell goods at significantly lower rates compared to its competitors.
Visibility
In supply chains at a global level, complete visibility and compliance are primary concerns for all involved parties. Moreover, visibility is something that affects the perception of a company by the public. Therefore, a poor perception ultimately results in a company falling out of the public’s favor. Organizations not using the HTS are usually distrusted by the general public, which affects the overall demand for that organization’s products.
Increased Productivity
The HTS also augments the productivity of an importer. The product IDs from the HTS are unique identifiers that make the process of assessing duties and tariffs simpler and quicker. Therefore the importer can then invest more time in transporting the import rather than wait for the assessment by the CBP.
Conclusion
The Harmonized Tariff Schedule is crucial to ensuring that tariffs for American imports are accurately and fairly processed. From ensuring international trade compliance to increasing productivity, the benefits that come with the HTS far outweigh the costs of following it. However, it should be noted that the CBP is the final arbiter in determining the appropriate duty rate for a given consignment of goods; the HTS merely provides a mechanism that simplifies the process. Continue reading What is HS Code?
What is Trade Compliance ?
Defining Trade Compliance
- Cross-border movement of physical goods: customs clearance, tariff classification, duty payment, and country-of-origin documentation.
- Cross-border movement of services, technology, and intellectual property: export controls on software, technical data, and dual-use technology.
- Financial flows associated with international trade: sanctions screening, anti-bribery (FCPA), anti-money laundering (AML), and denied-party checks.
Trade compliance applies whether the business is a small e-commerce seller or a multinational manufacturer. The term emerged in the 1980s and 1990s as US export controls and sanctions regimes expanded under laws like the Export Administration Act (1979) and the International Economic Emergency Powers Act (IEEPA, 1977).
Why Trade Compliance Matters: Penalties and Business Impact
- Civil monetary penalties. Customs misclassification under 19 USC 1592 can reach the domestic value of the goods for negligence (multiples for fraud). Export control violations under the EAR can reach $300,000 or more per violation, and OFAC sanctions violations $250,000 or more per violation.
- Criminal liability. Willful EAR violations carry up to 20 years imprisonment plus $1 million per violation; ITAR violations up to 20 years and $1 million; sanctions violations under IEEPA up to 20 years and $1 million per violation.
- Loss of trade privileges. BIS can place companies on the Denied Persons List, prohibiting US export transactions, and CBP can suspend importer privileges. The financial impact extends well beyond the violation itself.
- Reputational damage and counterparty risk. Violations create lasting reputation issues, since partners, lenders, and customers conduct counterparty compliance reviews, and banking relationships can be lost over sanctions exposure
Who Is Responsible for Trade Compliance?
- Tier 1, Senior Management and Board. Ultimate corporate accountability: approving compliance programs, allocating resources, and signing annual representations on internal controls. Penalty exposure is personal in some violations (FCPA officer liability, ITAR responsible officials).
- Tier 2, Compliance Officers and Trade Teams. Day-to-day program management: developing policies, conducting training, maintaining documentation, managing screenings, and reporting violations. Often dedicated roles at mid-sized and large companies.
- Tier 3, Operational Roles (IOR / EOR / brokers / forwarders). Executing compliance at the transaction level. The IOR is the legally designated entity filing customs entries; the customs broker prepares filings under POA; the freight forwarder arranges transport. The IOR carries customs liability even when work is outsourced. See IOR and EOR responsibilities.
- Tier 4, Front-line Staff (sales/procurement/logistics). Identifying red flags (unusual end-uses, denied-party hits, classification ambiguity) and escalating per policy.
The 7 Domains of Trade Compliance
- Customs Compliance. Import and export customs filings, HS code classification, country-of-origin determination, declared-value accuracy, and customs bond management. Lead agency: CBP. Key regulations: 19 CFR Parts 1-200.
2. Export Controls (Dual-Use). Controls on commercial items with potential military applications, such as electronics, advanced materials, and encryption software. Lead agency: BIS (Department of Commerce). Key regulations: EAR (15 CFR Parts 730-774).
3. Defense Trade Controls. Controls on defense articles, services, and technical data. Lead agency: DDTC (Department of State). Key regulations: ITAR (22 CFR Parts 120-130).
4. Sanctions Compliance. Compliance with country-based sanctions (Russia, Iran, North Korea, Cuba, Syria) and list-based sanctions (SDN List, sectoral sanctions). Lead agency: OFAC (Department of the Treasury). Key regulations: 31 CFR Parts 500-599.
5. Anti-Bribery. Prevention of corrupt payments to foreign officials. Lead agencies: DOJ and SEC. Key regulation: FCPA (15 USC 78dd-1).
6. Forced Labor / Modern Slavery. Prevention of imports made with forced labor. Lead agency: CBP under the UFLPA (Uyghur Forced Labor Prevention Act, effective June 2022), which mandates traceability for inputs from the Xinjiang region of China. The AD/CVD trade remedies explained connect here as a related enforcement area.
7. Free Trade Agreements (FTAs). Compliance with preferential origin rules for duty-free or reduced-duty entry under agreements like USMCA, GSP, CAFTA-DR, and KORUS. Lead agencies: USTR and CBP.
Key US Trade Compliance Regulations at a Glance
| Regulation | Acronym | US Agency | What It Covers |
|---|---|---|---|
| Tariff Act of 1930 (19 USC) | – | CBP | Import customs, classification, valuation, origin, AD/CVD |
| 19 CFR Parts 1-199 | – | CBP | CBP regulations implementing 19 USC |
| Export Administration Regulations | EAR | BIS | Dual-use export controls, ECCNs, Denied Persons List |
| International Traffic in Arms Regs | ITAR | DDTC | Defense articles, USML, defense services |
| Foreign Assets Control Regulations | OFAC | OFAC | Country sanctions, SDN List, sectoral sanctions |
| 31 CFR Parts 500-599 | – | OFAC | Operational rules under OFAC |
| Foreign Corrupt Practices Act | FCPA | DOJ + SEC | Anti-bribery, accounting controls |
| Uyghur Forced Labor Prevention Act | UFLPA | CBP | Rebuttable presumption on Xinjiang-region inputs |
| Intl Emergency Economic Powers Act | IEEPA | Treasury | Emergency sanctions authority |
| Bank Secrecy Act | BSA | FinCEN | AML/KYC for financial transactions |
| Trade Agreements (USMCA, GSP) | – | USTR + CBP | Preferential origin rules, duty reduction |
Other jurisdictions have parallel frameworks: the EU’s Dual-Use Regulation 2021/821, the UK Export Control Order 2008, and similar regimes in Canada, Australia, Japan, and Singapore. US-headquartered companies operating internationally must monitor multiple frameworks simultaneously.
How to Build an Internal Trade Compliance Program
- Management commitment. Senior leadership formally commits to trade compliance, allocates budget, and signs an annual representation. Without management commitment, programs fail.
- Risk assessment. Identify the company’s risk surface: countries shipped to and from, products handled (dual-use, defense, controlled tech), counterparties (sanctioned entities, high-risk geographies), and volume.
- Written policies and procedures. Document procedures for each domain: customs classification methodology, export classification process, sanctions screening, and anti-bribery controls, with version control.
- Training. All employees touching cross-border trade receive role-appropriate training annually. Front-line staff get red-flag training; trade specialists get domain-specific training.
- Recordkeeping. Maintain transaction records for the legally required period: five years for US customs and EAR, longer for ITAR (some records permanently), in an audit-ready file structure.
- Audit and continuous improvement. Run internal audits quarterly or annually and use findings to update procedures. Voluntary self-disclosure of identified violations under BIS, OFAC, or DDTC programs typically reduces penalties by 50% or more. For the customs side, customs clearance services can carry much of the operational load.
GCE's Role in Trade Compliance (And Where Specialists Are Needed)
GCE Logistics specializes in the customs compliance side of trade compliance, particularly for international companies importing into or exporting from multiple countries. We do not provide ITAR, sanctions screening, FCPA, or AML compliance services; those domains typically require specialist legal counsel, compliance software vendors, or specialty consultancies. Being clear about that boundary matters more than claiming to cover everything.
Where GCE helps
- Customs classification and entry filing: HS/HTS classification, CBP entry filings (Form 7501), customs bond coordination, and post-entry adjustments, through GCE customs services.
- Importer and Exporter of Record services: for foreign sellers without local entities, GCE acts as IOR (destination customs) or EOR (origin export filings) across 170+ countries, through its IOR and EOR services.
- Country-of-origin documentation: USMCA, GSP, and FTA-specific origin documentation, including certificates of origin and supplier declarations, aligned with the Incoterms 2020 framework.
- PGA filings: FDA, FCC, USDA, and EPA filings for goods subject to Partner Government Agency oversight.
Specialists Where are needed
- ITAR / defense trade: DDTC-registered legal counsel and ITAR-licensed export consultants.
- OFAC sanctions screening: denied-party screening software and sanctions compliance attorneys.
- FCPA / anti-bribery: white-collar legal counsel and forensic accounting.
- AML / KYC: AML-licensed compliance officers and financial-services compliance software.
Common Trade Compliance Challenges
- Classification accuracy. HS/HTS and ECCN classification errors trigger most CBP and BIS penalties, and a single-digit error can shift duties significantly or move a product between license-exempt and license-required.
- Keeping up with regulatory changes. Sanctions lists update weekly, ECCNs change quarterly, and FTA rules of origin vary by agreement, so companies without dedicated teams struggle to track changes.
- Counterparty screening at scale. Screening every customer, supplier, and bank against OFAC SDN, BIS Denied Persons, and other lists is operationally intensive without automation.
- Documentation discipline. Audit-ready recordkeeping for five-plus years across multiple regimes requires document-management systems and discipline most small and mid-sized businesses lack.
- Cross-border tax and duty optimization. Balancing FTA preferential-origin claims, drawback recovery, and duty deferral requires customs specialism, often outsourced to brokers like GCE Logistics.
Trade Compliance Tools, Software, and Training
- Compliance software categories. Denied-party screening (against OFAC SDN, BIS Denied Persons, EU sanctions), classification automation (HS/HTS lookup, ECCN assignment), customs filing platforms (entry filing, ACE integration), and FTA management (origin determination, certificate generation). Selection should be use-case-driven rather than brand-driven.
- Consulting and audit services. Specialist trade compliance consultancies, customs brokers (like GCE for customs work), law firms (for ITAR, sanctions, FCPA), and compliance auditors, often used in combination since different domains require different expertise.
- Training programs. Industry associations, specialized providers, and online platforms offer trade compliance training. Annual training for staff touching cross-border trade is a recommended best practice and, under some agency expectations, effectively a requirement.
Building a Compliance Program? GCE Covers the Customs Side
Frequently Asked Questions
What is trade compliance in simple terms?
Who is responsible for trade compliance in a company?
What is an example of trade compliance?
What are the three types of compliance in trade?
What are the penalties for trade compliance violations?
What is the difference between customs compliance and trade compliance?
How can small businesses ensure trade compliance?
What is UFLPA and does it apply to my business?
What Are Export Control Solutions: Bans, Tariffs, and More?
The Export Control Solutions
Moving into international exports can be a tough task for any small to medium-sized business. Most governments implement policies that impose strict restrictions on overseas goods, which can make trade prohibitively expensive or even impossible. In 2015, an approximate $1.3 trillion in potential foreign exports to the US was disqualified due to regulatory requirements.
Understanding and navigating these barriers is vital to ensure the success of your export enterprise. Here’s a brief rundown of some obstacles you can expect.
Tariffs
In basic terms, tariffs are a tax on imported goods; these are levied to limit the amount of foreign products in the market, thus they act as a form of protection for domestic suppliers.
Quotas
Similar to tariffs, quotas limit the amount of goods that can be exported into a country to reduce the competition faced by local businesses. In effect, these should increase employment and give struggling local industries a chance to grow.
Subsidies
By subsidizing, local production governments can provide domestic manufacturers with a competitive advantage that allows them to sell their goods at lower rates.
Voluntary Export Restraints (VER)
These are agreements between exporting and importing countries. Usually, these place a limit on the number of goods that can be shipped within a period. While these can provide an obstacle to trade, they do offer exporting businesses an opportunity to increase prices and gain revenue, especially if they’re shipping a unique product.
Burdensome Regulations
These are legal barriers erected to control the quality and safety of imported goods. They can include certification or testing requirements specific to foreign exporters, complicated customs procedures, and specific standards regulating pollution, manufacturing materials, and build quality.
Overcoming Trade Barriers
In an increasingly global world, tariffs are slowly becoming a thing of the past; as barriers to trade and investment lessen, transport costs reduce and new technologies enable a constant and easy flow of communication. More and more businesses are looking worldwide to source raw materials, components, services, and finished goods. However, it is still essential for your business to conduct diligent research to identify financial and non-financial obstacles that could severely affect the feasibility of your exports. These risks must be factored in at the planning stage so that they can be mitigated. Make sure that expected returns outweigh the costs of doing business with your chosen foreign market.
Strategies for Tariffs and Duties
One method many firms use to gain a foothold in attractive markets is establishing a local presence. You may establish an affiliate in the local country that can effectively act as a branch of your enterprise without facing any of the export restrictions. Alternatively, you may form a partnership with an already established business in industries where governments heavily control foreign interference.
Of course, various countries have different rules regarding foreign business presence, which may make it unfeasible to overcome tariffs. In these cases, compliance is the best way to go. Adjust prices before you enter a market and ensure you have all necessary licenses and certifications.
Work With an EOR
When faced with complex regulations and other non-tariff barriers, working with an EOR can offer expertise with local customs and procedures, drastically speeding up the clearance process. They will take care of any import details, obtain all necessary permits, and handle the payment of any relevant duties. They can also offer some logistical support helping to arrange warehousing and distribution facilities for your benefit.
3PL Communication Best Practices: A Guide for E-commerce Operations Teams
Why Communication Quality Drives 3PL Performance
A 3PL (third-party logistics provider) handles warehousing, inventory, picking, packing, and shipping on behalf of a shipper, and the quality of that relationship rests almost entirely on communication. Poor communication leads to inventory mismatches, missed carrier cut-offs, slow exception handling, and customer-facing delivery failures- problems that rarely stem from the 3PL’s capability and almost always from the flow of information between the two sides. It helps to know the terminology too: a 3PL executes fulfillment, while a 4PL acts as a single point of contact managing the whole supply chain on your behalf. For a fuller view of the landscape, see types of logistics providers.
Set Clear Service-Level Agreements (SLAs) Up Front
SLAs translate vague expectations into measurable commitments. The strongest 3PL relationships start with written SLAs covering response time, accuracy, escalation, and reporting:
- Response-time SLAs. Define maximum response times for standard queries (typically 2 to 4 hours), escalations (1 hour), and emergencies (15 to 30 minutes).
- Order-accuracy commitments. A minimum of 99.5% pick accuracy and 99% inventory accuracy are standard 3PL benchmarks.
- On-time-in-full (OTIF) targets. Typically, 95% to 98% for e-commerce orders.
- Reporting cadence. Daily inventory snapshots, weekly performance summaries, and monthly business reviews.
- Escalation contacts. Named individuals, not generic inboxes, at three levels: day-to-day operations, account management, and executive escalation.
- Exception handling. A defined process for stockouts, damages, returns, and shipment failures, including who pays and who notifies the end customer.
Effective 3PL SLAs include each of these elements in writing. Most 3PLs provide a template; brands should review it carefully and add custom clauses for peak season, brand-specific packaging, and category-specific rules.
Establish the Right Communication Channels
- Operational tickets (the system of record)
- Real-time chat (Slack, Teams, or the 3PL portal)
- Recurring meetings (weekly or biweekly)
- Email (escalation and contractual only).
Integrate Technology for Real-Time Visibility
Real-time visibility removes most of the communication burden by replacing requests for information with self-service access. Four integration categories matter most:
OMS-to-WMS integration
EDI or API connections
Carrier tracking and ASN
Dashboards and self-service reporting
Set a Meeting Cadence That Matches the Relationship
| Meeting Type | Cadence | Participants | Purpose |
|---|---|---|---|
| Operational stand-up | Daily (5-10 min) | Brand ops + 3PL ops lead | Review yesterday’s exceptions and today’s priorities |
| Performance review | Weekly (30 min) | Brand ops + 3PL account manager | Review KPIs, open tickets, and escalations |
| Quarterly business review | Quarterly (90 min) | Brand + 3PL leadership | Contract performance, upcoming launches, peak planning |
| Peak-season prep | Annually (Q3) | All key stakeholders | Capacity forecasting, escalation paths, hotline staffing |
Track the Right KPIs, and Share Them Openly
- Order-accuracy rate. The share of orders shipped with correct items, quantities, and addresses (target 99.5% or higher).
- On-time-in-full (OTIF). The share of orders shipped on time with all items present (target 95% to 98%).
- Inventory accuracy. The share of SKU counts matching system records at cycle counts (target 99% or higher).
- Response time to queries. Average time from ticket open to first response (target per SLA).
- Damage rate. The share of orders arriving damaged (target under 0.5%).
- First-contact resolution. The share of customer-service tickets resolved without escalation (target 80% or higher).
Address Data Security in 3PL Information Exchange
Brands share customer data, order details, and inventory information with 3PLs daily, and security gaps in that exchange create real customer-trust and regulatory risk:
- Encrypt data in transit. Confirm all API and EDI connections use TLS encryption, and avoid sharing customer data via unencrypted email or chat.
- Define data retention. Agree how long the 3PL keeps customer addresses, order details, and personal data after fulfillment. Most brands set this at 12 to 24 months.
- Verify compliance. For brands selling into the EU, confirm GDPR compliance; for US healthcare or financial products, confirm the relevant standards.
- Limit access. Request that 3PL staff access customer data only when handling a specific order, and audit access logs quarterly.
Managing Communication With Multiple 3PL Partners
- Single source of truth. Consolidate inventory and order data into one OMS so each 3PL is not operating in isolation.
- Standardized SLAs. Apply the same SLA template across all 3PLs to enable apples-to-apples performance comparison.
- Unified communication tooling. Use one ticketing system or workflow tool across all 3PLs rather than each provider’s native portal.
- Cross-3PL escalation policy. Define which 3PL handles which order type and what happens when overflow needs to shift.
- Quarterly partner reviews. Bring all 3PL account managers into a single quarterly review to surface cross-partner issues and benchmark performance.
Resolving Communication Breakdowns
Even strong 3PL relationships hit communication breakdowns: missed cut-offs, delayed responses, recurring inventory mismatches. These four steps resolve most issues before contract action is needed:
1. Document the pattern
2. Escalate within the relationship
3. Agree a 30-60-90 day improvement plan
4. Escalate to leadership only if the plan fails
Coordinating 3PL Communication for Cross-Border Shipments
- Customs documentation handoff. The 3PL ships from the warehouse with a commercial invoice and packing list. The freight forwarder or IOR must receive these before the shipment reaches the border, not when it lands. Build the handoff into the SLA, and keep the key freight documents aligned across both parties.
- HS code consistency. Both parties must use the same HS classification on every shipment. Mismatches trigger customs holds.
- Status synchronization. International shipments generate status events from both the 3PL (shipped, manifested) and the forwarder or IOR (cleared customs, delivered). Brands need a single view of both. Most 3PLs do not surface forwarder data and most forwarders do not surface 3PL data, so closing that gap is one of the biggest cross-border communication wins. IOR coordination services exist specifically to bridge it.
🌐 When the Communication Gap Crosses Borders
For brands whose 3PL communication challenge extends across borders, GCE Logistics coordinates international freight, customs, and Importer of Record processes alongside your domestic 3PL, bridging the visibility gap that causes most international shipping failures. With 25+ years coordinating multi-party international shipments, our team slots in where your 3PL’s reach ends.
Frequently Asked Questions
What are the most important elements of a 3PL communication strategy?
How do I resolve a communication breakdown with my 3PL?
How do large companies manage communication with multiple 3PL partners?
How does communication differ for international or cross-border 3PL shipments?
What software platforms enhance communication with 3PL providers?
What KPIs measure 3PL communication performance?
How do I implement automated communication workflows with my 3PL?
Transport Management Systems: Domestic and Global Solutions
What are Transport Management Systems?
Transport Management Systems (TMS) are software that links a company’s Order Management System (OMS) with its Distribution Center (DC).
A TMS becomes a central hub of communication for the transport aspect of an organization’s supply chain. A TMS, therefore, facilitates a three-way interaction between the carrier, shipper, and ultimately, the customer. Conventional TMS systems offer modules for load optimization, yard management, carrier management, order visibility, advanced shipping, freight payment, audit, route planning, execution, and optimization.
To derive the maximum benefit from a TMS program, an organization should be able to meet the goals mentioned below:
- Cost efficiencies via optimized planning of routes, load optimization, and carrier selection
- Improved accountability via increased visibility of the transport chain
- Broader flexibility to accommodate alterations in delivery plans
- Completion of fundamental execution requirements of the supply chain
Challenges that shippers face in the present economic environment
In today’s business landscape, managing domestic and global transportation within a unified system is essential for an efficient and integrated supply chain. To this day, businesses rely on manual processes or use multiple systems to manage their freight. This leaves little to no room for evaluating performance or service quality. Other businesses use hosted legacy transportation management systems. Hosted transport management systems lack flexibility and don’t offer a comprehensive view of the supply chain. Without established metrics or best practices, businesses struggle to reduce transportation costs and improve service quality.
Effective international shipment planning requires shippers to manage sailing schedules, trade compliance, bookings, and tracking of imports and exports. We recommend reading Global Trade Management.
Using Transport Management Systems for managing global and domestic freight
One option that shippers need to consider is Transport Management Systems that are available as Software-as-a-Service (SaaS) and offer global and domestic functionality. Software designed for global logistics should ideally enable businesses to effectively manage all forms of transportation (domestic or global) under a single platform with a unified workflow. The entire supply chain should be fully visible and there should be direct communication between the carriers and shippers.
If shippers can deploy a global TMS, they will have an all-inclusive solution for managing domestic freight at a port-to-port level, which will have a direct impact on the company’s bottom line. Automated processes, streamlined communications, and a unified workflow among all supply chain partners enhance efficiency and provide greater visibility into payments and related discrepancies before they impact finances.
Technology designed for global transportation can significantly help in bridging the gap for companies with multiple divisions as they enable logistics management on a global and domestic scale within a single system.
Learn More about our IOR and Freight Services to improve your global transportation.
Explore further by reading Countervailing Duty
How to Make Your Region a Logistics Hotspot
How can a region transform into a hotspot for logistics? Southern Arizona serves as an excellent example of such a scenario. As a result of its transformation over the last ten years, the region contributes $18.7 billion to the economy. The area has been revitalized, its population is growing and employment has been created for thousands of people.
The success of one of the most rapidly growing regions of America can be linked to the fact that it has been able to successfully market its strengths in supply chain, to major logistics companies. The area has an extremely reliable workforce, well-developed infrastructure, and is a prime location. Therefore, in recent years, some of the biggest distributors (Target, Tractor Supply Company, HomeGoods), have been drawn to the region.
How To Hotspot Your Logistics
Workforce development
Any region that is a hotspot for logistics shares the common feature of having a skilled workforce. Consequently, with a significant portion of the US population approaching retirement, companies are increasingly targeting regions with a young and skilled pool of employees for expansion.
Taking the example of Southern Arizona, officials collaborated with the University of Arizona and Pima Community College to impart valuable business skill sets to students numbering in thousands. This makes promoting the area to companies easy for officials who are responsible for its economic development. A skilled workforce would be ready to work for the companies that would want to expand there.
Location
Any region that has access to the larger markets of the country immediately becomes an attractive location for logistics. Such is the case with Tuscon. Companies prefer establishing their distribution centers at such locations because they can conserve their resources to reach their customers. Logistics hotspots need to be near big metropolitan areas to appeal to large distribution chains and suppliers.
Arizona’s political, social, and business ties with Mexico, grant the region a sizeable advantage in terms of the access it permits to the Mexican market. This results in the creation of new business opportunities and an expanded reach for supply chain centers. This in turn promotes trade between Mexico and the US, and balances export and import levels.
Infrastructure
A functional and well-maintained infrastructure is necessary for any transportation and logistics company to be effective. One of the crucial factors responsible for transforming Southern Arizona into a hotspot for logistics was the Port of Tuscon, an intermodal rail system. It offers a range of transportation options via rail within the Southwest.
Tuscon’s proximity to deep water ports on the West Coast is attractive for companies that conduct business at a global level.
Highlighting assets
South Arizona has also successfully been able to focus on and develop the assets that enable logistics functionality. Infrastructure, workforce, and location are all strengths that the region has successfully leveraged.
Learn More about our Logistics Solutions
For more in-depth information, read 6 Tips To Save Costs When Importing or Exporting Goods
How IoT Can Boost Transportation Productivity?
Internet Of Things IOT and Transportation
Methods of conducting business have evolved rapidly within the last two decades. Advancements in technology have revolutionized all the various aspects of conducting business. Production and subsequent transportation, the key aspects of any business, have also undergone a revolution in this regard. Integrating new technologies boosts production volume and efficiency, ultimately improving the bottom line. The rapid increase in connectivity has enabled innumerable businesses to improve their process flows greatly.
Control Of The Supply Chain Through IoT
Businesses in logistics seek full supply chain visibility to make informed decisions and benefit all stakeholders. This further enables saving inefficiency costs and improving your profit margins.
Full Supply Chain Visibility
How is this possible with the Internet of Things IoT? There is a wealth of data that can be assimilated and analyzed within the existing supply chain of your business. This ranges from all your carriers, employees, vendors, and customers. Whether acquiring the data is done manually or through integrating systems, the effort is worth the insights that can be acquired.
Increase Supply Chain Efficiency
Fleet management in Logistics and Transportation is essential for the efficient maintenance of the vehicles in your fleet, along with their scheduling, daily usage, and the planning of routes. These are areas where processes can be optimized to lower costs and subsequently raise profit margins. One of the best ways to increase efficiency and effectiveness is to reduce the downtime of your fleet.
When used properly, a route planner can significantly enhance the visibility of your operations. It allows you to plan routes, providing you with known distances and durations. Consequently, both drivers and customers can stay informed about the timing of visits.
Checking in manually, paper copies, and receipts are all things of the past now. Hand-held scanners, mobile computers, and RFID-enabled systems allow for deliveries to be speeded up and generate data in real-time. This enables greater visibility for all the activity that is taking place at your ground operations. Using the leverage of this technology and maintaining the connectivity between you, your drivers and your fleet greatly enhances the efficiency of your operations.
Utilizing new technologies and integrating them with your existing business models is crucial for cashing in on the efficiencies they enable for your business. Advancements in connectivity allow your business to expand its reach into other geographical areas easily. The new technologies are the road to the future of conducting business. The Internet of Things (IoT) has greatly enhanced business connectivity and integration. As technology evolves rapidly, IoT represents just the start of a transformative business revolution.
Explore further by checking out these related articles
The Secrets to a Successful Global Trade Management Program
What is Global Trade Management?
Global Trade Management (GTM) optimizes the entire lifecycle of global trade, from order placement to logistics and final settlement. This is done to increase the efficiency of operations and subsequent cash flows. Companies that follow the philosophy of global trade as a cross-functional and system-spanning process can derive vast benefits from GTM practices. However, GTM practices involve crossing the traditional function-based silos within companies. As a result, companies may have to endure a period of poor performance that may span over years before they can fully derive the benefits of implementing GTM solutions.
Conventional GTM systems focus on enabling organizations to comply with innumerable rules that govern how products and components cross national boundaries. While trade compliance is still the primary focus, several GTM system vendors are expanding the capabilities of their solutions. For example, some systems feature an expanded concept of compliance that checks whether products were produced, packaged, and transported according to user-defined parameters.
Other systems are adding functionality that allows for the coordination of the tangible flow of goods, grants total visibility for products and inventory, checks if the specific materials are subject to preferential treatment under trade agreements, and facilitates the processes of settlement.
Key Components of the ideal GTM solution
GTM is challenging for many organizations because it requires enterprise-wide implementation. In today’s outsourced and decentralized business landscape, gathering the necessary expertise and resources for a global trade management program is difficult.
The success of a global trade management program lies in its comprehensiveness. The ideal global trade management program needs to accommodate sourcing, transportation, purchasing, compliance, sales, and expertise in accounting. Conduct and formally document a thorough analysis of an organization’s export and import procedures. The procedures that are documented will require each division to develop processes and procedures that revolve around the established goals. Only then will the organization be able to develop and implement a global trade management program that is comprehensive? We recommend reading Improve Domestic and Global Transportation With TMS
Goals for implementing GTM programs
The essential goals of any global trade management program have to include:
- Compliance according to the regulations set for each commodity
- Cost efficiency in the movement of all products
- High benchmarks for delivery on time
- Striving to meet all expectations of the customer
Moreover, every step has to be traceable and checked to enable providing flawless customer service.
Managing Change
Organizations need to develop partnerships with supply chain partners who are proactive. This is the basis on which change can be managed. Proactive partners will notify you of any changes in cost variables that could significantly affect your budget, or in compliance standards, geo-political setting, or the geo-economic setting that will disrupt the existing supply chain. Given today’s complex world, there is a multitude of variables that have the potential to affect your business. By extension, it becomes imperative for your supply chain partner to consistently analyze the necessary.
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ERP vs SCM Best For Global Supply Chain Management
Since their inception, ERP systems have been crucial for accounting, governance, HR, and finance. With time, the functionality of ERP systems extended to supply chain operations in manufacturing concerns as well.
However, the concerns of international trade and logistics are extremely varied, to say the least. To handle international logistics, ERP systems must efficiently manage complex requirements, particularly in global supply chain control and execution. This compromise would ironically be the result of expanding the functionality of ERP systems.
ERP systems: advantages and disadvantages
To keep pace with dedicated SCM software, ERP systems are beset with the twin problems of mobility and integration. ERP systems are great for systemizing the workflow within the warehouses of a single company, but cannot keep up once there is a shift of focus towards other processes that are of greater complexity. One of the processes is the involvement of third or fourth parties across different sites and systems, managing multiple vendors, and increased variability of material handling systems.
The integration of systems for facilitating the exchange of data and collaboration between partners of different enterprises is a necessity in global supply chain management. The problem is that most ERP systems simply do not have all the necessary data to be considered an effective solution. As a result, ERP providers have created more modules to accommodate such requirements. However, for most companies, the ERP system is the core on which the IT infrastructure of the company is based. As a result, it contains sensitive information, which is the reason why businesses wouldn’t want to permit “outsider” access.
The processes of global trade present another dilemma for ERP systems. We can use the example of customs processes to illustrate this. The regulatory requirements for customs change constantly. ERP systems cannot handle constant updating which is a necessity to conform with compliance policies.
SCM software
Dedicated SCM software programs are not designed to be as all-inclusive as ERP software. Their solution focuses on key areas like customs clearance, transport management, and collaborative supply chains. This is the advantage that dedicated solutions like these present. However, there needs to be a platform that facilitates all parts of the supply chain. Solutions dedicated to individual areas become restrictive by the very fact of their specialization, and hence cannot deliver an integrative benefit.
Conclusion
Therefore, deciding between an ERP system or SCM system, or both, depends on a company’s individual requirements and operational processes. A company needs to be especially careful if its requirements are highly complex, and should ideally adopt a solution that incorporates both systems.
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Understanding the Language of Incoterms
Understanding Incoterms or International Commercial Terms is crucial to understanding the mechanics of international trade. Incoterms are essentially:
The terms of the transaction that an international buyer and seller, have mutually agreed upon. After an understanding has been established, all the tasks, risks, and costs associated with the transaction, are assigned one by one to the buyer and seller respectively. The Incoterms also clarify the time, when the risk and costs being incurred by the seller, are assigned to the buyer.
The list of Incoterms is extensive. This article covers the most commonly used terms, most of which apply to all transport modes, though a few are specific to certain modes.
Incoterm EXW – Ex-Works or Ex-Warehouse
“Ex Works” means the seller delivers goods at their premises or another agreed location. The seller isn’t responsible for export clearance or arranging transport.
Incoterm FCA – Free Carrier
The term implies a third party designated as the “carrier”, who is selected by the buyer. The seller has to transport the goods to the carrier, at either the premises of the seller or a mutually agreed upon destination. Clarity is advised regarding the destination as once the delivery is complete, the risk is now borne by the buyer.
Incoterm CPT – Carriage Paid To
The terms are similar to FCA, but the seller also covers costs for transporting the goods to the agreed delivery location.
Incoterm CIP – Carriage And Insurance Paid To
The terms are like CPT, but the seller must also arrange insurance for the goods.
Incoterm DAT – Delivered At Terminal
In DAT, delivery is complete when the seller delivers the goods to a terminal, port, or storage space. The seller bears all risks during transport and unloading.
Incoterm DAP – Delivered At Place
The terms are the same as DAT, except that the delivery is completed once the goods have arrived at the agreed-upon destination. Unloading, in this case, is not the responsibility of the seller. The risks of transporting the goods are borne by the seller.
Read the Differences Between DAP and DAT
Incoterm DDP – Delivered Duty Paid
In DDP, delivery is complete when goods are cleared by customs and ready for unloading in the buyer’s country. The seller covers all risks and costs, including transport, export/import clearance, and customs formalities. continue reading the Meaning of the Incoterm DDP
Incoterm FAS – Free Alongside Ship
In FAS, delivery is considered complete when the seller has delivered the goods at the delivery vessel, which is selected by the buyer. Once the goods have been placed on the vessel, all associated risks are transferred to the buyer.
If you want to get more explanations about Incoterms, you can contact our commercial representative.
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