As with many decisions, a balanced, well-thought-out approach lies precariously between two dangerous, yet common extremes. Especially when expanding to international customers and suppliers, managers are exposed to two prevailing errors: over-conservatism and blind-faith liberalism.
Because many managers have little experience with foreign countries beyond ethnic meals and vacations in neighboring countries, they tend to respond to international opportunities with a lack of information that leads to fear or over-confidence. To avoid this, a manager must be able to identify steps that will prepare the organization to profitably take advantage of the opportunity to go global.
The reality is that international parcel shipping is the same as domestic parcel shipping with a few extra considerations. You still fill out an air bill, the service provider still picks it up at your dock and the customer still signs for the package when it arrives. However, extra considerations include:
There are different players to consider. While Federal Express is a recognizable name within US households, other providers are better known in many worldwide locations.
You fill out a commercial invoice that is used by the customs official in the receiving country to clear customs and, if any of the items are valued at over $2,500, a US Shippers Export Declaration is then required. Both documents are available from your carrier.
International sales are normally paid through letters of credit as opposed to the invoicing approach used in the
Next day air may take longer. In most countries (even ones as large as the
Preparation will go a long way in simplifying your international parcel shipping. To maximize the success of your efforts to distribute internationally, consider the following steps: know the players; design your distribution network; select the appropriate service provider and negotiate for the services you need; and consider some time-tested trans-border shipping tips.
Know the players
The hottest news in international parcel shipping is, believe it or not, about the post office; not the United States Postal Service (USPS), but Deutsche Post AG, the German Post Office. The Deutsche Post Office has aggressively grown its position and has recently made alliances with other countries, as well as several US companies to facilitate delivery of packages of all sizes throughout the world. In addition to this company, consider the following service providers: DHL services over 225 countries; Federal Express services over 210 countries; UPS services over 200 countries; the U.S. Postal Service delivers to more than 220 countries; and the Deutsche Post services 227.
Design your distribution network
The same package shipped to a country from different origination points will result in different duty and freight charges. One early step in the international shipping design process is to consider the best point of origin for delivery to your customers. For example, if you are drop shipping an item directly from a supplier to the customer, compare your suppliers based on the landed cost, not just price. Not only can the shipping cost vary from lane to lane, but the duty charges fluctuate based on the country of origin. This can be a complex step. It should only be undertaken if you ship a significant amount internationally and if you have options as to the shipments point of origin.
Select the appropriate service provider and negotiate for the services you need
In my role as a consultant, I am in the position to review the shipping costs for many companies. Time and time again, I see companies of similar sizes paying vastly different amounts for a given service. This can be true for domestic or international shipping. In order to negotiate the best deal for your company, you must first identify the services you really need. Specific to international parcel shipping, consider the following: Will I need real time tracking and tracing? Will I need time-sensitive service with guarantees? Will the carrier handle customs clearance tasks? Will I need assistance in complying with the letter of credit? Will I be shipping hazardous materials?
The answers to these questions will affect your options in considering which service providers and levels to utilize. With these answers and an estimation of your shipping volumes, you can ask the various service providers for a proposal. Taking this step up front will provide additional leverage to negotiate preferential treatment and will simplify your approach. As you complete this step, you will be able to set up one relationship to handle your international parcel shipments, allowing you to build a system of procedures to minimize paperwork, hassles, costs and headaches.
Time-tested trans-border shipping tips
International shipping has been around for a while, so we are fortunate to be able to learn from the experiences of others. The following are some tips you might consider:
Package each shipment to fall within pre-determined density ranges to avoid dim weight surcharges.
Clearly mark the freight. Remember many workers receiving the freight may not speak English and will be comparing characters to match shipments and addresses.
Always include your phone number and recipients number on the various forms. Questions arise frequently and could delay shipment if not addressed quickly.
Avoid identifying package contents. This will help avoid theft.
Never ship cash or jewelry.
Never incorrectly label hazardous materials.
Make sure your packaging is sufficient for the conditions in the receiving country. For example, if you ship a product to
Triple check the letter of credit to make sure your shipment complies with the conditions it contains.
Try to simplify the process by matching each individual parcel with self-contained paperwork. This will help avoid customs problems if the boxes get separated.
When deciding between air freight and ocean freight, include the inventory carrying cost in the equation. It is easy to dismiss air freight because it is more expensive than ocean freight. However, for some more expensive items, the extra cost of carrying the inventory for the additional days erodes any savings gained.
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Going global can provide many benefits. Not only can the risks of doing so be mitigated through a well-thought-out logistics plan, but that same plan can create business opportunities and additional sales. Talk to the service providers that have the expertise and experience to eliminate the fear or over-confidence that too-often goes with uncharted territory. So, take advantage of their expertise and capabilities and go global!
Tim Van Mieghem is a founder of The ProAction Group and the author of Implementing Supplier Partnerships. You can reach Tim at 312-726-6111, e-mail firstname.lastname@example.org or visit www.proactiongroup.com.