The Total Landed Costs of Offshoring in Marilyn Gettinger, C.P.M., CPSM

Transcription

1 The Total Landed Costs of Offshoring in 2013 Presenter: Marilyn Gettinger, C.P.M., CPSM Marilyn Gettinger, C.P.M., CPSM Credentials C.P.M., CPSM, MBA Customized training and consulting in supply chain management since 1994 Course developer and instructor for SCM certificate programs at Bergen, Union County, and Middlesex County Colleges as well as at William Paterson University International Trade and Importing at Baruch University 2 1

2 Presentation Objectives Review of the importing process Identification of information resources Import cost factors Total landed cost model Impact of regulations Total landed cost reduction opportunities 3 What Will We Talk About? Worth the work Definitions Challenges Resources Import regulations TLC model framework Keeping up with events 4 2

3 Worth the Work Poor return on investment Net losses Quality Issues Disruptions Incorrect pricing models Return to onshoring or insourcing 5 Definitions International sourcing Global sourcing Offshoring Near shoring Canada and Mexico Total landed cost or total delivered cost Total cost of ownership Trade and other U.S. agreements 6 3

4 Challenges Data difficult to gather Time constraints preclude adequate analysis Lack of resources to maintain cost inputs Silo mentality Focus on low wages rather TLC s Push from senior management 7 Resources Code of federal regulations Harmonized tariff schedule of the United States Customs Border and Protection Agency International Commercial Terms

5 Import Regulations Labeling and marking requirements Import licensing, registrations, permits 24-hour rule Import security filing 10+2 Container screening initiative Certifications Lacey Act Wood fumigation Seals 9 Getting Started Questions Prohibited Items Restricted Items Fish, Wildlife Meats, Livestock, Poultry Fish, Wildlife Food Plants and Seeds License or Registration Agency Identification 40 Possible Agencies FDA, USDA, EPA Markings and Labeling Made in America EmbargoedCountry Quotas Country of Origin Code of Federal Registration OFAC The Office of Foreign Assets Control Absolute Tariff Rate Title 19 Federal Trade Commission Cuba, Iran, Sudan Code of Federal Registration 10 5

6 Import Flow IMPORTER/SHIPPER Purchase Order CONSOLIDATOR / NVOCC Freight Receipt Master & House Bills of Lading Local/Ocean Transportation* Ship Manifest* CUSTOMS BROKER Import Entry Duty Payment Cargo Clearance Local Transportation* FACTORY Production In-country Transportation* FOREIGN PORTS/ TERMINAL OPERATORS Longshore Labor U.S. PORTS/ TERMINAL OPERATORS Longshore Labor FREIGHT FORWARDER Document Packet Original Bill of Lading (OBL) In-country/Ocean Transportation* OCEAN CARRIER Vessel Availability Port Landside Operations Ship Manifest TRUCKING COMPANIES/RAIL LINES Local Distribution FINAL DESTINATION 11 Getting Started - Pre-Transaction Costs Manpower Research Country study Onsite visit Overhead placement Cost analysis evaluation 12 6

7 Payment Terms Prepayment Deposit Letter of credit 2-3% of the value of the LOC Confirming bank Local bank Draft 13 Currency Fluctuations Agreement in Euros = 1,000, = $1.00 = $ 666, = $1.00 = $1,000, = $1.00 = $ 500, Agreement in Dollars = $666, = $1.00 = 1,000, = $1.00 = 666, = $1.00 = 1,

8 "E" Departure EXW Ex-Works Service Incoterms 2010 Responsibility Matrix - Obligations of Importer (Buyer) and Exporter (Seller) "F" "C" "D" Main Carriage Unpaid Main Carriage Paid Arrival FCA FAS FOB CFR CIF CPT CIP DAP DAT DDP Free Free Free Cost of Cost Carriage Carriage Delivered Delivered Delivered Carrier Alongside Onboard Goods & Insurance Paid To Insurance At Place At Terminal Duty Paid Ship (ocean Freight & Freight Paid To (ocean only) (ocean (ocean only) only) only) OBLIGATIONS AND CHARGES Warehouse Services Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Export Packing Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading at Point of Origin Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Inland Freight Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Port Receiving Charges Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Forwarder Fees Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Ocean/Air Freight Charges in Foreign Port; Foreign Airport Custom Clearance Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Customs Duties Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Delivery Charges to Final Destination Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller INCOterms Ask the right questions: What does that include? Documentation? Insurance? Carriage? Port fees? Licensing? Value added taxes? Province taxes? Packaging? Material costs? 16 8

9 Documentation Bill of lading Commercial invoice Customs invoice Entry Summary (7501) Immediate Entry Summary (3461) Proformainvoice Letter of credit Country of origin Entry Manifest 7533 Packing list Certificates Permits Customs bond Insurance document 17 Total Landed Cost Factors Unit Price Country of Origin Letter of credit Fumigation Seal closure Province taxes VAT Value added tax Inland transportation Certifications Export documents Importer security filing (10+2) Container screening QC inspection Shipping loading 9

10 Total Landed Cost In Transit Country of Destination Ocean freight Packaging Maritime insurance Ship unloading Port fees Import documentation Customs review $0.21% of value of goods with $25 min and $450 max Harbor maintenance fee 0.125% of the entered value of goods Customs duties Total Landed Cost - Freight forwarder Customs broker fees Drayage to location Customs bond $45/$1000 with $45 minimum Container screening $ Pipeline inventory Unit Price x.0075/week carrying cost x lead time in weeks Ex. $100 x.0075 x 6 weeks = $100 + $4.50 = $

11 Customs Broker Fees Customs Entry Form (7501) $ In-bond entry $ Routine messenger $ Additional classifications $ 7.50 Additional invoices or BOL $ each FDA, USDA, other agency $ each 21 Cost Considerations Offshoring up to 25% overall savings Offshoring Actual savings realized 4-6% Total cost of ownership supply chain costs 3-5% locally to increase to 35% globally 22 11

12 Electronic Transfer U.S. Custom s Automated Commercial System (ACS) Automated Commercial Environment (ACE) FAST Free and Secure Trade Automated Broker Interface (ABI) 23 Importer Security Filing (ISF) (10+2) January, 2010 Electronic filing 24 hours prior to loading container Up to $85 per transaction 24 12

13 Importer Security Filing 10 Elements Importer of record Consignee number Ship to party Manufacturer/ Supplier name/address Country of origin Commodity HTS-6 Container stuffing location Consolidator (Stuffer) name and address Importer Security Filing - +2 ASAP, but NLT 24 hours to arrival Foreign port of lading Place of delivery +2 Vessel stow plan Container status message data NLT 48 hours after departure 26 13

14 Customs-Trade Partnership Against Terrorism (C-TPAT) A voluntary certification program Secure international import processes CPB approval Average implementation costs $38,471 Average maintenance costs Security personnel $40,441 Salaries and Expenses of personnel $28, Keeping Up With Events Customs brokers Smart containers Sustainability and green initiatives Emerging seaports 28 14

15 Keeping Up With Events Intermodal growth Bunker fuel Harbor maintenance tax Prince Rupert Seaport 29 Keeping Up With Events The big ships Natural gas The Panama Canal Inland ports 15

16 Keeping Up With Events Food & Drug Administration Chassis Transloading Global trade management Keeping Up With Events Drayage trucking Foreign trade zones Duty drawback Bonded warehouses Future regulations 16

17 Thank you For Learning With Me Today For additional questions, please contact me Marilyn Gettinger at: Survey 17