I N D U S T R Y   R O U N D U P

 C O M P A N Y   C O R N E R

Time to review your purchasing policies?

For first time purchases, it’s not unusual for the seller to control the freight – and pass on the costs to the buyer. The same arrangement can continue for follow-up shipments, particularly if the first shipment went as planned. But this may not be in the interest of the buyer for a variety of reasons.

First, the seller will be less concerned about cost if it is the buyer who has to pay the final bill. For example, let’s assume you are the buyer and you need a low-cost, “no-frills” delivery in four weeks. If you controlled the freight, you could shop the market for the most economical four-week option. Your seller, however, does not have the same objective and, randomly or purposely, chooses a premium, two-week shipment. Your freight arrives – and you get hit with the higher cost of the two-week option.

Now let’s look at another scenario, which – unfortunately – is all too common. You need delivery in six weeks. You get delivery in six weeks. And you also get a bill for a six-week delivery. Except it is not the true cost. It’s the true fee, plus some padding that the seller added. It could be a little. It could be a lot. You just don’t know because the billing process lacks transparency.

We are all interested – and often mandated – to control and minimize costs. So it only makes sense to control and minimize freight costs by taking full control of those freight costs. The seller shouldn’t mind because it is just one less thing to do – and why handle the freight if there is no profit in the work?

Here is something else to consider – insurance. You are motivated to have sufficient coverage, but is the same true for the seller? Could you end up with too much coverage or, worse still, too little? And then there is the risk of errors in the INCOterms, which result in misunderstandings that inevitably lead to additional costs, most often for unwanted services.

“If you have a mature relationship with a seller,” explains Mark Glionna, Vice President - Client Relations for Universal Logistics, “there’s no reason to leave control of the freight with the seller. You are almost always better off controlling the freight yourself because you are motivated to find the best price and terms.”

If you are unsure about how to handle freight forwarding from a foreign market, help is available from Universal’s freight management team. “A lot of companies are exporting for the first time from new markets, such as the Far East,” notes Dave Lychek, Manager - Ocean & Air Services, “and feel they are in no position to manage the freight, because they are unfamiliar with that region’s unique business practices and government regulations. But it really isn’t that difficult if you have the help of one of our freight management consultants. We also offer a Freight ED seminar that our clients have found very helpful.”

Bottom line: taking control of your freight is a proven way to cut costs and reduce transit times.

Learn more by contacting David Lychek, Manager – Ocean & Air Services.

How to use INCOterms

INCOterms are definitions commonly used in international trade documents. Despite their wide usage, many INCOterms are applied incorrectly.

Read on to spot common errors and learn how to use INCOterms properly.

For more information on these and other INCOterms, go to www.iccwbo.org/incoterms/id3045/index.html.

Shipping to/from India?

You may think that it takes some special arrangements to import from or export to India. But that is not the case, says Dave Lychek, Manager –- Ocean & Air Services. “Nothing extraordinary is required,” explains Dave. “Just your basic documents – bill of lading, commercial invoice and a certificate of origin.”

You should also know that India follows ISPM 15 Standards for the importation of wood packaging. Failure to meet this standard means your cargo will be refused entry in either Canada or India.

For imports, the required paperwork includes a Canada Customs Invoice, Commercial Invoice, Form A Declaration of Origin and the Ocean Bill of Lading. Provide the original bill of lading if this is required by the shipper, based on their terms of sale with the consignee, or an ocean waybill (express release).

More information is available on Migra’s Canadian Export Guide.

“Greener” transportation now an option

Want to reduce your environmental footprint by choosing “greener” transportation options? There are more options than you might think – and it may not be long before going green is, to some extent, mandatory.

Transportation companies have long pursued more efficient fuel use because it helps reduce costs and environmental impacts. Now there are growing demands, by both consumers and government, to further reduce the fuel consumption, or environmental footprint, of freight transportation. Here are just a few examples of how the industry is responding.

• CN is acquiring 65 new fuel-efficient, high-horsepower locomotives in 2007 and 2008 as part of a general effort to reduce the company’s greenhouse gas emissions
• The Vancouver Port Authority is incenting vessels to go green by offering better rates to vessel operators that employ emission reduction practices. There are Gold, Silver, and Bronze rates, with the highest rate (Gold) being applied to vessels with the highest emission reduction practices.
• Low sulphuric fuel is being used by an increasing number of steamship lines.

Governments are also considering, or preparing to implement, “go green” initiatives, largely because of the rising tide of concern about global warming. For example, the Canadian Coast Guard is considering using the funds it collects in service fees to reward industry leaders that reach certain environmental benchmarks.

Overseas, the European Union has announced, but not implemented, plans to apply carbon dioxide caps to commercial airlines flying into member country’s air space. The plan has sparked a sharp debate between industry and government over how and where “green taxes” should be applied.

Contact us if you or your company has a mandate to reduce its environmental imprint and wants advice on how to source and use “greener” freight movers. Freight consolidation is a simple, but effective, way to reduce your environmental footprint (and costs). You may have to agree to a slightly longer transit time, but if there is some “wiggle” room in your schedule, there is no downside.

Learn more by contacting David Lychek, Manager - Ocean & Air Services.

Mandatory Electronic Release at all Canadian Ports

Despite plans to implement Mandatory Electronic Release effective October 15, 2007, the Canada Border Services Agency (CBSA) has instead employed a phased, six-month transition period. Thereafter, subject to
some exceptions, paper release packages will no longer be accepted for shipments entering Canada.

Universal Logistics was well prepared for the October 15th deadline – releasing 91.4% of its customs shipments electronically, versus the industry average of 82%.

The right information at the right time

The CBSA requires all relevant information (importer, carrier, driver/crew and conveyance) prior to shipping to make an informed and timely release decision and assess high-risk importers and commodities.

Mandatory EDI is also meant to prepare importers for Phase 3 of the CBSA’s Advance Commercial Information initiative, referred to as ACI and e-Manifest. Earlier this year, the government announced the investment of $396 million for e-Manifest to provide the CBSA with 100% automated risk assessment before the shipments reach the border.

What’s changed?

In the past, drivers presented hard copy documentation to the broker when they arrived at the border. A paper release package was then prepared and processed by Customs while the driver waited at the border. When documentation is submitted electronically in advance of arrival, drivers can be pre-approved without delay.

What to include

The following documents should be provided by the carrier to Universal, prior to arrival:

• Canada Customs Invoice (fully completed, including a complete description of goods along with the Country of Origin and HS Tariff Classification number)
• Commercial invoice
• NAFTA Certificate of Origin (where applicable)
• Packing list
• Bill of Lading
• Carrier’s unique Pre-Arrival Review System (PARS) bar code

Multi-line / multi-page invoices

For shipments with multi-line / multi-page invoices, providing electronic documentation will eliminate the need for the customs broker to re-key information, thereby reducing the risk of human error.

To ensure your shipments are set-up electronically and to avoid potential delays, book your truck freight directly with Universal Logistics by contacting Mark Glionna, Vice President –- Client Relations.

For more information, please contact Brian Rowe, General Manager - Customs Consulting Services.

Final phase of Advance Commercial Information
still a year away

The third (and last) phase of the Advance Commercial Information (ACI) program won't be implemented any time soon and could be at least a year away. This phase, called eManifest, will focus on cargo and conveyance by highway and rail. This is the most complicated of the three phases because it will require the electronic transmission of advance cargo and conveyance information from carriers for all highway and rail shipments.

In addition, electronic transmission of advance secondary data will be required from freight forwarders, and electronic transmission of advance importer data will be required from importers or their brokers.

Phase One, called Marine Mode and implemented in April 2004, focused on marine cargo and conveyance. Phase 2, called Air Mode and implemented in July 2006, focused on air cargo and conveyance.

ACI, created to provide a more effective risk management process for unknown and high-risk shipments, is part of the Canada/US Smart Border initiative.

For more information:

ACI Air: www.cbsa-asfc.gc.ca/prog/aci-ipec/airmode_menu-eng.html
ACI Marine: www.cbsa-asfc.gc.ca/prog/aci-ipec/marmode_menu-eng.html
ACI eManifest: www.cbsa-asfc.gc.ca/prog/manif/menu-eng.html

Adjusting for the lower U.S. dollar

To compensate for the declining value of the U.S. dollar versus most other currencies, steamship lines are imposing a Currency Adjustment Factor (C.A.F.) of up to 15% of the ocean freight charge.

The steamship lines say this is necessary because most of their operating costs, such as port charges, are in foreign currencies, however, their revenue is in U.S. Dollars. So their revenue is reduced while costs remain high.

Learn more by contacting David Lychek, Manager - Ocean & Air Services.

U.S book publishers take
new approach to dual pricing

In response to the rising value of the Canadian dollar versus the U.S. dollar, U.S. publishers are adjusting their dual pricing (presentation of U.S. and Canadian prices).

Many have reduced the difference between the Canadian and U.S. prices. Some publishers say some difference is necessary because distribution costs are higher in Canada.

Pearson airport lowers fees

Landing fees and terminal charges at Toronto Pearson Airport will be reduced as of January 1, 2008. Landing fees will be reduced by 3.1% and terminal charges will be reduced by 4.7%.

“By pricing Toronto Pearson more competitively, we are able to decrease the cost of doing business, which is good for airlines, good for passengers and good for the region,” said Lloyd McCoomb, President of the Greater Toronto Airport Authority (GTAA).

Air Canada was quick to commend the move and suggest further ideas to increase revenue and efficiencies. Montie Brewer, President and CEO of Air Canada, called on federal governments to match this move by reducing rent paid by country’s airports.

“Airports are catalysts for economic growth. Ottawa collects more than $2 billion in rent annually from our country’s airports but it diverts this money into general revenue instead of spending it to encourage the expansion of air services. Ultimately, this is a regressive tax that stifled economic growth", Mr. Brewer argued in his statement.

Learn more by contacting Islay Fairholm, Supervisor – Airfreight Services.

NAFTA Reminder

To avoid penalty, duty is payable on shipments of goods if NAFTA Certificates for 2007 have not been replaced with valid 2008 Certificates.

If you claim preferential treatment without a valid NAFTA Certificate, the shipment is subject to an AMPS (Administrative Monetary Penalty System) transactional penalty of $1,000 for a first infraction and escalating penalties for repeat infractions.

Duty is refundable, penalties are not. If a Certificate is obtained post import, a claim to recover the duties paid may be presented to the Canada Border Services Agency (CBSA) for up to one year after import.

If you are not compliant and don’t have the time to do the necessary follow-up with your vendors and CBSA submissions, take advantage of our NAFTA Management Service.

Learn more by contacting Darren Lair, Customs Consulting Services.

Adding a gift into a cross border shipment headed into the U.S. might seem like a harmless step. But if the gift is not declared and it is found by Customs inspectors, you will be fined and your entire shipment may be seized – a big price to pay for a little mistake.

Be sure to declare all gifts, regardless of value, on export documentation. Gifts containing food products should be avoided as even the smallest bag of candy will render your shipment subject to the advance notice requirements under the U.S. Bioterrorism Act and all rules/restrictions of the U.S. Food and Drug Administration (FDA).

Learn more by contacting Brian Rowe, General Manager – Customs Consulting Services.

Shortage of dock workers could lead to port delays

Cargo handling at major Canadian ports could be delayed if significant numbers of marine industry workers are unable – or unwilling – to meet new security clearance regulations.

The union for marine workers calls the regulations “discriminatory.” Industry representatives say refusal to follow the regulations amounts to an “illegal strike.”

It’s hoped that problems at the ports can be averted by extending the current deadline (December 2007) for implementation of the new regulations.

Learn more by contacting David Lychek, Manager - Ocean & Air Services.

Expanding agent network

Two senior executives of Universal Logistics – Mark Glionna, Vice President - Client Relations and Paul Glionna, Vice President - Operations – travelled to Dublin recently to attend the Annual General Meeting of the Certified Transportation Network (CTN), a worldwide group of international logistics providers.

Universal joined CTN this year to strengthen existing business relationships and to build new associations with people representing like-minded companies around the globe.

“These partnerships are important,” says Mark Glionna, “because they put us in a better position to meet and exceed our clients’ global needs.” No fewer than 200 one-on-one meetings took place at the conference – and Mark and Paul were in the centre of the action.

Learn more by contacting Paul Glionna, Vice President – Operations.

Leading the way

Who is the “go-to” guy when customs brokers want guidance on customs compliance?

That would be Mark Glionna, Vice President - Client Relations for Universal Logistics. At the Annual General Meeting of the Canadian Society of Customs Brokers (CSCB), held October 12-14 in Montreal, Mark gave a workshop on customs compliance, organized to survey existing practices and stimulate discussion on broker responsibilities, the formulation of industry standards, compliance services and contract wording.

Mark’s expertise was further underlined by the announcement of his appointment as a National Director of the CSCB. Also attending the meeting was Michael Glionna, President, Universal Logistics.

Learn more by contacting Mark Glionna, Vice President - Client Relations.

Mark Glionna, Vice President - Client Relations for Universal Logistics (second from left) joins some of the other Board members at the Annual General Meeting of the Canadian Society of Customs Brokers (CSCB), held October 12-14 in Montreal. Mark gave an address on customs compliance (see photo below) and was appointed as a national director of the CSCB.

	Darren Lair – Customs Consulting Services

AT YOUR SERVICE

Darren Lair, formerly with our Niagara Falls office, has rejoined Universal after travelling and teaching in Japan for three years.

Darren is eager to assist you in his new role within our Customs Consulting Services group. Okaerinasai Darren!