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

Opening of new Hong Kong office signals expansion
of Asian services

	Our new office in Hong Kong will be managed by Nick Ng

Here’s proof Universal Logistics is committed to providing all the support you need to ship freight to and from Asia – effective April 1, 2010, we will have an office in Hong Kong.

“This marks the first time we have opened an office outside of Canada,” notes Mark Glionna, Vice President Client Relations. “It’s an important step because we are not satisfied to simply offer an Asian service. We want to offer the same high quality service that has made us so successful in other trade lanes, such as Europe/Canada, and that is only possible with an office in Asia.”

Want to meet with our new representative in Asia?

Operating as Universal Logistics Asia (H.K.) Inc., this office will be managed by Nick Ng. Mr. Ng understands the Asian market and will be able to visit our client’s suppliers and customers in Hong Kong and China. In addition, he will regularly come to Canada to see our Canadian clients. His first visit is planned for May 2010. Call us now (905-882-4880) if you would like to set up a meeting.

Mr. Ng, who brings more than 15 years of industry experience to his new position, will have the following responsibilities:

• Identify shipping options that allow our clients to achieve cost savings and optimize transit times
• Enhance management of client shipments and expedite the resolution of any issues
• Provide recommendations on best shipping solutions and options when transit times are critical
• Manage your shipments while most North American offices are closed
• Provide improved communication & documentation flow

For more information, contact Chris Barnard, Vice President – Projects & Market Development.

What rising demand for freight transportation means
for your business – and how we can help

Recent statistics show the overall economic outlook is improving. But all modes of transportation are still in recovery/cost cutting mode. Both ocean & air carriers saw significant reductions in cargo volume during the recession and have taken steps to deal with this reduction.

Ocean carriers have responded by taking the following cost-cutting measures: combining services with other lines, adding ports of call, reducing sailing speeds, and parking vessels. At the end of 2009, over 500 cargo vessels were anchored worldwide.

Air carriers have also cut costs by grounding aircraft and establishing alliances with other carriers. The number of pure cargo airlines (freighters) has been cut because air carriers prefer combi-aircraft (Passenger/Freight). About 50-55% of air cargo now moves via freighter. Some predict freighter traffic could drop to as low as 10%.

It is expected that both air and ocean carriers will resist calls to increase their fleets, even during the coming peak seasons. As a result, there is going to be a “capacity crunch” (See case study below). Rates for both air and ocean have already increased and that trend is expected to continue throughout the rest of the year.

Another key issue is overbooking of cargo and extended wait times to get a booking. It is not uncommon to see selected ocean lanes booked a month in advance, and delays on air cargo of a week or longer, depending on demand.

It’s a tough situation, but we do have some solutions:

• Use other options to move freight, as opposed to relying on a single carrier with limited space options. For example, we may be able to solve a problem by arranging different tiers of service with varying rates and transit times.
• Ask us about consolidation opportunities, a good option during normal conditions, a great option when capacity is tight.
• Take advantage of our Cargo Forecasting service. Working with our network of worldwide agents and your shippers, we can establish cargo forecasts, and pre-book space on carriers, a particularly effective strategy for ocean FCL cargo.

Case Study
Overcoming challenges presented by
high volume FCL Ocean imports from China

Here’s how the fundamental strengths of Universal’s freight management service – close consultation with our clients and a deep understanding of the client’s business – solved two shipping challenges involving high volume FCL Ocean imports from China.

Challenge #1: To overcome limited cargo capacity (a growing problem), we utilized a primary carrier for the majority of shipments, however, at the same time we sourced other carriers that could step in if the main carrier encountered space difficulties.

We also keep open the option of switching modes of transportation. For example, we are prepared to switch from ocean to air when speed is paramount. “We are not serving our clients if we don’t anticipate a capacity shortage,” notes Dave Lychek, Manager Ocean & Air Services. “Our clients are paying us to think ahead and be ready to make things right when something goes wrong.”

	When your freight goes wrong, Universal Logistics makes things right.

Challenge #2: This client shipped weekly. But at times their receiving warehouse could not accept shipments and needed to process existing inventory. We responded by splitting cargo across two different sailings, a good solution because the smaller shipments were far more manageable.

In addition, we helped eliminate the possibility of extra charges, such as storage & demurrage, an important consideration with FCL cargo, which has very limited free time on arrival at destination terminal.

For more information, contact David Lychek, Manager – Ocean & Air Services.

Why the new Customs Audit process means more audits
of more companies – and more multiple audits

Here is what you need to know about the new Customs Audit process by the Canada Border Services Agency (CBSA). The old approach is gone. It took 18 months and involved seemingly endless requests for information, a review of internal systems/information, a walkthrough of your premises and a formal presentation of the results. While challenging, the process was very visible for operations and all levels of management within an importer's organization, and CBSA’s presentation provided clear findings on what was needed to correct the errors.

The new audit process is entirely different and can be completed more quickly. There is no on-site visit, no flashing of a badge at the front door, no security clearance to enter/extract your systems information and present findings.

Now the entire audit process is conducted with one letter requesting information. It’s called a Desk Audit, a simple process that allows the CBSA to conduct multiple verifications without tying up resources in lengthy reviews. Most important, The Desk Audit allows CBSA to review/monitor many more importers than was ever possible with a full blown, multi-program audit of each importer.

Desk Audits look at one program only, which is why they can be completed in a quarter of the time.

Audit findings must be communicated
to everyone who has to act on a finding

The challenge now is to ensure that the audit finding is communicated to everyone who has to act on that finding. For example, someone in the Accounting Department may have supplied Customs with all the requested information. But were the findings forwarded to every department that needs to see the report? Was there a valuation or tariff issue that requires correction to past transactions and, most important, did that information get passed to your customs broker, a necessary step to file the corrections?

Don’t assume Customs correspondence
is communicated to your customs broker

Many importers assume, incorrectly, that all correspondence from Customs automatically goes to their customs broker. The truth is the broker doesn’t know about the audit unless you tell them. You also have to ensure that the requirements of Customs’ findings are met in full. This means you need to correct not only past transactions, but also all future transactions of same/similar goods.

Failure to comply will result in AMPS penalties, as “Reason to Believe” has now been established. Put simply, if you repeat an error that was identified previously during an audit, CBSA assumes that you knowingly made the error.

Shortly after the initial audit (2-18 months), the CBSA will return to do a Monitoring Review to ensure you have met your requirements. If there was a requirement to correct past transactions, CBSA will select up to 25 transactions from that correction period and demand that you supply the applicable adjustment information. Failure to comply will result in the application of penalties.

If there was a valuation or tariff classification change, CBSA will select transactions that took place after the audit to ensure you implemented the required changes. All transactions selected will be more than 90-days old and thus outside your time-limit to adjust without penalty. If the error(s) still persist, penalties will be issued and you may have to go through another Desk Audit or, even worse, a full audit of your entire import system.

Remember. While Desk Audits can appear to be completely harmless requests for information, proper handling is a must to avoid potentially disastrous results. Management and your customs broker should be involved in every step in the process. Ensure your broker reviews all information before it is sent to the CBSA. Your broker should also review CBSA’s requirements to ensure they are correct. That’s right. Customs makes mistakes and those errors could cost you money or have you in Appeals for years.

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

2010 NAFTA Blanket Certificate Reminder

As a reminder, 2009 Blanket NAFTA Certificates of Origin have now expired. If your Certificate has not yet been replaced with a valid Blanket Certificate for the 2010 calendar year duty will be assessed (where applicable) to avoid potential penalties from Customs. If you make a claim for preferential treatment without a valid NAFTA Certificate, you will be subject to an AMPS (Administrative Monetary Penalty System) transactional penalty of:

1st infraction - $1,000.00
2nd infraction - $5,000.00
3rd infraction - $10,000.00
Subsequent infractions - $25,000.00

Where duties have been paid and a valid Blanket Certificate is provided after-the-fact, a refund claim may be submitted to Customs within 1-year of the import date. Duties are refundable, penalties are not.

For more information on NAFTA please also refer to www.naftanow.org.

We can handle the entire process for you with our convenient – and increasingly popular – NAFTA Management Service. For more information, please call (905) 882-4880 and ask to speak with Darren Lair, Customs Consulting Services.

Duty dropped or reduced on many classifications

On March 5, 2010 over 1,500 machinery and manufacturing input Harmonized Tariff Classifications (HS) became immediately duty-free or began Phase 1 of a 5-year tariff removal plan.

The duty drops to 0% for classifications ranging from raw materials and textiles to machinery and production equipment. For a complete list of the HS Classifications impacted, please refer to the Budget 2010 or contact Brian Rowe, General Manager – Customs Consulting Services, or Darren Lair, Customs Consulting Services.

China becomes world's biggest exporter

China is now the world’s top exporter with total exports in 2009 of $1.2 trillion (U.S.), according to a report from China's customs agency.

Germany ranks number two with 816 billion euros ($1.17 trillion). China's exports per person are still much lower than those of Germany, which has a much smaller population of 80 million people. China sells low-tech goods such as shoes, toys and furniture, while Germany exports machinery and other higher-value products.

China’s growth is being driven by government stimulus ($586 billion) and agile, low-cost Chinese manufacturers who continue to enjoy success while other exporters have been hammered by a slump in global demand. For example, in 2009 China now topped the United States in auto sales.

China's trade surplus dropped by 34.2% in 2009, reflecting China's stronger demand for imported raw materials and consumer goods, but it still has the world's biggest foreign currency reserves ($2 trillion).

The United States and other governments complain that part of China's export success is based on currency controls and improper subsidies that give its exporters an unfair advantage against foreign rivals. Washington has imposed anti-dumping duties on imports of Chinese-made steel pipes and some other goods, while the European Union has imposed curbs on Chinese shoes.

For more information, contact David Lychek, Manager – Ocean & Air Services.

How we built one of the industry’s most reliable
and efficient UK services

Universal Logistics has long had a special business relationship with World Transport Agency (WTA), our partners in the UK. In fact, we have been partners for 40 years and fully expect the relationship to last for another 40 years. That’s because the partnership has been good for both companies and, even more important, it has allowed us to offer one of the industry’s most reliable weekly ocean & air consolidation services from the UK.

Last month, two senior WTA executives (Gerry Lawler - Managing Director and Kelvin Edmundson – Operations Director) visited our offices to discuss service enhancements and to attend a special 40th anniversary dinner.

Universal Logistics and WTA have a lot in common. We are both family-owned businesses and we are both members of BookFreight, a worldwide network of freight forwarders specializing in the book trade (Universal Logistics is a founding member and the sole Canadian representative).

WTA, established in 1913, has six offices throughout the UK.

Look for us at London and New York Book Fairs

Universal Logistics will be represented at the two upcoming Book Fairs: London, April 19-21, and New York, May 25-27.

Paul Glionna and Chris Barnard will attend the London Book Fair, April 19-21, to show support for BookFreight, a worldwide network of freight forwarders specializing in the book trade (Universal is a founding member and the sole Canadian representative). Look for Paul and Chris in booth #R550.

More meetings are scheduled for May, when Paul and Chris will travel to New York to attend BookExpo America. Look for them May 25-27 in booth #3705.

Universal’s commitment to the publishing industry is further underlined by our involvement with the Canadian Book and Periodical Council. We are currently an Associate Member and have been the Council’s recommended vendor for Canadian Customs Clearance & International Freight since 1995.

AT YOUR SERVICE

	Nick Ng – Universal Logistics Asia (H.K.) Inc.

Universal Logistics now has an office in Asia, staffed by Nick Ng, who brings more than 15 years of business experience and five years of logistics experience to his new position. He’s perfect for the job because he enjoys travel and meeting people of different nationalities and cultures.

Nick holds a Bachelor of Science Degree in Mathematical Science and a Master of Science Degree in Information Systems. He and his wife, Lauren, have a nine-year-old daughter, Holly. Nick and Lauren enjoy cycling, sports, fishing, jogging, travel and photography.

Nick will be visiting our office in May. Call us now (905-882-4880) if you would like to set up a meeting during Nick’s visit to Canada in May.