PARCEL Fall 2019

LOOK INSIDE: 9 AWESOME IDEAS TO HELP WITH YOUR INTERNATIONAL SHIPPING

FALL 2019

PARCELindustry.com

CAUTIOUS OUTLOOK ON GLOBAL TRADE ACTIVITY AS SHIPPERS FACE DEMAND HEADWINDS. P.16 CHANGE IS ON THE HORIZON WITH RESPECT TO CUSTOMS REGULATIONS AND CROSS-BORDER LAST-MILE DELIVERY. P.14 MINIMIZING YOUR LEGAL AND FINANCIAL RISK AS YOU GROW YOUR INTERNATIONAL CUSTOMER BASE. P.26

COVER A PEEK INTO TODAY'S

POLITICAL CLIMATE

and the effect on the global supply chain. PAGE 10

CONTENTS /// Volume 26 | Issue 6

08 10 12 16 26 06 EDITOR’S NOTE Smooth Sailing Ahead?

By Amanda Armendariz

08 THE WORLD IS YOUR OYSTER Selling to a global marketplace can seem daunting at first, but by developing a solid strategy, you could see big dividends in the end.

By Justin Cramer

10 GLOBAL POLITICS AND THE IMPACT ON THE SUPPLY CHAIN Politically driven events can disrupt a supply chain quickly. Here’s a look at how the current happenings could impact you.

By John Haber

12 CARRIERS AND SHIPPERS ABSORB COLLATERAL DAMAGE IN THE CURRENT TRADE WAR Despite the global interconnectedness of the parcel sector, we are now only beginning to understand the effects of trade and security tensions on our industry.

By Shaun Rothwell

14 CHANGES IN CUSTOMS REGULATIONS WILL MEAN BIG CHANGES IN CROSS-BORDER LAST-MILE DELIVERY There are some major regulatory changes on the horizon, and it would behoove shippers to understand how they will affect their global strategies.

PARCEL media staff

16 CAUTIOUS OUTLOOK ON GLOBAL TRADE ACTIVITY AS SHIPPERS FACE DEMAND HEADWINDS As shippers prepare for 2020, the overwhelming feeling that characterizes the industry is that of uncertainty.

By Ravi Shanker

18 THE UPU AND YOU What the changes to the United States’ role in the Universal Postal Union mean for international shippers in 2020 and beyond.

By Krish Iyer

20 INCOTERMS FOR THE PARCEL SHIPPER As the global parcel market continues to grow, familiarizing yourself with the impact of Incoterms can help you protect both your organization and the customer relationship.

By Dominic McGough

26 MINIMIZING LEGAL AND FINANCIAL RISK IN INTERNATIONAL PARCEL SHIPPING The global sphere can be ripe with chances for a misstep, but there are ways to reduce your risk.

By Brent Wm. Primus, JD

28 WADING INTO INTERNATIONAL SHIPPING The key factors to keep in mind when it comes to choosing a carrier.

By Karl Wheeler

SPONSORED CONTENT 07 THE TOTAL PACKAGE 22 9 AWESOME WAYS TO IMPROVE YOUR INTERNATIONAL PARCEL SHIPPING

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PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ amanda.c@rbpub.com ]

EDITORIAL DIRECTOR ALLISON LLOYD [ allison.l@rbpub.com ]

AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ rachel@rbpub.com ]

CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ ken.w@rbpub.com ]

PARCEL (ISSN 1081-4035) is published 7 times a year by RB Publishing All material in this magazine is copyrighted 2019 © by RB Publishing. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, RB Publishing or its staff becomes the property of RB Publishing, The articles in this magazine represent the views of the authors and not those of RB Publishing or PARCEL. RB Publishing and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.

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FALL 2019  PARCELindustry.com 5

EDITOR’SNOTE

SMOOTH SAILING AHEAD?

By Amanda Armendariz

T

he decision of the United States to remain in the Universal Postal Union (albeit on different terms) came as a surprise to many.

Numerous experts had fully expected the US to follow through on its stated intention to withdraw from the UPU by mid-October if they could not reach a resolution at the UPU’s Extraordinary Congress, which was held in Geneva, Switzerland, at the end of September. While those in the know understood the underlying desire of the US to move to a self-declared rate system, given the price disparity that currently exists thanks to the terminal dues framework, most of us agreed that the effects of the pullout with respect to international shipping and commerce would have been grave.

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Thankfully, we avoided this scenario, and the US and the UPU reached an agreement that was acceptable to all involved.

Going forward, the US will be allowed to self-declare rates by July of 2020 (with rates set at 70% of domestic), and most other countries will move to a self-declared rate system by 2025. Overall, shippers are breathing a sigh of relief that the US is remaining a member of this 145-year-old institution.

That’s not to say, of course, that international shipping will somehow be seamless going forward. Indeed, from upcoming changes to customs regulations to tariffs and trade wars, navigating the global sector can seem even more daunting than its domestic counterpart.

And, indeed, shippers need to be aware of the myriad of additional complexities inherent to the international sphere.

But with risk often comes great reward, and nowhere is that more apparent than in the global commerce arena. When it comes to online ordering, the world truly is shrinking. Consumers are much more receptive to buying from companies all over the globe, and that could mean a large, currently untapped customer pool for your organization. So rather than holding back, consider this a prime time to leap into the international (shipping) waters. You’ll likely be glad you did.

As always, thanks for reading PARCEL.

EDITOR’S PICK

Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!

The United States to Remain in the Universal Postal Union

By Amanda Armendariz

FedEx Announces 2020 GRI

By Matt Bohn

Giving Customers a Choice: The Power of Personalized Delivery in the Age of Amazon

By Will Walker

APPLICATION ARTICLE

The Total Package Four practical considerations to get the parcel solution you need today without short-sighting tomorrow

Parcel is not only the fastest-growing mode, it’s also a complex one where requirements often differ from carrier to carrier.

Shippers still need to cover all transportation modes, so it’s important to have a solution that can address today’s business needs while considering the benefits it can provide tomorrow.

Finding the right fit starts with baseline considerations such as: will the solution work with other systems and workflows already in place, is it international, how is it deployed, how are carriers supported, what about my customers’ rules, special services, compliance? Beyond the basic expectations and market-leading feature/functions, companies are wise to think about future needs — can the solution scale and flex to meet tomorrow’s business needs? Here are four such areas to consider.

Efficient Returns Processing In the retail environment, a certain percentage of shipments will be returned, for a variety of reasons. Investing in a robust parcel system that can manage both outbound and inbound shipments helps to effectively streamline the returns process.

Look for a platform that can handle multiple returns carriers and services to enable the process that works best for your business. Parcel systems should be able to integrate into a customer’s portal system or provide a graphical user interface where a customer service rep could log in and produce a returns label. This is a point to cover early in the evaluation process.

Supplier Account Control Many shippers provide their carrier account numbers to suppliers to ship their orders on, but this gives the supplier an “open checkbook” to ship parcels on that particular account.

With an enterprise parcel system providing the ability to directly support supplier shipping, you get this control back. From deciding on the right carrier and service to use, to providing a label that is sent to the supplier, the right parcel system gives you a variety of control options for working with suppliers who are essentially shipping on your dime.

Order Entry Rating/E-commerce Rating Support Order entry and e-commerce ratings play an important role in today’s omnichannel shipping environment. Shippers use it to allow customers to have a say in which shipping method is used (by providing carrier, service, and rate information).

With e-commerce as a key sales driver for both B2C and B2B companies, there’s a strong drive to get more accurate shipping rates in real-time. When calculating a shipping cost on the spot for a customer who is placing an online order, for example, you can’t afford to either inflate or lowball the displayed rates.

Using the advanced tools of an enterprise parcel system, companies can leverage provide accurate, real-time cost and delivery windows. Even if these capabilities are not identified as an immediate need, they may prove valuable in the future to meet business needs.

Detailed Tracking Capabilities While a parcel system is not a substitute for auditing tools, some provide detailed data to help shippers determine exactly what was delivered and when. This tracking capability lets you get out in front of a potential customer service issue before it occurs — or respond quickly if something does develop. There is nothing like being able to reach out to a customer and let them know that you’ve nipped a potential problem in the bud before they were even aware of it. Ultimately, the ability to leverage all tracking information into a single system and do things a little better than your competitors is a strategy that can quickly turn into a competitive advantage in a rapidlychanging marketplace.

These tips only scratch the surface when it comes to the complex mode of parcel. Need help peeling back the layers to find a solution that provides the benefits and value you need?

Our experienced team can provide guidance whether you’re just getting started or ready to dig deeper.

info-amer@blujaysolutions.com +1.866.584.7280

THE WORLD IS YOUR OYSTER WITH INTERNATIONAL SHIPPING

Selling to a global marketplace can seem daunting at first, but by developing a solid strategy, you could see big dividends in the end.

By Justin Cramer

“T

he world is your oyster.”

Everyone has heard the saying, and every day, it is becoming more and more of a reality, especially in the retail industry.

If customers want an item, they will find a way to get it, no matter where the retailer is located. International commerce doesn’t scare the average shopper anymore. Instead, consumers are searching across the globe in order to find the lowest price and fastest delivery time to get the products they want. They truly view the world as their oyster when it comes to their buying needs, and this global customer base is eagerly waiting for more retailers to begin offering their products on a worldwide level.

If a retailer hasn’t already started offering international shipping, now is the time. Global e-commerce is only continuing to grow. According to Statistica, by 2021, worldwide e-commerce sales will grow almost 246%, from $1.3 trillion in 2014 to $4.5 trillion. This is an opportunity retailers should not ignore, especially with peak shipping season right around the corner.

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Unfortunately, this will be one of the shortest holiday seasons in years. With Thanksgiving a week later than usual, that leaves only about three weeks of holiday shopping, compared to the four weeks customers are accustomed to.

This means retailers are using exclusive product releases, artistic collaborations, and special promotions to push their products during this short timeframe.

However, international shipping is another way to ensure record-breaking sales numbers throughout the holidays and beyond.

By incorporating international shipping, retailers can expand their customer base.

For example, they can reach the 83% of Canadian shoppers already shopping internationally, the 81% in Brazil, and the other 78% in Mexico, to name just a few, according to UPS Pulse on the Online Shopper study. But there is more to implementing international shipping than simply adding it to a shipping strategy.

Retailers need to evaluate and overcome the barriers that may stand in their way.

International Shipping Barriers The first step: identify these barriers.

It’s no secret higher shipping costs are

the first thing on retailers’ and customers’ minds when it comes to global e-commerce. In fact, it is one of the main reasons for cart abandonment from global customers. But understanding the impact the increase in cost has on the customer and their experience will help determine how to combat this issue.

Unfortunately, higher shipping costs aren’t the only barrier when it comes to shipping internationally. The additional fees due to customs, duties, and taxes; the limited tracking capabilities and fulfillment concerns; and the slow delivery times impact potential customers’ decisions and the overall customer experience. While we’d hope customers would understand the additional time and costs it takes getting an order from one side of the world to the other, that just isn’t the case. Instead, retailers need to overcome these barriers and meet — or even exceed — customers’ expectations both domestically and internationally to ensure complete satisfaction.

Another barrier to international shipping is the retailer’s ability to do so. Every shipper wants to extend their customer base, but having the technology and capacity to do it can be an issue.

Overcome the Barriers in Order to Implement International Shipping Once retailers understand the importance of international shipping and the barriers to its success, it’s time to figure out how to implement it while also keeping the customer experience top-notch. This is a part that only you can do, since every customer base is different and has unique expectations for shipping costs and delivery times.

Ask yourself: How much will your customer base pay for shipping? What is the average time it takes for your facility to ship an order internationally? What is your strategy for tax and duty collection? Will your customer be responsible for paying? Does your shipping software offer international tracking capabilities? How will you ensure accuracy with regards to customs and documentation? Will you offer multiple international shipping options? Do you have the enterprise technology you need to accomplish your goals in the global sector?

After you’ve answered these questions,

be sure to analyze your current product inventory, shipping team, and shipping processes to confirm you have the necessary technology, team members, and inventory on hand to handle the increase in business. Once you have established that international shipping is possible, you can then develop an international shipping strategy. This strategy should include a wide variety of shipping options. Customers want choices, and allowing them to feel part of the journey will increase their experience. Ease of tracking is also a way to improve the customer experience with your operation. With the inherent length of package delivery time in the global arena, retailers must provide a trail of the chain of custody so customers feel confident the order is on its way.

A big hang-up for many retailers is ensuring complete accuracy on customs and documentation forms. Without guaranteeing these forms are error-free, retailers run the risk of delayed or even non-deliverable orders. The best way to avoid this is by making sure your shipping software allows options for international shipping. In addition to accurate custom forms, this software

can ensure the lowest and fastest shipping costs by rate-shopping multiple international carriers. If you’re planning to branch out globally, make sure whatever software you are considering can guarantee compliance by creating custom shipping labels with whatever carrier you choose while offering order tracking.

While international shipping may seem overwhelming at first, it is possible. Now is the time to try implementing it into your supply chain. Not only will your sales and customer base grow by reaching this new global market, you’ll live up to the saying — the world really will be your oyster.

Justin Cramer is Global Project Management Director and Co-Founder at ProShip, Inc, the global provider of today’s #1 multi-carrier shipping software. Throughout his time at ProShip, Cramer has designed shipping solutions responsible for executing more than 1.1 million labels per day and has worked with many small to global shippers on achieving certified carrier labels.

FALL 2019  PARCELindustry.com 9

GLOBAL POLITICS AND THE IMPACT ON THE SUPPLY CHAIN

By John Haber

C

onducting regular daily business can be daunting enough, but with businesses transacting more with suppliers, distributors, and clients around the world, it has become even more baffling and costly.

Politically driven events such as Brexit, trade wars, and oil production can upset a supply chain without a business even realizing it until it’s too late.

As logisticians, we are taught to mitigate risks, and for many of us, we do just that.

But because of the speed of news and announcements in our increasingly connected world, it has become even more difficult to grasp and react to political impacts to supply chains in a timely manner. However, before one can react to the events that

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are currently shaping our world, one should have a general understanding of the global political environment.

Brexit and the European Union In June 2016, the United Kingdom (UK) voted to leave the European Union (EU). Triggering Article 50 of the Treaty on European Union (TEU) to begin its withdrawal on March 29, 2017, time started ticking for the UK to plan their leave two years from that date. However, politics seemed to overtake planning.

Agreements with the EU failed to pass the British Parliament, and what planning seemed to take place was done primarily by individual shippers and logistics and transportation providers.

For the most part, much of this planning involved a combination of stock-piling inventory and moving distribution facilities to the mainland of Europe.

As March 29, 2019 approached, it was evident the country was not prepared and was bracing for a no-deal Brexit. Ultimately, an extension was provided until October 31, 2019, and the prime minister of the UK announced her resignation soon afterwards.

Since then, politics have remained the focal point, but some supply

chain achievements have been made.

For example, the UK Department for Transport announced that a reciprocal arrangement with the EU to maintain air traffic rights after Brexit will continue through October 2020. This means that the UK and EU airlines can continue to fly between any pair of points allowed today and will be able to make further stops within the locations without embarking or disembarking passengers.

Cargo operators will be able to make a stop in either territory and then fly on to an external final destination. For this period, the UK will also remain a member state of the European Union Aviation Safety Agency (EASA).

Despite this achievement, the British International Freight Association (BIFA) has stated that all modes of cargo transport will be affected, with over-theroad the most significantly impacted.

As the primary means of transport, the UK is bracing itself for slowdowns in domestic deliveries.

Global Trade Wars The US government’s global trade policies have always been at the forefront of American politics. However, actual tariffs and theoretical ones have created

— and are still creating — tremendous uncertainty around global trade. A random tweet can send shippers in a swoon and logistics providers in a mad dash to find capacity at a reasonable rate before a tariff is actually enacted.

For example, on August 23 of this year, President Trump took to Twitter, ordering American companies to “immediately start looking for an alternative to China” and build more products in the US. How best to describe such an environment? Uncertainty seems to be a mild description for shippers and logistics providers alike.

Although most of the focus has been on China, the EU, Canada, and Mexico, many other countries have felt the US tariff sting. Many of these countries have reciprocated in kind by introducing their own tariffs on the US. The results of these tariffs have been detrimental to shippers and their customers. Rising costs, some passed to customers while others have been absorbed, have strained supply chains, causing some shippers to relocate manufacturing to Southeast Asia, other regions of Europe, back to the US, or to some other location.

Meanwhile, front-loading of inventory ahead of actual or threatened tariffs has resulted in bulging US warehouses and declines in regularly scheduled inventory replenishment.

A number of questions are being raised in the press and among analysts: Will these trade wars result in a decline in international trade? Will supply chains become more regional and/or localized?

This uncertainty in the market makes it more difficult for shippers to adjust supply chains from reactive to proactive ones.

Global Oil Supply and Production The Middle East has been a volatile region in which to conduct business for decades. The epicenter for global oil trade, it is a region of political and economic turmoil as it works to lessen its dependence on oil revenues and build up its infrastructure. In addition, the threats of terrorism, Israel’s precarious position in the region, and Iran’s potential nuclear capabilities leave no room for easy business dealings.

The recent drone attacks on the world’s largest oil exporter, Saudi Arabia, suspended oil output, crippling well over half of the country’s daily production.

The result was felt globally as oil prices shot up in response.

The unease and uncertainty in this particular region are observed in an important trade route, the Strait of Hormuz, located between Oman and Iran. It connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil channel because of the large volumes of oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day, or the equivalent of about 21% of global petroleum liquids consumption.

Iran has periodically threatened to close the strait to enemy shipping, while the United States and its allies have pledged to keep it open and maintain freedom of navigation, by force if necessary. The resulting unease and uncertainty has made it not only difficult for the transport of oil but also for the region as a whole, leaving it a difficult place to conduct business.

The Outlook We live in a global environment that is rapidly changing. Managing expectations is difficult, and managing a global supply chain is even more difficult. The news can be confusing and can come at you from different platforms, including social media, the television, mobile, or person-to-person. How does one manage all of this news? How does one build a proactive supply chain? How does one manage costs so as not to burden customers any further than necessary?

These are just a few questions that shippers and supply chain managers should ask themselves on a regular basis. It’s easy for us to say that supply chains need to be adaptable, but to actually put it into practice is proving difficult in today’s environment.

John Haber is founder and CEO, Spend Management Experts. He can be reached at solutions@spendmgmt.com.

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By Shaun Rothwell

CARRIERS AND SHIPPERS ABSORB COLLATERAL DAMAGE IN THE CURRENT TRADE WAR

D

espite the global interconnectedness of the parcel sector, we are now only beginning to understand the effects of trade and security tensions on our industry. Outside of mere volume impacts, there is a practically unlimited range of acute impacts to carrier business, as evidenced by the Huawei dispute and the uproar over misrouted FedEx packages.

This particular trade and security-related impact is at the heart of the Export Administrative Regulation (EAR) lawsuit, filed by FedEx on June 24.

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The lawsuit is predicated on Fifth Amendment grounds, with the carrier saying they have been put in a position of risking exorbitant fines or denying shipments that seem to carry even a minute risk of violation. Paranoia over potential violations of the EAR has resulted in routing mistakes concerning key accounts, including Huawei. The end result? Poor customer relations with a key account and the governments of the two largest economies barking at the door.

Requiring FedEx to police its own network to determine customer compliance

with US regulations is not only impossible from an administrative sense, it also makes for truly bad business. It has the potential to cause mistrust between carrier and customer, the carrier and the federal government, and carries the risk of brand image being tied to perception of the company’s involvement in what amounts to a political dispute.

While FedEx should abide by the law of the United States, the law shouldn’t compel a private corporation to bear the enforcement burden of statutes while forfeiting the right to due process. This seems particularly crass considering

FedEx has generally acted in good faith, in accordance with federal law.

The US Department of Commerce filed a motion to dismiss on September 16, arguing that deliberations concerning the EAR should be reserved for legislative and executive branches. Commerce argues that a ruling could have substantial national security implications, as it could nullify statute applications that assist in controlling flows of weapons and technologies to foreign adversaries and terrorist organizations.

This assertion by Commerce raises legitimate concerns. It also exposes an unwieldy statute and a harmful lack of agility on the part of executives and legislators. As parcel shipments continue to scale upwards and represent an increasing share of global commerce, revisions are in order to promote the vitality of American businesses and their global customer base.

More Disruption Brewing?

Global macroeconomic headwinds have strengthened, enhanced by tit-for-tat

tariffs and a rising preference for populist, protectionist policymakers worldwide. Even if global trade policies were to stabilize tomorrow, the dĂŠtente would leave a legacy of weakened financial position for both carriers and their customers, particularly those heavily exposed to international markets.

There is already evidence of this, with both UPS and FedEx experiencing volume weakness with international services. September was a particularly disruptive month, as international shippers nationwide scrambled to execute contingency plans to ensure continuity in the case of a US withdrawal from the Universal Postal Union. Although crisis was averted in this case, parcel supply chains have felt the pressure regardless.

Another warning bell sounded on September 16, in the form of an inauspicious FedEx Q1 earnings report. The refrain over the past year has included global macroeconomic warnings, a sluggish and costly integration of TNT Express, and glaring omissions of threats

posed by the loss of Amazon business and stiff competitive pressures. Are these mere doldrums? Perhaps. In any case, trade policy is pushing carriers and their customers closer to a precipice.

Global Outlook There is no doubt it is a noble requirement of our leaders to make efforts to ensure broad prosperity for American citizens. At the same time, there is little doubt that certain measures can inflict substantial pain on a handful of industries, corporations, and their respective employees. In the case of parcel, the current pressures can only be alleviated if all parties come together to build an equitable, transparent system of global trade. Until then, parcel carriers, shippers, and consumers will continue to drag a financial anchor waiting to be unshackled.

Shaun Rothwell is the founder and CEO of iDrive Logistics.

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CHANGES IN CUSTOMS REGULATIONS WILL MEAN BIG CHANGES IN CROSS-BORDER LAST-MILE DELIVERY

T

he international commerce sector is seeing some big changes that could have a fairly significant impact on shippers’ operations. In that vein, we at PARCEL sat down with some with logistics technology executives to get their thoughts about how changes in US regulatory policies will affect the global parcel industry. Bob Malley (Managing Director, Pierbridge, Inc.); Benn Bekic (Head of Corporate Development Americas, WiseTech Global); Tim Leary (Director of Operations, ConnectShip, Inc.); and Chris Lentjes (VP, Pitney Bowes eCommerce) provide some insight into what changes shippers can expect in 2020 and how they can prepare.

PARCEL: Let’s start with the basics.

On a general level, how is e-commerce

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changing international parcel logistics?

Malley: Online shoppers are more likely than ever to buy goods from e-merchants located in other countries. In fact, cross-border e-commerce is now growing twice as fast as domestic e-commerce.

This has resulted in a dramatic shift in global logistics patterns from large containers deconsolidating into traditional supply chains with distribution from warehouses, to smaller, more frequent shipments delivered directly to last-mile residential consumers.

PARCEL: What impact is this shift having on US Customs clearance?

Malley: Global e-commerce is creating a “parcel tsunami” at the border, with waves of packages putting unprecedented strains on US Customs and Border Protection (CBP) resources. CBP is used to dealing with larger containers.

Clearing individual parcel shipments is time-consuming and tedious. As a division of Homeland Security, CBP has really struggled with balancing the need to streamline small-package clearance processes with the need to ensure border security. As one official said, “Small does not mean secure.”

PARCEL: What is the US government doing to deal with this issue?

Bekic: In 2016, the US raised the de minimis value threshold for so-called Section 321 shipments from $200 to $800. Raising the threshold encouraged more cross-border e-commerce volumes.

However, except for a few global parcel carriers who are allowed to clear parcel shipments in customs electronically as a single shipment, most customs brokers are subject to manual CBP filing requirements.

PARCEL: Is CBP going to broaden the use of electronic filing for cross-border parcel shipments?

Bekic: It appears so. In Q4 of 2019, CBP will begin testing an electronic filing process that will enable more customs brokers to automate manual Section 321 processes by transmitting detailed customs clearance data though ACE. That means freight forwarders with customs brokerage operations will be able to compete with global parcel carriers. This will achieve CBP’s quest for achieving both automation and increased border security.

PARCEL: How will changes in CBP processes impact cross-border service providers?

Tim Leary: Changes in industry trends and regulatory mandates often inspire logistics services and technology innovations to help meet business demands.

Whereas cross-border last-mile services were the exclusive domain of a few global parcel carriers, we expect to see an increase in participants, and opportunities will arise to integrate freight forwarding and customs brokerage with multi-carrier last-mile delivery networks.

Transitional modes and services will combine and blur. More competition will mean more customer delivery choices that are faster and lower cost.

PARCEL: How will changes in CBP processes impact parcel shipping system providers?

Leary: We have seen parcel shipping systems evolve from single-carrier point solutions to platforms that support domestic rating, shipping, and tracking needs for parcel, freight, and local carriers across the extended enterprise. Global e-commerce presents a whole new set of demands for parcel shipping technology providers. The parcel carrier industry is more fragmented outside of the US and farther behind in terms of technical standards. The old paradigm of hub-and-spoke communication with carriers is shifting to networks of carrier services built on collaborative partnerships.

Malley: E-commerce is forcing retailers and e-mer-

chants to adopt omnichannel fulfillment processes where shipping origins extend beyond traditional fulfillment centers to locations holding inventory in closer proximity to customers, including brickand-mortar stores, as a way of reducing the cost of free shipping while speeding up delivery. But it is also extending to the “endless aisle,” sources of inventory held by suppliers in domestic and international locations. Omnichannel fulfillment increasingly requires a “ship anywhere, from anywhere” mindset and an architecture that can manage the complexities of both inbound and outbound cross-border regulatory requirements, which are now in flux.

PARCEL: How will changes in CBP processes impact global logistics system providers?

Bekic: Freight forwarding and 3PL systems will need to accommodate the end-to-end data requirements that are common to all the transportation modes involved in the so-called “Cargo Chain.”

That includes ocean, air freight, ground freight, and parcels. These used to be siloed systems and processes. A new generation of solutions will emerge that will be fully digitized and integrated to support end-to-end delivery processes.

Leary: Unlike many freight modes, parcel carriers have never been subject to data or documentation standardization. One of the areas of expertise that parcel shipping system providers have is the ability to normalize non-standard data. To support end-to-end cross-border and last-mile delivery visibility, we will need to map parcel data against ocean and air freight data sets. This is all part of the silo deconstruction process now well underway.

PARCEL: The US was expected to withdraw from the Universal Postal Union (UPU) on October 17, but at the last minute reached a compromise. Why did the US pursue this initiative and what impact do you think this will have on global postal rates?

Lentjes: The UPU is an international body of 192 countries. They have kept global postal rates artificially low for 50 years to help promote international

trade with developing countries. This has created market distortions to the point where the rates for inbound shipments from China to the US are often less expensive than domestic rates. This has resulted in the USPS recovering only a fraction of their costs and has disadvantaged US domestic manufacturers, while at the same time helping e-commerce merchants compete worldwide.

The “Option V” compromise allows countries to self-declare terminal fee prices for letters and packages weighing less than 4.4 pounds, provided they pay $40m into the UPU to help fund pensions, security measures, and other initiatives. Actual price increases are not yet known because those rates are set privately between countries, but some commentators expect price increases in the 125% to 300% range for this class of shipments.

PARCEL: How will this impact global e-commerce?

Lentjes: Short term, it is likely to have an impact as shippers will need to absorb costs. And it’s likely that “free shipping” will go away. But longer term, more volumes will shift to other carrier services. It will encourage more innovations as more carriers will be able to compete with postal services that will be priced more competitively. We expect that more partnerships will emerge, including those involving global postal service providers. Of course, any new arrangements will need to pass muster with CBP. Currently, the inability for foreign post offices to provide advance shipping data on parcels entering the US was one of the factors influencing the US’s desire to leave the UPU. As shippers prepare for the regulatory changes occurring soon, it’s important that they not remain complacent. The US remaining in the UPU had many shippers breathing a big sigh of relief, but that decision doesn’t mean that the global commerce industry is remaining unchanged. Regulatory compliance issues and increasing prices means that shippers need to stay on their toes in order to remain competitive in this ever-growing sector.

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CAUTIOUS OUTLOOK ON GLOBAL TRADE ACTIVITY AS SHIPPERS FACE DEMAND HEADWINDS

As shippers prepare for 2020, the overwhelming feeling that characterizes the industry is that of uncertainty. By Ravi Shanker

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s we wrap up 2019, global trade volume growth is likely to remain weak, with 3Q19 trade activity the weakest since the global financial crisis. While monetary easing is gaining momentum, its effects are still being countered by lingering uncertainty about trade tensions. The emergence of these tensions has led global growth to decelerate from its peak of 4.1%Y in 1Q18 to a tracking 2.9%Y in 3Q19.

The effects of this slowdown have been more pronounced in the rest of the world.

Indeed, global ex US growth has already weakened to a post-crisis low. Growth in the US has held up better initially, due to the support from fiscal policy, which has partly helped to offset the impact from slower global growth. Trade tensions and slower global growth have already been reflected in weaker corporate confidence, slower trade, and manufacturing and capex momentum. This weaker capex activity has translated to a softer pace of jobs creation as well as a deceleration in

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hours worked, which is, in turn, transmitting to slower consumer spending.

Interestingly, consumer spending has slowed even though easier monetary policy has helped to support spending in interest rate sensitive sectors. In September, a decline in global manufacturing Purchase Managing Index (PMIs), Korean exports growth, and ifo Export Expectations outweighed the improvement in China’s manufacturing new orders. The recent release of global manufacturing PMIs indicates that both new orders and export orders moved deeper into contractionary territory and are similarly at post-crisis lows. Real imports growth, which is a good proxy for domestic demand trends, has remained weak.

Notably, import volume growth across the major economies remains in the contraction zone, except for the US and Japan. If trade tensions were to escalate further, they could bring corporate credit risks to the fore, resulting in a non-linear tightening of financial conditions, weighing further on consumer confidence

and spending. We expect global growth to remain challenging, which will keep global trade activity subdued with risks to the outlook skewed to the downside as global recession risks remain elevated.

US Shipper Macro Outlook Lowest Level Since 2016 In our latest shipper survey, most were concerned that net ordering vs. inventory remained negative for the third successive quarter (consistent with past freight recessions), and over 50% of shippers said that they were looking to reduce inventory levels. Shippers’ expectations for capacity tightness over the next six months fell again across all modes (truck, rail, ocean, and airfreight) except barge.

Most recently, rail volume weakness has come into focus as carloads across Class 1 Rails have deteriorated from -4.2% in 2Q (and -1.8% in 1Q) to -5.6% 3QTD. This is consistent with our survey where rail volume and spending outlook plunged while rail pricing expectations increased slightly for first time in six consecutive

updates, though still well below long-term average levels. Morgan Stanley’s Truckload Freight Index (TLFI), which has been a benchmark of truck market conditions for the last 20 years, has been underperforming seasonality driven by weaker demand among continued softness in macro data points. This is consistent with sentiment from our Industrials Conference in September, where truckers were cautiously optimistic regarding greenshoots and supply rationalization, but more tempered in their views on a 2H19 demand recovery. While demand has still sequentially increased, companies are reticent to be overtly bullish on peak season. Several other 2020 tailwinds that concern truck rates are rising insurance rates (small carriers are seeing 75-100% premium increases), ELD full compliance (one to three percent of supply coming out), and upcoming Drug & Alcohol Clearing House regulation. Notably, most companies do not see IMO 2020 as a meaningful headwind to the market.

With a weak demand environment

comes growing concern among negotiating lower rates as shippers worry brokers will not be able to honor the contracted rates should the market bottom in the coming months. 2019 rate expectations stayed stable but remain in negative territory. We note that the current demand environment is closer to ’15-’16 rather than ’08-’09, with ISM’s recent negative inflection not boding well for shipment expectations.

Tough Cycle Exacerbates Secular Disruption The tough geopolitical and macro outlook is only made harder by the industry’s need to tackle secular disruption concurrently.

Irrespective of where you are in the supply chain — retail shippers, asset-based beneficial cargo owners (BCOs) in transportation, brokers/forwarders, or other intermediaries like payment platforms — supply-chain secular disruption from e-commerce giants, insourcing of transportation needs by big retailers, digital disintermediation, and blockchain is likely top of mind. In some

cases, cyclical pressure could hasten the transformation while in others the pace of change will slow down, but it is important that companies do not lose sight of longer-term structural challenges while trying to deal with near-term cyclical ones.

Interested in seeing the survey results referenced here?

Visit PARCELindustry.com/ MorganStanleyFall2019 for the full report.

Ravi Shanker is an Executive Director at Morgan Stanley and covers the North American transportation industry. Ravi joined the firm’s global automotive industry research team in 2004 as a research associate before picking up lead coverage of North American Autos in 2009 through 2015. Ravi holds Bachelor of Commerce and Master of Management (Finance) degrees from the University of Mumbai, India. Ravi has been ranked by Institutional Investor magazine and recognized by The Financial Times as a top-10 stock picker across Wall Street.

FALL 2019  PARCELindustry.com 17

THE UPU AND YOU: What the changes to the United States’ role in the Universal Postal Union mean for international shippers in 2020 and beyond.

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By Krish Iyer

n October of 2018, the United States announced its intention to pull out from the Universal Postal Union (UPU) within one year.

As a founding member of this 145-year-old international organization, this development was significant. The UPU sets the terms and conditions for postal operators, so a US withdrawal would impact mailing and shipping relationships among postal entities, as well as commercial shipping carriers worldwide.

The impetus behind the pullout announcement was a desire to revamp the terminal dues framework, which refers to the rates that foreign posts pay each other for delivering mail and packet shipments.

The United States wanted to move to a self-declared rate system, or a system by which nations set their own prices for delivering inbound packets. The United States posited that inbound delivery costs into the US mirroring domestic shipping

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rates would then create parity between domestic and international businesses, specifically in e-commerce, and reduce some of the market distortions that the terminal dues system had created.

Let’s Start with the Basics: What Is the UPU? The UPU is a United Nations organization that sets the rules for global mail delivery, with the formation of a single territory by all signatory nations. The purpose of this single territory is uniformity of postal rates, weights, technology, security, and policies, while streamlining the global delivery of mail and parcels that travel in a postal environment.

How Did We Get Here?

The terminal dues system was created in the 1960s, when letters were the primary mail moving between countries. The rate structure was based on a classification system that took into account a country’s

development so that developing countries paid less than developed countries. China, despite having the world’s second-largest economy, was still considered a developing country in this classification system.

With the explosive growth in e-commerce — much of it coming into the United States from China — this system created market distortions.

For many years, the terminal dues framework acted as a sort of subsidy for low-weight shipments into the US. A one-half-pound packet shipment from New York to Beijing, for example, might cost nearly $14 utilizing a postal method, while the same shipment from Beijing into the US might cost only around $4. For an e-commerce merchant who increasingly has to offer free shipping methods to stay competitive, this structure created a distorted cost structure for both the merchant/shipper and buyer. With posts accounting for nearly 70% of cross-border deliveries, according to the International Post Corporation Cross-Border E-Commerce Shopper Survey 2018 (which was released in January 2019), this price distortion could potentially widen as cross-border e-commerce grows.

What Would Have Happened if the US Had Pulled Out? It’s difficult to fully comprehend the gravity of a United States pullout. While changes to the remuneration system (as we call the payment system for cross-border delivery) only affects packets, a US withdrawal would have impacted all international mail

and packages. Had the US no longer been part of treaties that underpin the UPU’s international postal services, international postal traffic to and from the US would then be considered cargo. Additionally, the US would have had to negotiate bilateral postal agreements with every country with which it wished to have a postal relationship. In simpler terms, this would have changed international mail and shipping as we know it, in terms of cost, clearance process, technology, and tracking visibility.

Merchants would then need non-postal solutions to manage their international shipments, a position that could be untenable in an e-commerce world that demands low-cost and, increasingly, free shipment methods.

What Were the Proposals?

For only the third time in its history, the UPU called an emergency “Extraordinary Congress” in September 2019 to address the potential United States pullout and terminal dues framework. Three options were discussed as proposals: Option A would have allowed for an

acceleration of a previously-approved terminal dues structure change, at a faster timetable. Option B would have directed countries to charge self-declared rates on inbound packets, with rates not higher than domestic rates. Option C would have adopted a self-declared rate structure but would have included a phase-in period at a maximum of 70% of domestic retail shipping rates.

The final proposal that passed is commonly referred to as “Option V.” In this proposal, elements of Option B and C were addressed, with the US moving to a self-declared rate model by July 2020.

Other countries will transition to a self-declared model by 2025, with self-declared rates set at 70% of domestic (with annual increases of one percent allowed if rates don’t cover costs) and a cap of 80% for most countries. Some exemptions for small countries and developing countries were made in this proposal, allowing them to keep the current UPU rates.

What’s Next?

The phase-in for the self-declared rate model for the United States will occur in July 2020. Over the next few weeks and months, the actual rate structures in place to satisfy the phase-in will be announced.

One of the key takeaways of this resolution is that international mail shipping rates, especially for inbound lightweight shipments, are going to increase in 2020, potentially twice. It will be important for shippers to analyze their international shipment methods to understand how to balance costs with transit time, shipment/ tracking visibility, and technology.

Krish Iyer is Director, Strategic Partnerships at ShipStation. He is an industry leader in cross-border trade and logistics software with more than 17 years of Fortune 100/500 global product marketing/product development, sales, supply chain technology, and integrated marketing experience. He can be contacted at krish.iyer@shipstation.com.

FALL 2019  PARCELindustry.com 19

By Dominic McGough

INCOTERMS FOR THE PARCEL SHIPPER

As the global parcel market continues to grow, familiarizing yourself with the impact of Incoterms can help you protect both your organization and the customer relationship.

I

ncoterms are internationally recognized and used worldwide in both international and domestic contracts for the sale of goods. Incoterms first originated back in 1936, but have been adjusted, added to, subtracted from, and seen increased uptake over the years. Recently, most changes seemed to take place towards the end of a decade; for example, the changes made in 2010 were effective in 2011 and the most recent changes announced this year will be effective in 2020.

It would not be surprising if you have not thought about Incoterms before, nor had to take part in a discussion about them, since they are typically used for international movements to (somewhat) standardize communication across what is most likely multiple languages and keep the tasks, responsibilities, and ownership of goods clear for all parties. However, the use of Incoterms domestically is on the rise as more and more shippers realize their benefit and usage in managing their freight movements and identifying exactly when they are responsible for

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the goods. Add in the explosive growth of global commerce that many shippers are experiencing, and you’ll see why Incoterms should be added to your knowledge base as soon as possible.

What Incoterms Are Not Before we delve deeper into Incoterms and their usage or importance and why they are now entering the parcel sphere, it is important to note what they are not, to avoid any over-reliance on their use. Incoterms do not constitute a contract in themselves, and they do not supersede the law governing the contract, address currency, credit terms, or price payable.

Therefore, Incoterms themselves are not law or a higher power governing the entire buyer-seller relationship.

How to Best Leverage Incoterms Incoterms are a tool used to clearly inform the sales contract to define the respective obligations, costs, and risks involved in the delivery of goods from seller to the buyer. Incoterms are also

a fantastic tool to have when entering any negotiation with your seller, as the actual price of the goods being purchased can and often is influenced by the associated Incoterm. Now, you may be curious as to how Incoterms will impact your buying price from your supplier, so let us take a look at a quick example.

The Impact of Incoterms Let’s say you are looking to purchase a quantity of 50 units from a supplier based in Asia. If your discussion is based purely on the product, the seller will assume you are only talking about the costs of manufacture, profit for the seller, and nothing further. If you expect the product to be delivered to your site in the USA, but the supplier is only focused on the cost of manufacture, then you are immediately going to have trouble making any settlement on price that will work for both sides and result in a positive-sum relationship. If we take this back to the start of your negotiations, both sides confirm that the Incoterm used will be EXW (better known as Ex Works), where both buyer and supplier are aware of the cost being discussed is product only and not transportation to the buyer’s facility. The buyer then knows that full responsibility and cost lies on their side.

Now, you may be thinking that as a parcel shipper, Incoterms sound like they have more to do with freight modes like ocean or possibly air, but this is quickly changing, and the parcel industry is adopting the use of Incoterms much like any other.

When moving goods internationally, it is vital that the risk and transfer are clear for both sides, as discussed in the example above. To make our example more parcel-specific, let’s say your website is getting hits from all over the world. This is a great sign that your market is expanding and your customer base is moving outside of the domestic boundaries you once operated in. However, if you are treating the orders in the exact same way, regardless of from where they originate, then your pricing for that customer and chance of the product reaching them in the timeframe you promised on your website might result in an unhappy customer and an expensive mistake.

If you begin selling internationally, you need to make your Incoterms clear with your end customer. The end customer, of course, will not be negotiating the price with you as in our initial example with a buyer and a supplier. Instead, they just need to know the final price they will be charged, as they have already made the determination that your product offering matches exactly what they are looking for and will satisfy their needs. However, if they make their determination based on your website’s price of $100, but this price ignores all duties charged and any other costs associated with the global sale, you’re going to be hit with an invoice for these charges.

Since you already promised your end customer a price of $100, it would certainly damage the customer relationship if you attempted to tell them that the price has changed.

But absorbing the cost of these extra charges is hardly ideal, either, especially if the goods are returned or rejected!

you know that shipping to the UK has a duties charge every time a shipment cost is over a certain threshold, you can factor this into your pricing before it is presented to the end customer, ensuring you know your profit margins and that the burden and risk do not land on your lap.

So, what Incoterm should be used in this situation? You probably need to use Delivered Duty Paid (DDP), which means that the seller bears all responsibility and cost of delivering the goods to their end destination. This means you have full control of your product until it is in the hands of your customer.

If you wish to improve your Incoterm knowledge and know the best ones to use for each situation, you should familiarize yourself with the latest set of terms and what they mean for the buyer-seller side. This can be done by accessing the International Chamber of Commerce website. The Incoterms are about to change as we move into 2020, so this is a perfect opportunity to get researching and ready for the coming decade.

Dominic McGough is the Managing Partner for enVista’s Europe, the Middle East and Asia (EMEA), and Asia-Pacific (APAC) offices. In his role, he is responsible for delivering transportation strategy, operations, and systems consulting for shippers, transportation intermediaries (3PLs, forwarders, IMCs, etc.), and private equity firms.

Avoiding Mishaps You can avoid the above scenario by ensuring you have organized your parcel movements and priced accordingly. If FALL 2019  PARCELindustry.com 21

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Have you thought about optimizing your offshore parcel agreements — those parcel agreements that are negotiated within Europe or Asia and not in the US? If not, it’s potentially a significant opportunity for savings — as much as 20% or more.

Alexandretta brings expertise for shippers to optimize both their domestic parcel and offshore agreements.

Offshore agreements are typically not as closely reviewed, while negotiating across multiple countries or regions brings a deeper level of complexity to negotiations.

Carriers differ from region-to-region, and one provider may have strengths in one service type, region, or weight break. Additionally, there are more players globally, and exchange rates and global vs. regional carrier pricing structures and pricing agreements must be understood in order to have a successful outcome.

Services can be very nuanced, and within Europe, for example, there are service considerations due to the relatively small geographic footprint.

Additionally, with the merger of FedEx

and TNT, there are specific merger circumstances that a shipper needs to have a firm understanding of to make sure all countries and services are covered. This is just one example of understanding the market dynamics regardless of region.

Alexandretta advises shippers on how to get the most of out of offshore negotiations and optimize parcel agreements from a pricing, service, strategy, and account structure perspective. And while the offshore markets can be extremely complex, offshore parcel agreements, if well-managed, are a tremendous opportunity for significantly increased spend visibility, management, and savings. Let Alexandretta be your guide for global parcel success. www.alexandrettaconsulting.com Info@alexandrettaconsulting.com 717.777.3377

BluJay’s Parcel is a single, scalable platform that handles domestic and global parcel needs, unlike vendors that only offer a single parcel solution with limited or no global capabilities.

Parcel is a flexible solution, part of BluJay’s Global Trade Network, providing global visibility and access to domestic and international shipping services, with flexible deployment options. It’s a future-proof solution for your parcel needs in a changing marketplace. Thousands of companies use it every day to automate mission-critical processes for parcel and LTL shipping, to lower cost, and improve speed and reliability.

With BluJay’s enterprise Parcel solution, you can handle increasing volume and any node/any mode — DC, warehouse, manufacturing, and corporate store — from one global platform. Three key capabilities further differentiate BluJay’s Parcel:

1. Global connectivity to the largest number of parcel carriers available in a single network 2. Shopping capability to select the most cost-effective carrier while still meeting delivery goals 3. Access to additional international services that enable shipments to move around the world with no delays or issues — frictionless borders

The need for a comprehensive international shipping solution drove the creation of the Consignor delivery management platform over 22 years ago. Since then, the growth in the cross-border commerce fueled our solution’s development and maturity.

With dedicated associates in 12 offices and 7 countries, Consignor continues to lead the international shipping solution market with an unwavering focus on our customers. Our solutions provide superior delivery management functionality and additional enhanced features that enable carrier performance tracking, invoice auditing, private fleet tracking, and much more.

Since its early days, Consignor remains to be a leader in the process of enabling, onboarding, and maintaining carriers on our platform.

With over 700 global carriers and thousands of shipping services, we provide our customers with connectivity to the largest carrier library in the world. Consignor continues to invest to ensure that we stay ahead of the

rapidly changing carrier market and provide our customers with access to all of what it has to offer.

Built to provide a scalable solution for small size shippers, global enterprises, and everyone in between, the Consignor platform provides integration methods that support all the leading ERP, warehouse management and order management systems, and top e-commerce platforms. With easy to use APIs and integration methods, the possibilities are endless.

We take data privacy seriously and have developed our solutions and processes to offer the highest standards of privacy and regulatory compliance.

Consignor is GDPR compliant, Privacy Shield and ISO-27001 certified.

BluJay’s Parcel is an enterprise-class, multi-carrier shipping management system that supports complex, high-volume, multiple-location international and domestic shipping. More than 4.5 billion parcels are shipped annually with BluJay’s Parcel solution. www.blujaysolutions.com Info-AMER@blujaysolutions.com 866.584.7280

At GlobalPost, we are dedicated to helping small- and medium-sized businesses ship domestic and international parcels as quickly as possible at very economical rates. Combined with our world-class customer service, easy-to-use technology, and seamless integrations with the world’s top shipping platforms, our GlobalPost international shipping services simplify parcel shipping so you can focus on growing your business.

The GlobalPost delivery network leverages partnerships with international postal operators as well as commercial carriers to offer worldwide delivery. GlobalPost services reach over 200 countries and territories and includes features not found in traditional international postal services, including, global address verification, electronic customs forms, the ability to ship merchandise in flats, instant refunds, free parcel coverage up to $100, and more.

GlobalPost currently offers three variations of the service: GlobalPost Standard International (includes delivery confirmation), GlobalPost Economy International (only includes tracking into the destination country), and GlobalPost Plus (includes Delivered Duty Paid service).

Whether you ship one or thousands of packages per day, contact GlobalPost today for a free shipping consultation. Visit www.GoGlobalPost.com or call 1.888.899.1255 for more information. www.GoGlobalPost.com info@goglobalpost.com 888.899.1255

www.consignor.com us@consignor.com 888.351.1553

FALL 2019  PARCELindustry.com 23

Logistyx Technologies simplifies the complexity of cross-border, multi-carrier parcel shipping so manufacturers, retailers, and 3PLs can quickly scale and ship high volumes of products profitably to customers worldwide.

Our SaaS-Based Transportation Management System (TMS) for parcel shipping features an integrated global carrier network of more than 8,500 carrier services, and Logistyx customers can leverage state-of-theart rate shopping and simulation tools to determine the ideal combination of carriers in real time, based on factors such as price, capacity, service requirements, and performance.

Control tower visibility and userfriendly dashboard reporting enable proactive exception management and carrier performance monitoring.

From fulfillment managers to customer service representatives, teams monitor and manage all carriers in one solution.

Best suited for shippers seeking a quick implementation and an accelerated ROI, Logistyx specializes in integration with e-commerce, WMS, OMS, TMS, and ERP systems to maximize the value of existing enterprise solutions and avoid fulfillment disruptions. The Logistyx TMS for parcel is easily configured to meet each individual client’s specific carrier network needs, and our current client roster spans multiple verticals worldwide. For more information, visit www.Logistyx.com. www.logistyx.com info@logistyx.com 877.755.2374

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International parcel shipping is getting costlier every year. One way to combat rising costs is to be mindful of excess penalties charged by your carrier due to inaccurate or incomplete addresses. Melissa’s Global Express Entry can help you improve the accuracy of your shipment addresses to cut down on value-added service charges like address correction, undeliverable shipment and residential surcharges.

Use Global Express Entry to get the address right every time – right at the point of entry. It’s an easy-touse address autocomplete service that integrates quickly into your web forms, shopping cart, order entry, and other applications. The solution suggests a complete, verified postal and/or email address as a user types, saving up to 50% on data entry time,

while also providing real-time verification to eliminate shipping costs due to incorrect addresses.

At Melissa, we know the address is the foundation for success, whether it’s to improve the customer experience, operations, shipping, and/ or fulfillment. Our address verification tools benefit from 35+ years of deep domain knowledge and industry experience, advanced parsing algorithms, and many international postal certifications to provide features and capabilities the competition simply can’t meet.

How do you get a package to a customer in Brazil? Will your products be subject to duties and taxes? What happens when there is a “dead” tracking number? These are important questions that brands (and their customers) grapple with regularly.

Through a combination of customer experience and technology, Passport is redefining what it means to be a shipping company.

If you’ve shipped anything overseas, you’ve probably heard from customers about unexpected customs fees that they had to pay in order to collect their package. Duties and taxes are part and parcel of international shipping. Surprise fees should not be. With Passport’s landed cost solution, applicable duties and taxes are calculated and paid for by the customer at checkout. Prepaying duties and taxes (i.e. shipping DDP) means no additional handling fees, no time-consuming trips to the post office, and bypassing that dreaded “held in customs” stress.

Handoffs in international shipping happen. Handoffs in customer support, however, should not. Passport handles customer support for all your international shipments, directly from a branded tracking page. Through Passport, customers (and brands) have one point of contact for all international shipping related questions.

This allows your customer support team to focus on wowing the customer, not pulling up tabs or trying to find the appropriate information. Winwin? We think so too.

Contact Alex Yancher (CEO) at alex@passportshipping.com or (415) 734-0465 and get started with Passport today!

Melissa.com info@melissa.com 800.MELISSA

www.passportshipping.com alex@passportshipping.com 415.734.0465

Today, online consumers are buying goods from overseas merchants on their smartphones and other devices at the click of a button, spurring retailers to extend “endless aisles” to inventory held by manufacturers in other countries. Global cargo chains are emerging to facilitate and accelerate cross-border last-mile parcel deliveries. The challenge for retailers and supply chain partners is how to make these processes as seamless and invisible to the end consumer as possible.

Shippers must keep on top of everything from multiple customs entry points to having the correct international paperwork, while at the same time trying to find the most cost-effective international carrier rates and timely deliveries to help meet customer expectations.

With that many moving parts made up of people, information, processes, and resources — that must all work together to get the item from the first mile to the last mile — there are

Zenda is a new shipping provider powered by British Airways that allows businesses to ship parcels from the US to Europe in 4 to 8 business days. As a Delivered Duty Paid shipping solution, Zenda provides prepaid taxes and duties, automatic customs clearance, and costs up to 50% less expensive than Express providers.

Zenda’s DDP service is beneficial for both businesses and consumers. Our accurate, real-time calculator presents all taxes and duties for any order and collects the total landed cost from customers at checkout. This means customers do not have to worry about customs delays or surprise costs, and businesses do not have to worry about dissatisfied customers. Once these costs are paid, businesses can use our shipping dashboard to manage their shipments, track parcels,

plenty of chances for it to misfire, leaving customers unhappy and logistics costs high.

Pierbridge’s Transtream TMS software helps shippers manage the many moving pieces of international shipping, from packing correctly, rate shopping the services, and printing accurate international export forms and documentation. Additionally, Transtream can help manage palletizing multiple packages into a consolidated shipment that is delivered to the destination country and then injected into that country’s local shipping stream until each package reaches its final destination. This helps to cut down on customs delays, costs, damage, and headaches. www.pierbridge.com/transteam sales@pierbridge.com 508.630.1220

and print all of the labels and customs forms they need.

Zenda can be easily integrated into in-house systems with API integration, or through plug-and-play solutions for businesses that use Shopify, Magento, Bigcommerce, and Woocommerce.

With Zenda, ecommerce businesses of any size can ship their parcels to Europe with ease, without upsetting customers with unexpected fees or worrying about delays at customs, and saving money in the process.

Mention ‘PARCEL Magazine' when you contact Zenda to get your first 20 shipments with us for free. www.zenda.global contact@zenda.global 404.431.5367

CONTACT INFO Alexandretta www.alexandrettaconsulting.com Info@alexandrettaconsulting.com 717.777.3377 BluJay www.blujaysolutions.com Info-AMER@blujaysolutions.com 866.584.7280 Consignor www.consignor.com us@consignor.com 888.351.1553 GlobalPost www.GoGlobalPost.com info@goglobalpost.com 888.899.1255 Logistyx www.logistyx.com info@logistyx.com 877.755.2374 Melissa Melissa.com info@melissa.com 800.MELISSA Passport www.passportshipping.com alex@passportshipping.com 415.734.0465 Pierbridge www.pierbridge.com/transteam sales@pierbridge.com 508.630.1220 Zenda www.zenda.global contact@zenda.global 404.431.5367 FALL 2019  PARCELindustry.com 25

MINIMIZING LEGAL AND FINANCIAL RISK IN INTERNATIONAL PARCEL SHIPPING

By Brent Wm. Primus, JD

W

hen sending goods globally, shippers need to be aware of the legal issues relating to international shipping and the risks they pose for parcel shippers. These risks include not only financial losses, but also exposure to criminal fines and penalties — not something that retailers want to encounter as they strive to grow their bottom line! Here are some best practices for ensuring your shipments meet the regulatory standards required for each country to which you are sending.

Know with Whom You’re Dealing For international shipping, the importance of knowing with whom you are dealing goes beyond such things as credit worthiness and a reputation for fair dealing of the entity with whom you’re working. It also includes knowing whether you are allowed to do business at all with your counterpart or in a particular country. The US Treasury’s Office of Foreign Assets Control (OFAC) is the US government agency that administers and enforces a variety of laws and sanctions against countries and groups of specific individuals, businesses, and organiza-

26 PARCELindustry.com  FALL 2019

tions with whom US persons may not engage in prohibited trade or financial transactions. Every company shipping goods overseas should be aware of OFAC and the laws it administers. A good place to start is on the US Treasury website.

Familiarize Yourself with Export Licenses and Controls Although most items can be exported from the US without a license, the US government has established regulations that limit or even prohibit the exportation of certain goods, technology, and software in order to promote national security and foreign policy objectives.

The US Department of Commerce Bureau of Industry and Security (BIS) administers some of the Export Administration Regulations (EAR) and licenses, but other US government agencies also license and regulate the export of certain commodities. Items that might be military goods may be regulated by the Directorate of Defense Trade Controls at the Department of State and the US International Traffic in Arms Regulations (ITAR). These, and many other US government agencies, such as the Nuclear Regulatory Commission, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms,

and Explosives, have information on their websites regarding the specific requirements for exporting and importing goods within the jurisdiction of their agencies.

The Department of Commerce suggests that the first step to take in determining whether your shipment needs an export license is to determine your item’s Export Control Classification Number (ECCN), which can be found on the Commercial Control List (CCL) on the BIS website.

Avoid Customs Issues and Fines Goods crossing borders in any country are subject to customs reporting and inspection. In addition to classifying goods and determining whether their entry into a country requires the assessment of a tax or duty, customs authorities often inspect goods to ensure that they comply with laws and regulations related to health, safety, and security.

In the United States, US Customs and Border Protection (CBP) is the US agency responsible for overseeing the importation of goods into the United States. Once the goods arrive at port, the importer or its customs broker must file an entry with Customs that provides information regarding the classification of the good and the specifics of the importation.

Even if an importer relies upon a customs

broker, importers are required to know the applicable laws and to exercise reasonable care in classifying and providing information to Customs regarding the goods they are importing. CBP publishes a variety of “Informed Compliance” publications.

They are excellent resources for importers and exporters. (Editor’s note: For more information on upcoming changes to CBP regulations, turn to page 14).

Don’t Ignore the Foreign Corrupt Practices Act Back in 2015, I wrote a set of articles for PARCEL focusing on the Foreign Corrupt Practices Act, whose primary purpose is to deter US businesses and business persons from participating in the corruption that pervades many countries throughout the world. It is a somewhat unique US federal statute in that it prohibits activities that could take place entirely outside of the United States as well as within the United States.

It is comprised of two principal sections. The first is known as the Anti-Bribery section, which prohibits “offering to pay, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official

capacity or to secure any other improper advantage in order to obtain or retain business.” These prohibitions are not to be taken lightly — there are substantial civil and criminal penalties. In 2010, a large international freight forwarding company and six of its corporate customers paid a total of more than $236.5 million in civil and criminal sanctions.

Understanding Your Contracts and Service Terms In domestic shipping, a larger shipper is often able to contract out of a transportation provider’s standard terms and conditions. However, in international transportation, this happens much less frequently. This is due to the fact that some forms of international transportation, such as ocean shipping, are still regulated, while others, such as international air freight, follow common industry standards.

In addition, all forms of international transportation are subject to international conventions governing carrier liability. While it is possible to negotiate individually tailored contracts, the contracts will most likely incorporate by reference large portions of the provider’s boilerplate terms and conditions.

Accordingly, it is very important for a shipper to familiarize themselves with

those terms and conditions and to take steps to avoid their impact. For instance, the common limit of liability for loss and damage in international air parcel shipping is 19 United States dollars per kilogram, or approximately $11.77 per pound. If one’s product is worth more than that, it would be prudent to obtain a shipper’s interest cargo insurance policy.

To conclude, I would like to acknowledge the contributions to this article by attorney Andrew Danas, who has a practice emphasis on international trade.

He has this advice for a parcel shipper new to international shipping: “While the rules and regulations may be unfamiliar and complicated, they can generally be navigated by the same basic principles required for success in the domestic marketplace: know your counterpart; know your exposure to liability and insurable risks; and be aware of applicable regulatory obligations. Learning these basic rules for international business can lead to new markets and new opportunities.”

Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Your questions are welcome at brent@primuslawoffice.com.

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WADING INTO INTERNATIONAL SHIPPING?

The key factors to keep in mind when it comes to choosing a carrier.

I

By Karl Wheeler

f international shipping is not on your radar already, it likely will be soon. After all, cross-border trade is the next big growth arena in e-commerce. Figure 1 shows the top five countries for projected e-commerce sales growth rates in 2019.

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While these markets are only the top five growth rates, the worldwide non-US growth rate is expected to hit 21% in 2019 — 50% higher than the expected US growth rate of 14%. Two of the top five growth markets have populations and growth rates that dwarf the US market. For American companies not

already shipping internationally but looking to grow revenue, these metrics are hard to ignore. But international shipping, while a lucrative possibility, is not something that should be jumped into without extensive research and preparation. One of the most important factors that could determine the success of your expansion is your choice of a carrier.

Choices Abound in the Global Sector When comparing options for international shipping, there are more choices and competition between carriers. Domestically, only two national carriers (UPS and FedEx) and USPS ship directly to all 50 states. For international shipping, there are several more carriers that provide service to the same 200+ countries. Some will use various, country-internal postal systems for a portion of transit. These will typically have longer transit times and less definite delivery dates. Depending on your needs, these can be viable and, typically, less expensive options.

Figure 1

For those looking to mirror a typical domestic e-commerce experience, Figure 2 provides a look at three well-known carriers with time-and-day definite transit guarantees. Equivalent competing service levels are grouped together with carrier-published benefits and transit times.

Best Practices in Contract Negotiation The best practices for negotiating international parcel contracts are generally the same as for domestic contracts.

There are some additional accessorials to be diligent on, as well as export vs. import considerations, but key contract areas are similar. Be sure to familiarize yourself with the following: Base discounts and revenue tier discounts  Incentives can be country-specific Minimums Dimensional Weight Accessorials  Advancement fees and other ancillary clearance fees Out-of-Delivery-Area surcharges When comparing competing carrier offers, it is vital that you compare proposal net costs on a representative sample of shipment data rather than just contract discounts. For the following examples, assume your marketing department has decided that India is the initial market to wade into international shipping for export.

They have determined there is demand

for your widgets, and combined with the growth and population metrics, India is the logical choice. Since they also want to mirror the two- to six-day definite transit promises offered to domestic customers, you are tasked

with deciding between carrier proposals for UPS Worldwide Expedited, FedEx International Economy, and DHL Express Worldwide.

In this hypothetical proposal example with package DIMs (see Figure 3), there are several moving parts. When you compare zone rates, you’ll notice it is more complex than comparing the general carrier alignment in the domestic zones 2-8. If you simply compare offer discounts, you would not end up with the lowest cost carrier. Adding to the complexity is the fact that differing DIM divisor offers can have a substantial impact on the billable weight — and what you are subsequently charged. In the example in Figure 3, it is impossible to make a linear rate comparison at one billed weight.

Like a domestic carrier contract negotiation, what is most critical is the ability to analyze all moving parts on a large sample of actual shipping data. It

Figure 2 UPS Worldwide Express Plus

FDX International First

DHL Express 9:00

1-3 days guaranteed time-definite transit (country-dependent) AM delivery times In-house customs clearance 57 US export countries

1-3 days guaranteed time-definite transit (country-dependent) AM delivery times In-house customs clearance 20 US export countries

1-6+ days guaranteed time-definite transit (country-dependent) AM delivery times In-house Customs clearance 53 US export countries

UPS Worldwide Express

FDX International Priority

DHL Express 12:00

1-3 days guaranteed time-definite transit (country-dependent) AM-early afternoon delivery times In-house Customs clearance 137 US export countries

1-3 days guaranteed time-definite transit (country-dependent) AM-early afternoon delivery times In-house Customs clearance 220 US export countries

1-6+ days guaranteed time-definite transit (country-dependent) Early afternoon delivery times In-house Customs clearance 75 US export countries

UPS Worldwide Expedited

FDX International Economy

DHL Express Worldwide

2-5 days guaranteed EOD transit (country-dependent) In-house Customs clearance 220 US export countries

2-5 Days guaranteed EOD transit (country-dependent) In-house Customs clearance 215 US export countries

 1-6+ Days guaranteed EOD transit (country-dependent) In-house Customs clearance 220 US export countries

UPS Worldwide Saver 1-3 Days guaranteed EOD transit (country-dependent) In-house Customs clearance 215 US export countries

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Figure 3

is the only way to attain the true lowest cost proposal. Factor in minimums, various retail rates for the same accessorials, different dimensional fee parameters, and the frequency of each data point, and you’ll quickly see that the process can get very complex. This complexity is one of the reasons that some shippers choose to collaborate with a third-party expert to help them navigate this new territory.

But whether you partner with a third-party expert or do your analysis in-house, remember, the best practices

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for negotiating international parcel contracts aren’t much different from a domestic contract. The contracts are often combined for improved discounts and terms on both. If expanding into international markets is not on your radar already, the market size and potential growth rates of markets across the globe will put it there sooner or later. The carriers are fully aware this is the next big growth arena for them and are aggressively seeking market share.

Don’t be surprised when your rep calls and wants to show you a “phenomenal”

presentation on the international shipping opportunity.

Karl Wheeler is a Sr. Pricing Director at Shipware LLC, a parcel & LTL spend management firm dedicated to helping high-volume shippers reduce costs. Karl specializes in understanding how the carriers structure margin-based parcel contracts and utilizes that knowledge to help Shipware’s customers realize savings up to 30%. He welcomes questions or comments at karl@shipware.com.