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The Shipping Obstacle Course

Sadie Keljikian, Top Billion Finance

Importing into the US requires considerable coordination. When you import goods, your shipment is often relayed among several other parties before you receive it: the supplier/exporter (or the person who ships the goods to you), the warehouse, carrier, freight forwarder, and customs. All throughout the supply chain, your goods need to be physically and documentarily prepared for each stage of transport and inspection to avoid delays.

Below are some the most common troubleshooting issues importers encounter and how to address them:

Rolled Shipments

A “rolled shipment” is a shipment that has been intentionally delayed by the carrier. This can happen if necessary documentation is missing from the shipment, or if the carrier experiences a decrease in capacity, an increase in demand, or both simultaneously.

The best way to avoid this is to either develop a relationship with several carriers over time, or use a freight forwarder, since they will have relationships with carriers already. Confidence in any carrier’s reliability can only be achieved over a long-term business relationship, so if you don’t have the time for trial and error, it is wise to take advantage of a freight forwarder who’s already done it. Freight forwarders are also very helpful in auditing your shipping documents and making sure that nothing is missing, so you are unlikely to experience a rolled shipment delay in the company of an experienced forwarder.

Transshipment Ports

“Transshipment” means your goods will travel on more than one vessel to get to you. If your goods go from the original sender to a transshipment port before they reach you, you may find your goods delayed in transshipment. This can happen if the port accidentally misses a transfer of goods from one freight carrier to another or, worst case scenario, accidentally sends your goods to the wrong location. The simplest way to avoid this is obviously to send direct shipments from point A to point B without the need for transshipment. Depending on the point of origin, however, this may be a challenge.

The best way to avoid issues if you absolutely must transship your goods is to triple check all your paperwork and make sure your goods are properly labeled, declared, and any permissions obtained prior to shipment. You may want to outsource this task to a freight forwarder, particularly if you and your staff aren’t fully comfortable navigating logistical complexities.

Trade Route Delays/Port Congestion

Often, freight vessels make several stops in transit to accommodate goods bound for multiple destinations. Although this is not unusual, the more stops a vessel makes, the greater the possibility of delays at various points along the way. This may be due to port congestion or insufficient paperwork attached to the shipment.

Unfortunately, these kinds of delays are sometimes unavoidable especially when they relate to issues like heavy traffic at ports or malfunctioning equipment. Again, an experienced freight forwarder can set you up with carriers who know how best to prepare and prevent issues that occur in transit from delaying your goods.

Inspections

Holds in the inspection process are some of the most common reasons for delays in shipping processes. The specific reasons behind these delays can vary, but most of them are related to the United States Customs and Border Patrol, or CBP regulations.

The foremost purpose of CBP regulations is to ensure that any incoming materials are safe to enter the country. If any of the goods you ship are deemed dangerous (weapons, chemicals, pharmaceuticals, etc.) or environmentally hazardous (plant matter that may host foreign pests, etc.), you must arrange all necessary permissions and declare your goods in detail to avoid holds. Otherwise, there is a chance your goods will be held indefinitely. Although there is no way to avoid inspection altogether, since inspections are often performed at random, having your paperwork in order gives you a greater chance of having a quick inspection or bypassing inspection altogether. If the goods are made to fulfill customer orders, make sure you communicate with your customer to keep them apprised of delays and coordinate expectations accordingly. This can prevent cancelled orders and potential returns and chargebacks down the line.

External Factors

Occasionally, your shipment will be held up for reasons that are out of anyone’s control. Inclement weather at sea, damaged vessels, or random flagging at ports can push back the projected arrival date of your goods by days, sometimes weeks. If you’ve taken care of all documents and permissions ahead of time, your shipments probably won’t be held for long, but the best way to avoid missed deadlines is to book your orders a minimum of 2 weeks ahead of the date by which you need them. You will be grateful for the leeway if anything unexpected happens in transit. As for unprecedented disasters like bad weather or sinking ships, make sure that you or your supplier obtain sufficient insurance coverage to offset any damages that might occur while the goods are being transported by the carrier.


Researching documentary requirements and carriers can help you avoid most of the issues that can cause delays in shipment, but hiring a freight forwarder simplifies the process significantly. Their experience and knowledge allows them to advise you in customs compliance and insurance, as well as direct your goods to reliable carriers and well-equipped ports, making delays in shipment as unlikely as possible.

Good luck and happy shipping!

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CBP Regulations 101: Part 1

Sadie Keljikian, Top Billion Finance

US-bound importing/exporting is one of the most complex and vast international industries in existence. Importers have numerous factors to consider in every transaction, including sourcing within their supply chains, warehousing, transportation, customs regulations, and more. Although importing is appealing as a potentially lucrative business, it requires an enormous amount of preparation and organization and should not be taken lightly.

One of the most complex among these factors are the regulations under United States Customs and Border Protection, or CBP. Familiarity with these regulations is essential in the importing business because if a shipment is in violation of CBP’s regulations, it will be delayed at port and potentially taken to a detention warehouse, where it may not be released and distributed for months, if at all. Since most of these regulations are generally focused on national security and health, it is vital that you learn the requirements and do everything you can to adhere to them.

Intellectual Property Rights Violations

This is one of the easiest regulations to accidentally violate because if you don’t haven’t licensed your goods, you may be in violation of another business’s intellectual property without even realizing it. In order to prevent delaying your goods and ensure that any product designs you own aren’t plagiarized, you must register them at the United States Patent and Trademark Office. This will alert you to any existing violations and make sure you never become a victim.

If you find that your goods are, in fact, in violation of another company’s licensing or intellectual property, you won’t be able to sell them in the US in any event. So, it is wise to investigate as thoroughly as possible prior to production to avoid spending money on goods you won’t be able to sell.

Agricultural Products and Food

If you import fruits, vegetables, meat or plants, it is wise to prepare for a number of possible delays. First, it is vitally important that you declare these items on your CBP declaration forms. Next, you should ask permission to transport these goods in advance and obtain any necessary permits. For example, if you are importing any seeds or cuttings intended for propagative purposes (meaning they will be planted or replanted when they reach their destination), you need a foreign phytosanitary certificate before the order arrives.

Due to the potentially disastrous environmental effects of certain pests and soil from foreign ground, all plant matter is inspected upon arrival at US ports. Provided that they are declared and found to be free of pests/soil and as described, most dead plant matter (meaning not intended to be propagated) will be permitted entry without incident.

Meat-based imports are equally, if not more, highly regulated than plant-based ones due to legal requirements from the Food and Drug Administration, or FDA. The primary concerns surrounding these products involve diseases like hand-foot-and-mouth disease (HFMD) or bovine spongiform encephalopathy (BSE, also known as mad cow disease), which are still prevalent in certain parts of Europe and worldwide. Goods containing meat products (i.e. prepared foods) from restricted countries are usually prohibited from entering the US, so be aware of the origins of all of your meat-based products to avoid losing your goods at customs.


To be continued…

For more information on CBP regulations, read our next blog or contact us.

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The Secured Lender Interviews Managing Director Mark Bienstock

Top Billion Finance Managing Director Mark Bienstock recently spoke to The Secured Lender about Hanjin’s recent bankruptcy and navigating shipping difficulties.

Read the full interview and see how Top Billion Finance can help you avoid shipping difficulties and subsequent lost business.

Mark Bienstock has over 25 years of progressive experience in the Factoring, Asset-Based & Top Billion Finance lending arenas. He specializes in providing customized financing solutions to many rapidly growing companies across a wide spectrum of industries. Mark is a frequent lecturer on Factoring & Top Billion Finance related topics, with specific emphasis in the Apparel & Textile industries.


Trump’s Victory Raises Trade Concerns Abroad

Sadie Keljikian, Top Billion Finance

Donald Trump’s presidential victory has raised concerns about the future of international trade.

A significant part of Trump’s platform has been a push to raise tariffs on exports from other countries to the US in an attempt to revive the US manufacturing industry and create jobs. Specifically, Trump has said that China absolutely must reform their trade practices. He’s promised to impose a 45% tariff and officially accuse China of currency manipulation, should current patterns continue. The Trade Facilitation and Trade Enforcement Act of 2015, signed by President Obama, addressed this issue. Trump, however, insists that the US needs to rebuild domestic manufacturing and condition trade with China carefully.

Trump’s plan doesn’t end with China; the president elect intends to discourage importing and outsourced manufacturing globally. The plan leaves European, Asian and Mexican manufacturers concerned with the possibility of an end to trade with the US, home to the world’s largest trading economy.

Concerns for the future of the global economy have been SAMSUNG CAMERA PICTUREScirculating since the United Kingdom notoriously voted to leave the European Union this year. Voters in the UK and US have demonstrated a focus on internal economic development. This would mean step back from participation in the global economy. The shift concerns industry leaders in other parts of Europe, as well as Asia and Central/South America, as both countries are powerful international traders.

Volkswagen Chief Executive Matthias Mueller and VDA, the German auto industry association, expressed particular concern. The industry has already been in a state of panic since the Brexit vote went through. Now, they are concerned that the US will take a page from China’s book. VDA said today, “It is to be feared that the United States under a new President, just like China, will mainly focus on their own economies, at the expense of international trade flows and relationships.”

The election result has added to uncertainty about global economy in other respects as well. Overnight following the election, global securities dropped abruptly. S&P 500 futures fell approximately 5%, its limit. The Nikkei stock index in Japan fell about 5% as well and the Mexican peso fell to a record low. Most of the immediate effects wore off by Wednesday morning. However, concerns continue to grow about the future of international trade under Trump’s administration.

It is currently impossible to tell if Trump will follow through with these specific plans, but presidents hold a surprising amount of power over trade policy, even without congressional approval. Trump intends to halt any existing international trade agreements, including NAFTA and the recent Trans-Pacific Partnership. A recent study by the Peterson Institute warned that China and Mexico may retaliate in response to high tariffs. They even suggest that the potential response could cause another U.S. recession and cost 5 million jobs. Again, it is impossible to predict how or if these eventualities will play out, but the potential disturbance in the global market has certainly raised questions and concerns on an international scale.

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Lack of Insurance adds to Hanjin’s Woes

Sadie Keljikian, Top Billion Finance

The latest issue in the Hanjin Shipping bankruptcy scandal surrounds a lack of insurance on chassis in the US.

Chassis provider Flexi-Van Leasing has requested assistance from a federal judge to cancel all its per-diem leasing agreements with Hanjin. Flexi fears that Hanjin will send “thousands” of chassis onto US highways without proper insurance coverage.

Ever since Hanjin’s filing for protection in a Korean bankruptcy court on August 31st, significant controversy has surrounded the fate of goods, containers, and ships under the Korean shipper’s jurisdiction. Formerly the seventh-largest container shipping company in the world, Hanjin’s losses dramatically affected the international shipping and trade industries.

Flexi-Van Leasing, a New Jersey-based provider filed the motion in US District Bankruptcy Court. The claim is that Hanjin’s insurance ceased on October 10th when the shipper failed to pay its premium. Flexi-Van says that when Hanjin failed to pay its premium, thousands of uninsured chassis in Hanjin’s possession. Hanjin has suspended all deliveries except to ports, but can resume deliveries at any time, according to Flexi-Van’s filing.

The current state of affairs relating to Hanjin is concerning US creditors and customers, understandably, but the Newark court is attempting to resolve some of them. Hanjin is seeking Chapter 15 status in the US, which would allow the shipper to move forward with bankruptcy domestically.

Although the court has yet to rule on Hanjin’s Chapter 15 status, it has on many of the other issues surrounding the shipper’s recent difficulties. Keeping up has proven a challenge as the court addresses dozens of attorneys working for numerous involved parties. Cargo owners, container companies, logistics providers and terminals are just some of those approaching the court for assistance.

In the last month, the court has already determined next steps for Hanjin and its customers. The court has instructed shippers in securing release of their cargo, told Hanjin what to do in order to deliver goods to their destinations, and decided what happens to the containers and chassis after the goods have been delivered. Customers of Hanjin continue to raise issues, mostly relating to damages incurred and payments made to Hanjin.

Flexi-Van claims that Hanjin owes them $3 million for services provided prior to the bankruptcy filing and held several contracts with the shipper, all requiring insurance coverage. Flexi-Van has requested a termination of their agreements with Hanjin, as well as payment for their insurance premium. In theory, this will allow delivery of all goods to move forward as originally planned.

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Hurricane Matthew & Impacts to Port Operations

As Hurricane Matthew moves up the coast, port operations along the Southeastern US Coastline may be impacted.

Florida: Port Readiness Condition Zulu has been issued by the US Coast Guard (USCG) for South Florida ports. These restriction conditions are in effect for Port Everglades, Miami, Miami River, Palm Beach, Canaveral, Key West, and all other South Florida terminals and facilities.  Under this condition, all vessel movement will be ceased along with all ship-to-shore operations.

Georgia: Port of Brunswick terminals are closed to all work activities until Monday (October 10). Port of Savannah terminals will be closed to truck traffic on Friday (October 7) and Saturday (October 8).  Click here for further updates from the Georgia Ports Authority.

South Carolina: After preemptively deciding to close operations, Port of Charleston has decided to resume normal operating hours at all terminals on Thursday (October 6) for the Wando Welch and North Charleston Terminals. To stay up-to-date on Port of Charleston operations, click here.

North Carolina: Current operating status remains unchanged and the Ports will continue to operate under normal business hours.

Vessels In-Transit are already rerouting to avoid the storm, which may delay cargo arrival for shipments to/from the US East Coast.

Your Top Billion Finance, Inc. representative will keep you informed of the status of your cargo and of the impact the storm will have on ETC operations.

Flight Reductions at Hong Kong International

Due to the implementation of Hong Kong’s new Air Traffic Management System (ATMS), airlines have been asked by the Civil Aviation Department (CAD) to reduce their passenger flight schedules by 10% (2,672 passenger flights) during the period from October 30 to November 26, 2016.

The Phased Functional Implementation (PFI) of the ATMS began on June 19th and the CAD hopes that this four-week temporary reduction during November will make for a smooth and successful implementation.

November is traditionally peak season for cargo transport by air, and the impact of passenger flight reduction on the air cargo industry will be significant in terms of increasing demand and shrinking capacity. Regulators have said that cargo flights are not being asked to reduce their schedules because of the peak season.

In all, 25 air carriers will be affected. Thousands of tons of cargo is expected to be impacted notably between Hong Kong and the airports at Taipei, Shanghai, Bangkok and Manila.

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Hanjin Shipping Bankruptcy Update

Sadie Keljikian, Top Billion Finance

South Korean Hanjin Shipping has been the talk of the international shipping industry since the company filed for bankruptcy on August 31st.

Shippers all over the world have grappled with declining demand as trade flows have slowed, particularly from China. Hanjin has faced especially enormous financial difficulty in the last year, which came to a head near the end of August, when creditors stopped supporting the company. On August 31st, Hanjin filed for bankruptcy in South Korea and sought recognition in the US under Chapter 15 of the bankruptcy code. Since then, Hanjin has spent much of their time scrambling to reconcile shipments that were still in transit when the company officially filed.

The most notorious aspect of Hanjin’s bankruptcy has been the fate of their ships and cargo. Immediately following the bankruptcy filing, Hanjin’s shipments found themselves with nowhere to go. Ports refused to grant access to the ships, due to uncertainty about who would be responsible for docking fees, container-storage and unloading bills. As a result, nearly $14 billion in cargo was stranded at sea for several weeks. Stranded as well were the crew members of the container ships, as well as a young British filmmaker who gained international attention with her social media coverage of the situation while she was stranded on a Hanjin chartered ship.

Reconciling the massive debt of Hanjin, the ninth largest shipper in the world, has proven difficult. Creditors seized a number of ships when the extent of the company’s struggle came to public attention, but a judge has since decided that all ships chartered by Hanjin must be returned to their owners. The New York Times, among others, has blamed a lack of insolvency planning for the ships becoming stranded, often drawing a comparison with Lehman Brothers’ notorious failure in 2008.

Regardless of the company’s financial future, the lack of planning that led to cargo stranded at sea has undoubtedly harmed Hanjin’s reputation. They will need to demonstrate a remarkable ability to plan and recover in order to thrive after this debacle.

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Brown Marmorated Stink Bug Strikes Exporters

Exports to Australia: Brown Marmorated Stink Bug (BMSB) SeasonBrown Marmorated Stink Bug, pictured here from Penn State's Department of Entomology

Australia’s Department of Agriculture and Water Resources has developed measures to manage the 2016-17 brown marmorated stink bug (BMSB) season. In addition to standard import requirements, these measures affect ocean FCL & break-bulk shipments of targeted tariffs imported from the United States between 1 September 2016 and 30 April 2017. A complete list of the exact commodities subject to these measures can be found here. The department considers goods transported on flat rack containers to be break bulk cargo. LCL shipments are excluded.

Break bulk goods treated for BMSB before December 1, 2016 must undergo treatment within 96 hours of loading. Containerized goods sealed after treatment and arriving with seals intact are not subject to a treatment window. Break bulk goods treated on or after December 1, 2016 are unlikely to become re-infested, so are not subject to a treatment window. Commodities manufactured after December 1, 2016 are exempt, as long as they are accompanied with a Not Field Tested (NUFT) Declaration that includes the Date & Place of Manufacture. A good is only considered to be newly manufactured after 1 December 2016 if all of its large, complex components have also been manufactured after 1 December.

Treatment Certificates must identify the Cargo Treated & include a unique identifiable link to the consignment, specify the date, type & timeframe of treatment and include a plastic wrap declaration. Australia’s Document Requirement Policy is available here.

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ICS Contemplates Post-Brexit Trade Environment

Sadie Keljikian, Top Billion Finance
The International Chamber of Shipping, or ICS, is predicting how Brexit might impact shipping.

The United Kingdom’s recent vote to leave the European Union will undoubtedly change international relations in Europe and elsewhere, but ICS secretary general Peter Hinchcliffe has said that the changes could benefit the world market. “The UK, in my experience, has tended to be quite brave in the IMO [International Maritime Organization]. Sometimes it has been prepared to argue against the EU for the greater good of the industry and maritime trade so therefore it’s interesting to think about how that role might change when the UK is released from the European restraints.”

He went on to note that leaving the EU will force the UK to focus more energy on maritime trade — an industry the island nation has a long standing and illustrious history, due to fewer trade opportunities in surrounding countries post-Brexit. Hinchcliffe claims that the UK’s historical success in the maritime and international trade industry suggests that the real loss in the equation may end up being Europe’s lack of participation in British trade.

The EU stands to lose the most in this equation, according to Hinchcliffe, who says that the EU will suffer with the United Kingdom no longer “inside the tent.” He predicts that the UK will do as best they can to comply with international regulations and even EU regulations, as many of them are consistent with IMO.

Regardless of the implications, Hinchcliffe says that he is “fairly surprised by the…instability that one country has been able to cause by a single, albeit momentous decision.” The UK and all its allies and trade partners will have to manage instability and changing policies once it begins the formal process of withdrawing from EU, so the ultimate effects are quite difficult to predict.

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Definition of Importer Security Filing Importer

Notice of Proposed Rulemaking for Definition of Importer Security Filing Importer

US Customs and Border Protection (CBP) has issued a notice of proposed rulemaking in the Federal Register regarding the definition of the Importer Security Filing (ISF) Importer. The proposed rule would broaden the definition of the Importer for certain types of ISFs filed, for example foreign cargo remaining on board (FROB), IE, TE and FTZ admissions.

Comments must be received on or before September 6, 2016.

Additional details can be found at the Federal Register here.

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