Freight Payment Providers Offer Top-Level Data Analysis, Visibility into Spending

The typical business spends $11 to manually process each and every invoice.  Now think about the number of invoices that come in and out of your AOG shop each day, and the numbers add up.

Which is why a growing number of businesses are choosing to outsource invoice processing to a freight payment provider (FPP).  FPPs are in the business of receiving, organizing, paying, analyzing, and recording freight invoices.  Since this is their singular focus, it follows that an experienced payment provider will offer seamless invoice management and payment processing, much more so than even the best in-house accounts payable team.

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Medical Device Exporters Face Haphazard Customs/Regulatory Challenges

On the one hand, export opportunities have never been better for U.S. medical device manufacturers, as global demand continues to grow for high quality, innovative U.S. products.  On the other hand, an increasingly complex international regulatory puzzle may cause some manufacturers to decide the process is more trouble than it’s worth.

Consider China. According to the International Trade Association, China imposed considerable regulatory changes during 2015 and 2016 that will significantly affect U.S. manufacturers.

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Has Your Warehouse Strategy Kept Pace with Omni-Channel Demands?

Behind every successful e-commerce transaction is a detailed fulfillment process about which the typical consumer could care less.  Really!  What consumers do care about – care very deeply about – are on time deliveries and overall efficiency.

But the behind-the-scenes work that consumers take for granted, is a leading source of angst among retailers.  That’s because the fundamental way in which products are bought and sold has undergone a dramatic transformation, and nowhere is this more evident than in the changing role of the warehouse.  Whereas warehouses were traditionally used simply to store inventory, today they have essentially become fulfillment centers, performing many of the tasks previously designated to distribution centers.

McKinsey&Company reported in its “The future of retail supply chains” analysis that “many of today’s retail supply chains are simply not set up to handle this demand for speed and convenience in a cost-effective way.”  The report notes that several established supply chains have “simply cracked” under the strain of the new multi-channel world, and suggests three key areas of deficiency:

  1. Not enough distribution centers to meet today’s demands for fast, low-cost shipping.
  2. Today’s supply chains are built for retail stores, and online is often “bolted on,” leading to poor cross-channel coordination across channel-specific inventory pools and fulfillment processes.
  3. Huge proliferation of online SKUs is creating new capacity and cost challenges, including demand for additional warehouse space and added picking expenses.

As McKinsey points out, “for most retailers, building a dozen more DCs to cover the United States is just out of the question.”  Instead, businesses are taking a hard look at existing warehouse strategies and determining their best path forward.  In many cases, this involves repurposing existing warehouses, or outsourcing to a qualified logistics provider.

A new white paper from Purolator International, “Today’s Changing Warehouse – Developing Your Ideal Strategy,” details the challenges of today’s omni-channel expectations, and identifies key solutions that are helping overcome these problems.  Click here to download a complimentary copy of Purolator’s new white paper.

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Don’t Let Customs Issues Exacerbate an AOG situation

Wouldn’t it be nice if you could choose the location of your next AOG emergency, so you could ensure that urgently needed parts wouldn’t get bogged down by a cumbersome customs process?  In many instances, carefully crafted AOG logistics plans have been waylaid by unforeseen customs mishaps, resulting in delays ranging from a few hours to a few weeks.  The reasons for customs delays usually fall into one of two categories:  Either the shipment arrived at its destination country without the proper paperwork and documentation or, in some countries, the customs procedure is extremely difficult to maneuver, with layers of review necessary before a product is cleared for entry.

As Abdol Moabery, chief executive officer of commercial aerospace company GA Telesis, LLC noted in a panel discussion at the recent MRO Americas conference in Dallas, “compliance is a nightmare.”  He went on to note that in China, compliance mandates can vary from town to town, with each locality authorized to impose fines and penalties as it sees fit.

This sentiment was echoed by Jack Arehart, president of MRO Services, Delta TechOps at Delta Air Lines who also spoke at the MRO Americas conference.  “The biggest thing we face is customs duties and regulations and their variability around the world,” he noted.  “It’s not uncommon to find AOG parts held up for some minor customs issue, and you’re having to cancel flights or ground aircraft.”

While the threat of a customs mishap can never be eliminated entirely, there are steps an AOG service provider can take to minimize the risk of an urgent shipment getting stuck.  Among the options:

Get your paperwork in order

A shipper has a role to play in preparing required paperwork and documentation.  An important first step is to make sure the forwarder or broker has the necessary Power of Attorney in place to facilitate the import/export process.  With regard to actual document preparation, in general, the more detail a shipper can provide about a shipment, the lower the risk of a flag being raised by a diligent customs agent.  Key pieces of information necessary to fully complete a commercial invoice should include, at minimum:

  • A complete and accurate description of the individual contents of the shipment
  • The value of each individual line item in the shipment
  • Manufacturer’s parts numbers and serial numbers for all line items
  • Proper units of issue associated with the material
  • Correct country of origin for each item listed on the commercial invoice
  • Correct name and address of both the exporter and importer of the material

In addition, a manufacturer’s affidavit is typically required in the U.S. customs clearance process. The affidavit, if properly utilized, can often result in the reduction of duties associated with the import.

Detailed information will help ensure accurate and thorough completion of all required customs forms.  In addition, detailed information will help with identification of the proper tariff classification code.  This in turn will identify any additional steps in the customs process.  For example, if a tariff classification code indicates that a shipment falls within the scope of International Traffic in Arms Regulations (ITAR), a special permit may be required before the part can leave the U.S.  Good recordkeeping and documentation are critical to customs preparation, so you are not blindsided when your urgent AOG shipment arrives.

Take advantage of technology

A surprising number of AOG shops have yet to fully integrate a technology system into their operations.  And given the number of affordable – and customizable – options now available, there’s really no excuse, especially given the benefits.  For one thing, with a technology system in place, much of the information required for customs documentation can be retrieved with the push of a few buttons.  And, the risk of error is greatly reduced.  In addition, an AOG manager can have immediate access to all customs requirements for the country to which its AOG shipment is headed.

Businesses should also be aware that a growing number of governments now mandate electronic pre-filing of all customs documentation.  In the U.S., the Automated Commercial Environment (ACE) is now mandatory and all shippers are required to submit data via this single window filing system.  Canada is also on track to have its Single Window Initiative in place in the coming months.

Technology can have a transformative impact on AOG operations, especially in preparing customs documentation and ensuring on-time filings and duty payments.

Use local assistance

When seconds matter, an operator can’t afford to have an AOG part stuck in a queue waiting to clear customs.   In some instances, it makes sense to  enlist a local broker and courier for expedited customs clearance and transportation.  The locals speak the language, understand regional transportation issues, know the customs process, and in many instances, have relationships with customs personnel.

Use an experienced logistics provider

This may seem logical, but I’m always surprised to find AOG managers who select their logistics provider based on advertising, or because “that’s who we’ve always used.”  And some of these same managers wonder why their shipments routinely have problems with customs!  The fact is, not every logistics provider has the expertise to ensure a seamless customs process.  And certainly, most don’t have expertise that extends globally.  So it’s critically important to take the time to do your research and find a provider with the level of expertise that meets your needs.

For example, there are specific regulations in the U.S. tariff code that allow U.S. carriers to import aircraft parts that were used abroad without a formal declaration or entry.  This little-known provision, if properly utilized, can result in significant duty savings and reduced merchandise processing fees.  Make sure you choose a provider that is knowledgeable about these provisions, and can ensure you take full advantage.

Look for innovation in your logistics provider

Tremendous innovation has taken hold within the logistics industry in recent years, and providers are able to offer services that were simply unimaginable as recently as 3 or 4 years ago.  With regard to customs clearance, a creative logistics provider might craft a transit plan that avoids airports with notoriously inefficient customs processes, or that lands at a less-busy airport and then provides an expedited ground solution for last mile service.  Or, it might make sense for an AOG part to be consolidated with other shipments headed to the same destination.  The consolidated larger shipment can move as a single shipment and then clear customs as individual transactions.  After clearing customs, the shipment can then be broken down for further distribution.  A hybrid comat/revenue shipment is another consideration for expedited or AOG movement.  In the end, choose a provider that is innovative and creative and who will go the extra mile to meet your logistics needs.

Make sure your logistics provider has “trusted trader” status

Many governments offer programs that allow expedited clearance to trade community members that meet rigid security standards and certify the safety of their supply chains.  In the U.S., shippers participate in the Customs Trade Partnership Against Terrorism program – C-TPAT.  And similar initiatives are in place elsewhere around the world: Canada Border Services Agency administers the “Partners in Protection” program, the European Union has its “Authorized Economic Operator” program and the Mexican government offers the “New Certified Companies Scheme (NEEC).”  Not only do businesses that participate in these programs benefit from expedited border clearance processes, but they establish themselves as legitimate, government-certified members of the trade community.

Time is of the essence in the AOG industry, with the cost meter constantly running for a delayed or grounded aircraft.  AOG managers work tirelessly to have parts identified and on their way as quickly as possible.  But every international AOG shipment – every single one – must make a trip through a local customs clearance process.  You can’t, unfortunately, choose where your next AOG emergency is going to happen.  But with a little advance planning, an AOG manager can minimize the risk of a customs snafu.


Mario Rojas

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For U.S. Businesses, Lots of Optimism with a Heavy Dose of Uncertainty

When Dow Chemical CEO Andrew Liveris emerged from a mid-February meeting with President Trump and senior administration officials, he told waiting members of the media:  “Some of us have said this is the most pro-business administration since the Founding Fathers.  There is no question that the language of business is occurring here at the White House.”

Liveris was at The White House as part of a group of 24 CEOs representing the nation’s largest manufacturers including Dow Chemical, General Electric, Lockheed Martin and Ford.  The DOW CEO has been asked by President Trump to lead an “American Manufacturing Council,” to focus on igniting manufacturing opportunities in the U.S.

This sense of optimism is shared by the nation’s small businesses, with the National Federation of Independent Business (NFIB) announcing a 12-year high in its small business optimism index.

Amidst all this excitement though, there is also a deep sense of uncertainty, as businesses wait to see exactly how some of President Trump’s campaign pledges shake out.  Will the President pursue his vow to impose a 45 percent tariff on imports from China?  What exactly is in store for NAFTA, which the President has called “the single worst trade deal ever approved in this country.”

The Administration has vowed to revisit existing trade practices that, the President says, in their current form are unfair to U.S. businesses.  At the same time, both the President and Congressional leaders have pledged to reduce the United States’ sky high 35 percent corporate tax rate, and reduce the regulatory burden on businesses.

A new white paper from Purolator International, “2017 International Trade Uncertainty: What’s at Stake for U.S. Businesses,” offers insight about each of the front burner issues now under consideration.

The paper also discusses actions taken in recent months by our top trading partners to further their own trade positions.  Canada, for example, significantly strengthened its international position with finalization in late December of the Comprehensive Economic and Trade Agreement (CETA), which is a free trade agreement between that country and the nations of the European Union.

It’s an interesting time.  But with so much at stake, businesses must keep informed.  Start now by clicking here to download a complimentary copy of Purolator’s new white paper.

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Manufacturers’ Efficiency Revolution Must Extend to Logistics Solutions

When PriceWaterhouse Coopers released its list of industrial manufacturing trends, it cited a “technological renaissance” taking place in America’s factories, “that is transforming the look, systems and processes of the modern factory.”

Technology has become integral to U.S. manufacturing, with research by the National Center for the Middle Market finding nearly half of “middle market” (companies with annual revenue between $10 million and $1 billion) companies rely on some degree of advanced manufacturing techniques including automation and robotics.  Of those companies that do not currently employ any advanced manufacturing capabilities, 78 percent expect to do so within the next 3-to-5 years.

Manufacturers that have successfully transitioned to automated, highly-efficient processes certainly did not make these investments without giving careful thought to their supply chains, and their ability to seamlessly move both supplies and finished goods.  How, for example, would increased automation affect the speed at which supplies were needed?  Would additional parts inventory be needed and if so, at what cost?  And what if a piece of machinery broke down?  What would be the plan for quickly having a replacement part available, to avert any production delays?

Fortunately, at the same time America’s factories were undergoing a technology revolution, so too were many of the country’s logistics providers.  As a result, logistics solutions are available today – and in place in manufacturing facilities around the country – that were unthinkable a few years ago.

For example, one Texas manufacturer was pleasantly surprised that its logistics provider’s ground solution could deliver its products to the Canadian market faster than most providers’ air solutions!  This expedited – yet cost efficient – solution allows the manufacturer to meet delivery promises to its customers without having to incur excessive costs.

A new white paper from Purolator International, “Preparing your Logistics Strategy for Today’s Advanced Manufacturing Practices,” delves into changes afoot in manufacturing practices, and the importance of strategic logistics solutions.  For businesses that have invested heavily in technology, ensuring the right logistics plan is in place is the natural next step.

Click here to download a complimentary copy of Purolator’s new white paper.

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AOG Repairs Don’t Always Have to Mean Premium Pricing

“Speed” and “Urgency” are words commonly used in the world of AOG repairs, as airlines spare no expense in locating parts needed to repair grounded planes.  But let’s add two additional terms – “Consolidation” and “Cost Efficiency” – that can help streamline the process and control costs.

We don’t often think of an AOG repair as an opportunity for cost efficiency, but innovative logistics solutions are increasingly changing the way certain carriers approach their repair orders.  And consolidation – the process whereby smaller shipments are combined to achieve economies of scale – is rapidly becoming a preferred option for many AOG managers.  While you certainly can’t plan your next AOG situation, you can, as the saying goes, make lemonade out of lemons by finding opportunities for efficiency.

How exactly does consolidation work in the fast-paced world of AOG repairs?

Consider these three situations:

  • Same City Maximization: Let’s say a plane is hard grounded in Atlanta, with an unserviceable air data computer.  AOG technicians will find the necessary replacement part to get the plane airborne again, but the malfunctioning part will need servicing at a repair station located in Dallas.  Now in the past, that single unit would be expedited to Dallas via a costly courier solution.  But doesn’t it make sense to combine the broken air computer with other parts also in need of service in the Dallas area?

Some airlines are beginning to make good use of this classic example of consolidation.  Multiple parts in need of service move together – as a single shipment.  Upon arrival in Dallas, the larger unit is broken down and each part is transported directly to the appropriate repair center.  This solution is ideal for AOG repairs that are slightly less urgent, and can have a surprising impact on transportation costs.

  • Volume Efficiency. It’s not uncommon for an airline to have a volume of unserviceable parts in need of repair at the same time.  An example of this might be an FAA-mandated modification to a certain part that needs to be made across an entire fleet.  Rather than ship individual components on a piecemeal basis, airlines are realizing the efficiency of consolidating parts into a single shipment.  Airlines have gotten quite sophisticated at developing and maintaining spare parts provisioning lists.  It makes sense then, that a consolidated approach to performing mandated equipment upgrades/refurbishments would be most effective.
  • Customs/Handling Facilitation for International Shipments. Many international airlines rely on U.S. repair facilities.  This of course involves transport of parts and materials across international borders which, if not properly managed, can be a supply chain killer.  Keep in mind, the top reasons for border clearance delays are incomplete paperwork and missing documentation.  Plus, U.S. customs agents have increased scrutiny on parts, equipment, and technology-related shipments, meaning AOG-related products are prime candidates for extra scrutiny.

If properly handled consolidation can minimize delays associated with the clearance process in several ways.  First, a consolidated shipment will move as a single unit, meaning each individual product will not have to be processed for transportation as a shipment.   Upon arrival at the port, individual items are cleared as separate units.  This prevents the entire shipment from being delayed should customs seek further inspection of a particular item.

In addition, international shipments traveling to different domestic destinations can move as a consolidated shipment in the manner discussed above. Once cleared through customs, the larger shipment is deconsolidated for further domestic distribution.

Consolidation also has the benefit of minimizing in-transit damage, since smaller units are bundled together, and less susceptible to turbulence, shifting and other in-flight risks.

It would seem then, that consolidation opportunities would be especially appealing to larger carriers, that deal in significant volumes.  However, I am continually amazed to find AOG managers who not only fail to take advantage of consolidation, but who seem to believe their current logistics operations are just fine.

Well maybe parts are arriving on time, and there haven’t been too many glitches, but there is always room for improvement.  AOG managers should be constantly on the lookout for innovations, always looking for the “next great thing,” and constantly curious about how other carriers manage their AOG services.  Consolidation, for example, could be a tremendous source of savings, but if an AOG manager doesn’t know the option even exists, it will remain a missed opportunity.

AOG repairs are so costly, that managers need to turn every stone looking for areas of efficiency.  Shipment consolidation is an obvious place to start, and as I will point out in future posts, it is certainly not the only place.


Mario Rojas

Mario Rojas

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Single Window Initiative – Long-Awaited Relief for U.S. Trade Community

If you needed any convincing that the U.S. customs compliance process was in need of an overhaul, consider this statement from U.S. Customs and Border Protection‘s (CBP) own publication: “Forty-seven agencies are involved in the trade process and among these agencies, nearly 200 forms are required for imports and exports. The current processes are largely paper-based and require information to be keyed into multiple electronic systems. As a result, importers and exporters are often required to submit the same data to multiple agencies at multiple times.”

The situation reached a point where members of the trade community appealed –- loudly and often – to the government for relief. A report by the Peterson Institute for International Economics found “the United States is no star when it comes to logistics. Overall the country lags in trade facilitation to its own detriment as a competitor in the global marketplace.”

And a subsequent analysis from the Washington, D.C.-based Wilson Center found that border inefficiencies added roughly $800 to the price of every new car manufactured in North America. Among other reasons, overlapping authority of government departments, plus requirements for multiple inspections, were cited as key factors in driving up costs.

Fortunately, help arrived in the form of the single window initiative, which was fully implemented in January 2017. The single window, known officially as the International Trade Data System, operates off of the Automated Commercial Environment (ACE), and now serves as the nation’s primary trade processing system.

This means a trader can satisfy all documentation requirements by entering data once. The ACE platform will accept the data, and then route the information to all applicable agencies. Going forward, traders will no longer be hampered by the onerous process of complying with multiple documentation demands, or the prolonged process of waiting for CBP to determine a shipment’s admissibility.

A new white paper from Purolator International, “The ABCs of CBP’s Single Window Initiative,” takes a detailed look at the new process. Among other things, the paper discusses how the system works, and how members of the community can become ACE-compliant.

To learn more, please click here to download a complimentary copy of Purolator International’s new white paper.

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Hidden Fees and Unexpected Costs in your Supply Chain

Next time you see an 18-wheeler stuck in a traffic jam, you’d better hope it’s not carrying a shipment addressed to you or your business. That’s because, as reported by Forbes Magazine, traffic congestion costs the U.S. trucking industry nearly $50 billion each year in lost productivity. That amounts to about $26,000 per truck, and guess who pays the costs?

That’s right, costs are generally passed along to shippers, and ultimately to consumers. The cost of poor infrastructure is just one of several “hidden” or “below the surface” fees that go into the transportation and logistics costs U.S. businesses pay each year. Other fees that are seemingly slipped in to transportation bills include costs associated with “free” shipping, costs resulting from shipments that arrive damaged, regulatory costs and excessive or unwarranted accessorial fees. This is in addition to costs resulting from inefficiencies and redundancies in warehouse and transportation operations that often go unnoticed.

Research by McKinsey and Partners estimates that supply chain inefficiencies are so widespread, a business could reduce warehouse costs by up to 50 percent, and transportation costs by 40 percent if corrective steps are taken.

The first step in taking control of these hidden costs though, is knowing about them. A business can start by conducting an audit of all freight and supply chain costs. Dig deep into the fine print and ask questions about any charges that look suspicious. There’s nothing to lose and everything to gain from asking a logistics provider to explain a certain charge, or provide supporting documentation.

A new white paper from Purolator International, “From ‘Free’ Shipping to Product Returns: Understanding Hidden Costs in your Supply Chain,” discusses several factors that help drive up overall supply chain spending. The paper highlights the impact these charges can have on the bottom line, and identifies solutions for managing these costs, if not eliminating them entirely

Please click here to download a complimentary copy of Purolator’s new white paper and learn more.

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With Two-Day Delivery the Norm, Expedited Service is an appealing E-Commerce Option

It’s no secret that online shoppers place a premium on free shipping, with multiple surveys showing that consumers have come to expect this benefit. But what does come as somewhat of a surprise, is the changing definition of what consumers consider “fast” shipping.

According to 2016 research by Deloitte, a strong majority of consumers — 83 percent – consider fast shipping to mean delivery within two days or less. Only 42 percent of consumers consider three-to-four-day shipping “fast,” down from 63 percent just a year earlier.

Deloitte’s researchers cite as a key driver behind this attitude change. Specifically, Amazon Prime, which offers two-day delivery to members who pay an annual membership fee. With as many as 65 million Americans reportedly signed up as Amazon Prime members, it’s not surprising that consumers have come to see two-day shipping as the new normal.

But meeting these expectations has been a challenge for many online retailers, who suddenly find themselves tasked with reconfiguring warehouse and inventory strategies, and developing logistics solutions to ensure fast, on-time delivery.

For many, expedited service has proven to be an obvious and highly effective solution.

Yes, this is the same expedited service traditionally associated with emergency shipments racing through the night, or across multiple continents to meet a critical deadline. But in today’s customer-driven world, a growing number of retailers are embracing expedited as a sure-fire way to meet expectations and ensure definite deliveries.

And like so much else in the logistics industry, expedited service has benefitted from technology and innovative thinking. Today certain logistics providers can provide faster ground-based solutions than some carriers’ air service. And high levels of visibility, in-transit communication, flexibility, security and exceptional last mile service ensure premium levels of customer service.

A new white paper from Purolator International, “Expedited Logistics becoming Preferred Option for Non-Critical Shipments,” takes an in-depth look at today’s expedited services, along with insight for shippers considering enlisting an expedited provider. Please click here to download a copy of the white paper.

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