Things you need to know about trade show shipping and custom clearance to avoid expensive mistakes

Before I became a customs broker in the logistic industry, I was at UBM 's subsidiary UBM Asia company (now named Informa Market because of the company acquisition), the largest trade show organizer in Asia connecting more than 60,000 exhibitors at 230+ events around the globe each year. During that time, I used to travel to more than 10 trade-shows around the nations and even abroad, sometimes as an exhibitor and sometimes as a trade visitor or press. I have first hand knowledge on how stressful the work is behind those glamorous booths, especially the logistics part.

There are two typical kinds of trade shows: permanent showroom, and temporary setting trade-show. Permanent showroom, such as Las Vegas Market and High Point Market, you can lease the showroom from the organizer and move in your samples during the show dates. This type eliminates more work to do because you don't have to build your booth from the ground. As for the temporary setting trade-show, each convention center might host dozens of such events throughout the year. They make a lot of money by renting the space for each event organizer. The booth is build-up for show date only and taken down right after.

Las Vegas Market ( Permanent showroom)

 Hotelex Shanghai Expo ( Temporary tradeshow booth)

 If you are planning to participate in an upcoming temporary trade-show as an exhibitor, here is what you need to pay attention to:

Choose a good shipping company who knows the business

Choosing an experienced trade show shipping company that knows the ins and outs of the industry is very important. The experienced trucking company is more likely to have a good rapport with relevant unions or official contractors like Freeman, GES, PICO, etc. Good relationships can help avoid service delays and may prevent your drayage costs spiraling in the event of a mishap.

Also, choose an experienced trucking company who knows the venue and will help deliver your product in the most highly and efficient manner. Whether it is McCormick Place in Chicago, the Moscone Center in San Francisco, Santa Clara Convention Center, San Jose McEnery Convention Center or Javits Center in NY, If your carrier has specific venue experience, you benefit too!

If you don't know where to find these companies, you can also turn to truck brokers for help. They have connections with private carriers who can move your freight in a dedicated truck giving your goods full attention.

Take advantage of ATA Carnet and pay $0.00 duties and tax

Both TIB ( Temporary Importation under bond) and ATA Carnet can be adopted when claiming exhibit goods, however a ATA Carnet is more convenient.

Usually, the ATA carnet will be issued by your shipper and sent to your nominated custom broker. The broker would attach a bill of lading, air cargo manifest copy along with original carnet package to hand into their local customs office. Once custom officers stamp and sign on the appropriate fields, the shipment is considered cleared.

An ATA Carnet would eliminate the need to post a bond and pay duties and taxes but the only requirement is the importer has to reexport the goods along with original carnet package back to the shipper before the deadline (usually within one year)

Time is Essence

You have two options to ship your trade-show goods to your show: the advance warehouse or the show site.

When shipping to the advance warehouse, your freight may arrive up to 30 days before the show dates — check your show’s exhibitor manual for information on advance warehouse ship dates. If you hire a personal contractor to build a very big and complicated booth with everything customized, I would suggest shipping your needed goods to the advance warehouse as quickly as possible. Shipping to the advance warehouse gives you the ability to track your freight and ensure that it has been received, with plenty of time to double-check. Also, your freight will already be in place when you arrive for the show setup. Although some show decorators may charge higher drayage and storage fee for a shipment sent to the advance warehouse, the benefits generally outweigh the cost. On the opposite side, if you choose a standard package booth using an official contractor, then you can just ship to the show site on move-in dates.

You will also need to watch out for the potential waiting time. For example, at a very popular show, trucks full of supplies sometimes have to wait for hours in the marshaling yard before they are able to deliver their shipments at the unloading dock. Marshal-yard fees range from $45 to $85 an hour. If you know the show is on a big scale and the waiting time is unavoidable, you should ask to deliver the goods as early as possible, or even ship to the advanced warehouse as mentioned above.

Participating in a trade-show can be super costly. Hopefully, you will prepare a successful trade-show without making expensive mistakes. Contact your local American Lamprecht Office if you have any questions, we are always happy to help!

Market Update: Tariffs and IMO 2020

Alert: What you need to know about the tariffs now

As reported by JOC.com and The New York Times, on October 11, U.S. and Chinese negotiators worked out the details of the first phase of a trade deal that calls for China to buy $40 to $50 billion worth of U.S. agricultural products and for the U.S. to cancel its plan to increase tariffs from 25 percent to 30 percent on over $250 billion in Chinese imports. The original date of the increase was October 1, and it would have affected building products, vacuum cleaners, lighting and plumbing fixtures, handbags, luggage, vinyl flooring, semiconductors, printed circuit boards, and chemicals.

The next round of tariffs is set for December 15. If implemented, these will affect products including footwear and apparel.

Exclusions, refunds, and more

While the 25 percent tariffs have brought stress to importers for more than a year, some are finding relief via product-specific exclusions and refunds for tariffs already paid. These exclusions are available whether importers have applied for them or not. Over 3000 exclusions have already been granted for products impacted by Section 301, and over 2000 are still under review.

The exclusion submission window for List 3 closed on September 30, and, as recently announced, the window opens October 31 for qualifying goods on List 4A. Companies interested in applying for List 4A exclusions should be aware that those letters are due by January 3, 2020, so they will need to act quickly. Product exclusions are announced in rounds, so importers should regularly check USTR postings or consult with a customs broker. For additional guidelines and important dates to meet, importers should follow the instructions on the Tariff Actions page at the USTR website: https://ustr.gov/issue-areas/enforcement/section-301-investigations/search.

Alert: IMO 2020 is a little more than 2 months away

January 1, 2020, the day IMO 2020 goes into effect, is just around the corner, and the International Maritime Organization’s regulation will bring about significant changes in the shipping industry.

To combat the high level of pollutants in the exhaust of the bunker currently used to power some 50,000 ships globally, carriers will have to re outfit their fleets so that they can burn fuel that’s better for the environment. This will involve physical upgrades designed to reduce sulfur emissions by more than 80 percent. One option is to install on board scrubbers that process the current fuel’s exhaust. The other is to convert the fuel supply to liquid natural gas.

“Goldman Sachs estimates that the overall impact on consumers in 2020 could be as much as $240 billion,” according to an article published online by Logistics Management. The article also mentions that the changes will add approximately $40 billion in increased shipping costs.

“This is the largest regulatory change in the oil space ever, and it will have a massive effect far outside of shipping,” says Svelland Capital portfolio manager Kenneth Tveter in the Logistics Management article.

IMO 2020’s effect on the industry

It is expected that carriers will comply with IMO 2020. One reason: Those that don’t comply risk alienating customers who care about protecting the environment. As ships are converted, new low-sulfur fuels will be in high demand. The conversions and the cost of fuel will create higher shipping prices. In addition, as ships are dry docked and converted, fleets will be reduced, creating more demand on the ships still at sea. And with fewer sailings, shipment delays will affect supply chains all over the world.

What you can do to prepare

With regard to tariffs: American Lamprecht can help you navigate the complex process of identifying existing exclusions, applying for new ones, and handling entry corrections and refunds (if applicable). Here are a few other things you can do:

• Determine how the tariffs affect your cash flow, line of credit, vendor payment schedule, payroll, and more.
• Confirm your credit status with your broker, forwarder, and overseas vendors.
• If you haven’t done so already, set up an Automated Clearinghouse (ACH) account with Customs so that you can pay through Periodic Monthly Statement (PMS), which gives you an up-to-45-day float.

With regard to IMO 2020: There are things you can do now to prepare your company for the industry’s new changes:

• Ship early to avoid the capacity shortage, and arrange for domestic storage if required
• Optimize flexibility in the event your first or second option are blank sailings
• Diversify shipments so that no single carrier has all of your product
• Learn how using multiple carriers can work for you, especially in periods of limited capacity
• Consider air freight for certain shipments
• Reconfirm allocations and forecasts

Like the challenges caused by the escalated tariffs, those caused by IMO 2020 will require importers and exporters to work with logistics experts like American Lamprecht to find solutions that preserve the integrity of supply chains and the profitability of their businesses.

"It is about doing the right thing" - Choose the correct tariff code

After finishing the show Breaking Bad, I started to follow its derivative show Better Call Saul. Saul Goodman, formerly named as Jimmy McGill, is a small named attorney hustling to make a name for himself. He is "morally flexible", sometimes he will use tricks to benefit himself as long as it is legal. However, when facing some critical moments, he's said, "it is not about doing it quickly. It is about doing the right thing." I really recommend this show.

Back to today's topic, the principle of "doing the right thing" for the customs broker, is to provide as accurate and complete information as you can to U.S. Customs. Although making an entry with 50 lines seems a lot of work, if that is the way it's supposed to be, you have to do it anyway. If you happen to make short cuts and group all the items into 5 lines, the tactics might backfire at the end if and when the shipment gets examined. On the other side, the importer is the ultimate responsible party to provide accurate classifications as this is a "reasonable care" requirement of U.S. Customs Compliance. If you would like to save duties by misusing tariff codes, such non-compliance conduct can result in a substantial cost, both in back duties and penalties for the importer.

I have a real example here:

So this importer sells a large range of cleaning machines (like commercial level vacuums and cleaning machines) and its components and accessories. So he simply provides the broker one tariff code 84519000 for all its invoiced items. By definition from HTSUS book,

84519000

Drying chambers for the drying machines of subheading 8451.21 or 8451.29, and other parts of drying machines incorporating drying chambers

However, if we examine the commercial invoice and packing list, there are "accessories bags", "deep clean pads", " handy brushes", "battery" etc. These articles, although can be used in conjunction with a cleaning machine, but should not be classified as parts of any article. If the battery leaves the cleaning machine in question, it is still a battery. Apparently, the importer tried to play around the rules by claiming that battery, bag and all this and that item are just parts of the drying machines. This importer knows the bags has 17.6% duty while parts of machinery only have 3.5% duty. It makes a huge difference in the duty amount but it is not right to do so.

If you have doubt, please make sure you check with your broker whether it is okay to classify the goods to be part of the parent item or not. Actually there are classes of goods that can never be considered to be parts of a parent item. These are considered to be "Parts of General Use" defined in Note 2 to Section XV, HTSUS. These articles include springs, nails, screws, pipe fittings, etc. Under no circumstances can they be considered to be parts of any article, but must be classified under their own headings

One size CANNOT fit all.

In any case, if you feel that you don’t understand the meaning of a particular heading or subheading, there are several tools for you to utilize

The Customs Ruling Online Search System

https://rulings.cbp.gov/home

The Customs Ruling Online Search System (CROSS) is a very user-friendly system that allows you to search by keywords. You can either enter descriptive names for your article or if you want to see what customs has classified under a particular HTSUS number, put that number in and see rulings that have been issued classifying products under that number.

The Harmonized Tariff Schedule of the United States

https://www.usitc.gov/tata/hts/index.htm

This is the official and most updated listing of 10-digit product classifications for products imported into the United States.

You will find the six General Rules for the Interpretation of the Harmonized System (GRI’s), found on page one of the EN. These rules are also found at the beginning of the HTSUS. However, the EN has detailed explanatory notes on all the rules, so it is considerably more useful.

Remember if in doubt, contact your local American Lamprecht Transport Customs Broker.

U.S. Goods Return

One of my favorite stores is Costco because they have an incredibly great and free return policy. No questions asked, no BS, just take the product back for a refund within the allowed period. That easy and free return policy encourages me to spend more money with Costco than any other supermarket. Returning goods is mostly hassle free when it's being done through your local grocery store or shopping mall. Now let us talk how returning goods work when doing importation business with U.S. Customs Board of Protection. Returning goods back to the origin country where they are made after importing into the US is not so easy once they have been cleared to enter the Country. As an importer, it is important that all steps are followed and you do your homework to be sure all goes smooth and that the compliance guidelines are followed.

Here is a scenario: A Canadian company bought goods from a U.S. company several months ago. They received their shipment and the goods were refused by the buyer because they did not meet their product specifications. All the packages and products remain the same. The goods can be returned to the U.S manufacture. Is this duty-free U.S. Goods return? The answer is yes.

Per 19 CFR 10.1, the HTSUS code 9801.00.10 is a special classification used for the duty-free importation of “Products of the United States when returned [to the USA] after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.” The last two digits of 9801.00.10 classification vary.  They are based on the length of exportation or importation of the article or on the original HTSUS classification of the article

So, based on the scenario above, what if they Canadian company accepted the goods and a few months later they wanted to return them back to the US? They re-processed the goods and re-manufactured them into a more advanced product since they've had them. Would these same goods qualify as a US goods return? The answer is no.

CBP Form 311

When clearing returning U.S. goods through Customs and Border Protection (CBP), the importer should file the CBP form 311- declaration of Free Entry of American Goods Returned and hand back to your customs broker. Please make sure that your manufacture has never applied the manufacture drawback on the item. The official form can be found here

Manufacture's Affidavit

For formal entries valued more than 2500 USD, manufacture's affidavit is also needed to further prove the ownership of the goods. U.S. Customs requires the affidavit to be on the U.S. manufacturer's letterhead and it must be signed by a C-Level corporate officer from the U.S. manufacturers facility. A properly worded manufacture's affidavit that is complained of 19 CFR 10.1 can be requested from your local customs broker.

Foreign shipper's declaration of US Goods return

This is completed by foreign shipper who ships the goods to the United States. CBP requires a declaration by the foreign shipper indicating that the products were not advanced in value or condition while outside the U.S. The form also needs to be signed by a C-level corporate officer from the foreign shipper company.

Proof of U.S Export

Another document will be deemed sufficient proof of export from the U.S. for U.S.-manufactured goods or foreign-origin goods provided that the information contained therein proves an export: a copy of the entry into the foreign country, U.S. export invoice or bill of lading/airway bill, or Electronic Export Information or Automated Export System filing the exemption.

If you are ready to ship a U.S goods return product, we would highly suggest starting to prepare the needed docs before you ship out. It takes some time to get the corporate officers signature. And you certainly do not want your shipment to experience delays.

American Lamprecht Advisory: IMO 2020

We want to keep you updated of the new regulations impacting our entire industry as of 1st JAN, 2020.

What is It?

The International Maritime Organization (IMO) has ruled that from 1st JAN 2020, that they will put a cap on Sulphur emissions for the marine sector in international waters. The marine sector will have to reduce Sulphur emissions by over 80% by switching to lower Sulphur fuels or by installing scrubbers. The current maximum limit for fuel oil Sulphur of 3.5 weight percent (wt%) will fall to 0.5 wt%. That is the largest one-time regulation in transportation fuel ever undertaken.

Why is everyone talking about fuel?

The marine sector consumes about 3.8 million barrels of fuel per day, responsible for half of the global fuel oil demand. The cost difference between IMO compliant and non-complaint fuels is significant. Ship operators that now need to change to a different fuel type, will now compete for fuel directly with truckers, railroads and airlines.

Who will be affected by IMO 2020?

It is expected to be a disruptor for the entire maritime industry. However, the level of impact is expected to vary from region to region, based on ship size, fuel cost and carrier readiness. The impact should start to be felt from Q4 of 2019 onwards. It is expected to last for a few years, as the shipping sectors adapt to the new rule.

What does IMO 2020 mean for our mutual business?

Growing demand for the new fuel type is likely to result in increased prices. The ocean carriers are unable to absorb the increased cost, so it’s expected that such costs will be passed on to the cargo owners. Based on that, either ocean freight rates will increase, or a surcharge will be implemented to recover such cost increases.

Will there be uniformity in the fee structure?

We are expecting to see a highly diversified way of carriers passing this cost along to the maritime industry. Therefore we are also expecting that there will be differences in amounts that Shipco will be forced to pass along to our customers. For FCL it will be a similar structure of how we are charged by carriers. For LCL shipments, we will review our average utilization and break the fee down to a CBM or TON additional that then is added to the invoice.

For additional information, please feel free to contact your local American Lamprecht Team.

Tariffs on All Remaining Imports from China to Begin Sept 1 along with the exemptions with no grace period

President Trump has announced that beginning Sept. 1 he will impose a 10 percent additional tariff on virtually all of the remaining $300 billion worth of goods imported from China that are not already subject to Section 301 tariffs (List 4 goods).

Initial indications are that the 10 percent tariff, which would be in addition to any other applicable tariffs, will be applied on the entire list (See attached “USTR 301 Proposed List 4”) of 3,805 full and partial subheadings announced in May. The Office of the U.S. Trade Representative said at that time that this list covers all apparel, footwear, and manufactured textile products, among others, but excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals. A Federal Register notice providing additional clarifying details is expected shortly.

Based on experience with List 3 goods, it is not expected that requests to exclude specific products from List 4 will be accepted while the tariff rate remains at 10 percent. If this rate is increased to 25 percent, which could happen if the administration deems it necessary to gain additional leverage in the ongoing U.S.-China trade talks, an exclusion process could be established.

The Office of the U.S. Trade Representative has issued a notice stating that the additional 10 percent tariff on List 4 imports from China will not be imposed on certain products that were removed for health, safety, national security, and other factors. A list of these products is available here. (See attached “USTR 301 Products Removed from List 4)
Additionally, the tariff will be delayed until Dec. 15 for products on List 4B. Those products are in the following tariff groups: cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
For products on List 4A, the tariff will go into effect Sept. 1. USTR also intends to conduct an exclusion process for products subject to the tariff.
- USTR List 4A (effective Sept. 1, 2019)  (see attached “List 4A Effective Sept 1, 2019”)
- USTR List 4B (effective Dec. 15, 2019)  (see attached “List 4B Effective Dec 15, 2019”)

The following additional details concerning the Section 301 additional 10 percent tariff that will be imposed on List 4 goods imported from China have been made available by the Office of the U.S. Trade Representative.
- The tariff on List 4A goods (see attached “List 4A Effective Sept 1, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Sept. 1. Such goods must be entered under HTSUS 9903.88.15.
- List 4A includes HTSUS numbers for which China’s share of U.S. imports from the world is less than 75 percent.
- The tariff on List 4B goods (see attached “List 4B Effective Dec 15, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Dec. 15. Such goods must be entered under HTSUS 9903.88.16.
- List 4B includes HTSUS numbers for which China’s share of U.S. imports from the world is 75 percent or greater.
- 25 HTSUS numbers (See attached “USTR 301 Products Removed from List 4) proposed for inclusion on List 4 have been removed based on health, safety, national security, and other factors.
- Any List 4A or 4B product eligible for admission under domestic status that is subject to the 10 percent tariff and admitted into a U.S. foreign-trade zone on or after the effective date of that tariff may only be admitted as privileged foreign status.
- The 10 percent tariff does not apply to List 4A or List 4B goods for which entry is properly claimed under a provision of HTSUS Chapter 98, except for goods entered under HTSUS 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80. For HTSUS 9802.00.40, 9802.00.50, and 9802.00.60, this tariff applies to the value of repairs, alterations, or processing performed abroad. For HTSUS 9802.00.80, the tariff applies to the value of the article less the cost or value of such products of the U.S.