May 1, 2006
enroute | Express Services

Get what you pay for

get what you pay for

A hot international shipment will lose its sizzle if it's held up by missing paperwork or a customs mixup. Here's how shippers and carriers are keeping those pricey shipments from losing velocity.

By Peter Bradley

It could be a valuable piece of electronics. Or something perishable, like a crate of truffles. Or an item with a short shelf life, such as a designer dress. International express shipping is pricey, and so shippers are likely to make use of it only when, to borrow from an old ad slogan, it absolutely, positively has to be there right away.

Though international express shipments represent but a small portion of all international shipments, the express segment is one of the faster-growing businesses for international carriers. Last year, more than 2 million international express shipments rocketed around the world every day, according to the Air Cargo Management Group, a Seattle-based consulting and research organization.

That trend has been building for some time now. In its biennial World Air Cargo Forecast, last published in 2004, Boeing Inc. reported that international express shipping had averaged 16.4-percent annual growth during the previous decade. The pace may slacken in the coming years, but the express segment will keep on growing, buoyed by an ever-rising volume of goods and materials sourced or produced overseas. "As businesses continue to expand beyond domestic or close regional markets," the Boeing forecast noted, "the international express sector will continue to grow, albeit at more sustainable long-term rates."

No more tangles
As sourcing becomes more international in scope, it's imperative that shippers keep their hot shipments from getting snarled somewhere in the supply chain. International express shipping carries some risks that don't affect domestic shipments. They include issues arising from language, cultural and currency differences. They include holdups that occur when shippers run afoul of documentation and regulatory requirements that vary substantially from country to country. And they include delays arising from scrutiny by foreign or domestic customs officials for reasons of both compliance and security.

Given the risks, it's small wonder that shippers are eager for any assistance they can get. And it's easy to see the appeal of using a carrier that can streamline the process. In fact, Jon Routledge, vice president for international sales at DHL, believes DHL's ability to take command of the full process is largely responsible for its success. "We provide as much connectivity and DHL control end to end as possible," he says. "As we've expanded the network, a couple of things have been constant throughout. We've maintained maximum control in order to give peace of mind with security and visibility."

Routledge notes that U.S.-based shippers typically want more from their carriers than just transportation. "There is a heavy reliance on the carrier not just to expedite the movement from point A to point B, but to steer through the regulatory and cultural barriers," he says. "There's an expectation by the customer that sourcing should be as easy in Asia as it is in North America.We attempt to make that a reality." The goal, he says, is to become an extension of the customer's company overseas.

Play by the rules
It's important to note that in the end, it's the customer who bears final responsibility for its international shipments. Ultimately, shippers are accountable for complying with the dizzying array of rules and regulations. But they're not entirely on their own. The express carriers, along with customs brokers, forwarders, and other international specialists, stand ready to help.

"Customers are concerned with two things," says Ken Grace, director of gateway services for DHL. "They want speed and visibility and they want compliance. We work a great deal with importers to ensure accuracy and proper documentation. Preparation is critical." He notes that imports have come under increased scrutiny by Customs officials since 9/11, making accuracy and regulatory compliance more crucial than ever.

One key to seamless service is taking the time to set up a new customer's first shipment properly, says Jerry Del Gaudio, vice president of international trade services for UPS Supply Chain Solutions. Del Gaudio explains that companies that are frequent users of international express service tend to ship mainly between the same origin and destination points, so the information gathered up front will cover most subsequent shipments. "We get lots of information on lanes and commodities," he says. Capturing information early allows the carrier to ensure that arrangements for such things as licenses or powers of attorney are in place before the shipment begins its journey. "Then we set it up electronically," he adds. "A lot of it is set up in EDI before the time of pickup. We can alert the destination 12 to 24 hours in advance."

Systems for hire
Not surprisingly, the major international express carriers have invested heavily in technology designed to make transport seamless. They've spared no expense setting up both internal systems and networks that link them with outside parties—customers or government agencies, for example—to keep shipments from getting held up along the way.

"When you start thinking about how to maintain speed—and to balance that speed with accuracy, security and compliance—a lot of that drives off investments in technology," says Del Gaudio. "Without these, we could not be as efficient. Information has to move more quickly than the merchandise so we can efficiently handle regulatory and customs issues."

Shippers without EDI can use other electronic tools offered by the major carriers. And for those customers who have yet to automate their operations (a very small percentage of international shippers, according to Del Gaudio), the carriers can capture data from fax or paper documents. "We have a lot of shipping systems for the unsophisticated end user," he says. "They can buy the software, or, for those who don't have any [systems in place], we can enter the information."

DHL has developed a number of online tools to help U.S. companies navigate the complexities of international shipping and to provide tracing and tracking. It will soon launch a new Internet tool called Import Express Online.

FedEx Express likewise offers online help to customers. In March, FedEx Express announced that it had enhanced its FedEx Global Trade Manager, an online tool for small and mid-sized companies, to give customers access to customs documents and regulatory advisories for more than 200 countries. The upgrade also gave clients access to an expanded International Denied Party Screening tool, which is crucial to complying with security requirements.

In fact, it's hard to imagine a discipline where it's more critical to stay up to date with the regulations than international shipping. Conceivably, last week's perfectly legal shipment could get held up this week because of a change in regulation either here or at the source. For that reason, each of the carriers has tools to keep its systems up to date.

Del Gaudio reports that UPS remains in frequent contact with government agencies to ensure that it's notified of any changes. "We do a lot of work with Customs, the Food and Drug Administration, [and] Fish and Wildlife to make sure we're compliant," he says.

Actually, all of the major carriers do much more than simply stay in touch with those agencies. They've also taken an active role in the process of developing and changing regulations. For example, carriers have been tireless in their efforts to simplify the global trade process, endlessly urging governments to develop standardized regulations and to open borders. Should they succeed, of course, they stand to see a big payoff in the form of increased business. "The more you standardize," Del Gaudio points out, "the more you can facilitate trade."

About the Author

Peter Bradley
Editor Emeritus
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.

More articles by Peter Bradley

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