International Trade Advice to Help Grow Your Business Globally

There’s nothing like being first to the party to give a business a leg up on its competition, for instance, when you happen on an exciting new product that’s generating great buzz in a foreign market but has yet to turn up in the U.S. If your market research shows that the product has significant potential in this country, trying to secure exclusive distribution rights might be the best way to capitalize on that opportunity.

Normally, an importer would not pay an outright fee to secure exclusive distribution rights for a foreign product, but there may be minimum purchase requirements, an additional margin built into the purchase price, and/or requirements related to marketing, promotion, value-adds, and other factors, says Stephen I. Siller, a New York-based shareholder in the corporate services and international transaction practices of national law firm LeClairRyan. The way to determine whether it makes sense to incur a premium for exclusive rights is through a financial analysis projecting total sales, costs and profits over the expected term of exclusivity, and weighing that against expected return on resources if deployed against other opportunity areas over the same period.

While licensing the product and manufacturing it yourself is one potential approach to exclusivity, buying the product from the existing manufacturer and securing exclusive distribution rights for a defined territory—which can range from a specific region of the country to all of North America—is more common, Siller says. Under a typical exclusive distribution agreement, the supplier appoints a company as its distributor in a territory and gives it distribution rights for one or more of the supplier’s products. The distributor then buys the products from the supplier and resells them to sub-distributors, dealers, retailers and/or direct end-users for its own account.

SMBs looking to form exclusive distribution agreements with foreign suppliers need to pay close attention to a number of factors, Siller advises. Among them are currency fluctuations and the issue of dispute resolution, and the latter is a big one. “Normally, a foreign manufacturer wants to have the law of its home country apply, while most American companies want to have the law of one of the U.S. states apply,” he says. “Litigating in Europe is very different from litigating in the U.S., and litigating in other parts of the world can be even more challenging.”

Siller points out that arbitration is popular for dispute resolution in Europe, but U.S. businesses should be wary of it. If you are forced to accept arbitration for dispute resolution in an exclusivity contract, try to insist that the process be heard by three neutral arbitrators rather than two party-appointed arbitrators (one by each party to the dispute) and a single neutral arbitrator, which is the default arrangement in many agreements. “When you only have one neutral arbitrator, you’re leaving your fate in the hands of a single person who is not bound by the law,” he observes. “What’s the point of even having a contract then?”

Some other items that should be covered in exclusive distribution agreements include ownership of intellectual property rights associated with any improvements or enhancements the importer might make to the product, registration and validity of the manufacturer’s trademarks/copyrights in the U.S., ability of the importer to use the manufacturer’s patents if the importer will be doing any manufacturing under license, and whether or not the manufacturer is ultimately a potential buyer of the importer’s business. Before entering into exclusive arrangements, one should consult with a qualified legal counsel to avoid any antitrust implications.

Whether you are planning to export goods made in the U.S. or import products from another country, there is a host of consumer protection and product safety standards you need to be aware of - both in the country of origin and in the country of destination. "The range of standards that govern the movement of goods varies widely across markets and countries," says Frank Gozzo, chairman and CEO of Noverant, a global regulatory compliance specialist firm. "While there are some common themes, such as tariffs and excise taxes, which are generally well documented, understood, and standardized, there also are many new regulatory standards that pose serious challenges - and opportunities - to any organization."

Among the consumer protection and safety-related standards small businesses may need to deal with are:

• Registration, Evaluation, Authorization, and Restriction of Chemical Substances (REACH). This is a European initiative that places "an unprecedented responsibility" on industry to manage the risks from chemicals entering the European Union (EU) and to provide safety information on substances, Gozzo says. "In fact, while the initiative originally focused primarily on large chemical shippers, REACH will soon impact all upstream and downstream suppliers of virtually any product," he warns.
• Homeland Security. Businesses' ability to import and export products is increasingly being affected by rapidly changing security measures controlled by the Department of Homeland Security. In addition to training employees to address these new requirements, small business owners engaged in import/export activities must also maintain an ongoing compliance management system so they can easily demonstrate evidence of compliance when called on to do so. There are several voluntary programs in which you can enroll, such as Custom-Trade Partnership Against Terrorism (CTPAT) or Importer's Self-Assessment (ISA), that may reduce clearance times for your shipments.
• * Hazardous materials. The handling of certain materials, such as radioactive substances, is clearly hazardous, and the applicable requirements are generally well understood by those involved in such activities. However, the ever-expanding definition of what constitutes a hazardous material poses an ongoing challenge for small businesses. "From dry ice to vegetation, an adequate understanding of HazMat is crucial for any organization," Gozzo stresses.
• Harmonized Tariff Schedule. The 2011 edition of the Harmonized Tariff Schedule for use in classification of imported merchandise contains more than 3,000 pages of critical reference material, with at least 15 substantive changes from the prior year's edition. Staying current on the Harmonized Tariff Schedule (HTS) and its ongoing revisions is critical to remaining in good standing and compliance with associated consumer protection and product safety regulations, Gozzo says. The HTS code for the first six (6) digits is internationally harmonized. You can view CBP rulings for classification on its website.

It may sound like there are a daunting number of hurdles small businesses have to leap in order to participate in today's global marketplace, but, fortunately, there is a lot of help available. Government agencies and industry trade associations maintain vast databases covering these topics, and most are accessible free of charge. A good place to start is the U.S. International Trade Commission's Trade Remedy Assistance Office, which exists to provide small businesses with general information on trade laws and to provide technical assistance to eligible small entities seeking relief under the trade laws. The U.S. Department of Commerce's Export Assistance Centers, with offices in several major U.S. cities, also offer services to domestic companies interested in doing business internationally.

Having a subject matter expert on-staff is also an effective strategy, albeit an expensive one. "The new trend we are seeing is for clients to develop efficient compliance management systems and tap seasoned experts as required," Gozzo says. "This approach tends to reduce the risk of relying heavily on a few employees and also provides a standardized framework for handling almost any import or export challenge."

Unlike goods imported or exported for sale, sample merchandise is not subject to duties - but only in certain cases. In point of fact, the only product category that provides broad exemptions for sample merchandise is textile garments and articles, and even there the rules vary tremendously from country to country. What's more, you need to think long and hard before claiming duty - free standing for sample merchandise. Just as the U.S. Internal Revenue Service views certain tax-return deductions as "red flag" items, that is exactly how most countries' Customs services look at sample merchandise claims, warns Susan Kohn Ross, International Trade Counsel at Mitchell Silberberg & Knupp LLP.

"Legitimate use of trade samples is very limited," Ross says. "Small businesses need to be aware that claiming duty - free status is a higher - risk situation because all Customs services worldwide look very carefully at any claims for duty - free treatment." It's no secret why, she adds. They're all trying to maximize revenue streams.

In the U.S., samples are specifically defined. For the most part, they are limited to textile articles and garments, which must be mutilated in a specific fashion in order to be considered samples, but Chapter 98 of the Harmonized Tariff Schedule also makes allowances for small amounts of alcoholic beverage samples and tobacco samples.

However, the rules are different in each country, and they may vary by value and/or have their own requirements regarding mutilation. "In the U.S., if something qualifies as a sample, it may enter duty - free, but it is not necessarily exempt from other user fees," explains Ross, a cofounder of Trade Lawyers Blog, which is devoted to international trade issues and whose bloggers are trade lawyers in many different countries. "But again, treatment varies from country to country."

To make matters even more complicated, the ways in which various countries treat sample merchandise shipments can also vary by the trading-partner status of the importer or exporter. Free trade agreements (FTAs) often include special provisions that give preferences to FTA partners that are greater than those given to other trading partners, Ross points out. "There are literally hundreds of FTAs between trading partners all over the world, and each would have to be analyzed separately to get a comprehensive view of how sample merchandise is treated." However, none of the FTAs to which the U.S. is a partner involve special treatment for samples, making it a moot point for most U.S. businesses.

Valuing shipments can be another challenge for small businesses. Even items that are rightfully shipped as sample merchandise still have to be valued according to the receiving country's rules, and that can be tricky. International tariff codes typically call for Customs charges to be levied at what is called transaction value, which is similar to fair market value, Ross explains. "The two most common reasons small businesses get in trouble in this area are because they don't meet the test for sample merchandise or they don't value it correctly," she says. "You can be sure that somebody in Customs will notice either of those two things."

Ross says the best, free resource small businesses can access for help with import and export questions is The International Trade Administration , but it does not deal with this topic at the level at which businesses need to make decisions about samples. "Such technical information can often be obtained from the trade staff at an embassy or consulate of the trading partner's country," she says. "There are also services that provide this level of information, but they are all subscription-based. The best thing to do is find a good customers broker for import and a freight forwarder for export."

Dr. Eugene Laney Jr.
Vice President of International Trade Affairs
DHL Express U.S.

There is plenty of evidence that the free trade agreements (FTAs) with Colombia, Panama, and South Korea will provide a much-needed boost to the still-stagnating U.S. economy – along with a vital avenue toward long-term economic growth and stability for U.S. companies in an increasingly global marketplace. In fact, policy experts, business organizations, and community leaders across the spectrum have been pushing the U.S. Congress to ratify these FTAs that were completed several years ago, publicly urging action and an agreement on the one big sticking point – funding for Trade Adjustment Assistance, a worker assistance program that helps to retrain U.S. workers who lose jobs as a result of international trade. In newspaper editorials across the country, calls have been made time and again for legislators to compromise on worker assistance, and to embrace free trade for the good of local companies and international commerce, and in the name of job creation.

But while businesses advocate making these long-awaited FTAs a reality, they should also ensure they are fully prepared to take advantage of them when and if they are approved.

Trade with Colombia and Panama
When it comes to trade with Latin America specifically, the Colombia and Panama FTAs promise good things for U.S. companies – and the U.S. workforce. According to the Congressional Research Service and U.S. Department of Commerce data, growth in U.S. trade with Latin America over the last decade has exceeded that of all other regions. Between 1998 and 2009, total U.S. merchandise trade (exports plus imports) with Latin America grew by 82% compared to 72% for Asia and 51% for the European Union. Over the last 15 years, the United States has signed FTAs with 11 Latin American countries, implementing nine of them. Ratifying the outstanding two trade agreements – with Colombia and Panama – should serve to improve growth along these Latin American – US trade lanes by immediately eliminating most tariffs on U.S. exports of goods and services, with a phase-out of all remaining tariffs over time.

Ultimately, the FTAs will create a level playing field for U.S. companies of all sizes looking to do business in some of the most rapidly growing economies in Latin America – and with more business comes more jobs for U.S. workers. The U.S. International Trade Commission estimates that the trade agreements with Colombia, Panama and South Korea combined would increase exports from the U.S by $13 billion, and for every $1 billion in exports, 6,000 jobs are estimated to be created. And while the U.S. trade pacts are stalled, other nations with whom we compete are moving forward with their own pro-trade agendas. On July 1, for instance, a trade agreement with the European Union and Korea went into effect, and agreements between the EU and Colombia, as well as Canada and Colombia, are expected soon. In the first two weeks of the EU-Korea FTA in effect, according to Korean Customs, trade between Korea and the EU increased almost 20% both ways.

The value of Colombia and Panama as trade partners cannot be underestimated. The agreement with Colombia alone is expected to generate demand for American goods on the order of $1.1 billion, according to the U.S. International Trade Commission. Colombia’s economy is the third largest in South America, and includes strong opportunities in agriculture and related products and services, as well as oil and gas-centered businesses. Even without the FTA in place, U.S. goods exports to Colombia totaled more than $12.0 billion in 2010.

Panama also has one of the fastest growing economies in Latin America, expanding at 6.2 percent in 2010, according to the Office of the United States Trade Representative. Along with the construction, mining and milling industries, Panama is increasingly gaining attention as a logistics hub and a center of financial services in Latin America. With the expansion of the Panama Canal set for completion in 2014, and with significant new investments in Panama City’s Tocumen International Airport, the country is fast becoming and economic powerhouse. Congressional approval of the free trade agreement will give U.S. businesses valuable access to this growing market, where the U.S. dollar is the official currency and English is widely spoken.

Preparing for Implementation
For U.S. businesses looking to do business in Colombia and Panama for the first time, preparing now for the implementation of the FTAs is critical. Likewise, those companies already exporting goods or providing services in these markets should take steps to make certain that they will qualify to take advantage of the elimination of tariffs under the agreements. By preparing early and understanding the requirements for compliance with the rules of the agreements, businesses will be able to quickly adjust to the new trade paradigm when it is eventually realized.

First and foremost, U.S. companies must understand the rules of the trade pacts as they relate to “country of origin.” Like all free trade agreements, the Colombia and Panama agreements provide their own specific requirements for products to be qualified for preferential tariff rates, and businesses must familiarize themselves with these requirements. While the specific regulations on the rules of origin have yet to be written because Congress has not ratified the agreements, the general rules are already documented in the FTA text available on the U.S. Trade Representative’s website: www.ustr.gov

Companies that are exporting or will export products should ensure that they have the proper documentation from all suppliers within the supply chain to demonstrate that the finished product in question meets the requirements related to, for example, minimum percentage of local/regional content. If a company’s product does not currently meet the country of origin requirements of the FTAs, then the company may want to find new suppliers for component parts, for example, in order to achieve compliance as soon as possible. For businesses big and small, examining the supply chain and understanding regulatory documentation is vital.

Supplier documentation will allow those exporting to Panama and Colombia to assess the classification of their products according to the Harmonized Tariff Schedule – a numerical coding system recognized throughout the world to classify commodities for importing and exporting. Businesses must make certain that they have determined the harmonized code number for each of their products, and should confirm that – based on the codes – their duty assessments will in fact be the preferred assessments under the FTAs.

Compliance with the FTAs and import/export rules in general also requires that products be properly valued for customs purposes. For companies exporting for the first time, ensuring the correct valuation of their products is key, and may of course directly impact duty rates. In addition, it is critical to determine whether or not a product requires a special license under U.S. export control laws.

Businesses should also understand that special tariff rates and procedures may apply to the shipment of product samples, and that specific customs forms may be required in the case of sample exports.

How Small Businesses Can Prepare
Increased opportunities for trade benefit companies of all sizes, but small and medium sized businesses are big winners when markets open and barriers are reduced. According to the U.S. Department of Commerce, 97 percent of identified U.S. exporters are small businesses. If high tariffs and regulatory barriers were reduced in more regions of the world, many additional small companies could better compete in the global marketplace. The fact is, a great number of small firms just do not have the capital to navigate through the complex trading system, and do not export as a result.

There are, however, resources and new exporting platforms available to small companies, and in preparation for the approval of the Colombia, Panama and South Korea FTAs, these organizations should familiarize themselves with these important tools.

First, in order to understand the key requirements of the FTAs, including country of origin requirements and classification procedures, businesses can seek guidance from local trade experts through the U.S. government’s Export Assistance Centers (EAC) at www.export.gov. Located in metropolitan areas across the country, more than 100 EACs provide advice and support to small and medium-size businesses seeking to engage in trade on a global basis. Each center is staffed by experts with ties to various agencies.

New technology and more abundant, easy-to-use shipping options are also bringing more small companies into the business of exporting. The Small Business Administration, for instance, offers the Export Business Planner software to help companies take part in the $1.7 trillion export market. At the same time, express carriers and freight forwarders offer new technology tools, access to their global network and hands-on assistance to make exporting easier. By using express delivery service providers, for instance, a small business can access over 90% of the world’s GDP within 2 to 3 days shipping time. DHL Express serves over 220 countries and territories and by using DHL, a small business in the U.S. Midwest can reach the same markets overseas as any large Fortune 500 company.

According to the Business Roundtable, more than 70 percent of the world’s purchasing power lies outside the United States. As the global middle class expands, the value of international business will only grow. Companies that are ready to take advantage of the new FTAs immediately upon their implementation will be in a better position to benefit, and to drive their organizations, and the U.S. economy, forward.

A solid financing plan is essential for an export business, but in order to secure the financing your business requires, you need to know how to respond to financial institutions’ requests for information. The good news is that, unlike export activity itself, those requests for information won’t take you into unfamiliar territory. If your financial house is generally in order, you should have all or most of the information you need near at hand.

Banks, in conjunction with the Small Business Administration (SBA) or the Export-Import Bank of the United States (Ex-Im Bank), are generally the best and lowest-cost form of financing for SMBs starting out in exporting, says David Bovée, president of Zenith Global Solutions, Inc. Over the past 10 years, Zenith has been providing companies with faster time-to-market and increased ROI through its China Now program, and Bovée says the biggest reason many companies are unsuccessful in obtaining export financing is because of the way they engage with lenders and the information they provide—or fail to provide. “The single best piece of advice I can offer is that companies should establish relationships with one or two banks that can service their entire relationship needs, including trade financing,” he says.

The Ex-Im Bank is the official export credit agency of the United States, and its mission is to assist in financing the export of U.S. goods and services to international markets. It does not compete with private-sector lenders but provides export financing products that fill gaps in trade financing. It assumes credit and country risks by providing working capital guarantees, export credit insurance, direct loans, and loan guarantees, most often through its private-sector bank partners. On average, 85% of its transactions directly benefit U.S. small businesses. As part of its Global Access for Small Business initiative and the National Export Initiative launched in January of 2011, Ex-Im Bank is looking to add a total of 5,000 new small businesses to its portfolio, double its annual small business loan volume to $9 billion, and approve $30 billion in total small business transactions. Additionally, the Small Business Administration (SBA) has several lending programs in place for small businesses that have or are seeking to export.

Bovée advises companies seeking export financing for the first time to come prepared when meeting with potential lenders. Essential documents and information include:

• A basic business plan, which can be as short as two to five pages but should detail why you are seeking export financing; demonstrate that you understand and are prepared to deal with the risks involved; and spell out suppliers, customers, timing, and projected revenues and profit margins.
• Evidence/demonstration of knowledge and certification on relevant compliance procedures. The best proof of this competency is a prepared export compliance manual.
• Historical financial statements, including relevant P&L statements, cash flow reports, and tax returns.
• If the amount of funding being sought is large, then projected financials more detailed than those contained in the short business plan will probably be required.

Bovée jokes that lenders may wish to know if your second cousin twice removed has a criminal record, his point being that the depth and scope of information lenders require these days is greater than it was in the past. “Anything is up for grabs now,” he says. “The increased level of due diligence is driven by rigorous regulatory compliance at the top end.” He adds that many SMBs don’t have third-party reviews or audits of their financial statements due to the cost involved, but lenders are asking for them more frequently. Especially in cases where the amount of financing being sought is large, paying for a one-time audit of your financials might be a good investment.

A letter of credit is a financial instrument you can seek from your bank to offer assurance to exporters of your ability and commitment to pay for your import of their merchandise. It also establishes the terms and conditions of the export-import transaction and makes payment contingent on those terms being met.

The International Trade Association (ITA) of the U.S. Department of Commerce explains that this method of payment spreads risk evenly between the exporter and importer. Your exporter may prefer this approach if you are engaged in your first transaction or have not yet established a trade relationship. The agency notes, “Unless the conditions of the LC state otherwise, it is always irrevocable, which means the document may not be changed or cancelled unless the seller agrees.”

Letters of credit may also afford you protection as the importer, “since the documents required to trigger payment provide evidence that the goods have been shipped or delivered as promised,” the ITA explains. The downside for you is price. You’ll need to have your documents related to the import prepared by meticulous professionals, because payment terms require that documents be completely free of even minor discrepancies. If they’re not, the bank is entitled to refuse to honor the payment obligation.

“The key documents that are part of a letter of credit are usually a copy of the commercial invoice and something called an original onboard ocean bill of lading. The bill of lading is a negotiable document,” explains John Capela, author of Import/Export for Dummies and an assistant professor of business at St. Joseph’s College in Brooklyn. “So it’s important that someone new to importing understand the role of a bill of lading and why that is an important document.”

Additional points to keep in mind:

• The letter of credit is based on your sales contract but is not part of that contract.
• The bank’s obligation to pay is based on your exporter’s compliance with the letter of credit’s terms and conditions.
• This means your bank will not concern itself with whether your exporter fulfilled the terms of the sales contract. Its attention will be focused entirely on the documents related to your trade transaction, not the goods you imported.
• Letters of credit may be made transferable.
• You can seek a revolving letter of credit, under which “the issuing bank restores the credit to its original amount each time it is drawn down,” the ITA explains.
• Another foreign commerce financial instrument is the standby letter of credit, which your exporter may request under certain circumstances. Bear in mind that this option may work to your disadvantage, as it will consume a percentage of your line of credit.

For more detailed information, consult the letters of credit chapter of the ITA’s Trade Finance Guide. Your financial and banking advisors can help you to determine when it’s in your interest to use this method of payment for your imported merchandise and refer you to professionals who can prepare the documents properly.

Currency exchange rates are affected by national or regional economic conditions as well as events like natural disasters or the discovery of new natural resources in a country. To work successfully in international markets, you need to know how to track foreign exchange trends and understand their potential impact on your import commitments.

Following daily fluctuations is easy. You can access that information via online currency converter sites like OANDA, which also offers free mobile apps that allow you to check foreign exchange rates from your Android, Blackberry, or iPhone. But it’s not enough to know how the dollar fared today, this week, or this month against the currency in your exporter’s home country

Willis Black, CEO of WBB International, which has been structuring capital goods projects in emerging markets for 30 years, advises small business owners to review the exchange rate’s stability during a 12-18 month period to get a more accurate assessment of any future risk your company may need to mitigate. He also recommends keeping track of political and economic conditions in your exporter’s country by checking The World Factbook for news and updates.

Once you’ve got a handle on how the exporter’s currency is faring against the dollar, you’re ready to consider which foreign exchange (or forex) options are right for your small business and its import transactions.

Start by considering whether you’d like the products you’re importing to be priced in U.S. dollars or another currency. Black cautions that it’s not always a straightforward decision, and it’s something you have to negotiate with your exporters. Depending on the other country’s banking and currency laws, “it may be difficult for an entire sale to be paid for in U.S. dollars,” he says. “There can still be forward purchase/sale of currencies to lock in the exchange rate - but the U.S. small business person must know his delivery schedules in order to time his hedging correctly.”

That may sound complicated, but according to Black, it’s a mistake to think hedging is beyond your capacity as a small business owner. “Many businesses do not realize how easy it is to hedge an exchange rate. Somehow they believe it is for only the global giants, but not for them,” he says. “Nearly all global banking organizations either have forex departments or have contracts with larger banks, to provide buy/sell arrangements for their clients. The only ‘risk’ in this for the small business person is to know his or her own timeframe needed to ‘unwind’ the hedge.” Your financial and banking advisors can help you to explore this option and its potential to strengthen your import operations and profitability.

Whatever you decide, it’s important to revisit the question of which currency to use each time you initiate a new transaction, even in an ongoing relationship. Doing this serves your interests as well as those of your trading partner. And Black encourages you to weigh the interests of both parties in your foreign commerce transactions.

“If you can give some added business intelligence or global intelligence to his side of the business as well that benefits you both, then you’re both better positioned to continue with your ongoing business,” he says. “I always want to look out for the business partner, because at the end of the day, relationships make the business last.”

A solid financing plan is essential for your import business. To secure the financing your small business requires, you need to know how to respond to financial institutions’ requests for information. But unlike import activity itself, those requests for information won’t take you into unfamiliar territory.

Your bank will need to know that you have adequate working capital and a reasonable projection of how much revenue your import activity is going to generate. Those baseline criteria are no different than those the bank would use when evaluating any application for credit, notes Mark Luppi, HSBC’s head of business banking for North America, which handles accounts of companies with sales from zero to $30 million. “People hear international and think there’s a lot more red tape,” he says. “Basically it’s the same process.” Here’s how the process breaks down:

• Typically, HSBC looks for companies that have been in business for two years and can provide two tax returns or two years of financial statements that have been reviewed by a CPA, outline operations, and show profitability.
• You’ll be asked to fill out a personal financial statement, which is essentially a personal balance sheet that details your mortgages and loans.
• Finally, the bank will need a monthly overview of objective cash flow. “You’re buying this inventory, and in your mind, you know how long it’s going to take you to sell it,” Luppi says. “So then we’re going to know how long the credit requested will be needed, and we can make sure that what you’re outlining as your need for financing is going to be met based on the timetable you’ve outlined.”

Your import credit application process itself isn’t much more complicated than that. But if you’re new to international trade, there is another financing component that can help you to succeed in your import launch. Luppi recommends that you seek financing from a bank that specializes in supporting small businesses that operate in global markets. That can allow your company to draw on your bank’s experience working in the countries where your exporters are located - and perhaps even working with those exporters.

To that end, a good bank may take on an advisory role that goes beyond simple loan application review and processing. HSBC’s business banking branch officers would ask you about the goods you’re importing to be sure you have the skills necessary to complete your planned import transactions. They’d assess your ability to evaluate the imported merchandise and the length of time required to liquidate the imported inventory.

They’d also speak with you about the product’s country of origin. “HSBC is in 86 countries and territories, so we have the information to make sure that you’re not doing something that’s going to be inappropriate based on U.S. or state regulation here in our country or in the country you’re dealing with,” Luppi says.

When investigating your import financing options, also find out whether your bank can be a resource in evaluating your prospective trade partners. HSBC, for example, would ask how much you know about your prospective exporter in terms of whether their delivered products match the quality of their samples, whether they have a record of timely delivery, and whether they can provide references.

Of course, you can’t rely on your bank to complete all the due diligence you need to conduct on your trade partners and new markets you’re exploring. But a bank with global experience can offer an additional layer of protection to help assure that your entry into the import market is both well thought out and well financed.

As someone who works in a growing business, you need to keep track of your industry’s market rates and prices. But that’s on the domestic level. Once you become an importer, you face the greater challenge of following those market and price trends on an international scale, both in the countries where your exporters are located and the countries that want to compete with your exporters.

How do you make sure the exporter with whom you are negotiating is offering a fair price and fair terms for the transaction - and the best deal available to you internationally?

To begin, make sure you know what you’re buying. You might, for example, be comparing prices offered by clothing exporters in China and South Korea. Jeffrey H. Bergstrand, professor of finance at Mendoza College of Business, University of Notre Dame, explains, “China is much more abundant in unskilled labor relative to South Korea, so it can provide the same product cheaper to the United States."

If the garment quality is equal and price sensitivity is high among your customers, the Chinese product might be your best deal. But you want to be sure that the two manufacturers are using comparable production processes and that neither is lowering its prices by cheapening its standards in a way that will cost you business over the long run.

For that reason, you want to be sure you’re well acquainted with your prospective exporter’s administrative organization and quality control systems as well as that country’s standards for product quality and working conditions. “People are willing to pay a little higher price if they know the production process is credible,” Bergstrand says. He notes that in general, “there’s a very strong correlation between the per-capita income of a country and the standards they use with regard to contract enforcement, rule of law, and consumer protection - issues that may influence your final appraisal of how much value you’re getting from one exporter versus another.

When comparing prices offered by exporters in different countries, you also have to factor in comparative duties and tariffs imposed on merchandise from different countries. Make sure you know not only how much you’ll pay the exporter, but what additional costs you’ll incur before you accept delivery on your shipment.

Similarly, you want to track import and export price indexes so you are aware of any trends in rising or falling prices. To learn the basics of how to understand and use export and import index data, see these FAQs prepared by the U.S. Bureau of Labor Statistics. A link from that page will take you to the U.S. government’s monthly press release regarding the index data.

Once you’ve evaluated those factors and identified the most suitable trading partner, you’ve still got opportunities to negotiate price. Your exporter may be able to offer a discount depending on the method of payment you choose, the quantity of merchandise you order, or the frequency or regularity with which you place new orders.

By analyzing all these factors, you’ll put your small business in its strongest position to negotiate the best price and terms available for the imports best suited to your needs.

Finding an international partner may be the fastest, most effective way for some small and medium-sized businesses to enter a new, global market. Building a joint venture with a company that has in-market capabilities and resources such as distribution channels, technology, and/or finance can put you ahead of the curve. However, before entering into a joint venture with an international partner, you should be clear about your goals and objectives and confident that a partnering arrangement is the best way to achieve them.

“Every business case has its own justification,” says E.C. Sykes, president of Flextronics Clean Tech, a product designer and manufacturer that has operations and has partnered with other companies in 30 countries around the world. Among the most common justifications for SMBs are rapid growth, cash constraints, the need for new markets, and the need for a lower-cost location for manufacturing operations. If your business doesn’t fit any of those profiles, Sykes suggests taking a hard look at whether you actually need a partner to take it global. If you do, it’s also important to make sure your business needs match up against those of your potential partner. “For example, if you have a very entrepreneurial culture, you need a partner who can understand that and work without a rigid set of rules and guidelines,” he says.

Joint ventures can be tricky because they involve two companies coming together to form a third entity that has to create value for both its parents. They work best when there is strong alignment of expectations and a shared definition of success, Sykes says. SMBs often use partnerships to supplement an area that may be soft at their own company, so it is critical to make sure your joint venture partner has the required expertise and/or resources. Look for evidence of technology investment, location investment, or government relationship activities that are beneficial to your company. If your long-term business model is global, finding a partner who can help across all geographies is more cost-effective than joint-venturing with multiple partners who can only provide regional solution sets, he says.

During the process of interviewing potential joint-venture partners, look for solid evidence that a candidate can complement your company’s strengths. Go beyond PowerPoint presentations, and ask for site visits and customer references. Review any available case studies carefully. When Sykes is considering JV partners for Flextronics, he favors candidates who are more mature in their thinking, have a strong sense of what they want to accomplish, have a solid business plan that promises good ROI, and have the financial strength and capital structure to support anticipated growth. Additionally, given the current legal landscape of greater scrutiny and enforcement against bribery and other non-compliance areas, thorough due diligence of your potential partner is a must.

Joint ventures are an area where SMBs need to tread carefully, but the payoff can be worth the effort. “Investments into partnerships are just like other investments; when you put something in, you want to get something out,” Sykes says. “Before you commit your time and resources, you want to make sure you have a good match up front. Do your homework, do it well, spend time with the partner, make sure there is a cultural fit and that the partner can provide the services and value your company needs to be successful. Then make good, solid investments in those relationships. It’s a lot more difficult to unwrap a partnership than to become engaged in one.”

When you enter the world of global commerce, it’s essential to familiarize yourself with the bilateral chambers of commerce located in the countries from which you plan to import products. The U.S. has bilateral chambers of commerce serving nearly 50 countries around the world, and many of them have plans and programs designed to help your company connect with businesses abroad and develop your import activities.

The following examples offer just a few illustrations of the kind of support you can find in these organizations:

• The United States of America-China Chamber of Commerce includes an entrepreneurial consulting group that offers objective advice to U.S. companies to help them maintain their competitiveness when working in the Chinese market. Its services are designed to help you become acquainted with the Chinese market and identify the manufacturers of products you want to import. The organization also can provide assistance in coordinating visits to local businesses and creating joint ventures. Its knowledge of this enormous and complex market can provide your business with a competitive edge when exploring import opportunities there.
• The Argentine-American Chamber of Commerce has developed a program to promote exports to the United States. The organization provides free advice to its Argentine members about the US government’s import requirements and regulations. It also has completed a bilateral analysis of the products most likely to be developed successfully for export to the US market. As a result, joining this chamber of commerce will allow you to network with Argentine exporters who are already well informed about what you need from them to make successful international transactions.
• The American Chamber of Commerce in Austria has implemented a variety of services and activities designed to encourage U.S. imports of Austrian products. To promote economic relations among businesses in the two countries, it has organized public relations campaigns and created a network designed to facilitate direct interactions between individual countries. By participating in the network, decision makers at US companies can connect one-on-one with their counterparts in Austria to explore import opportunities. The organization also publishes reports to keep its members informed about new foreign commerce developments and organizes live events designed to strengthen foreign commerce.
• The Caribbean American Chamber of Commerce & Industry has developed a system to help you find partners in that region. Its member assistance programs include support in developing a business plan and information about a financing program being developed by Caribbean companies that want to engage in international trade. The organization also offers import and export consulting and has created a list of resources related to doing business in the Caribbean and obtaining relevant licenses and permits.

These are just a few of the numerous bilateral trade organizations you’ll find to support your company’s import activity around the world. Each chamber of commerce provides you with business intelligence related to the specifics of doing business in the markets that are best suited to your import objectives. To explore the services available in the markets that most interest you, see the list of bilateral chambers of commerce that DHL has created at http://www.dhlsmallbusiness.com/usa/resources/import.shtml. This resource provides a link to each chamber on the list.

Poor translations and etiquette missteps can cost you more than embarrassment in global commerce. Understanding your trading partner’s country and culture can affect the quality of the product you receive and the fairness of the prices you’re charged. That’s why it’s not only polite, but also profitable, to learn to adapt your business communication and style for foreign commerce.

Doing this successfully means being attuned to nuances in language, customs, and practices, says intercultural communications specialist Barbara Gibson, principal at Cultural Resolutions Group. For example:

• Be aware of attitudes toward hierarchy in other countries. In some cultures, it’s important that the people on each side of the negotiating table have similar positions within their respective companies. In that case, sending one of your managers to speak with one of your trading partner’s executives or owners could be perceived as an insult.
• Understand that culture’s view of authority. “The negotiator may not be the decision-maker,” Gibson explains. “So in negotiating with a Japanese company, for instance, the person you’re negotiating with will do all the bargaining, but they actually don’t have the authority until they take that back and discuss it, usually with several other people.” That may mean the deal isn’t finalized when you think it is.
• Recognize that “getting down to business” is valued far more in the U.S. than it is in many other countries, where people may invest more time in building relationships and trust. That often means you’ll have to build more time into a business trip to socialize with your prospective trading partners, get to know them, and give them a chance to know you. Remember, too, that many cultures think in terms of negotiating with a person, not a company. If the person representing your company changes, that can cause a setback in negotiations.
• If you’re conducting negotiations in English, speak at a moderate pace, take care with your pronunciation, and engage them in questions that can help you keep track of how much they understand. Be diplomatic when you suspect they missed something. One good strategy is to apologize for having used overly idiomatic language (even if you didn’t) and then reword your comments. This is a painless way to relieve your trading partners of embarrassment.
• On the other hand, if you opt to negotiate in something other than English, remember that language alone is not always a bridge across cultures. Take regional differences in speech and style into account. And if you need to communicate in writing in another language, hire an established professional to handle your translations. Online translators often produce results that will leave your exporter laughing, baffled, or worse.

Looking for advice that’s keyed specifically to your target market? Check out the country-specific International Etiquette Guides and Doing Business in… guides at Kwintessential, which offers an introduction to cross-cultural communication in nearly 90 countries. Using these tips and resources can help ensure that you’re regarded as professional and respectful in the countries from which you import goods.

Products certified as green or fair trade are in greater demand than ever. Your company can support its import success and drive stronger sales by sourcing environmentally and socially friendly products from foreign markets.

How big is the opportunity? Consider the experience of Dean’s Beans Organic Coffee, which sells fair trade products imported from 14 countries in Asia, Africa, and Central and South America. Founder and CEO Dean Cycon reports that the company has achieved growth in each of its 17 years in business and has a profit margin of 12%. Last year, it grew 17%, he says, and this year’s results already put it 9% over last year, despite the economic downturn.

“People want to know that the companies they buy from represent a certain set of values that they can believe in,” Cycon says. And his customers represent a broader demographic than you may imagine. “We have large populations of evangelicals buying our products. We have large populations of liberal progressives buying our products. It’s not about a political stance. It’s about an ethical stance, which a lot of people can really understand and appreciate.”

How can your company get in the game? Cycon recommends several online resources as the best places to begin a search for fair trade export partners. Your best source for exporters of crafts and clothing, he says, is the Fair Trade Federation. For foodstuffs - anything from olive oil, rice, or sugar to coffee, tea, and cocoa - check out the website of TransFair, the U.S. certifying agency for Fairtrade Labelling Organizations International, which is headquartered in Bonn, Germany.

Labeling is critical to help you avoid unethical exporters who misrepresent their working conditions, impact on the environment, and child labor practices. You can’t rely exclusively on a label placed on merchandise by the manufacturer or exporter, Cycon explains. “It’s very important to look at exactly what a label represents, because many of them use generalized language about what they certify. Unless you look at them very closely, you may be taken in and make representations about your product that aren’t exactly true.”

To protect your own product integrity and your company’s reputation, he recommends doing as much as possible to establish direct relationships with your foreign trading partners.

“That’s actually relatively easily done, in the world of fair trade especially, because the point of fair trade is to make that connection direct and make that information transparent,” he says. “Part of the job of the person involved in ethical trade is to help people make that personal relationship with the product. That makes it a real human connection between the people who make it and the people who use it.”

That feeling of human connection can help your company to do well by doing good. By offering fair trade and green imports, you position your company to provide its customers not only with the products they need, but also with the opportunity to help people in developing countries. That makes for a powerful sales pitch - and a strong part of your company’s strategy for increased customer loyalty, revenue, and growth.

According to 2010 U.S. Census data, the population of people living in the United States included approximately 50.5 million people of Hispanic origin, and 14.7 million people of Asian origin. Together, those two groups represent more than 20% of the total U.S. population. Yet immigrant consumers are sometimes underserved by the mainstream market. This creates sales opportunities for importers of goods that are sought out by the immigrant community but are not easy to find in the U.S.

San Diego, California - based MexGrocer.com seized that opportunity 10 years ago. Its founder, Ignacio Fernandez, reports that the company has achieved 30% annual growth ever since and is on track to do a little better than that this year. The company sells to consumers, retailers, and small independent Mexican restaurants in 15,000 U.S. and Canadian cities.

The appeal, Fernandez says, is nostalgia for hard-to-find products from his customers’ native country. MexGrocer stocked 500 items when it began and has expanded its inventory to 1,800 items, including 250 brands of spices, condiments, candies, and other food products imported from Mexico as well as cooking utensils, cookbooks, party supplies, and religious items. One of its bestselling products is Mexican Coca-Cola, which fans say tastes better than the Coca-Cola made in the U.S.: it’s made with cane sugar rather than high fructose corn syrup.

“From a business perspective, it always makes sense to carry what others don’t have,” says Sri Suku, principal of Aditi Spice Depot, which sells specialty imported Indian spices and foods from two stores in the Washington, D.C. suburbs of Vienna and Herndon, Virginia. Like Fernandez, he says nostalgia plays an important role in driving sales of products and brands that consumers remember from their home countries.

Any product that appeals to cultural identity can be a hit - and a sales success. Hinsul Lazo’s MuseoDelDisco.com, based in Miami, taps into the Latino market by offering CDs and DVDs by recording artists from a wide range of Latin American countries. Unlike mainstream Top 40 music, “a lot of the product is not online yet. It’s not available digitally,” he explains, so sales, especially older titles, remain stronger on CD. His inventory is so extensive and includes artists from so many countries and eras that he has customers in several dozen countries, although 80% of his online sales are shipped to customers in the U.S.

How can your small business use ethnic imports to increase sales? Start by asking your customers or local community organizations which products they miss and would like to see sold locally.

Once you know which products are in demand, look for bilateral chambers of commerce that promote foreign trade between the U.S. and the countries in which those products are manufactured. If you go to the “What You Need to Know About Importing” resources page at the DHL Small Business portal, and scroll down past the “Tariffs and Imports Fees” section, you’ll find an alphabetical listing of links to nearly 50 bilateral chambers of commerce. In addition, the “What You Need to Know About Importing” page offers a range of resources for importing and exporting. Also, get your company listed in the American Importers Association’s database of U.S. importers so exporters in your target countries know where to contact you.) is specifically geared to helping readers navigate to the bilateral chamber list and utilize the many other resources on the page.

Finally, if your company isn’t already engaged in e-commerce, consider establishing that capability. Remember, although your local ethnic community may be a small niche market, it’s part of a larger nationwide community that can represent big sales potential for your business.

As a new or established importer, you need opportunities to network with exporters from other countries, access to new merchandise your company can launch in the U.S. market, and current intelligence about international industry trends. Trade fairs allow you to encounter all these competitive advantages in one place - if you know how to make the most of attendance.

Steven Hacker, president of the International Association of Exhibitions and Events (IAEE), offers some tips to help you identify the best trade shows for your business and make the most of the opportunities they present.

• Find the right fair - “The first fundamental concept is, make sure you are participating in the right event,” he says. The IAEE maintains a trade show and event search engine on its website and provides links to the trade fair websites. The website of the International Center for Exhibitor and Event Marketing offers another starting point for learning what’s out there. And there’s a lot out there. “More than 15,000 exhibitions take place in the U.S. and Canada every year. In every industry, or for every interest, there could be dozens and dozens of different events, and the differences in audience can be significant,” Hacker says. That means you have to be clear about your targets and then research available events to discover which are best suited to your needs. “You can do that by contacting the organizer of the event and asking that specific question. Many of the events develop demographic analyses.”
• Do your research - Find out which exhibitors will attend the events that interest you. Also find out what other products are manufactured in their countries so you can explore additional import opportunities there.
• Identify your objectives - Once you’ve identified an event that meets your specifications, establish the goals you want to achieve by attending that particular trade show. Be as specific as possible in outlining those objectives, Hacker advises, and create an agenda for your days at the event. “Your time is going to be very limited. You can’t just randomly stroll down the aisles of a 2000 exhibitor show that takes place over two days and expect to knock off those exhibitors that you want to see.” He recommends that you chart a course that plots your strategy for covering the right territory and meeting the exhibitors with whom you want to connect.
• Know what you want in advance - Another pre-attendance tip: Make clear, detailed decisions about the kinds of deals you want to cut. Having that knowledge in place will help you to choose wisely among the exporters you meet. You might, for example, be seeking opportunities to serve as a wholesale distributor; if you’re clear about that goal, you can eliminate companies that are not interested in such an arrangement. But more generally, that strategy will aid you in comparing exporters and their products.

The ICEEM offers additional tips for trade fair success in its online resource titled, “Attention Attendee - Don’t Just Show Up.” By making use of Hacker’s advice, the ICEEM guidelines and your own research, you’ll find that trade fairs can be key tools in strengthening your company’s import performance and profitability.

Although many U.S. import regulations, documentation requirements and Customs procedures are universal, some import processes vary by industry, due largely to the fact that imports are governed by a parallel system of multiple government agencies. “As a business owner, you must be aware that you’re not dealing just with Customs, but also with these other government agencies,” says James Min, vice president of international trade affairs and compliance at DHL Express USA.

While U.S. Customs and Border Protection has the authority to enforce more than 50 sets of laws at entry points into the country through their delegated authority, other government agencies may have primary jurisdiction over the merchandise being imported. Food and drugs imports, for example, are subject to Food and Drug Administration regulations, while children’s clothing must be compliant with Consumer Product Safety Commission regulations.

If you’re adding an import component to an existing business, you should be familiar with the government agencies that regulate your industry. And DHL, which has years of experience dealing with diverse regulated commodities, has internal processes in place to ensure that its shipments are in compliance with all regulatory requirements.

Still, as an importer, you’re liable for the claims you make with Customs, and that liability can create different complications depending on your industry and the products you import. For example, although U.S. textile quotas have been eliminated, you can still be penalized for making false claims of origin. “You really have to practice sound due diligence with your buying agent or your middleman, and you need to have documentation showing that the products were made in that country,” Min says.

Depending on your industry, another area of concern may be in the area of child labor and corporate social responsibility. “There is legislation flying around in Washington that would require importers to certify that their products did not use child labor or prison labor,” Min says. In addition to that looming legal concern, companies whose imports fail that test face increasingly negative publicity and public opinion repercussions. For that reason, it’s wise to make sure that the factory or manufacturer that exported your products has been audited and certified as not using exploitative labor practices. When engaging in importation of goods, U.S. Customs mandates a standard known as the “reasonable care standard,” which in essence is that: The importer must take reasonable steps to understand what he or she is importing.

U.S. Customs offers a reasonable care checklist that members of the trading community should be using.

The good news is that there’s no short supply of exporters who are willing to comply with regulations in the world’s largest consumer market. If you run into problems with an exporter who is indifferent to requirements imposed by the regulatory agencies that have oversight in your industry, your best bet is to avoid needless headaches by seeking a different exporter.

Since most modern economies are members of the World Customs Organization (WCO), you can check that website for countries that are not members and for those that have signed on to the WCO’s various conventions and agreements. That’s an easy way to identify exporters located in countries that may not have implemented global standards at this point.

For additional information about import regulations for your industry, see DHL’s overview of the U.S. Customs system. It includes an explanation of Licensed Customs Broker services, which DHL provides in-house. It also provides an overview of legal matters related to export and import, packaging requirements, paperwork requirements and other government agency requirements, including those specific to certain goods or industries.

The U.S. is just a stopover point for some of the products and materials small businesses import. If you plan to import materials to create merchandise that will subsequently be exported, there are specific processes and procedures you must follow.

"First, always do your homework," advises Lou Tapper, vice president of global business development at Longistics, a provider of global logistics services that helps small businesses connect with the right parties and interests globally. "Research what is involved in importing your products, including total operating costs, such as manufacturing and the domestic and/or international sourcing of them. Next, determine how you plan to import amd whether you will handle the logistics yourself or employ the services of a third-party provider."

One strategy that can help small businesses navigate the intricacies of importing for re-exporting is dealing with a logistics company that has access to a Foreign Trade Zone (FTZ). FTZs were created in the U.S. to provide special customs procedures to U.S. businesses engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then re-exported, which helps offset customs advantages available to overseas producers who compete with U.S. companies. FTZs can also be used to defer duty payment until the goods produced or stored in those zones are actually imported into the U.S. The U.S. International Trade Administration's (ITA) Import Administration maintains a website to help small businesses familiarize themselves with FTZs. The site includes a list of FTZs by state, with contact information and subzones.

The rules and regulations covering such things as labeling, reporting, and security requirements can vary widely on a case-by-case basis when importing products/materials for re-export. For example, an imported product that would not require a specific warning label if it were going to be resold in the U.S. might require such a label for re-export to certain countries, especially in the EU. An excellent one-stop website for help in dealing with these issues is Export.gov, which the U.S. Department of Commerce's International Trade Administration (ITA) manages as a collaborative effort with the 19 federal agencies that offer export assistance programs and services. For specific information on how to conduct business internationally - such as exporting or increasing sales to new global markets - Tapper suggests checking out the U.S. Commercial Service, which is the trade promotion arm of the ITA.

Small businesses, especially those new to the process of importing for re-export, can benefit from enlisting the help of a qualified partner. Tapper advises looking for partners who possess the experience, resources and tools to help minimize your operating costs and grow your business above all else. "The partner should be an asset to your company, not an impediment, and should specialize in logistics and customs in the area where you are doing business," he says. The U.S. is one of only a few countries that have a consistent customs process at all ports of entry. Customs at destinations outside the U.S. are often inconsistent, with standards sometimes varying even with the same country's different points of entry, so outsourcing responsibility for these activities makes sense for many small businesses.

Customs procedures and paperwork can seem overwhelming to a small business owner new to the world of international trade. U.S. Customs and Border Protection (CBP), one of the largest and most complex components of the Department of Homeland Security, is well aware of that. And while CBP's priority is keeping terrorists and their weapons out of the U.S., it also has responsibility for securing and facilitating trade while enforcing hundreds of U.S. regulations, including immigration and drug laws.

That's no mean feat, but CBP will facilitate about $2 trillion in legitimate trade this year while enforcing the laws that protect the economy, health, and safety of the American people, says a spokesman for the agency. It accomplishes that mission through close partnerships with the trade community, other government agencies, and foreign governments - and through automation.

As a service to the public and the trade community, CBP makes available an extensive selection of electronic forms that small businesses can complete online, save for future use, and then print as needed. These can help you work more efficiently in foreign commerce once you've established your company in international trade. Among the more than 100 forms available in this format are the application for Foreign Trade Zone admission and/or status designation (CBP Form 214), Customs bond (CBP Form 301), Automated Clearing House credit enrollment (CBP Form 401), North American Free Trade Agreement certificate of origin (CBP Form 434), power of attorney (CBP Form 5297), and dozens more. In addition, CBP provides free publications, called Informed Compliance Publications (ICPs), on its website. These ICPs provide detailed information on specific products and/or commodities.

You can view the full list at CBP Forms. Troubleshooting help is available at CBP Accessibility Instructions. Information on ordering forms from the National Distribution Center (NDC) can be found here. The site also features a Sample Customs Declaration Form.

While automated forms can be a boon to small businesses with limited resources who want to engage in international trade, they represent just the tip of the iceberg for CBP's long-term automation plans. Importers and exporters are looking forward to additional benefits from the Automated Commercial Environment (ACE), a multi-year project currently underway to modernize the business processes essential to securing U.S. borders, speeding the flow of legitimate shipments, and targeting illicit goods. ACE will eventually replace the current import processing system for CBP and will allow trade participants access to and management of their trade information via a secure online data portal. ACE features currently available include account management, reports, revenue, cargo control and release, and entry summary processing capabilities.

The ACE Secure Data Portal offers account users near real-time review of CBP entry, entry summary and manifest data via a Reports tab; account-based views; secure content creation and assignment of user access privileges; and the ability to post information and track and/or respond to CBP on compliance and operational issues. If you'd like to learn more, small business owners can participate in free, web-based ACE training.

Once you've placed an order with a foreign supplier or received an order for goods you plan to export, you'll need to keep track of your shipment from its starting point to its destination. For small businesses doing exports, deliveries of domestic orders via a carrier such as DHL usually provide customers with a tracking number that allows them to easily track and follow up on their order. The global marketplace presents additional challenges.

"When it comes to foreign orders, no matter whether it is one item, a carton, or a pallet being shipped, you want to make sure that the supplier can not only provide you with the visibility to track the goods, but also inform you what mode of transportation is being used, as well as the service level that is being provided," says Lou Tapper, vice president of global business development at Longistics, a global logistics services provider. For example, imported goods traveling by air offer more visibility than those sent by ship. With sea shipments, delivery dates can be variable; air shipments generally provide quicker delivery and often come with an arrival date guarantee.

Passage through Customs is an important part of the logistics process. In the case of destinations within the U.S., Customs is fairly straightforward and consistent at all ports and points of entry. Items required to get through the process include a commercial invoice to get into the country, a packing list, information on the country of origin, and a shipping label. Depending on special circumstances for the item being shipped - such as if it falls under trade restrictions that limit import into a country - the process can be somewhat more involved. Note that the customs territory of the United States only includes the 50 states and Puerto Rico. Guam, the U.S. Virgin Islands, and other U.S. territories are not part of the customs territory of the United States.

Customs processes and procedures at destinations outside the U.S. can be much less consistent and may even vary among different points of entry within the same country. "The paperwork and documentation requirements can be quite extensive," Tapper notes. "Your best bet is to consult with a logistics professional to determine what should be done in such cases in order to limit your time and expenses."

Small businesses looking to stay on top of how long their import/export packages will be in transit are well advised to stay in close contact with their buyer or seller. You need clarification, reasonable expectations, and input from the other party to the deal in order to formulate reliable estimates of transit times, Tapper says. The same recommendations mentioned earlier - visibility to track the goods and knowing the mode and service level of transportation - apply here as well. Find out if the delivering firm employs a GPS system with coordinates showing exactly where the shipment is located in real time, and if it does, how you can access that information.

Your ability to track packages to their final destination and confirm their arrival will be subject to the mode of transportation and service level being utilized. If your goods are being sent in a shipping container, for example, you will have to work with a broker or another third-party services provider to get delivery confirmation.

The best transport medium for international shipments may depend on a variety of factors, including the size and value of the shipment, the Customs clearance procedures it will require, and the relative importance of delivery speed and price.

"Many factors should be considered in the logistics assignment and the subsequent logistics costs as a percentage of cost-of-goods-sold (COGS)," says Sheila Hewitt, vice president of Transplace International, a third-party logistics and technology provider. These include:

• Value of the cargo. The price sensitivity of low-product-value items typically renders airfreight cost prohibitive. Slower-transit ocean methods are often most suitable. High-value cargo, which can include merchandise subject to high risk of pilferage or theft, may be best suited for air.
• Customer delivery requirements. Choose the appropriate combination of transit time and routing that best accommodates on-time delivery to achieve optimal customer satisfaction.
• Regulatory compliance. Some types of cargo, such as hazardous materials, have various logistics requirements that may dictate approved methods of shipment. There may also be legislative considerations, such as the Jones Act (Section 27 of the Merchant Marine Act of 1920), which requires that goods and passengers transported by water between U.S. ports be done in U.S.-made ships owned by U.S. citizens and crewed by U.S. citizens.
• Inventory type and/or stock position. Often, a new product launch will require a greater inventory velocity compared to a replenishment item. Sudden changes in customer demand may also serve as a catalyst for more-expedited transit options.
• Shipment size. A cargo's gross weight may have an impact on routing decisions due to domestic weight regulations. Large-volume shipments traditionally ship via ocean services to maintain lower, more predictable landed-costs compliance.
• Flexibility. "As international supply chains lengthen and security measures continue to stiffen, it is wise to build logistics programs with inherent flexibility," Hewitt says. "One example would be: terminating an ocean container at the port of destination and transloading the cargo into an expedited inland mode of transport."
• Financial obligation. The Incoterms associated with the transaction may dictate routing.

Compliance should always be the primary factor when considering routing options, Hewitt says. "Poorly managed Customs processes can cause significant delays and associated costs." Speed of delivery is also important. Meeting customer delivery requirements and/or component production demands are key drivers in routing selection, she says, adding that shippers should formulate risk/benefit scenarios for late - delivery penalties as opposed to expedited logistics costs. Price is a relevant component specific to inventory or product types, but it's always important to find the best possible combination of cost and service. When it comes to shipment size, overweight and over-dimensional cargo has inherent logistics demands for special handling, while ensuring optimal container utilization for more common shipments types will help in reducing logistics costs.

DHL provides a wide selection of tools that small businesses can utilize to help them make better decisions regarding which mode of transport to choose for their shipments and other logistics issues. Among the tools DHL offers are a weight converter, dimensional weight calculator, world time zone converter, air travel distance estimator, currency converter, and more. The Business Across Borders Article Library provides useful and articles and links to additional resources.

A global supply chain is "an engine fueled by physical cargo movement, documentation, data and - most importantly - communication," Hewitt says. "A fine-tuned logistics program is vital for the path forward."