Exports to the United States

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Exports to the United States

Exports to the United States; what do you need to take into account?

The United States is a huge export market for Dutch and European manufacturers, offering major sales and turnover potential. If you decide to export to the US, you will have to take certain matters into account. Apart from product-specific requirements and the necessary certificates, logistics issues also play a part and need to be considered in advance. More about this here in this blog.

What agreements do you make with your customers?

Sometimes customers will find you and at other times you will find them. If you decide to start marketing in the US, it will be wise to think about how to deal with this. Will you engage an agent or distributor, which often work on a commission basis? Or will you set up the sales yourself, on-line or through local sellers, which will require an even larger investment? Each business has its own ambition and budget and must weigh the pros and cons of the various options.

Before you start to sell your products, you must carefully consider what agreements you wish to make with your customers. For instance, terms and period of payment are important and whether customers pay in advance or on credit. Apart from this, the condition of delivery or Incoterms must be agreed. You can sell your products on the basis of ex works, but customers who have not imported from you before might find this unacceptable and decide not to import your products. To avoid this, you can use DAP or DDP as terms of delivery, which means that you as the seller will arrange for transport. This also means that you will be responsible for the entire process and will have to bear the costs. Of course, you can pass on these costs to the customer or discount them in your selling price, but then you can offer a much more customer-friendly term of delivery and take away any concerns your customers may have.

What are the logistics options?

If you decide to organise your own exports, various options are available. You can forward each individual order by air freight or ocean freight; you can also group your orders into a single shipment and have it split up and forwarded to individual customers in the US; or you can store your goods in the US and supply them directly from that warehouse as soon as they are sold. Each option has its own pros and cons and its own price, while the one option may be more suitable than the other for a certain business. You may also decide to start with the one option and switch to another one as your business grows.

Order by order
If you decide to deliver each order individually, many different options are available. In case of smaller packages, you may choose to use a courier service, opt for ocean freight LCL or even FCL or for air freight if the shipments are small or must be delivered urgently. Irrespective of the method of transport, it is always wise to opt for delivery through the nearest (air) port. In case of many separate orders, you will have to find a forwarder who can quote DAP deliveries quickly, which you will only manage if you have a reliable local agent/partner. This method of transport is mostly used for low-volume orders/shipments or for permanent recipients who are supplied periodically to replenish their stock.

Grouped exports
If you have several orders every week and ship these in groups to the US, you will need a partner there who splits up the shipment and arranges for further distribution in the US. In this case, it is wise to think carefully about the partner you choose and especially the place at which it is situated. If your customers are mainly situated on the West Coast or on the Gulf, it is wise to find a partner who is well-represented in that region. If your customers are spread across the entire US, or even situated in Canada or Mexico, it will be more difficult to find a convenient location. In this case, it is important to keep your transport costs to the US as low as possible and to aim for an appropriate operating base from which to send on shipments within the US. You will also have to take account of the local infrastructure, such as (air) ports in the vicinity. A region with several airports or terminals (port or railway) will provide better options for transport in case of, for example, disasters or congestion. Partly for these reasons, businesses often prefer to find partners on the East Coast and in the Midwest. On the other hand, a port in New York may not always be the right choice, because it is the busiest port in the US and is often congested, which may cause delays.

Storage in the US
If you decide to engage a storage partner in the US, several other matters need to be considered. Apart from the factors mentioned earlier, the rates of storage and distribution are obviously also important. Your partner will need to have the possibilities to carry out fulfilment activities, such as order picking, packaging, labelling, etc. Apart from that, their IT environment must be equipped to enable you as the supplier to check the status of your stock as well as that of pending orders. In practice, it will be convenient to have a partner who has offices in the US as well as in Europe, preferably in your own country. This will make the communication much easier and any problems or questions can be dealt with more quickly and adequately because there is no time difference. As soon as you decide to keep stock in the US, you will probably have structural sales and it may be an option to set up your own entity in the US. This may be an LLC or a Corporation without an office and therefore only a paper organisation, while all physical operations are carried out by a third party.

What specific US regulations must be taken into account?

Whether you organise your own transport or you engage a forwarder, there are regulations which must be taken into account. The most important ones are: customs bond, foreign power of attorney, ISF, C-TPAT and AMS.

Customs bond
If you decide to import goods into the US under your own name and your goods either have a value of more than USD 2,500 or they are subject to certain regulations, you will be obliged to take out (through your broker) a so-called customs bond. This provides the American government with security for payment of all duties, taxes and other charges which are payable to them. If your import is once-only, you can choose to have a single entry bond, but if you decide to import goods in your own name more often, a continuous bond will be more convenient and affordable.

Foreign power of attorney
If you wish to import goods into the US under your own name, you will also have to authorise your broker to arrange for customs clearance. You can do this by means of a ‘Foreign power of attorney’. This is comparable to the direct representation which we use in the Netherlands. You can do this for a single entry or issue the power of attorney for a longer period of time or without a final date, if applicable.

ISF (Importer Security Filing)
Under ISF, importing parties in the US are obliged to report general information about the goods imported to the American customs department. The ISF must be submitted 48 hours before departure of the vessel to the US. The information to be supplied may vary from the name and address of the manufacturer and the seller to the country of origin and the statistics numbers of the goods. Failure to submit the ISF on time may result in high penalties or other measures, such as retention of the shipments; it is enforced strictly.

C-TPAT (Customs–Trade Partnership Against Terrorism)
After the attacks in 2001, customs control of persons and goods coming into the US has been stepped up. For businesses, this simply means that it takes more work and time to import goods. For this reason, government and other parties have set up C-TPAT. C-TPAT is a voluntary programme to promote security within the supply chain of American companies which import goods. As a result of this, delays at customs are largely prevented. Members of the partnership enjoy a number of advantages, such as access to ‘FAST lanes’ on the border, priority at inspections and fewer inspections.

AMS (Automated Manifest System).
In common with the two schemes mentioned earlier, AMS is also closely related to the strict security requirements applicable in the US. 24 hours before the vessel departs from the loading port, specifications of the cargo must be submitted to Customs. These details must be reported for goods destined for the US or Mexico as well as for goods which are transhipped in either of these two countries.

The above information shows that exporting goods to the US may be more complex and goes beyond the mere forwarding of a shipment. It is important to be aware of these regulations and to engage an experienced partner, who has the knowledge and certificates which are required for the correct handling of your shipment. If you work with an experienced forwarder, you will be relieved of all these duties and your shipment will meet all the rules and regulations. 

Are you looking for a partner who can handle your exports to the US?

Intervracht has more than 25 years' experience with exports to and imports from the United States. Thanks to its offices in the Midwest (Chicago and Cleveland) and long-term relationships with partners in Los Angeles and New York, Intervracht is able to handle the entire process from door to door, including customs formalities, with care. Intervracht as your partner means: local handling, favourable conditions and up-to-date information. Would you like to know more about what Intervracht can mean to your exports to the US or would you like some more information about exporting to the US? Don't hesitate to contact us.

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