Risk Lurks Everywhere

Risk Lurks at International Borders

While technology and logistics advancements fuel ongoing growth in global trade, efforts to extend business channels beyond U.S. borders are challenged by increased complexity in global trade compliance. Failure to provide adequate oversight of import and export trade rules can create significant risk exposure for shippers and importers as U.S. companies manage the movement of goods through the global supply chain.

In the wake of the Trade Facilitation and Trade Enforcement Act of 2015 (enacted in 2016), we continue to see sharp increases in trade enforcement activity by U.S. Customs and Border Protection (CBP). Congressional authorization of the Act validates CBP focus on enforcement of a broad array of regulations and elevates the level of punitive damages that can be levied, including fines, restrictions or even elimination of all import/export privileges for violators.

In spite of potential penalties, many companies entering the global marketplace are operating an open-door policy in hopes of better fulfilling consumer demands for choice and speed of delivery. While this practice may provide short-term benefits, ultimately, discovery of Customs violations can render penalties strong enough to threaten a company’s ability to remain viable.

We encourage all of our clients that are engaged in global commerce to consider some important questions:

  • Does your company have a documented compliance manual? All companies are encouraged to have an informed compliance program.  The compliance manual serves as the company’s representation of internal controls that govern importation and exportation activities to and from U.S. commerce.  
  • Does your company have a formalized import/export record retention policy? Record retention is vital and should be linked to a standardized checklist to result in each company’s ability to produce all records from purchase, transportation and import clearance to final payment to suppliers in hard copy format.
  • Do you have a Social Compliance Program documented and in place? Customs enforcement is increasingly focused on ensuring all U.S. trading partners – from supplier to retailer – adhere with acceptable social compliance standards related to child labor and slave laws, conflict minerals and other workplace ethical and safety concerns.
  • Can you verify the end use of your product? Many companies may sell their products domestically, but are the products consumed or used domestically? Some export regulations extend to the manufacturer or original shipper when the products are sold domestically and then exported to a foreign country in the products’ original state.

Whether a company sells and ships products around the world or buys or imports raw materials and finished products from global suppliers, it is liable not only for abiding by international shipping regulations, but also for providing documentation of compliance.

Increasingly, many shippers in the marketplace are adopting a proactive mindset toward international trade compliance and many companies are investing additional staff training, or hiring legal or international compliance teams to help them navigate trade waters. Surprisingly, others simply accept risk associated with international compliance as a cost of doing business. In a landscape where TFTEA results in increased penalties – especially for importers – that game plan will not be successful over the long-term.

As part of its robust portfolio of multi-modal transportation shipping solutions, Transportation Insight advises customers to adhere to well-defined global trade compliance processes that protect their goods, their ability to trade worldwide and their business’ ability to operate in a sustainable way. Our in-depth compliance assessment helps shippers identify gaps in processes that could create opportunities for an elevated financial risk. As we work with clients to better align their shipping needs with multi-modal transportation networks, we believe it is critical that import and export regulations remain on their radar as part of an Enterprise-wide effort focused on informed compliance and regulatory awareness.