When Spreadshirt, a global custom T-shirt company, investigated why its shipping costs were so high, it soon realized the company was paying more than $60,000 simply for products that weren’t deliverable because of invalid customer addresses. “Our shipping company would then charge to ship the package back to the U.S. from France or Greece. We were paying customs and shipping charges twice for each undeliverable package,” says Juergen Gauger, chief operating officer of Spreadshirt, based in Germany.
Unfortunately, mistakes such as these are often learned the hard way, after too many customer complaints and lost time and money. To make things easier on yourself, take a look at some common international shipping mistakes and the steps you can take to avoid them.
1. Not understanding the regulations for your destination. Each country has specific customs requirements, says Gauger, and the requirements you use for one might get your product stuck in customs in another. Before you set delivery expectations for your customers, research if your package fulfills the necessary requirements or regulations, such as certificates to prove the product’s country of origin. Mark Baxa, board member of Council of Supply Chain Management Professionals, says most countries maintain an up-to-date version of their trade laws and custom requirements online. He also suggests hiring a consultant or trade attorney familiar with the destination to research the regulations.
2. Incorrectly packaged shipments. With international shipping, it is essential to safely package your product to ensure intact arrival, Baxa says, given loads shifting in their packages and containers that can be accidently dropped. He recommends that companies find out the number of times a container will be handled and the mode of transportation. For example, he says if you are moving fine glassware, you need a very dense and shock absorbent type of packaging to protect it in transit.
You should also be aware of any regulations on shipping containers for the destination country. Businesses using wood pallets, for instance, might not realize that some countries regulate wood packaging to control pests and ask companies to follow specific standards The U.S. Department of Agriculture website maintains a database of the countries with special wood packaging requirements, but your consultant or lawyer should be to advise you on what regulations apply to your specific container materials.
3. Check your labels. As Spreadshirt learned, incorrect address labeling can delay packages and increase shipping charges. In this case, the company turned to an address verification system, which averages around 5 cents per order, to cut down on error. But keep in mind that your cartons and labels will need other specific markings, revealing information such as the country of origin and the presence of any hazardous materials. Gauger recommends that companies bone up on labeling requirements but to also to talk to their shipping provider who can advise them on any labeling errors that should be addressed. Hiring a lawyer representing trade in your destination country, one who is knowledgeable about your particular product type, can also help you validate labeling requirements.
4. Picking the wrong shipping company for your destination. No one international shipping vendor or method is the best provider for every circumstance. Since certain shipping companies have established relationships with customs in specific destinations, selecting a company for specific countries may speed up delivery to your customers. “Any vendor that you hire for international shipping services must understand the trade lane you are in and the appropriate solution to move your product safely, timely, intact and in fulfillment of all required regulations,” says Baxa. He says you can determine if the supplier has expertise in the destination by checking references and asking questions about how many years it has been serving the country, the number of transactions in the region and how many employees work on the ground. Baxa says that most shipping vendors with a strong presence in a country will also have a physical office location in the destination.
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5. Know who’s shipping your goods. When you contract with a shipping service to ship your products to another company, many businesses assume that the company will be handling the actual shipping. However, often the company then turns the package over to a shipping management company which then handles the shipping timeline and method. “Since the management company is out to make a profit, they often ship the product by the cheapest way possible, which is often the slowest,” says George T. Haley, Director of the Center for International Industry Competitiveness at the University of New Haven. Before hiring a shipping company, Haley recommends asking what management company it uses and determine if it guarantees a delivery date or method.
6. Relying too much on your vendors to educate you. As Spreadshirt learned, shipping is complicated and most entrepreneurs won’t ever become shipping experts. However, Baxa cautions businesses to rely only on their vendors to update them on changes in things like import and export requirements under U.S. law. “You need to remain in a constant state of curiosity about the world of international shipping to be successful because there are changes every day,” Baxa says.
Easy ways to stay in the loop can include regularly reading the Tradeology blog maintained by the U.S. International Trade Administration as well as studies and white papers produced by the International Safe Transit Association. The National Export Initiative’s relaunched site can connect you with information on regulations, events, free webinars as well as experts who can answer your shipping questions.
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