Colette: Today weíre taking a closer look at how to ensure youíre complying with customs and safety regulations when you source products from overseas with Kelby Woodard, Principal of TradeInnovations.com.
Colette: Kelby, is it best to use one country predominantly when youíre importing so that you can get a handle on all these regulations and even the culture of the country? Me being from another country I know how different cultures can be.
Kelby: I would say that it depends upon how large you are and what volume youíre bringing into the U.S. And I would also say that it depends upon your commodity. If you look at toys, for example, one of the reasons why the toy manufacturers are in trouble is because there are only about forty manufacturers that manufacturer most of the toys and theyíre all located in China. So they have all their eggs in that basket and when thereís a problem in China, when they get a cough, the toy sellers here in the U.S. get a cold, because theyíre so focused on China that anytime thereís an issue itís going to be a pretty massive issue. So typically, if we have a client of any size we suggest that you diversify your sourcing opportunities because there are lots of opportunities for most products to be manufactured in other places in the world. I would also say that primarily you need to be focused on regulations here in the U.S. because if youíre the importer of record for that product into the U.S., then really all you have to do is make sure that all U.S. laws regarding that import are followed and youíre compliant with those regulations, which means you only have to know one set of regulations. Usually your supplier is the one that needs to make sure it meets all the regulations of the country in which itís manufactured, both from a governmental standpoint, but also from a customs standpoint. For instance, if youíre importing from Haiti, that supplier in Haiti needs to make sure that theyíre compliant with Haitian customs and thatís not really your concern. If theyíre not it could mean a delay in your supply chain, so the more you know the better off you are, but for the most part itís the U.S. side that you need to be concerned about for your knowledge base. So you can import from anywhere.
Colette: Now to clarify, if youíre selling products in the United States, but what if youíre selling to another country, youíre importing in to yourself, but youíre selling that product into the U.K. or Australia? Maybe youíre getting the product from Mexico and then having it imported and then youíre shipping it? You should be aware of the regulations in those countries as well?
Kelby: Thatís correct. And again, itís important to know the volume of the company weíre talking about. Because if youíre shipping a few hundred entries a year into the United Kingdom, letís say, from the U.S. usually what you would do is use a company like FedEx or DHL Express, those kinds of companies who have this pretty intensive knowledge of both U.K. as well as U.S. regulations and customs. So if youíre doing that primarily those regulations and concerns can be met by a FedEx or a small partial shipment company like that. But itís when your volume increases and obviously your exposure increases as your volume increases, that does become more difficult if youíre selling to other countries to understand: 1) their culture from a marketing standpoint, but also; 2) their regulations from an importing standpoint. It can get fairly complex the larger you get because, of course, buying terms change regarding trade. So most companies who are importing into the U.S. that have any size to them usually buy whatís called FOB, or free on board, a foreign port, meaning that your supplier is responsible to get that container through the export customs process, through all the logistics in that country, and that you take possession of that once it is on board the vessel bound for the U.S. And thatís when your responsibility for the regulations and everything else take over.
Colette: So the supplierís main responsibility is getting it onto that ship and then you take it over, right?
Kelby: Thatís correct. Now, there are occasions where companies find it beneficial to buy whatís called X works. If you buy X works, then youíre basically buying it at the shipping door of the manufacturer wherever they are in the world. Thatís much more complex for smaller companies because you have to know the export regulations, because youíre now responsible for it. So watch the buying terms.
Colette: Well, you know, itís one of those things youíve just got to work out whatís best for your company and how you want to handle it.
Kelby: Thatís right.
Colette: It is time for another short break. We have a lot more to talk about with Kelby Woodard when we return. Go to ProductSourcingShow.com to listen to any of our past shows, read written transcripts, link to our podcasts, and more. Iím Colette Marshall.