How to Break down International Border Barriers
Insight Understanding shipping laws across borders can be confusing. The UPS Small Business Ambassador can help make that process so much easier.
Canadian small business owner Colleen Dyck, of GORP Clean Energy Bar, provides her experience and insights to help make going global easier.
Global logistics has a complex language all its own. It can be a daunting experience, even for veteran exporters, but fluency means entering new markets flawlessly — and penalty-free. To ensure smooth international expansion, business owners should be aware of the three most common errors:
- Assigning the incorrect value to goods
- Misclassifying goods
- Misstating the country of origin on a product shipment
Assigning the incorrect value to goods is a common error, since different countries have different definitions of value. Companies sometimes think a different value can be used for shipping goods to a subsidiary, as opposed to a customer, but the predominant rule is that the same value should be applied. To further complicate matters, different countries have different rules on whether the cost of packaging and transportation should be included in the valuation. Colleen Dyck, founder of Good Old Raisins & Peanuts (GORP) Clean Energy Bar, knows first-hand the opportunities that could be missed when goods are delayed at the border.
Launched in 2012, GORP is a small business based in Niverville, Manitoba that began as an alternative to traditional energy bars that have high fructose corn syrup, cheap vitamins, and bad aftertastes. GORP bars are sourced with the best ingredients to ensure there is no junk, fake sugars, or preservatives.
In September of 2016, Colleen made plans to present her Manitoba-made products in the Celebrity Luxury Gifting Suite in Los Angeles, which was happening on the Saturday before the Academy Awards, February 25. Colleen shipped her GORP bars via UPS 10 days before the event, but the shipment was seized in Kentucky by the Food and Drug Administration (FDA). Upon investigation, Colleen realized she had assigned the incorrect value of her product, listing the wholesale price instead of the actual price.
As a member of the UPS Small Business Program, Colleen contacted her UPS Small Business Ambassador, Jackie Keast. Jackie worked with Colleen one-on-one and discussed a tailored solution, while also providing her with total visibility of her shipment. Once the paperwork was revised, and the proper value was assigned, the packages were released and Colleen’s GORP bars were on their way to Hollywood.
“My bars are sold in retailers across Canada and parts of the U.S., so this wasn’t my first time shipping outside the country,” says Colleen. “This experience taught me the importance of understanding valuation regulations, and how essential it is to work with a logistics expert that can help you overcome your supply chain challenges before they may happen.”
Like assigning incorrect values, misclassification of goods is another common mistake that new and experienced exporters make. For example, suppose you classify an optical instrument that is something other than a binocular as a binocular. The binocular is duty-free, whereas the other item has duties of six percent. At the very least, you have to pay back duty plus interest.
Country of origin
Declaring a country of origin sounds simple, but in today’s global manufacturing environment, it can be tricky. For instance, a technology manufacturer may source components from multiple countries and assemble those components in yet another country. Is the point of assembly the country of origin? It really depends, but in most cases, 50 percent of what makes up the product typically determines the country of origin.