Abby Duffield is the e-Commerce Implementation Manager for Shapiro, an established freight forwarder and brokerage company that has been in business for over 100 years. She shares industry knowledge and informed insights on logistics, regulatory compliance, customs brokerage, purchase order management, e-Commerce shipping and more especially to small business owners, up and coming entrepreneurs, and product launchers like you who need guidance with their freight forwarding concerns. Learn from her anecdotes, get great advice and valuable tips on how to navigate the realm of international shipping, importing in the US, partner government agencies (PGA) compliance, US Customs to FDA as well as product regulations so you can optimize your overall business strategy to make it more cost-effective, efficient and compliant to ever-changing regulations.
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I’m here with Abby Duffield from Shapiro and we’re going to talk about some broad reaching topics because I want to introduce you to all that Shapiro does and how Abby supports that. It’s an interesting company. How long have you guys been around, Abby?
104 years coming up in this next cycle. We’ve been around for over 100 years in the international freight forwarding industry.
You are broader than freight forwarding and that’s what I want to bring to the forefront here. When you have someone who has a century-worth of information and processing for all different types of brands and companies, then we’re talking about such a broad brush of experience and all the things that you don’t know.
There’s a lot that can be encompassed in international freight forwarding, customs brokerage, eCommerce. There’s a lot information there that’s broader.
Abby, tell me a little bit about how you got involved with the company and how long you’ve been with them.
I’ve been with Shapiro for about four years now. I started in their customs brokerage team doing a lot of data entry and working on that side of operations. Eventually, I wanted to move into some more exciting stuff that we had going on, which was our eCommerce section, which is growing rapidly and we’re super excited about. I’ve grown from there. I am now the implementation manager with Shapiro in this sector. Me and my team help new people that are looking to get into the eCommerce world, understand how everything works, and all these tools and resources to help them get started. That’s a lot of what we do.
You have a little bit of background on the company. Why don’t you share that with us?
Our company was founded in 1915. We’ve been in business for over 100 years. The business is still a family business. Margie Shapiro is our current CEO and she’s the third in the generation of Shapiro’s that have owned the business. We are housed and located in the loving Port of Baltimore, Maryland in the United States. We are a women-owned business, with Margie leading the charge there. We have a strong emphasis on compliance, which has helped us succeed over the years, technological solutions, and customer service.
It’s that compliance is how we met. I’m not sure which one person from your company was giving the talk, but I heard the talk on compliance and it caught my ear because there are so many issues.
Compliance is one of the biggest sticking points that we have with clients that are coming in. They aren’t aware at all with all the issues that can come up from that with customs and compliance. I believe it was at Prosper Show we had met and there was that talk that happened when we ran into each other.
Define compliance for people because we have a lot of people on the platform who are completely new to freight forwarding and duty and all of those things. What does compliance encompass?
When we’re talking about customs brokerage, we’re talking about an entry into the US marketplace that were saying, “Here’s this electronic entry customs. Here’s what I’m planning to bring in.” Our customs are looking at that. That’s what we’re talking about compliance in terms of, “Is my commercial invoice and packing lists that I’m using, declaring my goods, is everything there with the best information that it can be? Is it as correct as it can be? Am I following all the regulations that the government has set forth for importers to follow?” That nugget right there is compliance. We want to make sure that all of our customers are highly compliant. It helps us to avoid issues in the day like exams or drawback or a lot of other really scary stuff that we can get into. It helps avoid all of that in the beginning.
That’s so important because we think that we just have to get it from our factory to our warehouse in the US or to Amazon’s warehouse, depending on what you’re thinking about. The reality is it’s not that simple. You’ve got to have it boxed right, you have it labeled right and you have to have it marked with country of origin. There are so many things that cascade back further into the product development process and into the manufacturing process. If you don’t know what you’re doing there and it’s your first time, you could use a good advisor with experience.
One of the strangest and most nerve-racking stories that I have is that we had a client that was bringing in a food item. They were noodles and they didn’t have any of the labeling that you needed for the Food and Drug Administration, for the FDA to come in. When it came into the US market and we sent in the customs entry, the client didn’t let us know that they didn’t have these labels. Customs sees the entire product and they didn’t let it come in because he was missing all of this regulatory information. It took a while, we got it sorted, we got it in. It was something where if the client has followed instructions early on, they had made sure that they had everything, they had worked more with us because we had asked them questions and they’re like, “I’ve got it, it’s fine,” we could have dodged a bullet there.
We don’t know to volunteer that information when you’re new to something, but you guys know to ask the questions. That’s a big difference in working with someone who has that type of experience that you guys have.
We love to ask and answer those questions, too. We have a lot of people that come in and they don’t know. We’re happy to teach because this is a big portion to make sure that everything goes okay for importers.
I see on your side here that says, “Key customers are small to medium in size.” You’d think when a company’s over 100 years old, they would only work with big firms, but that’s not the case. In fact, your particular job in the company is to talk to us, small businesses, and independence and things like that.
We found that our best niche market is with companies that are small to medium size. They’re not the big Fortune 500 companies that are bringing things in. It’s that growing importer, that growing business, just as we are a medium-sized business that is based out of Baltimore. We are growing, and we want to grow with people that have similar ideals and values to us. We’d like to fit in and we’d like to help everybody grow along with us.
It says, “65,000 entries annually.” Are those container loads being delivered? That’s what that means?
These are customs entries in terms of how many customs entries we are doing every single year. I don’t do as many of those as I used to, but those can range in terms of time. They take a very long time in terms of if they’re very long or they can be fairly short, but all of those we have a top-notch program that we use to enter that information in, to make sure that we’re working with customs the best we can and have good ACE entries.
What else you’ve got for us?
This is a little bit about Shapiro in terms of our mission. Our slogan as a company is: We deliver. Problem solved. We like to come up with customized solutions. If something does come up, we like to be very proactive in helping our customers if something does come up and letting them know. This is a little bit of a statement from Margie. That’s her signature there. She’s talking about the company.
One of the things that I want to point out is about being woman-owned and having a dedicated management team, half are women. I don’t think I’ve met a man at your company yet, and we’ve only known each other a few months. Still, that’s confounding to me because I had been working in the industry for 25 years. So much of it is male dominated, and you guys have a fabulous woman-owned and managed company. That’s terrific.
We do and we’re so lucky for it. It has helped us to have spectral characteristics that we all excel in. We do have one guy on my team, his name is Martin. He’s cherished as there are not a lot of male members on our staff. My direct supervisor is a super strong woman that’s in that position. We have a lot of other great female leaders that are in the company that have helped everybody to grow. We’re very fortunate and lucky. I agree, it’s not something that you see every day but it’s part of what makes us unique.[Tweet “Ocean’s going to take longer, but air is going to be much more expensive.”]
If you want to dive deep and read their mission and their legacy, this is a fabulous statement that Margie has made here.
I encourage everybody to find out more in our website, which is www.Shapiro.com. We have a whole page there that goes more into the history of the company, if you’re curious.
Go to Abby’s Expert Profile and you can get right to the links to anything for their company or any way to contact them. It’s all right there for you. You only have to go to one place.
Things to know about importing into the US. There are several different pieces to this, and I want to focus on first, the freight, what you need to know about shipping. There are two different kinds of shipping that we’re talking about when you’re looking at making something go from somewhere overseas to somewhere in the US or maybe somewhere internationally. You can either be working with a freight forwarder or a courier. When I mentioned a courier, it’s like DHL or UPS where they’re handling small parcel. Our freight forwarders are handling much larger shipments, at least over a pallet. Our minimum size is at least 200 kilograms, which comes out to be about a pallet, depending on the volume. The difference is that when your courier is handling small parcel, a freight forwarder is handling more something along the lines of FCL or LCL, which is a full container load or less than container load.
LCL Container load is that we’ll take pallets from several shipments and we’ll put them all into a container, consolidating all of them into one container. In that way, it’s able to move much more cost effectively and more flexibly for a client when they’re looking ship overseas.
That’s an important thing for someone who’s starting out and growing their brand that they probably do have less than container load unless their product is large. That helps that you will do consolidation for them. Sometimes it means you have to wait a little bit longer because you’ve got to wait for other people’s products to be ready and consolidated together. I imagine with doing 65,000 customs entry, you probably have a lot of container load shipping at all times.
We also are very fortunate to have something that we call GlobalFlex Network. We’re working with several agents overseas, so we’re not letting other people’s shipments stall our clients’ shipment out. We’re able to keep everything moving. We’re able to get it on the next moving vessel because we have other lines in the water that we can help tap and say, “You’ve got space in your container, we’ve got a package to send into that, we can fit that in there and get that moving ASAP.” A lot of new importers are starting with an LCL shipment. That’s something like a pallet, maybe pallet and a half. We do also find sometimes people are coming in with a single parcel or a couple of small cartons, and then they come to us for help. We say, “It’s more cost effective for you to go with the courier for this.” Once you get a little bit more, we’ll be right there to help you along the way because freight forwarders and couriers do have some different guidelines in terms of how those shipments work.
If you’re unfamiliar, DHL, that’s a courier. Just to give you an example so you understand that there are private ones as well.
There’s multitude. It’s easy to Google them to find out what’s going on over there. With that, we’re talking about a couple of different other kinds of shipments. Air versus ocean. Ocean is going to be your most cost-effective routing depending on the size of your parcel. It’s going to take the longest. Air’s going to be your quickest. Ocean’s going to take longer, but air is going to be much more expensive. You have two differences there. You’ve got Air Express, which is something more along the lines of DHL or UPS doing small packages or air cargo, which is pallets going into the base of a plane that’s heading out. That space is already very tight and limited, which is why the cost is higher than an ocean shipment, where you have hundreds of containers on a vessel. The space is much more available there, so the cost is much cheaper. The time is going to be longer, so it’s good to make sure you’re preparing your trains and times in advance. Especially around whenever there’s a holiday from where someone’s shipping, especially in China it’s good to make sure that you’re being as preemptive as possible.
It’s great to know that you handle all of those different types of things or recommend them because many companies that are starting up with a product and their launch can sometimes be a mix of having to express some things in, ocean freighting the rest, you may have to air a pallet. It depends on the timing of things and how delayed your launch might be to your marketing plan. You have to keep those things in mind and make sure that you’re in constant communication with who’s ever working with you for the freight forwarding because you may need to make some changes as you get closer to your launch date.
It’s true, especially if for some reason your supplier says there’s a delay and things are getting down to the wire. If you would let us know what’s going on as we’re working on you with your shipment, we’d say, “Let’s see if we can send half of this via air and get it there sooner. What are other options?” We’re always looking at those other custom experiences that we can have to get something moving.
Know your commodities customs and PGA requirements in advance. PGA is short for partner government agency. PGA takes in any government organization that would be looking at your cargo, Food and Drug Administration, the United States agricultural departments, the Federal Trade Commission for a couple of them. We know what a lot of these are because we’ve got a top-notch compliance team and we have several brokers in are company that have brokers’ license with the US customs, so that definitely helps to make sure that we know what’s going on.
It’s always good to check though. I had somebody that wanted to bring in color pencils. They didn’t check their duty rate until everything got here. Colored pencils have antidumping duties on them, which are extra duties because the US doesn’t want them here because there are private companies in the US that already have an interest in those products. There was an extra $100 plus duty rate percentage on top of those colored pencils. They had no idea until I came in, so it’s always good to check out what you have going on beforehand, especially when there are new regulations that seem to be coming out all the time.
There are new regulations going in and out all the time, so that’s something to be aware of. It’s something that when we work with our clients here, and that’s one of the goals of Product Launch Hazzards, is to make sure that you’re thinking about these things ahead of time. We say landing costs is more important than cost of goods because it can be double your cost of goods sometimes. We have certain ratios that we recommend you get them down to, and there’s a whole bunch of episodes on those things about pricing and costing and all of these other things. Make sure you check those out. One of those significant factors are these changing duty rates and customs issues and PGA requirements. All of those things factor in.
I’ve worked in and around the furniture industry for a very long time and there’s always been bedroom furniture duties that are higher than the cost of the furniture itself, which sounds just crazy because furniture should be expensive to make. When you’re talking about duties that are almost double what it costs to make the product, you can no longer be cost effective shipping. In this particular case, it’s a China duty only. You have to switch to another country for manufacturer. These are important things in your design, your planning, and your product pricing to make sure that you’re competitive.
The other part that we like to focus on is that some countries do need to have special documentation in order to make sure that they are compliant. If you are importing, let’s say sunglasses, you may need to have some kind of FDA certification about that because sunglasses are reviewed by the FDA with a customs entry. Things to keep in mind for first time inquirers. It may look easy and we talk about a lot of information, but you always want to make sure that you’re doing your due diligence and double-checking information that you have because at the end of the day, it’s your responsibility for everything. A customs broker or freight forwarder is technically a middleman. If you’re bringing something in, you want to make sure that you have done all of the work that you need to do, to make sure that you were talking to somebody who’s either an expert in the field or you’re comfortable with the information that you’ve received and have vetted it thoroughly.
When we recommend a customs HTS code for a product that you have, it’s always good to go and double check and say, this doesn’t match with my product, or say, it’s slightly off, maybe I had my description wrong, I really meant this one and we can get it revised. The other issue is, make sure you keep track of your records. Importers are supposed to keep track of their records for at least five years. I have a lot of importers that sometimes they’ll just say, “I’ve done this. I’m completely fine now,” and they’ll forget to go look at something until there’s an issue later. A great thing about Shapiro is that we’ve got an online portal which will help house your documentation for up to five years, but it’s always good to keep a backup just in case.
I’m mainly going to focus on importing into the US. There are plenty of regulations for every other country that’s international. Everybody has their own thing that they’ve got going on, but we’re just going to focus on the US for now because there’s a lot of information here and it’s one of the hottest markets that we have going on right now for eCommerce. For the US, if you’re importing, you would need something called a customs bond. Customs bond is collateral for the US government to say that you’ll pay your duties and taxes. You don’t want to use your bond because it’s like if you’ve gone bankrupt on a payment, you default that on the payment, so the bond is there for collateral. You have to have it set up. You have to have it if you’re importing. We do offer customs bonds. There are two different kinds that you can get, and you can get these from most brokers. There’s a single-entry bond or a one-time, one use bond or continuous bond, which will last for twelve months. It doesn’t last for a year, it lasts for twelve months. If you set it up this time now, it will be good until this time next year. The reason it’s called a continuous bond is that will automatically renew, like a subscription and it will continue on.
This is something that you don’t really need to do until you’re ready because you don’t want to do it too soon if you’re going to do a continuous bond.
Usually what we do is that when people are looking at a customs bond, we’ll send them the information, we’ll send them the application. You can fill in it in advance, but we won’t process it until closer to when you’re ready to ship. That way you’re seeing on that timeframe and you’re saving that money until you really need to use it. The other thing about customs bonds, depending on the type of entry that you have because there are two types. There’s an informal and a formal entry. An informal entry is for a shipment that has a product value that is less than $2,500 US. If it’s more than that, you need to have a formal entry, or if your product has some kind of PGA, so if it has FDA regulations on it, it’s going to be a formal entry anyway, because the US customs wants to see more about that product. You have to have a customs bond for formal entries. You may not need them for an informal entry, if you are using a courier, which will clear your product underneath their courier bond.
Shapiro’s not a courier, so we don’t have a courier bond, so we have all of our clients in a bond. What this does is that it helps to build a history with US customs to say, I am this importer, this is my number, this is my bond. Customs get a little bit sketched out when you start using different customs brokers and when you start having different bond numbers that keep popping up all the time because it’s showing that you’re not being consistent, so something to keep in mind.
Incoterm. This is probably something where I get the most questions about for international shipping. There are several incoterms. What the incoterm is it’s who takes ownership of the goods at one point. Who owns what, where technically. There are certain incoterms that I always like to suggest and there are some that I always like to say, you might want to rethink that. The most common incoterms that we see are EXW or Ex Works, which is where your buyer at origin, they take care of the export packaging. The seller is the supplier. The buyer, which is usually the clients or the importer, they take care of everything else, which means that they’re not taking care of it themselves. They’re usually working with their courier or freight forwarder for those portions. FOB, which is probably the most cost beneficial for most importers looking to start out, means that the seller is bringing the product to the port overseas and then from there, your freight forwarder and customs brokers is taking it on from the overseas port bringing it into the destination.[Tweet “Landing costs are more important than cost of goods because it can double your cost of goods sometimes.”]
That’s typically the way we work, Abby, and we recommend to most people to work because you want to really make sure that everything has been wrapped up, cleared. Ex Works leaves too much responsibility on you when you don’t know what you’re doing.
It’s very true and that’s why we like to recommend FOB as well. Plus, the fact that the move from the supplier’s warehouse to the port, you can save money on that if you’re having your supplier take care of that portion for you. On to the next we have CFR, which is cost and freight, or CIF, which is cost, insurance, and freight. They’re the same thing, just one has insurance and one doesn’t. Here’s where the issue for this comes in. Sometimes when you’re getting a cost from your supplier for a CIF shipment, there are things missing called destination charges and that’s when the vessel or the airplane lands up the port. It has to get to the warehouse where it’s going to get processed. Those charges are considered destination charges and they tend to be up in the air. You may not know how much those are going to cost you unless you ask about them.
The other issue is that you don’t have control over when your transit times are, when your arrival time is or when your shipment is actually leaving. That’s all in the control of your supplier. If you don’t have a good relationship with them, you could really have things stay in air. We always like to recommend, have the most control and visibility over your shipment. Make sure that you’re double checking everything. Don’t always trust where you think that you should. Sometimes it’s better to do it yourself.
I’ve seen a few of them happen and go very wrong.
We had one shipment that was a CIF that came in and their supplier didn’t have the ISF filed in time. They didn’t let them know that the destination charges weren’t going to be covered. They ended up having an extra $1,000 on top of their shipment of what they thought that is going to be really cheap, really easy. Arriving two months late based on the transit times that their supplier had picked for them. The only thing you can do at that point other than send somebody an angry email and see what leverage you have, but if you were taking control of the shipment to start off with, you can avoid a lot of those headaches.
The last one I’ll go over is DDP, which means that you’re selling or taking care of everything. It means that your seller is taking care of everything. You have control over nothing. If that doesn’t sound like it’s a good time, it really isn’t. I tend to not take us that one. Once something’s coming into the US, it’s asked to get to where it’s going because the port is probably not the final destination. When things come into the port, they usually go to a containerized freight station. If they are coming out from an ocean container or they’ll go to an airport warehouse, where they’ll get processed before they’re able to be picked up.
There are a couple different methods of delivery that we can focus on. There is the full truckload, so if you have a full container, you can have the container deliver directly to where it’s going, depending on what that warehouse or facility delivery requirements are. Less than truckload means that your pallet’s going into a truck and get consolidated with other shipments to move out, which goes along the same lines of being flexible with timing, being a bit more cost efficient and being able to get things there when it needs to get there. A lot of times, we see with the eCommerce marketplace that we have a lot of LTL shipments that are going.
There are very specific requirements as some eCommerce marketplace needs something they need to be palletized. It may have certain labels applied to it, so it’s good to make sure that you were having a conversation early with your freight forwarder. If they’re handling delivery about what you may need. We do handle rework at the warehouse when it comes in. Our truckers are able to do this for us and we have a partner network who is able to do this for us. If you need something, it’s always good to ask or double check. The last kind of style of delivery is courier. For those small parcels, couriers usually are able to take care of that shipment going directly to the door. If you have a delivery that needs to be split up in terms of going to different places. For example, you bring in a pallet and part of it has got to go to one warehouse and the other part has to go to the other warehouse. At that stage, it may be better to have something shipped out via courier, maybe somebody else’s delivery network that they have that handles small parcel. I do know that there are some eCommerce marketplace that do help with those resources, which is good because they have a high volume and they’re able to have very cheap rates with those couriers.
Some eCommerce marketplaces will not handle full container sizes, very large pallet loads, so it’s good to always double check that. The other item I was going to bring up and this goes back to making sure you’ve got things ready at origin and talking to your supplier and making sure that you’ve got the right country of origin label on there, is dunnage. Dunnage also means packing. When you’ve got the master carton, it’s going to have other products put inside of it. Let’s say I’ve got a bunch of soccer balls that I want to ship from overseas. Those soccer balls might need some kind of padding in there to make sure that they don’t get damaged if I don’t have them packaged inside something else, so dunnage would keep all of that stuff safe. Some eCommerce marketplaces don’t want you to use certain kinds of dunnage like Styrofoam peanuts or paper scraps that you’ll put in there or newspaper balled up. It’s good to check for that too. Other than style of packaging, it can help your shipment arrive somewhere very safely.
Check all the parts, labels and palletizing. Some products might need to have a certain UPC code put on them, they need to have certain labels for processing when the product arrives. It’s good to have that overseen. Make sure that you are meeting those requirements of what your delivery warehouse is expecting of you. Be clear with your expectations for your delivery and say, “I need it here by this date. I need these exact cartons going to this exact place.” I have seen deliveries go haywire because customers have not been clear on what their expectations are, or they might’ve given the wrong phone number for where that delivery should be going and what that appointment should be made in time. It’s good to be very clear with delivery expectations depending on what you need.
We’ve talked about freight forwarding overseas, getting to US, going through the customs brokers’ portion to enter into the US, the delivery to your final destination, and all the points that tie everything in together. You can really can never ask too many questions in this business in terms of making sure that everybody’s on the same page. You should fully understand something. There is fine print on these things. There are legal ways. It’s okay to ask questions about that to make sure that you understand what’s going on, you understand what’s included, what’s not included, what are these notes? What does this mean? Make sure you ask all the questions and double check things in advance.