3PL Perspectives
Roxana Osuna | THE ILS COMPANY
THERE IS NO doubt the COVID-19 pandemic disrupted trade as we know it. In a sense, it made the world seem smaller by the rapid pace at which the virus spread across country after country. But it also made the world seem bigger at times when it highlighted the disadvantages of having your supply chain managed from thousands of miles away. COVID-19 was not the only disruptor of trade in 2020. The launch of the United States-Mexico-Canada Trade Agreement (USMCA) brought another variable into the mix, as did the United States-China trade war and the uncertainties that come in an electoral year.
If we have one takeaway from 2020 it is that change is inevitable; it can creep up on us like a steady leak or come rushing at us like a broken water pipe. At first glance, the landscape may look dire in comparison to the comforts we experienced in previous years, but believe me when I tell you it is filled with opportunities for those that are ready to adapt and venture into international trade—even with all the unknowns.
We have already established that we cannot control what goes on in the world or, as many home office videos show, what goes on in our homes. Nevertheless, we can attempt to make the most of it. One way to do that is by playing to our strengths and getting help to manage our weaknesses. Product shortages emphasized the importance of how supply chains are managed here and abroad, as service providers who had been operating in niche markets were now being asked to do it all to meet changing consumer demands. This doesn’t necessarily mean that you now have to open offices in another country, or that you need to expand your headcount, but unless you find a solution it does mean your clients make look elsewhere for a company that can offer it all.
A strategy for companies that have participated in international supply chains is to look for local agents where demand exists. If your customer is now asking you, a carrier or logistics company, to ship door-to-door from Mexico to the U.S., you can partner with a Mexican-based agent to help you navigate current and future regulations, while you remain the face of the company to your customer and pull in additional revenues with the expanded service offerings. If you have a product that is now in high demand across the border, but you have never exported before, an international 3PL can guide you through the steps, minimizing delays and avoiding costly mistakes.
Many China-based companies have realized that shipping to the U.S. is increasingly burdensome and expensive. Many are now routing their shipments to Mexico where they have found trade companies and third-party warehouses that can import and store their goods in close proximity to their desired market while staying open to the possibility of making smaller shipments into the U.S. With the saturation of air and maritime ports, the ability to re-route to lesser known ports—for example, Ensenada instead of Long Beach—can make the difference in meeting forecasted sales as inventory arrives by the deadline.
IF YOU HAVE A PRODUCT THAT IS NOW IN HIGH DEMAND ACROSS THE BORDER, BUT YOU HAVE NEVER EXPORTED BEFORE, AN INTERNATIONAL 3PL CAN GUIDE YOU THROUGH THE STEPS, MINIMIZING DELAYS AND AVOIDING COSTLY MISTAKES.
International trade also comes with additional risks. Lack of knowledge of regulations can cause inventory to be seized upon arrival by Customs officials because of improper labeling or a driver may be accused of carrying contraband because he forgot or did not know he needed to present an additional document before reaching Customs. Drugs and counterfeit products also present a threat to legitimate trade and are the reason many transportation companies distrust offshore agents and shippers. Partnering with a reputable agent requires due diligence and should not be taken lightly. To combat organized crime and money laundering, Mexico established a law that gives it the power to look not only at Mexican companies’ finances and tax obligations but also at foreign companies doing business in Mexico. While an investigation is ongoing, a company that has not paid taxes or does not have the proper documentation to support the legitimacy of their business may be labelled as a member of organized crime and lead to the freezing of assets.
International programs such as C-TPAT or AEO are setting standards in terms of security and reasonable expectations for companies involved in international trade. While the expectations are reasonable, the costs for compliance for smaller companies may be prohibitive. This is where the strengths of backend service providers and outsourcing can come into play. A company can now outsource the administration of security services such as guards, K-9 units, GPS monitoring, and security program upkeep; freeing up its personnel to focus on its core business, be it manufacturing or transportation. While we get comfortable with USMCA and the enforcement of the new trade regulations, hiring a customs and international trade compliance firm or a shelter company can allow you to get your feet in the water while someone holds your hand and provides that extra sense of security since they are already familiar with your challenges.
In closing, I would like to remind you that we cannot escape change, but we can adapt. In a paraphrase from Charles Darwin’s On the Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is best able to adapt and adjust to the changing environment in which it finds itself. Companies have proven that they behave as organisms in the same manner as those that attune the fastest gaining an advantage. The world is increasingly connected, and it is in our best interest to understand the dynamics of how international trade plays a role in our jobs, our income, and our way o of life.
Roxana Osuna is the Senior Compliance Officer at The ILS Company, a thirdparty logistics company that focuses on international trade and specializes in cross-border freight between the U.S. and Mexico. Roxana is based in Tucson, Arizona and has more than 15 years’ experience in international trade with emphasis in security, risk management and compliance. Roxana can be reached at [email protected].
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