In today’s global construction industry, it’s common to have equipment from Germany, materials from Italy, and parts from China, Thailand and India. At the same time, project schedules have shortened, leaving less time between groundbreaking and ribbon-cutting.
Doing business on the world stage demands a hyper-efficient supply chain, which can be challenging given the various sizes and types of construction materials. Any shipping or border delay can result in thousands of dollars lost, as well as costly and inefficient project delays.
According to a recent Livingston International survey of 500 import-export professionals around the United States, more than 80 percent of small to mid-size businesses are concerned about customs delays impacting their ability to properly manage their businesses. However, nearly one-third report they tend to ignore the myriad of changes to government regulations and hope for the best when transporting their goods across international borders.
This is risky, especially with millions of dollars on the line for high-stakes construction projects. Companies need to protect their investment and their company by doing their homework, and by achieving complete transparency throughout their supply chain—from procurement to payment.
Consider the following when navigating the complex customs clearance process.
Preparing for Shipment
Preparation is key to preventing customs compliance problems. Discussing the high-level impact of the project with trade compliance specialists is an important first step. This is the time to review customs regulations, correctly classify shipments and determine duty rates. It is important to do this to avoid fines, but what many do not realize is that the correct duty rate also can save a company millions of dollars.
This is also the time to build relationships with customs officials. Taking the time to talk with officials in advance builds trust, which reduces the likelihood of any hassles between borders.
Another way to prepare for a smooth transaction is to review all speeds available to ship, particularly when using ocean freight. Often the quickest freight is the most expensive, but this may not be needed if the project is planned well.
The Importance of a Backup Plan
Even with the best laid plans, it’s possible to encounter unforeseen challenges when shipping across international borders. It’s important to be aware of some of the most common issues that could arise, and to develop a backup plan to work through these potential problems.
A relationship with an experienced customs broker is invaluable for ensuring a viable backup plan. Brokers can achieve transparency up and down the supply chain, keeping track of exactly where equipment and materials are at every stage of shipment. This is critical when construction companies need to expedite or delay shipping to harmonize with project timeline changes.
For example, if a construction project is moving behind schedule, shipping equipment and materials on a slower mode saves money and provides a temporary low-cost storage solution until the materials are needed, reducing overhead. In this case, a slow solution is the right choice.
On the other hand, in cases of mechanical failure, the faster the cargo is back on track, the better. If a shipping barge unexpectedly needs an engine repair, the cargo is delayed until another ship is available, putting the project timeline at risk. Knowing how to quickly identify and secure another ship—or an entirely different transportation mode—is critical.
Never before has efficiency been tied so closely to profitability. When planning to venture into global trade, consider a partner whose core competency is regulatory and operational compliance. The seamless transfer of construction goods can result in fewer risks and better bottom line performance.