Logistics Project – Challenge
Section 1 –You are an importer that will undertake a short-term logistics project that requires importing Widgets from China.
Volume is estimated 2 containers weekly starting next month (In 40 Footer containers per week for the next 8 weeks). Each container is a shipment.
Commodity is Electronics & Value is $100,000 per container.
Each Item Cost (FOB) $100 – There are 1000 Items in per container.
Incoterms are FOB Shanghai,
Ocean Liner is NYK
Transit Time is 34 days
Your Select Ocean Forwarder’s contract is $4,100 ocean freight from Shanghai to Miami, includes $100 in insurance.
Local inland to any South Florida Warehouse is $325.
Broker fees are $210 and other customs fees are $210
Duty rate for all items is classified by your customs broker as 12% duty.
NO anti dumping/Countervailing fees.
No applicable Free Trade Agreement.
Your Main Distribution Warehouse can only receive cleared US duty paid merchandise but you have contracts with your 3PL warehouses for handling and managing merchandise as a Bonded Warehouse and FTZ as required.
Section 2-Your Buying Team has informed you that this $1.6 million-dollar project has 80% of the merchandise is intended for sale to US Customers. The other 20% is intended for Re-Exports customers or License Distributors in Latin America.
The U.S. distribution merchandise is of high priority and must be made available within a few days are importation to our clients. Any decisions made for FTZ admissions, Customs Bonded Warehousing needs or full consumption and later duty drawback should consider that the 80% of the merchandise is meant for US distribution and made available right away.
Analysis
Apply the regulatory concepts learned in the module and to mitigate the risks to the company and the best and compliant logistics project. Review the case challenge above: identify the opportunities of duty savings/reductions by applying and assess best approaches using FTZ, Bonded Warehouses or Duty Drawback Program
Discuss the approach involved with evaluating each potential solution.
Mention a few of the different solutions that were considered and not applied.
Clearly explain why your approached proved to be the best alternative.
Each company has different constraints and based on the trade consultants and prior experiences and customer demands the solution may be different for everyone; however, defend your selection based on what you have learned from this module.
Analyze the Landed Cost for each shipment based on the case challenge information.
You can make additional assumptions to other requirements in development your review/assessment such as value added services (assembly, labeling or minor manipulation to make the merchandise ready to release to customers.)
