While most U.S. businesses expect that expanding to the Canadian market will include at least some degree of frustration with border clearance processes, one Pennsylvania-based guitar manufacturer was not prepared for either the scope of problems it encountered, or the difficulty in trying to resolve them.
The guitar manufacturer, recognized worldwide for its stunning designs, tremendous sound and attention to detail, was thrilled when the timing seemed right to expand to the Canadian market. The company always knew there was strong interest among Canadian musicians for its products, but had generally restricted shipping capabilities to the U.S. Once the Canadian expansion was underway, it wasn’t long before the manufacturer realized it had failed to anticipate the impact that the customs compliance process would have on access to the Canadian market.
The challenge
Specifically problematic were the requirements of U.S. Fish and Wildlife Service (FWS) and the Canada Border Services Agency (CBSA). Certain products are not allowed to leave the U.S. because of export restrictions on specific natural materials used to make high-end guitars, and FWS imposed exorbitant inspection fees on each guitar. Shipments were not allowed to enter Canada without proper documentation, and the manufacturer was not allowed to clear goods into Canada. This meant that the manufacturer’s customers (a) faced an unexpected invoice at time of delivery for additional sales taxes and brokerage fees; and (b) had to personally become involved in the importation process by traveling to the appropriate customs facility.
If the customs headache wasn’t enough, the in-transit damage sustained by a high number of guitars might have convinced the manufacturer to rethink its strategy. Instead, they called Purolator International.
We successfully intervened with the U.S. Fish and Wildlife Service on the manufacturer’s behalf. We made the case that a shipment of guitars should be a single entity, persuading the agency to charge a single examination fee per shipment, not per guitar, for a dramatic drop in costs.
We rectified the situation by guiding the company through the NRI program. This allows them to collect Canadian taxes upfront and navigate customs themselves, eliminating the unpleasant and inconvenient clearance process for their customers.
We initiated an overhaul of how products were shipped, revising the pallet loading process so that shipping labels point outwards. This simple fix allowed for scanning while maintaining pallet integrity, causing damage reports to all but evaporate.
We initiated a consolidation best practice, combining smaller shipments into a single unit for customs clearance. We also changed the billing from a per-customer fee to a single, fair fee for the entire shipment.
The results
Purolator was able to completely overhaul this manufacturer’s customs compliance process. What had been a tortuous experience, for customers as well as the manufacturer, became hassle free and essentially a non-issue. Canadian consumers were able to receive delivery of their merchandise, and the manufacturer was able to extricate itself from the unpleasant compliance process. Equally important, Purolator implemented processing changes that, almost overnight, eliminated the high incidence of products damaged during transit. In fact, since partnering with Purolator, no damage reports have been filed.
“We knew pretty much right away that we could provide a better solution,” says Betty Jo Rodey, Purolator International’s Strategic Account Executive. “No one else has the access to the Canadian market that Purolator does, so we went to work to deliver the solution this company wanted in the first place.”
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