Border Compliance Provides a Competitive Edge

Growing frustration about the increasingly complex U.S./Canada border clearance process has been well documented.  But some affected businesses seem to be turning the lemons of border compliance into lemonade, using their determination to master the compliance process as a competitive advantage.

“Look on the bright side,” one commenter to a recent Canadian Transportation & Logistics blog post wrote, “companies that can manage these issues properly can gain more competitive advantage over competitors.”

This particular blog commenter might not have realized how perceptive his comments were, given some of the “tweaks” that have been made in recent months by the Canada Border Services Agency. Canada is continuing with the rollout of an electronic cargo transmission process – eManifest – which, when fully implemented will require advance notification of all shipments headed to the Canadian border.

CBSA has announced that all highway carriers must be in compliance with eManifest by November 1, 2012.  Failure to comply could result in denial of entry and monetary penalties.  Industry analyst Laurie Turnbull, writing in his CT&L blog noted that the eManifest requirement “has tremendous significance in terms of the possibility for delay, or potential inadmissibility, of shipments.”  Turnbull suggests that transportation managers might want to “reexamine supplier agreements” to make certain that their carrier is up to the task of eManifest compliance.

Turnbull also highlights recent changes to Canada’s Custom Tariff Schedule that took effect on January 1.  Like most industrialized nations, Canada adheres to the list of internationally recognized tariff codes, as established by the World Customs Organization (WCO).  WCO maintains a list of more than 5,000 commodity groups, and assigns a six digit identifying code to each.  That six digit code means that shipments will be classified similarly around the world – a shipment of oranges traveling to Canada will bear the same six digit code as a shipment of oranges headed to China or anywhere else.

Each country is then authorized to use subsequent identifying codes, as a way to further track goods entering and leaving its borders.

Recently, the WCO made some changes to its coding system, which had the trickle down effect of causing some of Canada’s codes to change.  Unless a shipper or its logistics provider is aware of these changes, any affected items arriving at the border runs the risk of being deemed non-compliant, or of missing out on favorable tariff actions as a result of the mislabeling.

Which reaffirms the point that a savvy business will take advantage of the growing complexities of the compliance process, and turn it into a competitive advantage.