I interviewed Mihai Stroe who discussed Customs Compliance within Supply Chain: Dealing With Risk and Complexity.
Can you first provide us with a brief background of yourself?
My name is Mihai Stroe. I am currently the customs and trade manager for Amer Sports in the Americas. In the last 10 years, I've been living in Vancouver, Canada, but I'm originally from Bucharest, Romania. I started in the industry about 20 years ago with a great German company without any plan to build a career in supply chain.
In the last 20 years, I've relocated a few times. I was also a carrier, a freight forward, an official customs broker. And by now, I like to think that I'm able to connect the dots issuing the proper movement of goods from point A to point B, regardless of where those points are and what goods are being shipped. I hold an MBA, a bachelor degree in International Relations. I'm a licensed customs broker in Canada and the EU. I'm a certified customs specialist in the US, Canada in the EU. And I have a few designations from transportation and freight forwarder associations around the world.
Can you talk about what is customs compliance within the supply chain?
First of all, this area of supply chain, I believe it's neglected. I think companies don't understand the importance and don't understand what customs compliance is. We have to consider, when moving good internationally, we have legal responsibilities, or the exporter record has some legal responsibilities, ensuring that they meet the requirements and to check if they are allowed to export those goods from the country of shipping.
At the same time, on the way from the exporting country to the importing country, goods might go through different customs territories where it might have some implications on the duty being paid, or they might have some restrictions on how those goods are handled or storage or how they're supposed to be shipped.
When the goods arrive to the country of destination, they have to go through the importation process. Those processes could be streamlined if they are prepared in advance. But sometimes companies don't realize that customs have the power and authority to hold a shipment, to confiscate a shipment, or even to deny the entrance of those goods into the customs territory. So I think it's a very important piece in the supply chain, ensuring to the goods are moved properly, and they can be delivered on time and under budget.
Can you share with us how you think this impacts the supply chain?
First of all, there are some costs associated with customs compliance. There are different programs and different approaches that companies might choose to use to ensure compliance. It is very important to understand that there are some risks and liabilities that the importer and exporter bear conducting business in some countries. So the biggest impact is on the lead times and cost. So you might have, for example, you have 30 days to deliver your goods to your customer. But if there are any customs issues, those 30 days might easily transform in 60 or 90 days, which is definitely going to have an impact on your supply chain.
If you look at cost, to have goods inspected by customs, containers and packages have to be moved in a specific inspection facility which is on the customs provision, where the inspectors will conduct the search. All of those costs associated with moving the containers or the packages to those customs inspection facilities, they go back to the company who is shipping and importing those goods.
From a lead time and cost perspective, it can have a significant impact. We're not going to go into the liabilities and the personal risk at this point.
Can you share a little bit about how it's done effectively?
Well, effectively, I think it starts with some due diligence. So before agreeing and signing a contract with your potential customer, you have to ensure that, first of all, that customer is not on the denied party list. In the last few years, there's been an increase compliance [inaudible 00:05:42] shipping goods to people or organizations that are not allowed to get in position of any type of goods. For example, it could be terrorists or any governments or companies associated with groups that are on those denied parties. So that would be the first starting point.
Second, it's wise to start checking with the rules in the country of shipping to see if you're allowed to ship those specific products. With technology, that might require a specific license. It could as simple as batteries. They might require a special handling, and you have to check with the carrier and the freight forwarder. It might be different special requirements in the country of shipping.
It's recommended to have good communication with your customer, ensuring that they can do the due diligence in the country of importation, ensuring that whatever goods they're importing, they're allowed to import in that specific customs territory, ensuring that they are aware how much the customs duties will be and if there are any restrictions of the importation.
I can give an example. Not a long time ago, a company bought a significant number of trucks from Europe. They had them shipped to Canada. Unfortunately, they didn't check in advance with the transportation authority in Canada. And those trucks could not be registered to be operated on Canadian roads. Therefore, they ended up owning a significant number of trucks that they could do nothing with them.
Thank you, Mihai, for sharing today.
More than welcome to share everything that I have experienced.
About Mihai Stroe
Supply Chain/ Customs and Trade Compliance Manager - Americas