By John Carr
Since the 2007–09 recession, we’ve seen a trend among U.S. companies to evaluate their total landed costs when making supply-chain decisions. An analysis to find business advantages from the supply chain takes into consideration all supply-chain expenses, including manufacturing, sourcing, transportation, risk, inventory, insurance, duties and taxes, deconsolidation, distribution, rework, returns and more.
Couple this concern for cost effectiveness with the need for greater responsiveness and flexibility, and old assumptions about supply chains disappear. Companies are reevaluating when and where to outsource, near source, or source within the United States.
Long appreciated for its geographically central location and economical transportation, Kansas City is benefiting from the changing nature of logistics. The region has been and continues to look to enhance its images and capabilities as a logistics hub.
As proof, consider the Greater Kansas City Foreign Trade Zone (FTZ). It is one of the largest in the nation. With Alternative Site Framework (ASF) designation, site designation and activation in the Metropolitan Kansas City area can occur quickly.
With an FTZ, shipments move in-bond from the first port of arrival and remain under Customs custody while in the zone. This can have several advantages not available in a non-FTZ environment.
For example, in an FTZ, duty is paid when products move from the zone into U.S. commerce. For warehousing activity, FTZs eliminate the expense of paying Customs duty on material held in storage, representing a significant reduction in borrowings. U.S. duties are paid when merchandise is shipped to U.S. destinations; no duties are paid on exports. For FTZs authorized to manufacture products by the FTZ Board, this allows the manufacturer to choose the duty rate of either the imported part or that of the finished goods.
Importers also can save on weekly entry fees. Companies located outside of an FTZ pay a 0.21 percent Merchandise Processing Fee for each and every formal Customs Entry (shipment). This fee ranges from a minimum of $25 per entry to $485 for an entry valued at $230,952 or more. Using the FTZ Weekly Entry Procedure, the importer would pay only one entry fee per week, rather than processing fees for each and every shipment imported into the zone. Think of the savings!
Also supporting the area’s emergence as a logistics hub is the KC SmartPort. KC SmartPort is a non-profit economic development organization that seeks to make the transportation industry and the region more competitive in the movement of goods into, out of and through the Kansas City area. With insights on real-estate opportunities, foreign-trade zone activities and the trade corridor network, businesses reap the benefits of the group’s efforts.
While the area provides opportunities to enhance supply-chain effectiveness, third-party logistics (3PL) service providers have the personnel and infrastructure to deliver bottom-line savings.
Historically, 3PLs focused on connecting shipments with carriers. While domestic and international transportation is still a fundamental service, today’s 3PLs design network strategies, ensure shipment optimization, conduct carbon footprint modeling, and provide inventory visibility and control through transportation management system technologies.
Today’s 3PLs go beyond transportation services and focus on solving customer problems through global supply chain solutions. They understand the complex nature of supply chains, stay current with changing market forces, and offer a broad portfolio of services to best meet the
customer’s business needs anywhere in the world they operate. This allows customers to focus on what they do best.
Trade compliance is one example. This labyrinth of rules, laws and duties varies by country of origin and destination, and the price for non-compliance can be high, including fines and shipment delays. Businesses can mitigate those risks by outsourcing trade compliance with a 3PL.
With its central location, regional warehousing also can contribute to nimble supply chains. 3PLs offer outsourcing opportunities to reduce overhead and lessen response time with services such as light assembly, kitting and pick and pack.
John Carr is president and chief executive officer of MIQ Logistics in Overland Park, Kan.