Global Markets, Global Headaches

Important Reminder: Articles Exported for Repairs or Alterations

Global Markets, Global Headaches

"The factory in Germany missed its deadline. Can you pick up
the slack?”

Sound familiar? Reilly International is frequently called upon to make up for delays and missed deadlines elsewhere in the supply chain. We’re often at the tail end of the shipping process. As both dog owners and logistics experts know, being at the tail end is not always fun.

Here are some simple ways to avoid annoying delays in the first place.

Engineering: Engineers and product designers should consider shipping and packing requirements at the beginning of the product development process.
Considering shipping and packing from the start ensures that cargo always fits into the container or aircraft—a great way to reduce transportation costs.

Purchasing: Use total logistics costs, not per unit costs, for all buying decisions.
Save money by removing the sourcing decision. Later, if suppliers ship late or parts aren’t available on time, you can use these savings for expedited transportation.

Of course, it’s impossible to anticipate every problem. When setbacks do occur, we’ll be there to do what we do best—pick up the slack.

Important Reminder: Articles Exported for Repairs or Alterations

If you are exporting an item for repair or alteration, the returned item may be subject to duty only on the value of the repair or alteration. However, in order to qualify for this classification, you need to make sure:

1. The repair or alteration does not cause the identity or classification of the item to be changed.
2. Incidentals in foreign operations relating to the repair were limited to minor procedures, such as warehousing, repackaging, sorting and testing.
3. The repair or alteration is for a completed item.
4. No drawback was claimed for the item.

To qualify for the repair/alteration classifications, you need a declaration form the person who performed the repairs or alterations; a declaration from the owner, importer, consignee or agent; and a proof of exportation of the item such as a foreign customs entry, foreign customs invoice, bill of lading or airway bill.

The cost or value of repairs or alterations should be noted on the invoice and entry papers. Even if the repair was free (e.g. covered under warranty), the value of the repair must be stated and duties will be assessed on the value. There are other considerations in determining cost or value.

• Value does include labor costs
• Value does include any parts (including U.S. parts sent with the item to make the repair or alteration)
• Value does not include engineering costs, tools or test equipment

For example, if you sent an engine abroad to be rebuilt and you sent parts to assist in the rebuild, the value would include:

• The cost of the foreign parts added
• The value of the parts you sent
• The cost of labor

Please contact your entry specialist if you have further questions.

Steamship Lines Announce Fuel Surcharge

European Westbound LCL Cargo Affected

In early 2007, ocean carriers increased rates on the following items:

• Bunker adjustment factor (BAF)
• Interim fuel participation surcharge (IFP)
• Currency adjustment surcharge (CAS)

We were able to absorb these additional costs on the expectation that the U.S. Dollar would maintain its value against the Euro and that worldwide fuel prices would decrease.

Unfortunately, the market moved in the opposite direction. As a result, the steamship lines announced a second IFP increase on 1 September 2007.

To cover this new IFP increase, we must implement an interim fuel surcharge of USD $8.00 per cubic meter on all ocean freight LCL shipments. This will become effective on 1 October 2007.

We value your business and will continually strive to deliver superior service and solutions for your International shipping needs. Please feel free to contact us with any questions you may have regarding these carrier increases.

Around the World

Featured Case Study: Foreign Trade Sub-Zone

After identifying significant savings in import duties, an industry-leading client of Reilly International received approval to set up a Foreign Trade Sub-Zone within their warehouse and assembly facility. However, operating a Foreign Trade Sub-Zone is notoriously difficult and complex. Implementing the program started to seem nearly impossible.

The company sought out Reilly International for its expertise in launching and maintaining such a program. Reilly supplied optimal software and created a customized SOP (standard operating procedure) to guide all activities. Reilly also put a customs expert on site for a full 60 days to guide and train staff members.

The large manufacturing firm realized significant cost savings thanks to the FTZ program implemented by Reilly International. The savings have come not only from a major reduction in duties but also from reduced staff time necessary to manage the program. In addition, the company has seen greatly increased cash flows as a result of the deferred duty.

Six Questions About Maureen Haselhoff

Each member of our staff is a dedicated, hard working individual. But what else do you know about us? Below are six questions we asked Maureen Haselhoff. Maureen manages the import department at Reilly International, including the breakbulk and brokerage teams. She works closely with many of Reilly’s clients and their suppliers, as well as Reilly’s overseas agents, carriers, co-loaders and trucking companies.

1. What one thing do you like most about your job?
I enjoy the business itself and all its facts—the endless amount of knowledge there is to acquire and the customers I’ve built relationships with. However, what I enjoy the most would have to be my family here at Reilly International. I believe people are truly happy at a job if they’re able to love what they do, are able to do it well and sincerely enjoy the people they work with.

2. What three words would others use to describe you?
Only three words?!? I think my co-workers might say I’m fun, kind and understanding. I’m very serious about my job and my responsibilities, but I take pleasure in making what I do as enjoyable as possible for those around me.

3. How have you been spending most of your free time lately?
I’ve been having so much fun lately! My husband Neal and I bought a camper, which is parked by the Illinois River in Seneca, IL, right next to his family’s campers.

During the week, I spend my free time putting together a game plan for the weekend, preparing whatever I need to make our special place our weekend haven. The kids talk about how excited they are for the weekend every day, and it warms my heart knowing we’ll be together, enjoying each other as a family. There’s nothing like focusing on the things in life that matter most—friends and family.

4. If you won the lottery, what would you do? (And don’t just say spend it—elaborate!)
I would pay off debts for my family and hire them financial advisors. Then, I would buy a nice home for my mother in a community where she can interact with others socially. Next, I’d put my kids through the best colleges and set up trust funds they couldn’t touch until they were 25 (maybe even 35!). I would then travel to all the places I’ve been hoping to get to all my life. Finally, I’d settle down in a warm secluded place off a beach, spending my free time visiting friends and family and helping others in underprivileged areas of our country.

5. If you could have dinner with any famous person, who would it be and why?
Martina McBride. She is my favorite singer and shares a lot of my values. I also admire her involvement with her family, community, and several important charities, particularly her work with battered women and children’s programs.

6. What is your favorite line from a movie?
“Say hello to my little friend!”

In the Spotlight

Company Picnic

Ahh, summer in Wood Dale. What a better time to celebrate another successful year, and what a better way than Reilly International’s annual company picnic?

“Cowboy” Beto Cabral, planned the festivities, while Maureen “The Ref” Haselhoff organized and judged an entertaining set of games for both kids and adults. Everyone brought a dish and the food was delicious. We burned off the calories with hula hoop contests, dance contests, volleyball, bean bag competitions and other activities, including the chocolate pudding-pie eating contest (OK, that one didn’t exactly burn calories).

Thanks to all our employees who brought their families for a fun afternoon of team togetherness!

Jennifer shows off her incredible hula hoop skills

Maureen Haselhoff judges the highly competitive bean bag race

Svitlana Mykhaylovska serves another ace

Beto Cabral plays volleyball in a cowboy hat

Tia expresses her delight for pudding-pie eating contests

Vickie Reilly talks trash in the over 12 (U-12) division, but isn’t very intimidating

Carlos Cabral celebrates his pudding pie victory

The team smiles for a group shot at the end of a great day!