Success in any business is all about balancing risk with reward. For many top companies, finding a balance means outsourcing risk-intensive processes from your supply chain, even in instances where you have the ability to fulfil the role yourself.
This was precisely the case with our client, a large multinational digital infrastructure company with data centers located across the globe. Boasting an extensive reach and physical presence in each of their locations, they had the ability to act as their own Importer of Record for shipments containing new hardware.
Going down as the importer for any goods comes with significant personal and business risks. Additionally, Tech equipment, and more specifically data center networking equipment, is one of the most highly regulated groups of products regarding import compliance. This is due to its propensity toward being what is called “dual-use.”
So why would such a giant of the industry choose to outsource their imports to TecEx rather than managing them in-house?
The answer is simple, Risk vs. Reward.
Due to the risk ill-intended dual-use hardware poses not only to a countries network but also to the very safety of its people, Tech hardware is frequently more heavily scrutinized during the customs process. When acting as the Importer of Record (IOR), you are held responsible for ensuring all the local laws and requirements are met, and all duties and taxes are paid. This includes being held responsible for applying for and acquiring all the correct licenses and permits for your specific goods. This, along with the duties and taxes, is heavily based on the HS codes of the goods you are shipping.
The entire compliance process is an administrative nightmare and errors made at this point in the process come with severe consequences, such as your goods being seized at customs.
Customs offices also require the IOR to keep a record of their imports for audit purposes for a period up to seven years after the shipment has been cleared. Not only are audits an administrative nightmare, but they come with severe financial and legal repercussions if any documentation is missing.
The IOR is also held responsible for any financial penalties at customs which can arise for several reasons, along with civil fines and criminal penalties.
Compounding these legal, financial, and audit risks is the fact that the importer need not have ill intention to incur any of these negative consequences. Essentially, even the most innocent of errors or oversights can have disproportionately severe fallout.
The benefits of keeping something as complex and high risk as import compliance and IOR duties in-house are limited, as our client came to realize.
Although some may argue that keeping your import team in-house would decrease admin and be more cost-effective, this is not necessarily the case. Training a team and keeping them up to date on the requirements and intricacies of international customs in multiple countries takes significant resources. Furthermore, expecting a team to master this specialist and high-risk area in a company whose specialty lies elsewhere is a big ask for even the brightest minds.
Although keeping these duties in-house would afford you a little more control over the import process, unless handling imports is a fundamental aspect of your business model, the safest option is to hand off these responsibilities to a specialist.
This way you can be certain your import team is fully equipped to meet the challenges, and in the case of TecEx, you can enjoy this peace of mind and risk free international shipping into almost any country in the world.
Having weighed up their options, the company in this case decided that they did not want to play any part in their overall import process, avoiding all the risks involved with the role despite having the capability.
They placed complete responsibility for all their shipments in TecEx’s capable hands, taking full advantage of our DDP solution. TecEx readily stepped up to the challenge, coordinating all the moving parts for multiple shipments. We handled everything from initial pickup to final delivery and all customs compliance, seamlessly integrating with and managing the client’s preferred logistics provider.
Impressed with our efficient delivery times and reliability, the company placed even more responsibility in our hands, requesting that we assist in managing their reseller partners.
Even as a massive multinational end-user, the client faced the same issues smaller end-users face when managing suppliers, such as resellers. TecEx stepped up and took over managing the company’s relationships and orders.
In doing so, we significantly decreased the administrative burden many end-users face, removing the need for multiple invoices and replacing it with one comprehensive invoice.
By outsourcing their international logistics and IOR needs to TecEx, our client enjoys a risk-free import solution on all their shipments. They also effectively streamlined the administrative process for their procurement team and opened up opportunities for central procurement. Doing so left the company more time to focus on what they do best and has resulted in them generating additional revenue.
TecEx prides itself on its ability to develop bespoke solutions to resolve our clients’ unique pain points. Why not contact our expert team to see how we can help you streamline your international logistics efforts?
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