Effective transportation analysis and engineering is dependent on methodologies and tools applied in a timely and consistent manner to provide transportation managers and executives with actionable information regarding freight and trade service performance levels and associated costs.

International, cross-border transportation service and cost analytics are inherently more complex than domestic service and cost analytics. Flow of goods from one country to another typically involves multiple-leg moves employing more than one mode of transport. The single largest difference between international and domestic transportation service and cost analytics (and a cost/service area often overlooked) is trade; the regulatory requirements and voluntary activities associated with the movement of goods between countries.

Origin cross-border transportation and trade activities start with inland freight movements via truck, rail, or intermodal service to an air or ocean port of export. Origin transport activities include carrier and freight-related tasks, as well as, government-mandated export trade tasks.

Line-haul transport from Port of Export may include transfers from one conveyance vessel to another or from one mode to another.

Destination cross-border transportation and trade activities include a wide array of steps; pre-arrival import filings, cargo recovery tasks, ad hoc regulatory customs inspections, cargo releases from customs and other import regulatory authorities, transfer of goods from Port of Entry points to intermediate locations for break-bulk or other value-add services, transfer of goods to railheads or drayage points, and inland transport to consignees or their distribution agents.

The increased level of complexity in the physical flow of goods that exists in cross-border transportation scenarios requires knowledgeable resources using proven analytics methods and tools. Companies and their customers, suppliers, and other partners along the transportation and trade pathway all benefit from rigorous monitoring of costs and service levels to continuously identify actionable opportunities to reduce and contain costs, while meeting and exceeding desired transportation service levels.

Macro Cost Factors

Category

Description

Modeling Value

Inbound Freight

Direct and in-direct freight costs associated with movement of raw materials, WIP or finished goods into location(s) including plants, DCs, agents

Provides insight to total landed cost of goods, hidden or included inbound freight costs, mode and route implications on key cycle times, scenario comparative cost analysis

Outbound Freight

All shipments from DCs to customers in all channels, shipments to suppliers (returns)

Provides total cost to serve by customer segments, markets and products; allows what-if analysis of service upgrades or slow-down; scenario comparative cost analysis

Trade

Activities and costs related to shipment import and export compliance, HTS classifications and associated taxes or duties, costs of FTZ or related tax/duty reduction strategies, impacts of trade agreements, security regulatory filings

Captures non-freight costs directly associated with the movement of materials and finished goods across national borders. These services are often provided by transport partners.

Trade Cost Factors

Cost Component

Description

Information and Data Sources

Classification and Valuation of Goods and Materials

Product classes, tariff codes, valuation of goods and materials for tax/duty, value-add changes to value, re-export values

Tompkins subject matter experts, Tompkins Supply Chain Consortium database of best practices and benchmarks, on-demand survey tools, strategic trade and transport partners, applicable prevailing/published mandatory government programs and costs, expert partners in customs brokerage, Tompkins engagement knowledge bases

Broker and Entry Management

Customs broker services and costs, in-house brokerage or broker management costs, systems costs or other technology costs

Origin Preference

Cost deltas related to in-country or preferred-origin country suppliers benefitting from FTAs (Free Trade Agreements) and reduced total landed costs of goods.

Duty Deferral/Refunds, Origin Preference

Duty avoidance/reduction/deferral strategies and their cost impacts, drawbacks, Bonded warehouses, Free Trade Zones, Special Economic Zones, Export Processing Zones, Customs “Handbook” program (CN)

Admissibility & Licensing, Security Filings

Activities and costs (or cost avoidance) related to quota and tariff quota optimization, import and export filings and compliance costs, any required licenses or permits, costs of security-related filings or known trading partner programs

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About the Author
Don Anderson
Don Anderson