Apologies for the lack of posts - I've been distracted by recent news, plus I'm starting a new contract tomorrow. I've been focused recently on the various mortgage issues in the news and blogs. Some of my favorites are Naked Capitalism, Marginal Revolution, and Credit Slips. They all offer commentary and insights that aren't in the mainstream media (usually because the authors are experts who also have space to go into detail) and the first two have excellent comment sections.
Since the news broke about document issues for multiple servicers in foreclosure proceedings, I've been wondering how far it will extend. According to Credit Slips, it's unlikely that someone who purchased a home out of foreclosure would be evicted or face financial consequences. If they bought in good faith, the previous owner would have recourse against the servicer or title insurer.
The issue that's still bothering me is cloudy titles. It goes beyond foreclosures, potentially affecting pretty much every house with a mortgage purchased in the last fifteen years. 60% of mortgages in the US are recorded with MERS instead of the county register of deeds. It's becoming apparent that there are flaws in the MERS system (JP Morgan Chase dropped MERS as a foreclosure agent), and those flaws may cloud the title of any house sold since the mid-nineties. I'm not sure yet what's going to happen, but it could be a lot of revenue for local government. The servicers may have to register a lot of notes with counties in a hurry.
Pretty much every time Yves posts about this on Naked Capitalism, someone comments that this is about deadbeat borrowers who would have lost their home anyway. First, that's not entirely true - there are documented cases of foreclosures against inappropriate parties, specifically in Florida. But this is about rule of law. The consequences could go beyond the US and beyond the housing market.
It is vital that the notary system and affidavits are honest and trustworthy. In international business you see notarized documents frequently. (There are also "chamberized" documents, usually certificates of origin, where the document has been certified by a representative of the local chamber of commerce. Your forwarder can help if you need this.) And that's not even getting into documentary letters of credit.
Wednesday, October 13, 2010
Friday, October 8, 2010
Being a good customer
One of the rules I try to live by is be a good customer. A lot of that is simple: be polite, only hold people responsible for things they can control, treat people as I would want to be treated. Those rules apply to working with your freight vendors, but a few more can help your relationship (and save money too).
I'm that customer who knows a lot about a forwarder's business. I've been known to call a forwarder and ask for a cubic meter on a specific flight, or a specific sailing. But I know the airline schedules, and I know in general how to look up sailing schedules. I've been booking trucking for seven years now. If you don't have that experience, the key to being a good customer is to give your vendor as much information as you can. If you have a hard deadline, tell them. If you don't have a deadline and are trying to do the move on the cheap, tell them that.
At the same time, don't set arbitrary deadlines. Don't tell them it's urgent and then change your mind (or apologize and explain if the situation changes). You need to trust each other in the relationship.
Finally, pay your bills on time (just like any other vendor).
I'm that customer who knows a lot about a forwarder's business. I've been known to call a forwarder and ask for a cubic meter on a specific flight, or a specific sailing. But I know the airline schedules, and I know in general how to look up sailing schedules. I've been booking trucking for seven years now. If you don't have that experience, the key to being a good customer is to give your vendor as much information as you can. If you have a hard deadline, tell them. If you don't have a deadline and are trying to do the move on the cheap, tell them that.
At the same time, don't set arbitrary deadlines. Don't tell them it's urgent and then change your mind (or apologize and explain if the situation changes). You need to trust each other in the relationship.
Finally, pay your bills on time (just like any other vendor).
Tuesday, October 5, 2010
Houston Ship Channel
Sunday morning an electrical power structure was hit by a tug boat in the Houston Ship Channel. The Coast Guard estimates that the channel may be open tonight, if not tomorrow. The estimated cost of the three day shutdown (including waiting for upwards of four dozen vessels) is $1 billion.
Why the shutdown? There are electrical lines blocking the passage to the bulk terminals and oil refineries (container ships load and unload at facilities on Galveston Bay, outside the channel). Houston is the second-busiest port in the country after Long Beach. The economic impact outside of jobs at the port and vessel delays may be on oil & gas futures, but that should be limited. These refineries can be hit by hurricanes, causing bigger shutdowns than two days of incoming crude.
Why the shutdown? There are electrical lines blocking the passage to the bulk terminals and oil refineries (container ships load and unload at facilities on Galveston Bay, outside the channel). Houston is the second-busiest port in the country after Long Beach. The economic impact outside of jobs at the port and vessel delays may be on oil & gas futures, but that should be limited. These refineries can be hit by hurricanes, causing bigger shutdowns than two days of incoming crude.
Friday, October 1, 2010
Customs Brokers and the HTS
Last week I mentioned that I'm studying for the Customs Broker Exam. You might be wondering, what does a customs broker do?
This only applies to brokers registered with US CBP. Other countries have different roles and rules.
In the US, a customs broker mainly files import entries and performs HTS classification. A customs broker is responsible for knowing American law and following it. Brokers are registered with ports (not exclusively ocean ports, every state has at least one port), and can also file remotely in other locations if they're registered for it. A customs broker may work for directly for an importer or indirectly through a freight forwarder or as an independent.
The importer of record can always file their own documents. So why hire a customs broker? First, it's complicated. If you're not an expert it can be extremely time consuming, to the extent that it will probably cost less to pay a broker then spend your own time on it. Second, there's legal liability associated with importing. Using a broker doesn't absolve the importer of record from responsibility, but it does minimize risk.
You don't have to use a customs broker for your HTS classification. In fact, my preference is to do that in house. Your customs broker isn't going to be an expert in your product, and expert-level knowledge can be necessary. Regardless who does the classification, the importer is liable for it.
You might be wondering - what's HTS? HTS stands for harmonized tariff system. Most countries have their own version of the harmonized tariff. You may see US HTS, the common abbreviation for United States Harmonized Tariff System. HTS usually refers to a ten digit code. Every physical good that exists (or may exist) has an HTS. The HTS is divided into sections and chapters. Sections are broad categories (animals and animal products, plant and plant products, and so on), and chapters are more detailed. Generally speaking, more processed or complicated products fit in higher chapters. The classification process follows the general rules of interpretation. You might also hear the term Schedule B. Schedule B is another classification system, managed by Census instead of CBP. Schedule B classifications are used for exports, HTS classifications can be used for imports and exports. If you're both an importer and exporter, using HTS for everything saves the work of classifying something twice.
Why is the system harmonized? The first six digits of a product's HTS are the same for every country that uses the HTS. The last four digits vary.
This is one of the areas where I've done a lot of work - I did about 6000 unique classifications in the last fifteen months. There's a learning curve to classification. The best way to start is a class or training with someone experienced. Once you've learned the process, start practicing. Try to classify products you see around you, at work or home. For example, I'm wearing a long-sleeve t-shirt right now. What information do I need to classify? I bought it at Target, according to the tag it's 100% cotton and made in Bangladesh. It's a boy's large.
It's apparel, so I know I'm starting in Section XI Textiles and Textile Articles. The shirt is complete (not a raw material), so it's an article. T-shirt fabric is knitted, not woven, so we're looking at Chapter 61. The code I land on is 6105.10.0030, a knitted cotton boy's shirt, not imported as part of a playsuit. The HTS also shows a duty rate of 19.7%. If it had been manufactured somewhere else (including Jordan or the Dominican Republic), it could have been duty free since it's covered under ten free trade agreements.
What are some of the common pitfalls when classifying? First, reading the tariff. Always read the chapter notes before assuming you belong in that chapter. Make sure you're in the right section, the tabs can confuse people. Finally, record your thought process. Don't just put the classification in your database, also put in a note with your logic.
Finally, chances are you're going to make mistakes at first. With classification, that's normal. The way to learn the tariff is familiarity and practice.
This only applies to brokers registered with US CBP. Other countries have different roles and rules.
In the US, a customs broker mainly files import entries and performs HTS classification. A customs broker is responsible for knowing American law and following it. Brokers are registered with ports (not exclusively ocean ports, every state has at least one port), and can also file remotely in other locations if they're registered for it. A customs broker may work for directly for an importer or indirectly through a freight forwarder or as an independent.
The importer of record can always file their own documents. So why hire a customs broker? First, it's complicated. If you're not an expert it can be extremely time consuming, to the extent that it will probably cost less to pay a broker then spend your own time on it. Second, there's legal liability associated with importing. Using a broker doesn't absolve the importer of record from responsibility, but it does minimize risk.
You don't have to use a customs broker for your HTS classification. In fact, my preference is to do that in house. Your customs broker isn't going to be an expert in your product, and expert-level knowledge can be necessary. Regardless who does the classification, the importer is liable for it.
You might be wondering - what's HTS? HTS stands for harmonized tariff system. Most countries have their own version of the harmonized tariff. You may see US HTS, the common abbreviation for United States Harmonized Tariff System. HTS usually refers to a ten digit code. Every physical good that exists (or may exist) has an HTS. The HTS is divided into sections and chapters. Sections are broad categories (animals and animal products, plant and plant products, and so on), and chapters are more detailed. Generally speaking, more processed or complicated products fit in higher chapters. The classification process follows the general rules of interpretation. You might also hear the term Schedule B. Schedule B is another classification system, managed by Census instead of CBP. Schedule B classifications are used for exports, HTS classifications can be used for imports and exports. If you're both an importer and exporter, using HTS for everything saves the work of classifying something twice.
Why is the system harmonized? The first six digits of a product's HTS are the same for every country that uses the HTS. The last four digits vary.
This is one of the areas where I've done a lot of work - I did about 6000 unique classifications in the last fifteen months. There's a learning curve to classification. The best way to start is a class or training with someone experienced. Once you've learned the process, start practicing. Try to classify products you see around you, at work or home. For example, I'm wearing a long-sleeve t-shirt right now. What information do I need to classify? I bought it at Target, according to the tag it's 100% cotton and made in Bangladesh. It's a boy's large.
It's apparel, so I know I'm starting in Section XI Textiles and Textile Articles. The shirt is complete (not a raw material), so it's an article. T-shirt fabric is knitted, not woven, so we're looking at Chapter 61. The code I land on is 6105.10.0030, a knitted cotton boy's shirt, not imported as part of a playsuit. The HTS also shows a duty rate of 19.7%. If it had been manufactured somewhere else (including Jordan or the Dominican Republic), it could have been duty free since it's covered under ten free trade agreements.
What are some of the common pitfalls when classifying? First, reading the tariff. Always read the chapter notes before assuming you belong in that chapter. Make sure you're in the right section, the tabs can confuse people. Finally, record your thought process. Don't just put the classification in your database, also put in a note with your logic.
Finally, chances are you're going to make mistakes at first. With classification, that's normal. The way to learn the tariff is familiarity and practice.
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