Import Data: It’s in the Bag
Computer carrying case manufacturer Targus gets a handle on duty drawback with global trade management software, unloading paperwork and packing in 30 percent higher refunds.
Targus Group International Inc., headquartered in Anaheim, Calif., pioneered the development of carrying cases for personal computers. Yet when it came to filing Customs and duty drawback documentation, the company’s interests were anything but well-protected. A global trade management (GTM) solution helped Targus get organized.
Targus maintains 45 offices worldwide and distributes products in more than 145 countries. The company manufactures most of its goods in southern China and imports finished goods into the United States for distribution, necessitating a great deal of Customs-related documentation.
The company used to rely on two systems for entering its import data and processing drawbacks, the refund of duties paid on imported products subsequently exported or used to make products for export.
Freight forwarders prepared U.S. Customs and Border Protection (CBP) Importer Security Filing (ISF) documents on Targus’ behalf because the company could not compile all the necessary data elements quickly enough to meet filing deadlines.
Relying on these systems created four challenges:
- The self-entry system was near the end of its supported lifecycle.
- Duty drawback filings were behind schedule, and the filing deadline for some claims was fast approaching.
- ISF documents required much of the same information as self-entries, yet Targus was missing out on the financial and efficiency advantages of compiling ISF data in-house.
- Neither of the two systems providers offered ISF software. Targus would have to acquire a separate system from a third vendor if it elected to compile its own ISF data.
Targus decided to explore whether one software solution could meet all its GTM needs. It solicited several bids and compared vendor offerings.
After a comprehensive analysis, Targus selected Westfield, N.J.- based QuestaWeb and its modular, Web-based GTM software, TradeMaster. It opted for the solution’s Customs House Broker module.
"QuestaWeb’s system offered full integration, and flexibility for adding future functionality," says Brian Couch, Targus’ manager of logistics. "The software was well-suited to our current and future needs."
Handling Three Needs at Once
With Customs House Broker, Targus can transmit and receive imported merchandise data through a direct electronic interface with CBP, leading to more timely, complete, and accurate data.
The company is now working with suppliers around the globe, preparing them to enter their own ISF data elements via the Web-based system. Having suppliers enter data eliminates one step in the current two-step process. Targus will no longer need to pay freight forwarders to prepare ISFs, and TradeMaster will be able to automatically generate import documentation from systems data, saving time and money.
Duty drawbacks also provide incentive for Targus to do self-entries. "We reclaim more than 10 percent of the duties we pay annually, on average," says Couch. "Duty drawbacks play a substantial role in managing costs and profits."
The new system not only automated the labor-intensive duty drawback filing process, but also enabled Targus to submit the filing electronically. As data became better organized, the number of filings decreased significantly, and the company became eligible for accelerated payments. Refunds are now available in five weeks instead of one year.
"We proved to Customs the reliability of our drawback documentation and recordkeeping system," says Tami Nelson, import supervisor, Targus. "Now we don’t have to provide the same level of documentation. Customs only requires two to three sample documents to support our claim. We have to produce detailed back-up only if Customs decides to do a desk audit."
A Change in Accounting
An important side benefit emerged from the implementation: QuestaWeb put Targus in touch with a drawback consultant who advised Targus to use a different accounting method for matching exports and imports for drawback purposes.
For years, Targus had employed a first in/first out methodology for drawback computation, because that’s what its old software required. The company’s duty rates are not variable, however, making the low-to-high methodology more appropriate. The new methodology increased the percentage of successfully recovered claimed refunds from 70 percent to almost 93 percent.
In 2010, due to a backlog in drawback filings, Targus claimed higher refunds and, with the new methodology, netted substantially more. "In years to come, the system should continue providing much higher average annual refunds," says Couch.
"The new system provides growth potential and sophisticated automation," Nelson adds. "We can easily add new functionality on our schedule with no fear of obsolescence."
With the new GTM system in place, Targus’ success is in the bag.
The Case for GTM Software
- Targus relied on two separate systems for self-entries and drawbacks.
- Freight forwarders prepared and filed ISFs on Targus’ behalf.
- Targus wanted to do ISFs in-house but would need a third, unintegrated system.
- QuestaWeb’s TradeMaster Customs House Broker module
- One integrated system meets all current global trade requirements and can accommodate future needs.
- Using a Customs-approved Automated Broker Interface system allows electronic filing and reduces documentation requirements.
- Targus achieved a 93-percent success rate in receiving claimed refund amounts, an increase of 30 percent.
- Refunds are available in five weeks.
- In the first year, the higher refund rate reached six figures. In the second year and beyond, it will be at least five figures.