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  • Published August 2016

    KEWILLR Sponsored by:

    In partnership with:

    Uncertain Times, Uncertain Roles Export Compliance Benchmark Study

    Part of American Shipper’s Import/Export

    Benchmark Series

    Written By:

    Julie Gibbs Director BPE Global

    Renee Roe Director BPE Global

    Eric Johnson Research Director American Shipper

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    Export Operations and Compliance | Benchmark Report: 2016

    ii

    Welcome to the seventh annual benchmark study covering U.S. export

    operations and compliance, produced by American Shipper in partnership with

    BPE Global. This report comes as U.S. exporters face unprecedented levels of

    economic and political uncertainty, and that’s saying something.

    Simply put, exporters who have been told they were a cornerstone of U.S.

    economic growth for the past five years face a future where support for

    exports (and global trade in general) might be actively disrupted. These

    external dynamics are worries that exporters have to face in addition to their

    normal litany of concerns around greater regulatory scrutiny and currency

    fluctuations.

    Roughly 40 percent of exporters say the strong dollar is hampering their sales,

    while 40 percent are also worried about the bottom falling out of the United

    States’ export initiative. More than 40 percent are unsure key trade

    agreements will be ratified. It’s the very picture of uncertainty.

    This year’s report delves into how exporters use technology to help combat

    some of these ongoing regulatory and topical impacts, as well as the role that

    third-party logistics providers play in export compliance. This particular

    iteration makes frequent comparisons between how retailers and

    manufacturers view their export obligations, strategies, and technology usage.

    The study includes input from 228 U.S.-based exporters, with responses

    gathered between early June and late July, 2016. The 23-question survey

    covered export compliance policies, strategic considerations, concerns, and

    export management technology.

    The U.S. presidential election campaign, which includes direct and

    unmistakable anti-trade sentiments, has exporters on edge. The change in

    administration may bring a dismantling of existing trade agreements, a freezing

    of progress on pending agreements, and a lack of focus on the export

    initiatives that made great gains in the last administration.

    Roughly two in five exporters believe momentum from the Obama

    administration’s export program will carry over to the next administration,

    while even more believe the TPP and other key FTAs will be stymied.

    Surprisingly, a large percentage of exporters are uncertain what impact TPP

    ratification will have on them, particularly for those in manufacturing. It’s

    possible that between headline news, anti-trade group publications, and a

    lack of time to study the actual text of the TPP, exporters believe there will be

    no impact to volumes, or at the very least are uncertain about what that

    impact will be.

    Executive Summary

    Uncertainty for Exporters

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    Export Operations and Compliance | Benchmark Report: 2016

    iii

    Exporter Perspectives

    Less than a third of respondents believe that their companies see export

    compliance as playing an important role in new business opportunities. The

    data suggests that perhaps the challenge is that they have not yet attempted

    to quantify why export compliance is an important topic when it comes to

    developing new business opportunities, or they need to better quantify their

    strategic role. Companies are increasingly reliant on ROI determination,

    business cases, and hard data. It’s up to trade compliance teams to spell out

    the worth of their involvement in these decisions.

    No role is as intrinsically global as that of an export manager. More than 80

    percent of manufacturers and nearly 70 percent of retailers are responsible for

    exports from at least North America, and the majority have responsibility for

    exports from the entire Western Hemisphere. Global responsibility means

    managers have an opportunity to streamline and consolidate export operations

    and compliance processes.

    Most exporters use their carriers and freight forwarders to file electronic export

    information (EEI) documentation on their behalf, although the trend indicates

    that more companies are taking this function in-house. The latter approach

    allows direct control and oversight on filing accuracy.

    The continued use of carriers and forwarders, who in most cases are not the

    legal “exporter of record,” may be due to a lack of resources or budget

    constraints. Either way, relying on a freight forwarder or carrier to file

    declarations requires airtight communication of compliance data, such as

    accurate shipper’s letter of instructions, and frequent audits.

    The vast majority of exporters review their EEIs either internally or via their

    carriers, but it’s not enough to assume that EEIs are being filed correctly when

    shipments are first identified for export. Changes can occur to the quantity,

    value, classification, and the “ship to” location of those shipments for a variety

    of reasons.

    There is an uptick in the number of countries shipped to by large shippers from

    32 on average last year to 38 this year. It’s interesting to note that systems-

    based exporters are shipping to a higher number of countries than those on a

    manual system, which implies that the systems-based exporters are better

    able to handle the added complexity of shipping to more countries.

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    Export Operations and Compliance | Benchmark Report: 2016

    iv Export Technology Trends

    The average headcount of export compliance departments at large shippers in

    last year’s report was 13 and nine for SME exporters. This might be linked to

    growing uncertainty over economic conditions and political headwinds. If the

    strong dollar is hurting competitiveness, and if companies see export-boosting

    free trade deals languishing under the weight of campaign rhetoric, it’s easy to

    see how export compliance departments might be one of the more vulnerable

    positions in a company.

    Meanwhile, respondents overwhelmingly said their export volumes grew

    in the last 12 months, despite pressure from a strong dollar and other

    regulatory hurdles.

    Seven in 10 manufacturers and four in five retailers are using some type of

    automation, so it seems the message has been getting through. Fewer and

    fewer companies are managing exports purely by spreadsheet or some type

    of export compliance automation

    The next stage of this evolution, however, is to move away from the piecemeal

    approach to global trade management, and there is still lots of work to be

    done there. Only 20 percent of export shippers are using a single GTM

    platform to manage their exports, while another 10 percent have built

    proprietary platforms. But questions remain about whether those home-grown

    systems can keep up with the content demands that GTM software

    companies and 3PLs meet.

    Most companies juggle multiple systems deployment and payment

    arrangements, something that goes hand in glove with the hybrid approach

    they take to usage of multiple export management systems. Data from this

    study shows exporters have more than one system, and those systems often

    have more than one deployment model.

    For example, an exporter might use its on-premise ERP to create purchase

    orders, or have an on-premise transportation management system, but use

    software-as-a-service trade compliance tools to determine product

    classification and check denied party screening lists. That hodge-podge might

    be getting the job done, but it’s not necessarily optimal.

    If there’s one worrying piece of data in this year’s report, it’s that the

    percentage of respondents who indicate they don’t have the budget to invest

    in export automation keeps rising. The will to invest is there, but the way to do

    so (in terms of budget and resources) is the roadblock.

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    Export Operations and Compliance | Benchmark Report: 2016

    v

    More than half of 3PLs are using some type of automated system, and fewer

    are using the hodge-podge approach found in a large percentage of export

    shippers. This makes sense. It behooves a 3PL to offer a singular platform for

    export management both internally and as a forward-facing connection with

    shippers.

    It’s interesting to note that an almost equal percentage of 3PLs are using

    in-house systems versus third-party systems. Creating a customized in-house

    system can be extremely expensive and requires a full-time IT staff. It

    wouldn’t be surprisin

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