Order fulfillment & fiscal representation example as part inbound service

This one example illustrates the advantage of CAPLINQ’s order fulfillment service and how it saves you money on custom clearance

We recent­ly received an email from a poten­tial cus­tomer inquir­ing about the Fis­cal Rep­re­sen­ta­tion ser­vice as part of the inbound ship­ping ser­vice CAPLINQ offers for order ful­fill­ment. The ques­tion was so typ­i­cal of many of the requests we get that it made sense for me to post both the ques­tion and our reply here. Hope this helps oth­ers as well that are con­tem­plat­ing CAPLINQ’s order ful­fill­ment ser­vice.

I’d like to run some num­bers to com­pare CAPLINQ’s order ful­fill­ment inbound ship­ping ser­vice using the COGS (pro­duc­tion val­ue) com­pared to using a reg­u­lar freight for­ward­ing com­pa­ny such as DHL, FedEx or UPS. Exclud­ing the ship­ping cost itself for now, say we have prod­uct ABC123 with the fol­low­ing details:

  • Har­mo­niza­tion code: 8473.30.0002
  • List price (sales price): $200.00
  • COGS (Cost of Goods Sold or pro­duc­tion val­ue): $100.00

Aside from CAPLINQ’s ware­hous­ing and ful­fill­ment fees, what would be the costs (tar­iffs, oth­er duties, and costs I may not be aware of) asso­ci­at­ed with import­ing using CAPLINQ? What would be the costs (tar­iffs, oth­er duties and costs I may not be aware of) asso­ci­at­ed with using sim­ply a freight for­ward­ing com­pa­ny?

Basi­cal­ly I’m try­ing to get a feel for total costs asso­ci­at­ed with import­ing at COGS vs not, so please also include any gov­ern­men­tal or oth­er tar­iffs and fees (out­side of stan­dard CAPLINQ ware­house and ful­fill­ment fees) that may be charged when an item leaves the ware­house as well.”

Thanks for this great ques­tion, as it is one we get quite fre­quent­ly. As a com­mer­cial enter­prise our­selves, we are also always look­ing at the most cost-effi­cient way to ser­vice our cus­tomers with­out sac­ri­fic­ing on qual­i­ty

These is the cal­cu­la­tion used by most freight for­ward­ing com­pa­nies:

  • Duty is paid on the val­ue of the goods enter­ing Europe
  • Freight for­ward­ing com­pa­nies always request the “com­mer­cial invoice” to deter­mine the val­ue (it’s the eas­i­est to ask)
  • Typ­i­cal­ly the duty on most items com­ing into Europe is 6.5%
  • If the list price is $200 then the duty rate typ­i­cal­ly paid (using a freight for­ward­ing com­pa­ny) would be $13 (6.5% of $200)
  • On top of this, the freight for­warder typ­i­cal­ly charges an admin­is­tra­tion rate of 2–3% with a min­i­mum fixed admin­is­tra­tion fee of $25
  • This brings the total to $238 ($200 + $13 + $25)

The awful part (as if this isn’t awful enough), is that the sup­pli­er (you) rarely ever see this. This bro­ker­age charge is billed to the end cus­tomer, who:

  1. Nev­er expects this charge and
  2. Is left with a bad “I feel cheat­ed” feel­ing after­wards
  3. Blames you for it

Look­ing at the way CAPLINQ han­dles the sit­u­a­tion, it’s actu­al­ly quite dif­fer­ent, and you will rec­og­nize the mar­ket part­ner aspect as opposed to sim­ply a freight for­warder.

If CAPLINQ han­dles the import:

  • The duty RATE would be the same 6.5%… BUT
  • We import against the COGS of $100 instead of $200 so the duty is $6.50
  • We charge no admin­is­tra­tion fees ($0)
  • So the total is $206.50 ($200 + $6.50)

Fur­ther­more, look­ing at what our sys­tem tells us about this par­tic­u­lar har­mo­niza­tion code, we have rea­son to believe we can even reduce the duty rate to 0%, but we would need to do some paper­work first with the cus­toms & duty office.

All of these ser­vices are includ­ed at no extra charge as part of our “Inbound Ship­ping Ser­vice”. This is includ­ed in our fis­cal rep­re­sen­ta­tion agree­ment.

I hope this exam­ple helps you. We are also work­ing on an Order Ful­fill­ment Cal­cu­la­tor that will be able to allow you to run many of these cal­cu­la­tions your­self. These are just a very close approx­i­ma­tion today, but we are able to pro­vide you an exact price if you pro­vide the fol­low­ing infor­ma­tion:

  1. Prod­uct Har­mo­niza­tion Code (or at least a prod­uct descrip­tion)
  2. The Gross Weight of the pack­aged prod­uct
  3. The dimen­sions (Length, Width & Height) of the pack­aged prod­uct
  4. The list price or sales price
  5. The cost of goods sold (COGS) or pro­duc­tion val­ue. Even a ran­dom val­ue that can be used for exam­ple pur­pos­es is suf­fi­cient.

To learn more about CAPLINQ’s fis­cal rep­re­sen­ta­tion in Europe, vis­it us at www.caplinq.com. You can also con­tact us if you have any oth­er ques­tions regard­ing CAPLINQ’s Euro­pean Order Ful­fill­ment Ser­vice or to get a quote for your spe­cif­ic prod­uct.

About Chris Perabo

Chris is an energetic and enthusiastic engineer and entrepreneur. He is always interested in taking highly technical subjects and distilling these to their essence so that even the layman can understand. He loves to get into the technical details of an issue and then understand how it can be useful for specific customers and applications. Chris is currently the Director of Business Development at CAPLINQ.

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