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Halloween Nightmares: Mitigating Risk for Importers and International Shippers

Confiscated imports, delayed deliveries and peak season surcharges. These are some of the nightmares that keep importers and shippers awake at night. In the latest Precision Report, Jerry Peck looks at the risks and strategies to avoid them.

Fall has always been one of my favorite times of the year: crisp evenings by the fireside, the changing leaves, and as we move towards the end of October, Halloween. As a kid, the combination of the uncanny and candy made Halloween irresistible. Even today, I get a kick out of decorating my porch and making it the scariest in the neighborhood. Of course that does mean some trick-or-treaters skip my door altogether. More chocolate for me!

Halloween heebie jeebies are fun because nobody is in any real danger. Zombies, vampire and ghouls are not real. And while chainsaw wielding maniacs might be a staple of horror films, they are unlikely to come trick-or-treating (at least not in my part of Texas). Unfortunately there are some very real Halloween dangers for consumers and importers — unsafe Halloween items. Luckily, in the US, we have Customs and Border Protection keeping watch.

Importer Nightmares

UNSAFE LEVELS OF LEAD

Ask an exporter, and they might say that dealing with CBP and the myriad of export regulations is itself a nightmare. But one of CBP’s most important duties is guarding US citizens from unsafe imports.

Here are a few examples. In 2012, Customs officers along with Consumer Product Safety Commission investigators examined a shipment of children’s Halloween pirate costumes from China. A lab analysis found that the buttons on the costumes were in violation of the Federal Hazardous Substances Act. These button contained 1,109 parts per million of lead — that’s more than 11 times the acceptable level. As a result, the $10,000 worth of costumes, destined for a Seattle distributor, were promptly confiscated and destroyed.

Candy and face paint may not be as harmless as you would think. Examinations of imported shipments of candy found unsafe levels of lead. Lead can get into candy when processes such as drying, storing and grinding the ingredients are improperly done. Lead can also leach in candy from the printing ink on labels.

In addition, CBP monitors imports off face paint for unsafe levels of lead, as well as nickel, cobalt and chromium. All of these are can potential cause lifelong skin sensitivities, such as contact dermatitis.

DANGEROUS DECORATIVE CONTACT LENSES

Another terrifying example is decorative contact lenses. Many of these are illegally imported to circumvent federal safety regulations. Contact lenses are considered a medical device. Therefore, the US Food and Drug Administration regulates them. Contact lenses and they can’t be sold for any purpose without a prescription from an ophthalmologist, optometrist or specially licensed optician. Lenses require proper fitting. This involves measuring the curvature of the cornea to ensure the lens hugs the eye without squeezing or scratching.

Lenses that aren’t FDA-approved also may use colored dyes that can be harmful to the cornea, or be carrying harmful bacteria. Corneal scratches and ulcers, conjunctivitis, and even blindness have resulted from using these.

UNSAFE COSTUMES AND TOYS

Unsafe import are not unique to the US. Last year, authorities in Ireland confiscated over 700 Halloween items. The seized items included toys, props and costumes. The Competition and Consumer Protection Commission (CCPC) along with officials from Revenue and Customs stopped two shipments at Dublin Port. The products did not meet EU safety standards and were destroyed. Costumes that do not carry the European CE safety label may be flammable. This is a particular worry considering the popularity of Halloween bonfires in Ireland.

THE IMPORTANCE OF DUE DILIGENCE

All these examples stress the same thing: the importance of importer due diligence. Many Halloween items are disposable and low value, but that doesn’t mean you should source from the cheapest supplier. You must ensure that your suppliers’ products comply with safety standards as well as labor practices, ethics and environmental policies.

Under the Consumer Product Safety Act, importers in the US have responsibilities and obligations comparable to those of domestic manufacturers. Similar laws apply in the European Union. The EU’s General Product Safety Directive makes businesses as well as national authorities, responsible for ensuring product safety.

Unsafe products can cause lasting harm to consumers. That in itself should be enough of a reason to ensure your imports are compliant with safety standards. Furthermore, confiscated products can result in a financial loss to traders and damaged reputations.

International Shipper Nightmares

LATE DELIVERIES OF SEASONAL ITEMS

Huge numbers of us buy seasonal items between Halloween and New Year. If you ship seasonal items cross border, you need to ensure that your shipment is compliant with local regulations. You’ll also need to to make sure that all your documentation is correct, and in the right format and right language.

Getting it wrong is a nightmare of customs delays, unforeseen costs, damaged customer relations and high volumes of returns. After all, nobody wants or needs a Halloween costume after 31 October.

PEAK SEASON SURCHARGES

It’s the period after Halloween that things get really scary for shippers. Peak season surcharges can significantly increase delivery costs and impact margins. Carrier volumes soar over the holiday period. To handle the volume they take on extra staff. UPS announced 100,000 seasonal jobs and FedEx has around 55,000 temporary positions. To make peak season profitable, carriers add surcharges for additional handling, oversize and overweight packages.

The important thing to remember about peak season surcharges is that these are additional to other surcharges. Are you going to absorb these costs, or pass them on to customers?

Planning is necessary. One important aspect is ensuring, where possible, that packaging does not exceed size or weight limitations. Some shippers could also schedule deliveries for dates when surcharges don’t apply. For example, this year peak season surcharges for UPS Ground apply from 19 November to 2 December. This period covers Thanksgiving, Black Friday and Cyber Monday. The surcharges kick in again before Christmas — between 17 and 23 December.

Another strategy is multi carrier shipping. This will allow you to switch between the big names and smaller, regional carriers so that you get the service levels you need at the lowest price. For example, this peak season FedEx will not be adding residential delivery surcharges. If you ship high volumes B2C, this could make a substantial difference over the busy period. But if you are locked into a single carrier contract you can’t seamless switch between service providers to take advantage of the best rates.

If you don’t plan for peak season surcharges, you’ll be hit with higher than expected carrier charges — sometime significantly higher. Now that really is a Halloween nightmare.

About Jerry Peck

Jerry Peck has over 30 years of experience in Global Trade Management. His career has uniquely encompassed nearly every facet of GTM, including third-party logistics, trade operations within Fortune 300 multinationals, and professional services consulting firms, with such companies as Kuhne + Nagel, Mattel Toys, KPMG and CapGemini-Ernst & Young, respectively. Jerry is a contributing author to the Dictionary of International Trade (World Trade Press), and has been a featured columnist with The Journal of Commerce since 2002.

About Precision Software – Trusted Global Trade and Transportation Execution

Precision Software, a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, Precision Software assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. Precision Software’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about Precision Software, visit www.precisionsoftware.com.