Tips for managing a Russian supply chain – Part one: customs clearance
September 25, 2013|
In the first of a three part series for the WTG Blog, Pascal Born, Vice President of Supply Chain Solutions at Neovia Logistics, shares his knowledge of customs clearance in the tough Russian market.
And whilst the country offers fantastic business opportunities, long-term growth in this new market is handicapped by weak infrastructure and red-tape sclerosis. The myth is that the same strategies and solutions that work in Western Europe or USA also work in Russia.
The great news is that setting foot in Russia with limited risks and good flexibility is absolutely possible. But first, allow me to address some common preconceptions:
* Customs clearance is slow and unpredictable, generating supply chain disruptions
* Reliable 3PL partners cannot be controlled or do not exist and consistently deliver bad performance
* Quality warehousing space is not available and extremely expensive
Having operated in Russia for years, Caterpillar Logistics, now known as Neovia Logistics, along with STS Logistics, have gained tremendous experience and know-how in this market, helping them to develop bullet-proof solutions to assist their customers along the way.
In this first article, I will share with you some tips related to customs clearance, and, in the next two posts, tips on warehousing and 3PL partners, respectively.
Customs authorities will follow to the letter their instructions and will systematically detect inconsistency, data gaps and whatever looks like the shadow of a gesture, to reduce due tax or duties to the Russian federation. Do not expect understanding or logic. They will happily block your shipment and investigate it to death, which can certainly damage your supply chain!
As usual, a recipe for success is made of a mixture of ingredients:
- Tons of documents are required. They have, in most cases, to be originally signed and stamped. Therefore do not underestimate the time and costs for printing, signing and stamping of meticulously prepared documents, providing clear and consistent quality information and data. To ensure that it is the case, present your documents to your customs clearance provider, possibly change them and explain your business, your products and your distribution model in the country. A must is to establish and test IT interfaces between you and your providers (customs clearance provider and possibly 3PL provider).
- Select an operator that has track record with companies and products that are similar to yours, thus reducing your risks & costs. Also ensure your operator has multiple active customs clearance licences so that if one is lost due to suspicious fraudulence generated by another of their customers, there is a plan B in place for you and you are not impacted. Ideally select a provider that is able to electronically archive your documents and is ready for the next big bang in Russia (customs clearance at the border). To reduce costs and risk, another useful step is to select a provider that this co-located or co-owner of the warehouse customs post.
- During the service and package negotiation with this provider, ensure ALL costs and activities are included. Avoiding cost and scope creep from day one is crucial for a long-term and solid relationship. You might end up with a slightly more expensive bill than the other bidders, but that is the guarantee of calm nights.
Screening through your potential partner’s current customers and the numbers of years they have been partners is also a good indication.
To conclude Part One, I cannot put enough emphasis on the importance of good and consistent information associated with the choice of the right long-term partner. 50 percent of the solution needs to be in your hands as your provider won’t be able to recover 100 percent of your mistakes. 50 percent is certainly in your provider’s hands too, so, as usual, choosing the right partner is crucial. This will be the subject of my next post.
Free supply chain webinar
On Wednesday 2nd October 2013, Pascal will present a free webinar looking at the mistakes to avoid and the right decisions to take for a successful business in Russia.
Specifically, the webinar will focus on:
- Top tips about logistics dynamics with proven solutions from Neovia Logistics and STS Logistics
- Understanding the importance of local partners to help businesses open the door to the regions
- Tried and tested success strategies which have helped optimise logistics accelerate growth
To register please visit WTG Webinars or click the above image.
As Supply Chain Solutions Director, Pascal Born is responsible for the business development for Service Parts Logistics in EAME. Pascal joined Caterpillar and hence Neovia in 1991 and prior to his current position, has served in the Industrial Power Systems division, where he held various positions in the aftermarket, dealer management and business development organisations.