Cole International: cross-border regs can be huge hurdle for importers.

by Ian, Ross

Northern Ontario Business • August, 2008 • 5 Logistics Experts

Since the 2001 terrorist attacks, it's no easy feat for companies to understand the complex rules of customs clearance and security requirements when it comes to shipping cargo.

"You often hear the catchphrase that security is trumping trade," says Kevin Sch wantz, the Sault Ste. Marie branch manager of Cole International, a leading Canadian customs brokerage and freight forwarding company.

The more rigid regulations are obviously reflective of tighter border security measures. It means more control and emphasis on registration of all the parties involved (carriers, brokers and importers alike), plus the electronic conversion of records like manifests.

Above all, it's about better communications by providing advance notice of arriving shipments, because no shipper or carrier wants to be held up by secondary inspection at customs.

A broker's knowledge of regulations by land, sea and air means eliminating delays at ports-of-entry for their clients, moving freight quickly and eliminating the heavy-handed fines.

Cole, like most Canadian customs brokers that deal with imports from the United States and any global destination of origin, is registered by Canada Border Services Agency (CBSA).

As part of the supply chain for importers the tariff demands, accounting of taxes, and reporting to other government departments falls under the company's responsibility.

The Calgary-based company has its roots in Thunder Bay in the late 1930s as Cole McCubbin Ltd. It began primarily as a customs brokerage and was incorporated in 1958. Since then, the company has been on the expansion track, establishing branch offices or picking up complimentary and competing businesses.

Today there are 45 offices in eight provinces covering ports, international airports, and the major border crossings.

It used to be that freight forwarders (for exports) and customs brokerages (for imports) were separate entities. In today's streamlined and integrated global supply chain, third-party logistics firms oversee as much as possible from providing their own warehousing through to partnerships with global carriers and international agents to cover the entire pick-up to drop-off.

Ten years ago, Schwantz says, most of the paperwork accounting was done "inland" at larger offices, but with the electronic requirements for various government departments at the point of entry, "we've actually been expanding our border offices."

Schwantz worked in Thunder Bay for 13 years before transferring to Cole's Sault Ste. Marie office which sits across the street from the Canadian bridge plaza at the International Bridge to Michigan.

He's helped arrange movement of everything from machinery for lumber, paper and mining operations across the North to handling shipments of souvenir knickknacks to Mom-and-Pop businesses. "It's very diverse, that's the fun part of it."

Customs brokerage takes up the bulk of his work in the Sault. Their successful 30-year longevity in the city has been built on maintaining one-on-one relationships with small and medium-sized businesses.

"You're not going to call a 1-800 processing centre, you're going to call someone who actually knows your account," says Schwantz. "Customs regulations are so demanding on compliance, with a monetary penalty system that we have, it's important to understand the importer's products to ensure they're classified properly"

Part of that is knowing Mandatory HS, a harmonized system of tariff code required on documents before a commercial shipment can be released into Canada. It's been a big challenge for brokers and importers but it allows short-staffed custom officials to protect the border by identifying high and low risk shipments.

The service fee structure, Schwantz says, is a tiered schedule and based upon an individual importer's situation. If it's a regularly-scheduled, repetitive product, the broker may establish a flat fee, says Schwantz, who declined to elaborate for confidentiality reasons.

"The fees are going to depend upon a commodity, government reporting (to various departments) and there are other things involved."

Though freight-forwarding to the international divisions remains a core capability, he finds overseas business rather sporadic in Northern Ontario because of Canada's traditional cross-border reliance on the U.S. "I hope it's something that would grow. Relying so heavily on one market can be detrimental to us."