Streamlined and Connected with NAFTANavigator^™

Challenges & Objectives

To reduce the costs of an intensively manual NAFTA solicitation process, while increasing the amount of NAFTA duty benefits claimed.

Strategy

• Maximize NAFTA benefits at time of original importation through an increase in the number certificates issued.
• Simplify the administration of requesting and obtaining NAFTA certificates through the automation of the NAFTA certification process.
• Reduce the cycle-time required to obtain NAFTA certificates.
• Eliminate the costly reclaim process.

Customized Solution

In order to meet this challenge Expeditors Tradewin, LLC (Tradewin^®) developed a unique web based program called NAFTANavigator^™ to streamline and automate the NAFTA solicitation process.

Importer Profile process

The annual profile of this company is typical of many U.S. importers.

• Imports over 3,000 shipments from Canada and Mexico into the U.S.
• Imports approximately 10,000 parts, which were potentially eligible for NAFTA benefits
• Utilizes over 300 suppliers
• Imports totaling $45 million
• Potential NAFTA duty rate reductions average 3%
• Potential NAFTA duty savings exceeds $1.35 million

Current Program

The North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada allows for significant reduction or elimination of duty on imports from member countries. In order to claim these benefits, importers must substantiate strict country of origin requirements through NAFTA Certificates of Origin ("certificates") issued by suppliers. The process of requesting these certificates is known as "solicitation."

The importer followed a NAFTA solicitation process typical of many importers. Solicitation letters were sent to their vendors in Mexico and Canada - all 3,000 of them. The responding vendors typed their NAFTA certificates and returned them to the customer by mail. This importer experienced a 35% response rate to their first batch of letters, which is not uncommon. The customer then keyed the information into their parts database.

As a result of this labor-intensive process the importer only recovered 35% of their potential annual duty savings at time of entry. After which, another 30% of the shipments received delayed NAFTA duty benefits through 520(d) post-entry claims.

The customer also maintained a list of certificates and eligible products. They used this list to monitor expiring or missing certificates. When the certificates near expiration, another batch of solicitation letters must be created, and the process begins again. This process was document intensive and required constant follow-up to ensure vendor certificates were completed and returned on time.

Process with NAFTANavigator^™

NAFTANavigator^™ allows importers to manage their solicitation process by sending their inventory items universe to Tradewin^® over the Internet. Suppliers certify their items directly through the NAFTANavigator^™ web-interface. Access to a work queue allows suppliers to see which items have been certified and those needing completion. Certificate integrity is verified by Tradewin^®, stored electronically in NAFTANavigator^™, and printed as needed by the importer.

Unlike their existing process, NAFTANavigator^™ starts with the automation of their items data.

Solicitation cycle-time is greatly reduced, allowing more NAFTA benefits to be claimed at time of entry, while reducing the need for costly 520(d) post-entry NAFTA claims. Program administration costs are reduced through the use of the Internet and the elimination of the associated document management process.

Benefits

The use of NAFTANavigator^™ raised the total percentage of items eligible for NAFTA benefits for this customer from 65% to 80% in the first year.

This was accomplished by increasing NAFTA claims at the time of entry from 35% to 65%, while reducing the number of items never claimed from 35% to 20%. 520(d) Post Entry claims, and associated costs, were cut in half (from 30% to 15%) due to the increased Claims at Entry, and were projected to be all but eliminated in the following year.

The company also experienced a 20% reduction in program management costs from the elimination of the manual solicitation process.

The total duty benefits claimed by this importer in the first year using NAFTANavigator^™ totals $1,080,000 -- a 23% increase over the prior year.