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Is Cross-Docking Right for Your El Paso Business?

A cross-docking worker preparing for a new shipment at the shipyard.The importance of the supply chain industry in modern business is due to many reasons. A successful business needs a fast, productive, and effective delivery of goods. If the supply chain is followed correctly, it increases the business efficiency and significantly reduces the time taken in transportation.

Click here to know more about cross-docking for your El Paso business

Before we dive deeper, let’s take a look at what cross-docking is.

What is Cross-docking?

Cross-docking is a supply chain model that immediately transfers goods from suitable suppliers to retailers or whole sellers directly with little or no storage.

This practice promotes faster replenishment and reduces shipping costs as it positions the inventory closer to the customer, which it has to supply.

It is done in docking terminals. The goods are unloaded from suppliers and loaded onto trucks that are headed to the customer or end-user.

Why is Cross-Docking Right for Your El Paso Business?

These are a few advantages of cross-docking that is highly beneficial for your El Paso business.

  • You can save a significant amount, as it means you don’t need more space for storage. In cross-docking, warehouse space is used to store for less time as it can be sent to the end customer quickly.
  • You can eliminate expenses like storing goods, handling and counting these goods, and insurance of inventory costs money. The best thing about it is the immediate transfer to the end customer with minimum holding time.
  • It edges the risk of your goods getting spoiled or damaged because of the immediate transportation facility, which leads to retaining the quality of products.
  • This has altered the idea of transportation. Now it is easy to manage large packaging as they break down large packages into smaller ones which are easy to handle and load in trucks. This exercise also edges the damage risk of the goods.
  • It provides a central site to handle products. The goods that will be transported at dock locations are sorted and loaded onto multiple carriers or transporters based on the shipment’s final destination.
  • When done correctly, it improves productivity quite well as you will be aware that your goods are in safe hands and will be transported quickly without any loss.
  • With the right cross-docking company, you can improve customer relationships because the proper packaging and on-time delivery are what a customer looks for. 
  • If you are dealing in the business of frozen items or products that need a specific temperature to be stored or transported at the right time, then it is better to go for a cross-docking company that fulfills all your requirements. 

Why Do You Need Cross-Docking?

To run a business successfully, cross-docking can work quite well and gives you a number of benefits. They can handle your transport problems and loading and unloading procedures, and now they are equipped with advanced technologies and machinery that effectively do things. 

Now, the companies that provide these services have forklifts, pallet trucks, conveyor belts, and more equipment that ensure faster loading and unloading processes. They can handle multiple deliveries in a single day without any difficulty and mismanagement. 

Cross-Docking in El Paso

We hope now you understand why it is essential to have a reliable cross-docking service for your business in El Paso. If you are looking for expert cross-docking services, then contact Cordova Brokerage and let us transport your goods with care. 

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What You Need to Know About Importing Goods From Mexico

flag of America and Mexico with postal packages logistic center 3d-illustration

Mexico is one of the United States’ biggest trading partners. Every day, there are about $1.7 billion in products and services crossing the U.S.-Mexico border. The relationship between the two nations cannot be emphasized enough, and it’s why trading agreements such as NAFTA and the most-recently-negotiated USMCA (United States Mexico Canada Agreement) made top news and ruffled political feathers when it was threatened. As these trade agreements were negotiated, the importance of the Mexican market was once again highlighted here at home. 

The importing process, of course, is another matter altogether, and one that requires a hefty amount of paperwork, understanding of laws and regulations, and customs clearance processes. 

Here’s what you need to know about importing goods from Mexico. 

If you’re looking for a customs broker in El Paso to help you import goods from Mexico, the Cordova Brokerage team is there to help. Headquartered in El Paso, Texas, we know the border regulations inside and out!

Importing Goods from Mexico 

Mexico is the second-largest supplier of goods for the United States. According to the most recent data, Mexico’s trade accounted for about 671.1 billion in 2018, which tallied up to more than the total trade with our northern neighbor Canada. The biggest categories of goods coming in through our Southern border include:

  • Vehicles
  • Electrical machinery 
  • Agricultural products
  • Mineral fuels
  • Optical and medical equipment 

What You Need to Consider When Importing Goods 

When talking about international trade—imports or exports—companies and businesses should note that every country is different. A lot of factors play when looking at important goods in the United States, all of which should be understood to avoid setbacks or loss of revenue. 

Factors to consider are:

  • Regulations of what you can and cannot import into the United States 
  • Tariffs on goods and where you import them from 
  • The time and the cost of transportation 
  • Other regulatory hoops 

Key Facts About Importing Goods from Mexico 

Many importers like working with Mexico as a country of origin for their goods because of the friendly relations and trade agreements between the two nations. Some of the benefits of importing from Mexico include:

  • Reduced or waived import duties. Consider import duties as an additional tax that a company must pay to customs authorities as a rate in addition to any goods coming in from other countries. Authorities calculate this duty with a percentage of the total value of the goods or the weight of the goods. Imports from Mexico, by contrast, do not have import duties.
  • Faster turnarounds. The proximity of Mexico to the United States reduces the turnaround time. Overseas imports, for example, have to account for a long transportation time from the moment the order is put in when it arrives in U.S. ports. The reduction in transport time can translate to more efficient orders and a major benefit to those working under fast fulfillment timelines, dealing with supply chain issues, etc.
  • Expedited communication. When working with international partners and companies, communication is key to ensuring the smooth flow of goods and payments. Because of Mexico’s geographical proximity, the time zones are very much lined up. The fact that Mexico and the United States share time zones make communication back and forth easier and more reliable.
  • Decreased transportation costs. The geographical location of Mexico just south of the border also reduces the physical distance that goods need to travel. By having imported goods travel a shorter distance, costs associated with transportation are significantly reduced.
  • Stable national relations. Mexico and the United States have amicable and working political and social relations, as well as trade relations. When countries have volatile relations, it can make the market less stable and subject to new tariffs, taxes, or stringent regulations. 

Other Things to Note

Despite the stable relations between the two countries, there is still a long list of rules and government regulations that companies must follow when importing goods from Mexico. For example:

  • The most commonly used import document from Mexico is the Customs Declaration Form for customs clearance. Mexico requires this completed document to be accompanied by a commercial invoice, a bill of lading, payment documentation, and more. 
  • All Mexican importers are required to register with the Official Register of importers. 
  • If you are exporting to Mexico, it’s worthy to note that Mexican customs regulations are strict and require absolute compliance. 
  • Products that qualify under the USMCA agreement will typically require a set of nine data elements in order to pass through as USMCA authorized products. 

Thinking of Importing Goods from Mexico, Find a Trusted Customs Broker to Guide You 

The job of a customs broker is to help clients move through the customs process effectively and in full compliance. Whether you are importing from Mexico or another country, the rules and regulations might differ, and understanding of paperwork and required documentation your goods can arrive on time and without added fees or penalties. 

Want to learn more about how to effectively import goods from Mexico? Contact Cordova Brokerage for expert guidance and advice. 

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Continuing Covid Lockdowns in China and The Effects on the Global Supply Chains

China covid lockdowns in a drawn example

For most people in the U.S., strict covid lockdowns are a nightmarish memory of the recent past, but for 24.9 million people, it’s still very much a reality. In pursuit of their ‘zero-covid’ strategy, China has once again shut down their cities and locked people in their homes. While to the rest of the world, the concept of endless lockdowns seems rather draconian and unthinkable, the Chinese government has doubled down on these policies. 

In addition to harming its population and its own economy, these governmental policies also cause reverberations around the world. Part of those reverberations includes the effects on the global supply chain. 

Let’s look at the specifics. 

The Continous Covid Lockdows and The Effects on the Supply Chain 

As the world slowly returns to normal in America, other parts of the world continue to struggle under the covid threat and are a long way away from normalcy. Recent reports out of China, for example, are slowly painting the horrid picture of a population stuck in their homes without the ability to work and —at times— feed their family. 

Chinese lockdowns are much different than what Americans might remember as lockdowns. Even the strictest period in American covid policy did not compare to the Chinese government’s enforcement. In China, residents can be subjected to much more oppressive actions, including the complete inability to leave their homes. They can’t leave for work, get food, or even receive medical care. It is keeping the population completely barricaded. 

Reports of people going hungry in Shanghai are slowly trickling into the Western media. According to some reports, government handouts of food have been somewhat unreliable. The authorities in China themselves have admitted to a food shortage as a result of a lack of planning and coordination. 

When Omicron hit Shanghai, the authorities changed course with their policies and turned to a zero covid mentality. Before that, Shanghai had comparable covid policies to the rest of the world: mask mandates and social distancing, but nothing to the level of draconian lockdowns. With the fast spread of Omicron, the government began what they called a ‘temporary pause,’ which has been extended again and again. For communities with a single new positive case, the lockdown is extended for 14 days. 

In Tesla’s factory in Shanghai, workers are practically living on-site in order to keep production going. The company is doing its best to provide sleeping bags and mattresses and designated areas for eating and entertainment. 

The External Effect 

The full consequences of the lockdowns still remain to be seen, as Western media has little access to many of the realities in China on the ground. Shanghai is where one of the world’s largest ports is located. Their Pudong airport is the world’s busiest cargo airport. The city accounts for 7.4% of China’s exports and 14.4% of imports. 

The city has one of the most essential semiconductor manufacturing centers, is the center of many auto producers, including SAIC Motor, and SAIC’s other joint companies, including Walkwages, GM, Tesla, and Ford. 

At this point, it is no secret that the United States imports a lot of goods from China. The past few years have certainly brought this idea to the forefront of people across all sectors. The United States imported about $435 billion of goods from various Chinese cities. 

The current policies are creating all kinds of stop gaps and hurdles in the city itself, where the ports are overfilling without anybody to pick up their orders or deliver them. This is despite efforts to maintain a ‘closed-loop’ system at the ports, where workers sleep and eat on-site without leaving. So when lockdowns end, a pent-up amount of orders will cripple supply chains by creating clogs in the supply lines.  

Reverberations of the Chinese Lockdowns in Europe

Many American companies have become highly dependent on Chinese goods. America is not the only country that feels the gaps in the supply chain due to Chinese policies. The European Union sent a letter to the Chinese government asking them to reconsider their stringent policies as European supplies suffer the consequences of backlogged orders. According to Freight Waves: 

  • Container volumes out of China have dropped 31%. This impacts the U.S. surface freight market. 
  • There are reportedly 300 containerships and 500 bulk ships off the coast of China
  • Backlog of orders when things open back up will create massive chaos and clogs in the supply chain

Get Professional Assistance With Exports and Imports Through a Customs Brokerage 

The world of global supply chains, imports, exports, and fluctuating markets is an ever-changing landscape. It is often affected by the policies of governments around the world and COVID lockdowns. 

A customs broker specializing in studying the changing regulations and what’s happening in the world of international trade in order to better facilitate the exchange of goods. 

Learn more. Connect with us at Cordova Brokerage. 

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What is the Bullwhip Effect in Supply Chains? Here’s How This Phenomenon Affects Trade

supply chain diagram hand drawing on chalkboard

supply chain diagram hand drawing on chalkboard

We’ve covered the complexities of the supply chains and the role of imports and exports in a highly globalized and interconnected market extensively. The vulnerabilities of the supply chain have become all too clear for people involved in every aspect of production, manufacturing, assembly, and distribution. This has led to major instability across many sectors and a profound assessment about how supply chains need to be reinforced and less dependent on imports from certain countries—at least that is the view for some. 

So in the coming months, you might be hearing a lot about the bullwhip effect in the supply chain. It’s already making the rounds. So what is this phenomenon? 

Here are the basics. 

The Interconnectedness of the Supply Chains 

The importance of uninterrupted movement and goods across all industries cannot be understated. Everything we see at the store shelves or car lots has likely undergone a long journey that possibly began in a different country, traveled across oceans, waited in a cargo ship or shipping container, went to the manufacturing plant, and then made its way—via highway and truck—to the store or dealership in which you will buy it from. 

This long journey was far more fragile than people had realized. It was the disruptions of 2020 that really cracked open some of the problems. Now that the economy is gearing back up, companies and manufacturers are running into different kinds of problems. 

How did it all begin?

A major shift in lifestyles, consumer demands, and economic conditions. For example, as the world shut down, consumer demands fluctuated towards at-home spending. This meant exercise equipment, cookware, entertainment, computers, and other personal products. 

The Bullwhip Effect Phenomenon

So there’s a lot of discussion right now about companies such as Peloton, suffering from the bullwhip effect. There’s speculation about the chip shortage and automobile manufacturing being impacted by the phenomenon as well. So what does this mean? 

The idea can be simplified as follows: 

Think of a whip. A relatively small movement of the wrist causes large waves in the movement of the whip at the other end. So, small changes in consumer demand at the retail level will cause ever-growing reverberations and fluctuations in demand at the wholesale, distributor, and manufacturing levels. 

Let’s look at an example of the Bullwhip Effect

A store sees an increase in demand for exercise equipment. As happened to Rogue Fitness at the beginning of the pandemic. The company then makes augmented decisions based on these observations, but the effects grow as it moves back into the supply chain. The amplified decisions made at the ground level easily destabilize and misalign the supply chain behind it. 

If a fitness equipment company like Rogue (for example), was used to selling 100 barbells in one month and suddenly they see a spike in demand, they will likely turn around and double their order. The company might over-correct and amplify that number and suddenly order 300. This sudden jump will have major consequences as it moves back to the supplier, manufacturer, and importer (if it applies). Hence, the bullwhip. 

The effect is magnified when there is uncertainty and/or lack of information, as there was when the pandemic began. Nobody really knew what was going to happen and some companies miscalculated, some ordered less, some more, and suddenly were faced with a strained and backlogged market.

The Microchip & Semiconductor Issue

One of the biggest concerns facing people in the trade and the domestic manufacturing business is the high dependence on microchips and semiconductors. A lot of our current consumer goods make use of these little components that are largely imported from places like Taiwan. 

These semiconductors are found in electronic devices, vehicles, computers, and other high-tech appliances. 

How is this Affecting Trade and Imports and Exports

For one, the world of international trade has certainly changed since the start of the pandemic. Countries have become a lot more stringent and the ease with which products flowed in and out has certainly been disrupted. Companies have realized that putting all of their eggs in the China or international import basket can be risky. So, some companies have gained an advantage over international importers given the backlogs at the supply chain. Products are not getting to the U.S. as swiftly as they once did. 

So this has shifted the balance in the importing numbers prior to the pandemic. Companies have started to manufacture components that were previously brought in from overseas, but that still leaves a lot of companies with material and labor shortages. 

Is Your Company Importing or Exporting Goods? Talk With an Experienced Customs Brokers

As a businessperson, you are likely watching these markets and fluctuations carefully. So while a customs broker doesn’t control the supply chain or the supply and demand of goods, we can help you with the ever-changing landscape of international trade and transporting goods across oceans. This is a complicated field as countries develop stringent paperwork and documentation requirements. 

You have enough to worry about. Leave the paperwork to us. Call Cordova Customs Brokerage today.

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The Benefits of Warehousing Services for International Trade

Male warehouse worker with a tablet.

Male warehouse worker with a tablet.

Do you know the warehousing industry in the US will be worth $29.2 billion in 2021 as international trade grows?

For the import and export trade, warehouses optimize your business’s operations. You should thus find the best warehouse for your storage needs in international trade.

For all your inventory management needs, you require a sizeable warehouse. Such needs increase with the business expansion internationally. A great warehouse helps streamline the supply chain, thus helping the brand grow.

Your business’ development is better suited with warehousing. If you doubt the need for warehouse space, this article is for you. Continue reading to understand the benefits of warehousing services for international trade.

Have Centralized Storage

Do you desire to have a centralized location for your business operations? Warehousing answers such concerns by allowing you a single site for storage.

The existence of a production gap in business can be a massive blow to business success. Your supply chain has to be as streamlined as possible, and it starts with having a central storage area.

Storing goods centrally allows you to receive, store quickly, and distribute commodities. As a result, you save on time and costs you’d otherwise incur with a production gap.

You’ll thus have to check the location when choosing a warehouse that fits your needs. It needs to be strategically located to meet the wants of your target market.

Better Order Processing

How efficient is your order processing? Did you know that you could increase your order processing ability through warehousing?

It’s no secret that you seek to serve your customers as fast as possible. An agile order processing system will help you achieve customer satisfaction.

Your clients want timely delivery, and the warehousing service helps you fulfill it. By having the items in inventory, you’re only left with shipping once clients place orders. Warehouses facilitate accountability, meaning you’ll know what inventory levels to maintain.

Improved Production Quality

Most people assume warehousing is only linked with the supply chain after production. It’s not true since investing in a warehouse also influences production.

When producing in large quantities, quality management systems can be lenient. You thus end up with several items in your inventory that might not be up to standard.

Warehouses offer you better insight into your production quality. You’re able to evaluate your raw materials to ensure you have quality inputs. By planning the necessary quantity for production, you’re able to keep an eye on the quality of the finished goods.

By detecting defects early, either on the raw materials or finished goods, you’ll adjust as need be. Warehousing thus ensures that your items meet the quality standards for international markets.

Improved Purchasing Decisions

How do you decide when to make additions to your business? From raw materials to equipment and supplies, warehousing helps make better purchasing decisions.

A warehouse is effective in inventory control and management. As a result, you’ll know about your order history on the sale of commodities. It’s thus ideal for identifying areas that need replenishing.

By determining what you need to stock up, you’re able to make strategic purchase decisions. You thus don’t get to splurge on raw materials or items that you don’t need. In the end, you’ll have an easier time turning a profit.

Leverage Seasonal Market Changes

Peak and off-peak seasons can be confusing for the business. Warehousing services assist you in leveraging operations for seasonal market changes.

Low seasons for your business are characterized by not hitting your sales targets. Such occurrences shouldn’t put you off since the warehouses let you plan for the low seasons.

You can study consumer trends to diversify your business as you adjust to market needs. Warehousing supports business growth since you can stock up for the peak seasons. The warehouse gives your business operations a boost without increasing the cost burden.

An Important Risk Management Tool

Business is risky, and you’d want to stay clear of anything that would result in losses. Warehousing is a risk management tool that’s invaluable in international business.

The risks within the international markets include inflation and exchange rate fluctuations. One of the functions of warehouses is to hoard commodities to avoid losses. You can keep inventory until you get an excellent market rate on your commodities.

There’s also the risk arising from product spoilage once production is complete. Warehouses are equipped with special facilities for a favorable condition to avoid spoilage.

Warehousing services leverage other risks such as theft and fires. The warehousing service insures goods in storage, so you get compensated for any product damage.

Types of Warehousing to Know

Let’s get familiar with the different warehousing types to better understand these benefits. You’ll need the knowledge before importing products!

Here is a brief outline of the various warehousing types:

  • Public warehouses are state-owned and presented for rent by private businesses
  • Private warehouses are owned solely by a specific entity to store their commodities
  • Cooperative warehouses are owned jointly but are available for rent to private businesses
  • Distribution centers apply in the distribution of shipments from one point to another

You Now Know the Benefits of Warehousing Services for International Trade

Every business has warehousing needs to be met for efficient supply chain processes. The needs grow with expansion into international trade, so you need warehousing services. The above guide highlights the benefits of warehousing services for international trade.

Are you looking for a warehousing service? Cordova Brokerage is here to help!

We’re strategically located within the US/Mexico border for convenience when exporting products. Our staff offer inventory control, logistics management, and security over the warehouse space. You can trust our team with your warehousing needs as we help your business grow.

Contact us today for a corporate statement.

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Supply Chain Vulnerabilities and Changes on the Horizon— A Customs Broker’s Perspective

Aerial view of container cargo ship in sea.

Hundreds of cargo ships hover out at sea, waiting, floating quietly, unable to port. Thousands of goods sat there, far from their destination. These scenes were real, and they caused a stir in the markets. The images took hold of the news cycle in the Fall of 2021 and began circulating concerns about supply chain chaos in our midst. Those working in the import and export business might have had a preview of some of this as various conditions began causing backlogs, labor shortages, and other problems. 

So what’s all this about? What does this have to do with exporters and importers of goods? 

Here’s what we know. 

The Tangled & Fractured Supply Chain, The View From Here

It’s no secret that covid struck a blow to what seemed to be a relatively robust economy and normal-flowing supply chains. The virus wasn’t just the normal jab to the chin, it went for the liver shot too, bruising the supply lines from different directions. Supply chains are fragile, intricate, and very much depend on the labor of people involved in every aspect of production and trade. 

If you mess with one part of the chain, the ripple effects are felt throughout. 

When the pandemic hit, supply chains were the first major indication to U.S. consumers that this virus was not just another over-blown scare tactic by the nightly news. Americans began to see the shelves of the supermarkets a little emptier than usual and then, a lot emptier, and all of a sudden hand sanitizer vanished from the face of the earth. 

For people in the import and export business, the incoming chaos was detectable on the horizon as early as January and February of 2020. It was then that the virus had started to spread in China and slowly trickled into the production of many essential goods manufactured there. 

In late 2021, people are still referring to the mysterious supply chain shortages in day-to-day conversations. The average American encounters these effects in a myriad of ways, such as short-staffed restaurants, longer-than-usual wait times when it comes to purchasing tech products, making vehicles, car rentals, home construction, and even DIY home projects, as well as access to skilled laborers and workers.

Some have narrowed down the shortages to a couple of major pain points:

  • Computer chip (semiconductor) shortages
  • Port congestions
  • Labor shortages at the ports
  • A shortage of truck drivers to drive goods cross country 
  • Skilled labor shortages across all sectors 
  • Backed up supply in manufacturing plants 
  • Heightened consumer demand after a year at home

 Stuck at Sea — Cargo Ships Floating of the Coast of America’s Port

The Port of Los Angeles is often known as “America’s Port.” That’s because it is the biggest and busiest port in the country— founded in 1907 and active ever since. This large port extends across 7,500 acres of land and water along the coast. It is through this port that thousands of goods enter the country and make their way into supermarkets, stores, and shelves. The port handles over half of U.S. imports, and yet, 65 cargo ships were stuck on the water in September 2021 waiting to dock.

What does this all mean?

On the ground, it appeared to be one continuous blame game. Some blame the dockworkers for not unloading fast enough, others blame a shortage of truck drivers for not clearing out the docks, and still, others blame more internal workings of the supply chains, varying covid-19 protocols across countries, increased restrictions, lack of supply, etc. In the end, some may argue that it begins with policy—that it has really been one domino after another that has acted upon the many layers of the supply chain.

So What Do Supply Chain Shortages Mean For Me?

Well, it depends. As of this writing, the supply chain shortage has manifested itself differently for everybody. For some people it means waiting on that home renovation project, for others it means holding off on buying that new car, and still for others it means being unable to find workers to staff their restaurant. 

For the nation at large, it means there is likely a link to a labor shortage, which means that everyone will see some effect of this in their lives, in some form or another. 

What Does All This Mean For Importers? 

As a brokerage company, we work with many clients that import or export goods. Amidst the dizzying changes and all the rest, importers and exporters are having to adjust and improvise. 

Some people argue that an over-reliance on imports meant that the U.S. was dependent on foreign goods. That dependence has been partially responsible for the situations we face today, and that it also poses a risk to the supply chains, which become vulnerable to outside conditions. For example, most of the semiconductors are produced in Asia and any backlog of production there will impact various sectors in the United States— from car manufacturers to the production of home appliances. 

The Guardians at the Supply Chain Gates

As brokers, we man the gates at the supply chains. That is, we do security, act as the liaison between importers and exporters and the Customs Border Protection Agency, which oversees the incoming cargo and products from overseas, as well as the outgoing goods. Brokers have no real control over the markets or the breakdown of the supply chains—we stand guard and make sure compliance is met by anybody taking goods out of the country or bringing them in. 

Are You an Exporter or Importer of Goods to the United States? Learn More at Cordova. 

Cordova Brokerage works with people on the ground ensuring accuracy and compliance. Whether the markets ebb and flow, as they do, goods continue to move in and out of our border and we are here to safeguard that process and complete the process accurately.

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Trade Deficits and Why They Matter: What Importers and Exporters Should Know

Global business logistics import export background and container cargo freight ship transport concept

Whether you are an exporter, importer, or work in the financial sector, the word trade deficit comes up enough to garner attention. During the Trump administration, this was a central talking point, and it certainly stirred debate from both sides. People that never concerned themselves with the trade gap suddenly found themselves arguing about it. As customs brokers, we operate in the international trade sphere day-in and day-out, this number is relevant to what we do and the importers and exporters we deal with.  So what exactly is a trade deficit and how does it impact the everyday back and forth of international trade?

The international market is interconnected, and the downfalls of one country will inevitably affect another. 

What do We Mean By a Trade Deficit? 

Whenever a nation has an import surplus— meaning they import more than they export—a trade deficit emerges. The Council on Foreign Relations, for example, cites the following number: in 2018, the U.S. exported  $2.500 trillion in goods and services while it imported $3.121 trillion. This means that there was a trade deficit of $621 billion.  

As part of managing the overall U.S. economy, the idea is to try and find a balance between these numbers. The trade balance makes up the nation’s economic relationship with other countries, known as the balance of payments. 

What is the balance of payments? 

This balance of payments, as defined by the Council of Foreign Relations, is that it “consists of the trade balance, or current amount, and the financial accounts or the measures of U.S. purchase and sales of foreign assets.”

So a trade deficit is mostly caused by an imbalance between the rate of investment and the rate of savings of any given country. To reduce the U.S. deficit will in turn mean that Americans should save more or invest less and smaller trade deficits might benefit smaller U.S. exporters that compete with importers. At the same time, however, smaller trade deficits might work against regular Americans as they have less choice for consumption domestically and fewer opportunities for investment that fuel further domestic growth. 

What Influences the Size of the Trade Deficit? 

Gary Clyde Hufbauer and Zhiyao Lu of the Peterson Institute for International Economics pointed out that the trade deficit is impacted by several working forces: 

  • Government spending: When the government is throwing cash around and increasing its spending, it decreases the national savings rate and raises the deficit. 
  • Dollar rate exchange: When the dollar is stronger, the American consumer can buy foreign products more easily.  
  • The growth of the U.S. economy: A growing U.S. economy means that consumers have more disposable income to pursue buying goods from abroad. 

The Trade Deficit Trends

Because the trade deficit numbers are always a balancing act, there is a constant pendulum shift in the numbers. Changing administrations and federal policies will also have a considerable impact on these numbers, so here’s what the last few years look like:

Trade deficit:

  • In 2017, $568 billion 
  • In 2018, $621 billion
  • In 2019, $616.8 billion
  • In 2020, $678.7 billion

Trade Deficit Number of 2021

In August of 2021, Bloomberg News published a report about the U.S. trade deficit and how it had widened to a record $75.7 billion for the month. The number—which indicates the trade gap between goods and services— grew to 6.7% to $75.7 billion. The report seems to indicate that there is a steady surge in consumer demand.

Why Does the Trade Deficit Matter?

Well, it depends on your industry. If you are in the import or export business, the trade deficit will tell you something about the state of the economy and what way the pendulum is swinging. The trade deficit also indicates how the U.S. is doing in terms of some of its largest imports and exports. In 2020, for example, the U.S. imported about $116.4 billion of petroleum, the lowest amount since 2002. 

How the trade deficit affects the U.S. economy is argued about by economists and industry specialists. Some argue that an increased deficit for a prolonged period means that the country is operating with debt and it makes the economy unstable. Other effects of a continuing large deficit mean that U.S. companies may not be producing that many goods and the nation become overly dependent on others for these goods. When that happens for long enough, the U.S. industries lose their competitive edge to foreign companies and slowly discourage domestic jobs. 

Connect with a Customs Brokerage That Keeps You on Top of Things 

As a customs broker, Cordova stays on top of all relevant international trade news. Whether it has to do with imports, exports, rising prices, worldwide pandemics, we got you covered. Part of our jobs is to keep our clients in compliance with ever-changing U.S. trade regulations, tariffs, and more. 

Ready to keep your international business in compliance with a professional brokerage company? Call Cordova today and learn more. 

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Import & Export News: Trade Scuffles with the Chinese and the History of Trade with the Nation

USA and China trade war. US of America and chinese flags crashed containers on sky at sunset background. 3d illustration

China has been in the news often for the past year. Aside from the virus, the country has also made headlines for some of its economic ties to many large companies in the United States. There have also been some tensions with the nation as news of some of its less than optimal working conditions continue to emerge. The United States does a lot of training with China and has had a complex economic relationship. A few imports from the country have been stopped recently, so we thought we would look at our trade relationship with the country and how that has changed over the years. 

Import News from China and Its Affects the Global Supply Market 

On May 28, 2020, the U.S. government blocked imports of seafood from the fleet of a Chinese company that allegedly forced its workers into slave-like conditions. These conditions also allegedly led to the deaths of at least three Indonesian fishermen last year, as reported by the AP. Customs and Border Protection announced the blockage as they got the news that the company, Dalian Ocean Fishing, had less-than-favorable working conditions for its crew. Imports from said company exceeded $20 million as recently as 2018. Most of their imports were tuna. 

Customs Law Allows for Protections and Holds Based On Forced Labor Suspicions

There is a law in the books that allows Customs and Border Protection to put such a hold when they suspect slave labor conditions. The law —the Tariff Act of 1930— is there to protect U.S. companies from unfair competition, but also is used as a political tool to put pressure on companies that engage in this kind of behavior. This law has been utilized more frequently in recent years as allegations of slave labor conditions emerge from various industries and several countries around the world. According to the report, the fact that U.S. Border and Customs Protection put a hold on the entire fleet means that investigations produced substantial evidence of abuse. The forced labor issue has been a point of contention between China and the United States and the recent developments will likely only strain the already-tense relationship. Before the exit of the Trump administration, they announced an import ban on goods from Xinjiang, as it was announced that it was produced with Uyghur forced labor.

Goods Imported By China to the United States 

The United States does a considerable amount of trading with the Chinese. Over the years, the U.S. and China have overcome several differences (political, social, and otherwise) to maintain a somewhat stable trade relationship. In 1979, the U.S. and China re-established diplomatic relations and signed a bilateral trade agreement. This spearheaded a time of rapid growth and trade between the two nations. It went from about 4 billion in the late seventies to $600 billion in 20217. China is the biggest source of imports for the U.S. 

The U.S-Chinese Trade Deficit 

China is the world’s largest economy and its production capabilities far exceed those of the U.S. because of its large population of 1.4 billion people. It also has a much lower standard of living, which allows for production with lower wages. This also allows for the trade deficit. The exchange rate also plays a role in creating the deficit. 

The lower standard of living makes most labor and goods a lot cheaper in China. The nature of the trade relationship between the two nations has changed and has gone from low-wage goods to necessary computer products. U.S imports from China include computers, cell phones, toys, clothes, sporting goods, and more. 

The top trade categories for imports coming in from China include: 

  1. Electrical machinery equipment 
  2. Mineral fuels including oils
  3. Computers and other machinery 
  4. Ores, slag, ash
  5. Optical or technical apparatus 
  6. Vehicles
  7. Plastics 
  8. Copper 
  9. Organic chemicals 
  10. Oilseeds

One of the biggest categories, of course, is imports of electrical equipment and machinery. So much of our electrical devices and tech tools we use every day come from Chinese borders. The electrical equipment imports focus on the following components:

  • Integrated circuits/microassemblies
  • Phone system devices like smartphones
  • Solar power diodes
  • Lower-voltage switches
  • tv/radio radar device parts 

Get the Import or Export Process Right with Experienced Custom Brokerage

Here at Cordova Brokerage, we help those involved with international trade navigate the troubled waters of trade relations. It’s not always clear-cut when it comes to trading with other countries and other nations always have their own restrictions, laws, and changing politics. 

Call us today. Learn more about what Cordova Brokerage can do for you and how we can help make your business and trade go smoothly. 

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An Overview of the U.S. Trade Systems and Trade Agreements Through the Years

Close up of businessmen shaking hands. Global network and a world map in the foreground. block chain concept.

As you sit in front of a screen and read these words, there are millions of goods and products being transported across borders. Many of the products we encounter every day have a long and arduous journey from where they are manufactured to the shelves of our stores. Trade impacts our economy in a significant way, and it’s why over the years we have seen changes to the way the country approaches its trade policies and why it has become a hot-button issue in elections and during difficult economic times. 

The U.S Constitution grants Congress the power of trade activities between foreign countries. Trade within states is regulated and overseen by the states themselves. Over the decades, the United States went from a far more protectionist nation to one that embraced free trade and emphasized its benefits. 

From Protectionism to Expansion of Imports and Exports

The state of U.S. trade policy has evolved since the Great Depression. The country’s views and needs have grown and shifted dramatically since then. Tariffs and dutiable imports reached 60%. There was no central organization that oversaw the changes that occurred in trade across the globe, so many local laws were shielded from understanding the bigger picture.

Before the Great Depression, the U.S was far more isolationist in both its trade policy and foreign policy, but the 20th century had its plans for America and the rest of the world, and events that transpired shifted the American approach to trade to a far more open policy. 

It Begins with a Little Act Called Smoot-Hawley

The U.S was in dire straits in an attempt to fix the domestic economic situation, so Congress had to make moves to remedy this by finding ways to grow the economy and get things moving again. The tariff act raised duties on over 20,000 imported goods and may not have had the effect desired. This led many U.S trading partners to step back and cause a reduction in total U.S trade volumes. Many historians argue that the Smoot-Hawley act deepened the Great Depression. 

Not long after, President Franklin Roosevelt signed into law the Reciprocal Tariff Act, which gave the President authority to negotiate reciprocal trade agreements. Around this time tariffs were reduced with 21 countries, which helped spur economic growth. Of course, it wasn’t until WWII, that U.S production and manufacturing boomed. After the war, GATT was signed. This was the General Agreement on Tariffs and Trade. 

The Trade Act of 1974, addressed many concerns for U.S trading companies that were seeing themselves as unable to complete with unjust import competition. This law imposed adequate procedures to help protect the American industry amidst a growing and exponentially more complex international market. 

In 1995, the World Trade Organization replaced GATT and helped a surge of free trade agreements after the Cold War. In this era, the percentage that was subject to tariffs dropped from 65% in 1990 to about 30% in 2017. 

President Reagan’s Impact on Trade in the Late 20th Century 

President Ronald Reagan helped continue to push the move towards more free trade. As a stalwart proponent of conservative policies, Reagan understood that opening up trade for America meant increasing opportunities. In 1988, Reagan gave a radio address about the virtues of having a free trade society and the economic and social benefits that this provided a society. He pointed to the pattern of free nations and their prosperity after imposing free trade laws and allowing for more freedom in the import and export realm.

Reagan declared “We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security, and the entire free world all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion. It is an American triumph.” 

It was this mode of thinking that continued a trend towards a trade policy that made the international exchange of goods more accessible. 

The Complexities of the Ever-Changing Trade Industry 

Developing a product to ship to international markets is a long and hard journey with plenty of steps and hurdles to overcome. It’s not always easy, as there are competing interests, politics, changing regulations from every angle. It’s a fast-moving industry that must adapt to the conditions and regulations of other countries, as well as changing economic and cultural trends.

As international markets and nations see ups and downs and changes in their administrations and leaderships, those changes are reflected in the policies and regulations imposed on importers and exporters. A customs broker is a middleman that does the heavy lifting when it comes to researching and following these changing rules. 

Stay on Top of The Changing Trends in Trade Policy with a Trusted Customs Broker

As a customs broker, Cordova Brokerage takes care of doing the leg work in ensuring you are in compliance with your import or exports to and from the U.S. We are here to provide accurate service and facilitate the difficulty in maneuvering U.S trade restrictions and law. 

Contact a reliable customs broker at Cordova today for questions regarding imports and exports. 

 

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The Many Roles of a Customs Brokerage: Importing, Paperwork, & Clearance

A businessman selecting a Customs Concept button on a clear screen.

A customs broker is a type of middleman. They are facilitators. Experts on laws and regulations that are ever-changing and shifting. A customs broker represents the interests of the United States as it relates to the importation and exportation of goods across international waters and borders. Here at Cordova Customs Brokers, we thought we’d take a moment to explain the day in the life of a customs broker, what we do, what we’re responsible for, and why it’s important to go with the one you trust. 

To put it simply, a customs broker works with importers and exporters of goods. Everything that comes in through this country’s borders must be documented and follow what we call compliance. We get shipments cleared through customs and other agencies that might need to get involved with shipments. There are thousands of shipments that come in each day, as the relative size of imports has grown from 10% of GDP in the early 1990s to 15% in 2017. 

Why Do Importers Need a Customs Broker?

Bringing goods into the United States, or any other country might seem simple on its face. In reality, each country has its own set of rules and regulations when it comes to bringing in goods from other countries. As it is stated by Customs, “When a normal ‘entry of merchandise’ is made under the provisions of 19 U.S.C the required information and documentation is required to be filled or electronically transmitted by the “importer of record.”

As customs brokers, we work for the ‘importer of record.’ They are our clients and we represent their interests in successfully getting their goods into the United States in order to do business. The United States has regulations as well and it can make importing goods a little more complicated. A customs broker navigates the complicated process for you, getting through the paperwork, compliance, and dealing with various agencies on your behalf. 

These shipments include everything from crabmeat to squeaky toys for dogs, children’s toys, shrimp, and more. 

The process of customs brokerage existed as early as the 1850s when an importer or consignee endorsed the bill of lading over to a tradesman. These tradesmen were called ‘customhouse brokers.’ In the beginning, these brokers would sign the merchandise with their name instead of the original consignee but it led to many problems. This issue was resolved with the Customs Regulations of 1857 and the beginning of what were to be many new changes to the way we do imports. 

What is the Process of Importation like? 

It depends on whether shipments are coming through by air, water, or land. As a general overview, however, the process is relatively similar. When we work with an importer, we get the information we need and input it into specialized software that will sort through the information and send it to Customs and Border Protection. So, for example, if there is a shipment coming in, we do the paperwork and preliminary clearance before they get to the designated terminal. If the product needs to be approved by another agency like the FDA, this needs to be done as well. When the shipment comes in, it will be cleared in their computer system and the goods will be good to enter and be released to whoever is going to pick them up from there. 

Today, it is all done electrically. Technology has certainly given our job a major advantage and speeded up the process of importation in the last couple of decades. 

On any given day, a customs broker that works with importers will see any number of different types of goods. Shipments will come in carrying food like shrimp, crabmeat, and other delicacies, toys from cheap toys to more commercially popular ones, clothes, and more. Many shipments come in from China, as one of our biggest importers. One interesting tidbit here is that shrimp is actually a big import. Thousands of people in the United States consume a lot of shrimp each day. 

What is the advantage of working with a customs broker? 

As we mentioned earlier, we act as a kind of middleman that facilitates the process between various entities and agencies. Most importers are business people who want to keep to the business they are in and are not interested in being backlogged with a bunch of paperwork and confusing regulations. This is where we come in. We take care of all the legal stuff so their shipments will have no problems at the border, so they will be cleared, and ready to continue with the business of making money. 

We take care of:

  • Clearing goods through customs 
  • Making sure those goods reach their destinations
  • Calculate duty or tariff payments owed
  • Compile and fill out necessary documentation like invoices, certificates, and cargo-control documents
  • Keep on top of changes in export or import laws and regulations

Are You an Importer Looking to Bring Goods Into the U.S? Call a Trusted Customs Broker

Here at Cordova Customs Brokerage, we have been helping importers do business in the United States for many years. Our brokers are always up to speed with new regulations and changes—as they happen often—and abreast of all necessary compliance guidelines. Call us today for more information.