Tips to Help You Choose an International Third‑Party Logistics Provider

To successfully enter the international market, retailers must ramp up their shipping capabilities and prepare to answer the needs of their new international customers. To meet this demand, many partner with third-party logistics providers.

Commonly known as 3PLs, these businesses outsource a range of services—warehousing, distribution, freight forwarding and more. Learn about these all-important supply-chain partners and how to find the best one for your business needs, below.

3PL 101

There are countless third-party logistics providers (3PLs) serving retailers and manufacturers around the world. Some only provide specific services like warehousing and distribution, others offer a full suite of supply-chain services; some have assets to offer businesses, others manage large-scale operations. 3PLs can offer the following services:

  1. Transportation—delivering a product to wholesale, retail or direct customers.
  2. Warehousing & Distribution—storing and managing products in warehouses based around the world.
  3. Freight Forwarding—arranging the storage and shipment of merchandise.
  4. Shipper Management—managing international shipping end-to-end, including carrier relations, access to transportation management systems and more.
  5. Financial—managing freight payment and auditing of financial transactions.

Deciding what 3PL to partner with takes careful deliberation. Below, we map out the most important criteria to consider when choosing a 3PL.

Consider Your Needs

Before contacting 3PLs to handle your international shipping needs, ask yourself these questions. Do you need simple transportation services? Are you looking for a warehouse or distribution center for your products in a specific country? Which market are you looking to enter? How much are you willing to spend? Do you have any technology needs? Once you’ve mapped out your answers, conduct research online to find 3PLs that fit your criteria or contact them directly to learn more.

Determine Market Accessibility

Knowing which countries you want to export to will help you narrow your list of 3PLs. Begin by eliminating the providers that don’t offer services in your intended international market. Visit their websites or reach out to them directly for an up-to-date list of countries they operate in.

Decide on Services

Next, it’s important to get a grasp of each 3PL’s capabilities. To narrow down the list, determine the answers to the following questions:

  • What is the full range of services they offer?
  • Do they have infrastructure (trucks, warehouses, etc.) or do they offer management and technology services only?
  • What transportation and warehouse options do they offer (if applicable)?

Assess Their Scalability

As your international business grows, so will your global shipping needs. To avoid switching companies midstream, it’s important to find a 3PL that can accommodate you when business escalates. Consider the following questions:

  • Is there a limit on the amount and extent of services they can offer?
  • What is the maximum amount of shipments they can handle to your international market (if applicable)?
  • Does the 3PL understand the needs of a growing e-commerce retailer looking to expand into international markets?
  • Have they scaled their service offerings for other businesses in the past?
  • Do they operate in other international markets you may want to enter?

Analyze Their Technological Capabilities

Many 3PLs have technology platforms that help their business operate and deliver on time. Be sure to find out whether these platforms are compatible with yours. A few important questions to keep in mind:

  • What technology platforms are the 3PLs using on a daily basis?
  • How advanced are their platforms? Do they have important features other 3PLs don’t?
  • Is the platform compatible with yours?

Look at Their Track Record

Before deciding on a 3PL, look at each company’s track record. Find a service provider whose work experience mirrors your needs. Consider the following:

  • Does the 3PL have case studies that showcase its success in international markets?
  • Can it share a roster of clients who’ve worked with the company in the country you’re looking to target?
  • What is the longest working relationship they’ve had with a retailer?
  • Can they provide industry references that speak to their success and reputation in international shipping?

Determine Customer Service

Good relationships are the cornerstone of a successful business. Before committing to a 3PL, gauge the level of attention you’ll be getting.

  • Who will be your point person at the 3PL?
  • How often can you contact them?
  • Do the workers who are based abroad speak English?
  • Can the 3PL provide a contact for reference?
  • What external reviews does the company have? Are they positive?
  • What was their biggest customer service complaint in the past? How was it solved?

The USPS and 3PLs

The USPS plays a critical role in global shipping for many companies. Contact us to see how our services can complement your international shipping strategy.

Conclusion

Entering the global retail market takes time and a calculated effort. Having a trusted logistics partner can help make your transition that much smoother. Find the 3PL whose services align with your needs and put your global expansion plan into action.

Cross Border E-Commerce Trends

In today’s online shopping world, country borders don’t stop shoppers. Increasingly, shoppers worldwide are turning to e-commerce sites in search of products and prices that might not be available in their country. As U.S. businesses try to take advantage of this trend, here are several countries they might want to consider, based on trends revealed by a PayPal/Ipsos report.

Directory of Websites that Provide Government Assistance for Exporters

If you have questions about exporting or need help getting started, chances are there is a U.S. government agency that can help you.

Here’s a list of websites related to many of the government agencies and programs that play a role in exporting.

Department of Commerce International Trade Administration

Promotes U.S. trade and investment and helps ensure fair trade by enforcing trade laws and agreements. Learn more

Department of Commerce U.S. Commercial Service

Part of the International Trade Administration, the U.S. Commercial Service can provide detailed information about government export programs, help you research markets, and generally guide you through the process. Learn more

Department of Commerce Bureau of Industry and Security (BIS)

Can help you determine if you need a license to export your products. BIS administers and enforces the Export Administration Regulations, which govern the export of commercial/dual-use items, less sensitive military items, and most commercial satellite and spacecraft items. Learn more

Export-Import Bank of the United States (EXIM)

Provides financial support to small and medium-sized businesses (SMBs) so they can export with confidence—whether entering new markets or increasing sales in existing ones. With EXIM support, SMBs may grant “open account” credit terms to their buyers, protect against nonpayment, provide vital working capital to fulfill orders, and offer competitive buyer financing. Learn more

Small Business Administration

Provides free counseling, training, and other assistance for small businesses, including special loan programs for businesses involved in international trade. Learn more

Department of State Business Information Database System (BIDS)

Has information on hundreds of opportunities for commerce around the globe. Learn more

Department of State Directorate of Defense Trade Controls

Controls the export and temporary import of defense articles and services covered by the United States Munitions List (USML). Learn more

Department of State Intellectual Property Enforcement

Advocates for protection and enforcement of intellectual property rights around the world. Learn more

U.S. Trade and Development Agency

Helps companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies. USTDA links U.S. businesses to export opportunities by funding project preparation and partnership building activities that develop sustainable infrastructure and foster economic growth in partner countries. Learn more

Export.gov

This website brings together information from various government agencies that deal with foreign trade, including the U.S. Commercial Service and the U.S. Small Business Administration. Learn more

Department of Agriculture Foreign Agricultural Service

Helps U.S. exporters develop and maintain markets for food and agriculture products while also working to improve global food security. Learn more

U.S. Customs and Border Protection

Helps enable legitimate trade by enforcing laws against counterfeit, unsafe, and fraudulently imported goods. Learn more

Department of the Treasury Office of Foreign Assets Control

Enforces trade sanctions against terrorists, international narcotics traffickers, targeted foreign countries, and others who threaten the national security, foreign policy, or economy of the United States. Learn more

Food and Drug Administration

Enforces regulations dealing with imports and exports of FDA-regulated products, such as food, medical products, cosmetics, and tobacco products. Learn more

U.S. Agency for International Development (USAID)

Works to improve lives in the developing world, in part by investing in agriculture, health systems, and democratic institutions. At the same time, it helps creates markets and trade partners for the United States. Learn more

Overseas Private Investment Corporation (OPIC)

As the U.S. government’s development finance institution, OPIC offers a variety of financial tools, including direct loans and political risk insurance, to help U.S. businesses invest in new and emerging markets. Its products can help businesses expand internationally while supporting growth at home. Learn more

Challenges and Benefits of Exporting Internationally

There’s a reason so many companies, small and large, have invested in international exporting and all that comes with it. The global marketplace offers countless opportunities. Of course, there are many companies still on the cusp of expanding their operations. Here are some of the most common challenges businesses face when entering foreign markets, and practical ways to overcome them.

International Product Restrictions and Regulatory Requirements

International shipments sent from the United States are subject to federal export laws and regulations.1 Before choosing a foreign market, companies must understand the shipping restrictions surrounding their products. Export licensing requirements vary by country and are based on U.S. foreign policy and national security concerns. Whether a license is required depends on the type of commodity, how it’s being used, where the commodity is being shipped, and who is involved in the export. Companies must do thorough research to find out if trade is feasible and worthwhile.

Helpful Tip: Though many goods do not require export licenses, it’s important to ensure compliance.2 Contact the federal agency that governs your industry to learn if you need a license. The three agencies that issue licenses are: the Department of Commerce, Bureau of Industry and Security (BIS), the Department of Treasury, Office of Foreign Assets Control (OFAC), and the Department of State.

Political Environment

Beyond laws and regulations, companies must also look at the political climate of a country. Is it stable enough to support successful business operations? Instability can hamper business dealings. Evaluate the environment and whether it can affect your partnerships and consumer purchasing behaviors. Political changes could create new import restrictions, tax controls and labor issues. Consider these details before investing in an international operation.

Helpful Tip: Map out the political and socioeconomic risks in each foreign country you’re looking to ship to. If a transition of power occurs, can the country seize your assets? Find out if and when that’s possible before committing to expansion.

Pricing

The cost of international expansion doesn’t stop at shipping and related surcharges. Taxes and currency values all play a part in exporting for businesses and, more importantly, their bottom line.

Surcharges

Some shipping providers charge additional fees such as fuel, dimensional weight, and extended area surcharges on top of international shipping rates. These added costs affect profit margins and, ultimately, the viability of an international business. Extended-area surcharges and dimensional weight surcharges, in many cases, can exceed the cost of the product. When choosing a provider, take note of the additional charges and how they factor into your strategy. Some providers, like the USPS, offer limited surcharges on international shipping.3

Customs, Duties & Taxes

Every country charges its own customs fees for importing and exporting goods. Seek out competent legal advice to determine whether your customer is responsible for paying local fees, duties and taxes. These costs add up. Companies looking to expand into foreign markets must know just how much financial burden they are putting on customers and explain the fees clearly on the checkout page.4

Currency Values

When doing business abroad, it’s important to know the local currency and its relation to the dollar. Fluctuations in currency value can affect a company’s bottom line. In some cases, companies can protect themselves from drastic changes in price.

Helpful Tip: For those in need of expertise, work with a bank or foreign-exchange specialist to help mitigate your risk.

Reputation Management

Managing consumer relationships abroad is a sensitive but all-important factor in global expansion. Delays, damage and language barriers present their own set of problems.

Delays & Mail Disruptions

Of course, disruptions and shipping delays are an inevitable part of exporting. When dealing with international customers, it’s important to bridge the distance with strong communication. Whether it’s the weather or labor issues slowing down your shipping times, customers always appreciate an update on their shipment.5

Package Loss & Damage

While there’s no way to prevent domestic or international shipments from being lost or destroyed, insurance can help cover the losses. Evaluate multiple quotes from shipping providers and insurance companies. Take into account the level of coverage, claims process, and compatibility with shipping systems before making a final decision.

Language Barriers

Being able to communicate with your international customers and understand their local customs and business practices is paramount. Companies should know all the languages spoken in their chosen market. Besides hiring translators to update print marketing materials and your international website, experts also suggest investing in surveys. Conducting online surveys in your chosen market can help you avoid communication pitfalls.6

Helpful Tip: Create a communication protocol for shipping delays. Be sure your messaging is clear and in the correct language. Avoid jargon to prevent confusion.

Intellectual Property Infringement & Copy Cats

Protecting your intellectual property from theft takes preparation. Every country has its own set of rules and guidelines. Consult with a competent attorney with the appropriate subject matter expertise.

Helpful Tip: If possible, work with a lawyer to draft a legal strategy protecting your intellectual property. Ask your legal counsel about the worth of registering patents, trademarks, and copyrights abroad to defend your company against any possible violations.7

Consumer Fraud

Preventing consumer fraud across international borders requires a bit more effort than it does in the United States. Instances of consumer fraud on cross-border transactions may be higher than domestic transactions. Take into account the different payment methods and regulations, prevalent in your foreign market when screening for dubious shopping behaviors.

Helpful Tip: Make time to regularly monitor purchase activity, credit card information, IP, and email addresses to help detect fraud and manage it.

Returns

For some companies, the price of shipping products back to the U.S. doesn’t make financial sense. The profit margins on their products don’t allow for it. They may choose not to offer returns. Those looking to invest in a great consumer experience can work with return consolidators in their foreign markets. These companies have warehouses ready to service a company’s international returns.8

Helpful Tip: Do your research on return consolidators in your chosen region. Find the company with the best rates for consolidating and shipping parcels back to the U.S.9

Ready to Make Moves?

While there are risks to global expansion, business owners—from small retailers to millionaire entrepreneurs—understand the benefits. Fear of language barriers, regulations and fraud shouldn’t stop your business from evolving. Success stems from preparation. Knowing the challenges ahead of time allows growing companies to meet them head on.

Please note: The content presented in this article is for informational purposes only and not for the purpose of providing legal advice. Please contact your attorney for in-depth advice on any pressing issue or problem.

5 Benefits to your Business by Entering the Global Market

Every company, no matter its size, wants to boost its bottom line. Many look at new ways to improve their metrics domestically, but the global market is ripe with opportunities to find new customer bases, extend product life cycles and, of course, increase sales. Discover five ways exporting can serve your company’s goals below.

  1. 1

    Grow your business, especially if the U.S. market for your product is saturated.

    Introduce your product to new markets around the world. By going abroad, your business can gain access to a world of possibility. Leverage your website, the perfect platform to access the global market. With a few enhancements, it can start taking orders from international customers.

  2. 2

    Diversify your customer base to fuel business expansion.

    New global markets mean new customers. Exporting gives you access to a larger, more diverse audience, one that’s willing to contribute to your business and help it progress to the next level. By tapping into new customer segments, you can optimize your revenue potential and stimulate your growth rate.

  3. 3

    Make up for slack during economic slowdowns.

    When the U.S. economy prevents you from meeting your financial goals, your business abroad can cover the difference. By investing in other markets, you provide new sources of profits and business growth.

  4. 4

    Increase your product life cycle.

    A cycle includes multiple stages—introduction, growth, maturity and decline. Instead of letting your product decline, new international customers can kick-start the cycle all over again. This increases the profitability and shelf life of your product.

  5. 5

    Boost the value of your business, should you decide to sell it.

    The size of your business dictates its value. If you’re able to exploit international markets and reach a healthy, profitable state, your business will be that much more valuable.

In Summary

If your company is willing to dedicate adequate resources, exporting may elevate your business in countless ways. No wonder so many make the jump into international markets each year. Reach out to government agencies at the federal, state and, in certain cases, the local level to access a tremendous amount of support to get you on your way.

Interview with USPS’ Ashok Parasuram on International Expansion

After a decades-long career in shipping, including eight years at USPS, Ashok Parasuram knows a thing or two about global expansion. Parasuram, the Manager of International Products and Global Accounts at USPS, has established trade lanes between the United States and Asia, managed freight forwarding at private companies, worked in cargo, the airline industry and more. He’s seen businesses develop global exporting strategies in countries around the world. So we sat down with the industry vet to tap into his experience and learn more about international expansion—from customs to costs.

Some business owners looking to ship internationally wrongly believe that they need exporting licenses. What are some other big exporting misconceptions?

Depending on the nature and value of the commodities being exported, an exporter may or may not require a license. There are several misconceptions about exporting and they usually center on the complexities associated with international trade: specifically, the documentation involved, customs, language, culture, etc. While exporting does require knowledge of a foreign market and the cultural nuances of that country, there are plenty of free or low cost resources that are available to exporters of all sizes. USPS has resources and an international sales team that can assist new and existing exporters with competitive and easy to implement shipping solutions. In addition, the US Department of Commerce (export.gov) and US Census Department (trade.gov) websites contain a lot of important and useful information to assist exporters with any concerns they may have with doing business in a particular country.

How do companies decide which countries to export to? How do customs and taxes fit into that decision?

In many cases, US companies who are new to exporting will typically target English speaking countries. Canada is usually the first country that most companies target as the language, culture and close proximity to the US make that country attractive.

Customs and duty thresholds play a part in the decision making as well. Depending on the country being exported to, the duty free threshold (aka de minimus), the value and nature of the product can impact an exporter’s decision on which country to target. For example, Australia has a duty threshold of $1000 Australian dollars, so almost all ecommerce shipments enter that country duty free. Duty thresholds vary by country so it is important to do one’s research up front.

Is it necessary for these smaller companies to have a large team handling customs?

In my experience, generally not, however, depending on the volume of exports, the company’s international customer base and the nature of the products being shipped, they may need more than one person dedicated to customs. Many of the small and medium-sized companies that I have come across have had one or two people responsible for that aspect of the business. Most of these companies started out small, and eventually grew the size of their export departments in line with the growth of their international business. Depending on volume of exports, the nature of the commodities being shipped, and regulatory environment, some companies hire outside consultants to deal with customs compliance.

Looking to zero in on the biggest issues in global expansion, we tailored the rest of our conversation to the international apparel industry. This area of business boasts success stories from companies small and large. Pulling from his career experience, Parasuram was able to shed light on many facets of global expansion—all through the lens of the apparel industry.

On the Global E-Commerce Apparel Market

First, Parasuram gave a bird’s-eye view of the e-commerce apparel industry, noting the strength of the dollar, and how U.S. exporters function in this economic arena.

Can you describe the current state of the e-commerce apparel market?

Brand name apparel exports to Asia and other emerging areas continue to grow despite the strong dollar. There is a trend among consumers living in countries impacted by the strong dollar to source from countries like China due to the low cost of goods. It’s interesting to note that many apparel importers, who source products offshore, export their products back to the same country where they were manufactured due to the trust that their customers have in US brands. Aside from trust, consumers in some instances purchase from US websites for status reasons.

What types of commodities are sold on the international market?

Depending of course on the country, brand name apparel, home textiles, small electronics, books/media and home furnishings are the types of commodities being exported by companies of all sizes. In general, apparel is the primary product that is being exported.

Where do small and medium-sized apparel businesses export to?

Canada is typically the first market that small and medium-sized businesses target once they enter the international arena. In addition, the EU countries, Japan, Korea, China, Mexico and other emerging markets are common places to export to.

How has the strong dollar affected global apparel exporting?

That depends on the geography and how much the local currency is impacted by the dollar. In the case of Europe, Western Europe with the exception of the UK has been impacted negatively. To combat the weakening of local currencies, consumers in South America and Europe have been purchasing directly from China. Despite that, there is plenty of opportunity for US based apparel exporters.

On International Returns

Understanding the challenges of shipping returns across borders, Parasuram zeroed in on the biggest pain points exporters face.

Let’s take a more granular look at global shipping. When it comes to international returns, do small apparel businesses offer them and, if so, do they charge for them?

It really depends on the commodity and value of the product. In certain parts of the world like Latin America, returns aren’t as big a factor because consumers prefer to resell their online purchase locally. There are markets like Europe where it is very important to offer returns. In that region, not offering a return service can negatively impact an exporter’s business. The cost of returns can vary and vary by retailer as well. In many cases, high-end retailers offer free or low-cost returns options.

What are the greatest operational challenges that apparel companies face when it comes to returns?

In my experience, customs can be challenging, however, if a commodity is exported to a particular country through a shipping company, the return should preferably be handled by that same shipping company to facilitate easy customs clearance.
The cost of returns can be a challenge for many online sellers. Depending on where the return is being exported from, the shipping cost can sometimes outweigh the cost of the product. The USPS is in the process of developing returns solutions that will address the needs of the e-commerce marketplace. For undeliverable and incorrectly addressed mail and parcels, shipments made through Priority Mail Express International® service (PMEI) are returned free of charge.

On Shipping Costs & Expansion Strategies

Finally, Parasuram spoke to the price of shipping and how companies, both small and large, have doubled their exports in the last five years.

Let’s transition the conversation over to another important subject – shipping costs. How do apparel companies deal with the high cost of shipping internationally?

Dealing with shipping costs is not industry specific, but a universal concern. Unlike many shipping companies, USPS does not levy surcharges, so shippers are better equipped to predict and manage their shipping costs. This predictability enables companies to keep the price of their products consistent and more attractive to prospective customers.

Have you seen apparel companies fold the cost of shipping into the price of the product?

In my experience, depending on the value of a brand and product, companies may include the cost of shipping into the product price. This is very typical among high end apparel brands.

Do you think limiting the types of products an apparel company sells internationally can help ease the expansion process?

In my experience, companies who are new to the international market place will test their products and depending on demand, will either reduce or expand the number of lines offered online.