UPS Global Supply Chain Solutions

 

Episode 15:  Today, Dr. Omar Ayyash, President and CEO of the World Trade Center Kentucky interviews a team of representatives from UPS who are deeply involved in UPS Global Supply Chain Solutions.  Kentucky is fortunate to have a significant UPS presence and the logistical expertise and capabilities they offer are truly a competitive advantage for Kentucky businesses.

Meet the UPS Team in the Studio

John Rushing is a WTCKY Board Member.  He’s the Managing Director of UPS Sales in the Central Zone.  He’s been with the company for 36 years.  Tim Wink is the Managing Director of Global Customs Brokerage Growth for UPS Supply Chain Solutions.  He’s a licensed US Customs Broker and holds Customs designations in Canada, as well.  Ryan Zehring is an International Sales Manager for UPS.  He has a 24-year career in sales.  The last 5 of which have been with UPS.

Omar begins by commenting on the value of having the UPS Worldport in Louisville.  In 2023, Kentucky exported $40 billion.  Much of the exports and imports relied on UPS and its Worldport operations.

The Role of UPS in Economic Development for Kentucky and the Region

John begins by describing the 5.2 million square feet facility for air operations.  They process 416,000 pieces per hour in the facility.  They are spread over 300 acres.  He comments that there are approximately 387 flights per day.  UPS also boasts one of the top 5 largest ground facilities in the UPS network, in the Louisville area.  As a company, UPS employs 22,000 people in Louisville.  The ties to Kentucky are significant.

The UPS ground facility is one of the newest in the network.  John explains that the facility is extremely automated.  The only time the packages get handled by humans is during the unloading and loading process.  The automated conveyor belts run at about 42mph and enabling the packages to be properly scanned and routed extremely effectively.

International Services from UPS

Tim reminds us of the importance of partnering with a company that has the size and scope to manage international logistics.  International freight can involve trucking, air freight, ocean freight, Customs brokerage, trade advisor services and Customs compliance.  It’s a full-spectrum competency that UPS client are able to rely upon for their international shipping support.

The Importance of Trade Compliance

This is an extremely important issue for any company shipping products internationally.  Tim mentions a variety of focus areas impacting global shipments during the past several years.  Section 301, Section 232, Type 86 entries have spiked in importance.  If it sounds complicated, it can be, if you haven’t properly researched these issues.

Trade compliance is the key.  Tim advises companies to make sure the know their products.  You have to know the proper name and description of the items being shipped.  The country of origin is definitely a factor.  This doesn’t mean where the product was assembled, rather where the produce components were made.  This applies to both imports and exports.  The Rules of Origin can become a significant issue, if not properly documented.

Tim uses an example of someone who regularly speeds through a school zone.  Assume one the day they get a ticket, but it’s for that specific infraction.  In international trade compliance, the company can be liable for each infraction, going back 5 years.  Documentation, due-diligence and a demonstration of reasonable care taken can help to reduce the risks for a company shipping products internationally.  UPS can help clients to effectively navigate complex international trade issues.

Building Relationships with UPS Clients

Ryan says it all begins with having a conversation.  What do they do?  What do they produce or manufacture?  Where are they shipping it to?  These answers lead to a discussion about their growth strategy.  That’s where Ryan begins to add value.  This is especially true when a company is new to shipping products outside of the United States.

Ryan discusses the portfolio of services for both domestic and international shipping, import/export and customs-related services.  The value of working with UPS representatives is they know where to go to get answers for clients or to bring in other UPS experts to help a client plan, execute and grow.  Ryan stresses the value of having a partnership with a team of experts at UPS.

Ryan explains that the size and scope of a company’s business doesn’t really matter.  If they need advice and assistance shipping internationally, UPS can help.  The same care, expertise and solutions matter to a smaller company as they would to a larger, more complex company.  Ryan has a “let’s grow together” approach.

Tim observes it’s often the smaller clients who really need assistance from UPS.  They may not have the internal resources (i.e. experts) are larger company may on staff.  The need an actual partner, usually because they know what they don’t know – or worse yet, they don’t know what they don’t know.

Ryan comments how the true value comes into play when the client brings UPS in as a partner.  They can become part of the client’s team, helping UPS to be viewed as highly-trusted advisors and much more, based on trust.

The Importance of Documentation in the International Trade Process 

Tim confirms this is the key to success in international trade.  Documentation is a foundational issue that helps companies to avoid problems, when executed properly.  The accuracy of the commercial information on the documentation is a vital factor in avoiding problems with clearing customs.

There is basic information that must be properly documented.  Some of these include:

• Tariff clarification
• Description of the merchandise
• Country of Origin
• Appropriate valuation of the products

Having the proper documentation can help to expedite the Customs-clearing process.  When the information is missing or incomplete, the shipment will get stopped and delayed until the issues are resolved.  The result can be a bad customer experience leading to negative online reviews.

AI is playing an increasingly important role in analyzing the documentation.  It can highlight when discrepancies occur and alert Customs and Border Protection officials.  More shipments are getting flagged when the documentation is incorrect.

How Extensive Are the UPS Global Supply Chain Operations?

Ryan explains UPS operates in 220+ countries around the world.  There are a number of sanctioned countries in which UPS and others aren’t authorized to operate.  The services offered to US-based companies are also being offered to companies across the globe.  UPS is one of the largest Customs brokers in the world.

Tim comments on the Customs and Trade Advisory Services.  UPS has over 400 Customs brokerage offices around the world, in 160 different countries.  They have partners in countries that don’t allow US Customs brokers to operate.  Those partners are thoroughly vetted and required to maintain high levels of services.

Why Contact UPS instead of a Freight Forwarder or Shipping Company?

Omar asks this question to the group.  Tim responds that UPS has the size, scope and experience to better service a client’s needs.  The other options are smaller and somewhat fragmented.  If your company is serious about expanding into global markets, having the right partner who can provide seamless, comprehensive solutions, not just a single facet of the process, it vital.

Tim advises clients who are new to international trade that there are 3 factor they need to focus on, from the outset:  1) Know your product, 2) Know your partners and 3) Know your providers.

Knowing your product focuses on the country of origin issue he previously mentioned.  Knowing your partners has to do with the people with whom you are doing business.  If forced labor was used, it will create a substantial problem related to importing/exporting your products.  Tim explains a US company needs to know the companies it’s using to supply component parts, but in addition, it needs to be aware of companies that partner is using.  It’s all part of the supply chain and can create Customs issues.

Knowing your provider comes down to selecting a partner with a global scope of capabilities, experience and expertise to help you.  This applies to transportation, Customs brokerage and trade advisory services.  Being able to provide this scope of service is a competitive advantage for UPS.

Is Package-Size Important?

Ryan explains how UPS handles virtually all of them.  They deliver letters and small packages, up to enormous shipments of products for a client, on a daily basis, all around the world.  Beyond the package itself, the consulting services enable UPS to efficiently resolve issues for its clients.

Another Advantage of Kentucky Having the UPS Worldport

Omar and John point out the additional flexibility for companies, provided by the Worldport.  UPS operates outside of normal business hours.  Companies that are located in the area are able to get a few extra hours to deliver their shipments to the UPS facility, based on proximity.  John points out that it may be a reason so many warehouses are visible along the I-65 corridor, just south of Louisville.

Healthcare and other Companies Co-Located with UPS at the Airport

John explains there’s a capability under the Supply Chain Solutions umbrella that some may not realize.  UPS offers dedicated healthcare facilities, dedicated distribution facilities, last-improvement technology solutions and other advantages within its Louisville operations at/near the airport.  It enables companies to realize specific advantages not found in other areas.

Tim discusses the healthcare campus that the UPS Worldport in Louisville.  During the pandemic, UPS handled billions of doses of the vaccine, globally.  UPS has invested in an impressive healthcare infrastructure including 2-8 storage and cold chain available at the Worldport.  A pharma business can take advantage of this capability by relying on UPS to receive the shipment, hold it at the proper temperature, service it and distribute it quickly and efficiently.

 Managing Supply Chain Disruptions

Omar comments how this issue became a significant threat during the pandemic.  But there are other factors that could also cause global supply chain disruptions.  How does UPS work to minimize the impact for its clients?

Tim points out how the concern involving trade with China are constantly in the news.  Demand from the Asia ports coming into the US is increasing, while capacity has not.  Shipping rates are rising significantly.  This is resulting in scheduling challenges and advanced logistics planning to ensure a client’s product makes it onto the ship.  Companies shipping into the US need to be planning for peak season now, or risk not being able to get space for your product.

That is driving a shift toward the more expensive airfreight option.  This will obviously impact the selling price to the ultimate customers.  Regardless of the outcome of the election, Tim predicts there will be an increase in tariffs.  It’s already taking place.

Tim notes the mindset shift from focusing on global trade and commerce to one of protection via Made in the USA initiatives.  It’s the US importer who pays the import duties, such as the Section 301 tariffs, at the time of import.  Those costs are getting passed along to the consumer.

Ryan adds to the conversation by pointing out the new buzzwords such as near-shoring, near-distribution, near-manufacturing and others.  This refers to the trend toward setting up operations near the destination country, such as facilities in Mexico with proximity to the US.

UPS can actually add value to supply chain operations by assisting with opportunities such as providing warehouse facilities just across the border.  UPS can obviously help with shipping the products into the US, as well.  These long-term solutions are aimed at providing ways to reduce or eliminate the impact of Section 301 issues.

UPS can also provide advisory services helping a company to better understand how some of the documentation can legally changed to minimize tariff exposure depending upon where the product was assembled.  Again, these are long-term solutions to help companies continue to grow and benefit from global trade.

Omar points out how duty drawback has been a significant advantage for companies who have worked with WTCKY for training and advice.  WTCKY was able to a company almost $250,000 in duty drawback.  Programs are in place to help companies who will take the step to contact the World Trade Center Kentucky and discuss their specific situations.

Tim mentions how leveraging Foreign Trade Zones is a great way to allow a US importer to bring in product and later export it, while mitigating the exposure to various duty, fees and other expenses.  The WTCKY had an extensive interview with Miguel Zamora, VP of the Louisville Riverport Authority, including Foreign Trade Zone #29, in Episode 11 of the podcast.

Tim loves it when a UPS client, or prospective client, invites them in to do a whiteboard session detailing their supply chain and providing UPS the opportunity to help them to make it more efficient and potentially save significant costs along the way.

Omar and the UPS team close out the episode with some final words of advice.

 

To Contact Ryan Zehring:

Email:  rdzehring@ups.com

Website: https://www.ups.com/us/en/supplychain/Home.page

 

Upcoming WTCKY EVENTS:

• 08/22/24 – Trade Chat: EU Calling! (Video Discussion)
• 10/12/24 – Global Trade Mission 2004 – Dubai, UAE

 

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