Don’t Let Customs Issues Exacerbate an AOG situation

Wouldn’t it be nice if you could choose the location of your next AOG emergency, so you could ensure that urgently needed parts wouldn’t get bogged down by a cumbersome customs process?  In many instances, carefully crafted AOG logistics plans have been waylaid by unforeseen customs mishaps, resulting in delays ranging from a few hours to a few weeks.  The reasons for customs delays usually fall into one of two categories:  Either the shipment arrived at its destination country without the proper paperwork and documentation or, in some countries, the customs procedure is extremely difficult to maneuver, with layers of review necessary before a product is cleared for entry.

As Abdol Moabery, chief executive officer of commercial aerospace company GA Telesis, LLC noted in a panel discussion at the recent MRO Americas conference in Dallas, “compliance is a nightmare.”  He went on to note that in China, compliance mandates can vary from town to town, with each locality authorized to impose fines and penalties as it sees fit.

This sentiment was echoed by Jack Arehart, president of MRO Services, Delta TechOps at Delta Air Lines who also spoke at the MRO Americas conference.  “The biggest thing we face is customs duties and regulations and their variability around the world,” he noted.  “It’s not uncommon to find AOG parts held up for some minor customs issue, and you’re having to cancel flights or ground aircraft.”

While the threat of a customs mishap can never be eliminated entirely, there are steps an AOG service provider can take to minimize the risk of an urgent shipment getting stuck.  Among the options:

Get your paperwork in order

A shipper has a role to play in preparing required paperwork and documentation.  An important first step is to make sure the forwarder or broker has the necessary Power of Attorney in place to facilitate the import/export process.  With regard to actual document preparation, in general, the more detail a shipper can provide about a shipment, the lower the risk of a flag being raised by a diligent customs agent.  Key pieces of information necessary to fully complete a commercial invoice should include, at minimum:

• A complete and accurate description of the individual contents of the shipment
• The value of each individual line item in the shipment
• Manufacturer’s parts numbers and serial numbers for all line items
• Proper units of issue associated with the material
• Correct country of origin for each item listed on the commercial invoice
• Correct name and address of both the exporter and importer of the material

In addition, a manufacturer’s affidavit is typically required in the U.S. customs clearance process. The affidavit, if properly utilized, can often result in the reduction of duties associated with the import.

Detailed information will help ensure accurate and thorough completion of all required customs forms.  In addition, detailed information will help with identification of the proper tariff classification code.  This in turn will identify any additional steps in the customs process.  For example, if a tariff classification code indicates that a shipment falls within the scope of International Traffic in Arms Regulations (ITAR), a special permit may be required before the part can leave the U.S.  Good recordkeeping and documentation are critical to customs preparation, so you are not blindsided when your urgent AOG shipment arrives.

Take advantage of technology

A surprising number of AOG shops have yet to fully integrate a technology system into their operations.  And given the number of affordable – and customizable – options now available, there’s really no excuse, especially given the benefits.  For one thing, with a technology system in place, much of the information required for customs documentation can be retrieved with the push of a few buttons.  And, the risk of error is greatly reduced.  In addition, an AOG manager can have immediate access to all customs requirements for the country to which its AOG shipment is headed.

Businesses should also be aware that a growing number of governments now mandate electronic pre-filing of all customs documentation.  In the U.S., the Automated Commercial Environment (ACE) is now mandatory and all shippers are required to submit data via this single window filing system.  Canada is also on track to have its Single Window Initiative in place in the coming months.

Technology can have a transformative impact on AOG operations, especially in preparing customs documentation and ensuring on-time filings and duty payments.

Use local assistance

When seconds matter, an operator can’t afford to have an AOG part stuck in a queue waiting to clear customs.   In some instances, it makes sense to  enlist a local broker and courier for expedited customs clearance and transportation.  The locals speak the language, understand regional transportation issues, know the customs process, and in many instances, have relationships with customs personnel.

Use an experienced logistics provider

This may seem logical, but I’m always surprised to find AOG managers who select their logistics provider based on advertising, or because “that’s who we’ve always used.”  And some of these same managers wonder why their shipments routinely have problems with customs!  The fact is, not every logistics provider has the expertise to ensure a seamless customs process.  And certainly, most don’t have expertise that extends globally.  So it’s critically important to take the time to do your research and find a provider with the level of expertise that meets your needs.

For example, there are specific regulations in the U.S. tariff code that allow U.S. carriers to import aircraft parts that were used abroad without a formal declaration or entry.  This little-known provision, if properly utilized, can result in significant duty savings and reduced merchandise processing fees.  Make sure you choose a provider that is knowledgeable about these provisions, and can ensure you take full advantage.

Look for innovation in your logistics provider

Tremendous innovation has taken hold within the logistics industry in recent years, and providers are able to offer services that were simply unimaginable as recently as 3 or 4 years ago.  With regard to customs clearance, a creative logistics provider might craft a transit plan that avoids airports with notoriously inefficient customs processes, or that lands at a less-busy airport and then provides an expedited ground solution for last mile service.  Or, it might make sense for an AOG part to be consolidated with other shipments headed to the same destination.  The consolidated larger shipment can move as a single shipment and then clear customs as individual transactions.  After clearing customs, the shipment can then be broken down for further distribution.  A hybrid comat/revenue shipment is another consideration for expedited or AOG movement.  In the end, choose a provider that is innovative and creative and who will go the extra mile to meet your logistics needs.

Make sure your logistics provider has “trusted trader” status

Many governments offer programs that allow expedited clearance to trade community members that meet rigid security standards and certify the safety of their supply chains.  In the U.S., shippers participate in the Customs Trade Partnership Against Terrorism program – C-TPAT.  And similar initiatives are in place elsewhere around the world: Canada Border Services Agency administers the “Partners in Protection” program, the European Union has its “Authorized Economic Operator” program and the Mexican government offers the “New Certified Companies Scheme (NEEC).”  Not only do businesses that participate in these programs benefit from expedited border clearance processes, but they establish themselves as legitimate, government-certified members of the trade community.

Time is of the essence in the AOG industry, with the cost meter constantly running for a delayed or grounded aircraft.  AOG managers work tirelessly to have parts identified and on their way as quickly as possible.  But every international AOG shipment – every single one – must make a trip through a local customs clearance process.  You can’t, unfortunately, choose where your next AOG emergency is going to happen.  But with a little advance planning, an AOG manager can minimize the risk of a customs snafu.