Small Differences, Big Impact

In our world of international logistics, we need to be aware and very sensitive to the different standards that exist in the world.

LWL039 Learning Metric

Those of us that work in the U.S.A. must be “bilingual” in order to think and act in terms of both the metric system and the “imperial” (“English”) system of weights and measures.

The graphic below is a real eye-opener showing how alone the U.S.A. is in world as it is one of only 3 countries that continue to use the “English” system of weights, measures, temperatures and speed. Even the English have switched to the metric system!

LWL039 Countries non Metric

But there are other, more subtle, differences between nations and trading blocks that we need to be aware of because they could cost us money!

Here are 2 small differences that you need to look out for!

Decimal Point vs. Comma

In the U.S.A., we would see this number 2.500 and say “two point five” or “two and a half”.

Europeans would say “two thousand five hundred”.

Europeans (among others!) and Americans switch the decimal point for a comma and vice versa.

If you are unaware of this, you could experience issues as we did on a recent import from Italy into the U.S.A.

FedEx was going to customs clear the below shipment for us showing a value of “200,000” Euros.

LWL039 EU Invoice

They interpreted the value as “two hundred thousand” euros, but the amount was really only “two hundred” euros (they carried the decimal point to the thousandths place as is typically done in procurement).

Based on the commodity, the import duty is 2.5% of the value of the merchandise.

The calculation to determine the import duty would have been:

1). convert the Euros to U.S. dollars: the value would have been 200,000 euros x 1.15 = $230,000.

2). pay 2.5% of the $230,000 as import duty…thus, $5,750!

Luckily, this shipment had another issue that required FedEx to contact us. They needed clarification regarding the type of metal used in the merchandise.

During that communication with FedEx, we were able to point out the true value of the merchandise.

Based on the real valuation, we needed to pay $5.75, not $5,570!

We have since put controls in place to better monitor the import duty amounts we pay on individual import shipments. If import duties exceed a specific amount from a given supplier, then we investigate and manually review the documentation.

Date Formats

This is another example of where the Americans have developed their own date syntax as compared with the rest of the world.

An American will see 7/04/2016 and know that he’ll be on vacation that day.
Of course, it’s July 4th…Independence Day!

Most of the rest of the world sees “April 7th”!

There are plenty of cases where this will certainly make a difference and we experienced one of them when our freight audit and payment company incorrectly audited invoices from our ocean carrier moving our products from Korea to the U.S.A.

The Bills of Lading showed the vessel sail date using the DD/MM/YY format, but our freight audit and payment company understood MM/DD/YY, as is typical for the U.S.A.

LWL039 EU Dates

In our case, we had negotiated lower rates beginning on July 1, but our freight audit and pay company interpreted the second Bill of Lading as having sailed on June 6, 2014 and, therefore, not eligible for the reduced rate.

The vessel actually sailed on July 6, 2014.

The decimal vs. comma and the date format are just 2 examples of the differences we face every day in our business. Your job is to be aware of these differences and be sure that you have controls in place to identify and properly handle exceptions.

Good luck!

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About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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