A guide to understanding how the two most frequently used methods of goods flow management in warehouses and companies work

The Fifo and Lifo methods are two goods flow management systems that are widely used in warehouses and companies. Both methods are used to keep track of the order in which goods arrive and leave, but the approaches differ in the order in which they are taken into consideration.

In this article, we will explain in detail what Fifo and Lifo are and how they differ.

The Fifo method

Il metodo Fifo, letteralmente First In, First Out (ovvero “primo ad entrare, primo ad uscire”), è un sistema di gestione dei flussi e permette che le merci che entrano per prime nel magazzino siano anche le prime ad essere prese in considerazione per la vendita. Pertanto, le merci che sono state in magazzino più a lungo vengono vendute per prime, ottenendo così una buona rotazione delle scorte. Questo sistema, che tiene conto dell’ordine cronologico di arrivo della merce, è particolarmente indicato per prodotti alimentari e per merci soggette a scadenze, come ad esempio farmaci o cosmetici.

The Fifo method, literally First In, First Out, is a flow management system and allows the goods that enter the warehouse first to be also the first to be considered for sale. Therefore, the goods that have been in the warehouse the longest are sold first, thus achieving good stock rotation. This system, which takes into account the chronological order of arrival of goods, is particularly suitable for foodstuffs and goods subject to expiry dates, such as medicines or cosmetics.

Advantages and disadvantages of the Fifo method

The advantages and disadvantages of the Fifo method include:

Advantages

• Assesses inventory accurately. This method accurately evaluates the costs of the goods sold and the remaining stock.
• Avoids expiry of goods. Goods are sold in a chronological order, so the oldest goods are sold first and the risk of goods expiring is avoided.
• Reduces losses. Due to this method, the oldest goods are used first, thus avoiding the risk of unsold goods.

Disadvantages

• Increases the cost of goods. The cost of goods sold is calculated on the basis of the cost of the oldest goods, which may be higher than the cost of the newest goods.
• May cause a distortion of results. The Fifo method could lead to a distortion of results in case of fluctuations in the price of goods.
• It has a medium to high management difficulty. In order to avoid errors in the valuation of goods, this method requires very careful management of inventories and stock movements.

The Lifo method

The Lifo method, literally Last In, First Out, in contrast to the Fifo method, holds that the goods that enter the warehouse last are then the first to be considered for sale. This method can be advantageous when product prices tend to decrease over time, as the cost of goods remaining in the warehouse will be priced lower, which will have a positive impact on the company’s profits. The system is particularly suitable for clothes or electronic products, which have a value that decreases rapidly over time.

Advantages and disadvantages of the Lifo method

The advantages and disadvantages of the Lifo method include:

Advantages

• It allows a reduction in taxation. This method can reduce the company’s taxable income and consequently the taxes to be paid.
• It has an effective correspondence between cost and revenue. The Lifo system more accurately reflects the trend in the cost of goods over time, since the latest is always the one with the highest cost (due to inflation or price changes).

Disadvantages

• The value of inventories is distorted. This happens because, with the Lifo method, goods remain in stock for a long time, resulting in a loss of value.
• It has a high accounting complexity. The constant monitoring of inventories and costs can create accounting complexity for the company, especially when there are a lot of movements.
• It is not available for all types of business. In the case of businesses that offer services and do not have a stock of goods, the Lifo method may not be applicable.

What are the main differences between Fifo and Lifo?

Both the Fifo and the Lifo method can have a significant effect on the valuation of inventory and the determination of the cost of goods sold.

In general, the Fifo method tends to increase the inventory value and reduce the cost of goods sold, while the Lifo method tends to have the opposite effect. Therefore, it is essential to choose the method best suited to the company’s needs and keep it constant over time to ensure proper management of goods.

Examples of calculation of the Fifo and Lifo methods

A practical calculation example is the best way to understand the meaning and differences between the two methods.

Let us assume that a company purchases:

• Lot A on 01/01/2023: 200 pieces at EUR 2 each;
• Lot B on 01/02/2023: 200 pieces at EUR 3 each;
• Lot C on 01/03/2023: 200 pieces at 4 euros each.

Out of a total of 600 pieces, it is assumed that 400 pieces were sold. The stock is therefore reduced to 200 pieces.

Is it possible to determine the value of the remaining pieces, taking into account the various costs incurred by the company?

Using the Fifo method, the remainder is valued with the prices of the lots that arrived last, in this case 4 euros.

Inventory value = 4 x 200 = 800 euros

Using the Lifo method, on the other hand, the remainder is valued with the oldest prices, those of the first purchases of the year, in this case 2 euros.

Inventory value = 2 x 200 = 400 euros

In this particular case, prices have trended upwards over time, so the Lifo method leads to an underestimation of inventories. The Fifo method, on the other hand, leads to an inventory calculation closer to the last costs.

Do you have doubts, questions, or simply wish to receive more information? Contact us, and we will be at your complete disposal.

We have chosen to join the initiative proposed by @WelfareCare dedicated to the prevention of breast cancer.

Women who live in the municipality where the event will be held and who meet the necessary requirements, will be able to have free mammograms and ultrasounds with immediate communication of the report.

The initiative is dedicated to women not included in screening programmes* and allows for free diagnostic tests.

Reservations will be available on the welfarecare.org website closer to the date of the event.

The official date will be announced shortly.

Find out more about the initiative on welfarecare.org and on their social channels!

*Age ranges may vary according to regional health guidelines.

#welfarecare #prevention #socialinitiatives #healthandwellness #breastcancer #womenpower #supportwomen

#breastcancerprevention

Cross docking is a supply chain technique to improve warehouse logistics management. This distribution strategy involves the immediate processing and distribution of goods as soon as they arrive from the supplier, without them being handled and stored in the warehouse. In other words, the goods are unloaded from the means of transport and, instead of being stored, are immediately sorted to another vehicle prepared for transport to the point of sale or directly to the end customer. The warehouse thus becomes a mere transit point.

The cross docking logistics method, therefore, exists to improve the efficiency of the supply chains and eliminate temporary storage: goods are transferred from the point of departure directly to the shipping point without the need to go through intermediate storage. This process reduces inventory management costs and accelerates the speed of procurement. In addition, the cross docking technique makes it possible to reduce the risk of damage to goods and increase the quality of the service offered to the end customer, also thanks to the speed of product delivery.

This logistics system is mainly used in the large-scale organised distribution of goods, such as the food and e-commerce sectors, where speed of delivery and cost reduction are key aspects of a company’s success.

Cross Docking and Logistics

Logistics – a set of activities aimed at the strategic and operational management of material, information and service flows – also deals with all activities related to supply chain management, including transport, warehousing, order processing, inventory management, distribution and after-sales.

As cross docking is a logistics technique that minimises the time taken to handle goods and thus the associated costs, it is also part of the lean logistics strategy, the supply chain management philosophy that aims to eliminate waste and improve the efficiency of the entire process. This strategy focuses on identifying problems, on removing unnecessary activities, and on creating smoother and more integrated workflows.

To apply lean logistics to cross docking, it is thus necessary to optimise workflows through targeted planning and coordination. This includes effective management of vehicle routes, careful planning of transfer times and the setting up of a storage and retrieval system capable of reducing product waiting times.

Furthermore, lean logistics requires the reduction of waste at every stage of the cross docking process, such as the elimination of excess inventory or the reduction of waiting times for trucks. This helps to ensure a consistent and efficient workflow that maximises resource utilisation and minimises downtime.

The Cross Docking System

The cross docking system, as we have seen, can be an effective and optimal tool, but it can only work at its best if the steps of the optimisation process are followed in detail.

Generally, the cross docking steps are as follows:

1. Collection of goods: goods from different suppliers are collected and transported to the collection centre (warehouse).
2. Sorting and checking: incoming products must first be sorted according to their destination, and then be checked to ensure that they have no anomalies and correspond to the order description.
3. Order preparation: depending on the different requirements, the outgoing order is prepared (picking) for the arrival of the means of transport.
4. Order loading: depending on the destination, the goods are loaded onto the various means of transport.
5. Truck departure: the trucks leave the central warehouse and drive to the final destination.

These steps may vary slightly depending on the type of cross docking system used and the type of goods transported.

Example of Cross Docking

A concrete example of cross docking could be that of a large clothing company that receives orders from its shops located in different parts of the country. In this case, the goods are delivered to the company’s central warehouse, where they are sorted and divided according to the needs of the individual shops that require them. The goods are therefore not stored long-term in the collection centre, but they are moved immediately by truck or van to the requesting shops.

Find out how cross docking could help you improve your supply chain. Click here to contact one of our operators: we are at your disposal.

CPT, literally “Carriage Paid To” is one of the clauses in international sales contracts and is intended to specify that the seller is solely responsible for the shipment of the goods and their transportation.

By “transportation” the term CPT means the journey from the place of departure to the carrier – a third party contractually obliged to move things or people from one place to another – who is responsible for transporting the goods to the destination agreed with the buyer.

Developed by the International Chamber of Commerce (ICC), the organisation that represents an international business, the CPT contract term is part of the ICC Incoterms, a set of international transport rules that define the obligations and rights of parties to an agreement for the international sale and purchase of goods.

CPT yield: who pays?

The CPT clause, as we have seen before, indicates the seller’s obligation to pay the cost of transportation to the destination agreed with the buyer. However, once the carrier receives the goods, the risks and liability for any damage or loss automatically pass to the buyer.

The clause generally covers the main transport costs but does not include additional expenses such as insurance fees or import taxes. Nevertheless, these additional expenses can be included in advance in the negotiation between buyer and seller.

Obligations of seller and buyer

Now let’s look in detail at the specific obligations of the seller and the buyer. Over the years, the International Chamber of Commerce has developed rules and guidelines for the international sale and purchase of movable goods, known as the ICC Rules for the International Sale and Purchase of Goods (ICC Incoterms), which were updated in 2020 and entered into force on 1 January of the same year.

The Incoterms Rules, which contain the CPT Incoterms within them, are used to standardise international trade and to minimise possible disputes between the parties involved. That is why the CPT Incoterms establish unambiguous perimeters as to which obligations are the sellers’ and which are the buyers’.

Seller’s Obligations:

• Conclusion of the contract of carriage of the goods to the place of destination;
• delivery of the goods to the designated carrier or freight forwarder by bearing all costs necessary to transport the goods to the agreed place of destination;
• bearing the risk of loss of or damage to the goods until the carrier or forwarder receives them;
• export customs clearance (where applicable) at the buyer’s own expense;
• updates the buyer on the status of delivery of the goods to the carrier or forwarding agent;
• provides the buyer with the transport document for commercial usage and, if required, with the information necessary to insure the goods.

Obligations of the buyer:

• Taking delivery of the goods at the agreed place of destination and bearing the risks from the moment the carrier or forwarder receives the goods;
• payment of the costs of unloading the goods at the place of destination if they are not part of the cost of transport paid by the seller;
• compliance with customs formalities for importation, bearing the relevant and possible costs.

Which are the differences between CPT and DAP?

DAP, literally Delivered At Place, is also, like CPT, a term used in international trade to define a mode of delivery of goods.

The main difference between CPT and DAP lies in the degree of responsibility of the seller and the buyer during the transport of the goods.

Unlike in the CPT clause, where the seller is responsible for the delivery of the goods until the agreed destination carrier receives them, in the DAP clause, the seller is responsible for the delivery of the goods to the agreed final destination and is obliged to cover all transport costs, including import and customs fees.

Do you have questions, doubts or would like more information? Contact us now: we are at your disposal.

“Free port” and “assigned port” are terms easily encountered in the world of trade and shipping. But what is their meaning? What are the differences between one and the other? In this article, we investigate all the basic aspects related to these two terms and the implications they have for your shipping.

What does assigned port mean?

The term “free port” refers to a shipment in which the seller is responsible for paying shipping costs until the goods arrive at their destination. If we are talking about international shipments, we can refer to Incoterms 2020 and link this wording to the DDP (Delivered Duty Paid) clause.

In other words, the seller assumes all the risks and costs associated with shipping the goods:

– arranging the transportation of the goods

– verifying that the packaging of the goods is adequate and correct for transportation

– paying all costs associated with the transportation itself (including insurance costs).

Once the goods arrive at their destination, responsibility shifts to the consignee, who is responsible for any damage or loss that occurs after the goods have been delivered to his or her address.

What does assigned port mean?

Instead, “assigned port” refers to a type of shipment in which the consignee must assume responsibility for the goods. He or she will therefore have to assume all the risks and pay all the shipping costs, from departure to arrival at the destination.

In this case, the buyer will then have to:

– arrange for the transportation of the goods

– pay all costs associated with the transportation itself

– ensure that the goods are properly packed for transport.

If one moves in the dimension of international trade one must refer to the Incoterm EXW (Ex Work).

Who pays for the transportation?

Who pays for the transportation is precisely the differentiating issue between free port and assigned port, in the world of logistics. In the case of free port, it is the seller who bears the costs associated with shipping the goods, while in the case of assigned port, it is the buyer’s burden. In any case, this type of choice always depends on the agreements between the parties.

Ordinary shipping and COD shipping

For those outside the industry, it is more common to encounter the terms “ordinary shipping” and “COD shipping.” In ordinary shipping, payment is made before the goods are shipped, while in COD shipping, payment is made upon delivery. However, these two terms are not assimilated with the terms being discussed in this article.

For this reason, it is important for sellers and buyers to be aware of the implications of these terms before agreeing to a transaction. Making sure you have a clear understanding of shipping terms can help avoid confusion or problems during the shipping process.

If you have any concerns or questions about this, you can refer to us: contact us!

What is the Bill of Lading?

The Bill of Lading (B/L) is a basic document of the transportation industry, used in domestic and international shipping.

The Bill of Lading certifies:

• The boarding of the goods in a specific ship at a specific port.
• The carrier taking over of the shipment of that cargo to a predetermined destination port.

The carrier takes responsibility for delivering the cargo in good condition.

According to the Navigation Code, the Bill of Lading, signed by both parties, is a binding contract with obligations and conditions stated on the back of the document, which has several functions:

• It constitutes proof of the agreement between the parties: carrier and shipper.
• It is valid as a cargo receipt.
• It guarantees the existence and nature of the goods described in the contract of carriage.
• It gives the person in possession of the original bill of lading also possession of the goods and thus the right to collect them at destination and the possibility of disposing of them for transfer to third parties by endorsement.
• It allows goods to be sent to multiple recipients by creating as many delivery orders as there are recipients.

The Bill of Lading is, therefore, a negotiable, representative of the goods and fractionable title.

Bill of Lading: who issues it?

The Bill of Lading is issued by the shipping company, in three originals, normally distributed as follows:

• One copy remains with the shipper as proof of carriage or in case of dispute.
• One copy to the carrier for handling the cargo during transport.
• One copy to the consignee to collect the goods at the port of arrival.

The B/L therefore is sent by the company (or the issuer) to the rightful claimant (sender), who will in turn forward it to the consignee of the goods only once the consignee has proceeded with payment.

There are cases, however, where a full set (3/3 originals) is required for a bank negotiation or at the express request of the supplier of the goods, and in special cases a larger number may be issued.

The bill of lading can be:

• Nominative: the name of the person who will collect the goods at the port of destination is indicated in the document.
• Bearer: the document does not identify the owner of the goods transported.

In both cases, therefore, the goods can be picked up only upon delivery of the bill of lading, and if the original is lost, the recipient may be denied delivery. Once one of the originals is used, the remaining two lose their validity (except for special constraints).

How to fill out a Bill of Lading

The bill of lading must be completed in its entirety, mandatorily including:

• Name and address of the shipper (or forwarder), i.e., the sender of the goods.
• Name and address of the carrier, i.e., the person in charge of the transport.
• Name of the recipient of the goods if the B/L is nominative.
• Description of the goods:
  • Nature, quality, and quantity of the items sent.
  • Number of packages and weight.
  • Value and conditions of return.
• Name of the ship on which the goods are loaded.
• Exact indication of the port of departure.
• Exact indication of the port of arrival.
• Indication of any ports of transshipment (transhipment).
• Date of departure of the ship (day, month, and year).

Another fundamental element that must be present on the Bill of Lading is the annotation “goods on board” dated and signed by the captain of the ship. If not, the document would have no value as a bill of lading but would become a simple receipt.

Bill of Lading: some typologies

In this area of mandatory documents, there are many details and shades that bring with them specific terminologies. Let us look at the main ones together.

Master Bill of Lading

The Master Bill of Lading (MBL) is a document used in maritime transport issued by the carrier, i.e. the shipping company, to the person who entrusted it with the cargo:

• To the exporter: the sender, who also organises the forwarding.
• To the shipper: if the exporter has entrusted the shipment to an intermediary who takes care of it on his behalf.

The purpose of the Master Bill of Lading is therefore to certify the taking-over of goods pertaining to multiple shipments. This document can be issued for shipments:

• FCL (Full Container Load): when the container is filled by a single shipper or loaded with goods all for the same consignee.
• LCL (Less than Container Load): in the case where a container contains several loads from different shippers with several consignees.

This transport document is not significant for either the exporter or the recipient, as both will refer to the bill of lading for the specific shipment, issued for them by the shipper.

House Bill of Lading

The House Bill of Lading (HBL), therefore, is always consequential to the Master Bill of Lading, or rather, to the presence of a figure intermediating the forwarding, the shipper. This document, in fact, is issued by the shipper for the benefit of the exporter as a receipt for taking charge of the goods and usually contains:

• Exporter’s details.
• Recipient’s details.
• Shipped cargo.
• Terms of payment.
• Shipper’s contact details.

Clean Bill of Lading

This is a characteristic of any bill of lading: it must be clean, meaning that it must not contain reservations, indications about the condition of the goods such as damage to packaging, goods, seals, etc.

Telex Release

In this case, the 3 original copies of the Bill of Lading are printed and stored in the home office of the shipping company. With the approval of all parties, the shipper authorizes the shipping company to “destroy” the set of originals and do a so-called “telex release” with a digital copy of the policy. This saves the cost of the express courier to physically send the original policies to the recipient, and most importantly, there is no risk of losing the originals.

Express Release

Once the Bill of Lading is confirmed in all its details by the shipper, the printing of the set of 3 originals is not done, as is usually the case, but only copies with also digital validity are produced. Obviously in this case there must be maximum trust between the parties, as there is no possibility of having control over the release of the goods at destination. The advantage is that it saves both the cost of printing the original set and sending it by express courier.

Through Bill of Lading

“Through Bill of Lading” means a direct or cumulative policy and is no longer used; it could be issued in the case of a transport performed by different modes by several carriers or when the place of pick-up or drop-off of the goods was different from the port of destination. In this case each ocean carrier took responsibility only for the section under its jurisdiction.

Import and export regulations in China and the customs procedures required can cause problems for Italian companies that have decided to trade goods with the Chinese market. Let’s take a look at some useful information for shipping to and from China.

Exporting to China: Certifications and Customs Clearance

Exporting goods to China involves complex bureaucracy. First of all, before exporting to the Chinese territory, you must verify if the product in question belongs to either of the two categories that require specific certifications managed by the CNCA (Certification and Accreditation Administration of the People’s Republic of China):

• Voluntary certification, not compulsory for authorization to sell
• Compulsory Certification (CCC – China Compulsory Certification), mandatory for products to be marketed in China

At the same time, for customs clearance paperwork, companies exporting to China must rely on a local partner in possession of Foreign Trade Rights, i.e. the Foreign Trade License issued by the Chinese Ministry of Foreign Trade. These files are submitted to the General Administration of Customs (GAC) office, which classifies goods into categories:

• Prohibited, goods whose import/export is prohibited
• Restricted, goods subject to quotas or licenses
• Fully traded, goods with no special restrictions.

All Documentation Required for Export to China

Goods being exported to China must have a customs declaration (SAD) and the following documentation must be submitted:

• Commercial invoice, drawn up in English
• Certificate of Origin, certifying the origin of the goods
• Phytosanitary certificate, required for export of cultivated products
• Certificate or declaration of free sale of cosmetics, to certify that the products comply with Regulation (EC) No. 1223/2009

Moreover, the relevant transportation documents must be presented:

• Air Waybill, which is the document for transporting goods by air
• International waybill, which certifies that the shipment has been accepted for delivery
• Packing list, with information on volumes and exact quantities of packages
• Labels, the requirements of which vary depending on the goods, but must contain the product’s name and origin, and the contact details of the importer

Importing goods from China: formalities and documents

In order to import products and goods from China to EU member states, it is necessary to:

• File a customs declaration in the country you are importing into
• File a customs declaration to prove payment of duties and VAT.

Regarding documents, however, it is mandatory to be in possession of:

• Commercial Invoice, which is essential for import transactions from China. It must contain details of the producer, the buyer, the products and the economic value of the goods
• Packing List, containing all necessary cargo data
• Bill of Lading, certifying the conclusion of the transportation contract and granting the right to obtain the goods
• Certificate of Origin, which states the country of origin where the goods were manufactured or assembled.

Shipping to and from China: how much does it cost?

When importing or exporting goods to and from China, three taxes have to be considered:

• Customs duties, calculated on the basis of rates that vary depending on the type of goods and the origin of the exported goods
• VAT, whose rates are 9% or 13% depending on the category of the product. For imports into Italy, on the other hand, VAT is 22%
• Consumption tax, which varies from 1% to 40% depending on the type of goods. This tax applies to health-damaging products, such as alcohol and tobacco, luxury goods, cosmetics and high-end products, such as cars and motorbikes.

Shipping costs must be added to these taxes, which naturally vary depending on the type and quantity of goods shipped and the means of transportation used.

C.T.I.: experts in extra-European shipments

Importing/exporting to and from China requires attention and in-depth bureaucratic knowledge, which is why we recommend relying on expert forwarders for a seamless and simplified experience. We have specialized in the transport of goods to non-European countries and China for years now at C.T.I. International Forwarders, using our passion, care, and above all, experience and professionalism to provide complete and secure services for shipping containers to China.

Have you ever heard of Incoterms? In international trade, it is essential to establish agreements between the parties to clearly identify the time and place of delivery and to agree on the costs of transporting the goods. For this reason, the International Chamber of Commerce has officially recognized Incoterms: contractual clauses that precisely identify the division of responsibilities between seller and buyer as well as costs related to transport. Let’s see what Incoterms are in detail and what they are used for.

Incoterms: Unambiguous Rules for International Trade

Incoterms, short for International Commercial Terms, were defined in 1936 by the International Chamber of Commerce with the aim of facilitating international trade after the First World War. The multitude of contractual terms required harmonization and identification of shared rules to make trade between countries easier.

Over the years, the diversification of modes of transport and the increase in the number of countries involved in trade have made it necessary to continuously update Incoterms. Although the previous editions are still valid and applicable – as long as they are made explicit in the contract – today reference is made to the latest revision that came into effect on January 1^st, 2020.

What are Incoterms rules?

Incoterms are a set of contractual rules used in the field of importing/exporting, which unambiguously define the rights and obligations of the parties involved in the transaction. Specifically, these rules regulate who amongst the parties must:

• Stipulate the contract for the transportation of the goods and any required insurance up to the place of arrival;
• Take responsibility for the duties related to customs clearance.

Furthermore, Incoterms identify:

• The time and place in which the delivery takes place;
• The moment in which the risk of loss or damage is transferred from seller to buyer;
• The costs related to the delivery of the goods.

How many Incoterms are there and how are they classified?

The Incoterms 2020 include 11 terms, which are classified into 4 macro-groups based on the obligations that fall to the seller and the buyer:

• Group E: obligations fall predominantly on the buyer (EXW yield);
• Group F: main transportation is the buyer’s responsibility (FCA, FAS and FOB yields);
• Group C: transportation is the seller’s responsibility and the risks are the buyer’s responsibility (CPT, CIP, CFR and CIF yields);
• Group D: both transportation and risks are the seller’s responsibility (DAP, DPU and DDP).

Another classification of contract terms is also made according to the mode of transport:

• Incoterms applicable to all types of transport, i.e. EXW, FCA, CPT, CIP, DAP, DPU and DDP;
• Incoterms applicable only to maritime transport, i.e. FAS, FOB, CFR and CIF.

The importance of Incoterms in a sales contract

The use of Incoterms is optional, but they are now an essential element in commerce as they provide basic guidelines for importers, exporters, transporters, lawyers, and insurers involved in international trade.

If the parties choose to adopt these rules, it is good to remember that they must be referred to within the contract, stating the chosen term, the agreed location and the reference edition.

Ex Works is one of the terms codified in the Incoterms, i.e. international trade terms. These terms identify the rights and duties of the parties involved in the import/export, the division of transport costs between buyer and seller, as well as any risks of damage to or loss of goods. According to the International Chamber of Commerce, what is meant by Ex Works and what are the characteristics of this contractual clause? Let’s take a detailed look at all the relevant information.

Ex Works surrender term: what does it mean?

Ex Works (EXW) is the return term that minimizes the seller’s obligations, risks, and costs. Therefore, all obligations are borne by the buyer, who assumes all possible risks and bears all transport costs. That is why it is one of the most appreciated and used Incoterms in international buying and selling.

Ex Works: the Seller’s Obligations

Ex Works is therefore the most advantageous term of delivery for the seller, as they only have to comply with the following obligations:

• Provide the goods and the commercial invoice to the buyer
• Deliver the goods to the named place, without loading them onto the means of transport
• Provide the necessary documents and all information relevant to the movement of the goods

Moreover, only if explicitly requested is the seller responsible for assisting the buyer in obtaining the export license or other authorizations. Furthermore, sellers are not responsible for drawing up the transport contract, taking out the insurance or providing the delivery documents to the buyer.

Ex Works: The Buyer’s Obligations

If EXW is advantageous for the seller, it is less so for the buyer on whom most of the obligations fall. The buyer, in fact, must:

• Pay transport costs
• Obtain import/export licenses or other possible authorizations
• Take delivery of the goods
• Communicate the date and exact point of delivery of the goods
• Provide the seller with proof of taking delivery.

What are the risks and costs of the EXW term?

So far, we have seen how the obligations of the EXW term are divided, but what does this clause state in regards to costs and risks? Ex Works return term foresees that the seller bears any risk of damage to or loss of the goods up to the moment of delivery. Thereafter, it is the buyer who bears all risks.

On the other hand, as far as costs go, the seller is obliged to bear the costs of the goods up to the time of delivery, including those related to quality control, measuring, and counting. Meanwhile, the buyer bears all costs from the time of delivery onwards, including any inspection costs for import/export.

Critical issues related to Ex-works

The term “Ex-works” exerts a good impression on operators, however, especially sellers, should not underestimate some problematic aspects that may arise. In fact, it entails a loss of control over the formalities related to customs operations, increasing the risk of non-declaration of goods or difficulties in finding export customs documents. Moreover, the absence of a direct relationship between seller and carrier means that it is impossible to monitor the shipment.

For this reason, before choosing between the different Incoterms yields, it is a good idea to get properly informed. We at C.T.I. International Forwarder are always available to advise you on the best transport solution and assist you at every stage of import/export.

No more paper, technology is advancing even in the business sector: thanks to EDI (electronic data interchange), communication between all actors in the supply chain becomes smoother and more innovative. If you need to digitize the exchange of invoices, delivery notes, orders and transport documents, EDI is a valuable ally for companies working in the shipping industry. But what is it, how does it work, and what benefits could it bring to your business? Read on and we will provide you with all the relevant information.

What does electronic data interchange mean?

EDI -an acronym for Electronic Data Interchange– is an electronic system that enables the exchange of standardized data, automating inter-company communication processes. Indeed, in an increasingly digital world, commerce not only has to digitize buying and selling activities, but also make all related activities, such as the exchange of information and documents, more efficient. And in this context EDI is becoming increasingly established.

Thanks to this technology, small and large companies can share with customers and/or suppliers, in an immediate and dematerialized way, a wide range of information including:

• Purchase orders
• Invoices
• Bills
• Transport documents
• Payment confirmations
• Inventories
• Requests for quotations.

Here EDI takes on a key role within the supply chain, making communication faster, safer and up to date with the digitization of the industry.

How does EDI work?

Today, many companies use EDI to exchange business documents. But how does this process work? First, there are two types of EDI transmission:

• Point-to-point, i.e. via an Internet connection between two computers or systems;
• Value-added network (VAN), which involves the use of a third-party network that handles the data transmission.

Underlying both these modes of interchange are EDI standards, common languages for the creation of electronic documents that can be elaborated by the computer systems of any trading partner. Let us see in detail what these are.

What are EDI standards?

EDI standards define the rules for sending and interpreting various business transactions, such as the order in which information is to be presented and the mandatory data to be entered. It is therefore the standardized language that must be used to generate the documents to be exchanged between the parties involved.

There are different types of EDI standards, from the most generic and widespread to more specific ones, used for particular companies. Among the most common ones are:

• ANSI ASC X12, widespread in Canada and the USA;
• ODETTE, mainly used in Europe for the automotive sector;
• TRADACOMS, predominant in English distribution;
• UBL, the standard used by European PAs.

The benefits of electronic data interchange

EDI is a valuable ally in business management, as automating the exchange of documents brings a wide range of benefits to companies:

• High time savings;
• Reduction of management costs by up to 90 per cent;
• Reallocation of human resources to non-time-spending activities;
• Optimisation of commercial and administrative departments;
• Reduction of errors and increased security;
• Real-time alignment of the business situation between partners.

The use of EDI is becoming increasingly widespread, especially by companies that develop many regular transactions with several trading partners. This is why we at C.T.I. International Forwarder have also adopted this technology, so that we are always up to date with the technological innovations related to our sector.

Customs procedures, as we have also seen in an article on import/export to the article on import/export to the UK, are not so simple. The European Union has therefore decided to intervene to facilitate some of these operations. As of 1 January 2017, a new way of certifying preferential origin was introduced: the Registered Exporters (REX) system. Let’s see what this system is and how the registration procedure works.

What is the REX system?

The REX system is the new certification system used to manage the origin of goods, and consists of a mandatory document that must be attached to the commercial document. In a more specific way, this new system is a specific case of invoice declaration, which is based on the principle of self-certification by traders.

This system was introduced by the European Union on 1 January 2017, as part of the Generalised System of Preferences (GSP) and in line with preferential trade agreements between countries. The intention of this change was to bring a significant advantage within trade: with this process, traders can provide their personal details only once and obtain the REX code, an identification value that allows them to benefit from preferential treatment.

You should know that the REX system does not affect the rules for determining the origin of goods, but concerns the method used to obtain that declaration.

How to register in the REX system as an approved exporter?

The first step in issuing a certificate of preferential origin using the REX system is to become an approved exporter. The procedure is simple: apply to the competent territorial office, filling in the form that can be downloaded directly online from the REX Portal, of which we will talk about later.

You must indicate the following data on the application form:

• Name
• Address
• Exporter’s identification number
• Any additional contact details.

In addition, if you are a trader, or a manufacturer, you will have to list the goods intended to be exported.

Customs offices then proceed with the registration in the database and provide operators with an identification number to be applied on the origin declaration, which must be attached to the commercial document.

Registration through the REX Portal

Since 25 January 2021, the technical services of the European Commission have made available the Operator Portal for the REX system. This site allows the digital submission of the registration request to the database.

To access this service, economic operators must possess:

• An EORI (Economic Operator Registration and Identification) code, which is the unique registration and identification code of the operator.
• A consultative or executive authorisation, requested through MAU, the Single Authorisation Model.

Which countries apply the REX system?

In 2017, when the new REX model came into force, the use of this system was limited to countries benefiting from the Generalised System of Preferences (GSP), but it was soon progressively extended to all preferential trade agreements between the European Union and other countries.

If you need to ship your goods to countries that apply the REX system and need help, don’t hesitate to contact us. We at C.T.I. are at your side to guarantee you an efficient goods transport service in line with all your needs.

In an increasingly eco-conscious world, packaging waste management is a relevant issue. Hence, environmental labeling of packaging has been introduced-an important tool for providing customers with increasingly comprehensive information about a given product. In particular, this labeling is used to identify the materials of which the packaging is made and consequently the disposal directions. Let’s take a look together at the guidelines, obligations and what is new under the law.

Environmental labeling of packaging: what it is and what information it contains

How often does it happen that you don’t know where to throw away the packaging of a product? The consumer receives very little information regarding the proper disposal of packaging, and that’s where the environmental labeling of packaging intervenes. This is a label that is applied to packaging placed on the Italian market to facilitate collection and encourage recovery and recycling. The label, in fact, provides information on the exact composition of the packaging and its destination, so that disposal can be properly managed.

The environmental labeling of packaging, in fact, provides information about the packaging so as to properly manage disposal. Specifically, the following information is provided to the consumer:

• Type of packaging, indicated with a graphic or description
• Identification of the material used, indicated by a code established by Decision 97/129/EC
• Family to which the reference material belongs and indications of the type of collection.

Where should environmental labeling be placed?

Environmental labeling must be made on all packaging that can be separated manually. Accordingly, it should be on:

• Individual manually separable components, such as caps
• On the main body of the packaging
• On the component that already bears the label.

What happens when the size of the packaging does not allow for the inclusion of these markings? Fortunately, nowadays technology comes to our rescue with QR codes or applications aimed at providing all the necessary information.

Is environmental labeling mandatory? What the new legislation provides

If you are a producer, you should know that Legislative Decree 152/2006, containing the information of the packaging waste management activity, was amended by Legislative Decree of September 3, 2020, No. 116, introducing a number of new features. The two main ones concern:

• The obligation of environmental labeling of packaging, in the manner prescribed by UNI technical standards and in accordance with the determinations adopted by the EU
• The obligation on the part of producers to indicate the nature of the materials used for packaging in accordance with the provisions of Decision 97/129/EC (European reference legislation)

However, provision is made for the possibility of marketing, while stocks last, products without the labeling requirements, provided that they are already on the market or already provided with a label.

Environmental labeling of packaging: the CONAI guidelines.

However, the new provisions have raised some doubts and uncertainties. For this reason, CONAI (National Packaging Consortium) has provided guidelines and a tool (e-labeling) to provide companies with answers on interpretative doubts related to the new regulations and to guide operators toward the correct implementation.

The document thus represents a clarification regarding:

• The components on which environmental labeling is required
• The applicable UNI technical standards
• The mandatory and optional contents

If you have doubts, do not risk putting on the market a product that is not in line with the regulations, but consult the official CONAI Guidelines.

In logistics, the milk run system is a method of shipping goods used to transport stocks and raw materials from different suppliers to a single destination. It is an efficient logistics process, a real strategic tool for managing deliveries, and a great ally of warehouses that will never be overstocked or understocked.

Let’s see together what the term “milk run” means and how the application of this method works in logistics.

What does milk run mean? The “milk run” in contemporary logistics

Nowadays, in a world increasingly focused on production and consumption, the cost of transportation cannot be neglected. For this reason, it is crucial to optimize shipments by organizing trips in such a way as to fully load the vehicle. As a result, more and more companies are working by following the philosophy of full-truck shipping, but without understanding its limitations: on the one hand, the customer may be oversizing his supply needs, and on the other hand, the supplier may only be interested in filling the vehicle.

It is in this context that the milk run, a strategic alternative for replenishment logistics, is developed. To understand what this is all about, however, we need to take a trip back in time, more specifically to the 1960s in the United States. Families used to leave empty milk bottles outside the door, which were promptly refilled with fresh milk so that they would never be without or overstocked. This is the rationale behind the milk run: managing raw materials according to a useful method that allows the real needs of the stock to be met and delivery to be organized from a Just in Time perspective.

How the milk run process works in logistics

The milk run method in logistics allows companies specializing in transportation to make multiple pickups and deliveries to different suppliers. But how does such a process work?

First, to make transportation efficient and avoid loaded vehicles, milk run logistics requires planning that takes into consideration the route to be taken, different intermediate stops, and delivery times. This will help to assess the most efficient route, greatly reducing transportation costs.

Once the planning is defined, the milk run process comes into motion: the vehicle travels to the suppliers’ warehouses to pick up the load, which will then be transported to the various destination areas, according to the defined route and within the established delivery time.

What are the benefits of the milk run system?

The main goal of milk run logistics is to carry out a lean production process that keeps the number of inventories low, limiting waste. Not only that, with this system the benefits are many:

• It improves stock logistics, as having only the right amount of goods on hand saves space and optimizes storage;
• Involves a reduction in transportation costs because it is planned in such a way that one vehicle can pick up different loads and deposit them at the same end point, without each supplier shipping the goods on their own;
• Environmentally friendly because optimizing transportation has a major impact on reducing CO2 emissions.

For a business, therefore, implementing milk run management could bring several advantages in terms of economics and coordination of production resources, greatly improving its performance. If you think your business might require such an approach, contact us; we at C.T.I. International Forwarder are available to provide you with the most effective transportation solutions in line with your business.

In international trade, it can happen that goods, before reaching their destination, must go through customs clearance. For this process to take place safely and smoothly, it’s important to know how the procedure works, which documents are required and what costs are involved. In this article, we at C.T.I. International Forwarder will give you all the information you need for your business.

What does customs clearance mean?

While free trade between EU Member States has allowed goods to circulate freely, in non-European countries, such as China and the United States, products must first be cleared through customs. But what does this mean?

In the context of import/export, customs clearance is a process that involves a series of controls to release goods from customs detention. This ensures that the goods comply with the regulations of the destination country and have met all tax obligations. Once these checks have been passed, the goods are ready to cross the border.

Customs clearance process: how it works

The customs clearance process for import involves:

• The arrival of the goods at customs
• The payment of customs duties and taxes
• Control inspections of the goods and related documentation.

At the end of this process, if everything is in order, the goods are released and placed in the country of destination. On the other hand, there are no customs duties and taxes on exports.

The customs declaration: the document required for customs clearance

All customs clearance operations obligate the owner of the goods – or his representative – to lodge a customs declaration. This is a unilateral act manifesting the will to place imported or exported goods under a certain customs procedure. This declaration must be made on a special form, the so-called SAD (Single Administrative Document) and must contain the following information:

• The identity and domicile of the owner of the goods
• The place of origin, provenance, and destination
• The number of packages
• The full description indicating the quality, quantity, commercial designation, and customs classification (HS code)
• The value of the goods and the amount of duty.

As soon as the goods arrive at the customs office of destination, the document is presented to the customs authorities, who are responsible for identifying the customs control circuit of the goods, which can be:

• Green channel, indicating that the goods are compliant
• Yellow channel, indicating that the declaration must pass through a further documentary check
• Red channel, indicating that the goods are to be physically inspected.

Once the inspection is complete, if the goods are found to be compliant, the declaration is signed and officially becomes a ‘customs bill‘.

Customs clearance: how much does it cost?

As we stated above, the customs declaration is also the element that gives rise to the tax obligation. Based on Art. 8 paragraph 3 Legislative Decree 374/90, the determination of customs clearance costs is linked to the parameters relating to:

• The quantity of the goods declared
• Their nature
• Their customs origin
• Bilateral agreements between nations
• Their value.

However, it is not so uncommon to run into misunderstandings: it happens that the goods get stuck in customs and a penalty is charged for compliance or, in the worst case, that it is seized and/or destroyed.

That is why it is necessary to inform yourself properly and seek advice from an expert. Rely on us at C.T.I. International Forwarder: we can support your business, offering you comprehensive customs advice to better manage the customs clearance of your shipments, even in countries with more complex customs regimes and processes.

To plan the logistics of a trade fair, it is essential to take many factors into account and to precisely consider the steps to be taken. In fact, organizing these events in detail means to build a strategy to plan the transport and storage operations, which also includes establishing the timing, the most suitable means of transport and understanding the type of goods to be handled.

In recent years, we at C.T.I. International Forwarder have increasingly specialized in the transport of goods in the eyewear sector, including for trade fairs. To do this, we provide vehicles and specialized personnel to guarantee our customers a complete, accurate and personalized product pick-up and delivery service. In short, we take care of the complete logistics management: this is the key to a successful trade fair event.

Let’s look together at what is meant by ‘logistics management’ for events such as trade fairs and what are the most important steps to follow.

Managing trade fair logistics: what is it all about?

Logistics management is a supply chain process, which consists of planning and implementing the transport and storage of goods from the point of departure to the point of arrival, which in this specific case will be the trade fair venue.

Managing this activity in the best possible way ensures the correct handling of goods on time and reduces transport costs, for complete customer satisfaction. However, considering the duration of the process, it is necessary to deal with it in detail: from strategic planning to the supervision of each individual operation.

Logistics at an exhibition event: how to manage it

When organizing an exhibition event, logistics management plays a fundamental role. So it’s a good idea to analyze the main phases on which to focus your attention in order to ensure the success of the event.

Assessment of Technical and Design Requirements

The first step is the assessment of technical and design requirements. It starts with a discussion with the customer to understand together what the customer’s needs and objectives are, in order to offer a customized, fast and efficient service. In this way it is possible to accurately assess:

• The type of goods to be handled
• The most suitable means of transport
• The time required for delivery

Adoption of a logistics strategy

After assessing the technical and design requirements, a strategy is devised. In this phase, tactics must be adopted to organize and optimize distribution processes, with the goal of reducing losses, maximizing profits, and satisfying the customer.

Tracking and tracing all operations

The entire logistics management process is long and complex, which is why it is necessary to track all operations. This makes it possible to manage time schedules and, in the event of unforeseen events, to intervene promptly, without creating difficulties for the customer.

Supervision and Control

Sometimes the customer may require support in setting up the stands. To ensure an all-round service, we work with trusted partners who complete the set-up operations to a high standard, guaranteeing a complete job and maximum customer satisfaction.

We at C.T.I. International Forwarder take care of both public and private trade fairs, all over the world, even in the most difficult countries, thanks to a dense network of relationships and the experience and passion that characterizes our staff. If you need support, do not hesitate to contact us, we are here to offer you the best service for your business.

Since England’s exit from the European Union, the free circulation of goods to and from the UK has also changed. Today, importing and exporting to the UK can be more complicated than in the past. In fact, as of January 1^st 2022, a full border control regime will apply. Let’s look at what has changed since Brexit and all the useful information that you may need when importing/exporting to and from the UK.

Shipping to and from England: What’s new?

The trading economy between Italy and England is one of the most flourishing, but with the event of Brexit, shipping goods to and from the UK requires some extra precautions. While Britain’s former EU membership allowed it to enjoy all the benefits of the unified market, the situation has now changed.

In order to ship physical goods to and from the UK, you must now follow the procedure for shipping outside the EU, which involves:

– Completion of documents for customs procedures.

– The assignment of an identification code to the goods, the sender, and the consignee.

Exporting to England: What has changed with Brexit?

Exporting goods to England requires the submission of full customs declarations, which include:

– Invoice for export: this is the most important document for the customs clearance of goods. It should include the sales invoice number, the name of the sender and consignee, a detailed description of the goods and their Tariff Number (i.e. the customs code).

– Declaration of Free Export: a mandatory document for non-European shipments, certifying that the goods in question are not among those prohibited in the UK.

– EORI Code: a code identifying the economic entity that is to ship goods to the UK.

– Waybill in English: a document certifying that the goods have been dispatched and that sets out the contractual terms with the shipper, as well as the tracking code to monitor the shipment.

– Sender’s identity document and recipient’s contact details.

Importing goods from England: How it works after Brexit

In order to import goods from Britain to EU member countries, you need to:

• Obtain an EORI code.
• Submit an electronic declaration to customs in the state you are importing into. Alternatively, you can hire a customs agent to deal with this.
• File an entry summary declaration (ENS) at the customs office where the goods arrive. The document must contain all the necessary information related to the security of goods and persons.

Shipping to and from England: How much does it cost?

As far as costs are concerned, the EU and the UK have a free trade agreement that does not charge customs duties for importing goods to England in the following cases:

• The goods have European or English origins.
• The materials or workmanship come from a European or UK country.

Otherwise, customs duties must be paid if the total value of the goods is greater than £135.

On the other hand, regarding VAT, for the import of goods and subsequent supply of goods from England to an EU Member State, the applicable rate is that of the destination country.

C.T.I., experts in extra-European shipments

Importing and exporting to and from Great Britain is certainly more complicated than in the past, which is why it is a good idea to rely on expert forwarding agents. For many years now, C.T.I. International Forwarder has specialized in the transport of goods to non-European countries. With care, passion, and, above all, experience, and professionalism, we can offer you a complete and safe service for shipping your goods to the UK.

Intermodal transport is one of the main logistics areas that we deal with here at C.T.I. International Forwarder. It is a method of transferring goods that combines several means of transportation and is an interesting system for companies that want to improve the efficiency of their supply chain. Let’s take a detailed look at what intermodal transport is, how it works, and what its advantages are.

What is meant by intermodal freight transport?

The increase in international freight traffic that began in the early 1950s created the need for increasingly efficient transport solutions, standardizing long-distance journeys and minimizing the use of resources. Hence, intermodal transport is being increasingly implemented to achieve this goal.

According to EU Directive No. 92/106/EEC, intermodal transport is defined as the use of maritime or rail services that span a distance of more than 100 km and that are combined with road transportation at the beginning and end of the journey. Through this method it is therefore possible to optimize the loading and unloading of goods, which, being arranged in loading units such as containers, mobile crates, and semi-trailers, can be easily transferred to different means of transport.

The main characteristic of this type of transport is that the goods must be placed in a specific Intermodal Transport Unit (ITU), from which they are never moved until they reach their final destination. In this way, goods do not have to be handled during transshipment. Furthermore, intermodal transport induces one to consider transportation not as a sum of individual and autonomous activities, but as a global goods transfer process in the perspective of an integrated logistics chain.

Why choose intermodal transport? The advantages

The possibility of combining several means of transport, such as ships, trains, trucks, and planes, makes intermodal transport advantageous in many ways. Let’s take a look at the benefits it can offer:

– Efficiency: the intermodal system maximizes the benefits of the different means of transport used, such as the capacity of trains, the convenience of ships, the speed of planes or the flexibility of road transport.

– Convenience: the combined use of several means of transport makes it possible to optimize time and reduce the costs of transferring goods.

– Safety: the products, placed in dedicated loading units, do not have to be handled during shipment, as it is sufficient to transfer the specific ITU to another means of transport. This reduces the risk of damage.

– Control: intermodal transport involves precise planning of movements between the different vehicles, which allows for continuous tracking.

– Sustainability: intermodal transport is one of the most effective ways towards sustainable logistics. In fact, intramodality foresees the use of road transport only in the first and last mile of the entire transport operation, significantly reducing CO2 emissions.

The differences between intermodal, multimodal, and combined transport

In addition to the term ‘intermodal’, one often hears of multimodal and combined transport, but these are not synonyms. Multimodal transport simply intends a service that uses different means of transportation to deliver goods to their destination. Intermodal transport, on the other hand, indicates a specific type of multimodal transport that is carried out using a single load unit. Finally, combined transport is when the mode of transfer is mainly by rail or sea, limiting road transport as much as possible.

Intermodal transport at C.T.I.

At C.T.I. International Forwarder, thanks to a dense network of international relations and many years of experience in the logistics sector, we plan intermodal transport down to the smallest detail, choosing the safest, fastest, and most cost-effective modes. With competence, dedication, and passion, we strive to guarantee a complete service capable of satisfying all our customers’ needs each and every day.

Order picking is one of the most important steps in the order fulfilment process, but it is also one of the expensive as its costs typically amount to more than half of warehouse management costs. This is precisely why it is important to know how it works and how to make it more efficient. At C.T.I. International Forwarder, we have been doing warehouse order picking for many years, let’s take a look at what this concept is all about, how costs may be kept down, and some useful tips to improve business.

The meaning of ‘picking’ in logistics

Warehouse picking consists in the activity of picking, sorting, and distributing materials from one loading unit to others. Every day, customers order goods that are to be shipped, and the objective of warehouse picking is to group all the items in an order with precision, process them, and send them to the recipients.

A properly functioning picking process can act as an effective warehouse management and monitoring strategy, especially if it is efficiently integrated with other warehouse operations, such as:

• Material procurement
• Order preparation and dispatch processes
• Packaging and wrapping of goods
• Storage and depositing

How picking works

The picking activity consists of selecting a type of product according to the picking list. This list organizes and orders the gathering activity, giving useful information on the location of the goods in question, the warehouse layout, and the quantity required. Once the items on the list have been picked, they must be packed and packaged for dispatch.

Particularly when managing large, well-stocked warehouses, it is important that products are efficiently  positioned and organized so as to optimize productivity and reduce the onerous costs of warehouse picking.

Types of picking: manual and automated

Warehouse picking can be done in different ways, from the traditional, manual picking that sees the physical involvement of an operator, to the more innovative picking approach based on a fully automated system. Both types can be effective, however, depending on the need and size of the warehouse, one will bring more advantages than the other.

Manual Picking

Manual picking is a type of warehouse picking that involves an operator selecting and gathering the units of goods on the picking list. This method is subject to the physical limitations of the human body, which is why it is suitable for smaller warehouses.

Mainly, the task of a picker is to identify and select the products on the list, check for damage, pack and label the order. Finally, the picker compiles a series of documents necessary for filing the order.

Automated Picking

Automated picking, on the other hand, involves the use of advanced technology for the picking of goods. Thanks to digitization, this picking method makes it possible to efficiently cope with the criticalities of a warehouse and aids in improving productivity, optimizing time and reducing the risk of errors.

This solution requires a more significant investment than manual picking, but automated warehouses will be increasingly indispensable as we move into the future, especially considering the characteristics of today’s logistics: demanding, flexible and digitized.

How to improve your order picking

Order picking can exceed 60 percent of a warehouse’s operational costs, which is why it is necessary to be able to implement the activity as efficiently as possible, by adopting more and more technological systems, but also through small measures that can make a difference:

• Appropriate training for picking staff
• An optimization of the warehouse layout according to logical parameters
• Investing in the technologies, from warehouse software to innovative tools such as voice picking, which consists of a voice synthesis device capable of sending commands to the picker, indicating the route to be followed and the tasks to be performed.

Obtaining the status of preferential origin for your products is key for exporting companies that wish to take advantage of the benefits that can be obtained from this condition. In general, the origin of your products, i.e. their “economic nationality”, is a fundamental concept to understand when it comes to customs and duty rates as it influences the amount of taxes due upon entering a country and allows you to avoid possible penalties. Here is a detailed explanation of what “preferential origin” means.

What is preferential origin?

Preferential origin is a status granted to goods originating from certain countries and that have fulfilled certain criteria, granting these goods the right to preferential tariff treatment. This status allows the sender to obtain:

– A reduction or exemption of the amounts due for customs duties

– The abolition of quantitative bans or quotas

Declaring preferential origin is certainly an advantage to be exploited when exporting and/or importing, but it is a complex and delicate process. The rules for acquiring preferential origin in EU agreements are set out in Article 64 UNCRC and the Generalised System of Preferences (GSP), a non-reciprocal, non-discriminatory system through which developing countries can gain preferential access to EU markets.

In order to benefit from these preferential agreements, goods must meet specific requirements, which vary depending on the product and the individual agreements between the EU and each foreign country.

The conditions for determining preferential origin

One of the factors determining the preferential origin of a product is whether it has been produced with raw materials originating entirely from its country of production. If this is not the case, to enjoy the benefits of preferential origin, goods must undergo sufficient working or processing in said country.

Alternatively, preferential origin can be obtained if the product meets the “added value” criterion, which can be reached through two possible means:

– if the value of the non-originating components used to make the product is lower than a certain percentage, which is established according to the invoice price of the product

– if the value of the non-originating components used to make the product is higher than the previously mentioned percentage, but remains lower than the value of the originating components.

For each type origin protocol there is a specific list of rules, i.e. all the working operations that must be considered sufficient, and that must be followed in order to confer preferential origin to the product. In addition, all the processes that would immediately disqualify a product from obtaining preferential certification are also listed.

Declaration of preferential origin: certificates and standards

Once you have verified that you meet the necessary conditions to obtain preferential origin status, you can proceed with your application. Until March 2022, preferential origin was guaranteed by the EUR1 pre-validation form for relations between the EU and countries with specific trade agreements. Since April, however, the European Customs Agency has decided that the pre-validation procedure is no longer necessary, favouring a digitalised procedure via the AIDA portal for requesting certificates. This solution aims to streamline the process and improve control.

Another simple solution is self-certification by the exporter, but this possibility is limited to goods with a maximum value of €6,000. Furthermore, this declaration must be completed according to specific wording provided by the customs authorities and presented with an original stamp and signature.

The regional convention on preferential PEM rules of origin

The regional Convention on Pan-Euro-Mediterranean (PEM) preferential rules of origin provides common rules of origin among more than 20 EU partner countries to facilitate trade in the pan-Euro-Mediterranean free trade area. Since 2012, a modernisation process has been taking place and some countries have decided to temporarily apply the revised rules. As of September 1^st, 2021, these changes are applicable in trade between the EU and Albania, the Faroe Islands, Georgia, Iceland, Jordan, Norway, Switzerland, Palestine, and North Macedonia.

Over the years, here at C. T. I. International Forwarder our specialization in the integrated logistics sector has increased as we consistently adapt our approach to ensure that all our customers’ needs are satisfied. But what exactly does this type of logistics entail? This concept is becoming increasingly widespread in the goods transportation sector. Let’s take a closer look at the definition of integrated logistics, how it works, and the advantages it can bring to companies.

What is integrated logistics?

Integrated logistics is an innovative process for planning, implementing and controlling all activities that constitute the transportation and flow of raw materials and semi-finished and finished products from their place of origin to the end customer. These processes include:

• Order management
• Stocking
• Warehouse management
• Shipments
• Goods tracking
• Returns management

In order to provide a complete overview of integrated logistics, it’s necessary to take a step back in time. Up until the 1960s, traditional logistics, that is, all activities required to move a product from the supplier to the consumer, were carried out with a fragmented approach where divisions remained divided and were managed independently. In later years, this approach was replaced by an integrated system based on the strategic co-ordination of all management activities in order to make it more efficient, reduce time and costs, and better satisfy customer needs.

Integrated logistics: how it works

So how does integrated logistics work? First, integrated and flexible logistics require a high degree of digital maturity for all operations, those related to storage and dispatch, as well as the real-time tracking of goods.

To make this complicated system easier to understand, it can be divided into two streams:

– Physical flow, the operational aspect of logistics including procurement, production support, distribution, and eventual recovery;

– Information flow, related to on demand information, logistical planning phases, production schedules, and supply chains.

It is essential to optimize these flows to reach efficiency, profitability, and quality of service objectives, to satisfy new customer needs, and to be competitive in today’s market.

The benefits of integrated logistics

The integrated logistics system, thanks to the synergy that characterizes all phases of the process, creates a series of benefits for both companies and customers:

• Maximizing time and saving money
• Better use of human resources
• Management optimization, given the presence of a single unit to whom the entire process is entrusted
• Greater customization
• Increased competitiveness in the global market

Nowadays, in our fast-paced world, the concept of integrated logistics continues to adapt, changing and adjusting to the evolution of supply chain management, which is being characterized by the improvement of management flows and the collaboration amongst external players. In this context, integrated logistics takes on a new approach in which the company becomes part of a network of players who all work together to provide products and services that create added value for the end customer. And that’s how we work at C.T.I. International Forwarder, guaranteeing that those who rely on us receive a specialized, attentive, and tailor-made service.

Among the various problems triggered by the Coronavirus there are also those related to logistics, such as the shortage of containers worldwide.

This has consequences for both producers and distributors, causing both delays and increases in transport costs, so much so that the Financial Times has called it the biggest crisis since the beginning of shipments by container. This crisis was mainly caused by the pandemic and worsened by adverse events such as the Ever Given grounding, the closure of two Chinese ports, the port of Yantian for a Covid outbreak in May and that of Ningbo-Zhoushan in August for the same causes. These events, however, have only highlighted the preexisting problems as many ports are inefficient and cannot manage the traffic of modern ships, which are too large for the existing infrastructures. Furthermore, the flow is based on a delicate balance of timing to have intermodal flow without delays. The slippage of the arrival of ships leads to slowdowns along the entire chain.

Among the most congested ports are those of Karachi, with an average delay of 27 days (and peaks of almost 90 days), Fos Sur Mer (France) with 16 days, Charleston, Long Beach and Atlanta (USA) with an average of 25 days late, Santos (Brazil) and Tomakomai (Japan) with an average delay of 15 days. To make up for these delays, ships may decide to skip some ports along the route (so called “blank sailing”), resulting in a delay in the delivery of goods that had to be unloaded and loaded in that port, as the routes are “circular” and then the ship returns to the port on the next “lap”.

Furthermore, measures put in place everywhere to counter the pandemic have created further delays, due to closures, buffers to be presented and so on. Secondly, there is the increase in consumption, resulting in an increase in the supply of raw materials / goods. In addition to this, given the collapse of global trade during the lockdown, many shipowners have canceled hundreds of ship trips, both to save on empty trips and because they took advantage of it to refurbish ships, thus leaving empty containers in the ports of destination, without being able to bring them back to the places where they would be needed (in particular the China -> USA route which after the reopening saw a displacement of over 4 million TEUs from September to December, without them returning to China). Consequently, this lack of gaps has created an imbalance between supply and demand, causing freight costs to rise, which have reached record levels with average increases of 800% on all routes.

Over this time horizon, the greatest threat remains the closures due to the outbreaks of Covid, especially in China where stringent rules and maneuvers are implemented, creating greater uncertainty on the timing of resorption of delays and consequent return to normality both in terms of punctuality and costs.

Contact us

The subject is highly complex but we will try to provide a basic idea; for a closer look, the CTI staff will be at your full disposal.

Non preferential origin and preferential origin

The concept of “origin” has become important especially for consumer protection. In the customs and excise field, the origin of goods is a complex concept which is of fundamental importance: the exact identification of the origin of goods is essential for a proper settlement of the tax due and to avoid incurring penalties resulting from failure to observe restrictions on import and export.

Non-preferential origin

By “non-preferential origin” we mean, in accordance with the provisions of Community regulations, the place of production of a good or the place where it has undergone its most recent substantial transformation. It can be stated that, for non-preferential origin, it is sufficient (exceptions) that a commodity undergoes substantial transformation on the territory irrespective of any percentage of domestic or foreign commodity used in production. From a customs and excise point of view, it is commonly found in the change of customs heading (the first four digits) a sufficient activity to change the origin of the goods. Establishing the origin can be more complex for a product made in a country using imported raw materials or parts. In principle, it can be stated that all the activities of mere conservation of a product, or which are limited to changing the appearance of the goods (e.g. change of packaging, packing or box) can never be considered sufficient to confer the origin of the goods as they do not materially alter the commodity itself (the good is and remains as it is, albeit with external appearance, although different).

The certificate of origin issued by the competent Chamber of Commerce is the document certifying at international level that the goods have actually been produced (or have undergone “the ultimate substantial transformation”) in a particular country. Therefore, in the case where it is shown that the goods could not receive such a certification, the consequences, which may be of a criminal nature, relate solely to the person who made the declaration and requested that the certificate be issued, incurring in this case a “false declaration of origin”.

Production which, by its nature, must always be considered insufficient to confer the origin:

1. Handling intended to ensure the preservation of the products

2. Simple dusting, sifting, sorting, classifying, assortment, washing, reduction of pieces

3. Packaging changes, divisions or match meeting

4. The affixing of brands, labels or other distinguishing signs on products or their packaging

5. The simple assembly of parts of products to make up a finished product

6. The accumulation of two or more of the above listed operations

Preferential origin

For products imported from certain countries and meeting specific requirements, provision may be made for granting “preferential origin”, namely the granting of import duty benefits (reduction or exemption of duties, abolition of quantitative restrictions or with fixed quotas). Basically there is generally an agreement between two countries From a general point of view, a commodity, which does not meet the requirements to be considered “entirely obtained” in a given country, must be “sufficiently” processed to be considered “original”. The identification of the processes that are considered sufficient to grant origin is instead based on the origin protocols of the individual agreements signed by the EU with certain non-EU countries, as sometimes the rules may differ in themselves, even considerably.

If you would like to know more about it and know what CTI could do for you, ask us.

MIDO, the international optics, optometry and ophthalmology exhibition that will be in Rho Fiera Milano from April 30^th to May 2^nd 2022, is just around the corner. The eyewear show is organized by ANFAO, the Italian Association of Optical Goods Manufacturers, and we at C.T.I. International Forwarder are the first and only official forwarders to take part in the most important event for the industry.

MIDO is the most complete, fascinating, and avant-garde exhibition of the eyewear world. This event marks an important and exclusive opportunity for the major names in the optical industry to introduce their new products. However, it is also a space designed to discuss the trends of the future and create a network of shared knowledge and innovation. In this way, MIDO is a creative laboratory where participants can explore and test innovative projects. MIDO is an event not to be missed, whether you are a specialized professional in the business or are just looking for innovation and inspiration!

Over the last few years, our teams at C.T.I. International Forwarder have specialized in the transportation of products related to the eyewear sector. We provide vehicles and specialized personnel to guarantee our customers a complete, accurate and personalized package of product pick-up and delivery.

Come and visit us at MIDO, we will be at stand D16 in hall 24 for the whole duration of the fair. And, if you need to send your merchandise to the show, please don’t hesitate to contact us.

Groupage transport is a particular type of shipment that consists in combining goods ordered by different customers into a single transport operation. In order to efficiently carry out groupage transport, it is necessary to precisely follow process at all times, that is, reception, storage, order preparation and dispatch of the goods.

This activity has the potential to become rather complex. For this reason, to guarantee an efficient and safe groupage service here at C.T.I. International Forwarder, we put our competent operational staff at your disposal, who are dedicated to managing each operational phase with care, attention, and speed.

What is groupage transport in logistics?

Groupage transport is becoming increasingly popular in national and international trade. But what exactly is it? Groupage is a type of transport that consists in grouping and consolidating goods that have the same or similar origins and destinations so that a single means of transport is used.

When a customer needs to ship small consignments of goods that do not take up the entire space of the required vehicle, they can opt for groupage transport by purchasing individual truck lots or containers. The products are then grouped together with those of other senders and shipped in a single loading unit. This optimizes transport management and thus saves shipping costs.

Groupage is therefore the ideal solution for companies that do not have a high volume of shipments, which is often the case for the eyewear sector. CTI has specialized in this growing sector, becoming a point of reference for transportation to hard-to-reach countries, as we also offer our clients a complete service in customs assistance.

The stages of the groupage process

The groupage process consists of several stages that must be organized and managed in detail by professionals in order for the shipment to be a success:

• Collection of goods by pre-defined zones
• Consolidation of articles according to destinations
• Transfer of goods, by appropriate means of transport
• Sorting of the packages, which are then grouped according to destinations

Delivery to various destination areas

Shipper obligations for groupage transport

The shipper that relies on a groupage transport service must provide the carrier with all the necessary documents for the shipment, especially in the case of dangerous, perishable, or valuable goods. In addition, they must fill out information documentation for the carrier, including:

• Recipient’s delivery address
• Number of packages, weight, volume and maximum overall dimensions
• Name of recipient
• On-call hours and closing times of the institution or establishment of destination

Carrier obligations for groupage transport

Once the groupage service has been commissioned, the shipping company commits to dispatching the goods by the deadline set by the customer. However, as far as the provision of the service is concerned, the company is free to choose which routes and means of transport are to be used, as well as the itinerary to be followed. At C.T.I. International Forwarder, having operated in the shipping sector since 1997, we ensure precision and a speedy service thanks to state-of-the-art transportation and, above all, an expert team that studies the best solutions, predicting and preventing possible criticalities to guarantee a successful shipment, whatever the destination.