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PRESS COVERAGE Import costs cut The Globe and Mail Companies that bring products into Canada have recently found they can cut their import costs dramatically by using a new generation of do-it-yourself customs brokerage software. Philips Electronic Ltd. recently tried it – and liked it. The company had been paying $200,000 a year to independent brokers to fill out forms each time its goods came into Canada. Like many other companies, Philips didn't want to bother with the paperwork for the hundreds of different products it cleared through customs. Instead, it farmed out the job to outside brokers. But Philips purchased a software package that runs on a personal computer. By punching a few keys, the system tells staff members at Philips' Toronto headquarters how much duty to pay on the various types of goods it brings into the country. What's more, the software allows the company to file documents with Ottawa by transmitting the forms electronically over the phone lines – a procedure that reduces the amount of paper going back and forth. The result? "We've cut our brokerage bills by 60 per cent a year," said Max Persaud, corporate logistics manager for Philips. "And because there's been so much less paperwork, we downsized our own staff by three people." Philips bought its brokerage package from MSR Inc. of Toronto, a company that specializes in import and export software. MSR president Raj Manucha says there are about 10,000 companies in Canada that import more than $5 million worth of goods annually. These firms, he said, could obtain significant savings from customs software. Not only does the package eliminate the need for outside brokers, but users also save money by classifying their goods more accurately. Independent brokers are so rushed or unfamiliar with a company's products that they sometimes put products into the wrong classification. In some cases, that means their customers pay a higher duty than necessary. "Clients are more familiar with their own goods than the brokers are," Mr. Manucha said. "There's no reason that they can't do it for themselves." For example, different duties are paid for amateur and professional skates; various rates are required for wire, depending on whether it is to be used for electrical, communications or other purposes. Mr. Manucha said little computer or business expertise is needed to operate the software system: "It requires just an average employee with an average knowledge of his company." MSR's software asks the user to describe his or her products. It then finds the appropriate duty. According to Mr. Manucha, accurate classifications can lead to substantial savings: "If you are importing $3-million or $4-million a year, you can easily find $100,000 worth of overpayments," Mr. Manucha said. One of his clients, he observed was paying $250,000 more in annual tariff charges than it had to. The MSR system, made up of a series of modules, can handle taxes, purchasing, costing, production, and sales and marketing. It also tracks where goods end up. If they are sold to manufacturers who re-export them, the Canadian importer gets a refund of the duty it paid - something called a drawback. "A lot of importers are missing out on that because they don't bother to track it," said MSR vice-president, Maria Sheppard. "But drawbacks can turn out to be worth quite a bit of money." Mr. Manucha noted that relatively few companies have installed customs software, explaining that when businesses computerize their operations, they tend to concentrate first on well-known functions such as word processing and accounting. Since 1988, however, the Canadian government has been trying to encourage companies to automate their import procedures, to cut the amount of paperwork that is sent to Ottawa. The government is such a fan of electronic transmission that it will give companies a free modem and pay for their line charges if they file customs documents in this way. "It's a tremendous win for them if you file electronically," Mr. Manucha said. "If you send forms by mail, government clerks have to key them into their computers. But if you send them by modem, it's entered automatically." |
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