The Role of Good Trade Compliance in Mitigating Supply Chain Disruption

The Role of Good Trade Compliance in Mitigating Supply Chain Disruption

It doesn’t take a global pandemic to turn a supply chain on end, but as many companies learned in early-2020, such an event can have major impacts on a company’s ability to operate normally. Be it a trade war, a geopolitical event like Brexit, or a natural disaster, supply chains are—and will always be—somewhat of an Achilles heel for the companies that run them.

“Importers and exporters are certainly no strangers to change,” Thomson Reuters reports. “Just in the U.S. alone, over the last ten or so years, compliance teams have worked through numerous trade issues such as 10+2, ACE, the Lacey Act, Export Control Reform, TFTEA, the numerous Section 301/232 duties, and USMCA.”

Accustomed to working closely with their internal counterparts on the transportation and logistics teams to stay in sync when conditions are changing, global trade compliance teams are feeling the heat right now. “Procedures that trade professionals follow to remain compliant and keep up with the new regulations have changed,” Thomson Reuters points out. “Regulations are changing for completely different reasons now, and the sources that trade compliance teams follow for regulatory information can be different.”

Preparing for What’s Next

To shippers that are restructuring their supply chains in response to the current environment and also preparing themselves for the next disruption, compliance is one area that is often overlooked in favor of getting products out the door; onto trucks, ships, and planes; and into customers’ hands as quickly as possible. Along the way, the issue of import/export compliance is going to rear its head at some point, and it’s something that all shippers need to be aware of.

Consider this: With the world’s healthcare providers and first responders in need of masks, ventilators, and personal protective equipment (PPE), the rush to fulfill these needs can’t overshadow the fact that there are compliance rules to follow. “Many of these items are regulated by the Food and Drug Administration (FDA) as medical devices and are also subject to US Customs and Border Protection (CBP) regulations,” International Law Office points out.

For example, because healthcare PPE is intended for use in the diagnosis, treatment, mitigation, prevention, or cure of disease, it is subject to FDA regulation as a medical device under the US Food, Drug, and Cosmetic Act, ILO explains. Therefore, most healthcare PPE – including gowns, goggles, gloves, and, until recently, all protective masks – must have either an FDA marketing authorization (which in this case is an FDA-cleared, pre-market or 510(k) notification) or be classified as a 510(k)-exempt Class 1 device (e.g., a surgical mask with the FDA-assigned product code MSH).

“In addition to the CBP requirements and the applicable country’s export requirements, the importation of PPE for healthcare use must comply with all FDA requirements,” ILO continues. “This means that the equipment must comply with the FDA’s pre-market clearance and all other regulatory requirements.”

Scanning the Horizon

When it comes to global trade, there are both excellent opportunities available for companies that want to open up new markets for their products and challenges associated with other countries’ complex regulations. To manage supply chain compliance effectively, shippers need good data, updated information, and high visibility over the products that they’re shipping (and, the raw materials that go into those products).

As the trade wars, tariffs, and COVID-19 taught many companies, a continual “scanning” of the horizon for emerging requirements can pay off handsomely when a disruption occurs. By working with an experienced logistics provider that knows how to manage export compliance, import compliance, and trade agreements, shippers can position themselves for success in any market conditions.

“For best results, shippers should take a proactive approach to managing changing market trends, disruptions, and opportunities,” says David Buss, CEO of DB Schenker USA . “As part of that process, don’t overlook the value of good import/export compliance.”

Importing and managing the logistics of your precious freight is no easy task. Compliance to U.S. Customs & Border Patrol is essential to your cargo clearing customs. Use a freight forwarder to lower your chances of having shipment delays and to oversee all of your international freight logistics. Contact a customs broker to file your ISF and issue any pre-alerts to avoid penalties and delays, and arrange your ocean freight and imports customs clearance.