Importer of Record: Philippines

FGX procures the import permits you need from the NTC & OMB to successfully import technology hardware into the Philippines

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A multinational consulting and audit firm had a project in the Philippines which required shipping infrastructure hardware from the US to their local office. Given the tight timeline of the project it was critical that the gear get there without any unnecessary delays. Despite having a registered business entity in the Philippines, the client did not have the required customs accreditation to act as an importer. FGX’s IOR service coupled with its logistics, customs compliance and last-mile delivery offering provided the ideal solution for the client. Prior to the shipment departing the USA, FGX managed the application process for two necessary import permits:

  • National Telecommunications Commission (NTC) Permits are required for any devices that support networking or radio communication. This permit is required on a per-shipment basis and typically takes 7-10 business days to process.
  • Optical Media Board (OMB) Permits are required for any devices that utilize optical communication or optical/magnetic storage. This permit is also needed on a per-shipment basis and can take 7-14 business days to process.

In addition to the import permits, FGX’s operations team also needed to ensure that all other documentation requirements for Filipino customs were in place prior to the shipment departing. We prepared the commercial invoice, packing list, and procured detailed data sheets for each device. Depending on the value, Filipino customs may also require that purchase orders be supplied to provide additional proof of declared value. As soon as the import permits were approved, FGX tendered the equipment on a direct flight from New York to Manila, the goods arrived within 24 hours. On arrival, our customs team efficiently cleared the shipment in 3 business days and delivered the same day as clearance. FGX’s logistics & compliance services allowed the client to deploy infrastructure equipment from the US to its remote team in the Philippines quickly and without any delays in customs.

 

Where does FGX fit into the IT hardware supply chain?

 

Hey Guys,

Justin here, I wanted to talk quickly about where FGX sits in the supply chain going from purchasing here (in the USA) to delivery in an end destination internationally.

There are a couple of different models, really two major ones that I’ve found:

1.    There is procuring in the U.S. and then deploying internationally into markets.

2.    Procuring in the international markets through an international VAR.

You know all of this already, you’re working with the domestic VAR, that VAR is working with a distributor who has a relationship with the manufacturer, and this is a super competitive marketplace in the US. Everybody’s margins are held in check. It’s nice and clean… easy and it’s cost effective.

The same gear that you’re buying here, you need it in an international location, let’s say Russia. What we find is that most of our clients are working with an in-market VAR. So a Russian VAR. Generally in these markets there is only a handful of legitimate players. They understand that they’ve got a captive audience coming to them. Because they’ve got this captive audience coming to them, their margins are pretty thick and quite frankly the manufacturers are charging the VAR in the end destination more than they’re charging the VAR in the U.S. (even going through a distributor as there’s a distributor in the middle internationally as well). The important thing is that we find that there’s a different markup, let’s just call it the “international markup”.

It’s not normal for a logistics company to have this conversation. But what we do is we really just help you replace the international VAR with the domestic market for international deployments. So remove the international VAR, take back that margin; get back into a really competitive marketplace. The logistics and compliance has been the thing that really holds people back from being able to do it.

Procuring it here is one thing, but then getting it into Brazil, getting into Russia, getting into China, the Middle East et cetera, is the difficult thing. I think a lot of people have had pain in the past, having not met a company that’s spent years and years understanding the compliance, the import requirements, certificates of origin, all of the documents that are necessary to do one of these deployments in an international market. So they’ve sort of defaulted to going to that international VAR, and in doing so have just had to pay the “international vig”.

So that being said, we’re here to help. We really compete with the International VAR, but we’re a logistics and compliance company. We look forward to speaking with you; we think we can bring a lot of value, even if we just have some short conversations.

Cheers,

Justin

Why Does IT Hardware Cost More to Buy in Russia, Brazil, China, etc?

Question: Why does IT hardware cost more when purchased in Russia, Brazil, China etc…?

After wrangling with this question myself and speaking to as many smart people as I can in the IT infrastructure ecosystem, I believe I have a good idea why IT hardware typically costs more to purchase abroad.

  • Reason #1: Wholesale Pricing Tiers (a.k.a Profit Protection)
    • When a network switch is sold to a distributor or VAR in the USA let’s say it costs them $100 to buy from the manufacturer. The same exact network switch will be sold to a foreign distributor or VAR at 1.25x the cost to buy it in the USA. * Markups vary
    • Whether a network switch is deployed in the USA or in China, it’s physically the same. There may be some region specific software or power cables/accessories for the Chinese version, but this can all be ordered & loaded in the USA.
    • Foreign distributor and VARs can charge more in their local markets. The local market has accepted being treated as a captive audience in these international locations.
    • The competition in foreign markets is significantly lower than in the USA. The competitive tension is lacking, thus you as the purchaser have little to no power when negotiating pricing.
  • Reason #2: The partners that you work with may not have incentives that are aligned. 
    • If you are looking to find out how to best support your international IT infrastructure needs globally, you will have a hard time finding anyone to speak with about centralizing your sourcing in the USA.
    • Inevitably you will find either a consulting company, MSP or VAR that leverages international VAR partners. Many of these companies will have a few international locations. Large consulting companies will have many global locations.
    • These primarily professional services firms are rewarded with larger profits when they funnel their client’s procurement needs through their pre-existing international VAR networks. Often times they will be taking a profit share from the manufactures on the back end.
    • The existing subject matter players also charge project management fees. The more complicated the sourcing platform the more billable hours there are.
    • What would you do in the position of these professional services firms?
      • Sell and support the market accepted solution of buying IT infrastructure in foreign markets. In other words: manage a complex global platform of partners, re-sellers, and support teams across multiple times zones, languages, and currencies while charging more and making larger % profits.
        OR
      • Centralize purchasing in the USA thus decreasing complexity, increasing competition between distributors/VARS and lowering project management fees. This would of course lead to less revenue with much smaller profit margins.
    • This is what I call a conflict of interest. If a firm is selling you hardware and has any incentive to manipulate your purchasing strategy in their favor, they shouldn’t be asked to advise on the purchasing strategy.
  • Reason #3: Fear
    • Because the market has succeeded in controlling/manipulating the client’s options internationally, fear of change is even higher than normally seen.
    • It’s clear to me that smart procurement teams and global infrastructure managers have sensed for some time that they are being taken advantage of internationally. Most have even tried to ship hardware into global markets. Unfortunately, these attempts have not gone well for them in general. They have most likely worked with a freight forwarder or a FedEx/UPS type company. This will fail a large portion of the time (detained, returned etc…). You need the right partner that understand all of the requirements from dock to datacenter.
    • The above has fed the fear loop and strengthened the market in keeping clients captive to their current sales model.

TL;DR – In the end this all comes down to the fact that IT hardware should be treated as the commodity that it is. Our goal is the disrupt the current IT hardware procurement model for our clients and enable them to buy the gear they want wherever it is the cheapest and help them deploy it anywhere on the planet. Welcome to the future.

Importer of Record: India

FGX deployed servers to 12 remote destinations in India including the contested Jammu and Kashmir Region

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Our client needed to roll out equipment for an upgrade at 12 of their Indian office locations. Time was once again of the essence for this deployment. The client was painfully aware from past experiences, that the customs clearance processes and requirements in India, if done incorrectly, can leave a shipment stuck for weeks at a time.FGX’s importer of record service and customs compliance management prevented any potential issues associated with importing into India. Furthermore, the client’s specific labelling protocol was used to ensure efficient distribution of the servers once the shipment was cleared and retrieved in New Delhi.

The Challenge

As with most of the Indian sub-continent, customs processes and requirements for clearance of any shipment is rather complicated and time intensive. One simple error or oversight in a shipments paperwork can cause lengthy delays. This is precisely what caused this client to seek FGX out. Our client had 12 destinations which it needed to quickly deploy hardware in India while their holidays were rapidly approaching. FGX was cognizant of these religious holidays in India and built a timeline to ensure that the shipment would be retrieved from customs before that period.

The Plan

Once the shipment was approved, FGX made the pick-up and immediately tagged each server with a customer reference number as well as FGX reference number. The serial number of the part was mapped to the final delivery address. FGX obtained: BIS Certificates, Country of Origin (COO), and HS codes on behalf of the client. We also procured datasheets to ensure that customs had all the required information for clearance. The client requested our IOR service and as such FGX acted as the IOR and facilitated the customs clearance process. Once a shipment arrives in Delhi Airport, customs release typically takes 5 – 7 business days. Using FGX’s IOR process, the shipment was cleared and retrieved in 3 business days.

The Execution

Upon clearance into India, the consolidated shipment was broken down and each individual deployment was re-packed and directly couriered to its final destination. FGX was extremely careful when sending shipments to the state of Jammu and Kashmir, which is in a constant state of conflict between India and Pakistan. FGX checked with both the consignee as well as local police and military for guidance before transporting any of the shipments to this location. Our methodology ensured that all 12 shipments were delivered ahead of schedule to their final destinations and the deployment bound for Jammu and Kashmir was delivered in the safest manner possible.

Importer of Record: Lebanon

Exporting IT Equipment to Lebanon Requires a Logistics Partner Who Understands the Regulatory Landscape

beirut

Rapid globalization has dictated the need for businesses to be able to function in vastly different countries. Often the political climate of the region can further complicate one’s ability to do business. Our client needed to ship CISCO servers to their remote office in Beirut. Lebanon has commercial sanctions in place from the Office of Foreign Assets Control (OFAC) in the US Treasury Department. Our due diligence as a logistics partner includes advising our client that prior to exporting, the consignee must be thoroughly vetted. As part of this process, FGX vetted the consignee as well as the associated contact through the following government lists:

Consolidated Screening List (CSL): a list of parties for which the United States Government maintains restrictions on certain exports, re-exports or transfers of items.

Specially Designated Nationals List (SDNL): a list of parties who may be prohibited from export transactions based on OFAC’s regulations.

Denied Persons List (DSL): a list of individuals and entities that have been denied export privileges.

FGX took steps to ensure that the consignee was not on any of the screening lists, then made arrangements to execute the shipment via our Importer of Record (IOR) service into Lebanon. FGX prepared detailed packing lists and customs documentation and ensured that they were compliant with the strict regulations typical of Middle Eastern countries.

Once FGX ensured that all documentation would be approved by customs through our pre-clearance process, we tendered the equipment on a flight to Beirut. In order to minimize delays at customs in Beirut, FGX made arrangements for duty & tax invoices to be paid in advance of the shipment arriving at the destination airport. Upon arrival, the shipment was cleared and delivered within 5 business days.

Importer of Record: Nepal

FGX simulated a commerical transaction in Kathmandu to clear IT equipment for the clientkathmandu

Recently a client needed a single CISCO server delivered to their remote office in Kathmandu. The customs clearance process in Nepal is complex and needs to be carefully managed. There are numerous complexities in the documentation needed as well as the clearance process itself. Navigating their system can be as difficult and daunting as traversing the country’s famous mountain ranges. Standard importer of record (IOR) processes typically involve a local trading company importing the equipment under their tax code and then transferring ownership of the goods to the end user.

In Nepal however, the IOR process is more complicated. In order to successfully execute a clearance, the equipment being shipped must go through a process that simulates a commercial transaction. In this case, the FGX’s IOR team arranged for the purchase of the equipment in Nepal using a Telex Transfer. FGX wired funds equal to the purchase price of the equipment to our local team. FGX then wired the funds from Nepal, back to our client in NYC, closing the loop on the simulated transaction. For shipments with large invoice values, FGX would require the client to make the purchase funds available before shipping. In this case, FGX wired the funds on our client’s behalf to expedite the process. The client then returned these funds to FGX post-delivery.

FGX’s operations team determined a flight routing that minimized transit friction and tendered on a direct flight to Kathmandu via HKG and arrived within 3 days. Equipment datasheets, eletro-mechanical certifications, ECCN numbers and HS codes were all procured by FGX during the pre-shipment clearance simulation. Our diligence in ensuring accurate customs paperwork ahead of time allowed for the shipment to be cleared and delivered within 5 business days of arriving in Nepal.

Unlock Russia with an Importer of Record

The Backstory

Encryption & Data Storage Legislation in Russia

In mid-2016, Russia passed a bill known as the “Yarovaya law”. This legislation includes a vast data-eavesdropping and retention program, requiring companies doing business in Russia to record and store all customer communications for at least six months. While telecommunications and internet companies are affected most by these new laws, all companies looking to move IT equipment into Russia have been affected by this legislation.  Companies are racing to become compliant with the new laws and avoid fines as high as 1 million rubles for non-compliance.

Due to the vast storage requirements, new equipment must be purchased either in Russia or imported from another country. Purchasing this equipment in Russia can be expensive and slow as local VARs need 4-6 months or more to source infrastructure hardware. Importing the equipment can be done, but is complex and requires significant import documentation as well as licenses, permits, and permission from each manufacturer. The right logistics partner can guide you through the import process, enabling you to quickly procure the needed equipment in the US or EU, then ship it to Russia in under 4 weeks.

FGX is uniquely positioned to help our clients navigate the complex customs & import compliance landscape in Russia. This case study outlines the benefits of our “Buy Local – Ship Global” methodology and how it provides more control, monetary savings and shorter timelines for our clients.

The Case Study

Client Need

A leading international data center & cloud services provider with 22 global locations; the client is rapidly growing their presence in APAC and EMEA through both organic expansion and acquisitions. Presented with an opportunity to provide managed hosting services to a Fortune 100 company in Moscow, our client needed a way to rapidly deploy several million dollars of IT infrastructure equipment to Russia. The timeline was tight as new data protection legislation demanded full compliance in a matter of months. Without a business entity setup in Russia, the client needed an efficient solution to import this equipment for installation in a colo facility.

Our Plan

FGX built a solution to enable the client to purchase all of the equipment from their preferred VAR in the US, and take advantage of their competitive volume pricing and quick delivery SLAs. Once purchased, the gear from 8 different manufacturers would be drop-shipped to FGX’s export facility in New York City. FGX would manifest each item by part and serial number, then custom crate the equipment for safe transit.

Utilizing FGX’s IATA membership, cargo space would be booked on a direct flight from NYC to Moscow, ensuring the most logistical control and fastest possible transit time. To facilitate import clearance, FGX would utilize their importer of record (IOR) service and work directly with each manufacturer to obtain compliance documents like EAC Certificates, FSB Notifications, and Letters of No Encryption. After clearing customs, a dedicated and secure vehicle would be arranged to deliver the equipment to the destination data center facility.

The Results

As soon as the bill of materials was finalized, FGX’s compliance team began compiling all of the import documentation by liaising with individual manufacturer contacts. The entire shipment was simulated with customs prior to departure to ensure the documentation was valid and that all compliance requirements had been met. Utilizing a direct commercial flight, the equipment arrived in Moscow overnight and began customs processing the day of arrival. FGX managed the entire customs process on behalf of the client, provided the importer of record service and completed clearance within 14 business days. Once cleared, the crates were delivered the following business day, well within the client’s aggressive timeline.

Insider Tip

Importer of record is a term used in customs law. It refers to an importer, whether an entity or individual, who is responsible for ensuring that legal goods are imported in accordance with the law of the place. Importer is responsible for filing legally required documents.

The Ideal Logistics Partner

When conducting a large scale deployment of IT equipment into Russia, you need to have a partner capable of managing the entire shipment end-to-end. You should involve your logistics partner as soon as the initial BOM is put together as they will assist you in validating that each part satisfies encryption regulations and will be cleared for import.

Pre-Order Guidance

Pre-screen the bill of materials (BOM) to ensure all components are cleared for use in Russia

Work with OEMs to recommend russia-compliant encryption configurations to the VAR

Post-Sale Compliance

Manage the classification of all part numbers, HTS Codes and ECCN numbers for the equipment in the bill of materials

Coordinate the collection of all required compliance documents for a range of manufacturers, component types and encryption levels

Understand the duty & tax implications and ensure the required taxes are paid on time to ensure no delay to the project timeline

Logistics & Customs Clearance

Coordinate custom crating for safe international air transit

Arrange for direct, expedited air transit from the United States to Moscow

Provide an importer of record service to allow the client to import IT equipment into the country

World Class Project Management

Most importantly, your partner should provide comprehensive project management and timely communication throughout the process by interfacing with the client, the VAR, the destination data center, customs, as well as the manufacturers and their compliance departments to ensure strict adherence to the required client deadline.

The Shipment in Numbers

The complexity of shipments into Russia varies based on a number of factors including the value of the actual shipment, the physicality of the parts being sent over, the manufacturers of the equipment, as well as the level of encryption each device utilizes. Each one of those factors affects the type of documentation required and the amount of time taken to source all necessary permits prior to the shipment departing the United States.

money

$3.6 Million USD

Total Shipment Value

server

320 Components

Routers, Switches, Firewalls, and Accessories

crate

15 Custom-Built Crates

Over 5,000 lbs of equipment

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7 Manufacturers

CISCO, EMC, Brocade, Gigamon, F5, Arbor, WTI

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94 Compliance Documents

EAC Certificates, Letters of No-Encryption, FSB Notifications

The Plan & Execution

FGX devised a 3-month project execution road-map based on the client’s required deadline for go-live in Russia. This detailed outline provided our client, the VAR, and FGX with structured guidance and transparency on all deadlines. The dedicated project manager assigned to this project also ensured that all parties stayed on task and were aware of the dependencies related to their assigned tasks.

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Compliance Documentation

Once final bill of materials was confirmed, FGX coordinated with Russian customs to understand the compliance requirements for each of the 320 components and sub-components in the shipment. Customs requires documentation for each and every part number declared on the commercial invoice.

Electro-mechanical devices, specifically power supplies, must have a corresponding EAC Certificate which is similar to an FCC approval stamp in the US. For devices that utilize encryption technology, different documentation is required, depending on the level of encryption. Devices that utilize mid-level encryption require an FSB Notification, while devices that utilize a high level encryption may require an additional import license or activity permit. Devices that do not use encryption typically need a letter from the manufacturer certifying that the specific device part number doesn’t use encryption.

FGX’s customs compliance team proceeded to liaise with the 7 different manufacturers involved to procure the following set of documents for each component:

EAC Certificate

EAC Certificate

FSB Notification

FSB Notification

Letter of No Encryption

Letter of No Encryption

Constant Communication

FGX provided the client with an online project tracker that allowed both our client and their preferred VAR to regularly monitor which items had been received at the FGX warehouse as well as what compliance documentation had been sourced and what was outstanding. FGX published photos of every single component and scanned packing lists as each shipment arrived at the export facility.

In addition to the online tracker, FGX continuously provided updates on the anticipated timeline and ensured that required documentation, quote approvals, and duty & tax payments occurred on time to ensure no delays to the final deployment.

Full Transparency

Prior to the shipment departing from FGX’s New York export hub, the client requested a site visit to ensure that all of the items were properly received, packed and manifested before departure. FGX provided access to our secure short-term storage facility and walked the client through our manifest process. In addition to the manufacturer labels, FGX’s custom labeling clearly displayed Part Numbers, Serial Numbers and the Country of Origin, enabling the client to quickly check each device.

The client was very satisfied with the thoroughness and organization of FGX’s processes. Once the entire manifest was confirmed by the client, FGX arranged for the items to be custom-crated.

Crating & Transit

The entire shipment was crated with anti-static foam and IPCC treated wood. FGX also custom-built a crate to house the 42U cabinet, complete with a built-in ramp and shock-absorbers for safe transit. The equipment was crated with items of the same manufacturer grouped together to ensure that Russian customs officers could easily locate any devices of interest should a physical inspection be required.

Once crating was completed and all documentation had been pre-approved by the local customs team, the shipment was tendered on a direct flight to Moscow. FGX’s IATA membership enabled us to utilize any commercial or cargo airline with available space to transport the equipment as quickly as possible. The shipments safely arrived in Moscow less than 24 hours after departing from New York.

Cabinet Crate

Breaking Up the Shipment

Since the shipment consisted of equipment from multiple manufacturers, with varying shipping SLAs, some equipment arrived at FGX’s facility later than planned

To reduce the impact on the overall timeline, FGX advised the client to split the shipment into three-phases. Each phase was grouped by manufacturer, and resulted in a staggered clearance which was easier for Russian customs to process. Since the majority of the equipment had already been cleared and delivered, when the final phase arrived at customs, the processing time was reduced, resulting in an on-time delivery for the third phase.

Customs Clearance & Final Delivery

In order to expedite the clearance process as much as possible, duties & taxes were pre-paid to Russian Customs in advance of each shipment arriving at the border. Simultaneously, FGX arranged for pre-clearance for each shipment, so that customs received the necessary documentation prior to the shipment physically arriving at the border.

Once each shipment arrived at customs, they were cleared against the entries already created during pre-clearance. Following customs clearance procedures using our importer of record (IOR) service, and physical equipment inspections, the shipments were released for final delivery to the datacenter.

FGX coordinated directly with the receiving data center to understand their delivery requirements well in advance of the first shipment. This ensured there would be no surprises when the crated equipment arrived at the final destination.

Delivery was completed with dedicated air-ride trucks and additional man power to assist in off-loading the large crates. The project was completed on schedule, allowing the client to meet their internal deadlines and dispatch a team of engineers to setup the newly imported equipment. The stakes were high, but FGX delivered a rock solid service offering that gave the client confidence for future shipments.

Importer of Record Enables Startup to Expand into Europe

FGX’s Importer of Record Service Enabled a Silicon Valley Startup to Expand its Business in Europe

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Overview:

FGX’s client had landed an opportunity in the EU and needed to expand their capabilities by deploying their proprietary hardware to a datacenter in Amsterdam. Given the high-value of the shipment, a formal clearance was required. Our client did not have a business entity that was registered to do formal imports in the Netherlands or the greater EU. The client reached out to FGX for a solution and we walked them thru the Importer of Record Service which best suited the client. The solution was tailored not only around the gear they were looking to import into the EU but also their desired timeframe.

The Challenge:

FGX was approached by a Silicon Valley start up that had recently brought on a new EU-based client. In order to fully service this new business our client would need to deploy their hardware to data centers in the region. The client did not have the usual 2-3 weeks needed to secure an import registration (EORI), so other methods had to be explored. Since their equipment was proprietary and not from a mainstream manufacturer, they needed a logistics partner who understood the additional compliance requirements.

The Plan:

FGX provided the client with two distinct options for clearing the goods into Amsterdam.

  • Option 1: Register as a Non-Resident Importer (NRI) and receive an EORI Number No cost to client Requires 2-3 weeks for processing Allows for VAT reclamation
  • Option 2: Utilize an Importer of Record Service Fixed fee based on shipment value Setup in 1 to 2 days No additional paperwork required

The Execution:

Prior to the shipment departing from the New York export hub, FGX manifested the shipment down to the serial number level to ensure that all of the hardware was properly received prior to international transit. The equipment was lodged on a direct flight from JFK to AMS and arrived overnight. Since the client chose the IOR service option, FGX acted as the Importer of Record and facilitated a DDP (duties & taxes pre-paid) customs clearance. The shipment cleared customs within 1 business day and FGX coordinated directly with the receiving datacenter to setup a delivery ticket and ensure a smooth delivery.

The Result:

FGX enabled the client to rapidly expand their service offering in a new market, with no lead time or paperwork.