Damage (in shipping)
Partial or complete destruction of goods in storage, staging or transit. See Claims.
See Hazardous Materials (HAZMAT)
In international shipping, de minimis is the threshold set by countries under which no customs duties or taxes are applied to goods.
How small is too small? When it comes to international trade, the answer will differ from country to country.
The threshold for de minimis shipments, where the value of imported goods is small enough to normally be exempt from customs duties and taxes under the law, varies greatly around the world. In some countries, de minimis shipments are subject to a low cap or tight restrictions, while customs authorities elsewhere set a more generous level.
What is de minimis’ role in e-commerce?
A generous de minimis threshold reduces the cost of moving goods internationally and means more goods can clear customs faster. This is good news for cross-border e-commerce.
In a 2016 move widely seen as a boon for online selling, the United States introduced one of the highest de minimis values in the world, increasing it from $200 to $800. Indeed, reports that the United States may reduce its threshold as part of 2019 trade negotiations with Mexico and Canada quickly raised the hackles of e-commerce platforms such as eBay, among others.
While de minimis duty exemptions are a benefit to e-commerce, they’re not without complexity. Above all, e-commerce sellers must clearly understand when and how de minimis exemptions apply to shipments. For example, in the United States, shipments of certain goods, including, but not limited to, alcohol and tobacco, do not qualify for de minimis. In addition, de minimis, which is authorized pursuant to Section 321(a)(2)(C) of the Tariff Act of 1930, only applies to a shipment of merchandise imported by one person on one day having a fair retail value not exceeding $800 and it does not apply if the shipment is one of several lots covered by a single order or contract which was sent separately for the express purpose of avoiding duty/fee payment. Knowledge of de minimis is not only good for vendors but buyers. Understanding de minimis helps sellers arrive at an accurate landed cost they can share with customers.
It works in the other direction too. By alleviating some of the intricacy of customs taxes and duties, de minimis helps make international returns easier.
Changes to de minimis rules
De minimis rules change regularly. Take Australia, which in 2018 nullified its de minimis provision that allowed the import of up to 1000 AUD of goods exempt from Goods and Services Tax (GST).
Similarly, in 2017 the European Union adopted measures to scrap its de minimis of 22 EUR, which exempted low-value imports from value added tax (VAT). This was part of a broader reform of the EU’s VAT regime for cross-border e-commerce.
As these examples illustrate, it’s important for exporters to stay informed of changes to de minimis rules.
Exporters must also remain vigilant when preparing customs paperwork, notably the commercial invoice. Under-valuation of goods to qualify for de minimis is not permitted and may lead to customs fines and costly delays. Currently, in the United States, U.S. Customs and Border Protection (CBP) is running Section 321 programs to enable the agency to monitor and protect against illegitimate trade while providing the public the benefits of duty-free shipments for qualified imports.
De minimis may be about small things, but its implications are big. Exporters should seek expert guidance on how best to navigate de minimis when clearing customs.
Declared Value/Insured Value
Declared Value or Insured Value is the combined value of the merchandise and cost of freight, packaging, forwarding charges and consular fees for which insurance is obtained.
Enter a Declared Value amount of up to US$25,000. Pre-authorization is required for Declared Value amounts greater than US$25,000.
For additional information refer to the UPS Air Freight Terms and Conditions of Contract.
Dedicated contract carriage
A contract with a third-party provider to move a company's goods through the provider's independent network.
A transportation fleet exclusively dedicated to the movement of goods for a company, whether the fleet is owned, leased or contracted through a third-party.
Exclusive, contracted use of a warehouse or warehouse space by a customer. This service is often provided by third-party logistics providers (3PLs).
Delivery order - Also known as Shipping order
A document from a shipping carrier instructing a terminal operator or shipping agent to release cargo or freight to the agent or consignee designated on the Bill of Lading. This document is required for the agent or consignee to clear customs and marks the end of the transport contract between the shipping carrier and consignee.
Delivery receipt - Also known as Proof of Delivery
Delivery receipt, also referred to as proof of delivery, is confirmation the shipment was delivered as intended.
Demurrage - See also Detention, Per Diem Driver Detention
Charges incurred when a container is not out-gated/picked up before the designated free time at the port.
The weight of a package or unit of freight divided by its volume; also commonly referred to as weight per cubic foot. Density can directly influence shipping rates charged.
Department of Homeland Security (DHS) | Customs and Border Protection (CBP)
U.S. Customs and Border Protection is the agency of the Department of Homeland Security responsible for security at over 300 air, sea and land points of entry into the U.S.
Dimensional weight reflects package density which is the amount of space a package occupies in relation to its actual weight. Dimensional weight is calculated using this formula (in inches): (Length x width x height) ÷139.
Dimensions (shipping) - Also known as Dimension
The length, width and height measurements used to calculate the dimensions of a shipment.
Direct to consumer
Direct to consumer (D2C) is a sales approach by which manufacturers and e-commerce brands sell directly into the marketplace without going through a traditional distribution network.
In retail, the traditional supply chain starts with the manufacturer. Products get bought in bulk by wholesalers or handled by distributors specializing in certain categories. Eventually the product makes it into retailers’ inventories and from there it is sold to the public.
Direct to consumer breaks the mold by cutting out intermediaries and establishing an open channel between manufacturer and end consumer.
What is direct to consumer’s appeal?
D2C can be highly attractive to both manufacturers and buyers for several reasons:
- Eliminating wholesalers or distributors can save operational costs. The manufacturer often can increase profit margins while maintaining a lower price point for the buyer.
- D2C can create opportunities for brands to interact directly with their buyers. Manufacturers can collect feedback firsthand, capture valuable buyer data, and nurture customer loyalty.
- It offers brands opportunities to share their stories - unfiltered -- with the marketplace.
D2C is increasingly common in business-to-business (B2B) sales too. Buyers like dealing with manufacturers and enjoy the opportunity to ask questions directly of the product’s maker before and after the sale.
The challenges of D2C
Despite its benefits, selling D2C is no walk in the park. Cutting out intermediaries may make aspects of the sale easier. But there’s a lot more work involved that D2C operations must take on -- or risk not selling.
Marketing is one such area. With D2C, brand development is at a premium. A compelling look and feel is critical to differentiating a D2C -- from product photography to its tone of voice. Without the trusted hand of distributors and retailers to promote their products, manufacturers must get good at executing promotional strategies themselves.
There’s also the question of logistics. Product needs to be picked, packed, and shipped. From inventory management to returns, direct-to-consumer brands must offer levels of customer service on par with e-commerce best practice. They must quickly take ownership of client complaints too. When things go wrong, D2C brands have nowhere to hide.
Pricing is another sensitive area. This is particularly true for companies operating a sales model that pairs D2C with retail distribution. Such brands must be careful to avoid creating channel conflict and confusion. For this reason, some large brands have been reluctant to sell D2C for fear of undermining their channel partners and cannibalizing sales.
Not all big brands harbor such reservations. Industry leaders such as Nike and Apple are renowned for their D2C approaches and the caliber of their direct-to-consumer marketing. And though most large brands understand the need to adapt to the changing retail landscape, they may not have the luxury of choice. A bunch of new of D2C start-ups are jockeying to disrupt the retail establishment.
Facing such headwinds, the willingness of manufacturers to embrace direct to consumer as a sales approach will likely only grow.
A warehouse outfitted for inventory storage and the efficient fulfillment of product orders.
Supply chain distribution is the process by which products and services are made available to end-users. Every item commercially manufactured is earmarked for distribution in some shape or form.
But distribution is more than simply getting products to users: it’s a critical feature of a properly functioning supply chain. Without effective distribution, products don’t reach consumers at the right time or in the right place. This creates a poor customer experience and generates inefficiency in the supply chain.
Neither does distribution take a one-size-fits-all approach. Different models for distributing goods from manufacturer to end user include:
- Via a wholesaler/distributor and then a retailer. This is the classic retail model. (Note the distinction between a wholesaler, who trades in bulk across a range of product categories, and a distributor, who is a specialized reseller. Both functions play an important role in distributing product.)
- Via wholesaler only. This is the model Costco operates. It is also increasingly common with online marketplaces.
- Direct from manufacturer to consumer. Direct-to-consumer is a practice more common in B2B, where there may be clear advantages for the buyer and product maker to liaise directly. As a practice, however, it’s not confined to B2B: Apple, for example, has made a highly lucrative business by selling direct to consumers through its stores. With direct-to-consumer selling, manufacturers need to be careful not to cannibalize sales by inadvertently competing with their distributors in the supply chain.
The role of an effective distributor
An effective distributor is more than simply an intermediary: in helping manufacturers shift goods, a distributor’s role is to add value to the product while moving it through the supply chain. Areas where distributors support the supply chain include:
- Supplying retailers with marketing material, such as technical information and product photography.
- Offering pricing and promotional guidance, including benchmark sales data.
- Delivering product education and user training.
- Providing repair services and OEM warranty management.
- Supporting fulfillment and inventory management.
Effective distributors work with manufacturers to set the distribution strategy across products: a luxury goods range may remain exclusive to high-end stores, for example, and not made available to mass retailers. They also work with manufacturers to determine which sales channels—from brick-and-mortar stores to online marketplaces—to target. The range of sales channels is wide, from traveling sales reps and online affiliate networks to direct response advertising and mail order catalogs.
In addition to getting products into the hands of users, the practice of distribution helps manufacturers test new markets and drive growth. From every angle, distribution is a critical aspect of a healthy supply chain and a continual source of feedback for all participants.
The transport of goods that originates and ends within a country's borders.
Door to door
The physical movement of goods from the point of pickup to end user. This may also be the name of a service provided, for example, "door to door service."
Charges incurred when a driver is kept waiting longer than the allowed wait times.
Drop shipping is a supply chain method in which the seller does not own or stock the goods for sale. Instead, the goods are stored and shipped to the buyer by someone else. This may be the manufacturer, a wholesaler, or a distributor. It may even be another retailer.
The pros and cons of drop shipping
Before launching an e-commerce operation based around drop shipping, it’s important to understand the pros and cons of this method of fulfillment.
For the seller, the main advantages of drop shipping are the low overheads involved: the responsibility for purchasing inventory and fulfilling orders rests with the third party. This ultimately comes at a cost to the vendor, however, whose margin on the sale is squeezed by competitors selling at rock bottom prices. It’s also squeezed by the seller’s shipping partners, who will often take a healthy slice of the difference between the wholesale and retail price as their compensation for supplying the inventory and fulfilling the order.
There’s also the issue of customer experience: with drop shipping, the seller exerts less control over the logistics of fulfillment. Managing returns through a third-party shipper can prove frustrating for vendor and customer alike, while a seller’s lack of direct control over inventory increases the risk of stock-outs. Brand control is weaker: it’s hard to create a memorable unboxing experience, for example, when drop shipping.
Despite the challenges, drop shipping has its place in the logistics mix. Retailers appreciate the flexibility it offers when handling seasonal spikes, and it can be a cost-effective way of testing new products and exploring new markets.
Setting up a drop shipping business
For merchants of all sizes, establishing a drop shipping business requires dedication. Sellers must perform due diligence before entering into commercial arrangements with drop shipping suppliers , vetting them for trustworthiness, reliability, and the strength of their delivery options.
Strong marketing, from quality product photography to compelling product descriptions, is another key element. Merchants should also invest in a comprehensive e-commerce platform that supports the needs of everyone involved in the drop shipping arrangement, starting with the customer.
By developing strong supply chain relationships supported by robust channels of communications and smart marketing techniques, retailers can set their drop shipping operation apart from the pack.
Materials used to stabilize and guard freight during transport, and may include foam, air bags, carboard or other materials.
Duty (in shipping) - See also Customs, Ad Valorem
A government tax imposed on imported goods. See ad valorem.