Tariff apps aim to ease overseas sales

Tariff apps aim to ease overseas sales

As the big package carriers start testing new software to calculate the full cost of shipping goods overseas, the key question isn't whether the applications can crunch the numbers they're fed.

It's whether the oft-changing international duty and tariff data the software vendors are gathering will be accurate enough to produce realistic cost estimates for online retailers and other companies that do business on the Web.

''Calculating the cost is the easy part,'' said Rick Sponholz, global e-commerce product manager at United Parcel Service of America in Atlanta. "That's just kind of like adding a couple numbers together. The hard part is gathering and maintaining all the data that's out there."

The burden of collecting tariff and product-classification data from dozens of countries falls on the shoulders of several small software vendors that are developing the new calculation engines and pairing up with UPS and its delivery rivals.

The goal is to give online retailers the ability to automatically calculate so-called landed costs -- what products will really cost foreign buyers once all the extra charges are added. That kind of calculation is a nightmare now, prompting many Web-based businesses to hold off on taking international orders.

Getting the required data is also a manual slog for the vendors. New York-based Syntra Technologies and NextLinx in Silver Spring, Maryland, each have at least 15 employees working full-time to collect duty and tariff information and to update it daily.

Both companies plus a third, Vastera in Dulles, Virginia, are starting small by building in support for a limited number of countries.

They also plan to run the calculation software on their own servers and provide access to it via the Internet, so users don't have to download the updates.

Even with all that attention, the data's accuracy still needs to be tested to see ''how well [the software] calculates things compared with what actually happens" in customs offices, said Michael Comstock, senior vice president of planning and e-commerce at DHL Airways in Redwood City, California.

During the first quarter, DHL plans to launch several 90-day pilot projects using Syntra's landed-cost calculation engine to see whether its results are accurate enough to rely on for guarantees on overseas delivery costs, Comstock said.

Sources said UPS is embarking on similar tests of NextLinx's landed-cost application, while FDX Corp. in Memphis is working with Vastera.

Shipping overseas can add a big amount to a product's price tag. For example, even the price of a 250-tablet bottle of nutritional-supplement pills can increase 25 percent on shipments to countries such as Germany, according to Healthy Discounts, an online retailer in Austin, Texas.

But even if the vendors do get the data right, a potential problem looms: Different customs offices in the same country sometimes classify products in different ways, which means multiple tariff rates could be applied to a single product, depending on where it enters the country.

"At best right now, what you're going to get [from the software] is still an estimate," Sponholz said.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments