Logistic/Regulatory Project for Solar Panel Import from South Korea to the US

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This paper discusses the logistic and regulatory process for importing solar panels from South Korea to the US. It covers the country of origin and destination, product, trade barriers, trade requirements, incoterms selection, free trade agreement, bonded warehouses, freight forwarders, customs brokers, cargo security, supply chain management security, risk management, technology and regulatory management, and cost estimation.

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Logistic/Regulatory Project
Product name – Solar Panel
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Table of Contents
Introduction.................................................................................................................................................2
Project description.......................................................................................................................................2
Country of origin and destination............................................................................................................2
Product....................................................................................................................................................3
Trade overview............................................................................................................................................4
Trade Barriers..........................................................................................................................................4
Other trade requirements.........................................................................................................................5
INCOTERMS selections.........................................................................................................................5
FTZ and Bonded Warehouses..................................................................................................................6
Use of Freight Forwarders and Customs Brokers....................................................................................7
Self filing.................................................................................................................................................8
Cargo security/Supply chain management security.................................................................................8
Volumes..................................................................................................................................................9
People......................................................................................................................................................9
Trade Automation..................................................................................................................................10
Risk Management......................................................................................................................................10
Political risk...........................................................................................................................................10
Technological risk.................................................................................................................................11
Environmental risk................................................................................................................................11
Technology and regulatory management...................................................................................................12
Cost estimation..........................................................................................................................................13
Conclusion.................................................................................................................................................14
Sample Exhibits.........................................................................................................................................15
References.................................................................................................................................................16
Appendix...................................................................................................................................................18
Table 1: Incoterms.................................................................................................................................18
Table 2: Cost estimation........................................................................................................................19
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Introduction
The primary purpose of the paper is to provide an effective view of international logistics. To
understand the international logistics process the trade between South Korea and the US took
place where Solar Panel has been imported from South Korea to the US. The paper eventually
discusses the country of origin than the destination and also about the product. The paper also
discusses the trade barriers, trade requirements, incoterms selection, a free trade agreement, and
bonded warehouse and also the use of freight forwarder and customs brokers. The paper also
discusses the risk management then the technology and regulatory management and cost
estimation for the project.
Project description
Country of origin and destination
The proposed logistics project effectively implies the importing of solar panels from South
Korea to the United States. It is one of the renowned Asian countries in term of electronic
products. There are numerous companies like the BJ Power, CMD Korea, Eco Power, and
SolarPark is some of the companies that manufacture solar panel in Korea (South Korea’s solar
industry recovers its glow, 2019). It is one of the biggest parts of country economic factor. It can
also be depicted that Korea is supporting its exporting industries for stimulating the economy of
the country. The major driver of Korean economic development is considered to be export-
driven growth. The country primarily relies on the free trade policy that eventually helps them to
promote the export from South Korea. It is the fact that the country is a member of WTO as well
as they have free trade agreements with numerous countries. The country is considered to be the
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5th largest export country in the world with more than 500 billion dollars in total export. The
country is already known as the world leader for renewable energy technologies and solar panels.
The USA is considered to be the second largest destination that has Korean products. The US
marketing is facing the increasing demand in term of the solar panels, and it can be estimated
that by the year 2025 the solar panel market size in the US will reach by 22.90 billion USD
(Felton, 2018). In the year 2016 there was significant growth in term of installation of the solar
panel within the country, and for that, it is expected that in the coming years' people will get
more addicted towards the solar panel. This is because people are becoming more
environmentally conscious and also being the highest economic country the USA provides a
suitable opportunity for their people for developing.
Product
The proposed products that are to be imported by the US market are the solar panels. It is the
device that generally converts the light in the electricity. It is called a solar panel because the
panel uses to grab the light from the most powerful source that is Sun. It is also known as
photovoltaic which mean light-electricity (Kawamoto, & Shibata, 2015). The technology behind
this product is relatively old though it has the futuristic appeal. The basis of this system is the
same, but the efficiency of the solar panel has developed over the years. This product has
suitable craze all over the world among the people due to the increase in environmental
awareness.
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Trade overview
Trade Barriers
The trade relation among the US and South Korea has been tough with some of the issues in the
critical sector like agriculture, electrical and automotive industries. In line with the Korean
approach to trade, the country has signed the FTA in the year 2018 that will eventually result in
the reduction of trade barriers. The FTA has eventually entered within the power in the year
2012 where some of the amendments were added in the year 2018. It is the fact that the US-
Korea FTA has eliminated numerous restrictions of tariffs and non-tariffs within the countries
(Draper, 2017). Importing electronic commercially within the country USA is a hassle for the
marketers, but at the same time, it could be higher rewards if managed properly. There are
countless regulations as well as the large margin that create trade barriers in term of the
electronic products to get import in the USA. In addition to the facts, the barriers could be
minimized by providing the complete implementation of the Trans-Pacific Partnership (Bernard,
Grazzi, & Tomasi, 2015). The trade deal will also help to eliminate most of the duties in 12 or
more countries that are related to the deal and maintain suitable trade facilities.
According to the FTA it can be seen that Korea was the 6th largest suppliers of good import to the
US in the year 2017 and till date it help the firm to provide the best facilities to the business. In
term of Solar Panel this FTA allow the business to effectively import the products to the US with
suitable cost and custom broker activity in the international market. The Free Trade Agreement
eventually helps the firm to invest in the huge process as it can be seen that the maximum import
of electronic products to the US is almost 15 billion dollar from Korea which show the suitable
and effective business process within both the countries.
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Other trade requirements
In the import of products other than tariffs, there are also non-tariff restrictions as well as the
special requirement that can eventually hinder the international trade resulting higher cost. Non-
tariff trade barriers generally include the quotas then the additional requirements regarding the
product quality. The United States did not have the quotas for electronic product imports from
South Korea (Van den Putte, 2015). The US has the tight import requirements which require
compliance with the standard of product quality, then the vessel security, international trade law
as well as the border protection. First of all, it is highly essential to mention the Customs-Trade
Partnership Against Terrorism program that the cargos for import of products to the US need to
comply with the regulations (Nam, 2016).
Furthermore, it can be seen that the US Customs and Border Protection is the agency that
governs the security issues in international trade. Import compliance also needs to provide a clear
product description as well as compliance with the technical standard for the products.
Moreover, the importing also has various sets of documents like the commercial invoices than
the letter of credits as well as the bill of lading. One of the most effective PGA agencies that
could be viewed within the process is the EPA and the USTR that have the vital impact over the
import system in the US.
INCOTERMS selections
Incoterms are the guidelines regarding the international trade that contains all the terms as well
as it is fundamental regarding effective trade. The document effectively provides the key term as
well as the rule that is widely used within international trade. These terms are globally
recognized as guidelines, and it helps to eliminate the cultural as well as legal discrepancies
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within the countries. In international trade, 11 standards need to be considered as per Incoterms
(Lee, & Huh, 2017). These standards provide the view regarding selling condition, then delivery,
liabilities, cost and the freight issues and even the insurance terms. The effective incoterms that
are being utilised within the international trade can be understood from Table 1 in the appendix.
This term help to establish the contract agreement within the buyer as well as the seller. The
responsibilities of seller soar from the very first incoterm EXW to the DDP. The transportation
and all the risk should be taken by the buyers to have the more control over the delivery system
as well as use expertise for the selection of best shipment options (Lee, & Rahimi Midani, 2017).
The selected Incoterm is the FOB that is Free on Board which suggests that seller have the
responsibility to deliver the product on the vessel board whereas; the firm will be responsible for
the delivery to its destination. The incoterms that are being selected for the import duty provides
the suitable and effective view in term of the loading cost. It is the fact that charges regarding the
loading within the main carriage are effectively applied on the products. The suitable charge for
this process is around 100$ per container which leads to 4000$ for the loading or the handling
cost of the containers as there are 40 containers.
FTZ and Bonded Warehouses
It is quite possible to reduce the legal cost that also by establishing the Free Trade Zone and even
using the bonded warehouse. The FTZ, as well as the bonded warehouse, enable the firm for
reducing their duties as well as improve the supply chain management and for that it helps to
reduce the shipment cost as well as manage the inventories (Chao et al., 2016). It is the fact that
an FTZ allows the firm to achieve the sizable reduction in the customs duties as well as taxes.
This will eventually improve the competitiveness of the business in term of their regulatory
benefits. The custom bonded warehouse is considered to be a secure area where the imported
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products are primarily stored without paying any duties for almost five years. It can be seen that
there are 11 types of bonded warehouse one can eventually found in the US (Park, & Jeong,
2016). The warehouses eventually allow the importer to have full control over the merchandise
as well as manage the duty obligations. The FTZ is not utilised within the process because of the
FTA facilities that are available within the import duty. Some of the major challenges that could
be faced regarding the usage of FTZ within the import process are the risk of arbitrage then the
vested interest and even the physical space. Considering all the facts it becomes essential for the
import duty to utilize the custom bonded warehouse.
Use of Freight Forwarders and Customs Brokers
The use of customs brokers, as well as the freight forwarders, is highly reasonable regarding the
importing projects as it can enhance the process as well as deliver the merchandise to the
destination within appropriate time. The freight forwarder is the company that is responsible for
the logistics as well as actual transportation of the merchandise (Wang, 2018). The organisation
generally engage in the paperwork regarding the delivery process and the customs brokers are
engaged within the payment of duties as well as processing the documentation of the importer to
the CBP. It is the fact that the customs brokers are licensed as well as regulated by the CBP and
for that, they are responsible for the clearance and freight forwarder are responsible for
transportation (Carson, 2016).
The list of customers brokers that could be effectively useful for importing the products are;
Bay Brokerage Inc
Delmar International NY Inc
Livingston International Inc
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FEDEX trade network transport and brokerage Inc
These above four custom brokers have been selected as they provide the best service in the field
and also they are directly linked with the Alexandria Bay port New York. It helps to have the
suitable and effective logistic working function within the field and for that the operative
function become more suitable and flexible.
Self filing
The two most popular models that could be viewed regarding the filling of the US imports that is
self-filing and the filings with the custom brokers. In this logistic system the self-filing model is
effectively utilised for maintaining the import of solar panel within the country. In the process of
regulatory changes it is essential that the information is being provided to the importers in term
of customs laws as well as the regulations. System integration process is also essential for
maintaining the self-filling activities within the logistic process.
Cargo security/Supply chain management security
The supply chain security or the cargo security is one of the most effective process in term of
logistic and import system. One of the most effectively used security process is the CTPAT that
is Customs Trade Partnership Against Terrorism which is the program of federal government
that has been set up by the US Customs and Border Protection that eventually allow the company
in term of shipping goods and materials. The supply chain management security regarding the
import of products is being provided in term of cyber security. The import compliance help
regarding the development of supply chain management effectively within the field and provide
suitable shifting or products under rules and regulation.
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Volumes
The volume of import from South Korea is around the products of 2 million dollar. There will be
40 containers to carry the products. The new volume from the acquisition would be around the
products costing 3-4 million dollars that is considered to be highly suitable for the people of
USA. It is highly essential for the logistics department to maintain their NVOCC and for that
they need to maintain the documentation and proper activity in the field. The Cargo shipper
sends the booking request where the NVOCC generally book the cargo with the ocean carrier
and they provide the booking confirmation to the cargo. The volume have the huge impact in
term of NVOCC process as this help to provide proper bill and documentation for the shipment
process. The merchandise that are being imported from the old company and in the process of
sales for the firm there will not be any difference in the negotiation process with the NVOCC
and the Carriers. The entire negotiation is highly based on the import of the products from the
new sites in the international market.
People
People are the vital part within the business process of logistic department and this might also
create issue in term of trade. It is the fact that the current staff associated with the project and the
logistic departments are mostly from South Korea and for that they are having little issue while
dealing with the new staff members that is from USA. The cultures of people are different and
for that this issue has led to the trade barriers for the project. To deal with this situation and to
enhance the business process it is highly essential to have proper recruitment process and people
within the field. In this project both the present and the new staff members are essential to deal
with the situation and custom broker activity in two different countries. In this situation let going
the personnel is not an option as getting more people within the business will help to deal with
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both the country and the working behavior of the people. In the present situation there are 6 staff
performing within the import duty and getting 4 more people will eventually help the firm to
make their work effectively in the field. This amount of employees will be sufficient for the
business to maintain their activities in term of the import of goods.
Trade Automation
The technology that would be utilised within the project will be the self-filling which allows the
business to maintaining the import of solar panel within the country. In this situation the software
trade automation is highly essential for maintaining the solar panel and the number of containers
it will be dispatched within the market.
Risk Management
Logistic in the business process are highly exposed to uncertainty like other business activities.
This eventually deals with transportation as well as international trade, and for that, numerous
risks need to be managed (Kim, & Cha, 2016). Ignorance of the risk can lead the firm towards
the project failure as well as significant losses. Analysis of the risk factor becomes a vital part of
the project to reduce their risk.
Political risk
The political risk within the business is considered to be one of the most vital sources of
uncertainty for the business when it becomes more globalized. With the increase in the
complexity of international business, the importance of political risk is even higher. The
international political situation has eventually intensified with the risks that are coming from the
Middle East, Europe and some other parts of the world (Mensi et al., 2016). China has a stable
political environment, but some problem may arise within the region due to military activities.
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The political risk within recent years have been subsided with the decline of the risk; however,
its exposure still exists; therefore, the appropriate response is highly beneficial. The risk can be
reduced with the development of the contract, and even it is possible to use the insurance policy
for reducing the risk.
Technological risk
The technological risk is primarily related to the damage of the vessel as well as other
transportation equipment because of the technological problem. This risk is considered to be as
the internal source, and for that, it can be eventually minimized with the help of effective
monitoring as well as preparation of the product delivery (Cooke, & Wells, 2015). Moreover, the
technological factor is embedded within the vessel regulation that is eventually required from the
logistics company which is considered to be the effective control of the vessels or other
transportation methods for the transportation of goods. Furthermore, it can be depicted that the
use of private insurance is reasonable for protecting critical property.
Environmental risk
Environmental risk is the external risk that the logistic company did not possess any control over
it. The business generally operates within the risky sector, and for that, it is highly exposed to the
numerous risk factors. Moreover, it can be seen that the transoceanic shipping is considered to be
exposed to the various environmental issues that might have an impact on the vessels as well as
the products (Vlassis, 2016). In this situation, the most effective way is to use the liability
insurance for the products so that the logistics companies are enabled to ensure external risk.
Moreover, the selection of the shipping company can also help to reduce the risk due to the
significant experience as well as the insurance protection in the logistic system.
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Technology and regulatory management
Technology is one of the growth factors in international trade. In the world of logistics the e-
commerce then the mobile technologies, as well as advanced vessels, have eventually entered. In
the technology industry, it can be seen that data analysis is the new trends. It is the fact that the
supply chain technology help to optimize the operation as well as it becomes a vital component
for the global trade (Backer, 2018). Technologies have also become the source of competitive
advantage for the business. Computerize compliance in term of a supply chain can eventually
result in the cost as well as time-saving for the business and for that the use of new technologies
is highly reasonable for the organizations.
Other than computers numerous technologies support the business significantly within the global
supply chain management. The Internet and Electronic Data Interchange support to access the
data on the market then demography and other data that are related to the compliance. The
internet technologies are effectively utilised within the marketing along with the advertising
process (Aragón-Correa, Marcus, & Hurtado-Torres, 2016). The internet also helps the firm to
select the freight forwarders as well as the customs brokers for choosing the best option
regarding the projects. Technology reduces the paperwork and boosts the payment process and
even simply the transaction between the parties within the international logistics.
The use of technology within the supply chain process allows the firm to improve its data
accuracy, profiling, compiling, documentation and even the data security. It provides suitable
support in term of the vessel tracking then monitoring the actual route and even enhances the
planning (Zhang et al., 2017). Implementing the tracking devised for the transportation and
delivery process allow the firm to have a clear view regarding the entire process within the
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supply chain management. It will eventually help the firm to save its reputation as well as
enhance the relationship with the consumers.
Using the technologies for import compliance, it is essential that the importers maintain their
responsibility in term of diligence then the reasonable care as well as supervision along with the
control. Setting up of the electronic system for adopting the compliance program will help the
importers to have timely filing then supervision as well as control. Due to this process, the firm
will be able to monitor the clearing process for the products in the USA. The audit capabilities
are also essential within the process which will help the firm to file the documents with the CBP
as well as other regulatory bodies.
Cost estimation
The initial cost of the solar panel is almost 2 million dollars with almost zero duty fees. The
project also involves the shipment cost where the project utilised almost 40 containers. 10
containers prices at 2513 dollar and therefore the total delivery cost is around 25130 dollar. The
time for transit was around 22-26 days and for that total cost 25130 dollars. The entire import
will be done by the cargo ship and the container. The importers also have to claim their duty
drawback on the 20% of the items. It effectively shows that the expenses of the import are
claimed back for the 20% of the products. The tariff increase at the value of 30 percent that fall
under section 201 which show that the volumes of the container and the price value have diverse
activity in term of 30%. It effectively show that the business have to face the increased tariff rate
of 30% within the import of solar panel. Furthermore, an anti-dumping case with the South
Korea can be visualized with the charging of 15.24% that also have the impact on the cost
estimation regarding the financial activity of the project.
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Conclusion
The paper eventually concludes the fact that the importing project of Solar Panel from South
Korea to the US required suitable and effective planning in term of freight forward then duty fees
and other regulations. The paper also concludes that the CBP is highly responsible for the border
protection as well as duty collection in term of import. The free trade agreement within South
Korea and the US provided huge facilities for the countries in term of import and export of
products. The paper also concludes that minimal estimated cost is required for the transportation
of the products.
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Sample Exhibits
Exhibit 1: US imports of Solar panel
Exhibit 2: Solar Panel
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References
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strategies of international firms: old controversies and new evidence on performance and
disclosure. Academy of Management Perspectives, 30(1), 24-39.
Backer, L. C. (2018). Theorizing regulatory governance within its ecology: the structure of
management in an age of globalization. Contemporary Politics, 24(5), 607-630.
Bernard, A. B., Grazzi, M., & Tomasi, C. (2015). Intermediaries in international trade: Products
and destinations. Review of Economics and Statistics, 97(4), 916-920.
Carson, A. (2016). Facing off and saving face: covert intervention and escalation management in
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Draper, T. (2017). American business and public policy: The politics of foreign trade. Routledge.
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Retrieved 15 March 2019, from https://www.marketwatch.com/press-release/us-solar-
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Appendix
Table 1: Incoterms
Incoterm Transport
Mode
Seller Responsibility
Ex Works EXW Any To a certain premise
Free Carrier
FCA
Any A certain premise and loading
Free Alongside
Ship
FAS
Sea and inland
waterwa
y
Export clearing and delivery alongside the vessel
Free on Board
FOB
Sea Export clearing and delivers to the port on the vessel’s
board
Cost and
Freight
CFR
Sea Delivery on board of the vessel and payment for the
delivery to the foreign port
Cost, Insurance
and
Freight
(CIF)
Sea Delivery on board and insurance for the buyer’s risk of
loss or damage
Carriage and
Insuranc
e Paid to
CIP
Any Delivery to the carrier at a named location plus
insurance of a buyer’s risk
Carriage Paid to
CPT
Any Delivery to the carrier at an agreed place and payment
for the delivery to the destination
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Delivered at
Termina
l DAT
Any Export clearing and delivery to the target destination
plus unloading
Delivered at
Place
Any Export clearing and delivery to the destination at the
disposal of the buyer
Delivered Duty
Paid
DDP
Any Delivery to the target place plus import clearing
without unloading
Table 2: Cost estimation
Product Cost Tarff Transportation
Solar Panel 2,000,000 0 25130
Total 2,000,000 0 25130
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