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Handling International Returns

Whether goods and materials are being returned for repair, refurbishing, recycling, or resale, reverse logistics has its own unique considerations. In addition, when companies need to manage returns across international borders, reverse logistics becomes an even more complex process.

That complexity-not to mention the cost of freight, which often outweighs the benefits of taking the item back-discourages many companies from bothering with international returns.

Yet, sometimes there are compelling reasons to become involved in reverse logistics internationally. In some instances, a returned product can be sold to recover some of the costs incurred, says Dale Rogers, professor of supply chain management at the University of Nevada-Reno. "If you can recover some asset value out of the refurbished product above the cost of transportation, it may make sense to ship it outside the country," he says. "And if a company imports items into the United States and they are returned by the end customer unused," he adds, "it may be possible to resell them in a third country and claim a refund on the original import duties under duty-drawback regulations."

Tips from the Pros

Managing returned goods across international borders is a complex and specialized process. Here's some advice from experienced logistics professionals on what to watch out for.

Documentation

Be sure you know exactly which documents customs authorities in both the origin and destination countries will want. Customs will accept nothing less than what is required. Some governments require special documentation for returned goods-when they leave or enter a country on a temporary basis, for example. Be aware and ask all the questions about how your specific circumstance affects documentation.

Regulatory Controls

When highly regulated products, such as pharmaceuticals and foodstuffs, cross borders because of quality problems or because their expiration dates have passed, they inevitably raise red flags with customs and other authorities. There are laws in most countries about the quality of the products that can be brought across their borders. These laws can be in conflict-such as when salvaged pharmaceuticals are shipped to Europe but are rejected by customs authorities because national laws prohibit entry of pharmaceuticals within six months of their expiration date. It's vital, therefore, that shippers thoroughly research relevant laws in the destination country prior to making a commitment to ship regulated goods.

Valuation

When companies import returned goods, they usually prefer to declare a used item's resale value, which can be considerably lower than its value when new. However, customs laws in some countries may require shippers to use the item's original value. It's important to straighten that out before shipping.

Barriers to Immediate Replacements

Before promising immediate replacement of parts to customers overseas, shippers should be sure there are no regulatory barriers to providing that service. Some countries, such as Peru, Colombia, and Ecuador, require preshipment inspections of all commercial shipments-even replacement parts-prior to export. These inspections are carried out by agencies appointed by the importing nation's government. Inspections can delay emergency shipments, so shippers must consider that when establishing repair-and-replacement services for international customers.

Cultural Differences

Shippers in the United States have many options for handling returned goods, including resale in secondary (discount) markets, export to a third country, and destruction in landfills or by incineration. However, cultural differences may limit a U.S. manufacturer's options when dealing with a customer overseas. For example, U.S. manufacturers often include an allowance for damaged merchandise and expect the customer to dispose of those items. That's not acceptable in the food industry in Europe. Distributors and retail stores are encouraged to recycle in whatever way they can. Their reverse logistics process is built around recycling as the primary avenue for disposing of merchandise. It is very different from the typical bill-back or resell situation in the U.S.

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