Market Overview

Commentary: Innovative Program Offers Pre-Clearance And Domestic Distribution In Brazil From Miami

Commentary: Innovative Program Offers Pre-Clearance And Domestic Distribution In Brazil From Miami

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Thanks to a law being changed in Brazil, one city in one country has the authority to offer e-commerce buyers in Brazil an expedient method to order online and receive goods in a matter of days instead of weeks. That city is Miami, Florida, and the country is, of course, the United States. With 85 weekly flights between Miami and cities in Brazil, this lane is offering potential exponential growth and opportunity.

Wind the clock back about five years to when Correios, the Brazilian post office, wanted to find a way to supplement its mail business. Not unlike the evolution of the U.S. Postal Service from letters to final-mile packages of goods being ordered online, Correios sought a way to diversify and generate additional revenue. Brazil is a notoriously difficult country for imports, with a complex series of regulatory hurdles that I personally believe were designed to extract additional revenue through penalties for seemingly insignificant violations like unlabeled boxes rather than facilitating trade into and out of the country.

But Correios, Brazilian customs and the national legislature worked together to enact a change in the law that permits a pre-arrival process and cleared the way to develop and test a pilot that paved the way for the program in place today.

The program, called "Compra Fora" – which in Portugese translates to "Buy foreign" or "Buy outside the country," requires Brazilian buyers to register and receive a unique identifier number. Along with this number, buyers receive a unique Miami address and box number. This is the shipping destination they specify when making a purchase.

Packages are routed to Interport Logistics, a foreign trade zone in Miami adjacent to the airport. Gary Goldfarb, Chief Strategy Officer, describes the process for arriving packages.

"When a package arrives at Interport, it is identified and matched to the buyer, weighed, measured and a three-dimensional picture is taken electronically. We then open the package and take a picture of the contents and, if included, a copy of the commercial invoice. All of this information is provided to Correios and the Brazilian customs authority, which then begin the process of reviewing the goods and approving them for entry."

Not all commodities are eligible for this program, Goldfarb cautions. Things like cigarettes, vaping equipment, guns and ammunition are prohibited and have been intercepted at Interport in transit and not forwarded.

Once released, Correios advises the Brazilian buyer of the total charges for Interport's handling, the final-mile delivery and customs duties (if any). Once paid, a label is generated that Interport applies to the package and sends the cargo by air to Brazil where, upon arrival, it bypasses the customs warehouses and goes straight to Correios, which delivers it to the buyer.

The time savings for Brazilian buyers is huge. Because of the inherent challenges of clearing customs with commercial shipments by air (or sea) within Brazil, the process can take weeks or months. Once the goods are cleared and paid for, they begin their journey to the recipient, taking four to six days on average.

Goldfarb credits the success of the program to the work of Miami International Airport and Miami-Dade County. Emir Pineda, Manager of the Trade & Aviation Logistics Marketing Division of the Miami-Dade Aviation Department, said that his department worked very closely with people on the ground in Brazil and the United States to make this pre-clearance happen. "The close relationship and connectivity between Miami and Brazil meant that we as a city and as an airport were the most natural fit to undertake this initiative."

Today, the audience is limited, but the plan is to expand it exponentially. "Only 12 percent of 204 million Brazilians have an international credit card, which is required to buy goods outside the country. This leaves a large portion of the market underserved," Goldfarb explained. "Our joint venture partner, Sinerlog, is working with a local bank in Brazil to lay the groundwork to create a platform where the bank handles the international currency exchange and supplants the domestic card with an international one for the purchase."

In the future, Goldfarb said the goal is to integrate the Compra Fora platform directly in the systems of large retailers and e-commerce companies that ship tens of thousands of orders nightly, making the current two-step process of paying for the goods and paying for the shipping charges a single transaction. Working collaboratively, the incentive for all the stakeholders is more business.

Goldfarb continued, "The retailers get access to international buyers and a new audience for their goods. Correios gets more packages. The customs authority gets accurate information about what is being purchased and its valuation, including images of the products from the retailers' libraries. This couldn't happen without advances in technology and the willingness of everyone to work collaboratively to make it happen."

Interport has committed approximately 4,000 square feet of its 300,000 square foot facility to this project, with plans to expand it in the near future to 16,000 square feet. Goldfarb believes that if the growth continues as forecast, this service could require an additional building of its own.

"This could require an additional 100,000 square foot building. Of course, it would have to be an FTZ [foreign trade zone] as well, but that's what we do. While we have a commercial intent to make money, the most important part is the social intent – serving the country's entire population using 21st century e-commerce."

Image Sourced by Pixabay

Posted-In: air cargo Freight Freightwaves LogisticsNews Global Markets General


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