The following is a guest post by Denise Bossard, who along with her husband Kelly, runs Er.u.di.tion, a site which provides games to help children learn basic phonics and sight words. With the economy being what it is, many people are looking to start their own businesses, and this post is a good example of the fact that you must always be aware and involved with your endeavor.
As a stay home mom with my children approaching school age I began to look for ways to make money while maintaining the flexibility to care for my kids before and after school and during the summer. In the fall of 2007 my oldest child entered kindergarten and began to learn sight words. After working with flash card for about 5 minutes my son lost interest.
I thought there must be a better way. After much thought and consideration, my husband and I decided to develop and market one of our ideas for sight word games. The resulting game, titled Er-u-di-tion, exposes players to basic phonic sounds and sight words in a fun and engaging way. For the past eighteen months my husband and I have devoted significant time and money to our entrepreneurial adventure. Through this process we learned two fundamental principles – perform due diligence and expect the unexpected.
These two notions were present in many aspects of our business, but proved particularly relevant when transporting our games from the manufacturer to our warehouse. Through due diligence we found it most cost effective to have 5,000 games manufactured in China and shipped to a warehouse in south central Pennsylvania (about 1.5 hours north of our home in Gaithersburg, Maryland). We obtained three shipping quotes that varied significantly from one another, ranging from $4,900 to $6,800.
We agreed to pay $4,900 to have our games shipped from Hong Kong to Baltimore, Maryland and then, via eighteen wheeler, on to York, Pennsylvania. We also agreed that if customs chose to inspect our cargo we would be assessed an additional charge. As fate would have it, our games were randomly selected for investigation by U. S. customs. When we heard this news we were disappointed, but thought this was a minor hick-up that might cost a few hundred dollars at most. A few days later we inspected our games for ourselves and noticed customs only opened one carton, which contained six board games. This reassured us that the additional fee related to customs’ inspection should be minimal.
A couple weeks later we received a bill for $1,721 related to custom’s inspection. Talk about shock and awe. How could it cost $4,900 to ship 5,000 games from Hong Kong to Baltimore and on to Pennsylvania (a month-long journey) and then cost an additional $1,721 for customs to open one carton (a process that took a few hours)? After a day of discouragement and anger, we put on our investigative hats and began our due diligence. We asked for an itemized breakdown of all charges that comprised the $1,721 bill as well as a contact person for each service provider. The breakdown provided was as follows:
- Customs exam $815
- Handling 240
- Bond premium 150
- Inland freight and services 516
- Total charges related to customs’ inspection $1,721
After a call to the U. S. Customs office, we learned that this governmental agency did not charge us a dime – all charges related to 3rd party service providers. A company called The Belt’s Corporation charged $815, most of which related to “devanning” (i.e. taking a fork lift and removing 18 pallets from the shipping container so they could be inspected). While this seemed a little steep for an hour or two of blue collar labor, we were at least satisfied that required services were provided. We intend to pay this amount.
The $240 handling fee was charged by our shipping agent for making a couple calls to handle logistics. Needless to say, we were not impressed with how the inspection logistics were “handled.” We do not plan to pay this charge and requested that our shipping agent waive this fee. Despite two separate requests, we have not received any support for the remaining charges. We are particularly interested in hearing justification for the $516 “inland freight and services” charge since the customs officer told us that it is only a 5 minute drive from the Baltimore harbor to The Belt’s Corporation.
While this chapter in our entrepreneurial adventure is not yet closed, it appears that more than half of the amount charged for our customs inspection was bogus. By performing our due diligence and investigating the charges, we expect to save approximately $900 and feel proud that we did not allow ourselves to be victimized.
Do you have any experience running your own business? Have you ever had to dispute charges that you thought were wrong?
Photo by qwrrty.
{ 4 comments… read them below or add one }
I own my own business and I can personally attest to this. You have to be skeptical and make sure you cover your bases. Not everyone in this world is truthful and honest.
I’m sorry you could not find an American source to build your product.
I think being charged the wrong price is one of the biggest issues to running a business. Another issue is dealing with contractors who quote one rate and charge another.
You just have to make sure everything is clearly spelled out in a contract.
Yeah, customs is a major problem. As we are based in Canada and many of the publishers and distributors for our board games are in the US, we deal with the border on a regular basis. We have given up trying to have the games shipped up by a 3rd party. In all cases, the cost of freight and the cost of brokerage was too high – ranging from 10% to 25% of the cost of our shipment.
In the end, we found it easier to do the paperwork ourselves since all these board games are zero-rated anyway. The paperwork is minimal, taking all of 10 minutes at most to do and driving down and up ourselves is much simpler.