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Global sourcing is the purchase of goods and services from foreign countries and requires the Postal Service to account for trade regulations, duties, and tariffs when selecting sourcing locations. Costs related to shipping in global sourcing include:
- Transportation costs — transportation, drayage, fuel, surcharges, and other freight-related fees.
- Inventory carrying costs — warehousing, handling, taxes, insurance, depreciation, shrinkage, obsolescence, and other costs associated with maintaining inventories.
- Cross-border taxes, tariffs, and duty costs — often referred to as “landed costs,” which are the sum of duties, shipping, insurance, and other fees and taxes.
- Supply and operational risks — including geopolitical factors, such as changes in country leadership, tariff and policy changes, transit delays, and instability resulting from war, terrorism, natural disaster, and other matters.
Cost/benefit analysis should be performed to address the challenges associated with accounting for these cost factors when selecting sourcing locations. Cost/benefit analysis should be completed for any complex nondomestic or domestic shipping decisions. To make an intelligent sourcing decision, all costs for each potential location must be determined.
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