Shippers try software to tally foreign tariffs

The race to deliver the ability to calculate the full cost of shipping products to foreign buyers is heating up as the big package carriers pair up with rival vendors of international logistics software.

But the technology still needs to be proven in real-world settings before it can be put to broad use by online retailers and other companies doing business on the Web.

"Quite frankly, there are still a number of unknowns," said Michael Comstock, senior vice president of e-commerce and planning at DHL Airways. "We really need to test this."

DHL Airways last week said it plans to launch several pilot projects early next year, using a landed-cost calculation engine developed by New York-based Syntra Technologies.

Later this month, sources said, Atlanta-based United Parcel Service (UPS) is expected to make a similar teaming announcement with NextLinx. And Memphis-based FDX is quietly working the same turf with Vastera, the sources added.

What's pushing the shipping companies to act is a burning need on the part of online retailers to be able to automatically tell overseas customers the so-called landed cost - what a product will really cost after duties, tariffs and other fees are taken into account.

"The endgame here is to be able to guarantee (the final cost)," Comstock said. That could open up international markets to online retailers that currently don't want to risk surprising overseas buyers with big bills they refuse to pay.

Healthy Discounts, a small retailer of nutritional supplements that launched a Web site last spring, quickly stopped taking overseas orders because trying to manually calculate landed costs was such a headache.

"I don't want to turn business away, but I knew we had to do it right or no one would come back," said Mariano Farrar, the owner of Healthy Discounts in Austin, Texas. And the stakes are high: Farrar said purchases by foreign distributors could eventually exceed domestic sales to consumers. Healthy Discounts plans to be one of Syntra's first users.

The landed-cost issue first emerged into the public eye last summer. But the software is still "in the birthing stage," said John Fontanella, an analyst at AMR Research in Boston. The big question is whether vendors are feeding accurate duty and tariff data into their calculation engines, he added.

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