Streamlining Duty Drawback: How K&N Engineering Boosts Cashflow with Flexport’s Digital Logistics Solution

Introduction: The Hidden Opportunity in Duty Drawback

In the fast-paced world of international trade, businesses are constantly seeking ways to optimize their operations and improve their bottom line. One often overlooked opportunity for significant savings lies in the duty drawback program – a federal initiative that allows U.S. companies to reclaim customs duties and taxes paid on imported goods that are subsequently exported or destroyed. However, a staggering 78% of eligible duty drawback refunds go unclaimed, leaving substantial amounts of money on the table for many businesses.

This article explores how K&N Engineering, a leader in the auto industry since 1969, has leveraged Flexport’s digital logistics platform to implement an efficient duty drawback program, resulting in remarkable time and cost savings. Their success story serves as a compelling example of how embracing digital solutions in logistics can lead to significant financial benefits and competitive advantages.

K&N Engineering: Driving Innovation in Filtration Technology

K&N Engineering has built a strong reputation as an innovator in the automotive filtration industry. Known for their high-quality, reusable air filters, K&N caters to a diverse clientele ranging from auto enthusiasts and experts to everyday car owners looking to upgrade their vehicles. As an official partner of NASCAR, K&N has played a crucial role in helping crown notable racing champions.

Beyond performance, K&N’s commitment to sustainability is evident in their product design. With an estimated 100 million disposable filters ending up in landfills each year, K&N’s reusable air filters offer a more environmentally friendly alternative, aligning with their tagline “filtration for the future.”

The Challenge: Navigating the Complex World of Import/Export Duties

For companies engaged in global trade, like K&N Engineering, the costs associated with importing and exporting can be substantial. In recent years, tariffs and duties have seen significant increases, putting pressure on businesses’ bottom lines. While many logistics and compliance managers are acutely aware of these rising costs, fewer are familiar with the potential savings offered by the duty drawback program.

The complexity and time-intensive nature of the duty drawback process present significant barriers for many companies. This combination of factors – lack of awareness and the need for specialized expertise – often prevents businesses from taking advantage of this valuable opportunity to reclaim customs duties and taxes.

Enter Flexport: A Digital Solution to Duty Drawback Challenges

For K&N Engineering, the journey towards implementing a duty drawback program began with the arrival of Dan Strick as their Corporate Compliance Manager. With his experience in drawback programs at Fortune 500 companies, Strick quickly recognized the potential savings K&N was missing out on, particularly given the significant customs duties they were paying – up to 30% from Section 301 tariffs alone.

While Strick had the knowledge to ask the right questions, this was his first time building a drawback program from scratch. It was at this juncture that Flexport’s duty drawback program emerged as the ideal solution, offering not just a technological platform but also the expertise of a dedicated team of drawback specialists.

The Flexport Advantage: Automation, Centralized Data, and Expert Support

Flexport’s digital logistics platform provided K&N with several key advantages in implementing their duty drawback program:

1. Automated Data Collection: As Flexport was already serving as K&N’s sole customs broker for imports, all necessary import and product-level details were readily available in the Flexport Platform. This integration significantly simplified the data collection process, with Strick noting, “I don’t have to upload any import information whatsoever. Everything is already handled through Flexport’s Platform.”
2. Time Savings: The automation and centralized data offered by Flexport’s platform dramatically reduced the time required for duty drawback processes. Strick, who single-handedly manages drawback, freight forwarding of international inbound shipments, ESG efforts, and K&N’s product compliance programs, found this time-saving aspect invaluable. He remarked, “With other companies, the drawback process was easily a week-long task. With Flexport’s system, it now takes a few minutes.”
3. Expert Guidance: Beyond the technological solution, Flexport’s team of drawback experts provided crucial support and guidance throughout the process. Strick described the Flexport team as “fantastic business partners,” helping navigate each step of building K&N’s duty drawback program.

Results: Boosting Cashflow and Staying Ahead of Competition

The implementation of Flexport’s duty drawback program has yielded impressive results for K&N Engineering:

• Increased Refunds: K&N was able to grow its drawback refunds seven times the expected amount, significantly boosting the company’s cashflow.
• Time Efficiency: The time required to complete a duty drawback claim was reduced from a week to just 15 minutes, freeing up valuable resources for other critical tasks.
• Stress-Free Process: Flexport’s guided approach and expert support made the implementation and ongoing management of the drawback program stress-free for K&N.
• Reinvestment Opportunities: The additional savings enabled by the duty drawback program allow K&N to continue innovating, investing in new technologies, and expanding their brand presence to engage with a new generation of customers.

The Broader Impact: Enabling Innovation and Sustainability

The success of K&N’s duty drawback program extends beyond immediate financial benefits. By improving cashflow, K&N is better positioned to invest in research and development, furthering their commitment to innovation in filtration technology. This aligns perfectly with their mission of providing “filtration for the future” and supports their efforts to offer more sustainable alternatives to disposable filters.

Moreover, the time saved through Flexport’s efficient digital solution allows K&N’s compliance team to focus on other critical areas, such as ESG initiatives and product compliance, ensuring the company remains at the forefront of industry standards and practices.

Conclusion: The Power of Digital Logistics Solutions

K&N Engineering’s success story with Flexport’s duty drawback program underscores the transformative potential of digital logistics solutions. By leveraging technology and expertise, K&N has not only reclaimed significant funds but also streamlined their operations, allowing them to focus on what they do best – innovating in the automotive filtration industry.

For businesses engaged in international trade, the lesson is clear: embracing digital logistics platforms can unlock hidden opportunities for savings and efficiency. As the global trade landscape continues to evolve, companies that leverage such solutions will be better positioned to navigate challenges, optimize their operations, and stay ahead of the competition.

The journey of K&N Engineering serves as an inspiring example of how traditional industries can benefit from modern, digital approaches to logistics and compliance. It demonstrates that with the right partners and technologies, businesses can turn complex challenges into opportunities for growth and innovation.