The art of navigating parts into and out of Brazil more quickly
Competitive aviation increasingly requires minimizing the stocks of inventory owned and kept onsite by airlines while preserving speedy access to necessary spares. It also requires very fast turnaround of major repairs at shops, which demands prompt access to necessary parts.
Both types of fast part access present myriad challenges, not least of which is getting parts across borders and through customs. In Brazil, that has long been a bit of a hurdle. Speed is now imperative as the nation gains significance in global aviation markets.
Brazil's airlines have handled most of the direct burden of importing parts and these airlines are crucial to easing access in the future. But manufacturers, shops, parts traders and others also have a stake in the effort and roles to play. They too can help expedite importation or establish parts stocks in Brazil ahead of time.
says its Brazilian customers face challenges that result in higher inventory costs and slower flow times for repairs than those incurred by airlines elsewhere. The company works closely with customers there within this difficult framework. And it collaborates with airlines and others in advocating laws and regulations that would promote more efficient operations.
The airframe original equipment manufacturer (OEM) says its airline customers know customs clearance processes and costs best. Boeing does not participate in ownership of any pools of imported parts in Brazil.
Other OEMs must also make the best of sometimes difficult conditions. Supporting more than 30,000 engines worldwide,works to manage and mitigate potential customs issues all around the globe, notes spokesman Perry Bradley. “For Brazil specifically, due to our large presence in the country both in aviation and other GE divisions, we have built up a strong local team handling logistics at both our GE Celma overhaul facility and with corporate teams that support each GE business.”
For carriers that overhaul engines at Celma in Petropolis, Brazil, GE logistics teams handle the flow for parts that are required.
GE has found that the best way to ease customs bottlenecks is to comply with all rules and regulations. Fortunately, Brazilian regulations list specific processes for importing parts on an expedited basis for qualified firms. But to make use of these expedited processes, a company like GE must ensure that all relevant requirements are met whenever it is audited.
“Attention to detail is key,” Bradley says. For example, Brazil requires that all goods entering the country have separate commercial invoices and packing lists, and that the commercial invoices be signed in blue ink. GE's standard process generates a combined commercial invoice and packing list, and neither of these has a space for a signature. So one of GE's Brazil-based field service engineers headed a project to create and implement a procedure just for Brazil-bound shipments. The new procedure resolved the compliance issue and has eliminated delays due to non-conformance with bureaucratic rules.
Sometimes in-country stocks are a better answer than faster transit through customs. So another GE initiative drew up special provisions for its H80 turboprop engine, which powers the Thrush 510G agricultural aircraft, certified in late 2012. “Brazil is an important market for Thrush, and fast and efficient engine service and support is key to penetrating the market there,” Bradley explains.
To ensure rapid response for H80 operators, GE positioned a complete spare engine in Brazil, along with a parts inventory that includes consumables, periodic inspection items and other critical objects such as fuel controllers and propeller governors. Thus, GE's in-country field service engineers are fully equipped to handle any issues without delay. “We also make sure each 510G operator has a tooling kit and inspection kit so they can do their first periodic inspection without any spare-ordering requirement,” Bradley says. This approach is working well. Thrush delivered six 510Gs to the country in the second half of 2013 and has ramped up for more deliveries in 2014.
Other companies are eager for business there but realistic about the challenges. “Brazil is a great country forAerospace Systems to do business in right now,” stresses Paul Snyder, vice president and general manager of customer service.
Snyder acknowledges that tax compliance is expensive due to the sheer volume of required tax filings and electronic reports. But Brazilian customs and tax regulations offer special rules for aerospace companies. “For example, we have realized some tax benefits for work performed in Brazil, such as reduction of the VAT [valued added tax] rate from 18 percent to 4 percent for import and sales of some aerospace parts.”
But moving UTC parts in or out of Brazil still takes 10-30 days due to paperwork and inspections. The types of inspections determine how much time customs take, and Snyder says clarifying inspection levels would help speed things up. “As aerospace requirements and regulations mature in Brazil, we look forward to improving our processes to mitigate the risk of more tedious inspections and reduce the time to get parts through customs.”
UTC's MRO facility for nacelles and reversers, based in Atibaia, helps support Brazilian customers. The company also provides a pool of parts through its Prime Solution program, which makes rotable assets available. But Snyder says Brazilian laws on exchanging aviation assets are not as clear as they are for other industries.
The U.S. manufacturer has increased inventories for the most frequently used parts. And it concentrates all imports and exports for Brazil with one vendor, reducing freight, brokerage costs and fees.
's Brazilian customers are responsible for the actual importation of Honeywell parts into the country, so the U.S. OEM has limited familiarity with Brazilian customs, says spokesman Nathan Drevna.
However, Honeywell keeps, in partnership with one of its authorized dealers in Brazil's business and general aviation (BGA) market, a regional pool of parts at a bonded warehouse. Honeywell parts stocked at this facility can be released in 2-4 hr., any day, any time. Honeywell BGA also has a network of service-center channel partners that stock materials to be used in repairs, modifications and upgrades.
If a part cannot be obtained from the bonded warehouse and must be imported from the U.S., Honeywell recommends that an authorized Honeywell dealer in Brazil handle importation. “They are experienced with importation and have a good history and reputation with customs,” Drevna says. “The chances for a fast and smooth importation process are much better.”
However, Nelson Aquino, managing director ofBrazil, argues that customs clearance there is no more challenging than it is in any other country in which Rockwell does business. “It is just a matter of understanding the process and planning and adjusting accordingly.”
Rockwell is promoting its Dispatch asset-management program. Under Dispatch, airlines would be assured consigned spares at hub and line stations, dedicated or closed regional pools, availability monitoring and repair performance guarantees. The company is considering putting spares pools in Brazil either at a Rockwell site in Sao Jose dos Campos or at partner facilities.
James Hardman, vice president of customer services for Latin America at AJ Walter (AJW) Aviation, says customs processes in Brazil are complex and differ from U.S. processes, the usual reference point. Fortunately, Hardman says, Brazilian operators are adept at navigating these processes and often route deliveries through their hubs or freight forwarders in Miami. So part brokers like AJ Walter usually deliver parts to Miami.
Furthermore, airlines are exempt from paying two main taxes—those for imports and industrial products. So importation costs mostly involve warehousing and freight.
AJW must ensure that two copies of the customs invoice are signed in blue ink, that these copies are inside and outside the box, and that all other paperwork is in place. Brazilian airlines usually manage the rest.
AJ Walter now holds substantial inventory in Miami, an excellent distribution point for most locations in Brazil. Hardman says logistics providers such as FedEx offer quick, reasonably priced service to the country. But hazardous goods can be problematic and these providers do not service all Brazilian cities.
Hardman says there have been some local initiatives to pool parts among airlines. But there is some question whether the synergies actually are available to Brazil's airlines, given their scale and disparate equipment.
The country has eight passenger airlines, but only a few of significant size—Brazil, TAM, GOL and Varig .There is surely some commonality in parts required for these major fleets, but perhaps not enough to justify much pooling among them.