The Legal Issues of Customs and Importing Goods
When it comes to importation, you always have to look into the legal aspects of importing your goods and if your moves comply with the country’s rules and regulations. But the good news is there are only a few numbers of customs and importing regulations. But if you’re importing for the first time ever, the best recommendation is to use a broker. By doing so, things will easier for you in the long run, especially when you already know the necessary steps to product importation.
There may be times when you are purchasing from or the shipping companies themselves will be dealing with the importation forms on your behalf. If your imports are lighter than 150 lbs or 68 kg (this is the maximum weight that the shipping companies can handle), you can just pick these up at the post office. Have those customs duty paid. There may be times when you will be receiving a notification informing you that your goods are held up at a certain location and will only be released once the import duties are paid up. You will also be informed where and when the items can be picked up.
But, for sure, you will be importing heavier and larger goods than this. They will more likely be in container loads of half containers.
Limitations Set by Customs
Before ordering your products, you need to look into the restrictions and the necessary special licenses. Countries differ in their regulations towards restricted goods.
There may be countries that ban goods that you have already expected, such as drugs and chemicals. On the other hand, there are countries whose restrictions can leave you shocked. Just like in Italy, importation of shoes is disallowed. In Australia, you can’t also import cultural and heritage goods.
Here’s an important thing to consider. If you are thinking of selling your goods to International buyers, you must look into the Customs regulations of other countries.
Just visit the Customs’ websites for your country and the countries where you are planning to sell your items. If the information you’re looking for isn’t there or if it’s lacking, you can opt to contact Customs directly by phone or email.
- USA http://www.customs.gov
- Australia http://www.customs.gov.au
- New Zealand http://www.customs.govt.nz/default.htm
Negotiating for a Contract
After finding a supplier for your product, you have to discuss a contract. The contract must tackle matters like the price per unit, packaging, how many items are to be loaded into each case, shipping terms and others. There is a lot of shipping terms which you confer with. But you must keep in mind that your contract will make the supplier take the greater risk on board more than you do.
Here are some of the most important shipping terms:
- Ex-Works – Once the goods are no longer at the supplier’s doorstep, you will already be responsible for all the costs.
- FOB – This means that at the supplier will shell out all expenses from the very beginning up to the Port of departure and the export fees as well.
- CIF (Cost, Insurance & Freight) – Supplier pays the costs, insurance and freight charges for sending the goods up to the port of destination.
- DDU (Delivered Duty Unpaid) – Supplier disburses an amount for all the costs incurred in delivering goods to the buyer’s door. This excludes the duties, of course.
- DDP/CARRIAGE PAID (Delivered Duty Paid) – From the term itself, the supplier pays all the expenses including the duties as the goods are delivered on the buyer’s doorstep.
- FOB (Freight on Board) – This is most common shipping term which pertains to the freight expenses to the point of loading.
Caution
There are few things you need to take into consideration because there are some terms which might get you confused, such as the following:
- FOB factory (Freight on Board Factory) – This pertains to the payment of onward costs to the local port or airport which likely results to price increases. This usually happens if the company is located inland.
- ‘CI&F’ or Cost, Insurance and Freight – Other than the FOB price, you are also given the insurance and freight costs. This way, you can come up with a good budget. Or if you’re fortunate, you can have the price paid up once it’s delivered to your door.
To gain more information on importing and exporting (especially when you’re a newbie), visit the Export 911 site at http://www.export911.com/e911/gateway/gateway.htm. This site offers you valuable information on the stages of the import/export process as well as the importing terms and requirements. From the domain name itself, this site is dedicated to exporters instead of importers. However, most of the terms and processes are the same. This site is aimed to make you use their services and so the processes involved are pertained in those terms.
Magnitude of Shipment
The cost of shipment relies on the volume you want to ship. It could come in a Full Container Load or a Lesser Container Load.
The standardized container sizes of full container loads come in 20 foot and 40 foot lengths and can hold whatever products you desire to load. The shipping costs already include the usage of the container. But if you are planning on making regular purchases, you may buy a container if you like. If the products are purchased from one supplier only, the container will be brought to the supplier’s location, filled up on site, conserved and gathered to be shipped to your country. If you’re purchasing from various suppliers, you can have all the goods delivered to your chosen freight agent who will be loading the products at their own location. To save more on money and labor, full container loads are great for shipping your goods. Aside from this, Export/Import processing and Handling & Haulage costs are easier on your budget since full container loads are considered as a single transaction.
On the other hand, if you are not importing products on a full container load, your shipment will be combined with the shipment of other companies that are going to be delivered on the same destination. The charges of a Lesser Container Load are computed by the volume your goods take up in cubic meters. In contrast to full container loads, Lesser Container Loads are impractical. Packaging, loading and unloading the products are can be very exhausting.
Proof of purchase and Documents
Once you have already negotiated with a seller (which already includes the shipping terms, price of goods and the type of packaging), the seller sends you a pro forma invoice. You will be paying these based on what has been agreed during the negotiations.
Generally, pro forma invoices are advance copies of the final invoice. These are necessary in applying for a letter of credit (L/C) and/or foreign exchange (import) allocation.
Once the items arrive, they are coupled with the commercial invoice. Similar to a sales invoice, the Commercial invoice clears the goods throughout the customs. The only difference is the Commercial invoice consists of particular details needed for export-import purposes. To see what a commercial invoice looks like, check http://www.export911.com/e911/export/docCI.htm#docCI.
Keep in mind that the invoice contains the things you wanted and have agreed upon. What the supplier wants is also on this invoice. Thus, you have to double check everything to minimize miscommunication.
Arrange your own shipping
If you prefer to have your own shipper, you can look for shipping companies in Google. When you do, obtain quotations from these shipping companies, so you’ll know what company to choose from. The best part is, you can definitely save around $100 and $500!