As a shipper embarking on international shipping for the first time, customs clearance can be a daunting stage in the process. Authorized documents grant the rights to import and export specified goods to and from the country, and without this official clearance, the shipper may experience shipment delays, penalty surcharges and more.
Here’s a quick 5-step guide on customs clearance to know what to prepare for your cross-border shipment and how to do it right!
Step 1: Check whether your shipment requires any licenses
At the very beginning of a shipment order, check whether you require an export/import license for the goods. For certain commodities, not having these important documents mean that your goods can’t exit the country or enter another. To find out whether you need an export/import license, first confirm where you are shipping to and what it is you are shipping.
- Where: Which country’s import regulations you need to adhere to
- What: The nature of the goods and if it requires an import license or special handling
Each country has their own goods-specific regulations. Below is a table which provides an overview of the license requirement for each nature of goods.
For example, fertilizers (what) are controlled goods in the Philippines (where) and according to their country’s regulations, an import license must be issued from the Department of Agriculture – Fertilizer and Pesticide Authority of Philippines before it can be allowed entry.
All customs offices treat imported goods strictly “for reasons of national security, environmental and public health protection.” (“Philippines – Prohibited & Restricted Imports”, export.gov).
Step 2: Ensure the consignee understands their role
One assumption is that the consignee (can also be referred to as the receiver) plays a passive role because they simply receive the goods. However, they may play a proactive role in facilitating the entry of your goods into the country.
- The consignee is the person who obtains the import license from the destination’s custom office to certify that the cargo has been authorized for entry.
- Should there be any changes in shipment details, the documents that are to be submitted would be subjected to change as well. The consignee can declare these changes to the customs office early on, giving them adequate notice to update their systems so that no penalties may be incurred.
Having a communicative relationship between the shipper and consignee may aid in the resolving of any potential shipment issues.
Step 3: Choose the right Freight Forwarder (FF)
You choose your FF based on:
- The countries you are exporting from/importing to
- The mode of transportation required (air or sea)
With a FF have experience in local shipping or prior insights on your trade route, they may provide more comprehensive advice or smoother service than one who is not. However, it is important to note that FFs are not obligated to share information of past services or clients, but they will be able to advise on the correct process flows.
It is still recommended to be fully aware of your shipment requirements prior to engaging the FF or seek one who is knowledgeable on the specifics of your cargo.
To find out what are the required documents for customs clearance, move on to Step 4.
Step 4: Know which mandatory shipping documents you and your FF are in-charge of
The general shipping documents required for customs clearance include:
- Bill of Landing (ocean freight) or Airway Bill (air freight).
- Commercial Invoice — specifies the value of the shipment. The amount of duties & taxes payable will depend on this document. It is not recommended to under-declare the value of your shipment for the sake of lower duties & taxes, as you will then be subjected to penalties levied by the customs office.
- Packing List — states the cargo dimensions and weight. It serves as a tally sheet of your shipment at checkpoints such as the warehouse or destination.
- Export & Import Permit — FFs are responsible for the Bill of Lading or Airway Bill. The Export & Import Permit will also be declared to customs by FF upon receiving all relevant shipment details from you and your consignee.
- Certificate of Origin/ Country of Origin (COO) — the COO is an important document for first-time international shipments and is prepared by the shipper; as with both the Commercial Invoice (CI) and the Packing List (PL). Being in close contact with your goods and your consignee throughout the international transaction, the shipper tends to have the most access to crucial shipment information which are required for the COO and CIPL. Usually, the FF is not the party who generates the CIPL as they are not familiar with your shipment details. The only exception for the FF generating the CIPL would be if the FF has been managing the shipper’s inventory or have handled the cargo themselves.
- Any other documentation (e.g. licenses) as specified by the buyer or as required by financial or regulative institutions according to the importing country regulations.
Step 5: Check, check, and check again!
After all these steps, make sure the details across these documents are consistent and complete before submitting them for clearance. These are legal documents and any changes made after submission might be subjected to extra charges. Any misrepresentation detected by the customs office such as deliberate undervaluation, missing information or spelling errors would render your documents invalid, and your shipment may incur penalties.
This disclaimer is to inform readers that the views and opinions expressed in the blog belongs solely to the author; and not necessarily to the author’s employer, organization, committee or other group of the individual. The primary purpose of this blog is to educate and inform readers but does not constitute as professional advice and should not be taken as such.
Carigos’ (Logistics Connections Private Limited) blog website assumes no liability for any activities in connection with these articles, information or opinions.
At CARIGOS, we can match you with our trusted freight partners who have years of experience preparing shipments like yours for cross-border shipping. We have a strong network of partners in more than 100 cities which can serve different modes of transportation, ocean, sea and land. Our team of logistics professionals can provide you with guidance throughout your shipping arrangement process to ensure your shipment reach their desired destination in a timely manner.
Are you ready to embark on an international shipment and customs clearance? What if we told you that you don’t have to start your journey alone?
Let us help you in choosing the Right FF!