Importing products from overseas has always been a critical component of the gift and decorative accessories business in the U.S., and in the era of globalization, it's becoming even more important. Indeed, imported products account for as much as 75 percent of the goods sold in the category. This heavy reliance on overseas sourcing inevitably means working with suppliers from non-industrialized countries, some of whom have little experience exporting to the U.S.
But even experienced suppliers in industrialized countries can make costly, time-consuming miscalculations. And with greater government vigilance at U.S. points-of-entry since 9/11, the negative impact of such miscalculations make it all the more imperative to get the details of international shipping right the first time.
Delays and overruns in international shipping can be very costly, especially when international shipments are pegged to trade shows or other logistically precise situations, where timely, dependable consignment is crucial. We've all heard the horror stories: costly delays, labor strikes, unanticipated customs costs, shipments lost, damaged, or separated in transit, and goods improperly delivered or never delivered at all.
Sometimes the problem arises even before shipping, as when the wrong merchandise is packed or items are excluded due to human error, or even deliberate fraud. However, these horror stories are by far exceptions to the rule. Only an estimated one in a thousand international shipments is lost or shipped fraudulently by an unscrupulous supplier.
Still, the potential for shipping problems does exist. Happily, there are a series of steps an importer can take to substantially reduce the risk of something going wrong. Here are some general guidelines:
The changes since 9/11
- Establish and maintain good communications between buyer and seller. Though it may seem time consuming, ongoing communication is the foundation for successful consignment of product.
- Provide a detailed commercial or pro forma invoice. A commercial invoice is similar to other invoices, providing a description of merchandise, along with the price and the addresses of the shipper (seller) and consignee (buyer). A pro forma invoice, which precedes the commercial invoice, is intended to provide evidence of the final form and amount of the commercial invoice.
- Ensure proper preparation of shipping documents. This includes the commercial invoice and air or sea bill of lading, both of which are completed overseas by the freight forwarder. Proper preparation means including all necessary information on both forms. The freight forwarder in the country of origin can assist the seller in completing these forms.
- Maintain an open dialogue with the U.S. Customs broker. Open communication means that both the U.S. Customs broker as well as the importer fully understand the transaction and each other's responsibilities. One way to facilitate this understanding is through the proper use of incoterms on the commercial invoice. Incoterms (e.g., ExWorks, FOB, CIF) break down the responsibilities of the buyer and seller regarding transportation and insurance issues. Maintaining communication with your broker prompts the broker to watch for the shipment, clear it, and deliver it without constant reminders. Good communication increases the chances that everything will go smoothly.
Though officials have become more vigilant in the post 9/11 era, most importing procedures haven't changed very much. Importers sourcing products overseas are required to present the same documents as before: a detailed invoice and a bill of lading. What has changed since 9/11 is the inspection process, which has become more extensive and time-consuming. Consolidated sea freight shipments are the most likely candidates for more intense examination. To minimize Customs clearance delays, your overseas supplier should follow these guidelines:
Although it can be a complex process, importing goods into the U.S. need not be a horror story. By following these suggestions, you'll maximize your chances of having a seamless, problem-free transaction every time.
- Include all information on Customs invoices.
- Prepare invoices completely and carefully. Write clearly or type. Allow sufficient space between the lines. Keep data within each column.
- See that the invoices contain all information that would appear on any well-prepared packing list.
- Provide a detailed descriptionfor each item of merchandise contained in individual packages.
- Label goods legibly and conspicuously with the country of origin, unless they are exempted from country-of-origin marking requirements.
- Anticipate and comply with the provisions of special U.S. laws that may apply to the goods being shipped.
- Both exporters and their U.S. customers must work with U.S. Customs to develop appropriate packing standards for the merchandise being shipped.
- Establish sound security procedures at the exporter facility and in transit to the shipper. Do not give smugglers the opportunity to introduce illegal merchandise into your shipment.
- Consider shipping on a carrier participating in the Automated Manifest System. Carriers and customs brokers participating in this program receive electronic releases from U.S. Customs so that original paperwork is not required for release of the merchandise. Otherwise, messengers have to deliver original documents, and that takes time.
Phil Hobson has 16 years experience in the freight forwarding and customhouse brokerage industry, of which the last nine has been as president of Phoenix International Business Logistics Inc., Elizabeth, N.J. Phoenix is a fully licensed international freight forwarder and U.S. customhouse broker specializing in onsite logistics for trade shows and other special events.