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The Legalities of Customs and Importing Goods

The importation process requires you to be aware of the legal aspects of importing goods.  You must comply with the country’s rules and regulations.  If you’re a first-time importer, you should probably use a broker.  They will help things to go easier for you in the long run.

If your imports are lighter than 150 lbs or 68 kg—the maximum weight that the shipping companies can handle—you can pick these up at the post office.  Make sure Custom duties are paid.  If not, you may be notified that your goods are held up at a certain location and will only be released once the import duties are paid up.  They will tell you when and where the items can be picked up.  If you are importing heavier or larger goods in half containers, there are limitations placed by Customs.

Customs Limitations

Countries vary in regulations and restrictions.  Before ordering your products, you need to research the restrictions and license requirements for your product. There are some restrictions you may find common, like the banning of drugs or chemicals.  Others, you may find strange such as Italy disallowing the importation of shoes, and Australia disallowing the import of cultural and heritage goods.
If you are thinking of selling your goods to International buyers, you need to research the Customs regulations of other countries.
You can visit the Customs’ websites for both your country and the countries you plan to sell to.  If you can’t find the information you need, you can contact the Customs by phone or email.

Negotiating for a Contract

After researching regulations and finding a supplier, you begin contract negotiations. The contract should cover items such as:

  • Price Per Unit
  • Packaging
  • Number of items per case
  • Shipping terms

Knowing shipping terms will help make the process flow more smoothly.  Here are some of the most commonly-used shipping terms:

  • Ex-Works:  You are responsible for the costs once the product leaves the supplier. 
  • FOB:  The supplier pays out all expenses from the very beginning to the Port of departure including export fees.
  • CIF:  Cost, Insurance & Freight—The supplier pays the costs, insurance and freight charges up to the port of destination.
  • DDU:  Delivered Duty Unpaid—The supplier disburses an amount for all the costs incurred in delivering goods, excluding the duties.
  • DDP/CARRIAGE PAID:  Delivered Duty Paid—The supplier pays all the expenses including the duties. 
  • FOB:  Freight on Board—This pertains to the freight expenses to the point of loading.

Some terms may cause you some confusion, so take caution.  Two of them are:

  • FOB FACTORY:  Freight on Board Factory—This is usually seen if the company is located inland.  It pertains to the payment of onward costs to the local port or airport.  It can cause price increases.
  • CI&F:  Cost, Insurance and Freight—This differs from the FOB price.  In addition, you are given the insurance and freight costs. This helps you prepare a good budget.  You may be able to have the price paid up when it is delivered.

More information on importing and exporting can be found by visiting the Export 911 site at http://www.export911.com/e911/gateway/gateway.htm.  There, you can find valuable information on the stages of the import/export process.  You’ll also find the requirements and importing terms.  This site is geared to exporters instead of importers, but most of the terms and processes are the same.

Magnitude of Shipment

The volume of shipment determines the cost.  The standardized container sizes of full container loads come in 20 ft X 40 ft lengths, and can hold whatever products you plan to load.  The shipping costs will include the container.  If you are planning on making regular purchases, you may decide to purchase a container. When you purchase 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 purchase from more than one supplier, you can have all the goods delivered to your chosen freight agent who will load the products at their location.

Full-container loads are great for shipping, because they can save on labor and money.  Since full-size loads are considered as a single transaction, import/export processing, handling, and haulage costs lower as well.  If you are not importing products in a full container load, your shipment is combined those of other companies which will be delivered to the same destination.  Lesser Container Load costs are computed by using the volume your goods take up in cubic meters. Lesser Container Loads are not as practical.  It can be an exhausting process to pack, load and unload the products.

Documentation and Proof of Purchase

When negotiations are complete, a seller will send you a pro forma invoice.  The cost you pay will be what has been agreed upon during the negotiations.

Pro forma invoices are generally advance copies of the final invoice.  You will need these when you apply for a letter of credit (L/C) and/or foreign exchange (import) allocation.

When the items arrive, you will receive a commercial invoice.  These are similar to a sales invoice.  They are used to clear the goods through Customs.  Unlike the pro forma invoice, the commercial invoice contains details needed for import/export purposes.  You can see an example of these by visiting http://www.export911.com/e911/export/docCI.htm#docCI.

Be sure to double check everything to make sure everything is what you agreed to.  This helps minimize miscommunication.

You can choose to have your own shipper.  You can easily locate your own shipping company by searching on Google.  Make sure to receive quotes from the companies and compare them.  It takes a little extra work, but you can save anywhere from $100-$500.

 

 
 
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