Importing can be challenging and confusing if you’re doing it for the first time. The regulatory and procedural compliance needed to safely import goods from foreign countries certainly takes time and effort. When you’re planning to take advantage of the lower cost of goods from other countries, it is important to be fully aware of the steps required to ship and transport the goods to your destination.
While the importing process remains a lot similar across countries, individual countries have different restrictions and tariffs on certain imports. Hence, it is important to understand the importing laws of your country before you start importing goods.
Some small importers are discouraged by looking at the daunting task of importing ahead of them. However, with an understanding of the import business and a few experiences in importing goods, any importer can become well-versed with the details and establish a successful import business venture.
Step #1 Understand Import Laws & Regulations in Your Country
It may be a hard pill to swallow, but you need to educate yourself on the laws and regulations for importing goods into your country. There is no working around this problem. You can, however, get a lot of help from agents and customs authorities.
Pay a visit to the customs office and get information on the prohibited and restricted goods for import. If certain goods are prohibited, it is illegal to import them into your country.
If certain goods are restricted, you may need a permit or license from relevant authorities to import them.
You can also get first-hand information on the tax benefits you may be eligible for depending on the product your importing, country of origin, etc.
There are certain goods that may warrant getting approval from additional government authorities before importing them.
In such a case, you can get this information from the customs authorities and save any last-minute hassles that can stall your imports.
Step #2 Find the Best Suppliers for Your Products
You must find the best suppliers for the products you’re importing. The biggest problem that many importers face is the inability to differentiate between manufacturers and trading companies. If you need the best prices, it is important to deal with manufacturers. If you’re unsure if the seller is a manufacturer or trading company, simply ask them via chat/email.
Step #3 Shipping Method
After deciding on the supplier, you have to determine the shipping method. Shipping by sea is usually the cost-effective method but can take a lot of time to get your goods if the country of origin is far from you. It is good to prefer sea freight if you want to save cost and move large quantities of goods to your destination. Air freight is good for ordering small quantities of goods for sampling and analysis before placing large orders.
If you have Full Container Load (FCL) shipments, then your shipment can be speedily moved for loading into a cargo ship. If you have Less than a Container Load (LCL) shipments, you will have to wait for other shipments to share your container.
Step #4 Shipping Cost
According to the International Commercial Terms (Incoterms), there are some terms that are used to define the shipping responsibilities of the buyer and seller in a trade.
- CIF (Cost, Insurance, and Freight) – CIF means that the seller is liable for the transport and insurance of goods until the point of loading for departure. When the shipment is loaded for departure, the risk is transferred to the buyer of the goods.
- FOB (Free On Board) – FOB means that the seller will bear all the costs until the shipment is loaded for departure on the freight.
- DDP (Delivered Duty Paid) – DDP means that the seller is responsible for shipping costs, export and import duties, and other expenses up until the destination port of the buyer.
- EXW (Ex Works) – EXW means that the buyer is responsible for all costs including transportation and risks associated with getting the goods from the seller’s factory until the destination.
Step #5 Calculating Final Cost
While the price you see quoted by the seller seems attractive, you have to take into account additional costs like transport cost, customs duty, insurance coverage, currency conversion rates, and handling costs. The final cost or landed cost is the sum total of all the cost required for an importer to get the final delivery of the goods at the destination.
You can better calculate the customs duty and tariffs with the Harmonized System (HS) Codes. Find the category your goods fall into in the international standardized system. You need these codes for customs declaration and collection of duties and tariffs.
Step #6 Customs Documents
There are customs documents that must be produced at the time of arrival of your shipment for you to be able to clear your goods and transport them to your destination. Some of the common documents needed by customs officers include:
- Invoice – Document to show the sale of goods along with quantity and price of goods
- Certificate of Origin – Document to verify the country of origin. This is used to check customs duties and tariffs. The country of origin may also warrant an inspection of your goods by customs officials.
- Airway Bill / Bill of Lading – Description of the contents of shipments by sea and air.
- Inspection Report – Report of the inspection service used before shipping to the destination
- Packing List – List of all boxes in the shipment with the list of content inside
Step #7 Receiving Goods
Once the goods are received in your destination port, you will have to produce the customs officials with the documents you have ready. Upon successfully producing the documents and verification, your goods are released and can be transported to your destination through the freight of your choice.
You can outsource preparing customs documents and receiving goods to a customs broker who can handle the task better and save you a lot of time. While this may cut into your profit margin, you can still go ahead and hire a shipping agent to do the task if in the end you still have a decent profit margin. By using a customs broker, you will save a lot of time that can be invested into your business to look for better suppliers and new opportunities.
The process of importing goods can seem complicated in the beginning. But by educating yourself of the import laws and making a few imports, you will become much more versed in the process and can begin to look for ways to save more and improve your shipping times.