Before goods can be imported or exported abroad, customs clearance is a necessary procedure. Before a cargo can be handled after being cleared, the shipper must show proof that all required customs fees have been paid.
While passing customs can be a drawn-out and challenging process, it is made substantially simpler when a customs broker is used to relate to imports and exports.
Our comprehensive guide to customs clearance can help you comprehend the procedure and finish your subsequent overseas shipment with confidence.
What is Customs Clearance?
Before sending different items, a shipper might be curious about what customs clearance entails and how it relates to their shipping alternatives. Every international ocean freight shipment is subject to the country's quota for customs clearance.
A required step in allowing the entry of commodities delivered into a nation by a licensed customs broker is customs clearance. Information about shipments, imports, and exports, as well as the people participating in the process, are included in this procedure.
Custom clearance process parties
There may be more or fewer agents involved in the process depending on each country's customs clearance procedure. However, as a general rule, you can discover:
The cargo owner
They are in charge of customs clearance, albeit it doesn't always have to be the exporter or vendor of the goods.
An agent or representative of customs may occasionally assist the party in charge of shipping. This is due to the complexity of some procedures, particularly if you are unfamiliar with the market you are shipping to.
The freight forwarder
A freight forwarder or forwarding agent is another agent that is physically present in the customs office. This person is in charge of managing foreign shipments, creating and processing customs paperwork, and handling other shipments abroad-related duties. They serve as a middleman between carriers, importers, and exporters.
These are among the most crucial components in the supply chain of any e-Commerce company. In the case of overseas shipments, more than one courier will be engaged in the delivery of your products.
The importer / recipient
The importer does not always have to be the recipient of the package, just like the exporter. The importer of the goods is the buyer in the case of e-Commerce exports for a buyer.
As we have previously stated, the export procedure is extremely complicated and varies according to the country of origin, transit, and destination, the value of the goods, the kind of customs clearance process used, etc.
What is a Customs Broker?
An importer's agent that helps them with their customs business is known as a customs broker.
By way of tariff laws, these agents are permitted. A customs broker is a private person or business that has been granted authorization by U.S. Customs and Border Protection (CBP) to manage custom entries, duty payments, and any potential effects that CBP's release of goods from custody may have on these processes.
What services can customs brokers assist with?
A customs broker can help with HTS codes, which are based on product classification numbers of 8–10 digits. The first six digits are HS codes, while countries of import contain the additional digits that are supplied for further classification in the following digits. The United States International Trade Commission is responsible for overseeing all codes.
Furthermore, it can be challenging for Customs to identify the country of origin. Country of origin is crucial for marking. It is determined by the nation where the product was assembled or where the greatest amount of labor was expended.
6 steps how does the Customs Clearance Process work?
Although the meaning of custom clearance is simple, the actual process entails a number of steps and can initially seem daunting. To clarify what occurs when a shipment arrives at customs, let's walk you through it step by step.
1- Document examination
Your shipment's papers will be examined by a customs officer to signify that the customs clearance process has begun. A commercial invoice (CI) (which includes the names and addresses of the shipper and receiver, the export date, a description of the cargo, and its value), a purchase order from a client, a packing list, a shipping bill, a bill of lading (BOL) or an air waybill, and a certificate of origin can all be examples of this (NAFTA or USMCA Certificates of Origin, for example).
Additionally, the buyer, finance institution, LC terms, the importing nation, or other parties may require additional documents. For incoming cargo, Canada, for instance, also demands a Canada Customs Invoice.
2- Calculating taxes and duties
The customs broker will make sure that the relevant taxes and duties are paid or collected based on the merchandise being exported, its declared value, and the importing nation's customs regulations. It is the duty of customs officers to confirm and keep track of whether these fees have been paid.
3- Tax and duty payments
The customs officer will demand payment if the taxes and duties that apply to your cargo shipment have not yet been settled.
4- Delivered Duty Paid (DDP)
If a shipment is labelled as DDP, all taxes and duties have been paid in advance, typically through your customs broker, who can compute and handle tax and duty payments in advance in exchange for a clearance charge.
5- Delivered Duty Unpaid (DDU)
In order to collect the sum owed from the recipient as well as additional expenses including inspection, storage, handling, insurance, and disbursement, shipments labelled as DDU are sent to an independent customs broker.
6- Shipment release
The shipment is freed by customs and can proceed to its final destination when any unpaid taxes and fees are paid. A shipment may pass over the border while being kept "in bond" at a warehouse run by some trucking companies until it is cleared. When the required paperwork is not available to properly clear a shipment, there is typically a fee involved. In other words, while a carrier's "in bond" capabilities are useful, a shipper shouldn't rely on them each and every time a shipment traverses international borders.