Before we delve into our next chapter, which is all about how to get your goods through customs, let’s take a look at what we’ve already covered in this Import 101 series:
What to import
Choosing a country to source your goods from
Key concepts in importation
3 effective ways to find your supplier abroad
What to know when developing International Purchase Agreements
4 ways to arrange payments with your supplier
Now that you have the background, there’s one final step: making sure your goods get through customs. As with the rest of our subjects, it can be complex. So we’ll try to make it easy to understand.
Step 1: Complete Importer Security Filing
This process actually starts with you completing the Importer Security Filing with CBP (Customs and Border Protection) before your merchandise can even leave its home country. If you’re working with an international freight forwarding company or a customs broker, they will file this information on your behalf. The purpose of the Importer Security Filing program, aka 10+2 program, is to capture twelve data elements. This is where we get the 10+2 name: ten pieces of information are provided by the importer before the goods are shipped, and the other two by the carrier. This information includes: those that are from the importer: manufacturer, seller, buyer, ship-to party, container stuffing location, consolidator, importer of record, consignee number, country of origins, Harmonized Tariff Number, and those that are from the carrier: the vessel stow plan, container status message.
Step 2: Round up your documents
You’ll need the following documents in order to clear the merchandise with Customs:
1. Bill of Lading (BoL): Once the merchandise is handed to the carrier, the carrier will issue a BoL. This document proves that the carrier has received the goods and agreed to transport them to the destination. Air carriers issue only one BoL, while ocean carriers issue three copies, one of which is the master copy that can be used to obtain the release of the goods. The exporter obtains the BoL from the carrier; and forwards it to the buyer via mail or banking channels once the payment is made by the buyer.
Remember: only with a BoL can you retrieve the goods from the carrier. Usually the seller will mail you this all-important document only after they have their money.
The BoL can either be non-negotiable (straight) or negotiable. Non-negotiable means the carrier must release the goods only to the consignee named in the BoL. A negotiable BoL, on the other hand, is usually issued to the shipper’s order instead of a specific consignee, and the owner of the BoL has the right to reroute the shipment. The law requires the BoL to be negotiable, unless the two parties agreed on a non-negotiable in their international purchase agreement. When a negotiable BoL is in effect, the importer needs to present it to the transportation carrier and to customs with other applicable documents in order for the goods to be released.
2. Commercial Invoice (CI): The CI is usually sent to the buyer together with the BoL. CBP requires certain information to be clearly specified in the CI, otherwise the shipment can be detained. You as the buyer are responsible for checking with customs and informing your exporter which specialized information to include on the CI.
3. Packing List: Although submitting a packing list is optional, very often the exporter attaches it with the CI and BoL. A packing list comes in handy when the buyer needs to claim insurance for any damage or defect. Therefore if you are the one who pays for the insurance, remember to ask your exporter to prepare a packing list for you. You never know when you may need it.
Step 3: Arrival Notice
As the goods arrive at the port, the transportation carrier will send the importer (or the hired freight forwarder/customs broker) an Arrival Notice. Once the notice is received, the importer will have five days to prepare and provide CBP with all the necessary documents to clear the shipment.
Step 4: Filing Entry/Immediate delivery
As a rule, an importer has to pay for all customs duties before CBP can release his goods. However, with a customs bond, the importer can obtain immediate release of the goods by filing an Entry/Immediate Delivery form. Customs brokers or freight forwarding companies who are allowed to use Automated Broker Interface (ABI) or Automated Commercial Environment (ACE) can file the Entry/Immediate delivery online. They can also pay the duties on a monthly basis using the Automated Clearing House wire-transfer process. The Entry/Immediate delivery request will then be evaluated based on different criteria, such as the import/export history, classification, and country of origin. This analysis is done by computers, but the decision whether or not more examination is required, or whether the merchandise will be released can be changed upon valid justification by local customs authorities.
Step 5: Filing Entry Summary
Within ten days after the Entry/Immediate delivery submission, and within five days after the merchandise arrives at the port, the importer must file an Entry Summary – the main document to clear the goods at customs. If no Entry/Immediate Delivery was filed prior to the Entry Summary’s submission, the Entry Summary will be considered as Live Entry. While Live Entry is common and necessary to certain types of goods, filing an Entry/Immediately delivery is strongly recommended since it gives CBP advanced notice and therefore speeds up the clearing process. All the customs duties and fees, including a merchandise processing fee and the harbor maintenance fee, must be paid with the Entry Summary submission.
Step 6: Receiving the Goods
If an exporter agrees to deliver the goods to the buyer, he will also issue a Delivery Order to the buyer’s freight forwarder in the US once the goods arrive. This will activate the transportation between the US port of arrival and the buyer’s preferred location. Once the customs process is cleared, the customs broker or the freight forwarder will instruct the trucking company to pick up the goods and deliver it to the importer.
Now, what’s left to do is CELEBRATE!
You’ve successfully received the goods! It’s time to start making money from what you just imported.
In this series, we’ve covered the basics of importation. And yes, it may seem complicated. And it actually can get even more complex than what we’ve discussed so far since many things can go wrong. That’s why we’ve started by walking you through the process – as it occurs when everything goes right.