International shipping is different
When your small to medium size enterprise (SME) has built some serious traction in the domestic market, it’s time to consider going international. There are many benefits to expanding internationally:
- New revenue potential
- Exposure to foreign investment opportunities
- Access to new customers
- Government incentives
- Diversifying markets for the business
However, international shipping is different from domestic distribution. Considerations are required regarding the shipping process and the many players involved in international shipping.
Success for your first international shipment
- Understand import/export regulations
Unlike domestic distribution, shipping internationally carries restrictions. Each destination country has import and export regulations that you must consider. Failing to comply with the destination’s specific custom requirements can result in your products and goods getting stuck in customs, which can have a detrimental effect on your first international shipment.
The Harmonised Tariff System (HTS, also called HS) is the foundation for customs tariffs, controls and procedures, including commodities that are prohibited or restricted. It is also the basis for international trade negotiations and agreements. The HTS, plus your international freight forwarder can provide the current customs regulations for specific countries.
2. Ensure shipments are packaged correctly
Unlike domestic parcel and mail delivery, cargo shipped internationally will go through numerous exchanges and transport modes. Therefore, an essential requirement is to ensure the correct packaging, so that your shipment reaches its destination intact and fit for purpose.
Incorrect packaging results in damaged goods, unhappy customers and wasted time and money; not to mention severe damage to your company’s international reputation.
For your first international shipment, packaging considerations concerning weight, dimensions and fragility must be made. These details will inform the type of packaging your goods will need to stay protected in transit. For example, fine glassware needs to be shipped in packaging that’s heavily shock absorbent. Temperature sensitive shipments such as food and perishables must be packaged with a product specific packaging solution.
Remember, as the sender, it is your responsibility to ensure that cargo is adequately packaged to protect against damage. If in doubt, consult your freight forwarder to confirm whether the product is appropriately packaged.
3. Prepare the right documents
To ensure your first international shipment experiences smooth sailing as it crosses borders, it must be ‘customs compliant’. This requires providing the right documentation for your cargo. While each country will require specific documents, there are some common documents used in international trade. These are:
- Packing List
- Airway Bill
- Bill of Lading
- Export Licenses
- Import Licenses
- Generic Certificate of Origin
- Dangerous Goods Certificate
- Material Safety Data Sheet
- Shipper’s Letter of Instruction
- Commercial Invoice
- Pro-forma Invoice
Consult your shipping agent for advice concerning any other documents that may need to be provided, based on your country of import and export or the goods being shipped.
4. Calculate taxes, tariffs and duties
Like customs regulations, international taxes will vary by destination. Most shipments that cross international borders are subject to duties and taxes. Local customs will determine the duties or taxes of your goods, based on your declared value.
Most countries have what is known as a de minimis value.This is the shipping threshold that goods must meet to be subject to duties and taxes. If your shipment falls below this minimum value, it will not be levied with a duty or tax.
This is why it’s essential to provide an accurate valuation of your customs documentation. Not declaring or undervaluing a shipment will result in customs processing delays and heavy fines or penalties.This can harm your company’s reputation with local customs, so avoid such unnecessary risks.
5. Insure the goods
To determine if the goods need to be insured,you must assess the value of the shipment contents and risk tolerance of the business. If you have high-value content such as electronics or fine glassware, consider getting extended coverage.
Every major shipping carrier provides free coverage for goods valued under a certain amount. If the value of your goods falls below this amount, it will be automatically insured. And before buying additional coverage, read the fine print. Confirm what the coverage entails if your cargo is lost or damaged in transit. While this is rare, it enables you to protect your investment and recoup financial losses.
6. Contract with an appropriate freight forwarder
No single shipping company is the right provider for every situation. Certain freight forwarders have established relationships with specific carriers, destinations and markets. One with a history in Europe may not have relationships in the Asia-Pacific, for example.
When contacting a shipping provider, confirm the markets where they have established relationships. Check references and their history in your chosen market. Their expertise in that market helps to guarantee your cargo will be shipped in a timely and safe manner, in respect of required customs regulations.
7. Research, research, research
This must be a continual step, as the shipping landscape is constantly changing. While your first contact for shipping advice should be your shipping provider, don’t depend purely on them. To manage your expectations and to be a responsible sender, do your own research.
While there’s no expectation for you to become an international shipping expert, it pays to be informed. There are many resources that provide expert advice, such as the websites of border agencies. The more you know about the international shipping industry and processes, the more successful your first shipment will be.
Be ready to go global
International shipping may be complex, but it doesn’t have to be difficult. Making your first international shipment is an important milestone that signifies your company is ready for bigger and better things. Don’t let your first international shipment be the last.
This blog has been written by Toby Edwards, CEO of Shipa Freight, based in Dubai. Shipa Freight is an online platform owned by Agility; making it easy to get air and ocean freight quotes, book, pay and track shipments online.