Top 3 Mistakes Importers Make and How to Avoid Them

10/04/2018
Top 3 Mistakes Importers Make and How to Avoid Them

Whether you’re a first time importer of goods from overseas, or import on a bulk basis, understanding the somewhat complex process of shipping can make or break a successful order. When margins are thin and risk is high, which is often the case for many small businesses today, making mistakes can be detrimental for a business.

That’s why we’ve teamed up with the Whether you’re a first time importer of goods from overseas, or import on a bulk basis, understanding the somewhat complex process of shipping can make or break a successful order. When margins are thin and risk is high, which is often the case for many small businesses today, making mistakes can be detrimental for a business.

1. Get the right incoterm, duh!

Free on Board shipments have been an attractive proposition – it stands for  ‘Free on Board’ – where the seller is responsible for delivering goods to the port in their country; the buyer is responsible for shipping and getting goods to their destination. Using FOB for containerised goods is generally not advisable.

Nowadays it’s probably a better idea to use FCA or EXW for goods which are shipped on containers. That way goods will be loaded onto the shipping line and it’s the seller’s responsibility to pass them through export customs; often complicated for the buyer to coordinate in unfamiliar territory.

Picture this; you’re importing computer equipment from China and your warehouse / company is based in sunny San Francisco. Unfortunately, getting delicate electronic circuits onto a container ship in China and also clearing export customs at the China port is complex, and will normally require documentation and clearance. That’s why FCA or EXW might be more suitable contracts to go by when importing goods.

2. Know your goods, off by heart, back to front

It’s so important to know exactly what you’re importing. We’ve seen trousers being delivered as one leg, because pairs weren’t defined on the contract. Also, it’s important to know dimensions, weight and quantities so that you can calculate the requirements for standardised container shipping.

Generally speaking, if you know the following, you’ll be able to include these details on customs documentation, Bills of Lading and on commercial invoices.

  • How many goods or services are you importing?
  • What type is it?
  • What’s the right commodity code and trade tariff?
  • What are the goods made of?
  • Where were they manufactured?
  • What country and city were the goods made in?
  • Do you know all of the details of the seller?

3. Not understanding charges

When importing goods to a port (be that air freight or sea freight), it’s important to understand that port authorities charge fees for late deliveries. Ports need to manage hundreds if not thousands of containers flowing through each day.

In order to reduce delays and increase efficiency, you will get charged if you don’t pick up your goods from the destination port, or return containers that you borrowed late.

Demurrage fees are charged when goods arrive at the destination port (importer’s port) and aren’t picked up on time. Port authorities normally don’t levy these charges until 7-10 ‘free days’ but after that they’ll charge a daily fee per container per day from midnight, so be sure to communicate clearly with your shipping agent or courier to avoid these charges which can easily mount up.

Detention fees are if you’re naughty at school. But if you do borrow the port’s containers to take your goods back to your business and return them late, you’ll be charged. As with demurrage, the shipping lines will give 7-10 ‘free days’ normally, after which you’ll be charged for late returns.

1. Get the right incoterm, duh!

Free on Board shipments have been an attractive proposition – it stands for  ‘Free on Board’ – where the seller is responsible for delivering goods to the port in their country; the buyer is responsible for shipping and getting goods to their destination. Using FOB for containerised goods is generally not advisable.

Nowadays it’s probably a better idea to use FCA or EXW for goods which are shipped on containers. That way goods will be loaded onto the shipping line and it’s the seller’s responsibility to pass them through export customs; often complicated for the buyer to coordinate in unfamiliar territory.

Picture this; you’re importing computer equipment from China and your warehouse/ company is based in sunny San Francisco. Unfortunately, getting delicate electronic circuits onto a container ship in China and also clearing export customs at the China port is complex, and will normally require documentation and clearance. That’s why FCA or EXW might be more suitable contracts to go by when importing goods.

2. Know your goods, off by heart, back to front

It’s so important to know exactly what you’re importing. We’ve seen trousers being delivered as one leg, because pairs weren’t defined on the contract. Also, it’s important to know dimensions, weight and quantities so that you can calculate the requirements for standardised container shipping.

Generally speaking, if you know the following, you’ll be able to include these details on customs documentation, Bills of Lading and on commercial invoices.

  • How many goods are you importing?
  • What type is it?
  • What’s the right commodity code and trade tariff?
  • What are the goods made of?
  • Where were they manufactured?
  • What country and city were the goods made in?
  • Do you know all of the details of the seller?

3. Not understanding charges

When importing goods to a port (be that air freight or sea freight), it’s important to understand that port authorities charge fees for late deliveries. Ports need to manage hundreds if not thousands of containers flowing through each day.

In order to reduce delays and increase efficiency, you will get charged if you don’t pick up your goods from the destination port, or return containers that you borrowed late.

Demurrage fees are charged when goods arrive at the destination port (importer’s port) and aren’t picked up on time. Port authorities normally don’t levy these charges until 7-10 ‘free days’ but after that they’ll charge a daily fee per container per day from midnight, so be sure to communicate clearly with your shipping agent or courier to avoid these charges which can easily mount up.

Detention fees are if you’re naughty at school. But if you do borrow the port’s containers to take your goods back to your business and return them late, you’ll be charged. As with demurrage, the shipping lines will give 7-10 ‘free days’ normally, after which you’ll be charged for late returns.

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