5 things to do before shipping your first export consignment

Are you new into the business of exporting and not sure how to get it right the first time? You are not alone. Not many people are aware of how to handle their first export consignment.

Considering the international nature of the business, it is not easy as it requires a deeper understanding of the entire process of the markets its rules and regulations.

Ensuring this on a regular basis is challenging even for experienced agencies in the export/import market.

So what should you do? Well as a first timer, the best you can do is prepare. Prepare yourself and develop an in-depth understanding of the market you are exporting to and more importantly, about the export rules and the best practices to keep in mind.

While the business scenario and shipping regulations would differ from country to country, there are certain common things that you must ensure while exporting.

Here’s a look at the 5 important things to consider before shipping your first export consignment abroad.

1. Understand the Required Export Documentation

Whenever a shipment reaches a particular country, it goes through customs clearance. And the custom requirements for different countries may vary, so if you label your consignments according to the requirements in the US, your products destined for Australia may just get stuck in the process. Result? Delay in shipment, process repetition as well as increase in costs.

To avoid this, you must ensure a few things:

• Pay explicit attention to the paperwork involved, and include all necessary documentation. While most international shipments require you to include an export invoice, applicable licenses, and a dangerous goods note, its best to check with the export document requirements for your destination country
• Label your consignment properly with the correct contact, packing or payment information
• Correct classification of goods according to the Harmonized System (HS) codes or whatever is applicable

A lot of these mishaps occur because of carelessness, a lack of knowledge of rules and regulations, or just simple typos, but no matter what, this mistake can have catastrophic results for your shipment, and ultimately delay your payments.

2. Familiarise Yourself with the Import/Export Rules

Next, you need to be absolutely aware of the import/export rules and regulations for a particular country. Often they are a means for countries to develop their domestic industries, foreign trade relations, and prevent any damage to their consumers and the environment.

So if you are looking to maintain good foreign trade relations with a country, it’s important that you follow their policies religiously to avoid any restrictions or legal issues.

To ensure that, try to get a deeper understanding of their legal and compliance regulations. You can find most of these information on the respective government organization’s site. They maintain a list of denied parties with which you can’t indulge in any export business unless you have a valid license.

Thus, you must check the status of all the parties involved in the export transaction against the list of restricted parties to avoid legal or compliance issues. And also check for any restrictions that might apply to your consignment to avoid penalties.

For example, Australia has strong trade ties with the rest of the world. The government has a number of policies that seek to develop and assist Australian businesses involved in international trade. It has six Free Trade Agreements (FTAs) with other countries in force and another eight under negotiation.

If you are looking to export goods in Australia, classification of goods is a must. This should be followed by declaration procedures based on self-assessment by importers, that must be made to the Australian Border Force.

3. Know How to Interpret HS Codes

Harmonized System (HS) codes is essentially a 6-digit code followed for describing the type of commodity that is shipped. But owing to its acceptance and versatility by several organizations worldwide, it has become an indispensable tool for trading internationally. Infact, over 98% of the merchandise in international trade is classified in terms of the HS.

But the challenge here is how tricky it is to understand or interpret it for use across countries and customs authorities, especially for first timers. Improper usage of the HS code could result in an improper tariff being applied by customs which can increase the cost of imports exponentially to the customer.

And that’s not all. Not following the HS or any other goods classification term that applies to your exporting destination can land you in some serious trouble causing legal penalties on grounds of non-compliance, misleading or misdeclaration. This can lead to seizure of goods, thereby defeating the very purpose of your business.

So if you are exporting a consignment for the first time, it would be prudent to consult customs directly or experts in the customs clearance companies for advice on the correct HS codes to use.

4. Check the Applicable Tariff and Fees Beforehand

For a hassle-free export experience, the next important step is to check your applicable tariff and fees on export consignments beforehand and understand who pays what charges in a sea freight shipment.

These are the additional fees charged once your consignment clears the customs in the destination country. It may increase the cost of your product to the foreign buyer and may affect your competitiveness in the market. So knowing what the final cost is to your buyer can help you budget your product according to the exchange rates applicable for that market.

The tariff rates on international shipments usually depend either on the country’s bylaws or on the globally recognized HS codes. And to determine the estimated tariffs and taxes for a particular country, here are the steps you should follow:

• Identify the product classification number for your consignment
• Once you know the HS code, you can use it to determine your product’s applicable tariff and tax rates for a specific foreign country you are shipping to

However these numbers are just an estimate. Be aware that only the customs officers in the country where the goods clear can make the final determination of your tariffs and taxes.

5. Manage and Organise the Export Data

Last but not the least, knowing how to manage and organise your export related data can play a major role in running a successful shipping business.

Unlike the manual paper-based process which is both error-prone and time-consuming, using a cloud-based export documentation software can bring you notable benefits such as:

• Secure storage of data on the cloud, eliminating the possibility of unauthorized access or unforeseen damages
• Reduced cases of data redundancy or data inconsistencies, saves time
• Data accessibility anytime from anywhere
• Saving the cost of unwanted expenses and fees usually required while applying for manual documentation
• Printing the documents generated by different departments remotely without having the need to visit any government offices
• Easy tracking of the export documentation activities for the purpose of management reporting as well as for further improvements

A cloud based software could be a useful digital tool to keep your export documentation up to date in lieu of the changing trade rules and regulations. It will save you a lot of time, money and effort, eventually increasing your business productivity. This further adds to your business integrity.

As we have discussed, the entire process of exporting your consignment overseas can be daunting if you are new to import/export business whether you are importing for the first time or exporting for the first time.

But following these 5 steps will help you take care of any subtle details, and ensure you have a great start to your business.

Author Bio:

Manish Desai has been in the business of International Trade, Logistics and International Supply Chain management for more than 20 years. He founded ImpexDocs, a cloud-based export solution, after observing a gap in the industry for companies to streamline and integrate their varied export trade and logistics business processes. These collaborative solutions assist companies to improve business processes, compliance and documentation management.