Your shop is ready to take off. Customers across the globe are filling up their e-carts with your one-of-a-kind products. However, getting those products from your HQ to your customer’s doorstep is a bit more complicated than licking a stamp and slapping it on a package. You’ve got to obtain customs clearance.
If you’re ready to sell your products to buyers outside your home country, the customs clearance process is an important concept to understand. No matter your destination, customs clearance refers to the successful movement of goods through a customs office or border authority.
Often, people use “customs clearance” to refer to the arrival of goods into a country (import), but customs officials and processes exist before the cargo can leave its home country (export) as well.
What Does Customs Cleared Mean?
Customs cleared is the stamp of approval assigned to a package once it has been released by the customs department.
There is a distinct difference between customs cleared and customs clearance. Having customs clearance means that your international shipment has been released by the customs authority. Customs cleared is the aforementioned seal of approval after it’s been released by the customs department.
Your package is now free to proceed to the next stage of its journey or delivery.
What Does Customs Clearance Mean For Imported Goods?
Customs clearance means that the government has given you the green light for your shipment to enter the country and for you to move your parcel down the line to the final destination—the warehouse facility.
So, what is the customs clearance process and what can a seller expect at this point in the shipping journey?
The importance of having correct customs paperwork for your specific goods completed correctly can’t be understated. So, we’re going to state it again—completing the right customs paperwork filled out properly is extremely important. (See? It really can’t be understated).
Just to recap:
- Customs clearance is a process a parcel has to undergo once it arrives into a country.
- Customs cleared means your parcel has undergone the necessary customs inspections and the duty fees have been paid and calculated. The international shipment is then free and clear to move on to its next destination.
Frequently Asked Questions
Does Customs Check Every Package?
In short, yes. Although the exact process differs from country to county, it is always best to be properly prepared.
For example, at the John F. Kennedy International Airport, the U.S. Customs and Border Protection (CBP) has a multi-tier process to tag which packages to open and fully inspect.
Their inspection to-do list includes:1
- Cross-check shipment data with Homeland Security, the FBI, and the DEA,
- Have detection dogs sniff out drugs,
- And visually review all packages with an x-ray scanner.
If your shipment arrives damaged, that may also signal full inspection before clearing customs. A good rule of thumb is to package and document your shipments with the expectation that they will be thoroughly inspected during the customs process.
How Long Does Customs Clearance Take?
As with any process that deals with safety and regulations, customs clearance can take some time. The entire process can take anywhere from a few hours to a few weeks. The amount of time depends on several factors, including:2
- The regulations of the “from” and “to” countries,
- The type of cargo,
- Whether or not the imported goods are controlled substances,
- And how efficient your customs broker is.
Some countries have agreements with others that allow for quicker clearance times. Meanwhile, others have quite the opposite.
For example, did you know that if you’re importing something from China to the United States, it’ll take longer than importing something from Canada to the United States? You might think, “Sure, that makes sense, China is on an entirely different continent!” But geography isn’t the only thing that comes into play here.
Due to China’s stricter regulations and an ongoing trade war with the United States, clearance times are much longer than they would be if you were importing something from Canada.
What Duties Have To Be Paid To Clear A Shipment At Customs?
If you’re shipping products across the world, you’re probably familiar with the long list of taxes and fees you have to pay to get your product from point A to point B. Included on that list is something called duties. Most countries require that the importer pay duties (also called tariffs) and taxes on their imports.
Rates vary from zero to 20% or more, depending on the type of cargo and the country’s policies. Different types of goods are subject to different rates, with the cost usually calculated by weight, volume, or a combination of both.
The best way to estimate duties is by understanding and using the Harmonized Tariff Schedule (HTS) for the country in question. 3 But your focus should be on creating and selling your wares—not on learning facts and figures outside your wheelhouse. Give your business its best chance by focusing on your strengths and letting an advocate and an expert handle the duties estimate. If you’re shipping with Zee, we can provide you with extremely accurate duty and tax calculations thanks to our years of experience.
Who Handles Paperwork and Payments Needed For Customs Clearance?
Usually, it is the responsibility of the Importer of Record to handle the paperwork and payments during the import process. However, this can depend on the incoterms used.
An Importer Of Record (IOR) must be present to declare the paperwork, pay the fees, and receive the shipment. But what is an Importer Of Record (IOR)? An IOR is the temporary legal owner of the goods during this process and can either be the manufacturer/shipper of the goods or a legal individual or entity appointed to represent them.
When is Customs Clearance Needed?
Customs clearance is required for all international shipments of commercial goods. So, if you’re a business looking to import and/or export products, you’ll need to have all the relevant documentation ready for customs officers to review.
The Customs Clearance Process: Explained
There are four key stages in getting your goods cleared through customs:
1. Inspection of documents
First, a customs officer will review your paperwork to ensure all the information is correct and complete.
For example, they’ll look at your commercial invoice and shipping label. The commercial invoice should list the contact information for the shipper and receiver, as well as the export date and airway bill number.
2. Tax and duty calculations
Next, import fees and duties will be calculated based on the types of goods you’re importing, their value and local rules and regulations.
The role of the customs officer here is to verify and track whether the relevant fees have been paid.
3. Payment of taxes, duties and fees
You have two options for payment: DDU (Deliver Duty Unpaid) and DDP (Deliver Duty Paid).
If the goods are marked as DDP, the goods are already paid for, which is the best way to achieve an efficient customs clearance process.
If the goods are marked as DDU, the customs officer will forward the shipment to an independent customs broker, who will collect the required amount.
Learn more about the difference between DDU and DDP.
4. Release of shipment
Once everything has been paid, the shipment will be released and the goods can enter the country.
If you get held up, this is likely because your paperwork is incorrect. It’s advisable that you get this sorted as early as possible, because stuck shipments can be costly for your business.
Challenges Of Shipping To A Foreign Warehouse
Shipping to a foreign warehouse may be the perfect way to grow your business, but there are various factors that influence your expansion in new markets. The process comes with customs challenges that include:
- IOR designation – A knowledgeable and trustworthy Importer Of Record (IOR) is the key to getting your products through customs and into the country of import. Poor, or incorrectly completed customs documentation and even bad communication could result in a shipment being refused, delayed, or charged higher fees.
- Shipping costs – Choosing a reliable freight provider and negotiating good rates can be difficult. Every penny counts and wasting any of your pennies on unreliable freight providers may slow down your business’s growth in the long run.
- Packaging – Your imports have quite a road ahead of them, so make sure your goods are ready for a long, rocky journey to the destination country. They’ll be handled many times as they make their way to a new home. Balancing protection with appearance can be difficult, but it is an important detail to master.
How to Avoid Customs Clearance Delays
1. Get your paperwork ready
It’s advised to have all paperwork and documentation prepared for customs before you ship your goods.
For example, you need a commercial invoice. This helps customs to assess whether your goods can enter or leave the country. It includes information about the buyer and seller, HS codes, country of origin, incoterms and more.
You also need a transport accompanying document. This is different for each mode of transport. For example, ocean freight requires a Bill of Landing, air freight an Airway Bill, and road travel a CMR.
2. Write an accurate goods description
As an ecommerce seller, you need to provide an accurate goods description on your commercial invoice.
If you do this incorrectly, the customs officer won’t be able to classify the goods, potentially resulting in delays and stuck shipments. It also helps customs to work out taxes and duties.
You need to be specific in your description. For example, instead of writing ‘shirts’, you could write ‘10 t-shirts, size medium, made from polyester’.
3. Adhere to country specific regulations
Rules and regulations differ from country to country, so make sure to do your research to meet local requirements. For example, there may be additional documentation you need for certain countries.
This is a highly complex process and, if done incorrectly, can lead to delays and stuck shipments. A customs compliance specialist like Zee can help you navigate these processes, because we have extensive experience helping ecommerce sellers to ship their goods globally.
4. State the value of your goods
Stating the value of your goods helps customs to work out taxes and duties. You need to declare what the buyer has paid, and provide customs with proof of the transaction, so they can calculate all relevant fees.
5. Explain the reason for shipping
By stating your reasons for shipping, you may be eligible for lower customs charges and preferential duty rates. Conversely, if you don’t state this, you may have to pay higher charges than necessary.
6. Keep information consistent
If you have any discrepancies across your documentation, this could lead to customs delays. To avoid any issues, make sure your values, goods descriptions and codes are all consistent.
Work With The Right Import Partner To Grow Your Market
Growing your business internationally is a daunting task already without having to worry about import compliance. You need a partner you can trust for import logistics – one that understands the local rules and regulations when it comes to shipping products internationally.
Zee has the answers to all of your international shipping questions. Explore our import compliance and logistics solutions, including:
We can help keep your international shipping costs low while making the shipment process easy and efficient. And if any questions arise, our customer care team is always just a phone call away.
Contact us to partner today.
- Insider. How JFK customs searches 1 million packages a day for illegal items. https://www.businessinsider.com/jfk-customs-searches-million-mail-packages-drugs-counterfeit-2019-9
- Crowley Logistics. All About Customs Clearance. https://www.crowley.com/all-about-customs-clearance/
- U.S. International Trade Commission. About Harmonized Tariff Schedule (HTS). https://www.usitc.gov/tariff_affairs/about_hts.htm
- CSA Transportation. Customs Clearance: A Complete Guide. https://www.csatransportation.com/blog/customs-clearance