Importing from overseas can be a complex process, but it’s also necessary. Unfortunately, trade doesn’t freely flow between countries – even those in free trade areas. There are always forms to fill in declarations to sign and, in many cases, fees to pay.
Managing imports, though, can be a challenge. While it is a good way to grow your business, it comes with many administrative hurdles. Many companies learn by doing, figuring it out as they go along.
Where you import from matters a lot. If you’re ordering goods from China, the EU or North America, the rules are different.
You can theoretically manage all your imports in-house. However, most firms go to specialists, such as customers brokers and freight forwarders.
Freight forwarders are experts in international logistics. They understand how systems work between countries and can show you where products will go as they make their way from the country of origin to your depot.
Freight forwarders usually offer customs brokerage as part of their services, something that we discuss below. They use a network of partner logistics companies to orchestrate the movement of your imports around the globe, before they get to your door.
You’ll usually work with an account manager. This individual will be your single source of reference for all your logistics requirements. If you’re a small firm, you’ll share this person with many other companies. If you run a larger enterprise, you may be able to get a dedicated third-party freight manager.
Customs brokers, sometimes called “import brokers,” are people who help you set up all the customs documents and licenses that you need to import goods into your home country. They make sure that you have all the paperwork you need to get started, and will often deal with the authorities on your behalf.
Their processes are quite slick and they’re able to offer various quotes, depending on your circumstances. You’ll find that when you work with a broker, it’s much easier to get goods into the country because they often know the customs staff personally.
If you import goods into the country, you’ll also want to explore ways of cutting costs. How you do this is very much a bespoke operation related to your business.
Perhaps the first place to look is for suppliers within your free trade area. If you can source products or services without paying higher taxes on them, then you can often save money, even if the unit price is higher for certain suppliers.
Another option is to go to a duty drawback provider. These tell you whether you have overpaid any tax, and what you can do about it.
You might also want to explore your use of foreign exchange platforms. The way you exchange currencies varies considerably, depending on the platforms that you use. Your best bet is to use multi-currency accounts that allow you to make transfers between currencies at the going market rate – the spot price. If the exchange rate looks favorable and you know that you have a lot of expenditures in a foreign currency going forward, you may want to convert your home currency now to lock them in.
When you import goods from overseas, you also have a choice over how you transport them. There are as many ways of importing items as there are modes of transport.
Air freight, for instance, is typically used by companies looking to quickly import low-weight, high-value items, such as jewelry or electronics. Just like trucks, you can either rent the part of the aircraft that you need, or you can pay for the entire plane, depending on the quantity of goods. Sometimes, firms will charter aircraft themselves, as happened during the early months of COVID-19 when companies were trying to import vast supplies of PPE.
Sea freight is the most common form of freight for shipping goods from China to western markets. It’s slow, but it is also incredibly cheap. Vast ocean lines carrying thousands of containers make their way across the globe, going through the Suez and Panama Canals.
When you go down the sea freight route, you’ll usually pay by volume, not weight. While weight is important, most ocean transport ships can accommodate pretty much whatever weight you decide to put into the containers. Therefore, volume or space on the ship is more important.
Rail and road are also options. Rail is cost-effective in countries that have good networks. Road is a more flexible option but it can be more expensive for bulk distribution.