Harmonising – it’s all about the customer

Harmonising – it’s all about the customer

Loading container ships in HamburgIt’s funny how so many of us think of Customs as faceless people. Of course, they aren’t – but it might make it a little easier to grumble about the paperwork they require, especially at destination – they’re not even “our” Customs!

Thinking about Customs and shipping paperwork as irritating impositions really misses the point. We’re shipping these goods to a customer. Customers are gold – they keep our doors open, keep us and our staff eating, and we really, really want them to come back. So while we’re getting our ducks in a row, let’s remember who we’re really trying to please…

Keeping your customers happy

Aside from a good product at a reasonable price, what do our customers want and need from us? They want the same thing as we do when we buy something – good service, with no delays or unexpected expense. They want a say in how their goods will reach them, and they most definitely do not want any surprises – no delays or additional charges at Customs, for instance.

Our customers will most likely be reselling our goods to their own customers. Timely arrival of goods is crucial, particularly if they have customers waiting; cost control is equally crucial, because our customer will have based their selling price on our quote, which didn’t include any unexpected Customs or demurrage charges.

With that in mind, we also have to remember that some of our responsibility is to our own Customs service – outbound Customs. For a shipment to leave the country, it has to clear Customs outbound – for good reasons. Every shipment leaving the country – with few exceptions – must be entered for export; without this, goods cannot be loaded on a ship or aircraft.

Customs: looking after everyone’s interests

Outbound Customs is responsible for monitoring the export of prohibited,¬† restricted and prescribed goods, and for making sure that the proper approvals and protocols are in place and being followed. Customs can request more information on a shipment before allowing it to leave the country – which in practice means that, without the proper information and the proper process, your shipment can be left sitting in a warehouse while the ship sails. This isn’t going to please your customer – and it’s going to cost you money. Your profit on this sale is beginning to melt away.

Customs at destination is responsible for monitoring imports, to make sure no dangerous or prohibited goods are allowed in, and to make sure that standards are met. Inbound Customs can request more information on an incoming shipment before clearance – in practice, again, the goods may be delayed and incur extra costs if all the information isn’t available and proper process hasn’t been followed.

You might be fortunate enough to have a trusted forwarder who will look after all the pre-shipment protocols and requirements for you, for a known cost. However, if they make a mistake, it’s you who might lose a customer, so it’s important that you know what is required, how long it takes to cover all the requirements, and what the costs are.

Harmonised Codes

The first thing you need to know is: what’s the Harmonised Code for your product? It’s a powerful piece of information.

Having the correct Harmonised Code number will help both you and your customer determine what restrictions are in place, if any, and what has to be done before shipment to make sure that the shipment enters seamlessly and your customer receives the goods in time and without any added costs.

The Harmonised Code identifies your product for Customs both outbound and at destination. It tells Customs where your product falls in the overall scheme – whether it can be cleared without delay, whether there are any restrictions or requirements or prohibitions and what regulatory requirements there might be. It also helps you and your customer find out the same things, so you can be prepared.

To find it out, you can make a preliminary search at the Australian Bureau of Statistics’ AHECC codes page. Click on the Downloads tab to see the groupings and drill down from there to find the nearest possible description that applies to your product. Spreadsheets will open in Excel or compatible spreadsheet software.

To find out for certain, apply to Customs for an AHECC. If you don’t agree with the AHECC advice you receive, based on your earlier research, you can contact Customs and discuss it with them – all the contact information is on the Customs website.

It’s worth noting that the steps are the same wherever you’re exporting from or your customer is importing to. In some countries, a tariff ruling is for imports rather than exports, but Customs will still give advice.

In the EU, check the TARIC site for your own reference, and then follow the information for applying for Binding Tariff Information. In the US, check the US Tariff Schedule – click on Tariff Affairs at the top right for an indexed search tool – and then contact US Customs and Border Protection to check whether this is accurate. Rulings in the US apply to imports rather than exports.

Communications and conversations

It’s vital that you talk with your customer about Harmonised Codes, since the code will also apply – and may cause issues – at destination. If your customer will¬† need an import permit to clear the goods into the destination country, the code is particularly important; you may have to wait for the import permit before you can ship. Customs might not allow the goods to leave until the import permit is in place.

There may also be protocols at destination that are different from the local import protocols for the same product. Your customer needs to find out what these are, and the local Customs service will help them – you can help by doing some of the research, since you might need to put protocols such as product testing or certification in place before you ship.

For agricultural products, the DAFF MICoR database is an excellent starting place; to find out whether your product is a restricted or prohibited export, check the Prohibited and Restricted Exports page on the Customs website, and follow links where appropriate. For food and beverage permit and compliance requirements, consult DAFF or your industry body. If you’re not sure where to start looking, ask Customs.

Your customer should also check with their Customs and relevant government departments as well as industry bodies, to make sure they understand all the requirements for clearance at their end; this sort of preparatory work may seem time-consuming and irritating, but with luck the whole process will only be necessary once for each new customer; for subsequent shipments it will only need to be checked to make sure regulations haven’t changed.

Even if you’re shipping a carton of plastic bath toys, there will probably be some regulations covering clearance at destination – make sure you know what they are, and that your products meet the requirements.

Preparing for disaster

Does everyone remember the 118 containers of frozen beef that sat, uncleared, on Indonesian docks for over three months, because of a dispute over an import permit? Eventually it was established that the permits had been issued, but in the meantime the shipment accrued massive port and storage charges, and in the end the containers could only be re-exported. Exporters’ losses were enormous. What steps will you and your customer take to make sure this sort of situation doesn’t happen to you?

The time to consider any or all of these matters is before you ship. While you’re getting everything ready to be shipped, and before you generate the rest of your export documents, make all these checks – you’ll be glad you did, and so will your customers!

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