Challenges Freight Forwarders Face During Customs Clearance
May 7, 2023
Customs clearance can be a challenging and complex process for European freight forwarders, due to a number of reasons. From tariffs and duties and compliance requirements to documentation, there are many challenges to navigating and moving cargo across borders.
Tariffs and Duties
Customs clearance often entails the payment of taxes, duties, and tariffs, which can vary greatly depending on the country of origin, type, quality, and value of goods, trade agreements, and diplomatic relations. Dealing with tariffs and duties can be a daunting process, making it important to conduct extensive research. For example, you’ll need to find out how to classify goods correctly to ensure you are paying the correct amount. This involves identifying the specific tariff codes for the goods you are importing. Under the system maintained by WTO, the classification of goods depends on factors such as intended use, composition, and description. Once you have identified the correct code based on factors like the above, you can check the duty rate which corresponds to that code.
Freight forwarders must comply with a range of standards and regulations to ensure a smooth clearance process and avoid the rejection or seizure of goods. Among the most important requirements are product safety, environmental protection, and sanitary and phytosanitary regulations. Additionally, European freight forwarders may encounter labor and human rights, export control, and intellectual property regulations intended to protect patents, copyrights, and trademarks.
Customs clearance involves a lot of paperwork such as certificates of origin, packing lists, and commercial invoices. Other forms that may be needed include insurance certificates, permits and licenses, import/export declarations, and bills of lading.
Without the required forms, customs authorities can take various actions based on acting laws and regulations and the severity of non-compliance. They can request additional information, reject the shipment, seize the goods, or impose penalties and fines. As customs officials may need additional information, this can result in delays and extra costs such as demure charges and storage fees. If the customs authorities choose to reject the shipment, consequences can vary from increased costs for reshipping and financial loss to supply chain disruptions and damage to relationships with customers, supplies, and other parties.
Lastly, importers that fail to provide proper documentation can face legal liabilities such as revocation of export/import licenses, additional penalties, and even criminal charges.
Additional Considerations when Shipping to Customers in Developing Countries
In some countries, especially developing ones, customs clearance procedures may be slow and bureaucratic, with a lack of automation and modernization. This can lead to delays in the clearance process, resulting in increased costs and potential supply chain disruptions. Additionally, there may be a lack of clear and consistent regulations, making it more difficult for freight forwarders to navigate the customs clearance process. Other challenges that can make customs clearance time-consuming and challenging include language barriers, lack of infrastructure, shortage of skilled workforce, and limited availability of resources, including transportation and cargo handling equipment and warehousing.