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Every day, millions of goods are shipped from one country to another.
With this large volume of shipments comes the need for efficient customs clearance processes to ship these goods efficiently and without delays.
Unfortunately, customs clearance can be a complex process with numerous fees and paperwork that must be completed correctly before the shipment is allowed to proceed.
Even though only about 2% of shipping containers are inspected annually, you still can't evade customs clearance costs.
However, you can manage it more efficiently.
Our guide will walk you through everything you need to know about the customs clearance process — from what it is to how to ensure a smooth and cost-efficient experience.
What is Customs Clearance?
Customs clearance is a process that involves obtaining permission to pass goods through a country’s borders. It is necessary to prevent illegal items from entering a country and to ensure that tariffs and taxes are properly paid.
This process involves submitting necessary documents to various government agencies to obtain permission for your shipment to enter or leave a country. Additionally, it includes paying applicable customs duties, taxes, and other fees associated with the process.
The customs clearance process can vary depending on the type and value of your goods, the country of origin, and the country of destination.
For example, different countries may require different documents or impose additional fees. Therefore, it's essential to do your research before shipping any goods so you can prepare the necessary documents and understand any customs clearance costs that might be associated with your shipment.
Types of Customs Clearance
The customs clearance process can be divided into three types:
Pre-clearance occurs before goods enter a foreign country. This is done by providing all relevant documentation to customs officials prior to arrival so that the shipment can be cleared without any delays at the port of entry.
This process is especially beneficial for those who need to move their goods quickly and efficiently across borders. However, when you opt for pre-clearance, you can expect to pay higher customs clearance fees.
Transit customs clearance takes place while the goods are in transit through a foreign country.
The purpose of this type of clearance is twofold. Firstly, it helps to minimize any delays due to paperwork issues when traveling through different countries. Additionally, it ensures that all taxes and duties are properly paid at each stage along the journey so that there are no surprises when arriving at their final destination.
Post-clearance occurs once the goods arrive at their final destination. This type of clearance requires an exporter or importer (depending on who owns and/or controls the goods) to provide detailed documentation regarding the purpose of importing or exporting goods.
Once this information is given to customs officials, the shipment can then be cleared, and taxes and duties can be paid.
Customs Clearance Process
The customs clearance process can be complex and time-consuming if you don't have a good handle on it, so it's vital that you familiarize yourself with it.
Here's a step-by-step guide to the customs clearance process:
#1 Paperwork Inspection
A customs officer will thoroughly inspect the paperwork associated with each shipment to ensure that all required documents are present and accurate. This verification process helps to prevent any delays due to missing or incorrect information. Additionally, it ensures that all taxes, duties, and fees associated with customs clearance are correctly paid.
The shipping documents required for customs clearance include but are not limited to the following:
- Bill of lading or airway bill
- Proof of insurance
- Port spending
- Commercial invoice
- Certificate of origin
- Packing list
- Export and import certificates
- Export and import declarations
- Pre-shipment inspection certificate (when applicable)
- Transportation invoice
#2 Physical Inspection
After submitting the necessary paperwork for verification, your shipment will be inspected by a customs officer. This inspection includes physical examination of the goods being shipped, as well as a check for any hidden items that may not have been declared on the paperwork.
If any discrepancies or illegal items are found during this inspection, the shipment will be held up until the issue is resolved.
#3 Payment of Duties and Taxes
Once all paperwork and inspections have been completed, any applicable customs duties, taxes, and other fees must be paid before your goods can continue on their journey.
#4 Release of Shipment
After paying any taxes and duties due on your goods, you will receive a release order from customs allowing you to take possession of your goods and ship them out to their final destination.
At this stage in the process, it is important that you review all documentation associated with your shipment carefully before signing off on anything. This documentation must accurately reflect the contents of your shipment and should reflect any payments made during the clearance process.
Who is Responsible for Customs Clearance?
The answer is — it depends. However, there are two routes you can take: hire a customs broker or do it yourself.
Using a Customs Broker
Customs brokers are professionals are licensed by authorities such as U.S. Customs and Border Protection (CBP) to act on behalf of their clients. By using a customs broker, you don’t have to worry about preparing all the necessary documentation — they will take care of that process for you, ensuring that your goods are cleared at customs without any delays or problems.
However, using a customs broker does come at an additional cost. Not only are their fees typically quite high, but you will also be responsible for paying all applicable taxes and duties associated with your shipment.
Doing it Yourself
If you don’t want to spend extra money on hiring a customs broker, you can take the DIY approach and handle the customs clearance process yourself.
This involves doing your own research in order to obtain the necessary information on what documents you’ll need and how much fees you’ll need to pay for customs clearance. Everything from figuring out the HS codes to finding out whether you're eligible for the customs duty drawback will fall on you, so make sure you have everything in order before submitting your paperwork.
Regardless of your approach, it’s important to be aware that not completing the customs clearance process properly can lead to delays, fines, and even the seizure of your goods. So ensure that you're leaving your customs clearance process in good hands — whether they're yours or the professional's.
How to Successfully Clear Customs and Avoid Delays
#1 Start the Process Early
Given the complexity of the customs clearance process, it’s essential to start planning early. Even before your goods are on their way, you should still prepare all the necessary paperwork and ensure everything is in order before they reach customs. Otherwise, you risk delays and costly demurrage fees.
To help streamline this procedure, our shipment tracking systems offer an efficient way for companies with multiple shipments to stay organized. With coverage of 85% of global container traffic, rest assured that our system has you covered when it comes to customs clearance needs.
#2 Know Your Shipment's Contents
The first step in clearing customs is knowing exactly what you are shipping. You will need to provide a detailed list of the contents of your shipment to customs officials. This list should include each item's quantity, value, and weight.
Be as accurate as possible when listing the contents of your shipment because if anything is omitted, it could delay the clearance process.
#3 Prepare the Required Documentation
Once you have determined the contents of your shipment and chosen a shipping method, you will need to prepare the required documentation.
Discrepancies between the paperwork and the physical shipment can cause customs delays and, in some cases, even refusal of the shipment. To avoid this, be sure to double-check all documentation for accuracy before submitting it for customs clearance.
#4 Calculate Duties and Fees in Advance
Depending on the value and origin of your shipment, you may be required to pay duties or fees when clearing customs.
In some cases, like when shipping goods regulated by Free Trade Agreements, you may not have to pay any customs fees. Unfortunately, in most cases, you will have to pay some form of customs clearance fees.
Before your shipment reaches its destination, be sure to calculate the expected costs associated with customs clearance so that you can budget accordingly.
#5 Stay Up-To-Date on Changes in Regulations
Customs regulations can change frequently, so stay up-to-date on any changes that may affect your shipment. These changes may include new documentation requirements or changes in duty rates.
Staying informed about the laws of the countries your business operates in will help ensure that your shipment clears customs quickly and without any issues.
#6 Be Prepared for Multiple Customs Checks
Finally, be prepared for multiple customs checks. Depending on the destination country, your shipment may be inspected multiple times before it is released. This could include inspection at the port of entry, customs warehouses, and even at its final destination.
Don't Get Stuck at The Border
Customs clearance can be a daunting process, but with the right knowledge and preparation you should have no trouble.
By taking the time to properly research customs requirements and make sure all necessary paperwork is filled out accurately, you can rest assured knowing that your products will cross borders quickly and efficiently.
With our comprehensive global coverage of container traffic and efficient tracking systems, we have everything you need to ensure your shipments meet customs requirements with ease.
To top it off, our one-click document templates and automated invoices will help ensure accuracy and reduce paperwork.
Book a demo and learn more about how we can help with your customs clearance needs.
Customs Clearance FAQ
How to pay customs fees?
The payment process depends on the country. However, typically, customs fees are paid through a wire transfer.
How long does customs inspection take?
The average worldwide length of a customs inspection was seven days in 2021. However, the exact number of days depends on the type of shipment, the country of origin, and other relevant factors.
How long does clearance delay take?
The extent of the delay depends on the shipment type, the complexity of its contents, and the regulations governing it in the destination country.
What happens if you don't pay customs charges?
If customs charges are not paid, the goods will be detained and may eventually be forfeited or destroyed.
How long does US customs clearance take?
Typically, it takes less than 24 hours to clear customs, even though they're legally obliged to clear the goods within five days. However, if a shipment is held up in customs, it could take longer.
How to fill in customs declaration?
Customs declarations can be filled out online or on paper. The exact process depends on the country and the shipment type.
Who pays customs fees buyer or seller?
Either party could be responsible for paying customs fees. It depends on the chosen shipping method and the terms of the agreement (i.e., the agreed Incoterms) between the buyer and seller.
How much does customs clearance cost?
The cost of customs clearance varies greatly, depending on the shipment type and size. However, it is typically calculated based on a percentage of the value of the shipped goods.
Are customs fees refundable?
In some cases, customs fees are refundable. Depending on the country and context, you may be able to get a refund of customs fees if the goods are returned or rejected.