Each year, thousands of small and medium sized business begin the process of investigating international trade and how it might benefit their businesses. From apparel to food products to machinery, technology and more, businesses across all industries look for ways to expose their products to new markets and/or source materials for product manufacturing that allow them to reduce their costs.
However, for many business owners/operators and managers, the process of going global can seem daunting. There are so many factors to consider. From transportation and customs to regulatory frameworks and free trade agreements; the list of considerations seems far too ominous and many businesses choose to give up.
The truth is, international trade isn’t nearly as scary as it seems and can actually be a fairly seamless process if you have the right partners in place. The two most critical partners to enlist for support in global trade are an experienced and knowledgeable customs brokerage and a reliable freight forwarder.
What is a Customs Broker?
When goods enter a country, the have to be processed by customs officials in order to ensure they meet the regulatory requirements of the country they’re entering. Each country has a number of different regulatory frameworks in place that govern the specifications of products that can be sold within its borders.
In addition, many countries have free trade agreements in place that remove tariffs on goods entering their markets. While these trade agreements offer tremendous cost-savings to businesses, the rules governing them can be extremely complex and are often difficult to administer. If an importer claiming goods under a trade agreement isn’t compliant with the various rules and regulations of the agreement, it could face delays at the border and possibly fines.
A customs broker works on behalf of importers to ensure all the administrative work is completed according to the laws of the country into which the goods are being imported, and to ensure they are compliant with all regulatory frameworks and/or trade agreements. But not all customs brokers are created equal. A good customs broker will have a consulting arm that not only administers paperwork and ensures compliance, but also serves as strategic partner to businesses, helping them identify costs savings and efficiencies in how they get goods to market.
What is a Freight Forwarder?
The process of international trade is very complex and involves a number of parties. The business that wants to export goods to another market is called a shipper. The company that transports the goods from one market to another is called a carrier. In some cases, more than one carrier needs to be involved in the transport of goods. For example, one carrier may move goods across an ocean to a seaport in the United States, but another carrier will transport the goods from the port to their final inland destination.
In many instances, a large number of shipments are consolidated into one large shipment that is later deconsolidated into small parcels destined for multiple destinations within one country. It’s often the case that shipments need to be warehoused at a seaport or airport until they can be deconsolidated and/or loaded onto a ground transport. Certain goods require special considerations for transport. For example, fragile goods may need specific types of packaging and perishable goods may require temperature control and/or limited time in transit.
Once goods arrive at an international border, their paperwork is reviewed by customs officials to determine whether or not they are admissible and whether or not duty payments are required. Frequent importers of high-value goods will often have to have a surety bond in place to guarantee the value of the goods and any duties, and provide proof of this at the border.
A freight forwarder works with shippers, carriers, customs officials and warehouse officials to ensure that all parts of the import process are carried out without delays or additional costs. They often work with a roster of reliable, experienced, certified and compliant carriers and identify the best carriers for a particular shipment. Freight forwarders work with the carriers and customs officials to ensure all necessary paperwork is completed correctly and punctually so there are no delays at the border. They also ensure parcels are properly packaged and labelled and work with warehouse officials to ensure products are properly stored and sent to ground transport in a timely manner.
The Right Combination of Trade Partners
Given the close connection in roles played by a customs broker and freight forwarder, it’s incredibly advantageous to work with a customs broker that also acts as a freight forwarder. Working with this kind of customs broker helps to safeguard against miscommunication between broker and carriers, as well as delays in communication, and allows for an overall simplified and seamless trade process. Since a customs broker is always connected to customs officials and freight forwarders are always connected to carriers and port authorities and warehouse officials, it is critical to have an experienced customs broker and reliable freight forwarder as key partners in the trade process.