Ordering offshore for the first time? Here’s what you should know.
Many businesses today source offshore to take advantage of lower prices or to obtain goods unavailable in North America. The savings can be significant: sourcing from China, for example, can reduce product costs by as much as 75% - or even more (1).
However, there also may be different financial requirements, export requirements, and import requirements associated with using offshore markets. The best way to ensure your company meets the requirements for clearance of goods from offshore is to have a safe, researched, and contracted plan.
What can go wrong when ordering offshore?
If you're considering ordering from offshore, either for the first time or returning to it, you may have concerns. Your competitors may be selling the same goods for less, so you need ways to bring costs down. You may be uncertain about the process or have trust issues if you’ve had suboptimal experiences in the past. You may have concerns about the great distances your goods will travel. Other concerns can relate to hidden or extra costs connected to the shipment's transportation, clearance, and export. And there might be increased scrutiny at the border, which can increase the cost to you.
How to develop a sound plan to mitigate these concerns:
Here are several considerations to keep in mind in order to create or improve your offshore ordering plan and ensure you meet all the requirements for clearance:
- Be conscious of cultural differences when negotiating contracts. Knowing and understanding the social nuances of the country you are dealing with could mean the difference between success and failure.
- Choose a reputable vendor and carrier. You are ultimately responsible for the shipment, so you need to know who you are doing business with and whether they can be trusted.
- Follow safe financial transfer practices. Research how to make contracts and payments abroad. Mistakes and delays with payments will be your responsibility, regardless of whether your company made the mistake. Avoid these issues by developing a safe routine for handling payments and knowing the requirements related to such transactions abroad.
- Know the source country export requirements and costs, if any. You may be responsible for these costs, so you need to know them ahead of time to avoid unexpected delays and penalty fees.
- Know all import requirements. You must know if the goods are subject to permitting, marking, and/or labeling requirements of any other government agencies. This might apply to goods such as steel, clothing, textiles, foods, wood products, and electronics – to name a few.
- Know if your offshore goods are subject to duty. Such goods often are because of the removal of the General Preferential Tariff (GPT) in January 2015. Keeping abreast of recent changes to the law is essential to remain compliant with customs requirements. If duty does apply to your goods, you are responsible for knowing the amount and for paying it in order to avoid penalties. Familiarity with free trade agreements will ensure you take advantage of any duty reductions these can offer.
- Be prepared for an examination by CBSA of your first import from offshore. Being new to importing may draw attention for an inspection, but having a solid plan before you ship will make this process go smoothly and minimize delays or penalties.
Remember, many successful businesses import from offshore every single day without incident. You can too.
Work With a Logistics Expert Today
Cole International is an experienced logistics firm that has helped companies with their international shipping and brokerage needs for over 50 years. Contact us today to learn how we can help with your company’s offshore ordering needs.
Information provided by: Supply Chain Consultant. - Cole International
