With more than 70 percent of the world's purchasing power living beyond the U.S. borders, the need for businesses to tap into global markets has become critical. Yet for smaller companies, knowing how and where to begin, especially in terms of customs brokerage, can be confusing - and costly - if you don't have a firm grasp on process.
We turned to Gregory Tompsett, an area brokerage manager with UPS Customs Brokerage, for a crash course on ways businesses can more seamlessly navigate international customs.
1. Make sure customs documentation is clear, consistent and descriptive. "The biggest hurdle for people new to importing is documentation," Tompsett says. You need clear information for U.S. Customs or any government agency when it comes to descriptions, quantities and values. "Having proper documentation is the crux of good importing," he says. Likewise, make sure any export documentation is descriptive and consistent.
And that documentation needs more detail than most people think. Tompsett explains: "People might say, 'We are importing 300 bolts.' But it's better to say '300 6-inch stainless steel bolts to be used on motorcycles.'" This is because the U.S. Customs Harmonized Tariff Schedule (HTS) lists hundreds of classifications for bolts based on size, material and, sometimes, intended use. "The HTS classification makes a huge difference."
2. Look for cost savings. Imported goods might be duty-free if you have the right documentation to substantiate your claim, Tompsett says. He offers examples: "You might be importing from a company covered by NAFTA or some other country with a free trade agreement in place," he explains. "Also, shipments valued below $800 are considered low value, or de minimis, and are duty free and require only simple paperwork," he says.
3. An ounce of prevention is worth a pound of cure. It's much easier to deal with U.S. Customs officials vs. international officials when you can show that you've exercised due diligence, Tompsett says. "It's much better to ask questions up front and be transparent about what you are doing," he says. While the risk of a customs audit is not high, the penalties can be significant – up to three times the value of the goods on top of any unpaid duties – if you are found in violation.
4. Choose your suppliers carefully. Look for providers who can give you the level of detail and information you need. "This is one of those situations in which you get what you pay for," Tompsett says. "The cheapest source may not be up to snuff on customs documentation or responsive when it comes to making changes. Reach out to your shipper or broker to see if they can help. UPS does that through our Supplier Management Services group."
5. Stay up to date on customs regulations. Regulations change constantly not only on the import side but also on exporting to global markets. "This is like doing your taxes on your own vs. using a professional. You can do the paperwork yourself, but do you know all the different deductions, credits and exclusions that might apply in your case?"
UPS® is one of the world's largest customs brokers, with more than 80 years of experience. Click here to learn more.
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