Whenever you ship internationally, there is always a risk that your goods may be stuck at customs. Some of the ways to lower that risk are to ensure all the paperwork is correct, the HS codes are properly declared, and that the duties & taxes are paid before shipping. However, even if everything is done right, your shipment still has a chance of being stuck in customs. In the unfortunate circumstance that your shipment has been held, the first thing you should do is to figure out the reason why.
Why is your shipment stuck in customs and what can you do?
Due to the many regulating bodies involved with shipping internationally, there are many reasons why your shipment may be stuck in customs, especially if you are shipping IT Equipment (routers, servers, switches, etc.) and are using hub-and-spoke carriers like FedEx / UPS / DHL. Hub-and-spoke carriers are generally equipped to import shipments that are low in value (less than $1000 USD), small in size, and not subject to additional regulations. Whereas IT Equipment is typically high in value and have specific clearance requirements, or may even need an import permit or license.
Here are a few reasons why a shipment may be stuck in foreign customs and what you can do:
- The HS Codes were improperly declared or are missing
- The paperwork was submitted with consignment errors
- Customs flagged the shipment and it requires an inspection
- The declared value of the shipment is inconsistent with the accepted pricing customs has on file
- The incoterms were not appropriately specified to the carrier and customs is waiting for the duties & taxes to be paid
When importing goods, duties & taxes must be paid on the specific commodity based on the HS Code it is declared under. If your carrier didn’t declare the correct HS Code, or failed to declare one, the shipment will be held until the declaration is resolved.
If you contact your carrier and they require an HS Code to provide to customs, use an HS Code classification tool like www.simplyduty.com to determine the applicable code.
Most countries require at least a commercial invoice indicating the value of each line item for the shipment to be cleared. Without a commercial invoice, customs will not be able to determine the value of the shipment and determine the duties & taxes payable. Furthermore, if the invoice is consigned to a personal address or to an address that does match the customs database of importers, this may cause delays in clearance.
If your carrier requires a commercial invoice, search for a “Commercial Invoice Template” and fill out as much information as possible. Ensure that the full description of goods, quantity, and unit value are filled out accurately. Also ensure you have correctly specified the importer of record on the commercial invoice and include their local tax ID.
Random inspections occur frequently when shipping internationally, especially when shipping to countries with stricter import controls. For example, in China and Brazil, almost each shipment is inspected to ensure import regulations are met, and if the proper permits and declarations aren’t met, the shipment will be subject to lengthy delays and potentially confiscation.
If your shipment has been flagged for inspection and the officer reviewing the shipment needs more information, it’s important to ask your carrier for exactly what information is required by the customs official. Unfortunately, if you’ve attempted to import and don’t have the proper licenses, authorizations, or permits in place, the only method we have seen success with is to re-export the shipment back to the origin and start the process over from there, working with a company that can provide importer of record services and is experienced with the country in question.
A problem that you may face when importing into more regulated countries is how their local customs values the goods. When an item is imported, customs may deem the declared value of the item is not in-line with what they have seen in the past. If the declared value falls outside a valuation range customs deems acceptable, they will not clear the shipment and will require new paperwork is submitted with a higher valuation.
In the unlikely scenario this occurs, you will have to contact your carrier to understand what their process is for you to amend your shipping paperwork with a higher valuation that is more inline with customs. If they are unable to amend the paperwork, you may have to have the shipment sent back to the origin, and re-attempt the import with a more acceptable declared value.
If the value of your shipment is above a certain threshold, many carriers may not advance the duties & taxes due to customs on your behalf. Until duties & taxes are paid, customs will hold the goods. A consolidated carrier like DHL, FedEx, UPS, etc. may not be able to pay the duties & taxes on your behalf, if the incoterms have been incorrectly specific, and thus the shipment will be stuck in customs until the incoterms are amended and the carrier pays the taxes on your behalf.
If your carrier is not willing to, or unable to pay the duties & taxes on your behalf; you may have to hire a customs broker to liaise the transaction, or hire a local agent to complete payment to customs on your behalf. We recommend all import fees are paid prior to shipping, under the incoterms DDP; however if the shipment is already lodged in customs, you will need to check with your carrier to see if the incoterms can be amended to DDP.
This list doesn’t include the commodity specific issues that often arise when importing IT Equipment into a foreign country. For example, in Hong Kong, IT hardware classified as dual-use / encrypted technology requires a permit from the HKTID department before the shipment can be successfully imported.
If you’ve shipped devices that utilize encryption technology to Hong Kong without first obtaining a permit, there’s a good chance the shipment will be blocked, confiscated, or sent back to the origin.
If you’ve tried the above or don’t feel confident moving forward, what can you do?
If your shipment is already stuck in foreign customs, the chances of successfully clearing the shipment are low. Just to reiterate on the above, the first thing you can try is calling your carrier and providing them any additional information they request. Usually your carrier will ask you for additional product details, specific part numbers, and the value of each item in the shipment. They will try to re-declare the equipment and with luck, clear it into the country. However, when dealing with IT hardware, simply providing your carrier more information, may not be enough as certificates, import permits or licenses may also be required.
The best course of action to ensure you meet the local import requirements is to have the shipment returned to you and re-exported the proper way. IT Equipment is subject to many compliance and trade regulations that must be met prior to shipping to avoid the goods being confiscated and held in foreign customs. This includes the timely payment of duties & taxes, obtaining all the relevant permits, having a business entity in the foreign country that is set-up to import IT Equipment, and meeting logistical and packing requirements.
Fortunately, having the right logistics & trade services partner, like FGX, will take away all of the stress and uncertainty typically experienced when shipping internationlly. Please feel free to reach out to us for a free consultation or if you have any questions regarding international technology shipping.
FGX – First Global Xpress provides door-to-door IT deployment solutions into over 130+ countries. Combining in-house logistics with importer of record and trade services, enables FGX to manage all aspects of international shipping. Our global team works on your behalf to ensure the timely delivery of your IT hardware to your international offices, data centers, or colo locations. If you want to learn more about shipping IT equipment internationally, visit our stories page. Or if you want to reach out, feel free to contact us here.