There are many parties involved in an international shipment, which makes it difficult to identify the party responsible for each leg of the process when a problem arises. As a participant in this convoluted relationship, you must not only be aware of your own responsibilities but that of the other relevant parties as well. Not knowing the responsibilities of your supplier or freight forwarder represents a huge risk for an importer. And in a sector as complex as ocean freight, there’s a very thin line separating risk from logistical disaster.
At iContainers, we recently had a customer who was unable to load on the date he expected to due to the Chinese New Year. The agent received the supplier’s contact information too late, and didn’t manage to ship the merchandise prior to Chinese New Year, during which services and operations in China come to a complete standstill for nearly three weeks.
He did eventually ship the goods. But it was two months later - and too late. The long wait ruined their production plans and broke commercial commitments. As a result, he lost the sale and to add fuel to flames, he lost the client.
Those working in the industry are well-aware of the intricacies of logistics, and how a tiny and seemingly innocuous error can result in harsh consequences. In many of these such cases, the underlying problem is the lack of knowledge of roles and responsibilities.
Who’s really responsible for ensuring that an import goes smoothly? Is it the importer, the seller, the freight forwarder, or the carrier? The matter of fact is that there’s never one party that’s solely responsible for such a complex process. And it’s vital for each to understand the obligations of the others involved in order to get things done right. That said, let us go into the responsibilities of you as an importer/buyer.
Such data include the email, name, phone number of the contact person and the name of the company where he’s working. This information is key to streamlining the process. This is especially so when you’re short on time. Taking into account the time differences, it is best to provide this data as early and as accurately as possible. It could take as long as two days to begin processing your import from the moment you provide your supplier’s contact information to your freight forwarder.
Advice: As soon as you’ve confirmed your purchase and know that your merchandise is in production, you should begin to manage your booking with your freight forwarder to speed things up instead of waiting days or even weeks for production to finish. The agent at origin can keep the freight forwarder updated during the production process so that your booking can be modified if needed.
It’s not uncommon for providers to want to modify terms that have been previously agreed upon. They may want to switch from a FOB to a CIF, which could be risky, or to an EXW whereby the importer is responsible for a large portion of the process.
What’s the role of the freight forwarder in the event there’s still no Incoterm agreed at the final hour?
At this point, there’s not much the freight forwarder can do except to get an answer from both parties. It is ultimately up to the importer to ensure that the supplier complies with the agreement and above all, that terms and conditions are properly reflected in the contract.
Depending on the nature of your merchandise, you may have to submit additional specific documentation.
For example, the test report is one of the most common certificates required at origin when importing into the EU. It certifies that the merchandise being shipped fulfills the minimum quality conditions (strength, durability of the material, etc.) required by the European Economic Community.
In addition to the different origin and destination certificates, you may sometimes be required to produce other specific documents for importation. Take importing honey into the EU, for example, a certificate of origin is always required. And because it’s an animal product, both the importer and the exporter must be registered in TRACES (TRAde Control and Expert System).
The consequences of not having these specific documents prepared for your import are dire. If your cargo has arrived at destination and the deadline for which you have to produce these supporting documents passes, customs will demand one of two solutions: Re-export the cargo to the country of origin or destroy it. What’s important to note here is that any added expenses as a result will be fully borne by the importer.
It is unfortunately rather common for suppliers to not have the goods ready on the day of pick up. This snowballs into not being able to load on the vessel on the expected date. Here, freight forwarders can notify and remind you of an upcoming pick up date. But getting the merchandise properly packaged and ready for pick up is the exporter’s responsibility. If the exporter fails to comply with the pick up date, he may have to wait two weeks until the next vessel departure. And in those two weeks, many things could happen, including disruption to the supply chain and a breach of contract with third parties.
In such situations, the freight forwarder can help to look for alternatives, such as loading the cargo onto another vessel with a shorter transit time. But there may not always be such viable options that cater to such scenarios. The supplier is responsible for ensuring that production is finished on time to be able to make the pick up and load date.
As an importer, you must always be aware of all necessary permits required for your shipment. But the responsibility of providing these documents lies with the provider. If your provider isn’t taking charge of this, you should consider changing providers. If you’re unable to rely on your provider to prepare these documents, it may be an indication that you cannot trust him.
In cases where shipping vessels are fully loaded, carriers end up having to prioritize certain cargo. This results in certain non-important clients with whom they do not have personal relationships being unable to load. The freight forwarder’s role in this is to negotiate with the liner to secure the space needed by the importer. But note that the freight forwarder’s influence here is limited as the shipping line always has the final say.
It’s the freight forwarder’s responsibilities to know if a certain vessel will be doing a transshipment on its route and relay this information to its client. This may seem like a minor detail but it makes a big logistical difference. A transshipment implies that the merchandise is unloaded from one ship and loaded onto another. This highly increases the chance of unforeseen incidents and delays and their corresponding fees. Your freight forwarder should inform of these details so that you can make an informed decision regarding your shipment.
If you’re unaware if your merchandise requires additional documentation in order to ship, you may provide the product’s HS code to your freight forwarder so that he can check with the relevant customs authorities.
Making sure that the Incoterm you have agreed on with your provider is correctly reflected in your contract and providing accurate and precise information may appear to be trivial details. But dedicating the little time required to doing them can help prevent unnecessary delays and complications. The small details are often the factors of whether you’ll incur extra costs or if your shipment faces a delay.
That said, keep in mind that you can take all the precautions there are but at the end of the day, your shipment is still subject to factors beyond your control. We recommend you to always get cargo insurance as added protection but be aware that this only limits the blow. Knowing the responsibilities of the other parties involved will help you to better communicate with them so that they hold up to their end of the deal.
International maritime shipping is a complex process and there’s no magic formula you can use to avoid complications. You can only do what’s within your control and that’s to learn as much as you can, surround yourself with trustworthy suppliers and freight forwarders and avoid the troublemakers. And above all, fulfill your part of the responsibilities.
"Customs duties play an important role in your international shipment. How they're determined and calculated varies from country to country"
Klaus Lydsal, vice president of operations at iContainers