A successful shipment always starts with a plan.
Many companies have teams dedicated to organizing the logistical components of a supply chain. This ensures every shipment is in the care and custody of a responsible party. Yet, this challenge can be different depending on your business and customers.
Here are some fundamental building blocks to start planning a good shipment strategy:
- Incoterms®: The internal commercial terms, frequently referred to as Incoterms, pinpoint who is responsible for the care and custody of a shipment, as well as govern the transportation costs, transfer of ownership, and risk (e.g. loss and damage).
However, be aware that Incoterms are blind to specific governmental regulations that may supersede your commercial agreement. They also do not validate that the party who has the care and custody of the shipment actually knows that they are in charge and what to do. Make sure to determine the responsibilities of each party and clearly communicate them.
- Duties and taxes: Taking this into consideration is crucial for a complete plan. This piece can be challenging as it isn’t always black and white.
Regardless of who is in charge of paying duties and taxes, both parties normally share some responsibility regarding supporting documentation, shipment valuation, determining tariff codes and applicability of governmental programs, rules, and regulations.
Even then, your partner may not be up to the challenge, so do not forget to communicate and confirm each party’s responsibilities when it comes to duties and taxes.
- Authority: Once you have agreed and communicated who is doing what, you need to confirm that everybody has the ability to do the work. For example, someone needs to be given authority to handle the customs clearance – usually in the form of a limited power of attorney.
This can take time to complete, depending on what level of authority is required and who needs to extend the authority. Do not expect people to do things for you without authorization, such as asking a non-authorized third party to determine whether your product is considered hazardous goods. Be ready to talk through these type of scenarios. - Primary contact: This one is also really important. Missing information or documentation should never slow down a shipment, but it happens all the time. Questions will arise, so making sure that a primary contact has been identified and is prepared to provide information as necessary will improve your chances of success.
This can be as simple as a commercial invoice, packing list, and waybill but depending on commodity and country there can be additional information or documentation required to comply with various government agencies.
In addition, it may be required to amend documentation to comply with specific country requirements. In any case, a designated contact person is critical to ensure that the information requests are dealt with in a speedy manner.
