Customs Compliance: 6 Common Shipping Mistakes That Cost Time And Money

The shipping industry is complex. Shipping internationally, especially, can be challenging as there are many hoops to jump through. Each day thousands of shipments entering the United States and Canada end up delayed, due to a few common errors which could easily be avoided with the right planning. The good news is, it's easier than you think. There are a few key errors many importers make when shipping. Knowing which common shipping mistakes to look out for, will help you avoid penalties and ensure customs compliance for every shipment. 

Mistake #1: Lack of Detail

Detailed documentation for a shipment is essential, as it is the foundation of the customs clearance process. Lack of solid detail can lead to issues with the shipment, as well as consequences for the importer or shipper. Customs officials refer to documents to check whether a shipment complies with regulation, and they also compare details of the shipment to what is in front of them to ensure it is correct and legal. In order to avoid fines or further inspections, it is essential to provide sufficient information about a shipment’s contents, including:

• Quantity
• Weight and Dimensions
• Type of Goods and Materials It’s Made Of
• Origin/Country of Origin

Mistake #2:  Duty and Fee Errors

A lot of key documents in shipping, such as the customs invoice, will contain information needed to determine duties, fees and taxes on a shipment. The documents contain the tariff or HS Code for a shipment, which is used to assess the tax or duty which needs to be paid to customs. The Harmonized Tariff Schedule is what customs uses to determine the correct duty rate for any import, and is essential for customs compliance. Using the wrong code can result in errors with the rate, leading to penalties and issues with the shipment clearing customs.

When importing, it is the importer on record who is responsible for the payment of taxes or duties on a shipment. Even if a customs broker is working on your behalf, it is essential not to miss or be late with a payment, as this can delay the package and prevent release. There are fees and penalties for late payments, and if the mistake is severe enough there is also a risk of being added to the Customs Sanctions List by the CBP, which can lead to issues trying to import again.

Mistake #3: Missing or Incorrect Paperwork

In order to avoid losing money and time, it is essential to double check any documentation before a shipment is sent out. Missing paperwork can lead to fines, penalties and definite delays on a shipment getting released. Remember, customs may assume that you are trying to hide something if you are missing key documents, which is not great for customs clearance. Inaccurate classification of goods will also lead to penalties and difficult outcomes, so it is essential to be accurate with all of your paperwork

Documents such as a Customs Invoice, Bill of Lading, Certificate of Origin and Packing List should accompany all shipments, and failure to provide these documents will lead to issues at the border. Checking twice that all paperwork is in order, can be the difference between saving and wasting money.  

Mistake #4: Failure to Use Proper Incoterms

In international shipping and trade, there are terms used in the sale of goods, which are internationally recognized and outline responsibilities of the buyer and seller. Essentially, Incoterms are shipping terms which can be found on documentation, and are seen as 3 letter abbreviations. Improper terms used can negatively affect anything from customs declarations to issues of contract being followed between seller and buyer. This can become a costly and even at times legal problem, so it is essential to note the correct Incoterms.

Improper use of terms can lead to lack of understanding of costs or responsibilities between buyer and seller, incorrect rules for the mode of transport being used, and even disputes. It can lead to payment issues and affect delivery schedules. As these terms impact international sale contracts, they are important to complete correctly. To make sure that the goods being shipped have the proper commercial definitions, it is essential to assign correct Incoterms.

Mistake #5: Incorrect Country of Origin

At times, importers may make the mistake of improperly labeling the Country of Origin on the shipment documents, causing issue. It is important to remember that the country of origin may not be the exact same as the country goods were purchased in, so it is essential to label the goods correctly. The country of origin will help determine fees and duties owed, so it is essential to use the correct information. 

Mistake #6: Misunderstanding Free Trade Agreements

One advantage to shipping internationally is that sometimes countries have special trade agreements with other nations, which can improve the shipping process due to the benefits these agreements provide. However, there are times when mistakes are made in interpreting free trade agreements or programs. Importers need to make sure their goods actually qualify for the programs, which requires research. Documentation accompanying the shipment needs to support the claims that the importer is covered under a special trade program, to justify their claim to the benefits. The country of origin needs to be listed correctly, as this is one of the key pieces of information sought to confirm this.

When you ship internationally, you need to be careful about the customs paperwork. As with any other step of your business, it is important to know what to do and where to go, to get your goods across borders. With Zipments.io, you can save time, money and hassle when it comes to customs and transport documents. Zipments is a platform that allows you to streamline the customs and documentation process, to import/export across borders with a few simple clicks. PARS and PAPS tracking, customs invoices, duty calculator, and even CERS filing is easily accessible on one platform. We'll help take care of the paperwork, so you can focus on growing your business.