Navigating international shipping can be a daunting task, particularly for younger e-commerce brands and retail businesses. The intricacies of taxes, regulations, and the packaging required for international shipments can be overwhelming and intimidating.
However, in a world where the e-commerce market is projected to surpass $8.1 trillion by 2026, expanding into global shipping is becoming increasingly essential.
In this guide, we will make international shipping easier to understand and provide you with steps to help streamline and automate the process.
How do you prepare for international shipping?
Although the prospect of shipping a product, care package, or perishable item abroad may appear intimidating, the procedure closely parallels domestic package shipping.
1) Pre-purchase
Before you embark on international shipping, it’s crucial to confirm that the items you’re selling are permissible for delivery to your desired destination.
A. Check Eligibility for Shipping
Examine if your item can be shipped internationally. Regulations vary by country and product type. To ensure compliance, consult the Country Commercial Guides on Export.gov.
Depending on the content and export regulations, you may need an export license or ECCN number per Export Administration Regulations (EAR).
While ECCN classification and code format are generally uncomplicated, an example can provide a clearer understanding.
For instance, consider the ECCN code for re-exporting a Riot Helmet, which is 0A979.
Your shipments may face delays and fines can be incurred if you’re not compliant. Some countries have peculiar restrictions like Bulgaria restricts the import of used clothing.
To avoid issues, consult the official customs website of your target country, which typically outlines what’s permissible and what’s not.
B. Choose a customs broker and establish the terms of the sale.
Customs brokers play a vital role in ensuring smooth customs clearance for your shipments, effectively preventing any potential delays or complications. In case issues arise, your selected broker will act on your behalf to address them.
Generally, FedEx® international services include brokerage services for shipments with a declared customs value of USD 500,000 or less.
C. Collect essential data.
Before generating your customs paperwork and international shipping label, ensure you possess the necessary information to address these questions:
-
- What is the intent of your shipment?
- Is it a commodity or a document?
- What is the assessed value of your commodity?
- Where was your commodity produced or manufactured?
- Do you have the Harmonized System (HS) code for your commodity?
- Would you like to estimate duties and taxes?
- Who will act as the importer and/or consignee?
- Who is responsible for covering transportation costs, duties and taxes?
D. Identify the essential customs paperwork.
Before generating customs paperwork, gather key information such as shipment intent, commodity details, assessed value, production origin, HS code, duties estimation preference, and importer/consignee details. You can also select a customs broker for smooth customs clearance.
Below is the list of essential documents you’ll need for customs clearance:
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- ProForma Invoice
- Customs Packing List
- Country of Origin Certificate
- Customs Invoice
- Shipping Bill
- Bill of Lading
- Bill of Sight
- Letter of Credit
- Bill of Exchange
- Export License
- Warehouse Receipt
- Health Certificate
If your shipping provider sends customs forms or invoices for international orders to ShipStation, you can print them through ShipStation for inclusion with the shipment. ShipStation automatically submits customs forms for FedEx and DHL Express.
You can also enable electronic submission for UPS however, you need to contact UPS to activate the EDI feature on your account.
E. Types of customs duty
Taxes, fees, duties, tariffs – these terms essentially signify additional expenses. Let’s break them down:
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- Taxes: Represent extra costs, commonly calculated as a percentage. For instance, your shipments may incur an import tax, which can be paid in advance or upon delivery.
- Fees: These are fixed rates applicable to a shipment or transaction, irrespective of its value.
- De minimis: A de minimis is a limit that frees imports from duty and/or tax/VAT, and this threshold varies by country. It enables quicker clearance and opens up opportunities for competitive market sales. Within the European Union, member countries using the Euro share identical de minimis thresholds:
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- Duty exemption applies up to 150 EUR.
- VAT is consistently charged, irrespective of the value.
- Both duty and VAT become applicable when the value exceeds 150 EUR.
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- Duties: It is akin to taxes but is remitted to governments, typically as a percentage of the value after taxes.
- Tariffs: They are taxes added to foreign products, often used to restrict trade from certain countries or make foreign products less attractive, thereby safeguarding local trade competitiveness.
- Landed Cost: The complete landed cost comprises the total of product expenses and the computation of duties, taxes, and additional export or import charges. The landed cost calculation usually extends beyond taxes and duties alone. Additional fees, such as those imposed by shipping carriers, brokers, customs, or other government agencies, may contribute to the overall import cost.
F. How to calculate customs duty?
Usually, countries employ four methods to calculate duties:
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- Ad valorem based on CIF (cost, insurance, and freight): This method calculates import duties by assessing taxes on the total cost of the order, including freight, insurance, and the seller’s commission.
- Ad valorem based on FOB (free on board): In this approach, import duties are calculated solely on the cost of the goods sold. It does not include calculations for shipping, duty, insurance, etc.
- Weight: Here, import duties are calculated based on the weight of the goods being imported.
- No Duties Assessed (free port): While not a method per se, this scenario occurs when countries do not impose any duties on imports, rendering them duty-free.
Below is an example of the four methods:
For this example, let’s assume the item cost as 100USD, Weight 5kg and shipping 25USD.
|
Calculation method |
Duty Formula |
Equation and Result |
|
Ad valorem 10% CIF |
duty rate * (item cost + shipping cost) |
10% * (100 USD + 25 USD)= 12.50 USD |
|
Ad valorem 10% FOB |
duty rate * item cost |
10% * 100 USD = 10 USD |
|
Weight-based 5 USD per kg |
duty rate * weight |
5 USD * 5 KG = 25 USD |
|
Free 0 |
no duties calculated or applied |
0 |
G. Using Apps to calculate customs duty
Calculating import tax and duties can be a strenuous task. However, there are various tools at your disposal.
To begin with, we recommend using the following applications:
Zonos
With Zonos, you can automate cross-border tax compliance, cover landed cost calculations, duty/tax collection, VAT threshold management, in-country tax registration/remittance (UK VAT, IOSS), and reconciliation.
Additionally, for all your shipping and importing needs, you can check out Zonos’ country guides. They offer current duty and tax rates, examples of landed costs, and detailed information on restrictions, trade agreements, paperwork, and more. It’s a straightforward resource to make your shipping process smoother.
ImportYeti
With a strong user base of 500k, ImportYeti gathers data from U.S. customs sea shipment records, presenting it in charts, maps, and segmented sections.
Global e
Global-e’s comprehensive e-commerce platform empowers you to drive online sales across 200+ global destinations. With a single integration, you can provide a smooth, locally tailored shopping experience to online consumers worldwide.
H. Add a banner for international orders
You have the option to incorporate a banner on your website, effectively communicating crucial business updates to your customers.
This may include details regarding shipping delays, regions where international shipments are not accepted, or the introduction of new and updated policy pages.
For example, Dior mentions their delivery and returns policy along with dispatch details.
To create such banners, we recommend using Adcreative.ai. This tool will help to produce effective banners swiftly with the power of AI.
2) While order processing
Every shipment category, such as gifts, samples, and items for repair, undergoes an import clearance procedure as dictated by the customs regulations of the receiving country.
The clearance of the shipment by customs depends on factors like the nature of the goods, their country of origin, as well as their value and quantity.
A. Prepaid Customs
By utilizing the Prepaid Customs Tax Service, you can proactively pay the destination country’s various taxes, ensuring your package won’t encounter delays with local customs.
Typically, this process eliminates the need for additional clearance steps. The choice to use this service is entirely optional.
However, it’s important to be aware that the Extra Service fee, whether for the Prepaid Customs Tax Service or the Additional Warranty Service, is non-refundable and cannot be canceled under any circumstances.
For example, FedEx provides an EXPRESSCLEAR system that is completely automated, ensuring swift and precise clearance for your international shipments.
Every FedEx international shipment includes standard customs clearance, and you also have the choice to utilize your preferred broker through FedEx® International Broker Select.
Furthermore, FedEx offers supplementary clearance services that add value, enhancing your solutions and streamlining the clearance process. These services can expedite clearance times and reduce delivery times, providing you with superior efficiency.
B. Fill out and send customs paperwork.
To expedite customs processing, it’s crucial to maintain consistent and comprehensive descriptions of your shipment contents in all the necessary documents. An effective description should provide answers to the following questions for each item in the shipment:
- What is the nature of the item?
- How many units are included?
- What materials is it composed of?
- What is its intended purpose?
- In which country was it manufactured?
C. Generate an international shipping label.
As you complete the international shipping label, include the names, addresses, and contact numbers of both the sender and recipient.
D. Customs declaration template
A customs declaration form is a tool employed by cargo and freight companies to gather details regarding the contents of shipments.
Regardless of whether you’re transporting a vehicle, a watercraft, or a batch of products, you can utilize a free Customs Declaration Form to compile information about your merchandise before dispatching it.
E. Pre-shipment update to the customer
“Pre-shipment” is a tracking status employed by the United States Postal Service (USPS). It denotes the initial phase of the shipping process, wherein a shipping label has been generated by the sender, but the USPS has not yet taken possession of the item for transportation.
Keep an eye out for any notification from the customs office or local post regarding customs
3) Post fulfillment
Fostering trust with international customers involves selecting a shipping solution that offers comprehensive package tracking, enabling them to closely monitor their parcel and minimizing the chances of loss.
A. Check with the local post.
After the initial fulfillment process, it’s essential to double-check with the local post office. Confirming that your packages have been handed over to the postal service ensures that they are on their way to the customers.
This step is crucial for tracking the progress of your shipments and providing accurate information to your customers.
B. Define Policies for Customs Delays and Lost Shipments
Dealing with customs-related issues or lost shipments can be a challenge, especially in international shipping. 88% of the companies experienced shipping delays, while 51% of online shoppers did not receive at least one package they ordered online in the past six months.
In cases where customers have inquiries about their shipment, it’s advisable to refrain from making excessive commitments and instead, focus on effectively managing their expectations.
Additionally, it’s important to establish clear policies for these scenarios.
Consider the following:
- Customs Delays: Create a well-defined process for handling orders stuck in customs. This may include providing customers with information on potential delays, estimated clearance times, and what they can do to expedite the process.
- Lost Shipments: Develop a plan for lost shipments, including the message to convey when customers reach out about their missing orders.
Automate order updates through Saufter.
To track your orders and resolve issues proactively consider Saufter’s user-friendly system. It serves as a robust tool equipped with an extensive array of features, ensuring that you are consistently well-informed about the status of your orders.
Key Features
- Order Status Tracking: Utilizing an automated scanning system, you can receive real-time updates on vital order information, including location, delivery status, and expected delivery dates.
- Automated Order Monitoring: Saufter operates around the clock, diligently monitoring your orders. It promptly notifies you of any potential delays, enabling you to address issues instantly and ensure a seamless customer experience.
- E-commerce Workflow Automation: Streamline your e-commerce operations by automating repetitive tasks such as managing returns/exchanges, order modifications, and address changes.
- Comprehensive Order History: Saufter provides a unified view of your customers’ complete order history. With relevant information at your fingertips, such as order details and tracking updates, you can offer highly personalized support to your customers.
- Live Chat and Knowledge Base: Harness the combined power of live chat and a knowledge base to empower your customers to find solutions to common queries, such as checking order status or initiating returns/exchanges, on their own.
- Smart Reports and Insights: In addition to essential performance metrics, you can access valuable insights regarding trends in refunds, order delays, and more.
In Summary
The journey of international shipping involves careful preparation at every stage. From the initial steps of pre-purchase to the post-fulfillment phase it’s a multifaceted process that requires attention to detail and adaptability.
With the right tools, knowledge, and a commitment to managing customer expectations, international shipping can be a lucrative endeavor that opens your business to a global audience.
We trust that this guide has provided you with valuable insights and actionable techniques for elevating your international shipping process.
Additionally, the recommended apps are highly rated and packed with features. Nevertheless, we recommend giving them a trial run before committing to any payments or subscriptions.
Furthermore, for an efficient and automated customer service experience, we encourage you to explore Saufter. It can significantly enhance your ability to resolve any delivery issues proactively and enhance your shipping efforts
Begin your 15-day free trial today – no credit card information is necessary.
