Congratulations! You’ve just received your first international purchase order! Or maybe you can remember the excitement of your first sale overseas. The initial excitement quickly fades as you realize selling your product internationally raises a lot of questions. The most common question is, “How do I get my product to my customers?”
The first item to consider when looking at this question is the mode of transportation. There are several modes including train/rail, ocean, trucking, air freight, express, or a human courier physically carrying the goods. Often a shipment may require multiple modes. The decision on how to get your product to the end-user/customer may change from time to time based on three criteria: size, cost, and speed. If they need the product quickly, shipping by air is often the only option. An express shipping company such as DHL Express uses an integrated air and ground network to deliver goods quickly and reliably from door-to-door in more than 220 countries and territories.
The second consideration for ‘how do I get my product into the international market’ is whether you need the assistance of a broker or freight forwarder. In the U.S. an export declaration called Electronic Export Information (EEI) is filed in the Automated Export System (AES) and is required for controlled goods and shipments with a single commodity with a value over $2,500. The U.S. Government has a free website for shippers to do the AES filing themselves if they have the expertise to do so. The decision of who has the responsibility for filing the export declaration or paying the filing fee should be considered when entering into a contract with the supplier. Some shippers feel more comfortable having a third party such as DHL Express perform these filings. The AES export declaration requires the goods to be classified to assign a Harmonized Tariff number, which enables Customs to know precisely what commodity is being exported. Again, this is an area where your answer to the question will change with the complexity of the shipment.
Remember that every export will become an import at its destination. While we are not going to explore the import process in detail; in other articles we have touched on the need to consider the import process when preparing your export shipment. All customs authorities at the time of export and import ask three questions:
1. What is the product?
2. What is the product’s value?
3. Where was the product made?
Every international shipment requires a commercial invoice that outlines these transaction details for Customs.
A famous quote by John Beckley reads, “Most people don’t plan to fail; they fail to plan.” This certainly rings true in international business. When selling a product internationally, every company should have an export plan that answers the basic questions.
Phillip holds a law degree and is licensed to practice law; however, this article is intended to be general information and not legal advice. Readers are encouraged to seek legal advice to answer questions about their specific exporting situation.