A Simple Guide to Customs Clearance

Global trade has been expanding as nations continue to acquire and allocate resources to battle the pandemic. The global logistics industry has been projected to grow at a CAGR of 4.7% in 2021 amid stricter customs regulations and guidelines. Nowadays, shipping companies have been paying greater attention to international trade customs and how it affects them. So, what exactly are customs and how do you pass this hurdle?

What is Customs Clearance?

Customs refers to the official department in charge of collecting duties levied by the government on imported goods as well as the place where officials check incoming goods. In the case of the United States, the Customs & Border Protection (CBP) fulfills this role. Each foreign nation has their own customs department, so be sure to check the rules and regulations of the country of import. 

What do I need to Provide?

When a shipment is imported to the United States, the shipper needs to ensure they have all the necessary documentation for the CBP. Faulty documentation or inaccurate paperwork can lead to delays or even fines depending on the situation. With that in mind, these are the 10 common documents you need for customs clearance: 

  1. Purchase Order
  2. Commercial Invoice
  3. Bill of Lading/ Air Waybill
  4. Packing List
  5. CBP Form 3461
  6. CBP Form 7501
  7. Certificate of Origin
  8. Customs Bond
  9. Export/Import License
  10. Importer Security Filing

Once the documents are submitted, a customs official will review the paperwork and collect any custom duties that may be required of your product. One thing to note is that most documents are now submitted electronically through the Automated Manifest System (AMS) in the United States. The implementation towards digitization was introduced in 2004 as a way to increase efficiency and reduce potential security threats. 

HTS/HS and Paying off the Custom Duties

Checking the Harmonized Tariff Schedule (HTS) will help you classify the product with a specific 10-digit code and identify any tariffs associated with the product. The Harmonized Tariff Schedule of the United States Annotated (HTSUS) is specific to the United States; however, most countries, including the United States, follow the Harmonized Commodity Description and Coding System (HS) established by the World Customs Organization (WCO). The HS uses 6-digit codes to classify products and can add an additional 1 to 3 digits to form 7 to 10-digit HTS codes depending on the country. 

Once the custom duties are paid, the shipment can then be transported out of the port of entry. Customs clearance can take anywhere from within 24 hours to several days depending on how accurate your paperwork is. Failure to pick up the shipment within 30 days will result in customs officials removing and auctioning off the containers once the grace period ends. 

Consider a Professional 

Understanding what customs are and how they work is crucial to understanding the international shipping process. However, if all you’re looking for is to ship a package or container, consider a courier or freight forwarder to help you take care of your needs. Freight forwarders like SFI have decades of experience dealing with shipments and can help you handle everything faster and cheaper than doing it yourself. Contact us today!