Episode 2 –
30 years and still learning - Having spent most of my career post leaving the Royal Navy working in consumer goods. I find it fascinating that I still learn every day, sometimes it is a reminder of what I have forgot but for the most part, I learn something new every day… Today’s episode is about Importing – The Basics.
Living and working on an island, albeit that island was Britain, for many years taught me much about importing and exporting, Britain was once the power house of all international trade so it is in our business DNA to do business with other countries. Therefore, working in consumer goods it was inevitable to get involved at some point. Here are few answered questions I get asked from a general and US importers perspective, all to make things a little less scary.
Is the US an exporters utopia?
Yes and no…
Why yes?
Because when you are successful with an item that people want, the volume potential is huge, by population alone with over 300 million people, the math works out just great.
Why not?
As mentioned in previous articles and episodes of Creator to Consumer, although the US has a common language and currency many factors are different, state by state, cultural likes and dislikes, logistically the US is thousands of miles from anything East or West, we have 5 time zones.
Many more retailers and foodservice touch points than other countries and to make it big you need to invest in resource and travel (Pre-Covid-19) to get around, develop and maintain all the customer points.
What can be exported to & imported into the US?
Anything that is legal and accepted by the FDA, USDA or CDC, and consumers want to buy, funny enough the latter being the reality check of all.
Is registration is needed?
As the exporter of food and pharmaceuticals, you need to at least have the production facility registered with the FDA and or CDC, as the importer, depending on what you are doing with the product when it arrives you may need to register your business/facility with the FDA, USDA and or the CDC. All importers need to be registered with Dun & Bradstreet to have their own DUN’s # for their business.
To be able to sell certified products, such as Organic and Non-GMO items, you need to have US based certification and compliance.
When shipping food products especially agriculturally based products, these need a veterinary certificate for each load and or production run, along with a full certificate of analysis to prove what is in the product, along with ingredients and nutritional information.
What are import licenses and do I need them?
There are not many specific licenses that you need to import products into the US, unless you have something that needs government sign off. Not in our space at least.
There are import licenses that help reduce the tariff costs of certain product groups, such as cheese for example, if you have license for a certain quantity of product it reduces the import tariffs and therefore giving you a lower cost landed product, however, you can import without any license and just pay the full landed duty costs, commonly known as shipping over the top..
What is an Import Broker?
An Import Broker is a certified individual or organization who handles imports through the shipping, arrival and landing of the goods in the US, they are all part of the cost of importing.
Usually these are specialized organizations, however, larger shipping companies and some larger importers have their own in house import broker team.
Tariffs and how do they effect my product?
Tariffs are applied to certain products from one country to another, what it means is, if you want to import products from a region with high tariffs, then your product will be more expensive on the shelf in the US than possibly in their country of origin, meaning the knock on effect will or at least could reduce your volume potential. All political and out of any one individuals’ hand to effect
Is a US partner needed?
Not in terms of a true business or entity partner, however, it is favorable to have at least a organization you have ‘partnered with’ to hold and manage inventory while developing sales, who also looks after your interests on the ground in the US. Otherwise you will have to do a lot of travelling to get sales going or hirer a team to make it work, costly in the early days at least.
Where and who should I import from?
Anyone and everywhere you know if you have the agreements in place and true audits taken care of to be sure you are getting what you are expecting.
I have known importers to fly to the country to check the product before it is loaded on to the container and watched the container get loaded to ensure they were getting what they were expecting to get.
Where does the liability for the product and shipment lie?
Liability usually transfers from exporter to importer at the point when title to the goods transfers, usually at the exchange of money. So, if you are paying up front be sure you know what you are paying for.
Many importers pay by LOC, Letter of Credit, that way the funds are identified as being available to the exporter but only released at a pre-agreed moment from the Importer.
Exporting goods halfway around the world is as scary as it is to Import products, from a financial and quality control perspective.
My rule of thumb check and double check everything on both sides prior to shipping or paying for a shipment arriving.
How are the costs broken down?
In simple terms the costs are as follows, more complex explanation needs an article just on the importing flow chart.
Cost of the product you are importing.
Cost of shipping to the dock in the country of origin.
Loading the container onto the ship. (assuming sea freight for this example)
The sea freight passage.
The landing and disembarkation at the port of entry.
The clearance and entry, documentation customs clearance etc.
Import Broker Charges.
Picking up the product ship side.
Trucking from the port to your warehousing location.
(An additional cost and step in this, if there is any hold up in unloading and discharging the product from the ships care you can be charged demurrage)
Importing acronym’s worth knowing!
FOB – Free on Board – The liability is with the receiver once the product is loaded on the ship.
CNF – Cost, No Insurance & Freight – When the product arrives at the receiving port all the costs are on you to land it and get it out of the docks, the product is not insured throughout the journey
CIF – Cost, Insurance & Freight – The exporter is completely liable for the product all the way until it is off loaded at the receiving port.
Door to Door Acronyms
CFR – Door to destination port
DDU – Door to Door, excludes Duties/Taxes at Destination
DDP – Door to Door including Customs Fees.
Others
BOL – Bill of Laden – Documentation of what is loaded in the container.
COA – Certificate of Analysis – Product analysis including ingredients and nutritionals
COI – Certificate of Insurance
What payment methods are there to vendors/exporters?
LOC – Letter of Credit
Wire Transfer
COD – Cash (payment) on Delivery)
Payment Terms, usually once a relationship has been developed.
Now that is all as clear as mud, need more, please ask.
Thank you reading our Random Sound Bites Edition, we look forward to sharing more knowledge in future episodes here at Beach City Sales.
Interested in finding out more about the CPG/FMCG industry please visit our Chatter page at www.beachcitysales.com/blog or our general site at www.beachcitysales.com, for more direct interaction please e mail us at info@beachcitysales.com
Remember, whatever you know “good luck keeping up”