Global Freight Shipping Laws

Global Shipping Laws

Whilst there are broad legal shipping principles and regulations that cover international trade, there are also differences from country to country who have implemented their own procedures for the import and export of cargo. Whether it is regarding security, supporting documentation or specific rules of compliance you have to ensure that you fulfil all the legal obligations to ensure that shipments are moved safely and securely and without delays.

This means that you need to check your imported products to see if any licenses are required or if there are any additional controls on the products you are looking to purchase. You need to ensure that goods are moved, and that trade is completed with adherence to these strict regulations. Failure to do so can lead to all sorts of issues.
It is always recommended therefore that if you are exporting you check with the buyer at destination exactly what additional documentation is required along with the standard shipping documents that are produced for all shipments.

Regulations concerning shipping are developed at the global level to allow a degree of stability and uniformity which allows importers and exporters to move their cargo within the same broad framework of legislation. This means that in terms of sale, in terms of insurance, Letters of credit and terms of shipment etc tend to be standardized. You find that the leading carriers for sea shipments have the same conditions of carriage whatever the routing of the cargo even though the clearance and port authority controls do differ from place to place.

If you are importing electric products there will be certain standards and the goods will need to be accompanied by the correct CE documentation. If you are importing products of animal origin or products human consumption you are likely to find that you will need additional health, Phytosanitary and proof of origin documentation. You may need the ingredients list and processing certificates, and all of this is very specific to the commodity you are looking to trade.

Whilst the international economic and shipping regulations pertaining to carriage are often standardized you will find that it differs greatly from product to product as to what is required, and you need to do the necessary research specific to that industry and ensure that the products are compliant.

As the world has become a global marketplace, the international community has developed a strict system of trade covering access, tariffs and potential dumping of cheap cargo which could disrupt the local economy of the destination country. Broadly there is a WTO system that must be adhered to and any trade deals must be compliant with the principles of fair trade.
Other global laws cover such things as construction standards, navigational rules and standards of crew competence. The alternative to not having these laws would be a chaotic mess of conflicting national regulations resulting in commercial distortion and administrative confusion. This would compromise the efficiency of world trade dramatically.

Whatever method you use to import or export goods from the UK it is important to be familiar with global freight regulations and any additional requirements that are native to the countries you are working with. A freight forwarder is a crucial party in this to advise you and guide you through the process.

India

India has yet to adopt a uniform goods and services tax (GST) nationwide. A myriad of state tax regulations requires companies to pay taxes each time inventory crosses state lines, so shippers need to learn to minimize their tax burden by having a distribution center in most Indian states where they conduct business. The Indian government plans major investments that will triple the country’s cargo handling capacity at 12 major ports, with the goal of being able to handle three billion tons of imports and exports per year by 2020. International freight rules will be applied when either the place of origin or the place of destination or both lie outside India. As can be observed, the impact lies in the provisions of the ‘Place of Supply’ in order to determine the taxability of cross-border and in-state transactions. If goods are transported as cargo through ships, the outbound shipment is to be considered as exports, while inbound shipment attracts a service tax. If transportation is via air, then inbound as well as outbound shipments will not be subject to service tax. Subsequently, the tax liability, particularly of ancillary items like cargo handling, warehousing, and terminal charges will be determined on the basis of the taxability of the principal service.

China

The requirements for importing and exporting goods with China are stringent, and not all logistics providers have the capabilities to ship where your products are going. There are nearly 10,000 logistics companies in China, including thousands of much smaller logistics companies. Each company claims they can do any job in China because they have connections with brokers and transportation providers, this may not be the case though so do your research. Many of them say they can provide personalized job service if you require it.

Smaller logistics companies typically do not operate out of an office, own a facility, logistical system, or equipment in China. Most rely primarily on an agency network relationship to move the freight to China. In fact, it is common to find that more than two or three different logistics parties are moving the goods into China, especially in Tier Two and Tier Three cities.

To choose suitable freight forwarding companies in China, be sure they have these 5 capabilities:

1. Extensive knowledge about the procedures related to importing and exporting
2. Standardized and consistent processes worldwide
3. Standardized compliance practices worldwide
4. System visibility, and the ability to track and trace shipments
5. Proficiency with International commerce terms of sale
There is a huge market to sell goods inside of China. But in addition to the import regulations, Chinese distribution channels are more complex than those in the United States or Europe. Import goods are classified as Permitted, Restricted, or Prohibited. Distribution models in China include concentrated wholesale markets, business to consumer service (B2C), online distribution channel, and more.

United States

In recent years the US has developed more regulation and safety controls. You have to complete an AMS and present to the US broker who will need all the details of the shipment to coordinate Import Security Filing (ISF) Effectively this is a way of checking the cargo and its manifest and ensuring that the movements of goods are properly registered and accounted for. There are also additional customs responsibilities for agents there with power of attorney and bonds etc so you find that generally, it is more regulated than a lot of other nations.

The penalties for non-compliance can be steep so it’s best to be on top of your research when exporting to the U.S. You need to again speak to your freight forwarder and the buyer of cargo to ensure everything is properly in place.

In 2016 alone, U.S. Customs and Border Protection collected $57 million in fines and penalties from shipments not in compliance with customs laws. Businesses that don’t meet compliance requirements also run the risk of having their goods delayed in transit, this dramatically slows production and making it harder to meet customer delivery expectations. Recent initiatives to improve cross-border security, such as the Container Security Initiative and the Customs-Trade Partnership Against Terrorism (C-TPAT), have also increased the complexity of global freight laws for import/export businesses. While countries around the globe are taking steps to streamline customs procedures, progress has been slow. Migration continues to the U.S.’ Automated Commercial Environment (ACE), which aims to create a single paperless portal for the dozens of U.S. agencies involved in international trade. Many businesses are still learning how the new system will affect their operations, so it’s been slow going.

A good freight representative will guide you through though and work in unison with the broker in the US to ensure shipments are moved as smoothly as possible. Experience counts, and a good grasp of the regulations makes it relatively straightforward as they know exactly what is required and when.

Canada

The freight brokerage industry in Canada is significantly less regulated than it is in the United States. As in the United States, there is a “freedom of contract” whereby shippers, freight brokers and carriers may negotiate contract terms. There is accordingly increasing focus and a premium on the negotiation of “shipper-broker” and “broker-carrier” contract terms, in addition to “shipper-carrier” contract wording. Freight brokers must be deliberate – and contractually articulate – as to their business model. They should also pay close attention to their risk assessment, and their management of exactly what obligations they are prepared to undertake.

While an unregulated field readily allows for new entrants to export to Canada, the absence of a statutory codification of the standard of care expected of the freight broker may prove to be problematic for the unwary freight broker. It is important to implement a deliberate and consistent business model and method of operation to export to Canada effectively.

EU

If your products comply with harmonised rules as per the European Union and are not imported from third counties, they can be circulated freely within the EU. This means no restrictions may be put in place; such as limiting quantities of sales etc. Harmonised EU rules are based on a set of conditions, aimed to protect consumers, public health, and the environment. If your products are not subject to harmonised EU rules, they may be subject to national rules; if this is the case you will still be able to benefit from the free movement of goods on the basis of the principle of mutual recognition(the right to export and import goods freely within the EU).

If you import from outside of the European Union as it stands now the legal principles and regulations are standardized throughout Europe meaning that the control and duty rates are the same whichever EU country you bring the cargo into. Restrictions may be imposed on products if they would interfere with public interest – in particular on grounds of protection of health and life of humans, animals or plants, environmental protection, public security or public morality.
If your goods are not compliant with EU law, then you risk them being rejected or refused so you need to ensure that your goods are fit for market and supported with the correct documentation.

Conclusion

Global freight and shipping law compliance is a part of importing and exporting that you don’t want to be lax on. The fees and delays that can happen for a lack of compliance can take a huge toll on your business. Depending on what country or countries you are doing business with the varying laws can be incredibly complex. While it can be arduous in the beginning to orient yourself with the differing laws, it’s beneficial for your business in the long run for a variety of reasons. Not only does it allow for great business expansion, but also for ease of mind. Do your research and find a reputable company to help you. You won’t regret it!

 

Photo by Axel Ahoi on Unsplash