Table of Contents
1. Discrepancy between gross weight and net weight.
A mismatch between the weights showing on the Bill of Lading and a packing list can create significant problems for Customs clearance. The only time a discrepancy between these weights is acceptable is when the difference is due to extra packaging material like pallets, shrink wrap, ice packs, gel packs, or customized racking. This problem usually arises when warehouses create packing lists indicating cargo weight without actually weighing the cargo.
2. Using Incoterms wrongly for domestic shipments.
Incoterms were designed for use with international shipments that cross borders. However, they are often used for domestic shipments as well. In most cases, domestic shipments would use either DDP or EXW terms. When using EXW terms, buyers have to exercise extreme caution. For example, if the buyer were to agree to purchase an odd-shaped large item on EXW terms, there is a possibility that the item itself cannot be removed from the collection location without incurring extensive costs. In some cases, there may be a need to demolish pillars in loading bays and reconstruct these features after the item is trucked out.
3. Using ocean or seaway Incoterms for air freight.
When using the wrong type of Incoterms for the particular mode of transport, the biggest risk is that the conditions of the sales agreement become invalid in case of claims for damages. This creates further complexity because the Courts will have no precedence to take reference from and result in long and lengthy proceedings. In most cases, this will also result in legal costs for both buyer and seller.
4. Wrong HS code for import.
Importers and exporters very often leave it to their freight forwarders to sort out HS Classification matters for their shipments. In order to have quick operations, many forwarders prioritize faster clearance lead times over compliance. This leads them to make big assumptions on HS codes. They also tend to pick HS codes for imports that have minimum or no import duty and no licensing requirements. Forwarders can afford to take these risks because the person liable for penalties and fines is the importer or exporter as the case may be.
5. Misunderstanding jurisdiction of WCO and local Customs authorities
Importers may sometimes find publications from the World Customs Organization that seem to provide HS classification information on products. However, these may contradict local rulings. A common misconception is that the WCO opinion will take precedence over a country’s ruling. This is not true. A ruling issued by a specific country’s Customs authority will always take precedence over any publication from the WCO.
6. Declaring the wrong Country of Origin
The country of origin of a shipment is not the origin point of the vessel’s journey to the end destination. This is a common misunderstanding of what “country of origin” means. Country of origin refers to the country of manufacture of a product. In many countries, the manufacturing processes must meet minimum requirements before the country of origin of a product can be determined. At the same time, different authorities in the same country can have different definitions of how to determine the country of origin. Country of origin is mandatory information that must be declared to Customs when importing products so must get this right! Check with the supplier of a product if any doubts arise and make sure the information provided to Customs tallies with the information found on a product label.
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