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Business Implementation with your LSP (Logistics Service Provider)

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          Most Traders use one LSP (Logistics Service Provider) for both the Freight Forwarding and Customs Clearing components of their business. Some use separate LSP, one for Freight Forwarding and another for the Customs Clearing. The reasons for the latter may be for cost benefits, to meet buyer or supplier requirements or because of the Incoterms (International Commercial Terms) agreed. There may be more reasons for this but, whichever the case, there will need to be a full implementation of both your Freight Forwarding and Customs Clearing requirements with your LSP.

          Most LSP companies have specific implementation procedures. These may take different forms of SOP (Standard Operating Procedures). Documented procedures will be used to implement your specific requirements for customs and logistical processes. Some information will also be pre-captured onto the LSP internal IT systems.

          As mentioned in previous blogs, the more your LSP knows about your business, the better off you are. In fact, why not invite some of the staff from your service provider to your premises for a guided tour. Take them though your business processes and production line. Show them the product/s you import, produce, process, sell or export. This will help freight forwarding personnel to gain a better understanding of your requirements and unique logistical challenges, i.e. packing space, loading bay restrictions, temperature control, delivery time frames, etc. It will also help the forwarding personnel to guide the Customs Clearing procedures within their own (LSP) organisation.

          Personnel involved in Customs clearing who visit your premises will gain a better understanding of the unique characteristics, features and design aspects of your import or export products. This will help for tariff classification issues which affect the rates of duty and the OGA (Other Government Authority) requirements, i.e. for certificates and permits.

          Any LSP which conducts both of the freight forwarding and Customs Clearing components of your business will generally have a well-integrated communications and document control system to manage your work. A seamless integration of all procedures is achieved. Using different LSPs for the Forwarding and the Customs Clearing components may occasionally have its challenges, especially with regards to document handover procedures.

          The consequences of getting this wrong may impact on your business negatively regardless of who is responsible for errors in the process.

          You will want to ensure that all procedures and requirements are well communicated and implemented with all parties at all times.

Advance Research of Import & Export Requirements

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          I have seen it all too often. Consignments imported or exported without the required documents or an understanding of the duties and taxes involved.

          I recall a particular occasion when an importer came to visit us at the local Customs Branch. He had imported a consignment of wooden articles and curios from Bali, Indonesia. The consignment was stopped and inspected. Some of the articles had no import certificates (wooden articles require treatment certificates). Some of the articles had no import permits (second-hand or used goods require an import permit). And, some of the goods were cleared with incorrect descriptions and therefore with the incorrect tariff headings. This resulted in an under-payment of duties and taxes as well as the seizure of half of the consignment.

We had a meeting with the importer who was overwhelmed at the time. During the meeting the gentleman started to gasp for air, stating that this would be the end of his marriage and the farm he owned. I spotted a brown paper bag near to me; a sample drawn from a previous consignment. As he leaned to the floor we began to resuscitate him with the paper bag. We then gave him some water to help him relax. He recovered from the hyperventilation incident and went on to comply with the requirements where he could.

          But private individuals are not the only persons who make such mistakes. In another incident a company imported a large machine to go into a plant in the nearby vicinity. The company failed to declare the full value of the consignment (i.e. being part payment, he only produced invoices for the 30% advance payment and not for the full amount). This resulted in a large underpayment in duties and taxes. In order to obtain the machine from Customs storage, and in order to save face with his local buyer, the director of the company sold numerous company and private assets (including his house) in order to pay for the shortfall. I believe that the gentleman went on to make a success of his business.

          Advance research of the import and export requirements is key. But do not stop at only the Customs requirements. There are about 13 OGA (Other Government Authorities) which may intervene in your consignment. Some of these include for example: ITAC (International Trade Administration Commission); NRCS (National Regulator for Compulsory Specifications); and the PHO (Port Health Officer) to mention a few. For the OGA, you can visit the SARS website where you can review the List of Prohibited and Restricted Imports and Exports. This will help you with many of your permit and certificate requirements. Go to www.sars.gov.za. Search under “Customs” and then “Travelers”. The list applies to corporates as well.

          You will need to know your product very well, conduct your own research, and ask for advice from your Customs Clearing Agent. From time to time you should also ask for a second opinion, especially if you are not sure of something.

          Finally, do this before the goods are on the water. Do this even in spite of the provisions of the new Customs legislation; the conditions of which have changed in this regard.