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What core rights, obligations and risk prevention and control contents should be included in compliant transshipment trade clauses?
or complex compliance issues.
clearance and fund security.
I am the head of a foreign trade enterprise based in Shanghai, which mainly engages in the export of medium and high-end electromechanical products. Last month, I lost a long-term order worth 3.2 million euros due to the 28% anti-dumping duty imposed by the EU on Chinese electromechanical products. Now I am urgently launching a transshipment trade plan to avoid trade barriers, but I have never been exposed to such business before.
The transshipment trade agreement clauses provided by the cooperating freight forwarder yesterday confused me a lot: I am afraid that the lack of clear cargo title transfer nodes in the clauses will lead to loss of both money and goods, I worry that the foreign exchange receipt and payment clauses do not meet the compliance requirements of the foreign exchange regulatory authority and trigger regulatory warnings, and I even find no contingency clauses for abnormal situations such as transit port demurrage and destination port customs detention. Now I check my mailbox every day waiting for the final reply from the client, and I am extremely anxious. I would like to ask what core contents are included in transshipment trade clauses, especially the key modules for anti-dumping avoidance, compliant foreign exchange receipt and payment, and cargo title guarantee?
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
A common misunderstanding of current transshipment trade agreements is that they only generally mark "transshipment transportation" without clear core constraint clauses，and many enterprises have suffered losses as a result. If cargo title transfer rules are not clearly specified，transit port freight forwarders may dispose of goods without permission，which may delay delivery at best，or lead to total loss of money and goods at worst. If foreign exchange receipt and payment clauses do not match regulatory requirements，it will trigger compliance warnings from the foreign exchange regulatory authority，resulting in account freezing and payment channel interruption. If no abnormal contingency plan is agreed，transit port demurrage exceeding 72 hours will incur daily demurrage charges of thousands of dollars，while destination port customs detention will trigger a chain reaction of customer order abandonment and claims.
Three core contents should be clearly specified in the clauses for physical risk isolation: First，cargo title transfer node. It must be agreed that cargo title can only be transferred "upon the telex release instruction of the original bill of lading issued by the domestic seller"，and transit freight forwarders are prohibited from releasing goods without authorization. Second，three-flow matching for foreign exchange receipt and payment. It should be clarified that the cargo value and product name on transshipment trade contracts，bills of lading and commercial invoices must be completely consistent to avoid foreign exchange regulatory warnings. Third，third-party certificate of origin compliance. It is agreed that transit country freight forwarders must provide non-reprocessing certificates and certificates of origin issued by neutral country authorities to avoid trade barriers.
Exclusive loss stopping tip: The "transit freight forwarder performance deposit" clause should be added to the agreement，requiring the transit party to deposit a deposit equal to 10% of the cargo value into a third-party supervision account. In case of unauthorized goods release，document fraud and other situations，losses will be deducted directly from the deposit. At the same time，it is agreed that the transit party shall bear the burden of proof during compliance verification conducted by the foreign exchange regulatory authority.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
The core contents related to customs declaration in transshipment trade clauses should be clearly specified: First, document requirements for transit port customs declaration. It must be agreed that transit freight forwarders shall provide copies of transit customs declaration forms issued by the customs of the transit country, and the product name and cargo value on the customs declaration forms shall match the core information of domestic export customs declaration forms and destination port import customs declaration forms, to avoid price review disputes caused by inconsistent declared product names. Second, certificate of origin requirements for destination port customs declaration.
It should be clarified that the certificate of origin issued by the transit country shall not show any production information related to China, and shall be attached with a non-reprocessing certificate issued by the customs of the transit country, to prevent the destination country customs from identifying goods as directly imported from China and imposing anti-dumping duties. Third, division of customs declaration responsibilities. It is agreed that transit freight forwarders shall bear the customs declaration compliance responsibilities for both the transit port and the destination port.
If goods are detained due to fraudulent customs declaration materials, transit freight forwarders shall bear all losses including demurrage charges, fines and customer claims. Fourth, secondary declaration contingency plan. If the destination port customs requires supplementary documents, it shall be agreed that transit freight forwarders shall provide qualified supplementary documents within 24 hours to avoid customs clearance delay.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
The core logistics-related contents in transshipment trade clauses should cover: First, cargo title control logistics nodes. It is agreed that the whole process of warehousing, loading, unloading and transportation of goods at the transit port shall be supervised by the third-party logistics designated by the domestic seller. Transit freight forwarders are prohibited from storing goods in their own warehouses, and shall upload daily cargo positioning photos to the designated platform.
Second, bill of lading clauses. It is clarified that transit freight forwarders shall issue full bills of lading and transit port house bills of lading. The shipper indicated on the full bill of lading is the domestic seller, the consignee is the destination port buyer, the shipper indicated on the house bill of lading is the transit country trader, and the consignee is the supervisor designated by the domestic party. Third, demurrage charge and free storage period agreement.
It shall be clarified that the free storage period at the transit port is 7 days, and demurrage charges incurred after the free storage period shall be borne by the transit freight forwarder. The free storage period at the destination port is 14 days, and if delays are caused by the freight forwarder, demurrage charges shall be paid by the transit party. Fourth, port change and container rollover contingency plan. If container rollover occurs at the transit port, the transit freight forwarder shall arrange an alternative shipping schedule of the same route within 48 hours and bear the additional transportation costs.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The core tax-related contents in transshipment trade clauses should be clearly specified: First, value-added tax deferral clause. It is agreed that the value-added tax of the transit country shall be declared for deferral by the transit freight forwarder on behalf of the enterprise, and the domestic seller's payment shall not be withheld in advance to pay value-added tax, to avoid occupying the enterprise's cash flow. Second, related party transaction pricing clause.
If the transit country trader is a related party of the domestic seller, it shall be agreed that the transshipment trade pricing shall comply with the arm's length principle of BEPS, that is, the transshipment price difference shall not exceed 5% of the cargo value, to avoid triggering transfer pricing investigation by tax authorities. Third, tax risk bearing. It is agreed that transit freight forwarders shall bear the inspection responsibility of the transit country tax authorities.
If domestic enterprises are investigated by tax authorities due to fraudulent tax information provided by the freight forwarder, the transit freight forwarder shall bear all fines and late fees. Fourth, tax voucher requirements. It shall be clarified that transit freight forwarders shall provide value-added tax deferral certificates issued by the transit country tax authorities, transshipment trade tax invoices and other vouchers for the tax compliance filing of domestic enterprises.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
The core foreign exchange receipt and payment related contents in transshipment trade clauses should cover: First, foreign exchange receipt and payment time nodes. It is agreed that the domestic seller shall pay the transit fee to the transit freight forwarder only after receiving the full payment from the destination port buyer, and foreign exchange receipt and payment shall be completed through the CIPS cross-border RMB payment system, to avoid compliance risks caused by using offshore accounts.
Second, SWIFT message requirements. It is clarified that transit freight forwarders shall provide copies of SWIFT messages, the transaction code in the message shall be "121010" for transshipment trade, and the transaction note shall indicate "transshipment trade transit fee", to avoid transaction code verification by the foreign exchange regulatory authority. Third, foreign exchange settlement and account reconciliation clause.
It is agreed that transit freight forwarders shall provide a full set of transshipment trade documents including contracts, bills of lading and invoices for the domestic enterprise's foreign exchange settlement and account reconciliation, and the cargo value and product name on the documents shall fully match the amount of foreign exchange receipt and payment and the transaction code. Fourth, foreign exchange risk isolation. If the foreign exchange regulatory authority conducts compliance verification, the transit freight forwarder shall cooperate to provide all documents, and bear losses such as foreign exchange account freezing and fines caused by inconsistent documents.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The core law-related contents in transshipment trade clauses should be clearly specified: First, cargo title transfer legal clause. It is agreed that the ownership of goods shall always belong to the domestic seller before the domestic seller receives the full payment from the destination port buyer, and the transit freight forwarder only has the right to transport the goods and has no right to dispose of them. Second, force majeure clause.
It is agreed that if goods are delayed due to force majeure such as political unrest and natural disasters at the transit port, the transit freight forwarder shall notify the domestic seller within 24 hours and provide a force majeure certificate issued by the local authority, to avoid the domestic seller being claimed by customers. Third, guarantee clause. Transit freight forwarders are required to provide a performance guarantee issued by a bank, with the guarantee amount equal to 15% of the cargo value.
In case of unauthorized goods release, document fraud and other situations, the domestic seller can directly claim compensation from the bank. Fourth, dispute resolution clause. It is agreed that any dispute arising from transshipment trade shall be submitted to the Shanghai International Economic and Trade Arbitration Commission for arbitration, and Chinese law shall apply, to avoid rights protection difficulties caused by applying the law of the transit country.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The core on-site inspection related contents in transshipment trade clauses should cover: First, transit port inspection response clause. It is agreed that if the transit port customs inspects the goods, the transit freight forwarder shall notify the domestic seller within 12 hours, and provide photos and videos of the inspection site and inspection records issued by the customs, to prevent the freight forwarder from replacing goods without permission. Second, seal clause. It is clarified that when goods are loaded in containers in China, disposable seals designated by the domestic seller shall be applied. When containers are unpacked and reloaded at the transit port, seals with the same number shall be reapplied, and photos of the seals shall be uploaded to the designated platform, to prevent goods from being exchanged. Third, sampling and identification clause.
If the destination port customs requires origin identification of goods, the transit freight forwarder shall cooperate to provide an origin identification report issued by a third-party testing institution of the neutral country, and the report shall clearly indicate that the origin of the goods is the transit country, to avoid being identified as originating from China. Fourth, inspection cost bearing. It is agreed that if inspection is caused by the freight forwarder such as inconsistent documents, the inspection cost shall be borne by the transit freight forwarder. If the inspection is random customs inspection, the cost shall be borne by the domestic seller.
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The core supply chain planning related contents in transshipment trade clauses should be clearly specified: First, inventory linkage clause. It is agreed that the inventory at the transit port shall not exceed 10% of the monthly shipment volume of the domestic seller, to avoid inventory overstock occupying cash flow. Second, cost actuarial clause. It is agreed that the total cost of transshipment trade including transit fees, storage fees, document fees and so on shall not exceed 8% of the cargo value.
If it exceeds this proportion, the transit freight forwarder shall bear the excess cost. Third, trade term conversion clause. It is agreed that domestic export adopts FOB Shanghai terms, transit transportation adopts CIF transit port terms, and destination port import adopts DDP destination port terms, to clarify the responsibility division of each link. Fourth, supply chain risk early warning clause. It is agreed that the transit freight forwarder shall provide the domestic seller with transit port logistics data and destination port trade barrier dynamics on a daily basis. If the destination port trade policy changes, an alternative transshipment plan shall be provided within 48 hours to avoid order loss for the enterprise.