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Trade Q&A
What core nodes need to be strictly controlled for full-process compliant implementation of Philippine transshipment trade?
or complex compliance issues.
clearance and fund security.
I am engaged in the export of small household appliances, with the main market being the United States. Recently, as the U.S. anti-dumping duty on Chinese home appliances has surged from 15% to 40%, my profits have been squeezed to nearly zero.
I have to consider using Philippine transshipment trade to reduce costs, but I have never touched the transshipment model before. Last month, a fellow industry friend used a small agency for transshipment, but the goods were detained in the Philippine port for 20 days and fined nearly ten thousand US dollars.
Finally, the customer canceled the order due to the excessive delay. Now I am anxious to launch the business but afraid of falling into traps, and I want to ask about specific operational steps: such as how to review pre-submitted documents, how to connect core logistics nodes, how to avoid the risk of U.S. customs discovering the transshipment, and whether there are reliable contingency plans to reduce losses?
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
First，the details of pre-document review: it is necessary to verify the qualifications of the local Philippine partner and the authenticity of Certificate of Origin (CO) in advance. The Certificate of Origin shall clearly indicate the value-added processing links completed by the goods in the Philippines，such as component assembly，packaging renovation，etc。and the product names，specifications and quantities on the documents shall be completely consistent with the bills of lading and commercial invoices finally exported to the United States，so as to avoid logical contradictions and prevent subsequent customs from determining it as false transshipment.
Regarding core node connection: after the goods arrive at the Philippine port，we shall entrust a local compliant customs broker to complete customs clearance，and simultaneously complete the agreed value-added processing in the supervised warehouse (photos of the processing site，material receiving slips，working hour records and other vouchers shall be kept throughout the process). After the processing is completed，apply for a new Philippine Certificate of Origin，then book the shipping space and transport the goods to the United States. It should be noted that the cargo rights shall be controlled through negotiable sea bills of lading throughout the whole process，to avoid the agent or logistics party disposing of the goods without authorization and ensure the safety of cargo rights.
Contingency plans shall be formulated in advance: if the goods are inspected by the customs in the Philippines，submit the complete processing vouchers，trade contracts and origin certification materials immediately，if the U.S. customs questions the origin of the goods，provide the local Philippine processing records，warehouse vouchers and other materials to prove that the goods meet the Philippine origin standards，and entrust local professional institutions to intervene and coordinate when necessary.
Final compliant implementation: ensure the consistency of the four flows (cargo，documents，certificates，and funds). The payment from U.S. customers shall be paid to the Philippine partner's account first，then transferred to your domestic account，to avoid direct payment and collection that leaves traces of transshipment. At the same time，all documents shall be kept for at least 3 years for subsequent verification by the customs of both countries.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
The customs declaration link of Philippine transshipment trade needs to focus on the valuation logic of the Certificate of Origin. The Philippine customs will refer to the market price of similar local goods when valuing transshipment goods.
If the declared price is too low and no reasonable basis can be provided, it will trigger valuation disputes, and even be identified as under-declared prices and face fines. In addition, the customs declaration form for transshipment goods shall clearly mark the "transshipment" attribute, to avoid confusion with general trade goods; if the goods need to be processed in the Philippines, the processing trade manual shall be declared simultaneously when declaring customs, to ensure the compliance of the processing link.
If there is a need to delete and re-declare the declaration, the application shall be submitted within 3 working days after the goods arrive at the port. Overdue application will incur detention fees and late fees, and will affect the subsequent customs clearance credit rating.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
The logistics path of Philippine transshipment trade should give priority to Manila Port as the transit hub. The free stacking period of this port is 7 days. If you need to extend it, you shall apply to the shipping company 3 working days in advance to avoid incurring demurrage fees. When transporting goods from China to the Philippines, it is recommended to choose direct shipping to reduce transit links and the risk of cargo damage. After arriving in the Philippines, entrust a local warehouse with transshipment logistics qualifications to complete processing and repackaging.
The warehouse shall have customs supervision qualifications to avoid the goods being out of the supervision scope. When re-booking the space and transporting to the United States, choose the negotiable bill of lading issued by the Non-Vessel Operating Common Carrier (NVOCC) to ensure the flexible transfer of cargo rights; if a container is skipped, immediately activate the spare space plan, and claim for detention and loss of working hours from the shipping company.
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
The tax framework of Philippine transshipment trade needs to focus on VAT deferment and cross-border related party transaction pricing. The value-added tax of transshipment goods in the Philippines can be applied for deferred payment. It is necessary to submit the VAT deferment application when clearing customs, to avoid occupying cash flow in advance.
In addition, if you have a related party relationship with the Philippine partner, you shall set a reasonable related party transaction pricing in accordance with the BEPS (Base Erosion and Profit Shifting) rules, to avoid being identified by the Philippine tax authorities as profit transfer due to too low or too high pricing, and face tax audits and fines. At the same time, the U.S. import tax shall be borne by the U.S. customer, but it shall be clearly marked in the trade contract to avoid subsequent tax disputes; the domestic export tax refund in China shall be declared in accordance with the relevant regulations of transshipment trade to ensure compliance with the tax refund conditions.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The payment and collection link of Philippine transshipment trade shall be completed through the CIPS RMB cross-border payment system, to avoid being monitored by U.S. financial institutions due to the annotation problems of messages when using the SWIFT system. The payment from U.S. customers shall be paid to the offshore account of the Philippine partner first, then transferred to your domestic account through the CIPS system.
The payment and collection vouchers and trade contracts shall be kept throughout the process to ensure that the capital flow is consistent with the cargo flow and document flow. In addition, the offshore account of the Philippine partner shall have the qualification of payment and collection for transshipment trade, to avoid the account being frozen due to illegal operations; if there is difficulty in settling the account, communicate with domestic banks in advance and provide complete transshipment trade documents to ensure the compliance of foreign exchange settlement.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The contract for Philippine transshipment trade shall clearly stipulate the force majeure clause, including the responsibility division for situations such as Philippine port strikes and customs inspection delays, to avoid liability for breach of contract caused by abnormal situations. In addition, the contract with the Philippine partner shall clearly specify the authenticity of the Certificate of Origin and the compliance of the processing link.
If the goods are detained due to the false Certificate of Origin provided by the partner, it shall be agreed that the partner shall bear all losses and fines. The contract with the U.S. customer shall avoid mentioning the word "transshipment", only mark the origin of the goods as the Philippines, and stipulate the exemption clause for delayed delivery of goods; if it involves letter of credit settlement, avoid soft clauses, such as requiring the origin certificate issued by a third-party inspection institution, to avoid malicious refusal of payment by the customer.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
The on-site inspection link of Philippine transshipment trade needs to focus on the authenticity identification of the seal. After the goods arrive at the Philippine port, immediately check whether the seal number provided by the shipping company is consistent with the number marked on the bill of lading. If there is a difference, immediately raise an objection to the shipping company and replace the seal.
If you encounter the Philippine customs unpacking inspection, prepare the processing contract, material receiving slips and other vouchers in advance, and cooperate with the customs inspection personnel to verify the processing link of the goods; if the customs requires inspection and identification, entrust a local qualified inspection institution in the Philippines to ensure that the inspection report meets the customs requirements. In addition, after the goods are repackaged, replace the new seal and mark the new seal number on the bill of lading, to avoid questions from the U.S. customs during subsequent inspection due to seal problems.