What is Freight Forwarding Import Trade? What Are the Essential Differences from Regular Import Agency?

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I am the person in charge of a small and micro enterprise in Shanghai that just started importing beauty products. Last month, I imported a batch of air cushion foundations from Incheon Port, South Korea for the first time, and hired a small freight forwarder operated by a privately affiliated individual.

As a result, the other party missed applying for the Certificate of Origin and declared the wrong goods value, which not only led to 5 days of customs detention at Yangshan Port, costing nearly 30,000 yuan extra in port detention fees, document amendment fees and container detention fees, but also caused a breach of pre-sale orders for offline stores, resulting in more than 10,000 yuan in compensation. Now I want to expand the import scale, but I can't figure out what freight forwarding import trade is, what is the essential difference between it and the ordinary freight forwarder I found before?

Are there any compliance or cost traps I haven't noticed? I am very anxious now, afraid that another problem will directly drag down the company's capital chain. Can you help me break it down in detail?

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Expert Q&A

Evelyn Li
Evelyn LiYears of service:3Customer Rating:5.0

Cross-border Compliance SupervisorStart a Chat

First,for the details of preliminary document review,it is necessary to focus on verifying the format compliance of the Certificate of Origin,and the consistency between goods value declaration and purchase vouchers. Especially when beauty products involve preferential tariffs under trade agreements,the signature and stamp on the CO,and the HS Code of the goods must completely match the Bill of Lading and customs declaration form,to avoid customs detention or valuation triggered by document discrepancies.

In terms of core node connection,it is necessary to control the timeliness of manifest submission after loading at Incheon Port,and the synchronization of B/L exchange and inspection declaration after arrival at Yangshan Port. The freight forwarder shall complete the pre-declaration of the manifest 72 hours before the arrival of the goods,and submit the cosmetic import filing certificate simultaneously to ensure "seamless connection" of customs clearance.

Contingency plans for exceptions shall be formulated in advance: in case of customs valuation query,supporting documents such as cross-border payment slips and brand authorization letters shall be provided immediately,in case of port detention risk,an extension of 14 days of free storage period shall be applied to the port in advance to avoid high container detention fees and port detention fees.

In the final compliance implementation link,the freight forwarder shall be required to provide complete customs clearance vouchers and detailed expense list,and complete the HS code archiving and document retention of imported goods simultaneously,to ensure the continuity and compliance of subsequent import business.

Reference: The Complete Guide to Dutch Coffee Import Agency: Document Compliance, Logistics Optimization, and Trade Practice
Eric Zhou
Eric ZhouYears of service:6Customer Rating:5.0

Senior Manager of Foreign Exchange & Tax RebatesStart a Chat

In freight forwarding import trade, the core of the customs declaration link is the compliance of valuation and classification. Many small and medium-sized importers easily fall into the misconception that "the lower the declared goods value, the more money saved on customs declaration", which will actually trigger the customs price inquiry procedure, leading to a 3-7 day extension of customs detention time, and even being included in the customs key supervision list.

For beauty products, declaration shall be made based on the actual transaction price in strict accordance with the *Measures for the Examination and Determination of Duty-Paid Value of Imported and Exported Goods* issued by the General Administration of Customs (GAC). At the same time, a full set of supporting documents such as purchase contracts, payment vouchers and brand authorization letters shall be retained. In case of valuation disputes, you can apply for pre-ruling to lock the declared value and avoid subsequent repeated disputes.

Victor Sun
Victor SunYears of service:5Customer Rating:5.0

Trade Risk Control ManagerStart a Chat

The core of logistics in freight forwarding import trade is cargo ownership control and route optimization. Taking beauty goods shipped from Incheon, South Korea to Yangshan Port, Shanghai as an example, if a transit route is selected, it is necessary to confirm the storage conditions of the transit port and the timeliness of manifest submission, to avoid failure of domestic customs declaration caused by missing manifest submission from the transit port. At the same time, the endorsement requirements of the Bill of Lading shall be clarified.

For straight B/L, it is necessary to ensure that the consignee is consistent with the business entity on the customs declaration form to avoid cargo ownership disputes. In addition, the free storage period of Yangshan Port and the charging standard of container detention fees shall be confirmed in advance. You can apply to the shipping carrier for container detention fee reduction through the freight forwarder, and generally small and medium-sized importers can get an extra 3-7 days of free container detention period.

Linda Gao
Linda GaoYears of service:7Customer Rating:5.0

Documentation SupervisorStart a Chat

Freight forwarding import trade can reduce capital occupancy cost with the help of the VAT deferment policy. For small and medium-sized importers in Shanghai, if they meet the qualification of "general VAT taxpayer" of the customs, they can apply for VAT deferment when making import declaration.

There is no need to pay import VAT at the customs clearance link, but declare for deduction in the VAT declaration period of the next month, which is equivalent to obtaining nearly 1 month of free cash flow. It should be noted that VAT deferment only applies to goods declared in compliance. If there are errors in declared goods value or document discrepancies, you will not be able to enjoy this policy, and may even be required to pay late fees.

Grace Wang
Grace WangYears of service:10Customer Rating:5.0

Senior Foreign Trade ConsultantStart a Chat

Compliance of foreign exchange receipt and payment is a core risk point in freight forwarding import trade. Small and medium-sized importers shall ensure that the amount and currency of cross-border payment are completely consistent with those on the customs declaration form and purchase contract, to avoid triggering inspection by the State Administration of Foreign Exchange (SAFE) due to a difference of more than 5% between the received and paid foreign exchange.

If Cross-Border Interbank Payment System (CIPS) is adopted, the freight forwarder shall be required to provide accurate message information to ensure that the goods description and B/L number in the payment instruction match the customs declaration documents. In addition, documents such as foreign exchange receipt and payment vouchers, contracts and invoices shall be retained for more than 5 years for the post-event inspection of SAFE.

Lucas Liu
Lucas LiuYears of service:8Customer Rating:5.0

Senior Operations ConsultantStart a Chat

In freight forwarding import trade, it is necessary to clarify the liability scope of the freight forwarder and avoid the misconception of "full authorization". When signing the agency agreement, the responsibilities of the freight forwarder shall be detailed: if customs detention or port detention is caused by the freight forwarder's document errors, a specific compensation ratio (generally 80%-100% of the actual loss) shall be agreed.

Meanwhile, a force majeure escape clause shall be added, and the division of responsibilities shall be clarified for delays caused by port strikes, customs policy adjustments, etc. In addition, the freight forwarder shall be required to provide a valid letter of guarantee (L/G) to ensure the safe transfer of cargo ownership and avoid the situation where the freight forwarder is unable to pay compensation.

Andy Guo
Andy GuoYears of service:3Customer Rating:5.0

Supply Chain Management ExpertStart a Chat

Preparation for the on-site inspection link of freight forwarding import trade shall be done in advance. For beauty products, the customs may conduct random inspection on the consistency between the brand authorization, ingredient labels and the declared content.

In case of full container unloading inspection, it is necessary to ensure that the packaging of the goods is intact, and the language of the ingredient labels meets the requirements of China's *Measures for the Administration of Cosmetic Labels*. At the same time, documents such as Material Safety Data Sheet (MSDS) and cosmetic import filing certificate shall be prepared in advance.

If label non-conformity is found during inspection, you can apply for on-site rectification through the freight forwarder to avoid the return of goods. The general time limit for on-site rectification is 2-3 days, and the rectification cost and time shall be communicated with the freight forwarder in advance.

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