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This guide covers all information you need to know about delivery order.

So, if you want to learn more about delivery order, read this guide.

What is a Delivery Order (DO)?

It is a release document issued by the carrier while releasing cargo to the consignee mentioned in the Bill of Lading.

Ensure the cargo is given to the right entity failure to which the reverse process is very difficult.

A delivery note is the climax of the shipping process; it indicates the end of the contract between the carrier and consignee for that precise shipment.

What is the Importance of Delivery Order?

1. Is a crucial document in international trade that gives the consignee a go-ahead to clear cargo with customs and take from the port to final destination.
2. It ensures safety of goods; cargo is released under strict measures only to the party mentioned in the BOL.

What should a Delivery Order Include?

A delivery order entails the following:

1. A description of goods contained in the shipment.
2. Quantity of each type of product.

• The name and address of the shipment receiver.

1. The name of the person who will pay if payment is to be made on delivery.
2. The delivery date; which helps the carrier keep time so that cargo can get to the buyer on the designated date.
3. The container used to deliver the products.

• May include a delivery confirmation where the carrier is supposed to sign to confirm goods were delivered according to the given instructions.

The consignee also signs the confirmation to ascertain the carrier goods were delivered and received.

Who issues a Delivery Order in International Shipping?

This is important document can be issued by the following people:

1. It’s granted directly by the carrier of your cargo if they have offices at the given location or by an approved agent on the behalf of the carrier.
2. If goods are Less Container Load, the document can be issued by a Groupage Operator for LCL.

• If your House Bill of Lading (HBL) was issued by a freight forwarder, the freight broker’s agent at a given location to collect the original HBL.

1. He supplies a release letter to the main carrier asking a delivery order to be issued to the recommended consignee.

Can a Freight Forwarder or NVOCC issue a Delivery Order?

Well, there are no regulations that can limit a freight forwarder and Non-Vessel Owning Common Carrier (NVOCC) from issuing a delivery note.

Both parties are mentioned in the Master Bill of Landing. As stated above, a delivery order is issued to the freight forwarder or NVOCC named in the MBOL.

FF and NVOCC supply a house bill of lading.

There are no requirements or restrictions to issue a delivery order, however, they can issue the document depending on the internal orders and in-house practices.

Is Delivery Order the same as Invoice?

No, they are totally different.

A delivery order contains product description and quantity but doesn’t include a bill and is issued before the release of cargo to the consignee.

An invoice on the other hand is a bill that shows the total amount the buyer should pay.

It is sent after dispatch or along with the goods.

What is the Difference Between a Delivery Order and a Bill of Lading (BOL)?

Below are variations between Delivery Order and BOL:

Delivery order is a release document issued by the carrier while releasing cargo to the consignee mentioned in the Bill of Lading.

It is not a negotiable document and it doesn’t act as a receipt.

In addition, it doesn’t include means of transport of the goods delivered.

Bill of lading is a document issued by the carrier to the shipper with details of the type quantity and final destination of goods.

It confirms the transportation of goods to the carrier.

It also acts as a receipt as it’s signed by the consignee after delivery of shipment.

Similarly, it is a negotiable document; it also represents the title of goods.

Is a Delivery Order a Negotiable Document?

No, it is not.

A negotiable document means one that is negotiable according to article 7 of the Uniform Commercial Code.

It is a document that incorporates the rights to delivery of tangible assets and also satisfies the requirements for negotiability.

Negotiable simply means ownership can be easily transferred from one party to another.

Examples of such documents include an original bill of lading and a warehouse receipt.

Does a Delivery Order Act as Evidence or Receipt of Goods?

Unlike the Bill of Lading, you can’ use a Delivery Order as a receipt for your goods.

When is a Delivery Order Issued?

This document is supplied by the Master Carrier to the consignee.

when all handling bills have been cleared and the contract of carriage has been taken out as a detailed bill of lading.

Essentially the carrier issues a delivery order in exchange for a bill of lading of the delivered shipment from the consignee.

When BOL is not surrendered to the carrier, the carrier holds the cargo until proper documents are submitted so that goods can be transferred to the consignee.

What are the Conditions for the Issuance of Delivery of Order?

If the shipment named consignee is actual intended owner of the goods and there are no freight forwarders involved, the BOL used is Master Bill of Lading.

Because no third parties or any intermediaries are involved.

This means different BOL have different ways of surrendering the document.

It may sound complicated but I will break it down for you; don’t worry.

1. Surrendering of original BOL- Most shipments have three bills of lading. All these three must be submitted to a shipping agent.

That means no copies are supposed to be circulating among the shipper and consignee.

For surrendering to be accepted, it must be done physically to the shipping agent.

I hope we are together up to there.

When the documents are processed, the shipping agent can go ahead and issue the delivery order to the named consignee or recommended agent.

In addition, the back part of a BOL has to be accepted and endorsed by the following partied:

• the named shipper and consignee
• Appointed consignee’s agents
• Issuing bank of Letter of Credit.

In a Waybill of lading endorsement the parties above sign at the back of the document followed by the signature of the qualified person.

This is meant to ensure the terms of Contract of Carriage are accepted by all parties.

Sometimes the appointed agent doesn’t appear on the consignee section.

In such a case the carrier may ask for confirmation with a Letter of Indemnity from the consignee.

I know it sounds strict but it’s meant to prevent them from releasing goods to the wrong entity.

Once all these conditions of Original BOL have been met then they can release a delivery note.

1. Seaway Bill for the surrender of D.O- This one is simpler than the previous one.

When the Seaway bill is used to arrange shipment the carrier doesn’t supply the original copies of BOL to either party.

This makes the documentation process simple.

Besides, this is common where there is a lot of trust between the shipper and consignee or the transport arrangement is via the sea and is short.

The shipping agent issues the delivery order once ordered by the shipper.

The consignee or the agent is left paying the pending payment charges to the carrier.

• After settling the available debt- Carriers have adopted this from businesses like supermarkets.

You only walk out with what you have paid for.

In ocean carrier charges may include

• Detention
• Demurrage
• Ocean freight
• Telex release fee etc

The carrier will send you a notification once the goods arrive and a tax invoice of all charges related to your shipment.

The entity meant to pay for the cargo should do so before the release of the delivery order.

1. Once E-Delivery Order is issued- a while back D.O was physical documents and payments were done in physical cash or cheques.

Meaning you had to be present in the premises.

Today most countries have adopted Electronic Delivery Order Release.

If shipment is not planned with a seaway bill or telex release bill, instead of offering original BOL, consignee doesn’t get D.O, it’s done electronically.

Similarly, payments are done online.

You only need to issue a shipping agent with a slip.

They will then notify terminal operators of E-DO release and update the system.

What are the Consequences if Delivery Order is Not Issued in Strict Conformity With, and in Exchange, for the Relevant BOL?

A Delivery Order should be issued in exchange for all and I  mean all original Bills of Lading failure to which dire consequences may follow.

If both Bill of landing and delivery order of the same shipment are surrendered to the carrier can lead to a lot of complication.

As earlier stated a delivery order is not a document of title hence the holder of BOL will be held accountable for goods until stated otherwise.

Also, the entity holding the D.O is allowed to claim damages from the carrier to cover for the losses encountered.

To avoid such consequences, carriers should ensure all original Bills of Lading have been released.

Equally, they should ensure the number of goods outlined in the D.O are the same as the ones in BOL.

A D.O should also contain all information in the BOL including the loading time

So that in case all BOL has not been submitted, a D.O can be issued in exchange for a Letter of Indemnity.

A delivery Order is a very valuable document but it can complicate the entire shipment process in case of any minor mistake.

Carriers should be very careful.

Is there a Difference Between a Delivery Order and a Delivery Note?

Yes, there is.

These two terms sound the same because of ‘delivery’ however they are worlds apart.

Here are the differences:

A delivery order is issued by a carrier in exchange for a bill of Lading.

It is issued before goods are released by the carrier to the designated party.

Similarly, it doesn’t act as a receipt and it’s not signed.

While as a delivery note also called a dispatch note or goods received note, is a document that follows shipment.

It provides a list of goods and their quantity.

It is mostly printed but sometimes can be emailed to you as a soft copy.

It’s used as a checklist by the consignee to verify whether everything is present.

Sometimes the delivery note is signed by the consignee then sent to the shipper as proof of delivery.

Both documents contain products however the time they are issued and the purposes they serve are different.

A delivery order paves way for the release of the cargo while the delivery note is the final phase of delivery.

What are the Documents Required for Delivery Order?

For you to obtain a delivery order, you need to issue your shipping agent with the original Bills of landing.

Sometimes the carrier may request for a Letter of Indemnity from the consignee.

How does Delivery Order Differ from Delivery Instructions in Logistics?

These two terms are used interchangeably however they are different.

A delivery order is used to release cargo from the port.

Delivery instructions are precise specifications to the inland carrier regarding plans made by the freight broker to deliver goods at a particular dock.

Does Delivery Order Contain Provisions of the Contract of Carriage?

No, it doesn’t.

A Contract of Carriage is an agreement between the consignor, carrier, and consignee.

It spells out the rights, duties, and liabilities of the parties.

A delivery order is only a document used in regards to transportation of goods to the designated party not a Contract of Carriage or transportation document.

What is an e-Delivery Order and what are its advantages?

Electronic Delivery order is softcopy D.O sent electronically.

It’s very convenient and time-saving. Unlike D.O for an E-Delivery Order, you don’t have to go physically to the shipping agent’s offices.

You can receive the document from wherever you are online.

All you need to do is make payment online then send the payment slip as proof to the terminal Operators and finally, you receive the document.

What is Ships Delivery Order vs Merchants Delivery Order?

Below are the differences between these two terms:

Ship delivery order, is a document that contains Bill of Lading and an agreement by the carrier to deliver goods to the person named in the document.

Merchant Delivery Order is where a seller who has shipped goods, issues a merchant delivery order to carrier.

Ordering delivery of part or all shipments the carrier has to a specific entity.

If MDO is supplied by a third party, then presented to ship the carrier needs to acknowledge it before it becomes attached to him.

The document is considered ineffective until the attornment time occurs.

After the acknowledgment, it becomes similar to the ship delivery order.

How Can You Request a Delivery Order from your Carrier?

Below is a step by step procedure a consignee can select haulage type, fill in relevant details for requesting a delivery order:

1. At the top right corner of your home page, select account then login.
2. In the delivery section, key in shipment and click request delivery order.

• View task status.

1. Select the preferred haulage mode either carrier or merchant haulage.
2. Select request delivery order.
3. Modernize haulage details such as release date and release to.

• Also, update haulage instructions for any precise details necessary then click apply to all containers.
• Add a working email address to where your final delivery order will be sent to.

1. Update details of the entity responsible for paying the demurrage and detention fees.
2. Verify all the information, if it’s correct submits.
3. Customer service will receive the request, wait for your document.

What is the Relationship Between Delivery Order and Sales Order?

Delivery order and a sales order are very similar in that both documents contain

• Details of the shipment
• Quantity and quality of the goods
• Name and address of the customer
• Delivery date

What is the Process of Delivery Order?

A delivery order is processed in two steps.

Once the shipping agent receives D.O request, they begin to prepare for the release of the cargo.

Step 1 is the picking step- goods are moved from the stock to output.

Step 2 is the shipping step goods are moved from output to customer ready for shipping.

Is Delivery Order Form Similar to a Packing List?

Yes, they are similar.

Moreover, there is a slight difference.

A Delivery order form has additional instructions for the Bailee to ship goods they have in custody.

A D.O form is typically one page, it can be printed or you can get softcopy from legal software programs.

What are the Legal Effects of Delivery Order in Shipping?

Once ship Delivery Order is accepted, rights against the carrier under the Contract of Carriage are transferred from  shipper, to the person mentioned in the D.O.

The holder of D.O can take action against the carrier on the terms under the contract of carriage if he was among the parties in the contract.

The carrier is there for attached to the terms of contract present in the D.O.

This shows the similarity between the D.O and BOL because of the transfer of rights against the carrier.

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Let’s look at some fundamental aspects of electronic logging device.

So, if you want to learn more about this device, read this guide.

What is ELD (Electronic Logging Device)?

This is an electronic device used to record and capture driving time and hours of service (HOS) and engine activity. It is majorly used in commercial motor vehicles (CMV) such as trucks and buses.

It updates drivers and dispatchers with their driving status in real time.

What are Electronic Logging Devices used for?

Record hours of service that a driver has clocked in a day especially long distance drivers. It also records the number of hours they are on and off duty per week.

This is important to ensure that drivers do not drive long hours without rest, thus ensuring road safety.

It is integrated to vehicle’s engine to capture and record its activities such as ignition status, speed, miles covered. This is helpful when planning preventive maintenance service.

A part of it can be integrated to a GPS system to assist with vehicle tracking in fleet management.

Who needs an Electronic Logging Device?

Commercial fleet such as buses and trucks which travel long distances are required to have ELDs as part of compliance.

This is because the hours of services for commercial motor vehicles drivers is regulated by FMCSA.

What are the Benefits of ELDs?

It is mandatory for CMV to install ELD and record their driving time and hours of service for the drivers.

This is because HOS is stipulated by the Federal Motor Carrier Safety Administration (FMCSA).

Electronic logging device is capable of recording various information which is vital in fleet management and planning, compliance and efficiency.

Below are some of the uses for the electronic logging device:

Safety

ELD comes with in-built gyroscope and accelerometer which record driver’s driving style such as harsh braking, over speeding, sudden turning, etc.

This data can be used to train the driver to practice safe driving.

The HOS data is used to ensure drivers get adequate rest for their trips to prevent fatigue thus saving lives.

Also, the location data history can help exonerate innocent driver from false claims.

Compliance

The federal government regulates the HOS commercial vehicle drivers are allowed per day and hours on and off duty per week.

It is therefore a requirement for CMV to have the device installed in their vehicle.

The ELD will then record the number of service hours and duty status per driver electronically as “e-log”.

This data is then used by the fleet manager to create duty Rota for their drivers as per the FMCSA mandate.

Record Management

Before electron logging device mandate took effect in 2017, most commercial motor vehicle used to record this information on paper.

As a result, critical information was missed, and in some instances overlooked due to large paperwork record.

With the adoption of ELD, fleet managers are able to capture, data real time and mitigate and foreseen risk.

Besides, the records are important for posterity purposes.

Vehicle Maintenance

Since ELD are mounted on the vehicle’s onboard diagnostic (OBD) port, various engine activities are recorded.

Such activities include; mileage, speed, any faulty areas are also captured in the process.

This enabled fleet managers to plan for preventive maintenance in advance to prevent severe damage.

Additionally, the electronic driver’s inspection reports (DVIR) displayed on the driver’s smartphone increases efficiency and reduce amount of paperwork handled.

Dispatch and Routing

Because ELD is integrated to other systems such as GPS, dispatch officers have real-time vehicle visibility all times.

They are therefore able to plan for other vehicles without calling drivers to confirm location.

Security

Data generated by the ELD can be used to create virtual boundary using the geofencing feature as a form of security.

This helps you improve security and prevent potential loss.

Geofencing alerts you whenever a vehicle leaves the boundary in real time thus enabling you to detect potential theft.

What is the ELD Mandate and What does it Cover?

ELD mandate is the rule by U.S. federal government which requires all commercial operated motor vehicles to use electronic logging devices.

The body that is mandated to oversee the implementation of this rule is the Federal Motor Carrier Safety Association.

Electronic logging device records and keeps vehicle operations data and driver’s activity such as hours of service per day.

Commercial truckers’ HOS is regulated by FMCSA which has the maximum number of hours a drive should be on the road.

It also captures the hours on duty without driving and the rest time during the trip.

This federal rule was first passed in 1937 and commercial vehicle drivers used paper logbooks to record their working hours.

Paper logbooks were later replaced by automatic on-board recording device (AOBRD).

FMCSA made the EDL law in February 16, 2016 with CMV mandatory compliance date being December 17, 2017.

Commercial vehicles with AOBRD had until December 16, 2019 to replace the AOBRD with ELD.

The purpose of having this rule in place was to regulate accidents rate that were caused due to fatigue.

Previously, fleet managers would use paper log to record the hours a driver worked however, this was not very accurate.

To curb data tampering and improve safety on the roads, ELD has been made mandatory for all commercial motor vehicles.

Failure to comply with this rule leads to penalties or pulling non-compliant vehicles out of service.

FMCSA regulates the electronic logging device that are used to ensure they are tamper free.

What is FMCSA in Relation to ELD Mandate?

The federal motor carrier safety administration is a government agency that was established with the aim of averting CMV-related fatalities.

Majority of the accidents and injuries from commercial motor carriers were related to driver’s fatigue due to longer driving hours.

To prevent HOS inaccuracy and ensure drivers had adequate rest between trips, the FMCSA published the ELD mandate in 2015.

This rule required all commercial motor vehicle operators to install ELD to keep HOS and RODS data.

Failure to comply leads to fines or vehicle being barred from operations.

Why was the ELD Law Passed?

Before the adoption of the ELD law, commercial vehicle drivers would log in the number of service hours in writing.

This method was not accurate due to miscalculations or even employer’s pressure on drivers to work longer hours.

As a results, drivers were fatigued and accidents rates from commercial motor vehicles increased exponentially.

Such accidents drew the attention of media and public thus prompting regulators to find ways of reducing the accident rates.

As such, FMCSA, introduced the ELD law in order to control driving hours for commercial vehicle drivers and enhance safety.

This law required all CMV to install the device to record daily driving hours and weekly duty status for drivers.

How do you Know if you Need Electronic Logging Devices?

Electronic logging device mandate requires all commercial motor vehicles to install the device in order to be ELD compliant.

This is because commercial drivers who record RODs for up to 8 days in 30 days need to track them.

Commercial vehicles include; truckers, passenger transit buses, construction company vehicles, etc.

If you fall in the mentioned category then you need to comply with the EDL mandate.

Who Qualifies for E-log Exemptions?

Commercial motor vehicles must have electronic logging device installed and have both HOS and RODs record to be compliant.

However, this rule has exemptions for the following drivers or vehicle classes:

1. Drivers with less than eight days of record on duty status within 30 days period.
2. Vehicle manufactured before the year 2000 model.
3. Drive-away or tow-away operators provided the driven vehicle is part of the shipment.
4. Non-commercial driver license short-haul operators driving within 150 miles radius.

Although these drivers and vehicle classes are exempted from e-log, they are expected to have accurate logs.

This can be either in writing or AOBRD or any other log in software system available.

What are the FMSCA Regulations on Hours of Service for Truckers?

Hours of service is the maximum allowed hours for CMV driver to be on duty including driving and rest period.

The FMCSA provides HOS rules which commercial truckers must comply with to ensure they remain awake and alert while on duty.

The regulations are categorized as follows:

11-Hour Limit

This law allows truckers to drive for a maximum of 11 hours after having a 10 straight-hours off duty.

14-Hour Limit

A cargo carrying driver cannot drive beyond 14th continuous hours after coming on duty. The driver can only resume driving after taking a 10 consecutive hours off duty.

60/70-Hour Limit

This rule allows truckers to drive for a maximum of 60 or 70 hours in 7 or 8 consecutive days respectively.

The trucker is then required to take a 34 straight hours off duty before restarting a 7/8 consecutive on-duty days.

30 Minutes Break Requirement

A trucker must take at least 30 minutes break after 8 straight hours of uninterrupted driving.

The break should be non-driving, on or off duty or in a sleeper berth provided it adds up to 30 consecutive minutes.

Adverse Driving Conditions Exemptions

When long-haul commercial drivers encounter adverse weather conditions in their trip, an exemption is made to the 11and 14-hour limit rule.

A 2-hour extension period is added to the 11 and 14 maximum driving hours.

Short-Haul Exemption

This rule exempts drivers within a 150 miles radius in their normal work reporting location from the 14-hour limit.

They can extend their driving hours to 16 hours for 2 days within 7 consecutive on duty days.

Sleeper Berth Provision

This regulation requires drivers to spend 10 consecutive hours off duty and it can be split into two.

A 7 continuous hours in the sleeper berth and at least 2 hours can be outside sleeper berth but off duty.

The sleeper berth pairing when used together must add up to the 10 consecutive hours off duty.

How does ELD Impact Shipments?

ELD may affect shipment in the following ways:

• Overall capacity reduction on drayage and long haul FTL.
• Reduced flexibility and increased waiting hours at delivery points.
• Added charges such as lay over fee due to increased driver waiting time.
• Increased rate for drayage and FTl.

Does ELD Affect Cartage and LTL Shipments?

No, both cartage and LTL are exempted from the EDL mandate since they do not fall within the EDL mandate requirement.

However, it may impact on rates and capacity for drayage and FTL due to the regulated hours of service.

How does an Electronic Logging Device Work?

Electronic logging device is installed on a vehicle through the onboard diagnostics port where it directly record engine activity.

The device automatically captures engine status when on or off, miles driven, fuel consumption, vehicle location, faulty codes, driving hours, etc.

The integrated GPS system, gyroscope and accelerometer are able to record exact location, harsh braking and speed data respectively.

Also, the information from the engine and GPS is sent to a server that converts it into duty status records.

This data is then relayed through cloud computing method to an ELD web or mobile application for viewing.

The information is transmitted in real-time hence data update happens continuously.

The ELD web or mobile application can be synchronized with the fleet management system for data analysis, reporting and planning.

What Data does an ELD Device Record?

Electronic logging devices are mainly installed in commercial fleet to record drivers’ daily HOS and weekly hours on and off duty.

This is in line with the federal motor carrier safety administration’s mandate on hours of service for commercial vehicle drivers.

The device also records other important data information that can be utilized in various ways. ELD are also referred to as “telematics” devices because of their ability to transmit long distance computerized information.

They come with in-built GPS tracking, accelerometer and gyroscopes thus can record the following data:

• Driving time, number of hours of services per day for drivers and record duty status (ROD).
• Driver identification and user authentication
• Date and time
• The global positioning system (GPS) that comes embedded in the device gives real-time vehicle location.
• Engine speed and load data is displayed since the device is plugged on the vehicle OBD.
• Fuel efficiency, mileage and idling
• Diagnostics and fault codes
• Harsh braking or collision for safety monitoring.

When do ELDs record Information Data?

When the vehicle is moving at a speed of five miles per hour, the ELD picks the driving status.

As the speed increase beyond the threshold, it moves to in-motion status.

ELD records a stop status when the speed drops to zero miles per hour for three consecutive seconds.

ELD record information from driving to on-duty and not driving status, when the vehicle is not in motion for five minutes.

A status change pops ups to prompt the driver to enter the correct status.

If this does not happen within one minute, the device automatically updates to ‘on-duty not driving’ status.

Is an Electronic Logging Device Supposed to Record Data about Vehicle Performance?

ELD are installed to collect HOS data in compliance with the FMCSA HOS regulation.

Do the Specifications in the ELD Mandate include Requirements to Control the Vehicle?

ELD mandate only requires record of information that relate to driver’s record of duty status.

How Accurate is the Location Information for Commercial Trucks as recorded by ELDs?

When driving on duty, location accuracy is approximately within a radius of 1 mile.

When operating the CMV for personal use, the accuracy is within 10-miles radius.

How does an ELD Device Transmit Data?

ELD devices are telematics and utilize cloud computing technique thus can use different ways in their data transmission.

Commonly used transmission methods is via cellular data or Bluetooth pairing between the ELD device and the driver’s mobile application.

Alternatively, some ELD have in-built WIFI hotspots that provide connectivity between ELD and driver’s mobile app.

The Wi-Fi hotspot also enables drivers to stay connected and able to receive electronic work orders and access emails, while on transit.

What is the DOT in relation to Motor Carrier Safety Regulations?

Department of Transportation (DOT) is the federal government body in charge of transport safety, accessibility and efficiency in the U.S.

DOT through the motor carrier safety regulations act provides safety measures for the commercial motor vehicles operators.

These includes roadside inspections and annual safety audits to identify non-compliant CMV fleet.

The inspections are performed by state police officer or a certified DOT personnel.

How do you Transfer ELD Data to the DOT during a Roadside Inspection?

Roadside inspection are a mandate of the DOT to ensure CMV drivers are compliant with the hours of service.

These inspections are random and require the commercial driver to provide ELD data for the past seven days.

Whenever a commercial vehicle is stopped for ROD review from ELD, the driver should be able to transfer the data.

The transfer can be through a USB cable or Bluetooth pairing or the two approved ways; wireless web services or email.

• Wireless web services: send the ELD data to the DOT through a secure server. This is the recommended method of data transmission for roadside inspection.
• Email: sends ELD data to DOT via encrypted email message. However, email is unreliable and not commonly used.

What is the difference between ELD (Electronic Logging Device) and AOBRD (Automatic Onboard Recording Devices)?

Automatic onboard recording device (AOBRD) is an electronic device regulated by the AOBRD 1988 rule which replaced the paper logbook.

AOBRD was thereafter replaced by the electronic logging device in December 2019 when the ELD rule took effect.

Both devices are capable of capturing and recording driver’s hours of service and engine activity, however, ELD has superior features.

The major contrast between AOBRD and ELD include:

1. Both devices can record information on engine hours, vehicle location, date and time, driving mileage and driver duty status.

However, AOBRD is not able to capture vehicle status whether on or off, engine diagnostics, thus making it less reliable.

2. While ELD is able to record vehicles speed for 5 miles per hour and above, AOBRD must be set up.
3. ELD and AOBRD can show when and who made edits to the data. However, ELD provide more history of the edit that is required by DOT.
4. AOBRD cannot be synchronized to the universal coordinated time (UTC)

What does Engine Synchronization mean for purposes of ELD Compliance?

Engine synchronization is the integration of the ELD device with the CMV vehicle to monitor and record engine activities.

It is therefore able to records engine power status, vehicle movement status, miles covered and engine hours.

As a Carrier, how do I make sure that an Electronic Logging Device is Compliant?

Before purchasing an ELD device from a vendor, check if its manufacturer is registered and listed in the FMCSA website.

FMCSA maintains a record of approved ELD products whose manufacturer meet the required minimum operational specification.

How much will it Cost for my Fleet to be ELD Compliant?

The cost of installing an ELD depends on the provider depending on parts of a subscription and components that you own.

For instance, a provider may avail engine connectivity part and software for subscription while you buy your own device (BYOD).

Other providers will give you the driver’s device at one off cost or higher subscription rate.

The device provided in this case is normally less flexible thus allowing electronic logging only.

In both cases, ensure you install the right ELD solution to be fully compliant.

How can I get Drivers on board with ELD Compliance?

ELD compliance is mandatory for commercial motor vehicle operators that need to track drivers’ RODs for 8 days and beyond.

In order to get your drivers to adopt and be ELD compliant, you need to;

1. Select a FMCSA compliant ELD device provider with an easy to use solution.

The provider should be able to understand the ELD regulation and provide aftersales support in integration with other software.

2. Help the drivers understand the ELD device and how it will help them be ELD compliant. Allow them time to interact with it, make edit and enter information needed and give feedback on the same.

This will ensure that they understand the ELD functionality and use it effectively.

3. Involve the drivers in the ELD roll out plan and explain to them the need to be ELD compliant. This will make them feel part of the business success.
4. Include employee coaching program for continuous learning and improvement on ELD use.

Share reports from the ELD data and address any arising problems before it escalates out of control. Commend ELD compliant drivers as well to motivate them further.

A 100% compliance can be achieved if drivers, employees and employers collaborate to ensure effective and correct use of ELD devices.

Employers should have open communication with their drivers, encourage feedback on policies and sharing of ideas.

What happens if I am not in Compliance with ELD Mandate?

Failure to comply with the ELD mandate can land both the vehicle owner and the driver in trouble such as:

Hefty Fines

The driver, the vehicle or even the business can be fined heavily for flaunting ELD rule. This affects the business cash flow negatively.

Loss of Employee

When a driver is found violating traffic rules by speeding or aggressive driving, his license maybe revoked by the relevant authorities.

This will impact on the business negatively through loss of a skilled driver.

Increased Insurance Premiums

Insurance firms will see your fleet as a liability due to increased fines over non-compliance.

As a result, they will increase your fleet premium to cover the cover the risk of insure your fleet.

Being ELD compliant will enable you avoid such occurrences and save you time and money.

Do ELDs have a Feature to warn Drivers about approaching HOS (Hours of Service) limits?

Yes, the FMCSA permits the devices to have that feature however, it does not require it to signal drivers when approaching HOS.

How much is Electronic Logging Devices Price?

The price of an ELD depend on the vendor and the number of trucks to be equipped with the device.

Initially, an average cost of ELD was USD 2,500 per truck, this has significantly reduced with time to about USD 500.

This price reduction has been affected by various factors such as:

• Reduced hardware cost: Generally, the hardware price has been lowered over the year’s thus reducing overall ELD price.

Also, certain vendors offer discounted rates for large fleet thus lowering the price further.

• Device compatibility: Technology advancement has enabled compatibility across various smartphones.

This allows the fleet owner to use (BYOD) rather than vendor’s devices which are less flexible and more expensive.

• Installation: Some vendors charge installation fee per truck, this can be expensive for large fleet owners.

Ensure you get clear communication on installation charges before committing to a vendor.

Alternatively, you can select ELD solution that are easy to install and can be done by anyone.

• Training: When ELD sourcing, go for easy to use solutions to reduce the cost of training users.
• Add-ons fee: Different vendors charge differently for extra features such as fault detectors and data plans. All inclusive subscription fee is cheaper than separate fees per feature.

How do I Find the Best ELD (Electronic Logging Device)?

Not all electronic logging devices have the same features, hence there are a variety of options in the market.

For example, some ELD come with in-built hardware GPS tracking device while others give minimal location details.

Thus, it will not give real time data on location.

Other devices come with driver’s device for use hence require you to pay more.

Consequently, other ELD providers charge extra for added software features, like alerts, diagnostics schedules, eDVIR, etc.

In all these, the best ELD should be the one that is:

• Easy for drivers and fleet managers to use.
• Easy to install
• Reliable
• Offer add-on feature free of charge

What are the Common Myths and Misconceptions Surrounding the use ELDs?

Some of the myths and misconceptions surrounding ELDs is that they are too expensive and may lead to business closure.

The truth is that the price of ELD has dipped over the years with the advancement in technology.

Another misconception is that the devices have led to the loss of a driving hours due to the strict HOS regulations.

In reality, the majority of CMV operators have adopted the system because of its efficiency.

Many attest to the fact that they are able to log accurate RODs, unlike the previous paper logs which were inaccurate.

Additionally, it has reduced paperwork and saved on time spent writing and calculating hours of service.

Now it’s your turn and we would like to hear from you.

If you have any question about ELD or freight forwarding services from China – contact Tj chinafreight now.

I know you’re here to learn more about employer identification numbers.

A reason this guide will explore everything you’re looking for about employer identification numbers.

Keep reading to learn more.

What is an EIN?

EIN is an identifier of the business entity.

The IRS assigns this unique number to businesses to allow monitoring of tax payments.

The internal Revenue Service highly recommends the employers of businesses apply for the EIN if the business is within the US or its territories.

What is the Purpose of an EIN?

EIN is purposely used in the identification of business entities that are obligated to pay taxes to the relevant authority.

The IRS uses this number to trace the flow of tax payments made by the business.

Allows each hired employee to be assigned an individual EIN that allows them to be taxed individually while the entity is taxed separately

It allows fast processing of business licenses and allocation of finances to the business where need be.

Does My Business Need an Employer Identification Number?

Yes, it does. You will need to obtain an employer identification number for the business because the benefits outweigh operating the business without it.

These benefits include:

• Allows you to file the tax returns easily, therefore, avoiding constant encounters with the IRS.
• It also allows you to obtain finances to boost the business when need be.
• Acquisition of business licenses is made faster.
• It also allows you to obtain all the legal business documents that allow you to operate the business.

Also, if you have employees it is recommended to obtain the Employer identity number.

This allows the IRS to be able to determine the amount of tax taxed to employees and the business at large.

Note, even if you are operating a sole proprietor business it’s also advisable to obtain EIN to be able to separate personal and business taxes.

Also looking to scale up the business you need the EIN.

How does EIN vs SSN vs ITIN compare?

Comparison of EIN vs SSN vs ITIN is mostly applicable when determining how you are running the business.

This implies;

The business is a sole proprietorship

You are operating a limited liability company, hiring employees.

Operating as non-resident doing business in the US.

Therefore, Social Security Number is used when you are operating the business as a sole proprietor to pay for the business taxes.

It also allows you to have access to social security and social services.

In cases where you want to hire employees, obtain credit loans from banks or form a Limited Liability company the EIN is used for tax reporting.

Individual Taxpayer Identification Number applies to non-resident individuals operating businesses in the US, who are also obligated to pay taxes for the business.

Note, for you to obtain the SSN and EIN you should be a US resident and have all the legal documents to prove that.

Is the EIN the same as the Federal Tax ID?

Yes, it is

Federal Tax ID serves the same purposes as the EIN.

Employer Identification Number is also referred to as Federal Tax Identification Number.

It is commonly used to fasten the process of paying taxes.

Federal Tax ID is also important if you want to hire employees because it allows the employees to be taxed individually.

Can I Apply for an EIN without a Tax ID?

Yes, application of the EIN does not require you to necessarily have the Tax ID.

There are two basic procedures you can use to apply for the EIN.

They include:

You should incorporate the business in the US using incorporate.com within 2-3 business days. This is done by;

• Asking for the EIN directly
• Sending mails to the US mailing address
• Calling them using the given number

Secondly, you can obtain the tax ID from the IRS online platform or by using forms.

You can visit IRS.gov to apply online. Alternatively, look for forms and fill them out to apply.

Are Any Entity Types Excluded from Applying for an EIN?

No. They are not.

Every business entity can apply for the EIN whether the business is a small scale to large scale, whether a sole proprietorship or a partnership.

How do I Apply for EIN?

Application of the Employer Identification Number is done freely with no charges requested. You can apply for the EIN in the following ways:

1. Online application: This allows employers to fill in all the required information that is validated via a system and an EIN is issued.

This process is strictly for employers whose businesses are located in the US and its surroundings.

1. Apply using Fax: SS-4 Form is completed by the relevant employer and faxed to the issued fax number.

Upon-, review of the required information, the EIN is processed with a period of 4 days and faxed to the employer.

• Apply using Mail: IRS checks out whether the entity has provided the required information.

It is then determined if the entity requires a new EIN if so, it is processed and mailed to the employer through the provided mail address.

1. You can also call the IRS directly using the provided service number to obtain the Employer Identification Number.

You are required to provide the assistant with relevant information and upon verification of the legitimacy of the business, the EIN is issued immediately.

You can reach the IRS center via 800-829-4933 during working hours.

Can I Apply for an EIN Without a Business License?

Yes, you can apply for the EIN without having a business license.

Obtaining the Employer Identification Number first allows you to obtain other documents such as a business license.

In most countries, you must obtain the EIN during the initial stages of the business.

Obtaining EIN increases your credibility with the IRS thus prevents constant encounters due to delayed tax payments.

Also, it varies with the country and city you are operating the business in.

What are Responsible Party vs Nominee in EIN Number Application?

The owner, partner, or grantors of the business are the ones considered as the responsible party. Also, they have control or entitlement of the funds and assets of the business.

This entitlement allows the individual to directly or indirectly manage and control the business and disposition of business funds and assets.

A nominee is an individual nominated by the business to act on their behalf in running the business.

They are not entitled to controlling or managing funds, assets neither do they perform the dispositioning of the business.

Note in case the nominee acquired the EIN wrongly action should be taken to correct this mistake.

This prevents the disclosure of unauthorized information to the public.

To achieve this the business owner is required to fill all the required information in the SS-4 Form and submit it to relevant authorities

How Much does an EIN Cost?

The IRS has made the process of obtaining the Employer Identification Number free.

Besides, the employer is required to provide all the required information to the IRS, which allows easy processing of the EIN.

The internal revenue service has constantly issued a warning on companies that charge business owners for EIN whereas you can obtain it at no cost.

If you decide to obtain the EIN from online company, any charge made doesn’t go to IRS but instead to the company offering the service.

There are no charges requested while applying and obtaining the EIN for the business.

It is highly recommended to obtain the EIN directly from the IRS to avoid incurring unnecessary costs.

How Long will it Take to Get EIN?

The duration of obtaining the EIN depends on the mode of application you have used.

For instance,

The online application allows you to obtain the EIN immediately

If you prefer using fax, you are required to send a completed forms-4 to the service center and a response is given back within a week.

Application by mail takes four to five weeks if the required information on the SS-4 is provided accurately.

Also, application by phone calls, the EIN is processed immediately.

This mode is reserved by the IRS for international applicants.

What Happens if I Lose or Misplace my EIN?

You should consider the following actions in case you lose or misplace the Employer Identification Number:

• Contact the bank in case you used the EIN to open the bank account.

They will trace the EIN for you.

• Find the computer-generated notice given to you by the IRS when you applied for the EIN.
• Look for previously filed tax returns of the existing business that you have lost.

These papers should have an EIN indicated on them.

• You can call the IRS using the provide toll number to search for you the EIN directly

What Should I Do if I am Assigned an Employer Identification Number I didn’t Request?

If you have been assigned an EIN that you didn’t request it’s important to determine what was the main purpose, if the process is legit to avoid thefts.

Before assuming and taking any actions you should evaluate, maybe a third party requested the EIN for you for a legit business purpose.

For instance, third parties may include spouses, community club, business partners’ executor of a trustee while requesting for EIN.

Therefore, verify if the third party indeed requested the EIN

Contact the IRS for assistance if you determine that the EIN has been improperly assigned to you.

How Do I Find my Employer Identification Number?

Often you can encounter documents that require you to fill in the EIN and probably you cannot remember.

You can use the following ways to obtain the EIN:

Check the previously file tax return documents, it should be noted in that document.

Check on the original document issued by the IRS when you first applied.

You can also check on the bank documents issued while opening the bank accounts.

You can also check on the 1099-MISC form used to report payments for the business.

How do I Conduct an Employer Identification Number Lookup for Another Company?

Businesses may sometimes need to look up the EIN of the company to verify the information of new suppliers or clients information.

The following ways can be used for the lookup:

Ask the company directly

Search for securities and Exchange Commission’s website

Get the company’s business credit reports

Purchase of credit cards for the business in case the company is not registered as a public company.

This allows you to search for the company using the document in the public

Use a paid Employer Identification Number database

Use Melissa database for non-profits

Can I Verify the EIN? How?

No, verification requires authorization that is given by the IRS.

If you are not an authorized representative you cannot get verification of the EIN number.

In cases of non-profit business no authorization is required and the employer can verify directly with IRS on the Exempt Organization page of IRS website.

You should also check the paycheck to verify that the tax return filed has the correct Employer Identification Number to avoid its rejection.

Is an EIN Record Public?

No, The Employer Identification Number records are kept private by the IRS.

The IRS requires the employer to fill the SS-4 form that contains vital information such as the amount of taxes paid and business identification information.

Such information is not released to the public due to the safety of the employer and the business too.

Does my Business need a New EIN?

Yes, if you intend to expand the business in terms of changing from a sole proprietor to forming a partnership, hiring employees to work for you a new EIN is required.

The inclusion of employees into the business requires every employee to be issued with an EIN.

As a sole proprietorship, if you buy or inherit an established business or the business has been subjected to bankruptcy, you are required to obtain a new EIN.

Other considerations include; partnership where the old one has ended and a new one is formed.

Is Employer Identification Number the same Importer Number?

Yes, the Importer number can be used to serve the same purposes as the EIN.

Employers can conduct business or import into the country using the Importer number to pay tax duties to the relevant authority.

Can I Cancel my Employer Identification Number?

No, you cannot cancel the EIN obtained from the IRS the moment it is issued for the business. Also, the EIN cannot be reassigned or issued to other business entities.

It should be noted only the IRS can close the EIN account upon submission of the request and the reason you want the EIN closed.

The IRS ensures that all the returns have been made and any outstanding charges before closing the EIN.

Do Foreign Importers need an EIN when Importing into the US?

No, foreign importers do not need an EIN to import into the US rather a Custom Assigned Importer Number is issued by the relevant authorities. CAIN allows the importers to do business without having the EIN.

What is the Difference Between EIN and CAIN (Customs Assigned Importer Number)?

EIN is assigned to businesses for identification.

Normally, EIN is issued to employers who are residents in the US and are operating the business within or in the territories of the US.

Whereas, the CAIN is a type of identification used by imports in the US.

With the acquisition of CAIN, the importers do not need to obtain the EIN to operate.

Who is an Importer of Record for a Non-US importer?

If a company is importing to the US but is not established in the US, a third party will need to act as the importer of record.

This third party could be a third-party service, or the non-US company could arrange for the US client to act as the IOR.

Why does a U.S. Business Need to Act as the Ultimate Consignee for a Foreign Importer?

The US business acts as the ultimate consignee if:

• The business you are operating is registered and located outside the US territories.

Even with possession of EIN you are required to name the US as the ultimate consignee of the shipment.

• You do not have a US entity but in possession of CAIN.

you can name the US business as the Ultimate consignee during the importation of the shipment in the US.

Can Amazon Act as an Importer of Record for Shipments Going to an Amazon FBA Warehouse in the Us?

No, Amazon FBA does not act as IOR due to the huge responsibilities that the IOR are assigned.

Or ensures that the shipment has been successfully been imported to the required country.

What is the Procedure for Importing into the US Without a US Presence?

Importing into the US without a US presence requires you to provide relevant documentation of the business to allow verification of the legitimacy of the business.

This process is established as a foreign importer of records.

This procedure requires:

• Customs power of attorney signed by two officers of the company
• Copy of the articles of incorporation
• Copy of documents that empowers the two officers with authority to sign the power of attorney.
• Scans or pictures of the two signatories.

Do I need an EIN to Import from Alibaba?

No, Alibaba is more concerned with the quantity of the shipment you order from them.

They are not concerned whether you have obtained the EIN for the business.

In some cases, Alibaba requests the EIN because the customs request it during shipping.

Is EIN for Import Any Different from EIN for Export?

Yes.

EIN for import is used when shipping goods from other countries to the US.

EIN for export is used when shipping goods from the US to outside countries.

Both EIN for export and import are issued by the IRS to enhance business identification and for easy follow-ups on the tax administrations.

Where Can I Get More Information about US Import Policies, Requirements, and Procedures?

Topics on the CPB trade page explain the basic importing, exporting and requirements, arrival of goods formal versus informal entry, and restricted merchandise.

If you are a frequent importer, you should read Importing into the US that contains in-depth information when seeking to venture into importing business.

You should also read Informed Compliance Publication that has prepared some Informed Compliance Publication.

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Let’s look at some of the fundamental aspects of export control classification number.

So, if you want to learn more about ECCN, read this guide:

What Is An Export Control Classification Number (ECCN)?

An Export Control Classification Number is a number which is used by the Commercial Control List (CCL). The number consists of five numbers which include both numeric and alphabetical numerals

Also, the number helps classify exports and determine which exports require a license of commerce from the department of commerce.

The ECCN categorizes the exports into groups.

These are on the basis of the commodity, the software or the technology involved.

ECCN is divided into ten groups under the Commercial Control List.

Further divisions result to five product groups from the ten groups.

As a result, the first character of the ECCN describes the commodity in its broad prospective. While the second character identifies the product group.

Why Do I Need An ECCN Number?

Basically, an ECCN serves as a regulatory tool for which all exports must adhere too.

Aside from ensuring that the products are well categorized, ECCN numbers countercheck the need for licenses for the export goods.

What Is An Example Of ECCN?

First and foremost, the 10 groups used in classification are;

• Nuclear and Miscellaneous
• Materials, Chemicals, Microorganisms and Toxins
• Materials processing
• Electronics
• Computers
• Telecommunication and Information Security
• Sensors and lasers
• Navigation and Avionics
• Marine
• Aerospace and propulsion

The above categories form the Commercial Control List (CCL). For the product grouping, it is subdivided into five with alphabets.

These are;

1. Systems, Equipment and Components
2. Test, Inspection and Production Equipment
3. Material
4. Software
5. Technology

These groupings allow for easier identifications of exports. For example, an export with the ECCN number 4E001 postulates that the exports consist of Computers in relation with the Commercial Control list.

E categorizes the export product in the technology line of product.

Where Is An ECCN Number Necessary?

An ECCN is necessary to determine the need for licensing of an export product. A license depends on the mandates put forth by the country receiving the goods.

There are three levels of control in export for the products. The end user, end use and end use of the product.

This means that the exporting country may not be in need of a license. However, the end user term in the country of export may require a license for the end user.

The ECCN number thus helps to decipher the terms for export and determine need for a license.

Additionally, manufacturers are aware of licensing need owing to the fact that they have numerous handlings of the same product.

Therefore, manufactures apply the ECCN number to help their clients to easily be informed of the need for licensing to their products.

Manufacturers indicate this on the description box for the cargo. The description box has a ‘Reason for control’ part where manufacturers put an x to indicate need for licensing.

To be able to do these manufacturers apply the knowledge of the ECCN numbers as used in previous exports that required a license.

Do Export Licensing Requirements Change Depending On Method Of Shipment?

No, licensing option only differ depending on the classification of the product. The classification depends on guidelines from the Export Administration Regulation EAR.

There are products which are not liable to a license while for other it is mandatory for them to have licenses.

Nonetheless, the mentioned classifications are subject to review by the office of export compliance.

Therefore, method of shipment does not affect the licensing process. It does not matter whether it’s through online shipment or the physical shipment process.

The product is the one to either qualify or dismiss the licensing.

What Is The Difference Between ECCN Code And HTS Code?

Both the ECCN and the HTS Code are used in product classification. However, the HTS code is a 10-digit code used in determining custom tariff classifications for commodities.

The ECCN code consists of only 5 alphanumeric characters that help in the classification process.

What Is ECCN Code Format?

The ECCN follows a certain format universal to all ECCN numbers. This includes the application of both numbers and alphabets in determining an ECCN code.

First and foremost, the ECCN number begins with numbers ranging from 0 to 10.  These numbers categorize the shipment for easier identification.

The category represents the Commercial Control List as earlier outlined.

The second character is an alphabet that indicates further the product group of your merchandise. These alphabets are only five, thus from A to E, as earlier outlined.

In total, the ECCN code consists of five characters. The last three numbers illustrate the reason for control for the shipment.

How Do I Classify My Products For Export Controls?

There are three ways in which you can use to classify your products.

You can choose to classify individually, or use the BIS or rely on a product vendor.

It is part and parcel of the Commerce department, hence can be used to help classify export products.

The following are the three main ways to classify product for export control explained.

Self-classification Method

From the name, you can classify your export product individually.

This means that you will have to source for the ECCN codes in the CCL as well as identify the product group for your export.

As a result, you have to be fully aware of the type of product you are exporting. Additionally, an extensive knowledge on the format and structure of the CCL list is an added advantage.

Sending The BIS A Request For Classification

This can be achieved through an online process. This is an online system that allows you to submit a request for the classification of your goods.

However, there is a certain requirement before accessing the system. The company in charge provides an identification from the company known as the CIN, which allows you to assess the system in order to submit the request.

Rely On Vendor

The manufacturer of the product sometimes is best suit to understand the nature of the product. Additionally, sometimes the manufacturer`s knowledge on the product can easily avail you with the ECCN details.

However, you are also required to make an effort to ascertain the ECCN provided.

As much as the vendors are acquainted with the commodity, any mishaps on the ECCN identification falls back on you, not the exporter.

Ensure your ECCN code is up to date with the current codes and your findings are in line with the vendor’s suggestion.

What Is The Difference Between Schedule B And ECCN Number?

As earlier outlined, ECCN code is used to classify export products according in relation to the CCL list and product groups.

Schedule B codes on the other hand help to track trade statistics.  The codes help to categorize exports meant for other countries.

Unlike the ECCN code, Schedule B is a 10-digit code.  The US Commerce department, Census Bureau and the Foreign Trade Division makes use of the Schedule B especially in publishing the US export statistics.

How Do I Find An ECCN Number?

There are four ways which you can use to find an ECCN number.

First of all, you can choose to just look for the code yourself.  This means you get to familiarize with the CCL list and work your way through the product list as well.

Another easier way is to consult with the manufacturer of the product. Chances are high that the manufacturer has the ECCN number of the product owing to the numerous times handling the same product.

You could also choose to use the Electronic system for item classification. This is an online platform designed to help you find the ECCN number.

However, you will have to be registered and given a PIN that allows you access to the site

Lastly, you could reach out to the BIS and request for the commodity classification for your good. You will thus need to fill the BIS-784P then proceed to make the request.

However, make sure to make earlier arrangements as the process takes 3 to 4 weeks to finalize.

Are There Any Requirements For Product Classification Requests?

Yes, first and foremost you should adhere to the maximum number of request outlined. Thereafter, provide all the necessary information that can aid in classifying your item

This may include attaching brochures and extensive specifications to describe your item

The BIS-784 form helps to disclose the information required to help in the classification process. Ensure to fill it appropriately.

Once you have fully exhausted describing your item, ensure to sign and correctly submit for classification.

If you are using online request services, ensure you have the pin number to access the website for classification

What is A Commercial Control List?

A commercial control list from the name, is a list that outlays the categories for items and further divulges details on the need for a license for the particular items.

What Happens If My Product Is Not On The Commercial Control List?

The product is then listed as EAR99. It is very common as a majority of products are usually not on the CCL list.

Moreover, these goods do not require any licensing procedures. However, this is not the case if your EAR99 is being exported to a certified country, or has proscriptions on the end-use of the item.

In this case a license is mandatory.

Do Commerce Control List (CCL) and ECCNs Change Often?

Yes, the CCL and ECCN s do change over time. As a result, it is important to be aware of the current CCL and ECCN codes.

The commerce department makes changes to the CCL list by removing or even adding products to the list. Additionally, the technical characteristics to items also change.

To be up to date, subscribe to email notifications to help you stay up to date.

Moreover, you could always make visits to the website to double check your ECCNs authenticity and acceptability.

What Is The Difference Between EAR99 And NLR?

EAR99 is for item classification which is assigned to products which are not found in the CCL list.

NLR means no license required. It is used in shipment classification.

EAR99 items mostly fall under items with NLR.

Additionally, there are items in the CCL list that also do not require a license.

Moreover, an EAR99 can also be subject to a license if the item is exported to a country.

It whoever restricts the use of the item, or end-user of concern, or supports a barred end-use.

Is ECCN Number EAR99 A Free Pass For Export Compliance?

No, EAR99 is not a free pass for export compliance.

The EAR99 simply states the product classification is not on the CCL list. However, the item is still subject to authorization for shipment.

It has to undergo a check to determine the terms of transactions such as the need for licensing.

How Much Does ECCN Classification Service Cost?

The unit price used is the SKU. The SKU price depends on the volume of your products or items.

Also, the more the volume of items, the more the discount on the volume of your items which further translates to less costs.

What is ECCN Country Chart?

The ECCN country chart outlines the regulations for licensing for exports to various countries across the world. This is in line with the destination details and the information on reasons for control.

The item follows the procedure of first identifying itself with the CCL list. Thereafter, based on the given information, you either obtain a license or refrain from moving forth with the export.

What Are The Next Steps After Determining My ECCN?

The next step is to find out whether your item requires a license.

This applies to shipments which have items prohibited to the end –user or end use in the country of export.

To determine license requirement for your item, check the `Reasons for Control`.

The ECCN entry provides this information.

Further cross check this information with Reasons for control to the country of destination. The Commerce Country chart helps with these details.

Afterwards, once you find an X in the box, be sure to obtain a license for your item.

What Does Prohibited End User Or End Use Mean In Relation To Export Control?

Prohibited end user which means the item being exported is under restrictions due to the harm it could cause to people.

As a result, such items are subject to licenses or rejection by the country of export. The EAR provides guidelines and restrictions in relation to end user and end use.

How Do I Screen Customers For Exports?

Screening customer for exports helps to easily identify prohibited products from individuals or countries restricted for exports.

Although there are documents that can identify these customers such as the Denied Persons List or Entity list to help with restrictions.

However, there is a website that intensively highlights prohibited exports and the countries. It is known as the consolidated screening list.

It is a much available search engine database.

The information in this site is from the Department of Commerce, State and Treasury.

Moreover, the BIS also provides a website you can use to obtain more information. It can be on the customers, and look out for customers to keep off from.

If I Need An Export License How Do, I Apply For One?

The growing technology has made it easier to acquire licenses. Visit the described online platform as outlined by the export department and fill in the requirements described.

Ensure to attach the following documents in the application;

• Profile of exporter
• Copy of the purchase order
• Identification proof
• Address proof
• Bank certificate
• Any other relevant documents requested by the site.

Is There A Fee For Submitting An Application For License Application To BIS?

No, sending a licensing application form is free, it does not attract any extra costs.

What Is A License Exception?

This is an approval that grants the permission to export and re-export items without the requirements of a license.

The EAR outlines the necessary conditions subject to a license exception for different goods.

Under the EAR the following exceptions to licensing occur;

LVS; These are items with limited value

GBS;  These items are controlled for national security reasons to specific countries.
CIV;  These items are controlled for national security reasons to particular countries where end-user is a citizen.
TSR; These are certain technology and software to certain countries.
APP; These entails computer exports.
KMI;  This encompasses encryption exemption for key management.
TMP;   It entails temporary exports, re-exports, or imports,

RPL;  Involves repair and replacement parts for items already in export.
GFT;   These are gifts and humanitarian donations.
GOV;   Entails exports to some government entities.
TSU;  Involves mass-market technology and software exports.
BAG;    These are baggage exemptions.
AVS;    Aircraft and vessels and most exports of spare parts associated with aircraft and vessels.
APR;    Permits re-export from approved countries.
ENC;  These are encryption devices and software.
AGR;   Agricultural commodities.
CCD;   Authorization of consumer communication devices to Cuba.

What Happens If I Don’t Get The Proper Export Authorization?

You are most likely to attract penalties and fee charges from the export control department. As a result, you are strictly mandated to follow the regulations put in place to evade such extra costs and inconveniences.

Additionally, if you are using a representative to handle your exports, ensure they are in line with the EAR regulations. Failure to which you solely attract punishments, regardless of using someone else to handle your shipment.

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If you have any question about export license, you will find the answer right here.

So keep reading to learn more.

What Is An Export License?

Export license refers to a shipping document issued by the government which allows products shipping to a foreign country by authorized individuals or companies.

Why Is Export License Important?

In the International market, exportation and importation of products are carried out under certain rules and guidelines.

An export license happens to be one of the requirements for shipping certain goods to a foreign country.

Keep in mind that not all goods will need it.

Factors such as; nature of goods, end-use of the products, and trade activities will determine whether or not an export license is needed.

An export license is important, especially when dealing with expensive and high-value goods. It provides safety to the goods being shipped as it can be presented as a report of the goods.

Who Issues Export Licenses?

An export license is issued by an authorized licensing agency.

This is done after carefully analyzing all factors regarding the export transaction.

Do All Countries Require An Export License When Exporting Goods?

Not all countries require an export license when exporting goods.

Most people fail to understand that type of products being exported, destination, and usability also determine whether or not you will need export license.

In addition to that, trade relations among different countries or regions also determine whether or not you might require an export license.

If you need additional information regarding your exportation, you must confirm with your local authorities for any further requirements.

Are Export Licenses The Same For All Kinds of Shipments?

The export license will vary depending on the use of the product as well as the export destination.  Nevertheless, export license requirements remain similar despite the shipment method or transmission.

How Can I Get An Export License?

The first thing you need to ask yourself is whether you need an export license.

Some basic consumer goods don’t often require an export license and the process for acquiring one is not difficult.

Before sending your application, seek to find out whether the classification of your goods has a specific Export Control Classification Number.

This number gives a description of the products and the licensing requirements needed.

Different countries have different systems and therefore confirm with your local authorities to ensure that you have everything done as per the system.

After confirming if you require one, you will need to apply for the export license.

While some systems only accept electronic submissions, some accept both documentation and electronic submissions.

Supporting documents might also be required during the export license application process. Some of them might include;

• Letter of explanation
• Address
• Bank certificate
• A copy of the purchase order
• Proof of payment
• Application form for the export license

Once you have confirmed that everything is in place, you can submit your application. Processing of the export license might take around 2-6 weeks after which you will receive your export license.

It is important to know that certain factors can delay your application. Such factors are not limited to;

• Failure to sign the application.
• Submitting a handwritten application instead of a typed one.
• Not giving a full explanation to the products that you intend to export.
• Failure to explain the specific end use of the goods.

Depending on the type of export license, the validity period normally ranges from 6 to 12 months after being issued. However, this can vary based on certain factors.

How Do I Determine If I Need Export License?

To determine whether you need an export license, the first thing you can do is check whether your products are controlled by BIS. Analyze the Commerce Control List to see if your products have an Export Control Classification Number.

If they have a number, compare the number to the Commerce Control List to confirm the license requirement for your items.

Do I Need An Export License For All Goods I Ship Out Of The Country?

No, you don’t need an export license for all goods you ship out of the country. However, you shouldn’t assume that your products don’t need an export license.

Exporting some products might need an export license and failure to stay compliant can result in harsh repercussions.

The reason as to whether or not you might need an export license will be determined by the following factors;

• Destination of your goods – Different countries have different product control policies and trade agreements that might determine the acquisition of an export license.
• End use of the products – You need to ensure that your end-user is authorized to freely use the product.
• Nature of the goods being exported – Most if not all controlled goods require an export license.

Some of these controlled products might include;

1. Goods used for torture
2. Radioactive goods

• Products designed for military use

1. Dual -use-items which are used for both military and civil purposes.

• Licensability of trade activities – Exporting your goods to foreign countries might attract the need for an export license.

How Long Does It Take To Get An Export License?

The time taken to get an export license can range from 2-6 weeks or more.

The length of time taken will depend on a couple of factors such as how accurate you fill the forms.

Filling the forms wrongly might otherwise slow down the process.

Is There A Difference Between Export License And Import License?

Yes, just like import is different from export so does an export license differ from an import license.

Export license refers to document issued by government to allow shipment of goods to a foreign country by an authorized individual or company.

Conversely, import license refers to a document issued by the government to allow entry of goods into the country from other foreign countries.

One of the major purposes of an import license is to regulate the goods being brought into a country. This is mostly done to facilitate the thriving of local industries by preventing competition from foreign goods.

What Are The Contents Of An Export License?

An export license includes the following details;

• Details of the products being exported
• Mode of transport to be used
• The expiry date of the license
• Details of the exporter
• Destination of the goods being exported
• The reference number of the applicant
• Date of issuance
• Signature of the authorities
• Quantity of products being exported
• The immediate consignee in the foreign country
• The export license number
• Address of the place of issuance

Apart From Export License, Which Other Documents Do I Need To Export Goods?

An export license is not the only document you need to achieve successful exportation.

You will need to present other supporting documents for customs officials to efficiently allow the exportation of your products.

Other documents you might need for your exportation include the following;

• Bill of lading – A bill of lading is an export document issued by a carrier and acknowledges the receipt of goods.

It contains all the details about the products being exported together with the destination of the goods. Additionally, a bill of lading also outlines the terms and conditions of carriage.

There are three types of bills of lading documents which include;

1. Inland bill of lading – It is a contract between the shipper and carrier which serves as the receipt of goods via overland transportation.
2. Ocean bill of lading – Just like the island bill of lading, an ocean bill of lading serves as a receipt of goods via the sea.

• Air Waybill – An air waybill is a contract between the shipper and the carrier to acknowledge receipt of goods transported via air.
• Commercial invoice – A commercial invoice is a trade document issued by the seller to the buyer.

It gives a description of the goods being transported and the total amount payable.

A commercial invoice is one of the most important documents requested by customs officials. It provides details of the destination, contents, value, and origin of the shipment.

• Proforma invoice – Unlike an invoice, a proforma invoice is issued by the seller to provide cost estimates of the goods. Additionally, it includes the shipment time as well as the terms of sale and payment agreed upon.
• Certificate of origin –this is a trade document that states that the products are not only produced and obtained but also manufactured in a particular country.

In simple terms, it declares where the goods come from.

• Packing List – A packing list is a document that describes every aspect of the contents being exported. The type of goods, amount, weight, markings, size, and any special instructions for the shipment is included in a packing list.
• Dangerous goods forms – Just as the name implies, a dangerous goods form issued when exporting goods that are perceived to be hazardous. The document certifies that the goods have met the required standards before being exported.

Exporting such goods is always very tricky owing to the several restrictions in place.

Therefore, before indulging in such, ensure that you confirm if your products lie under the dangerous goods classification and take necessary actions.

• Export declaration – For the customs officials to control exports, they will ask for the export declaration of your goods. This document simply provides information about the goods being exported.
• Certificate of manufacturer – is given by manufacturer to buyer certifying that goods have been manufactured and are ready for pickup with all risks transferred to buyer.
• Shipper’s letter of instruction – provided by the exporter outlining all the requirements to be met during the handling and transportation of the goods.
• Dock receipts – Once your goods are received by your shipping company, they will issue you with a dock receipt. It acknowledges the receipt of goods by the shipper.
• Inspection certificate – An inspection certificate certifies that the goods have passed through inspection and meet the listed terms in a sales contract.
• Insurance certificate – An insurance certificate is meant to cover your goods against any loss or damage while in transit.

What Is An Export License Number?

An export license number comprises five characters that are alphanumeric and which are used in the grouping of exports.

This is done to assess whether or not an export license is needed.

The first character indicates the product’s broader features such as electronics or nuclear materials.

The second character indicates the product’s group which can either be grouped as software or material among other groupings.

What Is A Validated Export License?

A validated export license refers to a document that is issued by the government allowing the shipment of specified products to other countries.

The license is often valid for a specified period in which the exportation is to be carried out.

What Are The Requirements For A Food Export License?

Getting a food export license will depend on the laws and regulations enacted in the destination country you are exporting to.

For instance, most countries will put strict measures on the exportation of staple food to protect the sufficiency of the country.

With that in mind, expect to incur a higher cost when exporting such restricted foodstuffs. Nevertheless, some of the common requirements include health and safety certifications to prove that food is safe for human consumption.

Also, you need to ensure that the product being exported has enough shelf-life left and well packaged.

Additionally, the labeling on the packaging should list all contents and details of each food product.

Depending on the country you are exporting from, you will need to present additional supporting documents for you to get food export license.

Therefore, ensure that you keenly enquire from your local authorities of any other possible requirement needed by them.

Do Export Licensing Requirements Change Depending On The Method of Shipment?

The method of shipment used doesn’t affect the export licensing requirements and this is inclusive of technology shipments.

With the current trends, items such as technology can be easily exported through the internet or via hand-carried items.

How Much Does An Export License Cost?

On average, export license costs can range from $24 -$55 or more.

The cost might vary from one country to the other and therefore it is safe to confirm with your local authorities.

How Long Is An Export License Valid?

An export license is normally valid for up to 6 months since the date issued.

It’s important to note that the validity of an export license will also vary based on the type of export license.

For instance, an Open Individual Export License is normally valid for as long as 5 years.

On the other hand, the Standard Individual Export License is valid for up to 2 years.

Who Is Responsible For Export License?

The exporter always plays a major role in any export procedure as he or she is the one who initiates everything.

That said, it’s worth noting that the exporter is responsible for the export license.

The exporter should ensure that all rules and guidelines are followed to avoid penalties during exportation.

He or she should find out whether or not the goods being exported will require an export license and be well informed.

What Are Export License Exceptions?

Export license exception refers to permission that authorizes you to export or re-export products.

It is subject to Export Administration Regulations that would otherwise need licensing.

This is often carried out under stated conditions and includes products categorized under the Jurisdiction of the Department of Commerce.

How Do I Determine Export License Exceptions?

There are four steps to help in determining export license exceptions.

The first step is to find your product classification in the Commerce Control List (CCL).

There are 10 product categories in the CCL therefore you need to know where your products fall.

Once you find your product classification, you will come across the license exceptions for that classification in the CCL.

The CCL is also where you will find the conditions under which the exceptions apply.

Check in the Commerce Country chart if there’s an “X” in the box or any other requirements. If not, the product doesn’t require any license.

Review the license exceptions and ensure that you meet all criteria. If your products qualify, you are free to use the license exception.

What Are Export License Requirements For Hazardous Goods?

Some of the export license requirements for hazardous goods are not limited to;

• Hazardous goods should have special packaging to prevent them from causing harm.
• You should have your products appropriately labeled. The labeling should be translated to the language of the destination country.
• Exported hazardous items should have the necessary documentation.
• Hazardous goods should be exported by authorized and registered companies or individuals.
• You should not export hazardous materials 6 months to their date of expiry.

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In this guide, you will learn everything you need to know about export declaration.

You will learn how to fill export declaration from, goods to declare, know the documentation process and the parties involved, among other critical aspects.

So, before starting an export business, read this guide.

What Is Export Declaration?

Export declaration refers to a form that is submitted by an exporter to customs during the export procedure.

The form contains important details about the goods due for shipping including goods:

• Type
• Number
• Value
• Quantity and any other qualities
• Country of Origin

It is important for the customs official to have this information because it enables them to supervise the export.

Additionally, they can also compile numerical data of how a country trades globally.

This form works the same way as a certificate of origin. The document must be signed by the relevant authority in the country of origin.

Also known as exchange control, the following are some of the importance of export declaration:

• Enables customs officials to know the nature of goods being This ensures that the consignments do not contain any illegal goods.
• It also ensures that an exporter only exports goods for which they have the required documents and certificates.

This mostly applies in a case where the exporter is dealing with sensitive or restricted goods.

• Benefits exporter since he/she can get preferential treatment of the goods exported, especially if he/she is a member of the trading bloc.

The benefits could be payment of lesser fees or no customs duty especially if the goods originate from one of the trading blocks.

• Provides the intended export dates as well as details regarding the port of loading, port of discharge, and the destination port. This helps in avoiding inconveniences that may arise to the exporter, the exporting company, and the importer.
• It is helpful to the exporter while obtaining the Export Declaration Number (EDN). The exporter requires an EDN for a successful export process.

When Is An Exchange Control Form Needed?

This form is a basic requirement during export. However, the form should be filled 6 months before the export date.

This is for all types of goods that are controlled, regulated, or prohibited, and it is regardless of the value. It is imposed for commercial goods destined to any country other than the U.S.

Customs need the export declaration throughout the export procedure.

What Does An Export Declaration Include?

An export declaration shares in it some very important details. Some of these include the following:

• There must be details about the exporter or the consignor, the importer or the consignee, and the consignment.
• The goods in the consignment must be classified as per the prescribed codes, and this must equally be presented in the declaration.
• It is important to indicate in the form the date of export as well as the details about the port of loading, the shipping company, and the destination port.
• Customs require the consignor to sign a document called the charter party. This document has the information about the destination of the shipment, nature of the goods as well as overall freight charges.

What Is An Export Declaration Format?

The export declaration contains checkboxes for information that the declarant is supposed to fill or tick from the provided answers.

Some of this information includes:

• General Information like: customs security number, form number, nature of cargo, shipping bill number and date, mode of transport
• Name and address of the trader
• Name and address of the payee
• General commodity description
• Country of origin
• Country of destination
• Port of discharge
• Invoice number, invoice currency, invoice date, and invoice amount
• Other particular information includes FOB value, freight, insurance, commission, discount, other deductions, and packing charges.

After correctly filling the export declaration, the exporter or representative acting on their behalf should declare that indeed they are the consignor.

The declaration is made and the information they have provided in the form is accurate.

Lastly, the declarant should provide the relevant signatures at the end of the form.

Is An Export Declaration Required For All Kinds Of Goods?

You should file an export declaration for the goods that require an export permit and excisable goods. That is, goods produced within the country such as tobacco and tax paid on such commodities is called excise duty.

You should also file an export declaration for goods with a value greater than $2,000. There are however goods that customs exempt from the declaration such as pets, domestic cargo, household effects, etc.

Who Is In Charge Of Lodging An Exchange Control?

An exporter or a representative working on his/her behalf can lodge an export declaration up to six months before date of export.

The exporter should lodge an exchange control for every shipment he/she trades globally.

A shipment is basically goods sent from a trader to the one who trades. The trader still retains ownership of the goods.

The one who trades is a person exporting the goods. It can also be the one who owns the goods or representative of the trader.

A recipient of a shipment is the one who receives the final exported goods.

Let’s say, a trader trades with the receiver, the trader is supposed to lodge an exchange control for the shipment.

It is however important to note that the consignors are persons established by the European Union.

How Do I Fill Out An Export Declaration Form?

In filling out an export declaration form, you should consider the following:

• Enter the name of the customs office
• If the exporter is the declarant, enter the identity, postal code and location of the trader who is also the

Also fill in the identity, postal code and location of the receiver who is also the consignee.

• Enter the date of declaration and the name of the port of departure.
• State the name of the vessel that carries the goods and the date of departure of the vessel that carries the goods.
• Indicate the final destination and the country of the goods.
• Show the name of the warehouse where you will store the goods.
• Fill in the form after confirmation is granted by the customs counselor or relevant customs officer.
• Give the general product name as provided in the invoice.
• State the tariff schedule code (6 digits) and statistical code (three digits) of the Export Statistical Schedule.
• Enter the statistical units listed on the Export Statistical Schedule and also important to enter the quantity expressed by the unit.
• One must also enter the Freight On Board (F.O.B) price in the currency for the country of origin of the goods.
• Indicate the total number of cargoes, package marks, and numbers. When you load the goods into a container, indicate this and also point of loading.
• On the form provided for export declaration format, the consignor is to check and confirm that all columns are answered truthfully. This should be done before forwarding it to the customs office for verification.

Who Provides An Export Declaration Document?

The exporter may hire a shipping company, transporter or customs agent to make the export declaration and get their goods through customs.

The goods due for export must be ready before you can get custom clearance.

After the consignor fulfilling all processes with the exporting company and issuing of exporting license, then he/she can receive an export declaration.

Upon checking the declaration certificate, the shipping company provides the export declaration. They make the declaration and confirm the details given.

The value of the consignment that buyer receives represents the export value contracted and declared above.

How Much Does An Export Declaration Cost?

Export declaration costs are different for each country’s customs.

The estimated cost for a single export declaration however ranges from $20 to $70.

How Long Is An Export Declaration Valid For?

There is no definite amount of time that an export declaration is valid for.

However, customs office may render an export declaration invalid if goods have not left the customs territory after 150 days from release date.

Can I Lodge An Export Declaration In Advance?

Message declarants can lodge export declarations in advance 30 days before presenting the goods to customs.

The declaration must clearly state the date and exact time the shipment is ready for customs control.

After the date and time pass the customs presents the declarant with a settlement on the release of the goods.

Declarant can rectify declaration made in advance within the said duration, after which goods can be released from the customs territory for export.

It is also probable to delay or bring forward the declared time or date.

The exporter lodges the declaration to the Integrated Cargo System (ICS) of the customs territory. You can submit this declaration either electronically or manually and at the customs office.

What Is The Meaning Of Exchange Control Number?

This number; often abbreviated as (EDN), is a number that has nine alphanumeric characters. Customs provide this number to the exporter in exchange for his/her detailed information.

How Do I Find My Export Declaration Number?

To acquire the EDN, the exporter or export agent needs to lodge export declaration with the customs office using the recommended format.

There are two ways to lodge the declaration:

• Electronically: exporters use an electronic service system provided by customs to lodge their declarations from wherever they may be.
• Manually: the document is prepared manually and submitted at the customs office.

The Customs will verify the information in the export declaration then issue an Export Declaration Number.

If there are any errors, the exporter should lodge the declaration again after the amendment.

Note, to obtain an EDN, first you have to understand how to lodge an export declaration electronically using the correct software system.

How Is An Export Declaration Number Useful?

Some of the uses of an EDN include:

• It notifies the exporter of the release of goods from the port.
• Informs of return or release of goods from or to a warehouse.
• Helps in recognizing individual goods contained in one combined shipment.

Is There A Difference Between The Export Declaration Form And Import Declaration?

Yes, there is a difference between the Export Declaration form and the Import Declaration form.

The export declaration form is presented by a trader at the port. It provides detailed information about the goods due for export.

An import declaration is a form provided by customs office for importer to fill in. They declares the correct details about the goods being imported.

Can I Amend An Export Declaration?

It is possible to amend an export declaration.

You should submit an appeal for amendment as soon as you notice an error in your export declaration.

The goods meant for export cannot leave the customs territory until customs make a decision about the amendment.

The customs must then forward the decision as a pdf to the declarant.

If customs release the goods for export, then the declarant cannot perform but the customs.

The declarant can appeal for amendment to customs either electronically or manually (in writing) by the exporter or a representative agent.

If the export declaration that needs rectification was submitted by an agent, then only this agent can request for correction.

The request for amendment only affects declared goods that have already left the customs territory if the request is made by the exporter.

Can I Cancel An Export Declaration?

You can request for cancellation of an export declaration via the relevant e-customs system.

The steps for the cancellation process are as follows:

• Open the export declaration, go to the ‘actions group’ and ‘click send cancellation request’.
• In the request cancellation window, fill out the applicable fields and click send. The status of the export declaration will change to ‘cancellation sent’.
• The customs will send you a message whether or not your cancellation was successful.

In the event that the cancellation was successful, the status in the customs system will change to ‘canceled’.

If the cancellation was unsuccessful, you can find out the possible reasons for the rejection and try cancelling once again.

Which Documents Do I Need To Enclose With An Export Declaration?

Documents that you need to enclose with an export declaration include the following:

Proforma Invoice – this document shows the value of goods to be exported. Customs requires that the invoice used with the export declaration have the following details;

• The invoice number and the date issued
• The seller’s details (name, postal address, phone number, e-mail address)
• The buyer’s personal information
• Country of origin of the goods
• Country of destination
• Consignment details
• Time and means of delivery
• Commodity code (Hs number)
• Price of the goods
• Reason for export
• Exporters signature

Other supplementary documents that need to be enclosed with an export declaration include:

• Shipping bill- this is a form that customs use before goods can exit a country or a warehouse.
• Airway bill/ bill of lading– this is a receipt that the airline in question issues for goods as proof of export.
• Commercial invoice– this is a document that clearly describes the goods sold and how much the customer owes the seller.
• Letter of credit– this is a document that guarantees payment of goods. It is a third party that issues this document
• Certificate of origin– this document certifies that the goods meant for export are indeed from a certain country.
• Packing list– this document provides details about the consignment including all the packaging details about the consignment.

What Is The Difference Between An Export Declaration And Export Document?

The export declaration is presented by a trader at the port. It contains the information of the shipped items.

This includes what the goods are, the value of the goods and how many the goods are.

Conversely, export document is any document that the exporter issues to their shipping agent containing instructions for shipping the goods.

It also gives details of the goods due for export and the name of the country of origin.

Examples of export documents are: certificate of origin, packing list, invoice, shipping bill, etc.

What Happens If Goods Exit A Country Without An Export Declaration?

Ideally, goods should not leave a country without the export declaration.

If the exporter fails to lodge an export declaration, they might attract a penalty or a customs debt.

If goods exit a country’s without an export declaration, you should lodge an additional statement code and enter it in the export declaration.

The exporter should present all documents enclosed with the export declaration and any other proof that goods have exited the country’s customs territory.

If goods are already in another country where they also require an export declaration, you can lodge the declaration retrospectively under special conditions.

You should lodge the declaration in the country in question.

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If you have any question about express bill of lading, you will find it right here.

So, keep reading to learn more.

What Is Express Bill Of Lading?

An Express bill of lading is a document receipt that contains all the relevant information about the shipment.

Normally, the seller issues this document to the shipper who acts as transport agent of the cargo.

What Is The Purpose Of Express Bill Of Lading?

The benefits that come with the Express bill of lading are immense. These benefits include:

1. It is very useful in cases where shipping transactions do not involve a bank. This eliminates the need to secure payments on basis of the original BOL during delivery.
2. Express Bill of Lading is fast: it allows shipments to move faster to the consignee. The carrier should move goods to the named consignee without providing additional documents.

• In cases of a short duration of time, printing, and courier of original BOL is not achievable. Therefore, the shipper and consignee agree to use Express B/L to speed up the process.

When Can I Use An Express Bill Of Lading?

Mostly, you can use Express Bill of Lading under the following circumstances:

• If you have made the payments before shipping the goods.
• You can also use Express Bill of Lading if you still owe/credit the supplier.

By using Express Bill of Lading, the goods are not hold up since there is no issuing of original BOL. This, as a result, saves on the time taken to ship and reduces the courier fee.

What Is The Express Bill Of Lading Procedure?

There is a certain procedural setup that you should follow to ensure the safety of prompt’s shipment. These procedures include:

The consignee signs a contract with the seller, for which the consignee issues a letter of credit to guarantee payment.

The seller arranges for transportation by approaching a transportation agency in this, case the carrier.

The shipping agent can also serve the purpose rather than the seller doing it.

The carrier confirms the date and time of delivery to the seller (exporter).

Upon the arrival of goods, the person in charge of the ship submits receipts to the Port Authority Trust.

These receipts act as confirmation of the presence of the cargo on that ship.

The seller makes all pending charges to ensure the carrier acquires the receipts, which enable processing of the express Bill of Lading.

Once the seller makes payments, the carrier receives the receipts that allow physical inspection of goods against the contents on the receipt.

After completing the inspection, the carrier calculates the goods accordingly to ensure there is no short loads of the goods.

This clearance process allows the processing and fast discharge of the cargo by the responsible agents.

Note, due to the unavailability of the original bill of lading the shipper only presents the Express bill of lading to the carrier.

The agents at the port will not request carrier to produce any other document rather they will release the goods for delivery.

What Is The Difference Between Original Bill Of Lading And Express Bill Of Lading?

Original bill of lading commonly serves as a shipping document between the shipper and the carrier.

This document confirms the carrier receipts of the goods.

Additionally, the original bill of lading does not work as a single copy but rather printing of two similar documents is important.

Both the shipper and the consignee acquire one of these documents.

Note, with the original bill of lading, the consignee will not receive the shipments if the shipper still holds the original BOL.

Carriers use Express bill of lading to facilitate the contract between them and the buyer.

With Express bill of lading, you do not require to produce the original bill of lading.

This results in a fast release of goods for delivery purposes.

Using the Express bill of lading, allows you to mail the documents back to the shipper electronically hence eliminating courier fees.

This method saves on time and any extra cost you may incur along the process.

Is Express Bill Of Lading Negotiable?

No.

Normally this document is not negotiable.

With a negotiable bill, the shipper will specify the delivery of the shipment to anyone who has claims ownership.

The negotiable bill does not indicate the specific names of the carrier and the buyer.

It also specifies the document title and who controls the shipment (does not indicate the specific buyer names).

Express Bill of Lading is non-negotiable, which requires you to document all the necessary information on the same sales contract and not elsewhere.

Express Bill of Lading does not declare ownership of the goods but rather, specifies the names of the consignee to receive the shipment.

Who Issues The Express Bill Of Lading?

Normally, the carrier issues this document after taking over the control of the shipment.

This means the handing over of goods from the shipper to the carrier is complete and the carrier can load the goods for delivery.

During this process, the Express Bill of Lading is inclusive of:

• Receipts indicating the transfer of goods
• Legal ownership of the goods
• Contract aspect sating all the relevant details about the goods.

In some countries and shipping groups, there are set standards that regulate who issue this Express bill of lading.

Note, the issuing process occurs only when the carrier receives and loads the goods on the desirable means of transport for delivery.

What Is The Difference Between Seaway Bill And Express Bill Of Lading?

Seaway Bill normally confirms cargo transfer between the carrier and the buyer.

Seaway Bill does not allow any trading of goods during the shipping procedures as it is not a document of title.

When using the Seaway Bill there is no issuing of any kind of bill of lading.

Seaway bill can be used if you have already made payments whereas Express bill of lading does not allow pre-payments of goods.

Carrier normally use the Express bill of lading as a contract to facilitate the delivery of goods to the buyer.

The contract builds upon trust due to the limited time of printing and courier the same to the consignee.

Is Express Bill Of Lading The Same As Telex Release?

No.

The Express Bill of Lading is not the same as the Telex Release.

We have more distinguishing features that make these two types different.

Express bill of lading allows immediate release of goods upon arrival.

Express Bill of Lading does not require the shipper to pay a surrender fee since there is no request of Original B/L.

Therefore, there is an express release of goods.

Additionally, you do not require Original B/L cargo payments are secure and there is no involvement of the bank in any transaction.

In Telex Release, you should print and hand over the original B/L to the shipper/transporting agent.

As a shipper, you always surrender this document back to origin agents.

Telex Release requires the shipper to pay full documentation charges as well as surrender the charges.

Unlike Express Bill where there is an express release of goods, you can request Telex release under the following circumstances:

• Delays in mailing the Original Bill of lagging to the destination without incurring storage fees.
• If the shipment of the goods is secure and the Original B/L is not necessary.
• Saving on the mailing cost. Agents at the port charge the surrender fee and charges for sending a telex message.

Can An Express Bill Of Lading Be Changed?

Yes.

Changing of Express Bill of Lading is easily achievable.

Shipping agents, NVOCC, or the freight forwarders prepare the Express B/L according to booking confirmation.

You can change the Express Bill of Lading before and after receiving booking confirmation from the logistic service providers.

We have a different circumstance that enables easily changing or amending of the Express Bill of Lading. They include:

• You can change before import customs declaration
• Before export booking confirmation
• Before drafting Express Bill of Lading confirmation
• After import and export customs declaration
• You can also change before and after shipping manifest submission.

There two circumstances that may delay the changing of the Express Bill of Lading:

• Presence of a letter of credit from the financing bank, stating that the Express Bill of Lading should not have pending charges. This forces the consignee to first clear all the charges via the carrier before the release of goods.
• An already existing shipping manifest. This will cause a delay in changing the Express Bill of Lading but eventually, you will be able to change it.

Does The Express Bill Of Lading Need To Be Signed?

Yes.

The carrier mostly signs this document. This implies that the carrier is aware of all the information regarding the goods.

The Express Bill of Lading becomes legal once the responsible parties sign the documents. These responsible parties include shipper, consignee, carrier, and customs broker

Before signing the Express Bill of Lading ensure it is inclusive of;

All the responsible parties

Origin and destination of the shipment

The number of packages and package details.

Content of the packages.

What Precautions Need To Be Taken Before Signing An Express Bill Of Lading?

Before signing this document, you should consider the following precaution measures:

Ensure goods are in the right condition: You should firstly confirm that the goods are physically available on the board ship.

You should also confirm that the goods have an accurate description as per the Express Bill of Lading.

It should also be inclusive of, dead freight and any short-loading of the goods.

Shipper identity: it is important to give an accurate name, identity, and the location address of the shipper.

This will minimize the liability of the carrier in case of false information.

Port and date of loading: Before signing the Express Bill of Lading you should confirm that the dates coincide with dates on the receipt.

This allows you to determine the origin of the goods and the overall customs duty structure.

Port of discharge: this prevents deviations of the shipping vessel. It’s the responsibility of the charter party to enhance this process.

Description of freight load and quantity: before signing the Express Bill of Lading ensure that the description and quantity are correct.

It is essential to confirm the fright. Since the shipper might order a shipment for carriage by the carrier and end up declaring something else on the receipt’s documents.

Note, details on the Express bill of lading should match consignee details during the booking process.

Freight: before signing, you should ensure that the freight is no incorrect markings. For instance, prepaid freights or paid freights.

Conflicting terms: you should ensure that the Express Bill of Lading terms and those of the charter party are not conflicting.

This mostly occurs when the carrier refuses to show all details such as commercial information. This as result brings conflict between the consignee and carrier.

How Do I Surrender The Express Bill Of Lading?

Normally, if the cargo is not on credit, it is easy to surrender this document receipt.

Surrendering of these receipts requires you to submit the original documents with a letter request to the carrier of goods.

Upon receiving the express B/L, the carrier sends a message to the other counterpart at the destination port.

This message indicates complete surrendering of the Express B/L.

This allows you to acquire the freight without producing the Express B/L.

The person in charge at the destination port will release the goods without requesting other additional documents.

How Does Express Bill Of Lading Tracking Work?

Most companies are adopting the tracking method of the shipment to prevent losses along the way.

This process gives the shipper and the carrier an assurance that the shipment will arrive promptly and safely.

We normally use two methods in tracking the shipment;

Use of Express Bill of Lading: This document is essential as it contains all the information of the shipment such as;

• The names of the consignee and carrier and the addresses too.
• Specific handling instructions of the shipment.
• Description of goods available
• It should also include dates, shipping units, and measurements.
• Also, the value of the shipment. This gives the total amount the shipment is worth.

This method is the easiest and the receipts should be readily available for review of the shipment.

With advances in technology, you can use a Pro Number that comprises 6-10 digits. You should print this number and place it on the shipment which is easily scannable.

You will find this number in all paperwork including, the Express Bill of Lading.

This allows the carrier and the shipper to have a fast track of goods, delays or dead-freights

Does An Express Bill Of Lading Serve As A Contract Of Carriage?

Yes.

Contract of carriage involves an agreement between consignee and carrier.

This agreement allows the carrier to ship goods from the port to the destination address

This contract comprises rules, conditions, and obligations that guide the carrier.

That is, in case the carrier incurs the extra cost during the delivery it should reflect on the Express Bill of Lading.

This allows the consignee to evaluate the document and refund the cost to the carrier.

In case of disagreement between the consignee and the carrier, the carrier will hold back the cargo until an amicable solution is achievable.

Can An Express Bill Of Lading Be Consigned To A Customs Broker?

Yes.

You can consign the Express Bill of Lading to a customs broker. This consignment takes place under the following criteria:

The custom broker becomes an importer by obtaining relevant documents from the government.

By acting as an importer, it means you are liable to government regulations of importing goods into the country.

As a result, the Express Bill of Lading will consign with a customs broker who completes all the custom importing procedures. The custom broker finally accepts the delivery of goods as an importer.

Can Goods Under Express Bill Of Lading Be Transferred To Another Consignee?

No.

Considering that this document is non-negotiable and acquiring it does not prove ownership of the shipment.

It, therefore, means, if you obtain goods under the Express Bill of Lading, you cannot transfer them to another consignee.

Is Express Bill Of Lading Used Under Letter Of Credit Transactions?

No.

You cannot use it as it does not guarantee payments of goods by the buyer to the seller.

This document does not prove ownership and therefore, you can present it to clear the charges.

This implies that you cannot transfer these goods to any other consignee

Therefore, it is advisable to clear all the pending charges to avoid delay and withholding of the shipment.

What Are The Disadvantages Of The Express Bill Of Lading?

Below are some of the main disadvantages:

• It is non-negotiable: this implies that you can only present receipts of the goods without exchanging them for money.
• It is less secure hence increasing chances of fraud during the whole process.
• Withholding of goods might occur since the officers in charge request other additional documents.
• Possessing the Express Bill of Lading allows you to obtain the shipment without providing additional documents.

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If you’re looking for any information about fulfillment by Amazon (FBA), you will find it right here.

It covers all the critical details about FBA such as what it is, how it works, benefits, products you can sell, etc.

So, keep reading to learn more.

What Is FBA (Fulfilment by Amazon)?

Fulfillment by Amazon (FBA) provides inventory services such as warehousing, packaging, shipping, and customer services.

It helps to facilitate the online selling of products by business owners.

When Did The Fulfilment By Amazon Program Start?

The fulfillment by Amazon program was started back in 2006.

Before its launch, Amazon was facilitating online retail and was a key player on a global scale. It’s when it came to online sales and fulfillment.

One of the major reasons why Amazon founded this program was to fuel the growth of small businesses using Amazon fulfillment capabilities.

The brand not only provides storage and packaging services but also customer service. Which is an added advantage to any business owner selling in Amazon.

That said, the Amazon fulfillment program was geared to have as many third-party sellers as possible. Learn how to increase profits by choosing Amazon.

As current trends pop up, the FBA program ensures that it stays up to date with the current trends. To meet the needs of the evolving online retail environment.

In as much as this enables brands to stay on top of the game, it might as well be challenging to keep up with the constant updates.

How Does Amazon FBA Work?

In simple terms, you send products and Amazon packs and ships to your customers. Below is a detailed explanation of the processes involved;

• First things first, you need to set up your Amazon selling account, create your product listings and prepare your products.
• Thereafter, ship your products to Amazon where they shall be provided storage services in the fulfillment centers.
• Once your products are received by Amazon, you can keep track of them through their tracking system.
• Interested customer orders your product from Amazon and thereafter Amazon takes care of picking and packaging processes of sold products.
• After the sold items are packaged, they are shipped to the customer. The shipping method used will depend on the choice of the customer. The customer is also provided tracking information.
• Additionally, Amazon will provide customer service after the delivery of products. This also entails taking care of any product returns issues.

It’s important to understand that this program not only focuses on orders placed on Amazon but also on other e-commerce platforms.

What Are The Seller Responsibilities On Amazon FBA?

With the several services offered by Amazon FBA, it might be difficult to tell which responsibilities are left to the buyer.

Here are three responsibilities that any seller is in control of when selling through Amazon FBA.

• Selecting the type of products, you will be selling – This is indeed a key aspect if you are looking to sell on Amazon. It’s vital to choose products that sell fast to avoid slow-moving products and fewer sales.

Research and analyze current trends, this might help you settle on a suitable product that most people are interested in.

• Ensure that your inventory is well-stocked – Soon after completing the sign-up process, you can begin storing your products in Amazon Fulfilment centers. It is up to you to observe the stock and restock if need be.
• Marketing your products – It is your responsibility to get your products known to people. You can as well choose to utilize Amazon marketing tools to market your products. Otherwise, FBA doesn’t offer any marketing services. Apart from using Amazon marketing tools, you can decide to use other means to create awareness of your product in the market.

Which Factors Determine Amazon Fulfilment Fees?

The amount of fee charged will depend on three main factors namely;

• The weight of your products.
• The sales platform you use to sell your products.
• The size of your products.
• Type of FBA services used.

Based on the size and weight, Amazon groups products as either oversized or standard-sized.

Standard-sized products comprise products that weigh 20 pounds after being packed.

Aside from that, their dimensions don’t exceed 18” by 14” by 8”. Products that exceed these dimensions are ruled out as oversized products.

Take into account that you don’t have to be selling on Amazon to benefit from the Amazon fulfillment program.

That said, Amazon fulfillment services are available through a program known as Multi-Channel Fulfillment.

Through this, sellers are allowed to ship their products to their desired Amazon fulfillment centers after which Amazon handles their fulfillment processes.

FBA with MCF fees is higher as compared to when directly selling on Amazon.

What Are The Different Types Of Amazon Fulfilment Fees?

There are different types of Fulfillment fees. While some are mandatory for all FBA sellers, others are only applicable under specific circumstances.

Let’s have a look at the types of amazon fulfillment fees below;

• Storage fees – Storage fees are mandatory for all sellers selling on Amazon while using the FBA service. As the name implies, storage fees cover the storage of your products in Amazon fulfillment centers. The number of cubic feet your products take up is used to calculate the storage fees.
• Referral fees -We can describe referral fees as commissions paid by sellers to Amazon for them to sell on Amazon. This applies every time any sales are made by a seller.
• Fulfillment fees -As compared to storage fees, fulfillment fees are not mandatory for all FBA sellers. This fee is paid to Amazon FBA to cover the cost of fulfilling your order. Fulfilling your order will entail services such as picking, packing, shipping, and customer care, and after-sale services.
• Removal order fees – The removal order fee is paid every time a seller decides to remove items from the Amazon fulfillment center. The size and weight of the products being moved will determine the amount of fee to be charged.
• Selling fees – A selling fee is mandatory if you are looking to sell on Amazon. There are two types of plans you can choose from depending on your budget and preferences. There is an individual plan which costs $1 for every sale made and a professional plan which costs $40 per month on unlimited sales.
• Return processing fees – As the name suggests, this fee is applied to any products that are returned. The products must be originally sold on Amazon and have to be eligible for free return shipping.
• Unplanned service fees – Once a seller chooses to sell products in a fulfillment center, they must pack, label, and also barcode their products. Failure to do this will have Amazon take the responsibility and charge a fee. Such fee is what’s termed as unplanned service fees.

How Will Amazon Bill Me For Fulfilment?

Amazon will bill you by deducting the fee from the money credited to your Amazon sales account. The fee will be withheld from the payment of funds to you.

What Are The Categories In Which I Can Use FBA?

Settling on a product to focus on can be quite challenging more so if you’re new to this field. With a wide selection of products to select from, narrowing down your search and finding the best niche is the ultimate goal.

That said, below are some of the categories that you can use FBA;

• Books
• Baby products
• Clothing and accessories
• Consumer electronics
• Health and personal care
• Pet supplies
• Shoes, handbags, and sunglasses
• Sports and outdoor items
• Tools and home improvement products
• Video games and apps
• Beauty and personal care
• Musical instruments
• Office accessories
• Luggage and travel items
• Toys
• Software
• Camera and photo products
• Industrial and scientific (BISS)
• Garden and outdoor
• Home and kitchen
• Arts, crafts, and sewing
• CDs and Vinyl
• Automotive parts and accessories

While making your selection, it’s important to consider certain aspects such as the competitiveness of the product and profit margins just to mention a few.

Does FBA Have A Minimum Number Of Items Required?

No

There are no limitations to the number of products you can send to Amazon FBA. You are free to send any number of items from one to 5000.

If you are sending large-sized products, they must not exceed 500.

What Are The Advantages Of FBA?

Fulfillment by Amazon has a lot of benefits to your business which are not limited to;

• Provision of warehouse services – Storage space is vital for any business that sells products.

In as much as some choose to rent or buy their storage space, it might end up being a costly venture.

Not only will you need to pay for space but also the employees to manage it.

Additionally, determining whether space will be the right size for your goods might be tricky.

Fulfillment by Amazon takes away all these hassles and provides you with enough space for the storage of your products.

The overall cost is inclusive of the inventory fee which is quite affordable.

It’s worth noting that businesses with fast-selling products enjoy unlimited storage space as a reward.

• Managing your returns – Managing returns from customers can be an overwhelming task.

You have to find the cause of the return as well as decide if it is worth returning the product.

In addition, the costs are incurred by you and if by chance you need assistance you will need to employ staff.

All these are minimized by making use of FBA which ensures every process is handled smoothly as you continue with your routines.

• Sell products globally – Expanding business to reach the global market will require a huge number of resources which might be unaffordable to some.

Not forgetting the risks associate with such a milestone which might result in an unsuccessful business.

With that in mind, FBA has made it easier for any business owner to reach the global market.

With fewer resources and finances without many risks involved.

• Minimizes cost of shipping – Amazon has partnered with several prime shipping companies to ensure that your goods are delivered as desired at affordable rates.
• Handles your fulfillment process – The fulfillment process entails all the procedures done to complete a customer’s order. Fulfillment by Amazon handles all these processes for you.

How Do Amazon FBA And FBM Compare?

With Amazon FBA, sellers ship their products to Amazon warehouse and have their items delivered to customers by Amazon. On the other hand, FBM gives sellers full responsibility for storage and shipping orders.

Which Is Better Between Amazon FBA Vs Seller-Fulfilled Prime?

Both options have their unique benefits and cons.

Determining which of the two is better will depend on whether you are a smaller merchant or a larger merchant.

For instance, Amazon FBA would be ideal for smaller merchants lacking storage spaces and in need of hands-off fulfillment.

On the other hand, larger merchants owning their warehouses with experience in this field would find it ideal to use seller-fulfilled prime.

That said, it’s important to carefully weigh the two options and settle on what works well for your business.

How Can I Get Started With Amazon FBA?

The first thing you need to do for you to get started is to create an account. Amazon’s website provides all the information you need regarding the sign-up process.

On the Amazon website, you will find important and helpful information explaining services provided and how to go about selling on Amazon.

And that’s not enough, Amazon also provides marketing services and insights which will help you leverage the benefits.

Ensure that you take advantage of all these free tools and services as you get started with Amazon FBA.

Are There Drawbacks To Using FBA Services?

Yes, there are. Just like any other venture expect to experience both sides of the coin.

That said, Let’s have a look at the disadvantages that come with using FBA services.

• Costly fees – Slow-moving and oversized products can result in piling up of storage fees as well as fulfillment fees. In addition to that, the seller incurs charges on removal fees for damaged. Unsellable or defective items and disposal fees to get rid of unsellable products.
• Specific product requirements – There are a set of requirements that need to be met by certain products to ensure the safe delivery of the products.
• Product handling issues by Amazon – Sometimes products get damage during the fulfillment process. If the damages are caused by Amazon, they will repay the loss. Sometimes such faults go unnoticed causing the seller to incur losses.
• Many returns – Since Amazon takes care of returns with FBA, more customers will be willing to return products upon realizing how easy the process is.
• Stickerless Commingling – Might result in losses if a low-quality product is mixed with your quality products. The loss will be realized after your account gets suspended or accused of fraud.

Can I Enter A Joint Venture With Amazon FBA?

Yes, you can. Several service providers are opting to enter joint ventures in a bid to maximally utilize the convenience offered by this fulfillment service.

By so doing, third-party retails avoid dealing with the product themselves and have Amazon do all the preparation and delivery procedures.

FBA has continued to grow in popularity since 2004 when Beta was officially launched.

That said, FBA has made most businesses stay competitive and thus it’s a must-have for any business making online sales.

Is Amazon FBA Suitable For All Businesses?

In as much as there are several e-commerce entrepreneurs, Amazon FBA cannot be suitable for all businesses.

You must do thorough research and understand the requirements as well as your customers and target market.

Not forgetting choosing the right products to sell and having solid business objectives.

All these will help you decide on whether Amazon FBA is indeed suitable for your business or not.

How Do I Know If Amazon Fulfilment Is Right For My Business?

To know whether Amazon fulfillment is right for your business, you need to ask yourself the following questions;

Do You Have Adequate Employees?

Seasonal and trending products tend to sell fast during certain seasons.

In times like this, you might need extra employees to get work done efficiently.

Using FBA at such times would be a wise idea.

What Type Of Products Are You Selling?

Using FBA is ideal for small pricy products.

How Many Sales Orders Do You Receive?

If you are still new to the business, it might not be worth using FBA.

The reason being, you still have fewer orders which you can easily handle on your own.

Once your business picks up, it starts gaining popularity and so will the orders increase.

Managing orders on your own will be difficult and thus the need to hire employees will arise.

At this point, it would be ideal for you to start using FBA.

How Do I Upload My Listings On Amazon FBA?

There are three main methods you can use to upload your listing on Amazon FBA namely;

• Add a product– Once you log into your seller account, you will see the inventory tab. Click on add product.

You can as well add products by clicking “Add products via upload”. If you are dealing with a small number of items, you can one by one.

As soon as all your products have been listed, you can convert them to fulfill by Amazon.

• API interrogation -Amazon inventory catalog provides a platform where you can integrate your website or inventory management software. This is most ideal when dealing with a large number of products.
• Flat file feeds – Flat file feeds are applicable when listing several products. Upload a flight file and directly list your products for fulfillment by Amazon.

What Product And Order Information Do I Need To Provide When Uploading Listings To Amazon?

Amazon will require you to provide information regarding your products including the fulfillment of your items. You should follow the order of information upon request.

Some of the product information that you will be required to provide is not limited to the following;

Your product categorization and sub-categorizations

• The weight of your products
• Barcode data of your products
• Packaging dimensions
• Condition of your products

Can I Ship Directly From A Manufacturer In China To Amazon FBA?

Yes, you can directly ship from a manufacturer in China to Amazon FBA.

You need to trust your manufacturer to meet the required Amazon packaging requirements and quality standards.

You can either choose to directly ship to Amazon FBA or work with a freight forwarder.

However, it’s important to note that using a freight forwarder is suitable when shipping to multiple FBA centers since it’s cheaper.

In addition to that, it’s recommended that you use a freight forwarder when working with a new manufacturer.

What Is Stickerless Comingling Vs. FNSKU For Amazon Fulfilment?

For your products to be scanned as they pass through the Amazon system, you will be required to sticker them.

You are allowed to either use stickerless comingling or FNSKU on your items.

With stickerless comingling, you are free to use ASIN, EAN, or UPC among others.

Not only is it the cheapest but also the most efficient method you can use to sell on Amazon FBA.

Ensure that you carefully inspect your products to make sure they have stickers as listed. Failure to do this might result in being fined.

FNSKU (stickered) tends to be more expensive than stickerless since you will have to individually label your items.

Nevertheless, FNSKU separates your products from other sellers’ products which helps in quality control.

This is quite beneficial especially when your products have higher quality than other sellers.

What Are The minimum Packaging And Labeling Requirements For Amazon FBA Shipments?

The rules surrounding packaging are not that strict as long as the product is well covered and protected.

You can use items such as cardboard boxes, bags, plastic sleeves, and cardboard sleeves when packaging your products.

Nevertheless, the product should have a clear label to facilitate tracking.

That said, ensure that your packaging is secured without any markings to prevent any confusion.

If you are shipping using cartons, they must not exceed 50lbs and 500 products in the carton.

Products shipped in poly bags need to be sealed in transparent, clear, and durable bags which should be 1.5ml or larger.

The bags should also display barcodes and labels. Through the plastic as well as show a suffocation warning for bags that have a 5” or wider opening.

Keep in mind that any explicit products should not be packaged in a transparent bag but in opaque packaging.

Also, the expiration date of the product must follow the DD-MM-YYY format.

Another way you will have to display a sticker with the appropriate format covering the original date.

Last but not least, loose products should be well secured by tape.

How Do I Calculate How Many Products To Send To Amazon FBA?

Knowing the number of products to send to Amazon FBA is essential in avoiding any unnecessary payments.

Such payments can range from storage payments and restocking fees plus losing money on stock-outs.

To calculate the economic order quantity, you will need to have existing data of your business.

1. Identify the turns – Analyze how fast your product sells as this will help you calculate the cost of storage.
2. Identify the demand for sales velocity – Get to know how many products are sold per turn.
3. Calculate the ordering cost -The ordering cost is the fee that covers the process of ordering a product and shipping it to FBA. You will incur this cost upon creating a new shipment for FBA.
4. Calculate carrying costs products – Analyze the total cost of storage as well as management costs.
5. Calculate the Economic Order Quantity (EOQ) – This will help you know the right number of products to send to Amazon FBA to balance the ordering and total storage cost.

You should send more products to Amazon if the ordering cost gets higher. A decrease in demand will mean that you have to send fewer products owing to the payment of long-term storage.

Will My Products Be Safe In Amazon Fulfilment Center?

Yes, they will be safe. Amazon safely stores your products until the time of shipping. However, in some cases, your products might be damaged through the fulfillment process. The better side of it is that Amazon is always willing to reimburse you for any damages caused on their side.

Does Amazon Take Liability For Damaged Or Lost Products In FBA Warehouses?

Quite simply, yes! In case your products are damaged or lost in the FBA warehouse. Amazon might either replace the product with a new one or reimburse you for it.

Take into account that this doesn’t apply to returned products.

What Are Amazon Requirements For Product Shelf-life?

The expiration date of products is one of the most sensitive factors you should pay attention to whenever you are shipping to Amazon FBA. A slight mistake or violation in this might have your products confiscated or being fined.

Let me walk you through some more Amazon requirements that you should know about before engaging in this business.

• The format used to print the expiration date must be in MM-DD-YYYY format.
• Only one expiration date is allowed per carton.
• FNSKU must be used on any product that has expiration dates.
• You are only allowed to send products to Amazon FBA if the shelf life exceeds 105 days after being delivered to Amazon.
• The expiration dates must be highlighted preferably in 36-point font or larger. Each of the printing must be on every individual unit.
• If your products happen to expire within 50 days, they shall be confiscated by Amazon.

To avoid such situations, it’s important to know the right number of products send to avoid sending excess or less. Ensure that you send products that will sell before the 50^th day of the expiration date.

How Do I Ship Products To Amazon FBA?

You can ship products to Amazon FBA using the following eleven steps;

1. Sign in to your seller account and proceed to manage inventory.
2. Choose products that you want to ship from your inventory.
3. Select “Action on Selected” and next choose “Send/Replenish Inventory”.
4. Choose your shipping plan.
5. Enter your shipping address.
6. Confirm the type of packaging. Either individual products or case packed.
7. Click “continue to shipping plan”.
8. Choose the product preparation method then prepare and label your products.
9. If you are using labels, set the quantity and print labels.
10. Preview and prepare the shipment.
11. Select the type of shipment. Either small parcel delivery or less than a truckload.

Can I Use FBA Services With Third-Party Stores?

Yes, you can use FBA services with third-party stores. Buyers who purchase from third-party stores such as Shopify, and Etsy can receive products via Amazon.

The shipped products will be packaged in an Amazon-branded box regardless of the site bought from.

Why Does Amazon Label Some Products As ‘Add-on Item’?

To start with, add-on items refer to small products that might have a higher shipping price as compared to their actual price.

That line of reasoning, items can only be purchased if they are sold with other complementary products adding up to $25.

Upon realizing this, Amazon introduced the add-on item program and it’s easy to understand why.

If a customer runs out of a pen, they will purchase more products to have their totals stand at $25.

The weight and price of a product play a major role in determining whether a product should be added to the list.

How Do You Determine Break-even Point For Amazon FBA?

Just like any other business, selling on Amazon is a risk and most people are afraid to fail. This is due to the high costs and therefore every business owner strives to balance the costs with the sales. By so doing they can make profits.

Break-even Point in Units = Fixed Cost Over Sales Price per unit Minus Variable Cost.

Additional, calculate the total business costs of the following;

• Fixed Cost – Such costs include salaries, property tax, warehousing, Amazon fees, software, and lease. Let’s take for example $80,000 per year.
• Price per unit -This is the cost of a single product. We can use $20.00 for our example.
• Variable cost – Variable costs are dependent on the volume of sales. They include Amazon fee, Manufacturing, Amazon percentage, and shipping. We can set this at $13.00

Break-Even Point = $80,000 Over $20.00 Minus $13.00 = $3987

Ensure that you calculate the total costs to avoid losing money.

What Are The Tips And Tricks For Maximizing Amazon FBA Sales?

Some of the tips and tricks for maximizing Amazon FBA sales are not limited to;

• Optimizing your product page with SEO makes it easier for buyers to find your product. Use the right keywords in your product title to boost your SEO.
• Make use of influencer marketing strategies.
• Select products that go wide with keywords
• Create an email list or use social media to sell your existing audience.
• Register your brand to avoid issues with someone selling counterfeit products under your brand name.
• Have outstanding product images.
• Stand out from the competition. Seek to find out a gap that most sellers haven’t exploited and take maximum advantage of the opportunity.
• Strive to get customer reviews and feedback. Studies show that most customers check the product reviews before deciding on whether to make a purchase.

What Is Amazon Algorithm And How Does It work?

Amazon algorithm refers to the criteria used to rank products on Amazon to help consumers with their product search.

The algorithm ensures that the customer is provided relevant results by ranking sellers and their products on the site.

The reason why this is a prime key to any business. It determines whether or not your product will be visible to customers on the product page.

This goes a long way in determining how fast your products move as well as the overall profits and success of the business.

Interestingly, Amazon algorithms keep on changing and this might be challenging to keep up with.

Let’s take for instance Amazon A9 algorithm.

This algorithm ranked items based on profits. With the introduction of the A10 algorithm, the main factor is displaying to customers the most accurate results without considering profits.

Paying closer attention to the updates is quite important if you want to be at the top of the game.

What

If you have any question about first sale valuation, you will find the answer right here.

Whether you want to know what it is, role it plays or how to go about all aspects about first sale valuation – you will find them right here.

Keep reading to learn more.

What Is First Sale Meaning?

First sale valuation refers to a program that is aimed at reducing duty for specified products from a particular country. The duty reduction is what has been agreed between the two countries.

The main purpose of first sale valuation is basically to save costs associated with dutiable value of products.

Dutiable value refers to value incurred and capped from the first transaction between broker and manufacturer of a particular product.

It eliminates costs associated with utilization of middlemen.

What Is First Sale Valuation In Shipping?

An item that is being imported may be subject to several transactions, with each transaction adding to the final price paid. Because duties and tariffs depend on the value of goods being imported, the duties and tariffs due by the importer may increase.

First sale valuation is used in the determination of the real value of the goods being imported.

It enables importers under given conditions to base the valuation of a product entering the country on the first sale in several transactions.

A valuation can also be made on the last transaction. The purchase price between a buyer and the factory determines the dutiable value of a first transaction.

This is considered rather than using the price between the importer and vendor. Due to this, duties are not imposed on the vendors’ markup or any additional charges from consequent sales.

To take advantage of this, the following procedure must be met:

• To take advantage of first sale valuation, ensure that the export goods are destined to the given country. This should occur at the time the first sale is completed.
• Ensure that the bona fide sales are at a minimum of two before the importer’s purchase.
• The parties which are involved must be unrelated or rather the transactions conducted apart.

Is First Sale Legal?

Yes, first sale is legal although many importers are hesitant to do so despite it bringing forth a cost-saving advantage.

Some importers suffer by having a false perception that first sale means cooking books as it requires making two invoices.

One of the invoices has the total costs the importer has paid to the middleman. The other with the first sale cost for customs valuation at the border.

Despite this seeming shady, the first sale was established in Trade Agreements Acts in 1979. It has been observed by several legal decisions and guidance customs for a very long time.

Historically, importers used to seek approval to use first sale bypassing the Customs Service Office of Regulations and Rulings (OR & R).

This process was very long and could take about one to two years to complete.

Nowadays, customs permit importers to use reasonable care to self-certify. Alternatively, they may also pass through the port of entry or via the Customs Centers of Excellent and Expertise (CEEs).

Despite it not being mandatory for customs to approve the first sale, it may assist in making audits smoother.

How Does First Sale Valuation In A 3-Tiered Transaction Work?

Value of the goods purchased normally determines the duty to be paid. This is a phenomenon seen when goods are imported into any given country.

In a 3-tiered transaction, the manufacturer sells to a middleman. The middleman includes his/her charges then forwards or sells the shipments to the importer.

The importer is disadvantaged because they will pay duty based on price forwarded by the middleman on the second sale. The higher price margins constitute the profit margin of the middleman.

What Are The Benefits Of First Sale Valuation To Importers?

Some of the benefits of the first sale to importers include:

• Reduction of customs duties on all transactions from a vendor who has implemented the first sale.
• This leads to increased profits and the goods are offered at more competitive rates.
• Ensures there are no paying duties on certain incidental costs and indirect costs.

Who Is Eligible For The First Sale?

Importers using a multi-tiered transactions are the ones eligible for the first sale. The goods eligible for first sale valuations should be the first to be brought in the country.

Is The First Sale Rule Applicable To All Commodities?

Initially, first sale rule was used primarily in industries like uniforms and sportswear with particularly extensive FOB volumes and elevated duty rates.

With the recent trade agreements between different countries, companies are being impacted when it comes to duty free status.

This is because many of the countries have reintroduced duties on merchandise.

How Do I Implement The First Sale Within My Business?

For your business to be eligible, it must meet the first requirements as put in place by customs.

It is important to establish internal procedures and controls to ensure that the entire process stands up to scrutiny from customs.

First sale program which is well documented will make audits easy and provide clear manual backup expressing that products meet the requirements.

Where there is transparency and close supply chain relationships, importer will be able to trust factories are establishing first sale value.

It is important to carry out regular assessments to make sure that the requirements for the first sale are continuously met.

What Are The Requirements For First Sale Valuation?

The requirements for first sale valuation include:

• Should be Bona fide; intermediary’s transaction between them and manufacturer should be a bona fide sale and be complete with transfer of title.
• Should be enroute for export in the relevant country at the first sale period. For example, products are specially labeled or designed based on the standards of the relevant country.
• The transaction should be at “arm’s length” or be free of non-market influences. The manufacturer and the intermediary should not be related or if related, the transactions should be conducted at “arm’s length”.
• All the dutiable cost should be declared.

Which Factors Indicate Whether A Bona Fide Sale Has Occurred In A First Sale Valuation?

The reason why transaction constituting goods do not make up bona fide sales is that the goods are subjected to a sale.

These goods are usually shipped on consignment making it hard or impossible for them to be appraised based on their transaction value.

For goods’ transactional value to be appraised, it is important to ensure that they are not shipped into a country as consignment.

Goods that are imported are also not categorized as bona fide sales in the following cases:

• If the goods are promotional items and are to be issued for free.
• Gifts
• Samples
• Items indicated to be leased while in real sense were loaned out.

Some of the factors which determine whether a bona fide sale has occurred in the first sale valuation include documentary evidence like:

• Distributions
• Company brochures or reports
• Purchase orders
• Invoices
• Bills of lading
• Correspondence between the parties
• Proof of payment

Are Incoterms Of Significance In First Sale Valuation?

In scenarios where there is no other pertinent evidence, customs may determine whether a bona fide sale observed the terms of sale. This will show whether there was a transfer of the title and loss of risk.

In the absence of this, the sales term may be looked as part of the perspective of the whole situation. This is established together with the evidence gathered in totality.

The customs will primarily consider taking control of the sale terms given on the written contracts, invoices, and merchandise sales.

This means that all incoterms will follow the “Uniform Commercial Code” and “Incoterms 2020”.

However, this may only be exempted if the parties involved show via contracts, agreements, or course of dealing.

An important factor to be considered is showing that meanings to the terms have been utilized differently.

During A Multi-Tiered Transaction, At What Point Is It Clear That Goods Are Destined For Import Into The Respective Country?

Determining the point at which it is clear goods are destined for import in multi-tiered transaction may be made on an itemized basis.

Customs will put in mind that the goods are destined to be an import of a given country once evidence is available.

The evidence tends to prove that from the time the middlemen purchased the imported goods, the only possible destination was the respective country.

These goods should from the beginning possess the following specifications of the respective country:

• Conform to the relenant country’s design specifications for example material, models, and colors.
• Possess the relevant country’s labels, stock numbers, logos, and barcodes.
• Should be destined strictly to a particular country with no room for diversion.

Which Documents Are Required To Support A First Sale Claim?

Some of the documents required to support the first sale claim include:

• Purchase order from importer to vendor
• Purchase order from a vendor to factory
• Invoice from the factory to the vendor
• Payment from the importer to the vendor
• Payment from the vendor to the factory
• Contracts between the parties involved
• Any other additional documents that could support a first sale claim

When Is A Sale Considered To Have Been Conducted At “Arm’s Length” In First Sale Valuation?

While there may be approval of the first sale for related parties, customs may demand evidence that cost is a Bonafede arms-length transaction.

This tends to be a bit challenging more so if the parties are related to one another.

In this case, a sale would be viewed reachable.

The interaction between seller and the buyer should not have influenced the payable price or the price paid.

What Is Tariff And HS Classification And Why Does It Matter In A First Sale Valuation?

Tariff and HS classification are international systems used to classify imported or exported goods. They exist for all products which are involved in global trade

The classification is based on an international classification system.

It makes it possible for communication between customs departments and different countries.

Having the appropriate tariff classification codes on goods ensures your trade practices are compliant and saves a lot of money.

Very many countries around the world use 10-digit HS codes for classification and reporting imported goods.

Tariff and HS classification help to determine the number of duties required on every imported item. This helps ensure that you are not paying a lot of duty than you need to or eliminating heavy fines for non-compliance.

Is There A Difference Between First Sale Valuation And Duty Drawback?

First sale valuation is a legal route to cut down duty liability.

This is because goods value is declared by importer based on the first sale of a multi-tier transaction, thus lowering their duty exposure.

The importer is allowed to elect value declaration in the relevant country’s customs using the lowest of the many bona fide sales.

The chosen value may then serve as the basis of duty appraisal.

This applies so long as each of the sales is properly documented and ascertained as bona fide.

In first sale valuation, a lower declared transaction value translates into lower duties and fees imposed by the government.

Conversely, duty drawback refers to a refund of paid duties that amount to about 90 percent on imported goods into a country.

The owner of the drawback may either be a manufacturer, importer, or exporter.

What matters is that the claimant of the drawback has filed the relevant documentations for the drawback. The refund may be a reduction or waiver in part or whole of the customs duty which is assessed.

Assessment and collection of these duties occurs after the importation of the relevant materials. The main purpose of duty drawback is to encourage the relevant country’s manufacturing as well as export sales from foreigners.

The main types of duty drawback include:

• Manufacturing substitution drawback.
• Unused merchandise direct identification drawback.
• Unused merchandise substitution drawback.
• Manufacturing direct identification drawback.

What Are The Risks Of Incorrectly Implementing First Sale Programs?

Because of the large potential savings and related compliance risk, the implementation of first sale programs needs careful and experienced planning.

This is to make sure all legal requirements are met fully.

A first sale program that is implemented incorrectly may lead to several risks.

These may include massive duty exposures which are escalated by civil penalties, potential interests, and legal defense costs.

Implementation of a successful first sale program is determined by conducting rigorous auditing procedures.

What Are The Best Practice Tips For First Sale Program Management?

Some of the best practices for first program management include:

• It is important for importers to develop long term relationships with vendors. This is especially if they are planning to do with them long term business engagements.
• Custom compliance requires high levels of confidentially making it ideal for long term relationships between vendors and importers.
• Partner with your customs broker in implementing a first sales process in your company.
• You should consult with a specialist concerning the first sale such as a trusted Customs Attorney.
• Automate workflows to reduce the amount of manual effort to maintain compliance with the first sale.
• Make sure there is an internal escalation process should there be changes in business arrangements with your vendor or factory. This will ensure that you meet the requirements of the first sale program.
• It is critical to ensure that the first sale transaction is developed carefully. This may be done through careful planning and coordination with suppliers.

What Is Global Trade Management Software?

It is software that assists companies in the management of their trade operations throughout the world.

GTM is mostly used by exporters and importers to enhance collaboration with trade partners and in the management of trade operations.

How Does GTM Software Help With First Sale Program Management?

The right organizational structure in place assists to assess, implement, manage, and maintain a first sale program.

This can therefore be achieved by the digitization of records using cutting-edge global trade management software (GTM).

GTM software helps in the automation of first sale invoices using customization functions that enable companies to create and send invoices.

This is done automatically by turning it on and off for different vendors as not all factories qualify for the first sale.

Flexible GTM eliminates the need for keeping a second separate set of invoices displaying the value of the first sale.

This is because the vendor still requires to be paid the full amount.

GTM software also simplifies the following processes:

• Implementation of the first sale rule needs collaboration with your supply chain.
• Enables importers, middlemen, and manufacturers in communicating about specifically required information and to meet the first sale rule.
• Helps in mitigation of compliance risk.
• Reduction of costs of imported merchandise, increasing profits, and improvement of vendor relationships as they work more closely.
• Simplifies serious self-assessment and continual follow-up.

What Are The Common Barriers To First Sale?

Some of the common barriers for the first sale include:

• The first sale entails a lot of costs in setting it up including establishing the required documentation and certifying suppliers.
• In case your savings are small first sale may be cost-prohibitive. This is because it requires a manual component to maintain a first sale compliance program.
• There is a reluctance to reveal sensitive sourcing information.

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I know you are wondering what foreign trade zone (FTZ) is.

Or, you would like to know what happens in the foreign trade zone.

If that is the case, then read this guide.

Let’s dive right in:

What Is Foreign Trade Zone?

This is a geographical area near or inside United States entry port.

It is where domestic and local goods receive special customs treatment.

The areas are under U.S Customs Border Protection (CBP) under the federal government.

Commercial merchandise in FTZ are exempted from taxes, tariffs re-export payments, etc. to encourage American business to engage in global business.

Even though FTZ are generally outside the U.S. customs territory, they are still on the U.S soil. Therefore, all activities and merchandise within the FTZs are under federal, state and local government.

What Is The purpose Of AForeign Trade Zone?

The main reason for foreign trade zones is to create an enabling environment for U.S. based business to trade globally fairly.

Reducing the tax burden on the FTZ activities and goods allowed foreign producers to compete with producer in the U.S.

Is Foreign Trade Zone The Same As Free Trade Zone?

Foreign trade zones are areas within United States where goods can land, modified, repackaged, relabeled, manufactured and re-exported without customs regulations

Free trade zones are similar to FTZ in operations except for manufacturing on some but are not within U.S.

When you need to manufacture goods and re-export then foreign trade zone would be the way to go.

For repackaging or relabeling of merchandise, then free trade zones be the best choice.

In both cases, customs duties and taxes do not apply within the zone but would be applicable once they exit zones.

What Are Foreign Trade Zone Benefits?

Some of the benefits associated with foreign trade zones include:

• Exemptions from duties, value-added taxes, tariffs and re-export duties.
• Imports into the FTZ enjoy deferred duties and federal excise taxes.
• Manufacturers can enjoy inverted tariffs on goods whose finished product has lower tariffs than its individual parts.
  This occurs when the manufacturers import the component parts into the FTZ.
  Additionally, they can introduce the finished product at its applicable tariff upon exiting FTZ subject to authorization.
• Since FTZ have special customs procedures, the process is streamlined end-to-end making it faster and efficient.
  Instead of filing every entry, businesses can file weekly entries to and save on costs.
• It saves business money due to reduced cost of operations.
• Time is saved on goods at the port since they are not subject to customs inspections thus receive priority pier-side treatment.
• Business within FTZ are under federal, state and local laws and must meet the requirements before admission.
  This improves company compliance.
• Job creation
• Promote local and state development initiatives
• Goods can stay in FTZ for a long time since they are not taxed or subject to duty.

Where Are Foreign Trade Zones Located?

Foreign trade zones are enclosed sites located within or adjacent to U.S. entry ports in the U.S. soil.

Who Regulates FTZ Operations?

The U.S. CBP operates and supervises the foreign trade zones.

Normally, it is under the jurisdiction of the federal, state and local government agencies.

A FTZ site is under the governance of the location port director who represents the local authority in the FTZ Board.

The port director’s duty is to oversee day-to-day site activities and enforce customs related regulations relevant to FTZ.

The customs officials conduct regular visits to the FTZ sites to verify the activities and share in the Annual Customs Review.

Foreign trade zones must comply with the security requirements of the U.S. customs border protection.

What Are The Two Types Of Foreign Trade Zones?

There are two types of foreign trade zone namely general-purpose zones and special purpose subzones.

General Purpose Zones

This category of FTZ serves multiple clients (companies) at the same time and usually offers warehouse services only.

It is can be located at the entry port or in industrial parks.

General purpose FTZ are public and utilized by small companies that need to benefit from the FTZ but do not own one.

These clients can hire the services on a third party logistics (3PL) to optimize their processes while saving on cost.

General-purpose zones can also apply the Alternative Site Framework (ASF), which extends the FTZ outside their zones fasters.

Provided the company is customs compliant, it can apply the FTZ advantages virtually.

Special Purpose Subzones

Unlike general-purpose zones, a single company for specific need such as distribution or manufacturing utilizes special purpose subzones.

They occupy large spaces such as large acres of land designated for manufacturing plant only.

How Do You Set Up A Foreign Trade Zone?

Setting up foreign trade zone is not a walk in the park as it is a lengthy process and capital intensive.

One must do a thorough cost-benefit analysis before deciding to set up on by following the below steps:

1. Submit an online application to the foreign trade zone board stating why you need a new FTZ.
2. Specify the type of FTZ that you are pursuing, either general or special purpose zones.
3. Make the necessary payments as directed by the authorizing officer.
4. Request for zone activation from the U.S. Customs Boarder Protection before stating operations in the FTZ.

What Are The Considerations When Pursuing A Foreign Trade Zone Status?

Companies pursue foreign trade zone status in order to enjoy the benefits that come with them.

However, the cost of putting up a new FTZ is not cheap coupled with a long thorough application process.

You should therefore consider the following factors before pursuing a FTZ status;

Relevance Of FTZ Choice For Your Company

Most companies set up FTZ zones in order to enjoy the duty free and tax free importation into the zones.

This is beneficial as it allows them to compete with other alternatives products fairly in the market.

Certain goods such as steel and aluminum have to pay customs related duties and taxes even in FTZ.

Subsequently, there are other costs associated with putting up a FTZ such as security, system fee, legal, CBP compliance record maintenance, etc.

These costs when calculated may outdo the need of having your ow FTZ.

Therefore, you must consider doing cost analysis against benefits before going the FTZ route.

Tax Implications

While FTZ businesses enjoy tax exemptions and tariff free environment, not all are applicable everywhere.

There is federal related and state related tax benefit and they operate independently.

Federal tariffs include delayed duty payment.

Inverse tariffs, duty exemption on re-exported goods.

This ensures increased cash flows to the businesses and is controlled by federal government.

State tax benefits like reduced property tax vary from one state to another.

You need to understand how various state laws operate before venturing into FTZ status.

In some states, local tax bodies must authorize applicant’s use of FTZ, water district, fire district, etc. This process can be tedious and long where various tax bodies are involved.

Type Of Foreign Trade Zone

There are two kinds of FTZ sites a company can pursue.

They include; general purpose and special purpose subzones.

General-purpose zones are multiple use public FTZ that can accommodate several clients at any given time.

Special purpose subzones are single use sites that are designated for a special need outside the general-purpose zones.

Beside these two, there is also Alternative Site Framework which can either be a magnet site or usage-driven site.

Magnate sites are used by different clients who perform different independent activities and usage-driven is a single use site.

A single-driven user can operate within or outside the site.

ASF are used by applicants as they await their FTZ status approval process which takes a long time. Usage-drive sites are mostly preferred because of their short approval time of 30 days and its allocation is unlimited.

Usage-driven sites can be self-operated because they involve single user.

Conversely, magnate site allocation is limited to six sites only and it requires FTZ compliance commitment by companies.

For instance, magnet site automatically loses its FTZ status after five years on non-usage.

Secondly, it requires its operator which is highly unlikely due to many different users forcing a third party operator services.

Knowing which type of FTZ best suits your needs is key before making the decision.

Proper Paperwork

Paperwork must be accurate to make the process smooth all through.

This is because you need approval and activation of the FTZ before it becomes operational.

FTZ site can be approved but not activated meaning you are not eligible for tax or tariffs benefits that come with it.

Magnet sites can remain inactive for up to five years while usage-driven for three years, beyond which approval lapses.

Activation of FTZ is made through Customs Border Protection who are in charge of activation process. This must be accompanied by satisfactory reason for wanting a FTZ status and patience for the long winding paper work involved.

Activation process may take up to 15 months before a site is activated, is investment intensive and requires compliance commitment.

Businesses that wish to acquire FTZ status must carry out proper research before venturing into the process.

They risk losing time, resources and money if their application is denied after a long wait.

Who Can Use FTZ?

Small or large companies for various needs including manufacturing, distributions, packaging, assembly, exporter/importers, etc. can use Foreign Trade Zones.

It is important to perform cost-benefits analysis in order to ascertain if the FTZ will be right for you.

The type of product and volume also play a significant role when opting to use FTZ.

Some of the industries that use FTZ include:

• Automobile manufacturers who import different car parts and assemble them in FTZ site before exporting a finished car.
• Garments and textile distributors can use FTZ sites as their distribution sites.
  Therefore, they can ship-in in bulk and redistribute gradually for longer hence optimizing on consolidated shipment and duty benefits.
• Other industries that use FTZ include, oil refineries, footwear, pharmaceuticals, electronics, consumer products, etc.
• Companies using bonded warehouse or temporary importation bond may consider FTZ to reduce paperwork, save cost, increase flexibility and efficiency.

How Do I Know The Potential Savings To My Business If I implement FTZ?

Businesses incur costs from taxes, customs duties, customs fees and other related charges.

Foreign trade zones offer exemptions to such costs provided the company meets CBP compliance and is activated.

In order to enjoy such benefits a company must operate from an activated FTZ and acquiring one comes at a cost.

The costs include; application process, approval and activation fee, CBP fee, personal training cost, etc.

Analyzing the cost difference between the two will give you an estimate of the amount you are likely to save.

What Can You Put In A Foreign Trade Zone?

Only goods that are allowed entry into the U.S. can be allowed admission into a foreign trade zone.

This is because; they are still under the law of local, state or federal laws even in the FTZ sites.

The FTZ Board approves the activities that go on in a zone such as manufacturing, distribution, processing, repackaging, except retail trade.

Documentation like import permit and license may be needed to admit merchandise into the zones.

Admission of merchandise into FTZ may be restricted by government agencies if they feel that the site is inadequate.

Similarly, they may prohibit goods on public health and safety grounds, or handling capabilities.

They may also restrict the zone’s activity performed on particular products since they control and oversee FTZ operations.

What Types Of Activities Are permitted In FTZ Zone?

Foreign Trade Zones activities and goods are controlled by the FTZ Board.

The zones are considered outside U.S. CBP but under the jurisdiction of the local, state or federal governance.

Activities permitted in FTZ include; storing, manufacturing, mixing, processing, exhibition, repair, salvage, assembly, relabeling, repackaging, sampling, testing and manipulation of products.

Retail trade is not allowed in Foreign Trade Zones.

The FTZ Board may restrict an activity in a zone if they determine that the site cannot handle the activity it.

Restriction may also be imposed on goods that are considered harmful to the public.

How Does FTZ Work In International Trade?

Foreign Trade Zones were established in 1934 during the Great Depression Era as a way of encouraging commerce in the U.S.

They are a special area within the U.S. that are considered non-CBP territory.

FTZ allow businesses to process, manufacture, repackage and re-export merchandise without paying the normal duties when brining in merchandise into FTZ.

An equivalent of FTZ outside of U.S. is Free Trade Zone and they offer the same benefits and much more.

Many countries have embraced the free trade zones to promote international trade and enjoy the economic benefits that come with them.

For instance, fifty-four African nations signed the African Continental Free Trade Agreement in 2019 to free themselves from intra-Africa tariffs.

This made them compete favorably with other global manufacturing hubs such as Asia.

In U.S., the FTZ zones offer the American businesses same competitive advantage by allowing re-export of finished products at inverted duties.

As a result, there has been an increase in FTZ companies in the U.S. and more employment opportunities.

Besides, FTZ operated businesses can access “foreign status” commodities such as petroleum and oil, consumers, electronics and vehicles at competitive price.

What Is The Difference Between Foreign Trade Zone And Bonded Warehouse?

Foreign Trade Zone is enclosed locations near or within entry ports in U.S. that are outside the Customs Border Protection territory.

The goods brought into FTZ are not subject to customs procedures and tariffs.

Bonded Warehouses are secure government storage facilities for dutiable goods before actual duty payment.

Duty is once goods are moved from the bonded warehouse and are subjected to the normal customs processes.

A Foreign Trade Zone offers unlimited duty deferral period while a Bonded Warehouse offers a five-year duty deferral period.

Goods in bonded warehouses are for storage or distribution only while in FTZ goods, can be manufactured, distributed, stored, manipulated etc.

Customs filing is done when goods exit FTZ while upon entry in bonded warehouses.

FTZ admit both domestic and foreign merchandise, bonded warehouses only permit foreign cargo.

Movement of goods is relatively unrestricted in and out of FTZ while in bonded warehouse, movement of goods is limited.

Why Do Businesses Use FTZs?

There are various reasons as to why companies opt for FTZ sites rather than normal operations. some of the reasons include:

Weekly Entry Procedures

This was implemented in 2000 by the U.S. President Clinton under the Trade and Development Act of 2000.

It allowed FTZ users to file one customs entry per week as opposed to filing one customs entry per shipment.

Companies used to spend between USD 25 to 485 merchandise procession fee for every entry regardless of the duty cost.

This led to increased operational cost to businesses thus making it expensive to operate.

Weekly entry processes lessened the number of customs entries, significantly reducing the cost on business owners.

Duty Deferral On Imports

Duty is deferred on goods within the FTZ and is only applied when they leave the zones.

This increases cash flow for businesses operating within FTZ.

• Duty is eliminated on scrap and yield loss within FTZ, merchandise sold to U.S. military or NASA.
• Ad Valorem tax relief on products stored in foreign trade zones.
• Duty exemption on defective parts that need to be returned to country of origin.

What Is FTZ Identifier?

This is a unique label that is used to trace the Foreign Trade Zone that goods originated from.

It is for accountability purposes.

Goods that are no longer in FTZ export list should have their identifier reported to relevant agencies.

What Are The Challenges Of Using A Foreign Trade Zone?

Challenges associated with Foreign Trade Zones can be associated with the type of FTZ.

Compliance and paperwork is one of the challenges that applicants face when pursuing FTZ status.

Another challenge is that the process can take up to a year to get an approval from the board.

This delay may be costly to the company in times of resources and costs.

General purpose FTZ are hard to manage due to different clientele needs at the same time using same resources.

This is easier for special FTZ subzones since it is one client for a particular operation.

One of the requirements for FTZ is software integration into to the CBP system for oversight purposes. This still is a challenge to implement in a timely manner.

First time companies are likely to face serious delays due to frequent flagging by CBP for inspection purposes.

This can lead to major stock shortage if the company did not plan well.

What Is A Foreign Trade Zone Manual?

Foreign Trade Zone manual is a guiding document that stakeholders can use to get information on FTZ.

It is however not a binding document unless incorporated into a contract.

How Does Foreign Trade Zone Promote International Trade?

Some of the ways that FTZ promote international trade include:

• Allow favorable global competition between U.S, manufacturers and foreign companies.
• Promote exports business.
• Create employment for locals and foreigners.
• Encourage domestic business.

How Does Foreign Trade Zone Program Compare With Other Customs Tariff-Reduction Programs Such As Duty Drawback?

In FTZ program no duty is paid for imported merchandise meant for FTZ.

In duty draw-back a refund is paid in whole or part on imports whose duty were paid when coming into U.S.

What Are Foreign Trade Zone Regulations?

There are two key regulations that provide guidance on the administration and operation of FTZ.

• Customs Federal Regulation (CFR) Section 19 Part 146
• CFT Part Section 15 Part 400

These two regulations provide a guide on how FTZ work and how businesses stand to benefit from them.

They are complex therefore, businesses should have a basic understanding of these regulations before they venture into FTZ.

What Is The Cost Of Using A Foreign Trade Zone?

The cost of using a FTZ site by companies vary as per their operations and merchandise and many other factors.

There are standard requirements such as security, administrative fee, activation fees, operation costs which apply across the different FTZ types.

These costs can be determined by carrying out a cost-benefit analysis before pursuing a FTZ status acquisition process.

How Do You Transfer Merchandise From A Foreign Trade Zone?

Transfer of merchandise from FTZ can be for consumption in the U.S market under the following categories;

Privilege Foreign Zone Status

Here, importers apply to lock duty and tax rate at the time of import of merchandise to avoid paying current rates.

The reason behind this is that the rates keep fluctuating and are likely to be hire for the manufactured or processed product.

Non-privilege Foreign Status

Unlike privileged foreign status, there is no locking of duty or tax rate at the time of import.

Business pay for merchandise duty at the time the goods leave FTZ.

Domestic Status

Goods can acquire ‘domestic status’ when;

1. They are grown or manufactured within U.S. and have their taxes updated
2. They are imported into U.S. and have paid all the necessary duty upon entry or
3. Goods that were allowed into FTZ without duty.

Domestic status merchandise can be moved out of FTZ without CBP permit provided it has not mixed with other status.

Zone Restricted Status

The FTZ user must apply for ‘zone restricted status’ at the beginning of the process for merchandise meant for export or destruction.

Such goods cannot be moved to U.S. CBP territory unless authorized by FTZ Board.

What Paperwork Will I Need For FTZ Activities?

Paperwork is compulsory when operating in FTZ to verify the activities going on in the site. Some of the paperwork needed include:

• Commercial invoice
• Bill of lading
• Packing list
• Harmonized tariff codes (HS) for every item
• Import permit and license
• Arrival notification

U.S. CBP oversee the FTZ and may restrict activity if they verify that the user in non-compliant.

Do I Need Customs Broker When Admitting Goods Into A Foreign Trade Zone?

Foreign Trade Zones are considered non-CBP areas therefore, customs procedures are not necessary to admit goods into FTZ.

When these merchandise leave FTZ for export, still customs roles do not apply.

Customs brokers can be beneficial when introducing the goods in U.S. market place for consumption then custom entry process is required.

What Are The Recent Trends And Future Of FTZs?

There has been a rise in the number of FTZ sites in the U.S. particularly in Nebraska.

Two subzones have been opened in the past five years with several more inquiries from companies.

They continued growth will help open up many countries’ free trade zones for international trade.

In Africa, fifty-four countries signed an agreement that will liberate them from intra-Africa tariffs thus making them compete globally against other trade hubs.

U.S. and European union are in talks that could see a Trans-Atlantic free trade agreement signed.

This will open up the two continents for international trade.

In 2007, Alibaba founder Jack Ma opened a digital free trade zone (DFTZ) in Malaysia to promote Asia e-commerce growth.

This platform allows small traders to enjoy same benefits as large companies operating in FTZ sites.

Overall, there is an increased uptake of the FTZ both in developed and in developing countries.

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