Pre-Shipment Inspection Can Guarantee Delivery of Merchandise You Want
By demanding that pre-shipment inspection be a condition to payment, buyers of imported goods can protect themselves against fraud and poor quality merchandise, says David Rizzo, a global trade management consultant with JPMorgan Chase Vastera.
But what if you are an exporter that deals with hundreds or thousands of business partners around the world? How do you manage the demands of pre-shipment inspection on not only an individual level, but also on a country-by-country level as many nations require the pre-shipment inspection (PSI) of imported goods?
“While it may look like your international order is ready to ship, it actually may not be,” according to Rizzo. “Implementing the proper processes and procedures to address pre-shipment requirements will keep help you keep your supply chain moving and avoid additional customs duties.
“In many countries, PSI is regulated by the importing country and is in place as a method of ensuring that the goods entering a specific country are valued properly, that duty is properly assessed, and that the goods are in good quality. For export to countries with import certification schemes, PSI is a necessary step to receive an import certificate for the shipment. Without this certificate, the shipment will not be able to clear customs in the country of destination.
“For individuals, PSI offers importers the certainty that the goods arriving at their place of destination are in conformity with required specifications. These specifications can be a customer's own requirements or legal demands.”
Rizzo says that the inspection is performed by a private organization and the onus for arranging the inspection relies upon the importer. In most cases, the importer may choose between one of several inspections agencies, although some countries will only sanction one particular company to perform an inspection for that country. In most cases the importer also bears the costs of the inspection. In very rare instances, the costs are covered by the government of the importing country.
The importer will contact the local office of an inspection agency after the opening of an import license and either pay for the inspection up front, or make an installment payment based upon the goods value.
An inspection order will be sent from the agency in the importing country to its counterpart in the country of export. The inspection agency of the exporting country will then contact the exporter to arrange a date, place and time to perform the inspection.
Pre-shipment inspection is comprises a detailed inspection of equipment or materials after manufacture, but prior to shipment. The scope can include quantity and quality, packing and marking, and supervision of loading. Upon a successful inspection, the agency will issue a Clean Report of Findings (CRF) that will confirm the goods value, condition and classification. The CFR can be provided against a Letter of Credit and authorized by a Chamber of Commerce. The goods can now be exported and the importer will use the CRF to effect importation.
Visit http://www.export.gov/logistics/exp_inspections.asp for a list of countries that require PSI.