Ways to Simplify Trade Compliance

To effectively manage your supply chain, it is important to understand trade compliance regulations. Whether a big conglomerate or a small business, they are all subject to several export trade regulations. Violating these regulations can lead to substantial penalties.

What is Trade Compliance?

Trade compliance is the country's laws, rules, regulations, and requirements that a company must follow when importing or exporting products.  

Violations of the Export Administration Regulations (EAR) can lead to criminal and administrative penalties. According to the U.S. Department of Commerce's Bureau of Industry and Security (BIS), criminal penalties can include up to 20 years of imprisonment and up to $1 million in fines per violation. While administrative monetary penalties can reach up to $300,000 per violation or twice the value of the transaction.

Who is Involved in an International Shipment?

There are a lot of people involved in shipping cargo internationally but the ones who you should be concerned about include:

The International Shipping Company -

The company that owns the carrier (ship) and the ones with whom you sign the transport contract. They transport the goods from the loading port to the destination port. The shipping will address all your concerns regarding transport, bills, damages, etc.

The Freight Forwarder -

Freight forwarders are authorized agents who, on behalf of the importer or exporter, coordinate with all related parties - port and customs authorities, shipping companies, etc. Freighters negotiate better routes and rates, handle all documentation, organize transportation, and more.    

Customs Broker -

When exporting goods internationally, every country has its own trade rules and regulations, which continually change over time. Keeping track of these changes can be a challenge for the company. A custom house agent can seamlessly help deliver your shipment across international borders.   

Challenges in the Shipping Process

The whole import and export custom regulation process can challenge businesses wanting to transfer goods across borders to different countries. Some of the top trade compliance issues for manufacturers include:

  • Incorrect and incomplete documents
  • Lack of knowledge of exchange rates, licensing requirements, and regulations, restrictions on certain products, etc.
  • Failure to keep track of changing government export controls and sanctions.
  • Failure to find specific freight forwarders, customs house agents, or individuals who are able to ensure smooth shipment.

How to Achieve Simplicity in Trade Compliance?

Businesses already exporting or planning to start need to ensure they comply with export regulations. While trade compliance can be a challenge, simplicity in compliance is achievable. We have compiled important points to check if your company’s freight meets compliance standards.

The following are four ways the right export compliance software solution can help companies  to stay on top of any unwarated situation in short and long term.

  • Get the Right Export Compliance Solution for Trade Clearance

Freight forwarders are challenged with continually changing trade regulations and changing tarrifs. Moreover, violation of export regulations has significant repercussions, including delays in shipments, penalties, and even heavy fines. Simplify your entire global trade management process with trade compliance software that automates routine tasks, gives confidence, and saves time. 

An Export Compliance Software must link solutions such as Denied Party Screening, HTS/Schedule, FTA determination, License determination, etc. It can help you find the right compliance information to be aggregated and centralized, and enhanced to support the requirements of your trade team.  

  • Ensure Faster and Easier Trade Reconciliation with Electronic Broker Feeds 

By automating trade compliance, reconciling brokerage statements and other makes short work of. A compliance software company will have dozens if not hundreds of established electronic feeds that stream a comprehensive list of executed trades for fast, easy matching against what firm employees have entered — or not entered, as the case may be — in the firm’s compliance software system. Be aware: It’s not a given that a compliance software vendor will have set up such broker feeds. It’s expensive to do, and oftentimes, setting them up is not a high priority for the broker-dealer. Ask about this capability before you ink any deal. It’s a client-focused service worth searching out.

  • Ensure Document Compliance

For shipping your products overseas, documentation plays a significant role. Make sure you have all the required documents and it is detailed and thorough. A customs clearing agent will provide a comprehensive list of all the information required for a specific order. But the following are a good place to start:

  • Commercial invoice
  • Packing list
  • Incoterms - A set of internationally recognized rules which specifies who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities.   
  • Bill of lading - A legal document issued by the carrier that shows detail about the cargo - type, quantity and destination  
  • Any import permits or other documentation for government agencies such as the FDA or USDA

  • Choose the Customs Broker Wisely

Find a custom broker who is qualified, understands your business processes and can configure their solution to your needs. He should be listen, and guide you through the process efficiently and service you till the goods are delivered. Customs brokers should have a deeper understanding of compliance regulations. Look out for any discrepancies that the freight company has in the past and been penalized for.

Conclusion

By now, it should be clear how important it is for importers to partner with a qualified customs broker and freight forwarder. If you have questions about customs trade compliance, or ensuring your freight meets customs requirements, get in touch with Shipthis. Our platform encompasses the latest technologies and industry expertise for comprehensive functionality

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