How to import anything from any country.

The import-export industry has always had this aura of mystery around it. Trade secrets were everything, and costs saved in the supply chain were an importers primary competitive advantage. Those who know how to import goods cheaply, quickly and predictably can make lots of money arbitraging prices overseas with those here in the U.S.

We want to help shine some light on the subject of importing goods into the U.S.   The Internet is bringing down some of the last barriers to entry in the import-export industry, and we hope to play a part in their final destruction with CustomsHQ.com, a web application that makes it simple for anybody to import goods from overseas.

The first daunting challenge in importing is finding the products themselves. The most popular sites for this are www.alibaba.com and www.globalsources.com. Sadly those B2B marketplaces are pay-to-play only, meaning all the listings you see are actually paid advertisements.

I’ve been to several fake factories in China that I found on Alibaba.com, where a handful of workers were brought in to pretend to work on assembling the products. In some cases they wouldn’t have any working tools or benches, with everybody working on the floor. In one case, a factory purporting to make ATV trailers didn’t even have a working bathroom. Not even an outhouse, just a small hole in the ground outside the factory surrounded on three sides by cinder block walls.

Obviously with conditions like these, its important to visit your factories whenever possible. It can be quite amazing the kinds of conditions you’ll find; and the fact is that suppliers who care about their employees are also going to care more about their customers. The biggest trade fair in the world is the Canton Fair, held twice per year in Guangzhou, China. A great web site for finding trade shows specific to your industry is Events Eye.

If you don’t have time or can’t afford the trip to China, you should consider signing up for an account with ImportGenius.com. Import Genius uses shipping manifests to show you exactly who any overseas supplier sells to here in the U.S.   If you’re in the clothing business,  you can source directly from the same people as Lulu Lemon and Patagonia. Knowing that you buy from the same suppliers as world class brands with a reputation for respect for human rights and the environment can save you a trip to China.  You’ll also be able to sleep better. Check out some of their videos; you’ll be impressed.

Once you’ve picked a supplier and negotiated terms, you’ll need to arrange the payment. Typically the supplier will require either a 30% deposit by international wire transfer (which runs $25-40 bucks at most banks), or a letter of credit from a reputable U.S. Bank. If you go with the deposit, you pay the remaining balance once the goods are passed into the possession of the freight company, who will serve as the middleman to guarantee the transaction.

When you purchase a letter of credit from your bank, you are essentially putting the cash into escrow, which the bank will hold until the goods have been delivered to your possession. The supplier can usually take that letter of credit to their own bank locally to use as collateral for trade financing.

Personally I’ve never liked letters of credit because they cost money and add an extra layer of bureaucracy. If I’m working with a supplier, I trust them enough to hold my 30%. There’s a lot more at stake on each shipment you import than just 30%. Your brand reputation is on the line with every item you sell.

So after finding the supplier and making payment, there will probably be a delay of a few weeks while the goods are made. In the meantime, you’ll need to find an air carrier to deliver the goods. I never mess around with FedEx or UPS, as they’ll likely be too expensive. Instead look at companies like BAX Global, DSV Freight, or even the national airlines  there. TACA is the big one in El Salvador and other parts of Central America, but I’m not sure about Nicaragua.

You also might want to purchase freight insurance. This will protect you in the event something awful happens like this:

Next you’ll need a U.S. Customs Broker. CustomsHQ.com hasn’t launched our brokerage yet– still waiting for our license approval (we’re a new company founded by an experienced broker and three career importers). Check out US Customs’ list of brokers for each of the US ports in the official list of customs brokers. Call around to see which one will clear the shipment for you the cheapest.

If you find this post useful, please share the rate quotes you get from the different brokers in the comments below.

Once you’ve settled on a customs broker, they will help you classify the goods according to the harmonized tariff schedule, which will then determine the duty rate. Be sure to check to see if your goods qualify for duty-free under one of our Free Trade Agreements. Your broker can check this quickly right on the HS schedule.

Next, you’ll need to pull together your documents. This is the shortlist:

Commercial Invoice – provided by supplier
Packing List – provided by air carrier
Air Waybill – provided by air carrier
Arrival Notice – provided by air carrier

There are many other documents that may be required, depending on the type of goods you’re importing (e.g. fumigation certificate for wood products, certificate of origin for NAFTA countries). But in most cases, with these four documents, along with the proper classification in hand, your customs broker can clear your shipment through customs.

Alternatively, you can actually file the necessary customs forms yourself to save the money on a broker. If it’s your first time importing, I would advise getting some expert advise classifying the goods. But after that, by all means, you should consider saving money and clearing your shipments yourself. Any importer is legally allowed to clear goods for their own account without a broker.

If you have any questions about the process, or would like help finding cheap transportation and customs brokerage solutions, please contact us today.