A recent holiday season for Pure Fix Cycles should have been amazing. But the Burbank, Calif.-based company’s line of Chinese-made, single-speed bicycles kept getting held up at the dock by customs officials.
With shipment after shipment, co-founder Zach Schau says, the two-year-old importer saw its containers held for scanning and hands-on inspection by U.S. Customs and Border Patrol officials. That December, with hundreds of sports retailers eagerly awaiting bicycles, Pure Fix’s entire holiday order of 5,000 bikes was held up in customs for more than two weeks, causing the budding business to miss much of the holiday sales season.
Adding insult to injury, Pure Fix received a bill from CBP for $15,000 to cover its inspection expenses.
“We were growing fast, and we’d always be out of bikes,” says Schau. “And these customs costs were coming out of my and my partners’ pockets. It was crazy.”
Getting goods through customs quickly isn’t always easy for inexperienced small businesses, such as Schau’s. Since 2001, new anti-terrorism rules have made it tougher to get through customs. There’s also increased scrutiny at ports and border crossings from customs officials. Fortunately, with a little research, expert help and careful planning, small businesses can master the customs rules and keep their merchandise moving.
To learn more, check out these five tips to save you time, money and hassle at the border.
1. Produce complete and accurate paperwork. Simple paperwork errors are at the root of many customs delays, says Thomas Torcomian, chief executive officer of shipping firm Leading Edge Logistics in Philadelphia. He says simple mistakes, such as having a different address on the manifest than what’s on the commercial invoice can hold up a shipment five to seven days.
Make sure to accurately and completely describe each item included in the shipment, says Torcomian. Vague descriptions raise suspicions and customs officials take a dim view of undeclared items. Undeclared items might have been what tripped up Pure Fix’s holiday shipment. Schau says its Chinese manufacturer tucked a few small toys into the large shipment as a thank-you without declaring them on the manifest.
2. Have your Import Security Filing ready. This disclosure document is now required at the dock at least 24 hours prior to loading your international cargo on to a vessel. Since loading may take place days before sailing, it’s vital to think ahead, says Edie Tolchin, a customs broker and owner of EGT Global Trading in Hillsborough, N.J. Otherwise, your shipment may miss its sailing and be held up waiting for paperwork to arrive.
3. Know how tariffs will affect your shipment. A binding ruling, an official confirmation of what exactly you’re shipping, must be obtained from U.S. Customs & Border Protection before your shipment arrives at the dock and confirms your product’s classification under the U.S. Harmonized Tariff System, our nation’s complex code for correctly identifying and assessing appropriate tariffs on all goods being shipped cross-border. With this ruling, customs officials are assured this is a product that can legally cross the border, and immediately know what shipping duty to assess.
Finding your correct HTS code can be a challenge. As Tolchin says, “If you have a potholder, is it made of cloth, or a trivet made of wood? Those two items could have different tariffs.” Tolchin’s helpful hint: If your product is commonly shipped by other companies as well, use the Customs Rulings Online Search System database to find a previous customs ruling on the right code for your item. When in doubt, use an experienced customs broker to make sure you have the right code.
4. Get certified. If your product is regulated by the U.S. Consumer Product Safety Commission, a 2008 law requires you to obtain a compliance certificate from that agency confirming that your product meets safety standards. Tolchin notes there are three separate types of certificates you may need, depending on your product. For instance, baby toys require a Children’s Product Certificate.
5. Work with a “known shipper.” One way to reassure customs officials is to encourage your manufacturer to participate in the Transportation Security Administration’s Known Shipper program, says Torcomian. The vendor verifies its identity to TSA, making the company a known quantity when customs officials review its shipments.
This step can be taken further with vendor participation in the Customs-Trade Partnership Against Terrorism. In this more stringent program, manufacturers comply with stiff regulations and submit to U.S. Customs monitoring to ensure their shipments are secure.
6. Ask for help. Given how complex import-export rules have become, you might want to consult an expert. EGT’s Tolchin doesn’t recommend trying to manage customs yourself, even though do-it-yourself tracking software is available. An experienced third-party logistics company or customs broker could be worth the cost. Tolchin says she charges $185 plus shipping costs to classify and shepherd a single product.
Since hiring a shipping expert, Pure Fix Cycles has gotten its Chinese manufacturer certified as a known shipper, invoices are accurate and recent shipments have all passed customs without a hitch. Growing its shipping volume to upward of 20 containers a month probably helped, too, Shaw says.
“I think building a positive track record, making sure we’re accounting for everything we bring in, and just that they’ve never once found anything – it all helped,” says Schau. “We have been smooth sailing for the past eight months.”
Corrections & Amplifications: An earlier version of this article misspelled the last name of the co-founder of Pure Fix Cycles. It is Zach Schau.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.