Logistics Made Simpler- Export Customs Clearance

As a way to build knowledge of basics of Logistics and build logistics managers of tomorrow, we have started with a Did You Know Series, where we would be creating short crisp content around the logistics industry. For the 2nd chapter of this series, let’s get to know a little bit more about the Export Customs Clearance.

Any commercial cargo, be it for export or import, requires Customs Clearance. In simpler terms, this is the process of obtaining permission from governments to ship the cargo in or out of the country by preparing and submitting documents to the Customs Agency which will allow them to calculate the taxes and duties levied on the cargo.

Although the type and number of documents required by the customs agency depends on the type of goods being shipped, regulations of the country of origin and destination and any trade agreement between them, there are some basic, fundamental rules followed by all custom authorities around the world.

If you are preparing to export the goods for the first time, there are a few steps you need to be aware of-

First and foremost, you need to be registered as an exporting business in the custom authority’s system and obtain an export business number.

You will also need to make sure that the items you are planning to export aren’t banned from exporting from the country of origin or banned from importing at the destination country.

Once verified, you will need to obtain certificates of origin, determine export classification codes for the items, obtain export licenses, if required and finally file an export declaration for each shipment.

There is also a range of documents needed to be accompanied with the shipment which include-

· Export Declaration/Shipping Bill- A document submitted to Customs in a prescribed format containing the description of goods, value, name of exporters, name of foreign buyers/importers, and name of transport operators.


· Bill of Lading- issued by the carrier to shipper, acts as a contract between both the parties that includes product information and destination of the goods that is required at the post of destination for customs clearance.


· Customs Packing List- Contains the list of items being shipped which can be used to minimize the risk of exporting the wrong set of goods.


· Certificates of Origin- Certifies the origin country of the goods being shipped


· Insurance documents- stating the insurance policy under which the shipment is covered


· Proforma Invoice- Generated according to the terms and conditions agreed between the exporter and importer, states the intention of the exporter of selling the goods.


· Customs Invoice- Containing the details of the goods such as price, quantity weight, etc that will help the customs authority to determine the customs import value at the destination port, freight insurance, terms of delivery and payment, etc.


· Bill of Sight- A declaration made by the exporter to the customs department that allows the receiver of the goods to inspect the goods before making payment of any duties.


· Letter of Credit- A document by the importers bank stating that the importer will honour the payment to the exporter as per the agreement and once the letter of credit is received by the exporter, only then the goods are dispatched.


· Bill of Exchange- An alternative payment option that allows the importer to make payments on demand or at a fixed negotiable amount in the future.


· Export License- A document required from the shipper before making any shipment for the first time.


· Warehouse Receipt- Generated after the exporter clears all the relevant export duties and freight charges after customs clearance however, this is only required if ICD (Inland Container Depot) is involved.


· Health Certificates- A Certificate stating that the items (if they are food products) are fit for consumption and meet all safety standards set by the government.


Be it a Logistics Manager, anyone who's starting their logistics career, a buyer or a seller, having a detailed understanding of this process and in-depth knowledge regarding these documents is essential to ensure an efficient shipping of goods and so that no delays are faced at the customs clearance.