International Suppliers & Shipping Guidance

When purchasing from an international supplier, your goods will be transported from the supplier’s point of origin to the buyer’s destination point. The international commercial terms (incoterms) define the responsibility for carriage, cost, and risk during this transaction. There are 11 incoterms that run the spectrum of full buyer risk/ownership to full supplier risk/ownership.

Importing/Duty Free Entry

There are several areas to consider when purchasing from international suppliers.

Timing of Payments - Consider structuring your requisition with milestone payments. These milestones should be consistent with the transfer of ownership defined by the agreed upon incoterm.

Carriage - We recommend using a customs broker for packages that are heavy/bulky, high-value/sensitive, or involve challenging locations. Customs broker can assist in the following ways: 1) Reduction in time and costs of importing goods; 2) Assistance navigating complex and dynamic trade regulations; and 3) Guidance/Thought Leadership. Involving a customs broker prior to agreeing to purchase a good can help address some of these potential issues in advance.

Costs - These are the cost components of which you should be made aware:

Export Formalities Taxes and Duties;
Carriage; and
Import Formalities, Taxes, and Duties.

Risk - The buyer’s risk begins when the ownership of the good has transferred from the seller. Buyers should consider purchasing insurance for high-value (monetary or non-monetary) goods. If the value of the good exceeds the insurable value offered by the seller and/or carrier, then contact Risk Management for guidance on how to proceed.

Incoterms

· EXW (Ex Works or Ex-Warehouse): The seller packs the goods and makes them available at their location. The buyer handles everything else, including export, shipping, and import.

· FCA (Free Carrier): The seller transports the goods to a specified location within their country, like a shipping terminal. The buyer then takes over, paying for shipping and handling import duties.

· FOB (Free On Board): The seller takes care of exporting and loading the goods onto the ship. The buyer pays for shipping from there and handles all import costs.

· DAP (Delivered at Place): The seller delivers the goods to the final destination. The buyer is responsible for unloading and paying import duties, taxes, and customs clearance.

· DDP (Delivered Duty Paid): The seller delivers the goods to the final destination and pays all import duties, taxes, and customs clearance. The buyer only needs to unload the goods.

Suppliers typically prefer EXW since it minimizes their costs and risks throughout the transaction. We recommend FCA for buyers who want to control the logistics of their shipment from the supplier’s location to the buyer’s destination. We recommend DDP or DAP for buyers who would prefer that the seller control the logistics of the shipment. Under DDP, the seller pays all costs, including taxes and duties related to import clearance. Under DAP, the buyer pays the aforementioned costs.

International Shipping

It is important to note that a range of logistics and risk components apply when you are shipping or receiving anything, even outside of a purchasing context. American River and Walker International, our preferred customs brokers, can assist you with evaluating the logistics, insurance requirements, permits and taxes, and/or duties associated with the shipment.

Permits

A permit might be required if you are importing samples of human pathogens, animal pathogens and biological material of animal origin, soils, or wildlife and animals. For additional guidance on permits, please visit the EHS website. We recommended that you contact American River or Walker International at least 60 days in advance if you will be importing or exporting sample material that requires a permit.

Tax/Duties

Exemptions/Relief: In some situations, there are opportunities to receive exemptions or relief from taxes and duties if the appropriate steps are taken in advance.
Recovery of Taxes and Duties: The process to recover erroneous taxes and duties assessed or paid can be involved, and the time it takes to receive refunds can be extensive or futile.
A customs broker can provide you with advice regarding the best approach to address your situation.