Millions of people move cargo internationally seamlessly every day, however when things go wrong it is often very expensive. Costly mistakes, although easily avoidable, typically catch the uninformed.
1. Not having the correct permit for regulated goods can result in high storage fees or termination of goods
Certain goods are closely regulated by customs. In order to clear these goods from customs a permit may be required. Some permits can be obtained in a few days, but some take months.
Cargo that is not cleared by customs accumulates additional storage charges which could amount to thousands of Rands. Importers who choose not to pay the storage fees can either have the cargo terminated or sent back to the supplier. A common example is health supplements. Customs requires clearance from the Medical Control Council (MCC) before health supplements are allowed into the country.
Under the latest MCC procedures this could take up to 5 years. Another common example is a cellphones. Cellphones need to be approved for use on South African air frequencies, this could take months.
To avoid this unpleasant surprise, find out whether any special permits are required before you order and pay for your goods. You can find out for free at the Trade Logistics offices or look it up yourself in the Trade Logistics members area.
2. Payment of goods to a fake international supplier
International trade through the internet has grown at phenomenal rate. A negative factor to take into account when choosing your supplier online is that the only information available online is the positive, beneficial information that the supplier wants you to see.
Beware of fake companies that take your deposit and disappear. Avoid this by only sourcing suppliers on trust worthy trading portals who screen the suppliers beforehand. You can also use escrow facilities, a letter of credit or a documentary bank collection to lower your risk.
3. Supplier ships wrong or lower quality product
The product you see in the tradeshow is not what is delivered. The 5 cm thick wooden table slowly thins out to 4.8cm, 4.6cm, 4.4cm with each new order.
These problems can be avoided by a combination of properly vetting your supplier, arranging a preshipment inspection of goods and keeping your original sample to compare subsequent orders to.
4. Incorrect costing of imported goods
Not calculating the VAT and import duties, or not taking into account all the freight costs including inland transport cost and port fees can significantly influence the final landed cost of your cargo, eroding your profits.
For more information on how to cost an imported product read our last month’s entrepreneur magazine article on “How to cost an imported product” or our blog First-Time Importer- How not to lose money” blog and our calculating VAT and duty manual.
5. If the ship sinks and you have no insurance you are liable to pay the cost of the ship
Most importers and exporters are not aware that part of the terms and conditions included when you send cargo by sea is that the cargo owners are also liable to cover any damage to the ship that occurs on the journey.
The proportion of liability is equal to the proportion of cargo a trader has on the ship. Luckily the chance of the ship sinking is very low! But be aware of this potential additional risk when deciding on freight insurance.
Knowledge is power when it comes to International Trade. It may seem that there is so much information out there that it is hard to know enough.
Luckily South Africa’s international trade industry has a number of very experienced individuals who you can get trusted advice from, ensuring that your business is not caught in a costly mistake.