While there are abundant opportunities for business growth right here in America, some of the fastest growing markets are overseas. Capitalizing on these opportunities requires knowledge of export shipping. This article covers the basics of shipping your U.S.-made products overseas – efficiently and in full compliance with customs agency requirements.

Why Now?

The opportunities in cross-border trade are vast and varied, and the time has never been better. Just within ecommerce alone, Statista estimates the global market will top $7 trillion in 2024 – well above pre-pandemic levels.

Ok, so the opportunity is clearly there. But what do new exporters need to know to be prepared?

Key Terminology and Concepts

Before you jump in, it’s good to familiarize yourself with some of the key terms and concepts.

Consignor

This term refers to the party consigning the goods being exported, generally the seller. They can also be referred to as the shipper.

Consignee

The consignee is the party who receives the exported goods once they reach the destination port, generally the same as the purchaser. They are listed on the shipment’s bill of lading, which is essentially a contract for the transport of goods between the shipper and the carrier.

Customs clearance

This is the process by which export goods are approved or “cleared” out of port by customs officials. Paperwork is reviewed and goods can be inspected by customs officials to ensure adherence to applicable trade regulations, and to check for illegal or banned items.

Incoterms

Incoterms, short for international commercial terms, is a set of 11 rules created by the International Chamber of Commerce (ICC) to define and clarify the responsibilities and risks borne by sellers and buyers in international transactions. They cover primary areas such as who is responsible for contracting and paying for transportation and who bears the risk for cargo loss.

Letter of credit

A letter of credit requires the buyer’s financial institution to pay the shipper/exporter for the goods once they are received into port and cleared through customs. It is designed to protect both parties to the transaction.

Export Credit Insurance (ECI)

Export credit insurance protects the exporter from risk of non-payment by the importer or consignee for a variety of reasons, including insolvency, bankruptcy and political risks such as war or terrorism. ECI also covers things like currency inconvertibility and changes in import/export regulations.

The Preparation

There are a number of preliminary actions that companies must take to be approved and licensed for export shipping. Each step is important to be fully prepared to launch into cross-border trade.

Do I Need an Export License?

Only 5 percent of U.S. exports require an export license. Certain goods, technologies, and destinations may be subject to review for national security or foreign policy reasons. Typically, these are so-called “dual use” technologies and products with both a civilian and a military or aerospace application. Main categories include electronics, computer hardware and software, chemicals, biotechnology, aerospace and propulsion systems, communications/networking equipment, and firearms/ammunition. 

This is overseen by the Commerce Department’s Bureau of Industry and Security (BIS) and the State Department’s Directorate of Defense Trade Controls (DDTC). If your goods fall within the these categories, you may want to check if you need an export license.

Understanding Trade Restrictions and Sanctions

Shippers also need to review the Commerce Department’s country chart. This ensures that goods can be exported to the specific country, organization, or individual where they're bound. The BIS maintains web pages for major transhipment hubs and sanctioned countries (Cuba, Iran, North Korea, Sudan, Russia, Belarus, and Syria).

Importantly, companies are not allowed to ship anything to persons or organizations on the U.S. government’s Consolidated Screening List. This involves a search of the CSL database to ensure compliance and see if the consignee is restricted. 

The Players and Their Roles

Each party in the process has a different, important part to play. Other than you, the exporter, here’s a rundown of what other key parties are responsible for – from the receiver at port to the various export shipping companies:

Consignee

The consignee is responsible for receiving the goods upon arrival at the destination port. Payment of customs duties, taxes, and other fees depends on the agreed terms of sale (Incoterm). For instance, if the agreed Incoterm is DDU (Delivered Duty Unpaid), the importer (buyer, consignee, or receiver) must pay the import duties. On the other hand, in DDP (Delivered Duty Paid), the exporter (seller, consignor, or sender) must pay the duties, taxes, and clearance.

It’s also the consignee’s role to ensure that the goods are received as agreed. The consignee must inspect the products’ type, quantity, quality, and packaging before the goods leave the destination port and arrive at the buyers’ own premises. This way, any defect or discrepancy can only be traced back to the carrier or shipper.

Carrier

Carriers (shipping lines, airlines, trucking companies, railroads) transport goods according to contract terms, provide status updates, and deliver to the consignee based on the agreed-upon schedule.

NVOCC 

A non-vessel operating common carrier (NVOCC), as the name suggests, doesn’t own or operate ocean vessels. It arranges with shipping lines for cargo transport under its own bill of lading, known as a House Bill of Lading (HBL).

Freight Forwarder

A freight forwarder manages transportation, including booking cargo space. Many freight forwarders, like I.C.E. Transport, are also NVOCCs. Like a broker, a forwarder can also handle documentation and manage customs clearance. They often provide complete door-to-door services, which can also include warehousing, transloading, securing cargo insurance, and tracking goods in transit. Read our blog on the differences between a freight forwarder and an NVOCC.

Customs Broker

A Customs Broker is a licensed individual or company that handles customs clearance for importing and exporting on behalf of shippers. They act as an intermediary between the importer/exporter and customs authorities, preparing and submitting documentation for regulatory compliance, and expediting the process. Trade compliance can be quite complex. Smaller exporters, in particular, can benefit from the expertise of an experienced customs clearance agent.

At the Outbound Port

There is really no export customs clearance on freight leaving the U.S. unless the cargo is motor vehicles. In that case, titles must be validated by CBP. Other than that, the only export-related formality is the filing of the Electronic Export Information (EEI) – the electronic declaration of merchandise leaving the U.S. for export to a foreign country. The following documents will be needed for the EEI filing:

• Commercial Invoice – An itemized list of the goods being shipped, including description, quantity, unit price, total value, and any other relevant terms of sale. It’s a commercial record and a basis for payment.
• Packing list – This includes the type and quantity of goods, dimensions and weight, packaging materials used, and any special handling instructions.
• Certificate of Origin – This is typically issued by the manufacturer or exporter, verifying where the goods were produced. It’s an important document for clearing customs and establishing qualification for trade preference programs.
• Export Declaration – A detailed description of the goods, their value and quantity, and the destination, submitted to customs officials to facilitate regulatory compliance, statistical reporting, and export control enforcement.

Experienced forwarders like I.C.E. Transport can handle much of the paperwork and coordination with customs on the exporter’s behalf.

At the Arrival Port

At the arrival port, the exporter would only be in touch with its freight forwarder/NVOCC if the terms of sale made them responsible for the customs clearance at destination. In such cases, the exporter is in regular contact with the forwarder to verify clearance through customs Otherwise, they would not be involved in the process and it would be up to the importer to coordinate clearance and transportation from the port on their own

Exporting Shipping is Complex, But the Juice Is Worth the Squeeze

With cross-border trade opportunities in abundance, more and more growth-minded companies are pursuing overseas markets that are a good fit for their brands and products. This is not only a great avenue for business expansion, but also a hedge against the ups-and-downs of domestic sales.

The export shipping process requires a strong knowledge of customs requirements, documentation, and global shipping. Getting it wrong can result in shipping delays, fines, and unhappy customers. That’s why finding an experienced export freight forwarder is critical to your success as an exporter.

I.C.E. Transport, founded in 1987, offers full international shipping services to and from the U.S., with a specialty on shipments between the U.S. and Eastern and Western Europe. We manage complex, door-to-door deliveries, with strong land-side services at origin and destination. To learn more or to get a quote, contact the experts at I.C.E. Transport today.