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Customs clearance is an important process that needs to be taken seriously, especially for businesses that import or export goods. Failure to comply with customs regulations and requirements can result in delays, penalties, and even seizure of your goods. Below are some of the common issues that businesses face when dealing with customs clearance in Australia and provide practical solutions to help you overcome them.

Lack of Knowledge

One of the most significant issues that businesses face when dealing with customs clearance is a lack of knowledge. Many businesses don’t fully understand the rules and regulations surrounding customs clearance, which can lead to delays and other issues.

Educate Yourself on Regulations and Requirements

To overcome this issue, it’s essential to educate yourself on the regulations and requirements for customs clearance in Australia. You can find information online through the Australian Border Force website or by hiring a customs clearance agent or freight forwarder who can provide guidance and support throughout the process.

Create a Checklist

Creating a checklist of all the necessary steps and requirements can help ensure that you don’t miss anything during the customs clearance process. This can include documentation requirements, customs fees, and any necessary permits.

Incorrect Documentation

Another common issue that businesses face with customs clearance is incorrect documentation. Customs authorities require specific documentation to be completed accurately and submitted on time. Failure to do so can result in delays or even the seizure of your goods.

Ensure the Accuracy of Documentation

To avoid this issue, it’s essential to ensure that all documentation is completed accurately and submitted on time. This includes bills of lading, commercial invoices, and other necessary documents. It’s also important to keep copies of all documentation for your records.

Double Check All Documents

Before submitting any documentation, it’s important to double-check all information to ensure accuracy. This can involve having a customs agent review the documents for any errors or omissions.

Inaccurate Valuation

When importing or exporting goods, it’s essential to provide an accurate valuation to customs authorities. Failure to do so can result in delays, penalties, or even the seizure of your goods.

Work with a Customs Clearance Agent or Freight Forwarder

To avoid this issue, it’s important to provide an accurate valuation of your goods. This can involve working with a customs clearance agent in Australia to ensure that you’re providing the correct information. It’s also important to keep detailed records of the value of your goods and any expenses incurred during the shipping process.

Provide Detailed Information

To ensure an accurate valuation, it’s important to provide customs authorities with detailed information about the goods being imported or exported. This can include the country of origin, the product description, and any relevant certifications.

Customs Inspections

Customs inspections can be a time-consuming and costly process for businesses. While inspections are necessary to ensure that goods comply with regulations, they can also lead to delays and increased costs.

Ensure Compliance with Regulations

To avoid this issue, it’s important to ensure that your goods comply with all regulations and requirements in Australia. This can involve working with a customs clearance broker to ensure that your goods are properly classified and documented. It’s also important to provide all necessary information to customs authorities to facilitate the inspection process.

Prepare for Inspections

Preparing for customs inspections can help reduce delays and ensure that the process runs smoothly. This can involve having all necessary documentation on hand, providing detailed information about the goods being inspected, and having a customs broker or consultant present during the inspection.

Customs clearance is a crucial process for businesses that import or export goods. By educating yourself on the regulations and requirements, ensuring that all documentation is completed accurately and on time, providing an accurate valuation of your goods, complying with regulations and preparing for inspections, you can avoid delays, penalties and ensure a smooth customs clearance process in Australia.

Shipping terms are essential for anyone involved in the shipping industry. Understanding the various terms and their meanings can help individuals and businesses make informed decisions about shipping. In this article, we will provide you with a comprehensive guide to shipping terms, including definitions, examples, and common misconceptions.

Ex-Works (EXW)
Ex-Works is a shipping term that refers to a transaction where the seller is responsible for making the goods available at their premises, and the buyer is responsible for all costs associated with transportation, including insurance and customs clearance. This term is often used when the buyer is located in the same country as the seller.

Free Carrier (FCA)
Free Carrier is a shipping term that refers to a transaction where the seller is responsible for delivering the goods to a carrier or another person nominated by the buyer at a specified place. The seller is responsible for all costs associated with delivering the goods to the specified place, but the buyer is responsible for all costs associated with transportation, including insurance and customs clearance. This term is often used when the buyer is located in a different country than the seller.

Free Alongside Ship (FAS)
Free Alongside Ship is a shipping term that refers to a transaction where the seller is responsible for delivering the goods alongside a vessel nominated by the buyer at a specified port. The seller is responsible for all costs associated with delivering the goods alongside the vessel, but the buyer is responsible for all costs associated with transportation, including insurance and customs clearance. This term is often used when the buyer is located in a different country than the seller.

Free on Board (FOB)
Free on Board is a shipping term that refers to a transaction where the seller is responsible for delivering the goods on board a vessel nominated by the buyer at a specified port. The seller is responsible for all costs associated with delivering the goods on board the vessel, but the buyer is responsible for all costs associated with transportation, including insurance and customs clearance. This term is often used when the buyer is located in a different country than the seller.

Cost and Freight (CFR)
Cost and Freight is a shipping term that refers to a transaction where the seller is responsible for delivering the goods on board a vessel nominated by the buyer at a specified port and paying the cost of freight to transport the goods to the port of destination. The buyer is responsible for all costs associated with unloading the goods from the vessel and clearing customs at the port of destination.

Cost, Insurance and Freight (CIF)
Cost, Insurance and Freight is a shipping term that refers to a transaction where the seller is responsible for delivering the goods on board a vessel nominated by the buyer at a specified port, paying the cost of freight to transport the goods to the port of destination, and purchasing insurance to cover the goods during transit. The buyer is responsible for all costs associated with unloading the goods from the vessel and clearing customs at the port of destination.

Delivered at Place (DAP)
Delivered at Place is a shipping term that refers to a transaction where the seller is responsible for delivering the goods to a specified place nominated by the buyer, but the buyer is responsible for all costs associated with transportation, including insurance and customs clearance. This term is often used when the buyer is located in a different country than the seller.

Delivered Duty Paid (DDP)
Delivered Duty Paid is a shipping term that refers to a transaction where the seller is responsible for delivering the goods to a specified place nominated by the buyer, paying all costs associated with transportation, including insurance and customs clearance, and paying any import duties or taxes that may be applicable. This term places the maximum responsibility on the seller and is often used when the buyer is located in a different country than the seller.

As an Australian-based company, it’s important to note that shipping terms can vary depending on the country of origin and destination. Understanding the shipping terms used in international trade is crucial for successful import and export operations. In addition to the commonly used shipping terms listed above, there are other terms that may be relevant to your specific shipping needs. For example, Carriage Paid To (CPT), Carriage and Insurance Paid To (CIP), and Delivered Ex-Quay (DEQ) are all terms that may be used in specific situations.

It’s also important to be aware of common misconceptions surrounding shipping terms. For example, some people believe that Ex-Works means that the seller is responsible for all costs associated with transportation, but this is not true. Similarly, some people believe that FOB means that the seller is responsible for all costs associated with transportation, but this is also not true.

Understanding shipping terms is vital for anyone involved in the shipping industry. By knowing the various terms and their meanings, individuals and businesses can make informed decisions about shipping and avoid costly mistakes. We hope this comprehensive guide has provided you with valuable insights into shipping terms, and we encourage you to consult with an expert if you have any specific shipping needs or questions.

Incoterms® are a set of international trade terms that are used to define the responsibilities of buyers and sellers in the transportation of goods. These terms, which are updated every ten years, provide a common language for international trade, making it easier for businesses to understand their rights and obligations when buying or selling goods overseas. The latest version of Incoterms®, known as Incoterms® 2020, was introduced on January 1st, 2020, and will be in effect until December 31st, 2023.

As an Australian consumer, it is important to understand how Incoterms® 2020 will affect your rights and obligations when buying goods from overseas. Here are some key points to keep in mind:

1. The terms of delivery: Incoterms® 2020 defines 11 different terms of delivery, each of which specifies the point at which the risk of loss or damage to the goods passes from the seller to the buyer. Some of the most commonly used terms include FOB (Free on Board), CIF (Cost, Insurance, and Freight), and DDP (Delivered Duty Paid).
2. The responsibilities of the seller and buyer: Incoterms® 2020 clearly defines the responsibilities of both the seller and the buyer in the transportation of goods. For example, under FOB, the seller is responsible for loading the goods onto the shipping vessel, while the buyer is responsible for arranging and paying for transportation from the port of loading to the port of destination.
3. The cost of transportation: Incoterms® 2020 also specifies who is responsible for paying the cost of transportation. For example, under CIF, the seller is responsible for arranging and paying for transportation, while the buyer is responsible for paying for insurance.
4. The cost of customs clearance: Under Incoterms® 2020, the cost of customs clearance is the responsibility of the buyer. This includes the payment of any duties, taxes, and other charges that may be imposed by the authorities in the country of import.
5. The risk of loss or damage: Incoterms® 2020 also defines the point at which the risk of loss or damage to the goods passes from the seller to the buyer. For example, under FOB, the risk of loss or damage passes when the goods are loaded onto the shipping vessel, while under DDP, the risk of loss or damage remains with the seller until the goods are delivered to the buyer’s place of business.

As an Australian consumer, it is important to understand how Incoterms® 2020 will affect your rights and obligations when buying goods from overseas. By familiarizing yourself with the terms of delivery, responsibilities of the seller and buyer, cost of transportation, customs clearance, and risk of loss or damage, you can make more informed decisions when buying goods from overseas.

Businesses navigating free trade agreements can often find it an overwhelming process of finding the right information. Below we’ve broken down what free trade agreements (FTAs) are, countries Australia has them with, and links to comprehensive resources to assist businesses within Australia navigating freight forwarding – if you have any questions our team at Personalised Freight Solutions will be able to help you.

What are Free Trade Agreements (FTAs)?

A free trade agreement (FTA) is an international treaty between two or more economies that reduces or eliminates certain barriers to trade in goods and services, as well as investment. FTAs benefit Australian exporters, importers, producers and investors by reducing and eliminating certain barriers to international trade. The Oxford English Dictionary records the use of the phrase “free trade agreement” with reference to the Australian colonies as early as 1877.

Free trade agreements in force

The following are Australia’s free trade agreements (listed with the entry-into-force date).

• Australia-New Zealand (ANZCERTA or CER) – 1 January 1983
• Singapore-Australia (SAFTA) – 28 July 2003
• Australia-United States (AUSFTA) – 1 January 2005
• Thailand-Australia (TAFTA) – 1 January 2005
• Australia-Chile (ACl-FTA) – 6 March 2009
• ASEAN-Australia-New Zealand (AANZFTA) – 1 January 2010 for eight countries: Australia, New Zealand, Brunei, Burma, Malaysia, the Philippines, Singapore and Vietnam. For Thailand: 12 March 2010. For Laos: 1 January 2011. For Cambodia: 4 January 2011. For Indonesia: 10 January 2012
• Malaysia-Australia (MAFTA) – 1 January 2013
• Korea-Australia (KAFTA) – 12 December 2014
• Japan-Australia (JAEPA) – 15 January 2015
• China-Australia (ChAFTA) – 20 December 2015
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – 30 December 2018
• Australia-Hong Kong (A-HKFTA) and associated Investment Agreement (IA) – 17 January 2020
• Peru-Australia (PAFTA) — 11 February 2020
• Indonesia- Australia Comprehensive Economic Partnership Agreement (IA-CEPA) – 5 July 2020
• Pacific Agreement on Closer Economic Relations (PACER) Plus – 13 December 2020
• Regional Comprehensive Economic Partnership Agreement (RCEP) – 1 January 2022 for ten countries: Australia, Brunei Darussalam, Cambodia, China, Japan, Laos, the Republic of Korea, Singapore, Thailand and Vietnam. For Republic of Korea: 1 February 2022.

FTAs not yet in force

• Australia-India Economic Cooperation and Trade Agreement (AI-ECTA)
• Australia-United Kingdom Free Trade Agreement (A-UKFTA)
• Trans-Pacific Partnership (TPP)

FTAs under negotiation

• Australia-European Union Free Trade Agreement
• Australia-Gulf Cooperation Council (GCC) Free Trade Agreement
• Australia-India Comprehensive Economic Cooperation Agreement
• Australia-UAE Comprehensive Economic Partnership Agreement
• Environmental Goods Agreement
• Pacific Alliance Free Trade Agreement
• Trade in Services Agreement

if you have any questions please don’t hesitate to contact the PFS team today.

We’ve shared the answers below to our most asked questions for sea freight shipments that we receive as a Freight Forwarding company. If you have any additional questions or would like deeper insight which is personalised to you and your business, call our industry specialist team today on (07) 3207 9537 and they’ll be happy to assist with any questions that you have. 

1. Why do sea freight costs & rates fluctuate significantly?

One of our most frequently asked questions around freight is in regards to cost and fluctuating prices throughout the year. For businesses trying to keep ahead of these varying costs it can be frustrating.

The demand for shipping services is subject to a number of external pressures, including those of a political, economic and environmental nature. Trade sanctions, conflict, consumer behaviour, bad weather and more can affect demand, and that in turn affects cost. As there isn’t a single predictor or reason in the market, but a varying of factors including (but not limited to): 

Destination/distance – the more popular the destination and the shorter the journey, the lower the ocean freight rate. Less common destinations, including those with a reduced capacity to handle freight, are more costly, and the further goods have to travel, the greater the ocean freight rate will be.

Currency – as ocean freight rate is charged in US dollars, the exchange rate has an impact on cost.

Cargo type – the types of goods that are likely to attract higher fees include those that are dangerous, heavy, perishable, or out of gauge (OOG).

Fuel Costs – Bunker Fuel, that’s the name for fuel used to power a ship’s engines, and the cost can fluctuate, meaning the ocean freight rate charged will fluctuate. Bunker fuel has a big impact on the cost of ocean freight.

Seasons – certain goods are in demand, or in higher demand, due to the seasons, for example, in the run up to Christmas or the Chinese New Year. When demand is high prices often rise, whereas when demand is low, they fall.

Vessel size – as the biggest single cost in ocean freight is bunker fuel, the size and capacity of the vessel is important. Bigger vessels might use more fuel, but there are also more containers on board for that cost to be shared between.

Environment – 1 January 2020 saw the implementation of IMO 2020, new legislation introduced by the International Maritime Organisation. The aim is to reduce sulphur oxide gas emissions by using marine fuels with a maximum sulphur content of 0.5%, a hefty reduction compared to the previous limit of 3.5%. The expectation is an increase in cost.

2. What causes sea freight cargo to become delayed?

 Delayed shipments are one of the most frustrating parts of freight forwarding for many companies – the time involved, additional costs and waiting customers which has the potential to incur a larger cost (potentially losing clients/ customers). Vessels essentially move in a giant loop, calling from port to port then back again. if one tiny delay occurs at one port it can cause a chain reaction for all the other ports that the particular vessel calls in on, this can add days or even weeks to a transit time. Things that can cause these delays are:

• Impacts from weather conditions.  
• Industrial action.
• Vessel quarantine.
• Overbooking of cargo on shipments.  (its common for shipping lines to overbook space during peak season, just like airlines do.)
• Vessel malfunctions/mechanical issues. 
• Natural disasters. 
• Seasonality. 
• Equipment shortage. (no empty containers)

3. What is the wait time at wharfs typically?

“Waiting time” or “Demurrage” refers to the free time a freight or transport company allocates at a wharf – typically these are around 45 minutes. The purpose of this time is to be used to process freight and shipping collections within this time allocated. But this is of course dependent on the demand, traffic and resources available to have the cargo processed.

4. What happens if my goods are damaged in transit?

This depends whether or not you have insured your cargo and are covered for marine transit insurance – we strongly encourage our customers to cover their cargo and we have a partnership with Coverfreight, to make this process easier.

When you’re covered by marine transit insurance: you’ll be eligible to claim on the insurance that you’ve taken out and will follow the process to see how much you’re eligible to receive post their investigation.

If you’re not covered by marine transit insurance: you’re liable for the complete costs of your goods lost.

Having marine transit insurance also covers you if General Average is called. General Average is a principle of maritime law that essentially establishes that all sea cargo stakeholders (owner, shipper, etc.) evenly share any damage or losses that may occur as a result of voluntary sacrifice of part of the vessel or cargo to save the whole in an emergency.  This includes the cargo owners, which means exporters and importers may be liable to pay towards the losses of a major incident on the vessel, such as:

• a fire on board 
• the ship gets stranded or grounded 
• a container stack collapse 

Cargo might be partially or fully damaged. And, even if there is no damage to cargo, there will be extreme delays in deliveries until the general average procedures are completed, which may result in penalties, fines and chargebacks from end buyers.

The last time a general average was called was in 2021 with the Ever given being grounded in the Suez canal, Prior to that was 2019 after a fire on the Yantian Express.

General average claims are a risk for importers. Having cargo insurance is peace-of-mind in the case of these extreme cases.

Have another question for our team at PFS?

If you still have questions we weren’t able to answer above – or would prefer to speak directly with our industry specialist team, call us directly on (07) 3207 9537.

If you currently use sea freight as your choice of international shipping or are considering using sea freight, you might be evaluating the advantages of this freight type. We’ll be sharing the top Four benefits of using sea freight as your transportation choice,  if you have any questions our team at Personalised Freight Solutions will be able to help you. If you would like to see more of our range of services in regards to sea freight – please don’t hesitate to visit our Sea Freight page here.

1. You’re able to save money on heavy + large freight loads

In any business, money is an important  part of decision making – especially when it comes to transporting large quantities or bulky items. 

Your average commercial ship  exceeds the size of an average commercial plane by at least 5:1 in terms of cargo space, in fact some commercial ships can hold over 20,000 shipping containers -by using sea freight  you’re benefiting on savings that is able to occur in these huge vessels by sharing the overheads with other companies that have containers on the ship. Even greater savings can be found with sharing containers with other shipments (this is called less than container load or LCL).  

 2. Freight size is less restrictive for oversized, heavy or bulky items

If it fits, it ships! When transporting large quantities of items, oversized or bulky goods,  a 20ft shipping container which has approximately 25-28 cubic meter of usable space could be an option, alternatively, a 40ft container has approximately 58 – 62 cubic meters of usable space. Need more space, consider a Roll on Roll off or Break bulk freight option. If you have smaller quantities of cargo, consolidation could be a better fit and is charged based on a minimum of 1 cubic meter. Typically if you have around 13 -15 cubic meters of cargo, ask your freight forwarder to provide a comparison cost between FCL and LCL shipping.

3.  Fewer restrictions on permitted goods

Unlike air freight, sea freight doesn’t have the same strict level of requirements and restrictions in place – enabling a greater range of cargo being able to be transported. This by no means that there are no restrictions when it comes to using sea freight to transport goods internationally, but by having fewer restrictions in place it does eliminate as much red tape along with being able to actually transport an additional range of items.

4.  You have more options in sea freight types

Unlike air freight, which is restricted to rigid size limitations based on the type of plane, sea freight can provide options for transporting cargo with different pricing structures  based on the method chosen:.

Sea freight services include; 

• Less than Container Load (LCL): is used where the goods being transported won’t fill the entire container and share the remaining space with items belonging to different people/ businesses.
• Full Container Load (FCL): refers to the company and/ or person transporting the items within the entire container, only belonging to them. The containers have standardized dimensions. They can be loaded and unloaded, stacked, transported efficiently over long distances, and transferred from one mode of transport to another—container ships, rail transport flatcars, and semi-trailer trucks—without being opened.
• Roll on/Roll off (RORO): Vessels designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, trailers, and railroad cars, that are driven on and off the ship on their own wheels or using a platform vehicle, such as a self-propelled modular transporter. This is in contrast to lift-on/lift-off (LOLO) vessels, which use a crane to load and unload cargo.
• Breakbulk (LOLO): also referred to as “lift on/ lift off”, Break bulk cargo or general cargo are goods that must be loaded individually, and not in shipping containers nor in bulk as with oil or grain. Break bulk cargo is transported in bags, boxes, crates, drums, pallets or barrels. The cargo is brought to the quay next to the ship and then each individual item is lifted on board separately.

If you are looking to order your first overseas shipment, or just want to bench mark your current freight forwarder, please contact the PFS team to discuss your personal requirements and how we can add value.

But first, what Incoterms are & why they’re important

‘Incoterms’ is the short and simple way of saying International Commercial Terms. First published way back in 1936 by the International Chamber of Commerce, they’re a set of 11 terms defining who’s responsible for what during international transactions.

Or more simply, Incoterms spell out all the tasks, risks and costs involved during the transaction of goods from seller to buyer. Because they’re known and accepted worldwide and are a requirement on every single commercial invoice, they greatly reduce the risk of potentially costly misunderstandings.

The 11 Incoterms & their descriptions

1. EXW – Ex-Works or Ex-Warehouse

• Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).
• The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.

2. FCA – Free Carrier

• The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
• The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

3. FAS – Free Alongside Ship

• The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
• The risk of loss of or damage to the goods passes when the products are alongside the ship.  The buyer bears all costs from that moment onwards.

4. FOB – Free On Board

• The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.

5. CFR – Cost & Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered.
• The risk of loss of or damage to the goods passes when the products are on board the vessel.
• The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

6. CIF – Cost, Insurance & Freight

• The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
• The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
• The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

7. CPT  – Carriage Paid To

• The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
• The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

8. CIP – Carriage & Insurance Paid To

• The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
• The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

9. DAP – Delivered At Place

• The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all risks involved in bringing the goods to the named place.

10. DPU – Delivered At Place Unloaded (replaces Incoterm® 2010 DAT)

• DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.
• The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

11. DDP – Delivered Duty Paid

• The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
• The seller bears all the costs and risks involved in bringing the goods to the place of destination.  They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Check out these useful links:   Video   Quick reference chart

What are the most economic Incoterms terms? 

From our experience, FOB & EXW are the most common terms used when you are the buyer. This ensures you have control over a larger portion of the shipment & costs. If you are the seller then EXW,CFR & DAP are the recommended terms. 

Looking for additional advice? Speak to our industry specialised team today! 

If you’re looking for a quote or have a question that you would like assistance from our industry specialised team, please call (07) 3207 9537 today and we’ll be happy to help you any way we can.