The Guide to Imports and Exports in The U.S. - Fora Financial
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The Guide to Imports and Exports in The U.S.
February 23, 2020

The Guide to Imports and Exports in The U.S.

Trade has always been an essential facet of society and growth. In fact, imports and exports are how many products that aren’t available locally reach the hands of those who otherwise wouldn’t have access to them. In this post, we’ll review the supply chain process involved in imports and exports. We’ll also touch upon the constraints and issues typical with bringing goods to and from the U.S. Then, we’ll cover customs navigation, and the steps to get started with an import/export business. The goal is to provide an all-encompassing view of this critical global industry.

Modern international trade systems are a complicated web of businesses that import and export. These businesses manage the distribution, delivery, and sale of goods between countries.

There are numerous types of import and export operations. Your business could focus on exporting, importing, or both. Perhaps you could represent a manufacturer, or you specialize in specific industries. Alternatively, you may be an agent, merchant, or freelance broker.

The Supply Chain Process

Supply chains are connected systems of companies, information, and resources. They’re made to produce, source, and move goods from origin to destination. This is usually done by suppliers to end customers.

Many modern supply chains are incredibly complex. They span multiple nations and have many steps involved. In their primary forms, there are steps common to most supply chains, regardless of volume. These steps are:

  • The sourcing of raw materials to be transformed into finished products.
  • The refinement or manufacture of materials into their more basic pieces.
  • Assembling these parts into a finished product.
  • Packaging finished products and exporting from the origin location.
  • Importing goods into the destination country, and bringing them to the final destination.
  • Then, these goods are sold to end consumers.

There are quite a few steps that take place between each of the above bullets, though. Also, your role as an importer or exporter may consist of multiple (or all) steps of the process.

Here’s an example of a mid-level integrated, end-to-end supply chain solution:

  • You find multiple providers of raw materials to piece together an electronic device. These providers are located in El Salvador.
  • The raw materials are trucked to Honduras, where they go through minor customs-related processes. Once in Honduras, the materials are brought to a manufacturing building.
  • Materials are turned into finished products and packaged and consolidated into convenient pallets.
  • These pallets are loaded onto another truck and driven to a port in the capital city of Tegucigalpa.
  • After documentation is delivered and bills of lading are issued, the cargo is sailed via ocean to Port Everglades, Florida.
  • Upon arrival in Port Everglades, the cargo goes through rigorous customs processes and inspections. Luckily, documentation for importing electronics from Honduras is far less stringent than perishables.
  • Once cleared through customs, your imported goods are trucked to their final destination: your warehouse.

Efficient supply chain management processes rely on many individuals and teams. These cogs of the supply chain gear work together to provide accurate, timely, consistent processes. In the end, constraints are identified, processes are streamlined, and the importing and exporting process is solidified.

The U.S. Is Difficult To Move In And Out Of

The United States is one of the most challenging countries to move goods into or out of, as there are many regulations.

To understand the struggles, it’s important to first distinguish between exporting and importing.

  • Exports are goods and services that are produced in an origin country for sale in other markets.
  • Imports are goods brought into a destination country from an outside origin country.

What this means is that perspective is crucial when determining if you’re importing or exporting a product. If you’re in the U.S. bringing in products from Vietnam, you’re importing from Vietnam. However, on the other end, the source in Vietnam is exporting to the U.S.

About Importing Goods Into the U.S.

Relevant imports represent goods, services, or resources producers in one country sell to buyers in the U.S. The website for Customs and Border Protection provides excellent tips for new importers. This includes new importers, or those looking for further insight into the import process.

There are some types of services and goods that require permits or licenses to import into the U.S. While in many cases a permit isn’t needed, there are specific types of products that are more stringent.

To avoid issues when importing into the U.S., follow these tips:

  • Check the requirements of various federal agencies: The CBP describes what items could require licensing or permits, in addition to associated contact information.
  • Contact relevant points of entry in your supply chain line: These ports will have their own sets of importing requirements and additional information.
  • Even if an import license isn’t required, you’ll still need to complete relevant entry forms provided by CBP: These forms will need to be filled out fifteen days from the date your cargo arrives at a U.S. port. Ensure you provide your assigned importer ID on all forms.
  • You’ll need a business registration ID: This ID number provided by the Internal Revenue Service is your importer identification. If you lack this number or don’t officially own a business, use your Social Security number in its place.
  • Complete the CBP Form 5106: By filling out the CBP’s Form 5106, you can request a CBP assigned number. Present this form to the relevant entry branch at a port of entry.

About Exporting Out Of the U.S.

Exports represent resources and goods at any stage that buyers in another country purchase from sellers in the U.S. There are ample resources online providing assistance, knowledge, and tools to assist U.S. companies. Growth in U.S. export operations continues in 2020 and is expected to rise rapidly over the next ten years.

Depending on the goods being exported out of the U.S., you may require permits or licensing. Many items exported to foreign buyers don’t require export licensing. This is dependent on the Export Control Classification Number of what you’re sending internationally. It should be noted, though, that all cargo is subject to regulations and export controls.

One of the best ways to discover license requirements is to check the presiding agency of what you are exporting. Export.gov has incredible resources for this.

To avoid potential issues, follow the CBP’s export requirements. If you have questions, contact the port of entry in your supply chain.

Tips for Dealing With Customs

When dealing with U.S. Customs and Border Patrol, there are extensive online resources available. To ensure there are no potential issues with the clearance of your cargo, CBP recommends familiarization with their policies. This should be done before you actually import or export your goods.

It’s crucial to maintain awareness of entry requirements that are specific to what you’re importing or exporting. This includes requirements for any other federal agency that overlaps on your cargo type. To greatly assist with this, the CBP has developed this list of Tips for New Importers and Exporters.

How to Start An Import/Export Business

There are many different branches from the main line of starting a business focused on exports and imports. However, these six steps are widespread for most new companies focused on U.S. imports and exports.

1. Set Up Your Business Strategies

If you want to start a business, you must ensure all bases are covered. From legal paperwork to marketing plans, starting a business is a process. The first step is to ensure your business strategies are in order.

Initially, this consists of registering your business in the state where you’d like to be headquartered. Register your company’s domain name, procure licensing, and handle other startup tasks. In addition, you’ll also need to set up a business plan. Part of your business plan for import/export businesses should cover the regulations of your chosen market.

One example of this is the import of tobacco and alcohol into the U.S. To do so, you’ll need an Alcohol and Tobacco Trade and Tax Bureau permit. Although this permit is free, the wait time can stretch into the months.

Very similar research should be performed when doing business in other countries. You should take into account all scenarios, from labeling requirements in different countries to insurance requirements.

Most importantly, you’re going to need capital. Costs to start an import and export business varies extensively based on products. It’s no secret that it’s challenging to make money without some startup capital. For this reason, obtaining business financing is one of the most critical steps.

While we have extensive guides on obtaining business funding, contact us directly to learn more about our options.

2. Pick What You Will Import/Export

In regards to importing and exporting businesses, you’ll quickly realize that you won’t be able to do it all. When it comes to product decision making, pick something, and then stick with it.

Typically, there are two viable ways to select a specific range of products. One option is knowing that a product is popular enough to sell. Alternatively, the other option is that the product is something you’re passionate about.

The goal is to find something that blurs the lines between these two options. This is ultimately the perfect business plan and model. If you were traveling on the other side of the world, would you want to buy this product? If so, then you’re on the right track.

Once you select a product, it’s imperative to identify the proper market. It’s one thing to have a product; it’s another to have a customer base.

The most potent products for import/export businesses are those at the brink of popularity. Alternatively, products that show promise of future demand are great to get “ahead of the curve.”

3. Supplier Sourcing

Once you select a product to trade across borders, the fun part begins. You’ll need to find a manufacturer or producer to create your product. Whether local or global, you must develop a strong partnership with this manufacturer. Good relationships with suppliers are vital to lasting success in the import and export game.

Typically, you can find suppliers via companies such as Global Sources, Thomas Register, and Alibaba. Talk with your potential supplier regarding the benefits of the U.S. market. Then, determine the logistics needed to get their products to your locations or facilities.

4. Handling Product Pricing

At this point, you know what product you want, you’ve got your suppliers in mind, and you have your target market. The next step is the most challenging, as it hits the bottom line more than any other: determining the price.

Deciding how much to charge is a massive undertaking. In many cases, business models for import/export businesses will include two critical facets of operations:

  • Commission made on the volume of items
  • Number of units that have been sold

The trick comes in the pricing of your product. It’s imperative to ensure your markup doesn’t exceed what your customer base is willing to pay for your product. However, you shouldn’t set prices so low that you cut into your profits. It’s ultimately all supply and demand.

In the import and export industry, companies will typically take a ten to fifteen percent markup. This is above what the supplier will charge your business when purchasing the raw products.

5. Rooting Out Your Customers

Now, it’s time to find consumers who’ll be interested in your products.

Yes, you decided on a market before starting your business. However, picking a market is in no way similar to actually finding your customers.

For example, you can’t ship your products to the Port of Seattle and start selling from the dock to passers-by. Instead, you must find clients and distributors to take your product and sell it to others.

If you have built a strong marketing presence and extensive web properties, your customers could come to you. However, it’s highly unlikely it’ll start that way.

One of the most suggested methods is good old-fashioned cold calling. Check with local area contacts, chambers of commerce, and embassies. They could provide you with a local contact list to help you start contacting potential customers.

6. Handling The Logistics Processes

Logistics is easily the most complicated piece of the import and export process. You’re effectively taking a product created in one country and selling it in another country.

But how does a product get from factories in Eastern Europe to storefronts in Nebraska? This process, outlined above, is where things get complicated.

When operating inside a supply chain where customers, clients, and consumers all differ, the coordination efforts are massive. One step that many import and export businesses tend to follow is working through a freight forwarder.

Freight forwarders are typically an excellent idea for these businesses, as they take out some of the guesswork. These providers effectively serve as transport agents for moving your cargo. This saves time and stress from getting products from factories to warehouses.

Another tip is to find a provider who offers these logistics services in an end-to-end capacity.

Final Thoughts

The world of imports and exports is an incredibly complex system. However, it’s also crucial to so many industries and markets. It provides balance to both the economic and emotional needs of buyers to suppliers, with you in the middle.

If you want something produced elsewhere in the world, import/export companies provide the mechanisms to get it. But how can you, as a business owner, provide those in your area with the opportunities to enjoy these products? How can you do so and still create sustainability for those who produce and transport these goods?

Knowing the processes, benefits, and constraints associated with import/export companies is crucial. Whether you’re dealing with a supplier or managing the entire process, this information will help you succeed.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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