Importing: the 10 basic steps

Importing is often thought to be easier than exporting and perhaps in some ways it is. But there can be many traps for the unwary and inexperienced and it is therefore most important that you understand the basic steps before you even think about placing an order.

1. Identify potential suppliers and obtain a catalogue, samples, prices and payment terms

The chambers of commerce, industry associations, foreign embassies and consuls and government departments of trade can help in the process of supplier identification. The price should be based on and include a reference to Incoterms, eg: AU$500 CIF Fremantle 2000 Incoterms or US$100 FOB Singapore 2000 Incoterms. Incoterms represent the foundation for the interpretation of trade terms between countries. Therefore, a reference to Incoterms in the contract price reduces the likelihood of a misunderstanding between you and the supplier.

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2. Select a customs broker to assist with importation

Customs brokers expedite quick trouble free clearance of goods through Customs and Quarantine. They are experienced in valuation, duty rates, tariff concessions and freight. Customs brokers are listed in the Yellow Pages and may also be identified through the Customs Brokers and Forwarders Council of Australia Inc.

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3. See the international division of your bank

Discuss the financial considerations with your bank:

  • How will the transaction be financed?
  • What will it cost to finance?
  • What method of payment is to be used?
  • What will the bank charge?

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4. Prepare a cost analysis to arrive at a landed cost

Make sure you include all costs e.g. freight, handling charges, insurance and customs. Your insurance broker can undertake this calculation if you wish.

Calculating your landed cost on imported products

In some cases the costs are built into the price quoted by your overseas supplier:

  • FOB: free on board - includes ex-factory price, inland transport and handling charges
  • CIF: cost, insurance, freight - includes ex-factory price, insurance and freight to the port of arrival
  • FIS: free into store - includes ex-factory price, insurance and freight to importer's warehouse
Ex-factory price = price charged by supplier in country of origin

In some cases the costs are not built into the quote by your overseas supplier. The price will then include ex-factory price plus:

  • Inland Transport - within the country of origin to port of departure
  • Handling charges - at port of departure e.g. inspection and loading
  • Freight - cost of getting goods to Australia
  • Insurance - of goods whilst in transit against damage, loss or theft
  • Local handling charges - at port of arrival e.g. unloading and storage at wharf
  • Customs duty - check customs department or your broker for rates
  • GST - 10% of value of taxable importation (goods + duty + freight + insurance)
  • Import licence fees - check customs department or your broker for rates
  • Interim storage charges - for storing prior to receipt in your warehouse
  • Demurrage - charged on delays in clearing goods
  • Quarantine fees - for storage of goods, usually livestock in quarantine
  • Fumigation fees - for treatment of goods by fumigation process
  • Transport - to local warehouse
  • Testing and certification - for safety compliance
  • Customs brokers fees - for facilitation of importation process
  • Exchange fluctuations - depending on transaction currency (insurable but can be costly)
  • Repacking/labelling - to either comply with local regulations or to enhance marketability
  • Bank charges - for processing of transaction and money transfer
Note: Not all of the costs listed above are applicable in all situations

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5. Is it commercially viable?

Having arrived at a landed cost and investigated the marketplace to determine what your selling price should be, is there sufficient margin remaining to cover all your business overheads and leave an acceptable profit?

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6. Identify any special requirements

Establish if there are any special requirements such as import quota restrictions, certificates requires to import restricted goods or special inspections on arrival. Your customs broker can advise you on these matters.

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7. Place an order with the supplier

Request a written confirmation of receipt and acceptance of order. Ensure the terms and conditions of the contract of sale are clear to both parties e.g. product quality, specifications, quantity, price, price basis, payment terms, date required, freight arrangements and documentation.

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8. Advise your customs broker of the details

Unless you intend to clear the goods yourself, provide your customs broker with comprehensive details of the transaction and copies of relevant documents to facilitate trouble-free and speedy processing and clearance of the consignment. Your broker will advise you when the shipping documents have arrived and make sure they are in order before you accept them.

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9. When the goods arrive

When the goods arrive, make arrangements for your customs broker to clear them through customs (and quarantine if applicable). You will need to provide the bill of lading/ airway bill, commercial invoice and any other relevant documents.

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10. Take delivery of the goods

Examine the consignment immediately for insurance purposes. Give a clean receipt for the goods only once you are satisfied as to quality, quantity and condition.

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Related Information

Business Guide to view:
Pricing Strategy


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