Insights

Imports and Exports:
The Process, Entities, and Tracking Numbers

 

For both regulatory agencies and due diligence firms, mapping the export pathway is paramount. This can reveal red flags such as abnormal shipping routes and a falsified end user, as well as potential diversion points when the goods pass from legitimate logistics infrastructure into an illicit network’s control. Identifying these critical points, however, requires an understanding of the legitimate export process, described below:

 

 

End User – When an end user decides to import equipment produced overseas, they establish an agreement or contract with an importer of the technology.

 

Importer aka Consignee – The importer receives the order from the end user and contacts the overseas exporter of the technology to arrange the purchase.

 

Exporter aka Shipper – The exporter receives the request for purchase from the importer/consignee. They then begin the shipping process itself, contacting a freight forwarder to arrange the logistics. They also provide a packing list and a commercial invoice ro both the freight forwarders and the end user.

 

Departure Port Freight Forwarder – Once contacted by the exporter/shipper, the freight forwarder arranges ground transportation to the port. They also make a booking with the carrier which contains product information—such as packing lists, safety data, and end user certification—required to fill out the export paperwork.

 

The freight forwarder (or occasionally the carrier) will then generate a bill of lading (BOL) or an air waybill (AWB) for shipping via sea or air, respectively. This serves as a receipt, title to the goods, and contract between the shipper and carrier identifying the type and quantity of goods and destination to which it is being shipped. The freight forwarder obtains a signature on the BOL from the carrier and sends the original BOL to the consignee so they are able to retrieve the cargo at the port when the ship arrives.

 

Carrier – The carrier then takes responsibility for the goods and informs the importer/consignee that the shipment is underway. Occasionally, the carrier may also generate the BOL. Shortly before arrival, the carrier will provide the freight forwarder at the arrival port with documentation required to pick up the container, clear customs (see below) and reconcile any outstanding payments to the carrier.

 

Arrival Port Freight Forwarder - The the arrival port freight forwarder arranges storage and logistics at the arrival port, including working with the customs broker to ensure the shipment can clear Customs.

 

Customs Broker – The customs broker is assigned by the importer and is charged with facilitating clearance of the imported goods through Customs. They receive the required customs documentation such as the BOL, packing lists, safety data sheets, insurance documents, and certificates of origin from either the freight forwarder or the importer and provide it to the local Customs authorities.

 

Importer aka Consignee – Once the shipment has arrived and cleared customs, the ground transportation provider, working on behalf of the importer/consignee, will present a delivery order to the carrier which proves ownership of the goods and allows the container to be released and transported to its final destination.

 

 

 

Entity

Number

Description

End User, Importer

Contract Number

An agreement between the end user and the importer of the technology

Importer, End User

Invoice Number

An invoice for the goods given by the importer to the end user

Exporter, Importer

Invoice Number

An invoice for the goods given by the exporter to the importer

Freight Forwarder

Harmonized System (HS) Code

An industry classification system number assigned by the freight forwarder to the goods. It is based on a standardized classification system to denote the type of product and is used to collect duties and statistics on trade data. It is usually listed on the BOL or AWB (see below) along with the description associated with the HS number.

Freight Forwarder

Carrier

Consignee

Bill of Lading (BOL – sea)

Air Waybill (AWB – air)

The BOL or AWB serves as a receipt, title to the goods, and contract between the shipper and carrier identifying the type and quantity of goods and destination to which it is being shipped.

All

Order Number

All entities are likely to have order numbers within their own internal tracking systems

 

 

Special thanks to customs broker Kim Daniels, CEO of Mercantile Logistics & International Trade (https://www.mlitinc.com), for her assistance with this article.

 

 

See these online videos from Flexport’s Supply Chain Education Series for more information: