What is Customs Clearance?

Sep 03, 2020 Shawn Mack Shawn Mack

Out of all the activities and industries that came to a halt due to the coronavirus pandemic, it is the trade that faced the worst of consequences. Or better, it is the seize of trading activities and all involved procedures that impacted many lives adversely.

That's chiefly because the process of practical trade involves quite too many procedures. There's the quality check of products, cargo container selection, packaging, shipping measures, customs clearance, and whatnot. It's difficult for the systems of these fields to adopt a work-from-home strategy.

Therefore, only a few countries saw their trading activities flowing smoothly, even during the pandemic. The rest had to deal with a major loss until, of course, they established a safe working mechanism.

Amongst these, establishing online customs clearance methodologies was one of the most crucial and challenging aspects. That's because this department has an entirely on-field activity, and without it, trade cannot occur.

If you do not yet know what customs clearance is, you might not be able to understand the intensity of the situation here. So, first, let's have a look at the concept of customs clearance as well as a few accompanying essential details.

So, What Exactly is Customs Clearance? 

By definition, customs clearance refers to the process of authenticating goods for imports and exports. It is a department wherein shippers seek the validation and authentication from a customs authority to carry out the shipment process. 

Customs authorities, which happen to be the licensed experts, assess the quality, condition, and all the necessary submitted documentation to verify whether the shipment adheres to all standards or not. They confirm that the shipper paid all the duties and is eligible to continue further. Custom brokers, which are the licensed experts, can be individuals, licensed corporations, and even partnerships.


Customs Clearance during Pandemic 

The arrival of Coronavirus has altered the way of the functionality of the industries worldwide. Several companies have taken initiatives to promote work from home. However, the most drastic and immediate measures came into the Customs Clearance. 

A majority of countries adopted strategies to bring about three major changes, including a simplified Custom Clearance process, reduction in port charges, and quarantine.  Here are some of the strategic steps:

  • Reduction of Customer Clearance process time
  • On-board inspections to avoid delays 
  • Guidance to importers about trade changes through online meetings
  • Reduced requirements and restrictions on medical products   
  • Acceptance of third-party & electronic certificates
  • Reduction of tariffs & taxes
  • Reduced quarantine approval time

Four Fundamental Customs Channels

For letting the goods get into or pass through the national boundaries, the customs authorities often give a channel or entry circuit assignment. It may depend on the previous activity of the shipper, as well as the source and arriving location(s) of the goods.

Currently, there are four channels:

  • Red Circuit/Channel
  • Orange Circuit/Channel
  • Yellow Circuit/Channel
  • Green Circuit/Channel

The red channel, as the color signifies, is the most troublesome for shippers. It involves a physical inspection of the cargo or multiple reviews of the submitted documents. It's usually due to quality or legal issues with the shipment.

The orange and yellow channels aren't as intense. In the orange channel, usually, a document or two is missing, which the authorities request again. But until the shippers provide with it, the goods are retained. They only get dispatched upon approval or completion of all formalities.

The yellow channel, however, signifies that a particular customs document is missing, which the authorities request again. It might be a certificate or an invoice. On the contrary, the green channel signifies instant approval. When assigned with the green circuit, goods can leave or enter a country's boundaries without any complications or delays.

Essential Documents 

Perhaps, the most prominent and time-consuming role in Custom Clearance is paperwork. Globally, every port demands several documents with the arrived goods to verify its legality. Now, the type of documents required depends on the operation, trade mode, and shipping category. 

A few of the utterly necessary documents for the process are as follows: 

  • Packaging List

The packaging list displays information regarding the products. It may include product weight, description, quantity, numbering, and shipping marks. 

  • Purchase Sheet or Invoice 

The clearance procedure of customs is present in trade to verify the authenticity and ensure the legality of goods. Hence, the Purchase Invoice proves to be more of an evidence of legal business transactions during Custom Clearance.   

  • Bill of Landing 

It refers to a document stating the contract of carriage as well as the reception for goods on the cargo. Again, it is subjective to the category of goods and may vary accordingly. 

Concisely, Custom Clearance is an important procedure in the trade industry to smoothen the flow of goods as well as ensure the fulfillment of a country’s trade policies. While the pandemic has altered the methods, the world may as well as adopt its previous way once the situation eases.

Shawn Mack is a content writer who offers ghostwriting, copy-writing, and blogging services.His educational background in business and technical field has given him a broad base from which to approach many topics. He is also fond of writing interesting blogs on technology & digital marketing related topics. He occasionally writes blog articles for Techloner.

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