Importers, are you missing an opportunity to save money on duties?

Posted on Aug 8

If you are buying your product with Incoterms ® of CPT, CIP, CFR or CIF Destination, DAP, DAT, or DDP, chances are you may be missing an opportunity to save money on the importation of your goods even on a tariff that is duty free. Shippers unwilling to disclose freight charges does not allow for the deduction of transportation charges from the entered value of goods. The result is payment of duty on a higher rate than what it would be if the non-dutiable transportation charges were deducted.On a recent analysis of one importer’s shipments an estimated $15,000 payment of duties was revealed because the entered value, the amount that duties are calculated from, included the transportation charges. The importer was paying duty based on a value that included transportation charges and insurance.There are two ways to see immediate cost savings in overpaying duties. The first is to press the shipper to provide the actual freight charges paid to the carrier so they can correctly be deducted from the entered value of your cargo. The second and best option is to change the terms of sale for which the product is being purchased. This allows a better management of freight spend while also ensuring that the duty paid is accurate based on the value of the goods rather than the value of the goods plus freight charges.If your buying terms are under a C or D term, there is an opportunity to realize an immediate cost savings. Ask your supplier to provide the actual freight costs and include it as an itemization on the commercial invoice or provide a rated bill of lading. If they refuse, it may be time to consider changing to Incoterms ® where you manage the freight movement and see the benefit by reducing your duty costs.