How to Import from the Philippines: A Step-by-Step Guide

How to Import from the Philippines: A Step-by-Step Guide
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How to Import from the Philippines

Businesses of all kinds face logistical challenges when importing from the Philippines, a market known for its diverse products, including clothing, toys, electrical parts, and household items. Among the challenges that SMBs face include finding reliable suppliers, familiarizing themselves with Philippine export regulations, understanding the import regulations of the United States or Canada, and navigating the intricacies of international shipping. Despite these obstacles, the Philippines remains an attractive prospect, and many of these difficulties can be significantly simplified by teaming up with the right digital freight forwarder.

In this in-depth guide, we will take a deep dive into the complexities and nuances that you, as an SMB, will encounter when importing from the Philippines and provide you with valuable information that you can use to your advantage. Additionally, we’ll discuss how an experienced freight forwarder will help you overcome these obstacles effectively, improving the chances of your international trade becoming a success.

Setting up and Understanding Your Import Strategy is the First Step

Understanding the import strategy and taking the first steps when importing from the Philippines require thorough planning, research, and execution. It’s important to have a grasp on what the importing process looks like and which partners you’ll be working with throughout the process.

When importing goods from the Philippines, several key players are integral to the process, ensuring a seamless transition from supplier to end recipient:

  • Buyer/Importer: This is you, an SMB interested in importing goods from the Philippines to expand your company’s operations.
  • Manufacturers/Suppliers in the Philippines: These are entities that produce the goods you intend to import. Building a good relationship with them is crucial for consistent product quality and timely deliveries.
  • Customs Authority of the Philippines: Their role is to regulate the imports and exports from the Philippines, making sure that all local laws and regulations are followed.
  • Customs in the USA or Canada: They verify that the imported goods comply with domestic import regulations as well as collect the applicable import duties.
  • Digital Freight Forwarder: This is us. We act as your logistics partner, managing every aspect of the shipping operation for you, streamlining communication, and reducing paperwork.

Understanding the roles and responsibilities of each of these players can aid in navigating the intricacies of the import process and avoiding potential pitfalls.

Make Sure You Comply with the Philippines’ Export Regulations and Compliance

When it comes to importing products from the Philippines to the United States or Canada, typically, the responsibility of obtaining export licenses and handling export procedures falls upon your supplier in the Philippines. 

As the importer or buyer, your primary concern should be to negotiate the right incoterms, which are terms that outline each party’s responsibilities. 

Here is a brief overview of the compliance and regulations that your Philippines partners must adhere to.

Customs Declaration

If your partner in the Philippines exports goods from the Philippines, he or she will be required to provide a detailed customs declaration. A customs declaration must include the following:

  • Description of Goods: A clear and concise description of the item(s) being exported.
  • Quantity of Goods: Number of units, weight, volume, or any other relevant measure.
  • Value of Goods: The total value, usually in Philippine pesos or the currency of the invoice, of the goods being exported.
  • Harmonized System (HS) Code: This is an internationally standardized system that uses names and numbers to classify traded products.
  • Country of Origin: Where the goods were manufactured or produced.
  • Destination Country: The country where the goods are headed.
  • Mode of Transport: Details of how the goods are being shipped, e.g., by air, sea, or land.
  • Packing Details: Information on how the goods are packed, including the number of packages, type of packing, and individual package marks.

The customs declaration is an official document, and it’s essential the seller guarantees its accuracy. Any discrepancies or false declarations could lead to delays, penalties, or confiscation of goods. 

Export License (Philippines Supplier)

Exporting goods from the Philippines involves various licenses and permits, depending on the nature of the goods and the specific regulations governing their export. Here’s a list of export licenses and permits that a Philippine supplier might need:

  • Business Registration:
  • DTI (Department of Trade and Industry) Registration: Needed if the business is a sole proprietorship.
  • SEC (Securities and Exchange Commission) Registration: Necessary for partnerships or corporations.
  • Bureau of Internal Revenue (BIR) Registration: Every exporter, regardless of the size and scope of their business, must be registered with the BIR and obtain a Tax Identification Number (TIN).
  • Export Declaration (ED): This is the foundational document required for all export shipments. It acts as both a declaration and a permit for exporting goods out of the Philippines.
  • Certificate of Origin (CoO): A document indicating the source country of the goods, especially critical for goods being exported under preferential trade agreements.

Engaging in international trade offers Filipino businesses the opportunity to expand their market reach and drive growth. However, venturing into exports also means navigating a complex landscape of regulatory and fiscal obligations.

  • Value Added Tax (VAT): In the Philippines, export sales are subject to a zero-rated VAT. This means that while VAT is not added to the sale price, the exporter can claim a credit or refund for VAT paid on materials and services related to the exported product.

Negotiating Contracts and Incoterms with the Philippines Seller

Negotiating contracts with sellers in the Philippines, according to Incoterms, is crucial and requires an understanding of both the international trade landscape and the specific nature of the goods being imported.

Incoterms, which stands for International Commercial Terms, are a set of international terms specifying the responsibilities of buyers and sellers when shipping goods abroad. These terms specify who bears the transportation costs, where and when the risk shifts from seller to buyer, as well as who pays for cargo insurance. 

For example, under FOB, the seller remains accountable for the merchandise until it is aboard the ship. With EXW, the buyer takes responsibility for the items as soon as they exit the seller’s location. In the case of FCA, the seller hands over the goods to a carrier designated by the buyer. 

It is important to be familiar with the following Incoterms, which define responsibilities, risks, and costs between buyer and seller:

  • EXW (Ex Works)
  • FCA (Free Carrier)
  • FAS (Free Alongside Ship)
  • FOB (Free On Board)
  • CFR (Cost and Freight)
  • CIF (Cost, Insurance, and Freight)
  • CPT (Carriage Paid To)
  • CIP (Carriage and Insurance Paid To)
  • DAT (Delivered at Terminal)
  • DAP (Delivered at Place)
  • DDP (Delivered Duty Paid)

You can learn more about Incoterms here.

Understanding these terms, especially in the context of trade with the Philippines, can help you negotiate the most suitable terms for your import shipments based on factors such as the type of goods, the shipping method, and the level of responsibility you’re willing to assume.

Choosing Your Shipping Options and Handling Logistics

When choosing shipping options for importing goods from the Philippines, it is important to understand the specific requirements of the cargo. The volume, weight, fragility, and urgency of the shipment, along with the nature of the goods, will influence the choice of shipping method and logistic requirements.

There are several shipping methods available, each with its own advantages and disadvantages. Ocean freight could be a good choice for big, non-urgent shipments, while air freight is faster but, in most cases, more expensive. Careful assessment of these methods will guide you toward the best decision for your import.

An additional aspect to think about is the range of delivery options available, like port-to-door, port-to-port, or even door-to-door services. In essence, your freight forwarder will execute the logistics based on your preferences, from the collection point to your specified delivery location. This means that logistics can be dramatically simplified, eliminating the need to deal with multiple logistics suppliers for different stages of the shipping operation.

International shipping involves various risks, and careful planning can mitigate these. Engage in a thorough risk assessment and ensure that you have proper insurance coverage tailored to your specific cargo. 

Tracking and monitoring shipments is essential for maintaining control over the process. Utilize modern tracking systems that provide advanced updates on the shipment’s status. 

In addition, it will be necessary for you to handle carrier-related documents, such as the Bill of Lading and other shipping documents, throughout the shipping process.

How Freight Forwarders Streamline Your Shipping Operations

Freight forwarders are a great resource to utilize to streamline your shipping operations, especially in the context of international trade. 

  • Researching: Freight forwarders offer a variety of shipping options and additional services related to shipping, including customs clearance, financing for SMBs, and secure payment options. Thanks to their long-standing relationships and networks with carriers and service providers, they are more adept at negotiating and streamlining this procedure than an SMB attempting it independently.
  • Execution: They manage the logistics and oversee the shipping operations, ensuring the safe transport of your products from the Philippines.
  • Cargo Insurance and Tracking: In many cases, freight forwarders provide insurance options for your cargo during its journey. Furthermore, they can also offer advanced tracking solutions, allowing you to monitor your shipment’s location and receive alerts in case of unexpected events.

Import Regulations and Customs Duties When Importing Goods from the Philippines

Compliance considerations are paramount when importing to the USA and Canada from the Philippines due to the intricate legal landscapes governing international trade in these countries. Using the following as a resource can help you understand the specifics when it comes to importing to the USA and Canada.

Compliance Considerations When Importing to the USA and Canada

For Both Countries:

  • Quotas and Restrictions: To determine which products are subject to restrictions, consult the US Customs and Border Protection site for US restrictions and the Canada Border Services Agency site for Canadian restrictions.
  • Tariff Classification: It’s crucial to determine the correct tariff codes for imported products, considering the goods’ classification and origin.
  • Calculation and Payment of Duties: Understanding how customs duties are calculated and how to make payments is vital.
  • Environmental Regulations: Adhering to laws related to environmental protection, including packaging and waste disposal.

For the United States:

  • US Customs Bond: The United States Customs and Border Protection (CBP) requires importers to obtain a customs bond. This bond acts as a guarantee to the US government, ensuring the payment of all import duties and taxes.
  • Compliance with Specific Agencies (e.g., FDA, USDA): Meeting standards set by specific regulatory bodies for certain product categories.

For Canada:

  • Canadian Customs Bond: When importing goods for commercial purposes, the Canadian Border Services Agency (CBSA) normally requires certain importers to obtain a customs bond, also known as form D120. The bond acts as a guarantee for the Canadian government that the importer will be in compliance with all necessary laws and regulations, as well as that all import duties and taxes will be paid.
  • Business Number (BN): For commercial products to be imported into Canada, it’s necessary to secure a Business Number (BN) for an import/export account, which can be provided by the Canada Revenue Agency (CRA).
  • Bilingual Labeling Requirements: Compliance with English and French labeling requirements for consumer products.
  • Compliance with Specific Agencies (e.g., CFIA, Health Canada): Meeting standards set by Canadian regulatory bodies for certain product categories.

Documents and Other Considerations When Importing to the USA and Canada

Importing to USA and Canada:

  • Bill of Lading or Airway Bill: A legal document between the shipper and carrier detailing the type, quantity, and destination of the goods being shipped.
  • Commercial Invoice: A document prepared by the seller for the buyer that details the transaction. It includes prices, a description of the goods, delivery and payment terms, along with the names and addresses of both the buyer and seller.
  • Packing List: Describes the contents, weight, and dimensions of the shipment.
  • Certificate of Origin (CoO): Certifies the country where the goods were produced.

Importing to the USA:

  • Arrival Notice: Notifies the consignee of the goods’ arrival.
  • Importer Security Filing (ISF): Also referred to as “10+2”, this is required for ocean freight shipments. The importer or their authorized representative must submit certain information about the shipment electronically to CBP as part of the Importer Security Filing.
  • ACE Import Manifest Documentation: This system is an electronic reporting platform overseen by the United States Customs and Border Protection (CBP). Before the arrival of a shipment, carriers, importers, and freight forwarders are required to submit shipment information to the CBP electronically. The system facilitates pre-arrival screening and risk evaluation, which in turn speeds up the customs clearance process.

Importing to Canada:

  • Canada Customs Invoice (CI1): This document is mandatory for all shipments with a value exceeding CAD 2500. The document contains details about the items being transported from the Philippines, the seller, the buyer, and other related information.
  • Import Declaration: This form must be completed by the importer in which he/she describes the goods being imported. Canada’s customs authority relies on this declaration to manage and control imports into the country.
  • ACI eManifest: Administered by the Canada Border Services Agency (CBSA), Canada’s Advanced Commercial Information (ACI) eManifest is an electronic filing platform. This system mandates that carriers, importers, and freight forwarders provide cargo information before its arrival. Similar to its American counterpart, the ACI eManifest allows Canadian Authorities to assess the risk factors of incoming shipments and streamline the process of customs clearance.

These documents cover the general requirements; however, it’s essential to consult with customs, freight forwarders, and other trade experts to understand any specific or additional requirements based on the nature of the goods and other unique considerations.

How a Freight Forwarder Can Streamline Import Regulations and Customer Duties Process

Utilizing a freight forwarder to navigate the complex landscape of regulatory compliance for importing goods from the Philippines presents substantial benefits. The intricacies of international trade, which include customs regulations, tariffs, documentation, shipping, and more, can be overwhelming, especially for businesses that may not have an established presence or vast experience in global markets. Engaging the expertise of a freight forwarder simplifies this multifaceted process.

For SMBs without a dedicated international trade department, partnering with a freight forwarder is more than a tactical decision. It enables them to focus on their core business activities while outsourcing the complexities of regulatory compliance associated with importing goods from the Philippines to people who have expertise in that field. 

Ship4wd is Your Trusted Partner for Importing Goods from the Philippines 

Ship4wd is a digital freight forwarder specializing in helping SMBs import goods from international markets, including the Philippines. With years of dedicated experience, our team understands the unique challenges small to medium-sized businesses face in international trade.

At Ship4wd, we believe in providing tailored solutions that align with your business goals and compliance requirements. Our in-depth knowledge of regulatory requirements and customs, when combined with our network of established partnerships, enables us to navigate complexities with precision. Moreover, we enhance your importing experience by offering value-added services like cargo insurance and financing options. 

Our aim is to make your import journey from the Philippines as seamless and effortless as possible.

How to Get Started with Ship4wd

Are you ready to simplify the import process from the Philippines? Ship4wd is committed to helping you through each stage of your import journey. Whether your destination is the US, Canada, or anywhere else globally, using our digital platform, you will be able to easily search for instant shipping quotes to suit your shipping requirements. 

To make things even better, Ship4wd offers 24/7 customer support so that we can answer any question you may have or, if necessary, assist in getting around our platform.

Get started with Ship4wd today, and we’ll handle the shipping while you focus on growing and managing your business.

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