Import/export flow
General flow of export and import procedures
1. About export permits and approval
Export transactions may be carried out freely as a rule. However, export requires the permission of the Minister of Economy, Trade and Industry if the cargo conflicts with Appended Table 1 in Article 1, Export Trade Control Ordinance (weapons, weapon of mass destruction, and other related cargo).
If the cargo conflicts with Appended Table 2 in the same ordinance (e.g., CITES-listed animals), it will also require the permission of the Minister of Economy, Trade and Industry.
For more information, see the Ministry of Economy, Trade and Industry website.
Additionally, there are some items subject to export control under other laws and regulations. If you have any questions, contact the customs counselor office or the government office in charge of the applicable law or regulation.
(For reference)Trade Control on the Ministry of Economy, Trade and Industry website
2. Contract procedures
The parties involved in exporting and importing conclude a trade agreement.
The seller and buyer should determine the terms of trade. Traders generally follow Incoterms, the formula for international trade terms stipulated by the International Chamber of Commerce (ICC).
Incoterms has been revised many times, and Incoterms 2020 is the updated version that took effect on January 1, 2020.
The following table shows trade terms.
Since Incoterms is not a law or treaty, the contract should clearly specify that the contracting parties are adopting Incoterms 2020 in their transactions if they agree to do so.
In the case of container transportation, if trading parties apply FOB, CFR and/or CIF, which have been used for years, then the seller will bear the risks that occur from the work at the container yard to the loading of the ship.
During container transportation where the cargo is handed over at a container yard (CY) supervised by a carrier, the cargo handover will be completed when the cargo is put into the hands of the carrier specified by the buyer for FCA and when the cargo is put into the hands of the carrier specified by the seller for CPT and CIP. Then, the risk of loss is transferred to the buyer.
Therefore, in many cases, FCA is more suitable than FOB, CPT is more suitable than CFR, and CIP is more suitable than CIF for container transportation.
- 1Rules for Any Mode or Modes of Transport
EXW Ex Works
(insert named place of delivery)FCA Free Carrier
(insert named place of delivery)CPT Carriage Paid To
(insert named place of destination)CIP Carriage and Insurance Paid To
(insert named place of destination)DAP Delivered at Place
(insert named place of destination)DPU Delivered at Place Unloaded
(insert named place of destination)DDP Delivered Duty Paid
(insert named place of destination) - 2Rules for Sea and Inland Waterway Transport
FAS Free alongside Ship
(insert named port of Shipment)FOB Free on Board
(insert named port of shipment)CFR Cost and Freight
(insert named port of destination)CIF Cost Insurance and Freight
(insert named port of destination)FAS Free alongside Ship
(insert named port of Shipment)
3. Shipping request
Exporters do not carry out various export procedures, customs clearance, or shipping, which are in reality consigned to marine cargo carriers (shipping brokers).*
The following shows the documents necessary to request shipping.
- *Officially, shipping can be consigned to freight forwarders licensed under the Port and Harbor Transportation Business Act and customs clearance can be consigned to customs brokers permitted under the Customs Business Act. These two businesses are completely separate.
However, on a practical level, business operators with both licenses and permissions only engage in shipping procedures in a general. Thus, the following explanation presupposes that marine cargo carriers and customs brokers have both of the licenses and permissions.
- Shipping Instruction
- Invoice for customs clearance
- Packing list for customs clearance*
- Export permit, export license, export inspection certificate under the Export Trade Control Ordinance and other laws/regulations if necessary
- Materials that prove the details of cargo stated in the invoice and packing list (e.g., photocopies of catalog and spec sheet)
- *The exporter should prepare a packing list as a rule. If the task is consigned to a marine cargo carrier or any other specialized business operator, in general cases, on a practical level, a packer will prepare such based on a　manifest for an exporter, and an exporter will sign it.
4. Booking a ship
A marine cargo carrier is consigned to perform customs clearance and shipping procedures for export based on shipping instruction (S/I). Contracting parties conclude a purchase and sale agreement under the trade terms agreed upon by the parties.
When exporting using a containership, it is necessary to select the vessel that will be operated according to a schedule that shares the same point of embarkation, destination, and contract terms as the schedule disclosed by the shipping company.
Caution should be used in letter of credit (L/C) transactions, as L/Cs include the details of the terms.
It is possible to consign procedures such as ship selection and booking to a non-vessel operating common carrier (NVOCC).
5. Marine cargo insurance coverage
If CIP or CIF is required by the trade terms, the exporter should obtain marine insurance from an insurance company because the exporter is obliged to insure the cargo.
6. Export declaration and bonded area
To export cargo, the exporter must make an export declaration to a custom house and undergo the necessary cargo inspection to get a permit.
Exporters can submit export declarations before carrying the cargo to be exported into a bonded area, however, the export permit will be issued after the cargo to be exported is carried into a bonded area.
A customs broker (marine cargo carrier) prepares the export declaration form for the exporter based on the invoice prepared by the exporter.
Declarations are conducted through the Nippon Automated Cargo and Port Consolidated System (NACCS), the system that connects the terminals used in custom houses and customs brokers (marine cargo carriers) via the Internet.
The custom house reviews the export declaration form and if necessary, inspects the cargo.*
An export permit will be issued if there are no problems in this processes.
- *The exporter will bear the actual costs pertaining to the inspection, if applicable.
If an exporter applies with the customs superintendent for a AEO exporter (authorized exporter) certification and becomes certified, the exporter will receive certain benefits, such as simplified/accelerated cargo customs procedures.
Specifically, the exporter will be able to make an export declaration to get a permit without carrying the cargo to be exported into a bonded area.
7. Carrying in container yard (CY) or container freight station (CFS)
After the export permit is issued, the cargo to be exported should be carried in a CY (for container cargo) or CFS (if the cargo is mixed or small-lot) managed by the shipping company of the booked vessel.
If the exporter consigns shipping procedures to a marine cargo carrier using shipping instructions, the marine cargo carrier will arrange the work for the exporter.
- *The work will not occur if the export permit is obtained for a CY/CFS that is a bonded area.
8. Issuing bill of lading (B/L)
After it is confirmed that the vessel loaded with cargo including the cargo to be exported has left port, the shipping company or NVOCC will issue a B/L.
The exporter can receive the B/L in return for the payment of costs the shipping company (or NVOCC) incurred in the exporting country.*
- *If the marine cargo carrier pays the costs for the exporter and receives the B/L, the exporter will receive the B/L in return for their payment to the marine cargo carrier.
- 1Bill of Lading(B/L)
The B/L is a valuable security established by statutory law.
The cargo importer can receive the cargo from the shipping company in exchange for the original B/L received from the exporter. - 2Surrendered B/L
The original B/L may be sent after the ship arrives at the destination in the case of short-haul routes in the Asian region.
One set of procedures is: The shipper endorses all of the original copies of the B/L (usually there are three copies) issued at the place of shipping. All of the original copies of the B/L are returned to the shipping company at the place of shipping. The shipping company or NVOCC returns the original copies of the B/L stating "Surrendered" or "Accomplished" to the shipper, and at the same time, the carrier informs the agent at the place of delivery that the carrier has collected the original copies of the B/L. Then, the cargo can be handed over at the place of delivery without the original copies of the B/L.
This is also called surrender.
Surrendered B/L is a conventional practice established on a practical level. However, there are concerns or risks regarding disputes or lawsuits because there are no regulations supporting it. - 3Sea Waybill
The Sea Waybill became established as containerships became prevalent.
The original copies do not need to be presented upon reception of the cargo because the Sea Waybill is not a valuable security.
You can receive the cargo if it is confirmed that you are the consignee stated on the waybill.
It is preferable to choose to use Sea Waybills rather than Surrendered B/Ls, because Surrendered B/Ls have lost their original function of being a valuable security and there are stipulations regarding Sea Waybills in the Uniform Customs and Practices for Documentary Credits and Commercial Law.