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The Compliance Risks Small and Large Shippers Should Understand


Whether a company is trading globally or locally, it’s important that shipping is regulated under the trade laws. Fortunately, for larger shipping companies who might already have an in-house compliance staff won’t have to worry, but small enterprises will need to pay closer attention to these responsibilities.

Not complying to the international trade laws can run many risks of facing penalties. Provided by Inbound Logistics and VP of International Law, James Min lists the 4 compliance risks that all shippers should understand.

  • Destination risk. When trading with countries embargoed by the United Nations and the United States, understand the specific restrictions. If you do business in regions such as Iran, Syria, Sudan, North Korea, and Cuba, get familiar with the types of shipments allowed and prohibited, along with any rules that apply.
  • Product risk. For security and foreign policy reasons, the U.S. government closely controls the export of certain materials and equipment, including software and technology that may have dual use. Other countries have similar restrictions when shipping to the United States. Global traders must understand the nature of their product relative to existing regulations. For example, certain items require licenses to export. Using a product’s Export Control Classification Number helps to identify these items, and the agency that can provide the necessary license.
  • Customer risk. Companies must know who is placing orders and receiving shipments. Shipping to and from well-known overseas companies presents a lower risk, while fulfilling orders through freight forwarders should raise red flags, because shippers are liable for the ultimate end recipient of their products. A number of online tools from government agencies and private companies are available to help verify the identities of overseas customers.
  • Shipping risk. The United States is open to trade. By contrast, many other nations are strict when it comes to shipping violations, and may use significant resources to pursue misidentified shipments brought into their borders. Some countries consider it a criminal violation to undervalue goods, and companies that do so may face severe penalties and delays. Strictly following shipping disclosures and requirements can save companies significant time and money.

Are you aware of these risks in your supply chain operations? Our Supply Chain Optimization Strategic Approach will help you improve your supply chain management to avoid compliance penalties. Contact Us for more information!

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