The job of a shipment inspection agency is to check that goods conform to the buyer’s specifications and World Trade Organisation (WTO) rules, before they are shipped. Inspection agencies can also be used to verify cargo when it is already on board a vessel, and to check the security, seaworthiness and functionality of the vessel itself.
Accreditation required
Shipping inspection agencies need to be recognised and accredited by the authorities of the importing country, as independent and impartial third parties. To satisfy Customs requirements in India, the third-party inspection agency needs to be approved by the Directorate General of Foreign Trade (DGFT). Either a buyer or a seller of goods can hire an inspection agency.
Pre-shipment inspection certification (PSIC)
The shipment of consumer goods, secondary raw materials and certain soft commodities between countries can sometimes require a pre-shipment inspection certificate (PSIC) to be issued by an inspection agency, to obtain Customs clearance and assure the customer that they are being sent what they ordered.
What are pre shipment inspections checking for?
In the case of hazardous or non-hazardous waste shipments, pre-shipment inspections are likely to be checking for contaminants that contravene the rules of the destination country, and that might violate other contractual terms agreed with the buyer or importer. Scrap metal might be physically searched by an authorised inspector for prohibited metal items such as guns, ammunition or mines, and tested for radioactive materials using specialised equipment, before a PSIC is issued. For shipments of waste paper or waste plastic, inspection agencies might be looking for prohibited contaminants such as putrefiable organic matter, medical waste, or municipal solid waste.
What evidence do inspection agencies need?
Depending on what is being shipped, inspection agencies may only require emailed documents and visual evidence from the seller or exporter before authorising certification. Photographs or videos of key steps during the loading process are usually required to obtain a PSIC. For example, evidence may include photos of the container’s closed door with the container number visible; a bale break; and a photo of the seal in place clearly showing the seal number. This supporting evidence can then be forwarded as part of the inspection report to the relevant authorities, and shared with the customer.
PSI certification is no guarantee
Although pre-shipment inspections are meant to lower the risks of international trade for all parties, inspections of goods on arrival may still result in delays and disputes. Customs checks can reveal discrepancies between official documentation and the physical shipment, for example, resulting in a fine or the shipment being turned back. On arrival, the commodity’s stated quality or quantity may be disputed by the buyer if, say, the weight of a waste paper shipment is affected by excessive moisture content, or it presents as a less valuable grade. Disputes of this kind can give rise to claims for partial or full reimbursement, or the goods being rejected. Due to these risks, some traders use CTRM software to optimise their trading strategies and mitigate uncertainties.
