Shipping to a trade show? Get a carnet
Rodney C. Schonland -- Logistics Management, 6/1/2002
A traffic manager at a mid-sized manufacturing company gets a call from the marketing department telling him that the company will be exhibiting at a trade show in Germany in three weeks. The marketing staff wants to take along all kinds of materials, including audiovisual equipment, samples, computers and handouts.
The traffic manager understands that this is an opportunity for the company to boost overseas sales. The manager also knows that it will not be easy to import everything into Germany and then return it to the United States. Most of the items are not U.S.-made, and just because U.S. duties were paid on them once does not mean the Customs Service is done collecting revenue on them forevermore. (Read Chapter 98 of the U.S. Tariff Schedule for details.)
The best approach to this situation would be to make two shipments: one for items that will remain in Germany after the show and the other for goods that will come back to the United States.
The first shipment may be handled like any other export (i.e., you ship it, arrange customs clearance, pay the duty, and have it delivered to the exhibit area, free domicile).
The second shipment, however, should be covered by a carnet. A carnet, which is issued by the International Chamber of Commerce, is like a passport for merchandise. It allows the free, temporary international movement of goods between specified locations for up to one year. Rock bands on world tours, traveling art exhibits and so forth often use carnets to move goods easily from one country to another duty-free.
Carnets require that the goods be specifically identified by some means such as serial numbers. They also require that the itinerary be provided in advance, that a bond be pledged against the return of the goods and that the goods return to the originating country.
What are some of the benefits and drawbacks associated with carnets? Well, shippers benefit because they can dispense with filing a CF7501 entry summary, proving the country of origin, and fulfilling several other customs documentation requirements.
And the drawbacks? Carnets are not a substitute for complying with U.S. export control regulations. A carnet, moreover, is not a free pass; the user must present it to customs authorities every time the goods cross a border. Nor is the carnet itself free. A typical carnet will cost around $200, plus the cost of a surety bond. Shippers should also be aware that not all countries accept carnets. Check with your freight forwarder to make sure your destination countries participate in this program.
If you have a carnet, you should avoid selling the covered merchandise while overseas. If you do, you will pay a penalty that usually equals the amount of the bond. You should also avoid trying to secure a carnet at the last minute. Instead, allow enough time for your sales department to provide a complete list of the items to be shipped, plus four or five days for processing the application and unexpected delays.
Carnets are not for everyone, nor are they for every shipment. But if there is sufficient leadtime, the right set of circumstances and valid cost-benefits, then a carnet may be the ideal tool for that upcoming international trade show.
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