Executive Briefings

International Chamber of Commerce Has Concerns Over Return-Refill Packaging

Shipping goods across borders with reusable containers and tracking systems is better for the environment, consumers and companies, yet differential treatment by customs authorities can be detrimental for business, says the International Chamber of Commerce.

An increasing number of companies have been using return-refill packaging and container systems, where containers are shipped back to the exporter empty after delivery and reused. Sending goods in containers that are returned to them allows companies to use tracking and tracing systems that improve quality control, security and logistics management.

However, return-refill containers and packaging are often subject to stringent customs clearance formalities upon their empty return. While customs duties are rightly imposed on the goods in containers that enter countries, there is little international coherence on how customs should treat the returning containers that are empty except for perhaps their tracking systems, says the ICC.

Some customs authorities will impose duties on the empty returning containers, effectively penalizing companies for adopting this more sustainable transport method. Others will ask companies to navigate through lengthy transit procedures that can cost as much in time as the customs duties themselves. Such disparate customs procedures between countries mean that companies shipping their goods in return-refill container systems cannot be certain of the fees, taxes and time their trading will entail.

As an example, one ICC member works with a number of small and medium-sized Central American companies that export to other countries in the region using road transportation. The products, mostly fruits and vegetables, are shipped in plastic containers, which are then returned empty to warehouses in their home country. Customs would consider the empty box merchandise, though, and accordingly ask the companies to pay import duties on it.

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An increasing number of companies have been using return-refill packaging and container systems, where containers are shipped back to the exporter empty after delivery and reused. Sending goods in containers that are returned to them allows companies to use tracking and tracing systems that improve quality control, security and logistics management.

However, return-refill containers and packaging are often subject to stringent customs clearance formalities upon their empty return. While customs duties are rightly imposed on the goods in containers that enter countries, there is little international coherence on how customs should treat the returning containers that are empty except for perhaps their tracking systems, says the ICC.

Some customs authorities will impose duties on the empty returning containers, effectively penalizing companies for adopting this more sustainable transport method. Others will ask companies to navigate through lengthy transit procedures that can cost as much in time as the customs duties themselves. Such disparate customs procedures between countries mean that companies shipping their goods in return-refill container systems cannot be certain of the fees, taxes and time their trading will entail.

As an example, one ICC member works with a number of small and medium-sized Central American companies that export to other countries in the region using road transportation. The products, mostly fruits and vegetables, are shipped in plastic containers, which are then returned empty to warehouses in their home country. Customs would consider the empty box merchandise, though, and accordingly ask the companies to pay import duties on it.

Read Full Article