Export Advice Hub: Drop shipment – What to consider if buyer is asking you to ship directly to their end-user?

Aug 16, 2022


Question:

We sell goods to an intermediary in Singapore who buys on behalf of a company in India. To save time and cost, the Singapore customer has asked whether we can deliver directly to India by making the goods available to their Indian customer’s freight forwarder at our GB warehouse.

Can you advise what are the considerations if we were to do this, especially if the goods were subject to export licence. Is it possible for Singapore to export the goods from the UK using their invoices/paperwork, if they make reference to our GB EORI and export licence and provide proof of export? Or would they have to obtain the export licence in their name?

Answer:

In some ways it depends on what has been agreed contractually, but if the Singapore or Indian companies do not have a GB EORI they cannot be an exporter out of the UK and they cannot use your GB EORI. In addition, if the goods do require an export licence they would need a UK Entity, registered on the Export Control Joint Unit (ECJU) SPIRE application system to apply for the licence.

Assuming that you will be the exporter, which would apply for an FCA sale if India is paying the freight and selecting the forwarder, the licence would need to state the Indian company as the consignee and end user and mention the Singapore company as being involved in the transaction. If the goods are shipped to Singapore, the consignee would be the Singapore customer but the end-use would still have to be declared as the Indian company.

If it is a UK to Singapore sale, and a subsequent sale from Singapore to India then it is the UK sales value which would be declared to HMRC at export, but the Singapore sales value at import into India. Under FCA it would mean that the forwarder would have sight of the UK sales value, which could be an issue for the intermediary in Singapore.

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