The exporter of record (EOR) and importer of record (IOR) are vital entities in cross-border trade and if you are new in the global market, the terms can seemingly translate to the same thing.
The goal of the two is ensuring that goods or services successfully move from source to destination country. However, there’s a significant difference between EOR and IOR and the difference lies in their application.
While EOR services apply to exported goods, IOR services apply to imported goods. Previously, we discussed what an importer of record is in depth. This article focuses on the significant differences between IOR and EOR.
Let’s dive in!
What is an importer of record (IOR)?
An importer of record is the entity legally responsible for facilitating the successful movement of imported goods from source to destination. The entity can be the goods’ purchaser, the owner, or a third-party IOR.
A third-party IOR comes into play when the seller or purchaser of imported goods cannot assume the IOR role for some reason. Various entities can play the role of a third-party IOR, including:
A licensed customs broker
An entity licensed by a country’s customs authority to represent the importer during customs clearance. A customs broker can execute the following responsibilities:
- Sign and submit documents
- Classify goods
- Calculate and pay duties and fees
- Import permits
- Prepare and issue certificates.
Customs requirements differ from country to country and are also subject to change from time to time. This is where the expertise of customs brokers comes into play to track the changes.
As such, businesses and governments employ customs brokers to stay updated on paperwork requirements, tax rates, and import legislation.
A consignee
Consignees receive and collect goods from a carrier, ensuring the goods are as agreed. They inspect the packaging, quality, and quantity of goods before they leave the destination port to the buyer’s premises.
Depending on the type of incoterm agreed upon, the consignee can also be responsible for settling duties and taxes. For instance, if the goods are shipped on DDU terms, the consignee is responsible for the payment.
A consignee can be the buyer, distributor, retailer, or importer.
A dedicated company
The importer of record can be a firm dedicated to providing IOR services. As an IOR service provider, the company takes responsibility for a wide range of activities, including:
- Import customs declaration
- HS classification
- Product valuation
- Payment of duties and fees
- Transportation arrangement
- Freight forwarding
- Customs clearance.
Established IOR service providers like Blackthorne can also represent the importer in foreign destinations that require in-country entity representation.
While the customs broker, third-party company, or consignee can be an importer of record, their scope of services differs significantly. Hence, you must consider your role in the transaction before partnering with an importer of record.
We put together the five critical mistakes you should avoid when choosing an importer of record.
What is an exporter of record (EOR)?
Similar to the importer of record, the exporter of record ensures that exported goods are successfully moved from the source to the destination country. Usually, the EOR is the owner of the exported goods.
However, if the owner cannot offer all the services related to exporting the goods, a third party may assume the role of EOR. The third party must be a company or agent licensed and knowledgeable in providing EOR services.
The exporter of record is responsible for the following:
Customs clearance
The EOR organises and maintains paper records related to the clearance of exported goods.
Logistics management
The EOR ensures shipments leave the port within a specified time to reach their destination at the most convenient time. This includes activities like route optimisation and tracking of the goods in transit.
Financial obligation
EOR responds to all the inquiries related to exports made by relevant parties, including customs authorities of the exporting country.
In the event of any failed delivery, the EOR must compensate the affected parties by paying the remunerations related to the incurred losses (if any).
Freight forwarding
The EOR organises the delivery of exported goods to the final destination.
They provide the name, business address, and employer Identification Number (EIN) to the forwarding agent if the two work as different entities.
Note: Some EOR service providers, like Blackthorne, offer freight forwarding services as a single entity. In this case, the EOR is responsible for the door-to-door delivery of exported goods.
The difference between an IOR and EOR
Essentially, the difference between an importer of record and an exporter of record lies in their focus areas. The IOR focuses on imports, and the EOR focuses on exports.
The nature and scope of the activities may differ, but there’s only a thin line separating the two services.
The responsibilities of the parties involved in import and export transactions also differ. For instance, the terms agreed upon in every cross-border transaction determine the roles of the exporter and the importer. Hence, importers and exporters must understand their roles and responsibilities depending on their partner service providers.
Note: Partnering with a company or entity offering IOR and EOR services, like Blackthorne, can be more cost-efficient than acquiring the services independently.
The difference between a shipper of record and an exporter of record
A shipper of record is the entity or a person involved in documentation related to the exported items. These documents include a packing list, bill of lading, and commercial invoices.
The entity is also responsible for procuring the order of shipment and sometimes freight payment arrangements. In most cases, the shipper of record is the owner of the goods. However, it can also be the consignor.
On the other hand, an exporter of record is the entity or a person legally allowed by the government under customs law to export goods to another country. The entity must meet all export requirements on behalf of the exporter.
Can a freight forwarder be the exporter of record?
EOR and forwarding agents are not similar in terms of their titles. The freight forwarder acts as an agent in the logistics network to ensure the delivery of exported goods to the final destination. It could be a separate entity or a single entity offering both EOR and freight forwarding services.
The EOR and the freight forwarder can assume each other’s roles to facilitate the exportation of goods if they are working as separate entities. For instance, like the EOR, the forwarding agent maintains the paperwork with customs agent authorities to ensure that the exported goods comply with customs regulations.
Similarly, EOR or the forwarding agent is accountable for cases arising from the exported goods. These cases include incorrect assignment of HS codes or delayed delivery.
Consignor vs consignee
A consignor is the person or company sending exported goods in a consignment. It can also be an agent acting on behalf of a consignor or a buyer (customer) importing items.
In contrast, the consignee is a person or a company receiving exported goods. Hence, a consignor is the legal owner of an exported goods until the goods are paid for in full by the consignee when the legal ownership is fully transferred.
Here’s a summary of the difference between a consignor and a consignee:
- While the consignor is the sender of exported goods, a consignee is always the receiver (importer) of the exported goods.
- The consignor remains the legal owner of the exported items until the consignee fully pays for the exported goods.
FAQs
- What is the difference between a shipper of record and an exporter of record?
The shipper of record is the owner of the exported goods. On the other hand, the exporter of record can be the owner of the exported goods or a third party legally authorised to represent the owner. - Can a freight forwarder be the exporter of record?
Yes. Some global logistics partners offer both freight forwarding and EOR services. However, a freight forwarder’s services differ from EOR’s services. - Who can be the exporter of record?
The exporter of record can be the owner of the goods or a third-party EOR service provider legally authorised by the government or customs authority. - What is the difference between an exporter and an importer?
An exporter is an entity sending goods out of a country. On the contrary, the importer is the entity transporting goods from a foreign country to the importer’s home country.
Your Global Transport Solutions Provider
We hope that this blog has helped simplify the two entities and highlighted their differences. Whether you are new to the trade or not, it can sometimes get a little confusing and it is important to know how they can vary.
As a renowned global supply chain logistics provider, we specialise in making your life simpler. Our business provides a door-to-door service of the highest standard and you can expect only the very best partner for all aspects of your global IOR and EOR requirements in return. With over twenty years of experience in the industry, you are in the best of hands with Blackthorne. Get in touch with our team today and let us help you simplify your trade in the global market.
