Customs Considerations When Exporting to Japan

Mufaddal K.

articleImg

Manufacturers looking to export their products abroad need to consider various factors when evaluating export markets.  One of those factors is the customs clearance infrastructure and processes within a given country.  This article presents an overview of the time and cost it takes for a local partner to clear imported products through customs in Japan.  This overview, along with a regional comparison, should help you better qualify Japan as an export market for your products.



Country Overview


Japan is located within the East Asia & Pacific region.  It is a populous country with roughly 127 million people as of 2018.  94% of the population lives in urban areas.  The World Bank categorizes it as a high income country with a GDP per capita (PPP) of USD $42,700 per person.



Regional Comparison


The "World Bank's Doing Business project" publishes an evaluation of countries based on their efficiency of cross border trade.  When assessing import efficiency within a country it primarily reviews four factors:


1.  The time for border compliance (imports):  Compliance time associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


2.  The cost of border compliance (imports):  Compliance cost associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


3.  The time for document compliance (imports):  The time for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


4.  The cost of document compliance (imports):  The cost for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.



When evaluating border compliance time and cost amongst major regional economies, Japan ranks 6th regionally in terms of border compliance time and 4th regionally in terms of border compliance cost.  A US$50,000 imported shipment of auto parts would take 48 hours to clear border customs and cost roughly US$275.


Country     Border Compliance Time (Hours)     Border Compliance Cost (USD)    
Singapore 33 $220
Thailand

50 $233
Hong Kong 19 $266
Japan 48 $275
South Korea 6 $315
Malaysia 69 $321
New Zealand 25 $367
Vietnam 56 $373
Australia 39 $525
Philippines 72 $580
China 72 $790
Taiwan 141 $828


When evaluating document compliance time and cost amongst major regional economies, Japan ranks 4th regionally in terms of document compliance time and 9th regionally in terms of document compliance cost.  A US$50,000 imported shipment of auto parts would take 3 hours in Japan to have documents prepared & cleared and would cost roughly US$107.


Country     Document Compliance Time (Hours)     Document Compliance Cost (USD)    
South Korea 1 $27
Singapore

3 $40
Thailand 4 $43
Philippines 96 $50
Hong Kong 1 $57
Malaysia 10 $60
New Zealand 1 $80
Australia 4 $100
Japan 3 $107
China 54 $150
Vietnam 76 $183
Taiwan 149 $742


Differences Between Major Cities in Japan


The World Bank analyzed two major cities in Japan as part of their analysis.  As seen below, the time and cost for border compliance is higher in Osaka vs. Tokyo.  However, the time and cost for document compliance is about even in both cities.


Major City     Border Compliance Time (Hours)     Border Compliance Cost (USD)     Document Compliance Time (Hours)     Document Compliance Cost (USD)    
Tokyo 48 $275 3 $107
Osaka

24 $344 4 $107


Detail for Border Compliance Time and Cost


Border compliance time and cost are calculated as a function of three driving factors: the time/cost related to working with customs authorities, the time/cost related to working with other agencies and finally border handling time/cost.  For both cities, border handling is the major driver of time and cost for border compliance.


Tokyo Overview:


Detail Type     Time (Hours)     Cost (USD)    
Working with Custom Authorities 3 $90
Working with Other Agencies

0 $0
Border Handling

48 $185


Osaka Overview:


Detail Type     Time (Hours)     Cost (USD)    
Working with Custom Authorities 5 $96
Working with Other Agencies

0 $0
Border Handling

24 $248


Detail of Document Compliance Time and Cost


Document compliance time and cost is a function of the various documents required by the country when importing goods.  For Japan, the documents required when importing goods from abroad include an invoice, packing list, bill of lading, customs import declaration and SOLAS certificate.



Transportation Costs


Another factor that influences import trade efficiency is transportation costs.  For Tokyo, the port where goods would most likely land would be Yokohama port.  When calculating transportation cost for the US$50,000 auto parts shipment, the World Bank calculates that the shipment that would land at Yokohama port would need to be transported 20 km with an average travel time of 3 hours.  This brings the delivery transportation cost for the shipment to roughly US$323.



For Osaka, the transportation cost is higher.  The World Bank calculates that the US$50,000 auto parts shipment that would most likely land at Kobe Port would need to be transported 37 km with an average travel time of 2 hours.  This brings the delivery transportation cost for the shipment to roughly US$280.



Infrastructure Digitization


Greater use of technology within the customs clearance process helps improve efficiency and lower time and cost associated with customs clearance.  Today many countries use digital systems to streamline the customs clearance process.  Many of these customs systems are known as EDI or Electronic Data Interchange systems.  More recently however, there has been a push to develop even more integrated customs clearance systems known as SW or single window systems.  These systems provide greater integration within a given country and between multiple countries when managing customs clearance.



Japan does have an EDI system known as Nippon Automated Cargo and Port Consolidated System (NACCS).  It also has an operating SW system that was developed from the EDI system.  More information about this system can be found at http://www.naccs.jp/e/.