Case Studies

In the world of businesses, quality remains the priority as it affects the degree of customer satisfaction, and in turn the reputation of a business. There are several types of quality control inspection are developed that are conducted at different specific stages of production to ensure the expected quality standards are being met. One of the quality control processes is Pre-Shipment Inspection (PSI). In this guide, you will learn what it is, why it is needed, and various other aspects about it.

What is Pre-Shipment Inspection?

Pre-shipment inspection is the step usually taken by trade operators, such as buyers, suppliers, and agencies, to inspect newly manufactured products right before they are shipped for export or import. The primary objective of the pre-shipment inspection is to check the quality, quantity, defects, safety requirements of merchandise and issue reports for import and billing. This inspection step gives trade operators the assurance and peace of mind that their products are ready to be shipped to their destination.

Why is the Need for Pre-Shipment Inspection?

Pre-shipment inspections are typically conducted when mandated by the government of the importing country. In this way, the government can ensure that the price charged by an exporter reflects the true value of the goods. It also prevents goods of substandard quality from entering their country and reduces attempts to avoid the payment of customs duties. Thus, in general, pre-inspection is needed because it is mandated for the traders by their governments.

However, even if your country doesn’t mandate pre-shipment inspection, you can still choose to have this inspection conducted to ensure that you are getting goods that meet the specifications mentioned in this contract.

Who Performs Pre-Shipment Inspection?

Pre-shipment inspections are usually conducted by contracted private organizations or third-party quality inspection/control companies. Importers can select from one of the many reputable and recognized organizations when planning the inspections.

Who pays the costs of pre-shipment inspection?

The costs of pre-shipment inspection are paid either by the importer or the government of the importing country. However, in some cases, the Inspection Agency may invoice the seller in case of supplementary inspection visits. The costs related to presenting the goods for inspection, such as unpacking, handling, testing, sampling, and repackaging, are the responsibility of the seller.

Who is responsible for arranging the pre-shipment inspections?

Though the importing party is usually responsible for pre-shipment inspection, the exporter must make the shipment available for the inspection in the country of origin. Delays in presenting the goods can lead to problems in shipment delay and/or increased costs for the exporting party.

Thus, it is in the best interest of exporters to coordinate and work with the freight forwarder to ensure that all the information is accurate and provided to the inspection company immediately after the notification of the requested inspection. Sometimes, requirements for pre-shipment inspections are mentioned in letters of credits or other documents.

In case a disagreement arises on the findings of the Pre-Shipment Inspection, a resolution of the discrepancy should be negotiated with the inspection agency. When exporting to a member country of the World Trade Organization (WTO), the WTO agreement on PSI spells out the responsibilities of the exporter and the inspection agency.

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