Pre-shipment Inspection 2024: Complete Guide
I’m sure you’ve heard about “pre-shipment inspection” if you’re in the import business.
Whether the pre shipment inspection you’re looking for is a government requirement or just your own choice, there are many details you should be aware of.
LONG article warning! This article took our team a few days to put together and will take about 13 minutes of your time to read thoroughly. But it’s certainly the most detailed article on preshipment inspections you’ll ever find.
At the end of the article, you can also see a list of the 21 leading Pre-Shipment Inspection companies in China.
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What Is Pre shipment Inspection?
Pre-shipment inspection is a series of checks initiated by international trade parties (importers, trading agents, or suppliers) for recently manufactured goods before being shipped out of the exporting country.
What Are the Types of Pre-shipment Inspection?
Pre-shipment inspections can be divided into two types according to their purpose:
1st Type: Government-required pre-shipment inspection: Some countries’ governments make it mandatory for imported products to be inspected by a designated agency before shipping from the exporting country.
This type of preshipment inspection is carried out to prevent evasion of import duties, avoid capital outflows and prevent substandard products from being imported into the country.
2nd Type: Importer voluntary pre-shipment Inspection: For most countries, pre shipment inspection is not mandatory, but for the sake of protecting their rights as buyers, importers decide to inspect the goods before shipment.
This pre-shipment inspection, voluntarily initiated by the importer, focuses on verifying whether the goods’ quantity, specifications, and quality are consistent with the purchase contract.
It is important to note that an unstandardized inspection does not protect your rights as a buyer. Before you suffer a loss, find out how pre-shipment inspection works under ISO standards.
Government-Required Pre-shipment Inspection: Why, Which Countries, and Its Future
From its first introduction in the 1980s, pre-shipment inspection first appeared in international trade as a mandatory government requirement.
This chapter will talk about why government-required pre shipment inspections exist, which countries have such requirements, and the future trend of mandatory PSI.
What Is Pre Shipment Inspection Certificate?
The pre-shipment inspection certificate is a customs clearance document certifying the status of the goods issued by the importing country’s designated agency after product inspection before shipment.
Why do some country governments require pre-shipment inspection?
Due to inadequate customs infrastructure, some countries leave the door open for importers to conceal or under-declare the value of imported goods, resulting in a decrease in national customs duties revenue.
These governments mandate pre shipment inspections as a way to know the actual status, quantity, and true value of imported goods, thereby avoiding customs fraud.
Which Countries Require Pre Shipment Inspection?
About 40 countries around the world require a pre-shipment inspection to import products above a certain invoice amount or in particular categories.
Most countries that mandate preshipment inspection of imported goods are in Africa, such as Benin, Burkina Faso, Burundi, etc.
Asia also has several countries requiring pre shipment inspection certificates, such as Cambodia, Iran, etc.
The pre shipment inspection is typically not required in Europe, but the exception is if you need to import to Moldova.
It is worth mentioning that some countries had mandatory PSI requirements previously but later canceled this regulation. For example, Angola in Africa, and Bangladesh in Asia, preshipment inspection is no longer compulsory since 2013.
What Is the Future of Government-Required Pre-shipment Inspection?
Government-required pre-shipment inspection is undoubtedly helpful for importing countries, but it also adds to the supply chain costs for importers, on the other hand.
WTO’s Trade Facilitation Agreement (TFA)
As an international organization dedicated to making global trade smooth and free, the WTO’s Trade Facilitation Agreement entered into force on February 22, 2017, after being approved by two-thirds of its members.
“Members shall not require the use of preshipment inspections in relation to tariff classification and customs valuation.” — Trade Facilitation Agreement (TFA)
Therefore, in the future, we will see more and more countries terminating pre shipment inspections that are aimed at protecting national tariff revenues.
Importer Voluntary Pre-shipment Inspection: The Essence of PSI
Unlike government-required pre-shipment inspections that emphasize import tariff classification, voluntary pre shipment inspections focus more on verifying that the quantity, specifications, and quality of the goods are consistent with the contract.
I would say that voluntary pre shipment inspection is the essence of PSI, as it exists to reduce the risk for importers.
What Is the Need of Pre Shipment Inspection?
Pre-shipment inspection is actually like some kind of insurance. As an importer, you pay a small cost to avoid significant losses if a problem occurs.
With new suppliers, most buyers are aware of the need for product inspection before shipping. The problem lies with suppliers who you have worked with a few times with no major quality issues.
The following facts are why we recommend performing pre-shipment inspections for your current suppliers:
- Your supplier does not perform in-house inspections
- Unclear supplier internal quality checklist
- Your supplier is a factory, but the SKU you ordered may not be produced by them
- Due to the price increase of raw materials, suppliers change materials to keep product prices the same
ISO 2859-1: An Internationally Recognized Pre shipment Inspection Standard
Pre-shipment inspection is a quality control service, so how should you choose the right pre shipment inspection company to ensure service quality and efficiency?
In 1999, ISO ( International Organization for Standardization ) published ISO 2859-1 standard, which tells us how a third-party quality inspection agency should perform the pre-shipment inspection.
ISO 2859-1 specifies sampling procedures for inspection by attributes — “-1” means “Part 1” which is about “Sampling schemes indexed by acceptance quality limit (AQL) for lot-by-lot inspection”
What’s your takeaway? If your candidate pre shipment inspection agency can’t specify what standard they follow for product inspection, they likely don’t comply with any of those. No matter how good their inspection costs are, this is the last company you want.
Acceptance quality limit (AQL): The basis for an effective pre-shipment inspection
What is AQL? AQL (Acceptable Quality Limit) is defined by ISO 2859-1 as a “quality level that is the worst tolerable” and is used to determine the maximum number of defects that can be accepted during a pre-shipment inspection.
It’s pretty straightforward to understand. Imagine finding a major defect in 10,000 or 10 products, and their quality levels are completely different.
Sampling plan: Implementation plan for pre shipment inspection
If AQL is considered the theoretical basis, then the sampling plan is the detailed implementation plan for pre-shipment inspection.
Every pre shipment inspection has its own sampling plan, and each sampling plan is a combination of sample size as well as acceptance and rejection numbers.
Inspection level: fine-tune your pre-shipment inspection for the same lot size in different cases
The AQL inspection level designates the amount of inspection used in different scenarios.
ISO 2859-1 specifies three general inspection (Level I, Level II and Level III) and four special inspection (S-1, S-2, S-3 and S-4)standards.
Usually, Level 2 is the default choice. However, suppose your supplier has a good quality record. In that case, you may also consider Level 1 to save inspection costs and time, or if they have just had a major quality problem, you should consider Level 3 to check more samples.
Classification of nonconformities: Big defects and small discrepancies in a pre-shipment inspection
In a random inspection, the inspector may find several nonconformities, which are non-fulfillment of a specified requirement. When the nonconformity affects the product’s intended use, it becomes a defect.
ISO defines different defects according to their seriousness as Class A and Class B.
But at third-party inspection companies, a more common defect classification method is: critical, major, and minor.
How are these defects classified? What are the criteria for classifying defects in pre-shipment inspection?
Critical defects are defects that can potentially endanger the personal safety or health of the end user.
Major defects are those that affect the intended use of the product.
Minor defects are nonconformities that do not affect the product’s functionalities but do not meet the standards.
Advantages and Disadvantages of Pre-shipment Inspection
When you are considering product inspection in China as an importer, your first thought may be pre-shipment inspection. Yes, PSI is the most commonly used one of all types of inspections, but it may not always be a good fit for you.
Pre shipment inspection has a number of advantages. For example, it is the most cost-effective type of product inspection. If your quality inspection budget allows you to choose only one product inspection service, you should definitely go for a pre shipment inspection.
But on the other hand, pre shipment inspection has many shortcomings, for example, it cannot detect quality problems at the beginning of production, nor can it guarantee that your goods will be properly loaded into the container.
Here are some quick tips to help you determine how to choose other inspection types to fill the gaps left by pre-shipment inspections:
Consider a Pre-production Inspection when:
- Production lead time longer than 2 months
- You pay a deposit percentage larger than 30%
Consider a During Production Inspection when:
- The production lasts several days, with a large daily output.
- Suppliers have a history of poor quality.
Consider a Container Loading Inspection when:
- The products are fragile
- First time working with suppliers
What are the steps and procedures of pre-shipment inspection?
A successful pre-shipment inspection requires the cooperation of both the importer and the quality inspection company. The following 13 steps will help you understand how a pre shipment inspection works:
Step 1: define inspection requirements
As an importer, in addition to product information, inspection address, and date, you better inform the third-party quality inspection agency about your inspection requirements and the supplier’s previous quality problems, if there are any.
Step 2: confirm sampling plan
The sampling plan determines the sample size for pre-shipment inspection and how many defects are unacceptable. The pre shipment inspection company will recommend a sampling plan based on the AQL. As the importer, it is your responsibility to decide if the sampling plan is adequate according to your brand positioning.
Step 3: clarify inspection checklist
When you choose a third-party inspection service, usually they will have a ready-to-use pre shipment inspection checklist. You can add or reduce the items in the checklist according to your project.
Step 4: arrive at inspection address
On the inspection day, the inspector will visit the factory in the morning. Occasionally, when the supplier is a trading company and does not want to provide the customer with the detailed factory address, they will have the inspector come to their office first and drive the inspector to the inspection location.
Step 5: check product quantity
Verifying how many products are actually produced is one of the most essential tasks of the pre-shipment inspection. At this stage, the inspector verifies the quantity per carton through random inspection and counts the ready outer cartons to find out the total quantity of the entire shipment.
Step 6: draw random samples
The effectiveness of the pre shipment inspection relies on the inspector’s sampling being random and unbiased. Experienced product inspection professionals will not accept outer boxes drawn by suppliers.
Step 7: check product workmanship and appearance
Professional third-party quality control companies regularly provide training to inspectors so that they have sufficient awareness on various potential product defects. At the stage of product workmanship examination, the inspector will visually inspect all products within the sample size.
Step 8: conduct on-site tests
On-site testing refers to the safety and performance tests done by inspectors using test equipment to simulate product use scenarios. Compared to laboratory testing, on-site product tests performed during pre-shipment inspections have less time available and limited equipment.
Step 9: verify product specification
Product specification verification is a key step in pre shipment inspection. In addition to matching the product specifications stated on commercial invoices and purchase contracts, pre-production samples (also called gold seal samples) are also important references for product specifications.
Step 10: examine product packaging and assortment
The inspector checks the assortment, quantity per box, sealing method, and package material during this step. In the retail business, even the same product can be with different SKUs if there are bundled differently. For example, an individually packed toothbrush vs. a pack of three.
Step 11: check the goods marking and labeling
Many countries have labeling and marking requirements for imported products, as a way to standardize product quality. If imported goods do not meet the government’s mandatory requirements for marking and labeling, they will be refused entry and may be penalized financially.
Step 12: compare with client requirements
Each importer has its own unique requirements, which can be different from the regular inspection standards. For example, you can specify tolerance levels for different defects, or you can ask the inspection company to pay special attention to quality problems the supplier has had.
Step 13: prepare inspection report
Within 24 hours of the inspection, our inspector will compile the inspection findings with picture and data into a first draft inspection report, which will be sent to the customer after the technical manager has reviewed it to ensure it is error-free and easy to understand.
What is the cost of a pre-shipment inspection?
There is no standard price for pre-shipment inspection. What can be confirmed is that professional third-party inspection companies calculate their fees based on man-days. Usually the cost range for arranging a pre shipment inspection in China is $100 to $300 per man-day.
In a later section of this article, we will have a detailed list of pre shipment inspection companies in China and their prices.
Three types of pre-shipment inspection companies: which one is best for you
Many companies offer pre-shipment inspection services in China, and you may not know how to choose. These third-party quality inspection companies can be divided into three categories, each with specialties.
Type A: Multinational inspection and testing groups
This category of inspection companies has a long history with subsidiaries all over the world, and its scope of business is more than just inspection, but also includes verification, testing and certification. These big name companies are for example: SGS, Bureau Veritas, Intertek, Eurofins, etc.
When should you choose an inspection company like SGS?
The advantage of large companies like SGS is their high international recognition. Some countries with mandatory pre-shipment inspection requirement will appoint companies like SGS as the only approved inspection agency. Other than that, if you want your products to be placed on the shelves of supermarket chains, inspection reports from such international inspection companies may also have a positive impact on your business.
When is a company like SGS not for you?
When your quality control budget is limited, you may consider alternatives to SGS. I’m not asking you to give up on quality control, but there are many pre-shipment inspection companies you can choose from if the fame of an inspection company is not your key decision factor.
First tier quality control companies like SGS offer product inspection services in the price range of $300-$1500.
Type B: CIQ inspection agency
CIQ’s full name is the China Entry-Exit Inspection and Quarantine Bureau, a government authority in charge of import and export inspection.
When should you choose a CIQ pre shipment inspection agent?
Suppose you are planning to import from China to certain countries. In that case, you need CIQ pre-shipment inspection certificate for customs clearance at the port of destination. Countries require CIQ certificates including Egypt, Ethiopia, Sierra Leone, Iran, and Sudan.
As a foreign importer, you will have difficulties communicating and time difference in contacting CIQ yourself. Alternatively, you can find a CIQ agent in China to apply for a pre shipment inspection and issue a CIQ PSI certificate for you.
When is CIQ and its agents not for you?
If your importing country does not require a CIQ certificate as a clearance document, you don’t need to worry about it.
Type C: Local inspection companies
These companies have their own teams of inspectors in countries with low labor costs, and they may not always be able to provide inspections in multiple countries, but they are cost-effective in their own home countries.
When should you choose a local inspection company?
If your shipment value in less than 50,000 U.S. dollars, you should consider the cost-effective local inspection company, the reason for this is to control the cost of quality control does not affect business profits, the second is that this level of goods value is usually not paid by letter of credit, there is no restriction on the choice of inspection company.
When is a local inspection company not for you?
If your imported products are bulk raw materials of high value or require specific equipment for on-site product testing, most local inspection companies may not be able to meet your needs.
How to safely reduce pre shipment inspection costs?
I can relate to you. On the one hand, you don’t want the cost of pre-shipment inspection to be too steep, and on the other hand, you are afraid that over-saving on quality control investment will be harmful to product quality.
It’s not an easy balance, so in this section, I’ll share a few practical tips on how to reduce the cost of pre shipment inspections safely.
Adjust PSI inspection level according to the supplier’s status
Still remember how the inspection level works? In case you forgot, click here and go back to the corresponding section of this article that describes the AQL inspection level.
Simply put, if your supplier has a long track record of consistent quality, you may wish to tone down their pre-shipment inspection levels.
Let’s take a look at a real-world example. Let’s say you want to import a batch of 15,000 makeup bags. If you follow the default AQL General Inspection Level 2, you will find the corresponding sample size code letter is M, which means sample size 315 pieces. This pre shipment inspection will take two man-days to complete.
But if you have confidence in this supplier, in order to save time and inspection costs, you can choose General Inspection Level 1. In which case, the sample size becomes 125 pieces for the same total product quantity, and the inspection can be conducted with one man-day.
Combine product variants into a whole to consider sample size
If a product has 5 color variants, it means that the product has 5 sku. The number of SKUs in an inspection is closely related to the man-day calculation, because for each SKU, the inspector needs to check the specification conformity individually.
So for different variants of the same product, instead of calculating the sample size independently by sku, you can calculate it based on the total number of this product.
Charge suppliers for re-inspection
Experienced buyers will specify in the purchase contract that if rework is required because the supplier’s product quality fails to meet the requirements, the supplier will be responsible for the cost of re-inspection after rework.
Such a simple risk transfer clause can reduce your pre-shipment inspection costs as an importer and remind suppliers of quality control, especially in-house inspection.
Work with a local pre shipment inspection company
A good pre-shipment inspection service is not cheap, but it’s actually not as expensive as you might think. Many times, buyers feel that product inspection costs are high because they have chosen a pre shipment inspection company that is not local.
In other words, the inspector needs to spend a lot of time on the way to the factory, not to mention the transportation costs.
Top 21 Pre-Shipment Inspection Services, Companies and Agencies in China
In China, there are many companies that can provide pre-shipment inspection, we have selected the top 21 of them and attached their strengths so that you can choose the best third party inspection company for your project:
No. | Company | HQ Location | Price for one man-day | Highlights |
1 | Qima | Hong Kong, China | $309 | Widest inspection service coverage |
2 | Fami Sourcing | Guangzhou, China | $150 | Most cost-effective and best for small and medium-sized companies Proven supplier screening system prevents defects at the source |
3 | V-Trust | Guangzhou, China | $268 | One of the leading Chinese inspection companies, with its own in-house lab. |
4 | Asia Quality Focus | Shenzhen, China | $298 | Same-day inspection can be arranged before 8:00 a.m., reports available by 10:00 p.m. |
5 | HQTS | Fujian, China | $200 | Traceable inspection experience since 2000 |
6 | SGS | Switzerland | $300 | Global benchmark in inspection, testing and certification |
7 | Eurofins | Luxembourg | $220 | International Laboratory Group, founded in 1987, specializes in testing for European product regulations. |
8 | API | Hong Kong, China | $270 | Specialized in household goods quality control |
9 | InSpec by BV | France | $245 | A new quality inspection company for consumer products under Bureau Veritas. |
10 | China Certification & Inspection Group | Beijing, China | $218 | State-owned quality inspection company in China |
11 | Pro QC | USA | $298 | Excellent technical background and experience with COVID-19 PPE products |
12 | AQI | Dongguan, China | $198 | Collecting samples during inspection at no extra charge |
13 | Insight Quality | USA | $275 | US based company providing quality inspection and sourcing services |
14 | Krt Inspect | USA | $265 | American quality inspection service provider with traceable experience since 2004 |
15 | Tetra Inspection | Hong Kong, China | $240 | Live defect review service is available |
16 | Imex Sourcing | Guangzhou, China | $275 | Easy-to-use internal supply chain management system |
17 | CIS | Dongguan, China | $258 | One of the few inspection companies offering component design services |
18 | Chine Inspection | Guangzhou, China | $249 | The management team is consisting of both Chinese and Western industry insiders. |
19 | Annex Asia | Guangzhou,China | $295 | Experience with product regulations in Ecuador |
20 | TIC | Hong Kong, China | $210 | In-house mobile app to view inspection reports |
21 | QC Advisor | Hong Kong, China | $280 | One of the few inspection companies offering prototype qualification service |