6 Misconceptions About Shipping to Puerto Rico

Considering shipping freight to Puerto Rico? 

Maybe you’re an entrepreneur or a company entertaining the idea of starting a new business located in Puerto Rico. Or perhaps you’re a freight forwarder looking at entering the Puerto Rico market to attract new customers. 

Because of its status as a U.S. territory and, therefore, a Jones Act location, shipping freight to Puerto Rico can generate a number of questions—and misconceptions. Some people think it must be a complicated process. Others believe the transit times are too long. And still others imagine it must be expensive. Still others worry that dealing with the government of Puerto Rico will be a hassle. However, the truth is that shipping to Puerto Rico doesn’t have to be any of these things. 

In this article, we’ll discuss the six biggest misconceptions we hear about shipping to Puerto Rico. We’ll also give you the real scoop on each one, straight from our Puerto Rico shipping experts. Additionally, we’ll share some tips for making the shipping process to Puerto Rico even easier—and more efficient. 

Misconception #1: Shipping to Puerto Rico Is Pretty Much the Same as a Domestic Truck Move

As we’ll show you, sending freight to Puerto Rico isn’t as complicated or expensive as many people think. However, that doesn’t mean that it’s as simple as domestic over-the-road freight.

The truth is, Puerto Rico is more closely aligned with international shipping. Here’s why:

1. Commercial Documents Required

When you’re shipping domestically, all you might need to do is submit a multi-modal bill of lading to your forwarder, and you’re done. However, when you ship to Puerto Rico, you’ll need a little bit more documentation—but, we promise, it’s not as involved as you might think. (More on that in a moment!)

2. AES Filing

Additionally, depending on the valuation of your commodities, you may need to prepare an EEI (Electronic Export Information) filing that goes into the Automated Export System (AES Direct). Your forwarder can help you determine if you meet the threshold for filing. You can also review the requirements on trade.gov.

3. Declare Your Shipment to Destination

Finally, like shipping internationally, when you ship to Puerto Rico, you will have to declare your shipment to destination. However, unlike international shipments, domestic shipments don’t need to clear customs in Puerto Rico. Instead, shipments get processed through the Puerto Rico Department of Treasury or el Departamento de Hacienda de Puerto Rico, which processes excise tax for imports.

Now, as you look at this list of paperwork and procedures, you might think that it sounds complicated to ship freight to Puerto Rico. We’ll discuss that next.

Misconception #2: Puerto Rico Is More Complex Than Other Jones Act Lanes

The truth is, just as with other Jones Act lanes like Hawaii and Guam, as long as you use the proper care in organizing and filing your documents, shipping to Puerto Rico is not a challenging process. We’ll discuss a little more about what that means in the next few sections, including the exact documents you’ll need, as well as a few key actions that can eliminate any potential snags in the import process.

*Keep in Mind* A freight forwarder can help you streamline a number of these procedures by helping you prepare the correct documentation and ensuring all the right boxes get checked for each of your shipments.

When it comes to paperwork, let’s talk about exactly what’s needed for shipments to Puerto Rico. 

Misconception #3: You’ll Need to Prepare a Ton of Paperwork

We’ve mentioned paperwork a few times already, so you might be wondering just how much you’ll need to put together for your Puerto Rico shipments.

The truth is, you’ll only need to prepare three pieces of documentation:

1. A Shipper’s Export Declaration
2. Your Commercial Invoice with the valuation of your cargo, including the prices you paid on a line-item basis.
3. Finally, you’ll also need Bill of Lading instructions with the details of your freight—including their destination and any special instructions you have. Your forwarder will use these to create the final Bill of Lading with the freight carrier

For most shipments, that’s all you need to prepare for your Puerto Rico shipments—just those three documents.

Specialized Shipments

If your shipment includes hazardous freight or licensed cargo, just as with shipments to anywhere else in the world, you’ll need to provide the appropriate documentation for shipments to Puerto Rico.

Next, although shipments to Puerto Rico aren’t subject to customs duties, they are subject to Puerto Rico’s excise tax, which is paid to the Puerto Rico Department of Treasury or el Departamento de Hacienda de Puerto Rico—Hacienda for short.

Although some feel anxious about the challenges of dealing with governmental organizations, the Hacienda process doesn’t have to be painful. In fact, with a few simple tips, you’ll clear Hacienda quickly most of the time.

Misconception #4: Clearing Hacienda Is a Nightmare 

Hacienda is the governmental organization in Puerto Rico that collects excise tax on imports. For many goods, the tax is 11.5%, although it differs depending on your goods. (For more on figuring out the excise tax for your specific shipment, reach out to us.) 

If you’ve had problems with imports in the past, you might assume Hacienda will be a difficult agency to deal with. However, Hacienda has a pretty straightforward setup, and there are a few things you can do to make the process even easier: 

1. Establish an Account Within SURI

As soon as possible, make sure that whatever entity or company that will be receiving goods is set up in SURI. Through this online portal, you can pay all of your excise tax invoices quickly and easily. You can even pay by credit card or set up a regular payment schedule. (Note that there’s an option in the upper right to set the website’s language to English, in case you don’t speak Spanish.)

2. Make Sure Your Documentation Matches

This might sound simplistic, but some shippers get tripped up in this area. Make sure all the commodities and valuations match between the different documents you submit. For example, let’s say you’re sending down 100 computer monitors, valued at $300 each in your Shipper’s Export Declaration. However, on your commercial invoice, they’re valued at $150 each. That mismatch is going to raise some questions, and it’s likely your shipment will be held while everything is verified. That could cause significant delays.

3. Ensure Your Documentation Is Correct

Finally, it’s important to double-check that the valuations listed in your documentation are correct. If you’re sending down those same 100 brand-new computer monitors and their valuation is listed as $10 each, that’s also going to raise some flags. Make sure that the correct valuations are assigned to each line item. A simple typo can result in questions and delays.

When those three elements are in line, most shipments clear Hacienda quickly. Only a small percentage are held at all, and most of those are released within 24 hours, in our experience.

Those that aren’t released quickly usually have significant problems, or are randomly selected for inspection by Hacienda, ones you likely won’t encounter if you’ve followed our tips above.

*Keep in Mind* Fast, timely payments mean faster Hacienda clearance. You might get your tax invoice when the shipment departs or when it’s halfway through its voyage. Pay it as quickly as possible so your cargo isn’t sitting around, waiting for payment to clear.

Misconception #5: Cargo to Puerto Rico Takes Forever

Puerto Rico is not a destination served by a lot of ports in the continental U.S. In fact, most of the cargo headed for Puerto Rico originates at the Port of Jacksonville, Florida, with additional service from Eddystone, Pennsylvania and Houston, Texas. Since the majority of these ports are located along the East Coast, a number of West Coast shippers think that transit times will be too long to make shipments worth it.

Let’s do a little math…

Shipping from Los Angeles: You can get to Jacksonville in as little as 3–4 days over the road with a team of drivers. Even most intermodal companies can get from the West Coast to the East Coast within 7–10 days. Then, once your cargo is in an export container to Puerto Rico, it can get from Jacksonville to Puerto Rico in as little as three days. That means we’re talking 7–8 days on the fast end or 15–18 days intermodal.

Take a look at some of our typical transit times from a few different destinations:

Average Transit Times to Puerto Rico

• Los Angeles – 18 days
• Chicago – 10 days
• New York – 7 days
• Miami – 4 days

Misconception #6: It’s Too Expensive to Ship to Puerto Rico

Yes, it can be more expensive to ship to Puerto Rico than some international destinations. However, Puerto Rico isn’t the most expensive Jones Act destination—and you have lots of options for getting your freight to Puerto Rico in a cost-effective manner.

In the earlier example, we compared transit time to Jacksonville using a team of drivers vs. intermodal. Obviously, there’s a price difference, since it’s going to be a lot more expensive to hire a team of drivers and less expensive to ship intermodal.

As a result, before you dismiss Puerto Rico as a new destination, work with an experienced forwarder to run your options. They can help you explore what’s available. For example, out of the six sailings from Jacksonville, two are via barge. While the barge’s transit time is a little longer (six days as opposed to three), it can be cheaper than the ship service.

*Keep in Mind* A forwarder can help you 1) cost out your options and 2) calculate things like lead time and transit time to see if you can make it work. Just by replenishing your inventory on a different schedule, you might be able to uncover some savings in terms of freight cost to make this business venture in Puerto Rico viable.

Puerto Rico: A Market with Plenty of Upside

As you’ve seen, shipping freight to Puerto Rico isn’t as complex, labor-intensive, or expensive as many people think it might be. Plus, with a population of more than three million, Puerto Rico is a market with a ton of potential for the right business operation. With an experienced freight forwarder at your side, the paperwork, Hacienda clearance, scheduling, and logistics can make it easy for you to open your new venture in Puerto Rico. 

Have more questions about shipping to Puerto Rico? We can assist with any queries you might have about accessing the market and establishing your supply chain. Just reach out to connect with one of our experts. 

With multiple sail dates each week as well as the ability to receive freight in several U.S. locations, we can connect you with a flexible and affordable logistics solution to Puerto Rico. Additionally, we have on-island resources that allow us to deliver seamless, door-to-door service. There’s significant potential for growth opportunities in Puerto Rico, and we’d love to help you set up a logistics solution to expand your customer base. 

Original article on Approved Freight Forwarders: 6 Misconceptions About Shipping to Puerto Rico - Approved Freight Forwarders (approvedforwarders.com)