Pre-Shipment Inspection (PSI) Services
A Pre-shipment Inspection (PSI), also called Final Random Inspection (FRI), is an effective tool to protect buyers against costly import risks. It is used to ensure the quality, quantity, and documentation match the buyers’ requirements before goods are shipped.
A pre-shipment inspection will determine if there are any defective products in a batch and ensure that the products meet the quality and safety requirements of the target market. It provides the necessary results for deciding if the lot can be accepted or not before shipping. Examining products and documents and determining compliance with required standards avoids customs problems, reduces delays, and prevents defective products from reaching the customer.
Pre-Shipment inspections are guided by sampling. Sampling occurs when the material is 100% produced and 80% packaged for shipment. The principle of this type of inspection is to draw conclusions on the conformity of the batch from the results obtained on a sample rather than inspecting 100%. The sample size is chosen to be statistically representative of the total quantity and the individual units inspected are randomly selected by the third-party inspector. This quality control is the last opportunity to take the necessary corrective actions before shipping. When defective products are identified, they are either sorted or reworked so only compliant products are shipped.
The Pre-Shipment Inspection Precedent
Pre-shipment inspections are increasingly used and required because of an agreement to improve international trade standards under the General Agreement on Tariffs and Trade amended by the World Trade Organization. In international trade, third-party pre-shipment inspection services may be required to adhere to a letter of credit. When companies deal with foreign suppliers, a letter of credit is often created to protect the monetary interests of the buyer, ensuring that the products are as ordered before the bank releases the funds from the selling company.