Pre-shipment inspection: what it covers and how to use it

Once a container is sealed and on the water, a quality problem becomes expensive. Returning goods across borders is rarely practical, and claims take months. A pre-shipment inspection is the last point at which a buyer can find a problem while the goods are still with the supplier and the balance is still unpaid.

This guide explains what an inspection covers, what it does not, and how to get useful results from it. It is general guidance; inspection scope and methods should be agreed for your product with the inspection company you appoint.

What a pre-shipment inspection is

A pre-shipment inspection (PSI) is a check of finished goods, carried out at the supplier's premises before dispatch, usually by an independent inspection company acting for the buyer. The inspector compares the goods with the buyer's specification and issues a written report with photos.

The term is also used for a second, different thing: government-mandated inspection or conformity verification. Some importing countries require certain goods to be inspected or certified by an appointed company before shipment, as a condition of customs clearance. This is a legal requirement rather than a buyer's choice. Ask your customs broker whether any such programme applies to your product and destination.

The rest of this guide deals with the commercial inspection that a buyer orders.

What it normally covers

For food and agricultural products, the inspection usually also looks at cleanliness, odour, signs of infestation, moisture, grade and count, and the condition of the packaging. Samples may be drawn and sent to a laboratory for analysis.

What it does not do

• It is not a guarantee. Inspection is based on a sample. It reduces risk; it cannot prove that every unit conforms.
• It is not laboratory testing. Chemical, microbiological and safety tests need an accredited laboratory and more time.
• It is not a factory audit. An audit assesses the supplier's systems; an inspection assesses one lot.
• It does not transfer responsibility. The supplier remains responsible for delivering goods that meet the contract.

How sampling works

Inspecting every unit is rarely practical, so inspectors draw a random sample. For consumer and manufactured goods, the sample size and the pass or fail decision are commonly based on acceptance sampling tables such as those in ISO 2859-1, using an acceptable quality limit (AQL).

Three things are agreed in advance:

1. The inspection level, which sets how many units are examined for a given lot size.
2. The defect classes. Defects are usually grouped as critical (unsafe or illegal), major (likely to cause a return or complaint) and minor (small deviations).
3. The AQL for each class, which sets how many defects of that class the sample may contain before the lot fails.

The buyer chooses these values. Stricter limits suit higher-value or higher-risk goods. For bulk commodities, sampling normally follows the method set out in the relevant product standard or in the contract.

When to inspect

A final inspection is normally carried out when production is complete and most of the order is packed, so that the inspector can sample from the whole lot and check the packaging. Other checks can be added earlier or later.

• During production. Catches problems while there is still time to correct them. Useful for large or first orders.
• Pre-shipment (final). The check described in this guide.
• Container loading supervision. Confirms the condition of the container, the quantity loaded, the way it is stowed and the seal number.

How to brief the inspector

The quality of the report depends on the quality of the brief. Provide:

• the purchase order and the full specification,
• an approved sample or clear reference photos,
• packaging and labelling requirements, including shipping marks,
• the sampling plan, defect list and limits for each class,
• any on-site tests required and the tolerances,
• the destination market's mandatory markings, if you know them.

Agree the inspection in the purchase contract: who appoints the inspector, who pays, how much notice the supplier must give, and what happens if the lot fails. Without that clause, a supplier may refuse access or dispute the result.

Reading the report and acting on it

Reports usually end with a result of pass, fail or pending, the last meaning that the buyer must decide on a point. Read beyond the summary line: look at the defect counts, the photos and any remarks about packing.

If the lot fails, the usual options are:

1. Rework or sort the goods, followed by a re-inspection.
2. Replace the defective part of the order.
3. Accept with a price adjustment, where the defect is commercial rather than a safety or legal issue.
4. Reject the lot, if the contract allows it.

Decide quickly and in writing.

Linking inspection to payment

An inspection has most effect when payment depends on it. Common approaches are to make the balance payable only after a passed inspection, or to list an inspection certificate among the documents required under a letter of credit. See our guides to payment terms in international trade and letters of credit.

Planning an order?

If you would like help sourcing a product and planning the checks around it, request a quote and tell us the product, quantity and destination.