No law says you have to hire a customs broker to help you clear imports into the US. But a smart importer, whether large or small, usually engages with an expert for customs brokerage services.
Here’s how a licensed broker can help you clear shipments quickly through US Customs, keep you compliant with all regulations and help you avoid costly mistakes.
What is a customs broker?
A customs broker is a licensed professional who represents importers in their dealings with customs agencies.
As an importer, ultimately you are responsible for completing the necessary documentation, providing accurate information and paying the duties and fees that apply. But your broker does the actual work on your behalf.
And the customs broker has your back. Intimately familiar with import procedures and regulations, a licensed broker makes sure you provide all the data for your filings, double-checks that information for accuracy and meets deadlines for transmitting documentation to US Customs.
What does a customs broker do, step by step?
When you form a relationship with a customs broker, your first step is to sign a power of attorney, authorizing the broker to act for you in future transactions with US Customs. If this is your first import, the broker can also help you register with Customs as an Importer of Record (IOR).
Then, when you bring a shipment into the US, the customs broker does the following:
Helps you choose the right HS code – For each product you import, you’ll assign a 10-digit Harmonized Tariff Schedule (HS) code, which identifies the product so US Customs can determine what duties, if any, apply. Selecting an HS code is a complicated process. If you get it wrong, that could trigger an inspection, which comes with extra expense. A licensed customs agent understands how to make the right choice.
Completes and transmits the Import Security Filing (ISF) – This electronic document provides information about the shipment, including the first six digits of the HS code. ISF filings let customs agents at each port know what products to expect, where they’re coming from and when they’re scheduled to arrive. The ISF must be filed at least 24 hours before the shipment leaves the port of origin. Miss that deadline and you could incur a $5,000 fine.
Obtains an ISF bond – The broker purchases this bond from a surety company to guarantee that US Customs will receive the ISF filing, the document will contain the required data about the shipment and it will arrive by the 24-hour deadline.
Obtains a customs clearance bond – Also purchased from a surety company, this bond guarantees that US Customs will receive all required duties and fees.
Transmits the customs clearance documentation – This is usually done about a week before the vessel arrives at the destination port. The customs clearance includes much of the same information as the ISF but in more detail, including the complete 10-digit ISF code and all the commercial invoice details. When you import product that’s regulated by a federal agency, such as the Food and Drug Administration (FDA), US Department of Agriculture (USDA) or Environmental Protection Agency (EPA), this filing also includes any data such agencies require.
Arrange for necessary payments – These include standard customs clearance costs – the Merchandise Processing Fee (MPF), and the Harbor Maintenance Fee (HMF) for entries by ocean – plus any duties you owe and any agency fees. Depending on the arrangements you’ve made, the customs broker might pay this money on your behalf and then include that sum in the invoice it sends you, or it might initiate an Automated Clearing House (ACH) transaction to transmit the money directly from your bank account to US Customs.
The value of customs brokerage services
The fee a customs broker charges varies with the size and complexity of the work it performs. For the simplest entry and ISF filing – say, one that includes up to three HS codes or three commercial invoices – you’ll pay about $150 or $175. If the broker needs to file data for one or more regulatory agencies, that could add $30 or $40 per agency to the bill.
In exchange, you get a professional service that processes a customs entry in minutes, rather than the hours or even days it might take an inexperienced importer. The broker submits those filings electronically, helping to ensure that Customs will get them on time. Because it knows the process well, a customs broker reduces the risk of errors that could otherwise delay your shipment and increase your costs.
You’ll also have a much easier time securing bonds when you work with a broker. Surety companies prefer to work with customs brokers or freight forwarders. Unless you, as an importer, can offer a great deal of ongoing business, most sureties will refuse to work with you directly.
How to choose a customs broker
Every company that offers customs brokerage services must have at least one person on staff who holds a customs brokerage license. Other employees can perform data entry and similar services for clients, but the licensed broker must oversee their work.
Look for a customs brokerage with solid experience and a strong reputation. You want a partner that attends to details, turns work around quickly and is scrupulous with money. A broker that leaves filings until the last minute could miss deadlines, leaving you open to potential fines. A broker that doesn’t pay your duties as expected could get you in trouble with US Customs, the surety company, or both.
Word of mouth is a good way to locate a reliable customs broker. Your freight forwarder might also provide a referral. In fact, if your forwarder has its own close relationship with a reliable customs clearance agent, you won’t need to search for a broker or worry about the day-to-day details of the import process. The forwarder and its trusted partner will manage the whole process.
Looking for advice on how to arrange for efficient, worry-free customs clearance? Contact I.C.E. Transport to learn more.