For anyone importing goods into the U.S., there are two main types of companies providing services to help you bring them in: Freight forwarders and customs brokers. Forwarders focus on the cargo transport, from origin to destination, whereas customs brokers focus on efficient, compliant clearance of your imports through customs. While there may be some overlap in duties, the roles of brokers and forwarders are more complementary.

So what is a freight forwarder vs. a customs broker? Let’s start with a high-level, side-by-side comparison, and then dive into the details.

The Role of a Customs Broker

As the name implies, a customs broker makes sure your imported shipments clear through U.S. Customs and Border Protection (CBP). While your broker helps with many aspects of the importing process and completes documentation on your behalf, you as the importer are ultimately responsible for the accuracy of paperwork filed with CBP and paying all necessary taxes and duties.

A licensed customs broker knows the ins and outs of import procedures, regulations and documentation. They’re responsible for double-checking the information in your filings, making sure all the data is in place, and ensuring that CBP submission deadlines are met. They also calculate all the import duties and fees you’ll be assessed.

Every imported item needs to be assigned a ten-digit Harmonized Tariff Schedule (HTS) code – the product classification system used throughout the world. The HTS code is based on the international Harmonized System, a globally accepted product classification system managed by the World Customs Organization (WCO) that is used by more than 200 countries. The HTS code determines the U.S. duty rate on imported goods. Part of the customs broker’s job is to ensure you have the right HTS codes entered to reduce the risk of inspections, delays and fines from CBP.

The customs broker is also responsible for completing and transmitting the Import Security Filing (ISF). This electronic document, which includes the first six digits of the HTS code, lets customs agents know what products to expect, where they’re coming from, and when they’re scheduled to arrive. It must be filed at least 24 hours before the departure of the vessel bound for the United States; failure to do so results in a $5,000 fine. The broker also procures an ISF bond that acts as a guarantee that customs will receive the ISF filing.

The broker handles submission of the final customs clearance documentation roughly a week before the ship is due in port. This has much of the same information as the ISF but in more detail, including the complete 10-digit HTS codes and all the commercial invoice details. When your goods are regulated by the Food and Drug Administration (FDA), the US Department of Agriculture (USDA) or the Environmental Protection Agency (EPA), this filing also includes any data those agencies require.

Costs incurred by importers for each shipment ‒ including the duty, Merchandise Processing Fee (MPF) paid to CBP, the Harbor Maintenance Fee collected by CBP, and the customs bond fee ‒ are all handled by the customs broker.

There are various types of customs documentation involved in importing goods to the U.S., such as the Customs Entry Summary (Form 7501), the ISF, and the commercial invoice. It’s the job of your customs broker to create, submit or ensure the timely filing of these documents.

Why Do I Need a Customs Broker?

A customs broker removes much of the stress and risk from importing goods. Even seasoned importers can struggle to keep up with constantly changing regulations and filing requirements. A broker ensures your paperwork is correct, deadlines are met, and duties are properly calculated, minimizing the chance of costly delays, penalties, or cargo holds. 

Unless you or someone in your organization has the experience – and bandwidth – to stay on top of the latest customs requirements and timely paperwork submissions, it makes sense to leave CBP clearance to an expert who knows the ropes.

For businesses without in-house trade compliance expertise, a customs broker is an invaluable partner who helps keep goods moving and your operations running smoothly.

The Importance of a Customs Broker in a Time of Volatile Tariff Rates

Global trade regulations are more complex than ever. Shifting tariff policies,  evolving trade agreements, and new compliance requirements from regulatory agencies can all impact your shipments. Even minor errors can lead to extended delays at port or unexpected costs. 

A skilled customs broker keeps pace with tariff changes and their impact on HTS codes, advises you on best practices, and helps you navigate the intricacies of customs clearance so your shipments remain on schedule. 

Beyond compliance, brokers act as a safeguard against financial risk. They ensure duties, taxes, and tariffs are applied correctly so that shippers avoid costly overpayments or underpayments and penalties. They can also help identify potential duty recovery opportunities through programs like drawback or preferential trade agreements.

Considering that a number of things can trigger a container inspection at port, and that CBP can do a five-year look-back to audit import entries for noncompliance, a trusted broker provides peace of mind. They’re professional advocates who understands the nuances of your cargo profile, and ensure all documentation is buttoned up to mitigate risk.

What to Look for in a Customs Broker

When selecting a customs broker, look for experience in your specific industry and the types of goods you import. A good broker will have strong relationships with CBP, understand the nuances of HTS classification, and offer transparent pricing.

Your broker should be familiar with the ports and trade lanes you plan to use for your cargo importing. There are nuances to understand, such as which ports have higher rates of cargo exams (e.g., Los Angeles/Long Beach), and which ports are stricter about exact document formatting.

Reliability is a huge consideration. Is the broker accessible when you need them? Will they be responsive to your needs? Ask for references from other shippers, especially those that closely match your freight profile.

Finally, make sure your chosen customs broker partner excels at real-time communication. A broker who keeps you informed and responds quickly is worth their weight in gold.

Understanding Customs Broker Fees

Customs broker fees can vary based on the complexity of your shipment and the services provided. 

While these costs are in addition to duties, tariffs, and government fees, a competent broker can actually save you money by helping avoid mistakes such as misclassification, missed filing deadlines, or incorrect duty payments that could result in penalties or cargo delays. Ask for a clear fee schedule upfront so you can budget accurately.

Customs broker fees are a mix of fixed charges and variable costs, depending on the complexity of the shipment and the scope of services. Common fees include:

• Entry Filing Fee: A flat rate for preparing and submitting your import entry to CBP.
• ISF Filing Fee (Importer Security Filing): Required for ocean shipments, typically filed 24 hours before the departure of the vessel.
• Customs Bond Fee: Covers the bond required by CBP to guarantee payment of duties and compliance with regulations.
• Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF): Government-mandated fees paid by your broker on your behalf.
• Document Preparation Charges: For creating commercial invoices, packing lists, and other compliance paperwork.
• Additional Service Fees: For things like FDA/USDA filings, handling inspections, or managing post-entry corrections.

The key is transparency: Reputable brokers provide an itemized quote, explain each line item, and avoid hidden surcharges, allowing you to plan import costs with precision.

Responsibilities of a Freight Forwarder vs. a Customs Broker

If the customs broker can be thought of in broad terms as responsible for all dealings with CBP, then the freight forwarder is responsible for all the logistics of the actual shipment. They act as an intermediary or agent between shippers and carriers, ensuring the smooth, efficient transport of goods to the U.S. 

Here are more distinctions between a freight forwarder vs. a customs broker.

While not responsible for the actual customs filing, freight forwarders may be involved in preparing several shipping-related documents, such as the bill of lading (BOL), packing list, certificate of origin, and import declaration. They closely coordinate with customs brokers on import documentation. Often, forwarders provide customs brokerage services as part of their offering.

Beyond shipping, freight forwarders can arrange insurance, provide shipment tracking, and coordinate warehouse services when needed. Their expertise in international transportation – mode selection, carrier selection, route planning, regulatory compliance, document management, and carrier management – makes them essential for US importers.

Freight forwarders can handle a wide variety of freight, from standard containerized shipments to heavyweight and oversized/out-of-gauge cargo. They can contract for air freight as well as ocean freight, arrange for drayage from port, and coordinate trucking or intermodal transportation to the final destination.

Freight forwarders also closely monitor client shipments to minimize disruptions. They communicate with carriers, rerouting shipments if necessary, and keep you in the loop about any changes. If there are delays, they can help you find temporary storage for your goods at a reasonable rate through partnerships with third-party logistics (3PL) firms.

While delays and disruptions can happen, an experienced freight forwarder can find alternative solutions, such as coordinating with different carriers or adjusting the logistics plan. They can’t eliminate hangups entirely, but they can help reduce the impact on your supply chain. 

NVOCC vs. Freight Forwarder

In addition to our consideration of a freight forwarder vs. a customs broker, there is a further distinction to be considered. Some freight forwarders are also Non-Vessel Operating Common Carriers (NVOCCs), a license that is conferred by the Federal Maritime Commission (FMC) in the U.S. As the name implies, NVOCCs can provide shipping services without owning or operating their own vessels, booking space with ocean carriers on behalf of shippers.

Most importantly, an NVOCC can procure bulk cargo space from ocean lines and sell it to shippers at a rate below what a shipper could obtain on their own.  

For container shipping with a forwarder, you would need to sign a contract with the ocean carrier. In contrast, NVOCCs have their own service contracts with carriers and can issue their own bills of lading. Because of this, NVOCCs take full responsibility for your cargo, including direct legal responsibility for transporting your goods from port to port. 

The Best of Both Worlds: An NVOCC Offering Customs Brokerage Services

While it’s certainly doable to work with an NVOCC to handle all the logistics of your import shipments and separately engage with a customs broker, why not opt for a seamless “one-stop shop” approach? This gives you a single point of contact for preparing and submitting customs documentation, as well as for booking freight.

I.C.E. Transport, a New Jersey-based NVOCC in business for over 35 years, provides customs clearance services as part of its comprehensive global shipping solution. Through its customs brokerage expertise, I.C.E. stays abreast of trade compliance changes so you don’t have to – things like new CBP regulations, tariff changes, section 232 or 301 exclusions, and other critical information.

We can also help you find ways to mitigate increased costs due to the new tariff schedules, such as leveraging transloading services to reduce the number of ocean trips.

I.C.E. focuses on managing freight shipments between North America and Europe, with a particular specialty in shipping between Poland and the U.S. I.C.E. Transport handles everything from air freight to standard container shipping, heavyweight/oversized loads and LTL/TL shipping. We combine global scale with the personalized service of a family-owned, professionally managed business. To learn more about our integrated approach to import and export freight, contact I.C.E. today.