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Types of Customs Bonds - Activity Codes And Uses

The Complete Guide to Types of Customs Bonds
There are numerous types of customs bonds that are broken down by activity code. Each has its own unique function. Learn more about the different types of customs bonds and when you need each.
By
Jacob Lee
January 11, 2022
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Last Modified: February 7, 2022

Customs bonds are commonly used documents in the shipping industry. Each type of customs bond is used for a separate scenario. Despite how common customs bonds are, many people have a hard time figuring out which one is right for them. 

According to CBP (U.S. Customs and Border Protection), there are multiple customs bond types including:

  • Import Bond
  • Drawback Bond
  • Custodian Bond
  • International Carrier Bond

Read on to discover other customs bond types and their activity codes and details on their uses.

In the guide below, you will find all of the essential information regarding the different types of bonds you will come across in the shipping industry.

Need to Secure a Continuous Customs Bond?

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What Are Customs Bonds and What Is Their Purpose?

Customs bonds are often used as a contract between two different parties involved in the importing process. Some types of customs bonds are a contract between the importer and the exporter. Others are contracts between the importer and CBP or some other agency. 

The purpose of the bond is to guarantee that the importer will adhere to customs regulations set by the U.S. Customs and Border Protection (CBP). Each customs bond comes with a unique bond number.

Additionally, bonds are required under one or both of these circumstances. The first is if your commercial import is valued at $2,500 or more. The second circumstance is when your import is regulated by other federal agencies.  

Want to make sure your commercial imports are prepared properly for Customs clearance? Check out our article Importing Depends on the U.S. Customs Bond Verification Process.

The Most Common Types of Customs Bonds (Activity Code 1)

You can import products into the U.S. using either a continuous customs bond or a single transaction customs bond. As its name implies, the single transaction bond (or single entry bond) is good for one use of imported commercial goods. 

Continuous bonds, however, are good for multiple imports for one year. Some custom bonds can be used on either a continuous or single basis. Other customs bonds, however, can be used for both continuous and on a single transaction basis. 

Each type of customs bond has a designated activity code. The designated activity code organizes the customs bonds by their individual functions. The table below shows you each activity code and its corresponding customs bond.

Activity CodeCustoms Bond
Activity Code 1
Activity Code 1a
Import Bond
Drawback Bond
Activity Code 2Custodian Bond
Activity Code 3
Activity Code 3a
International Carrier Bond
Instrument of International Traffic
Activity Code 4Foreign Trade Zone Operator Bond
Activity Code 5Public Gauger
Activity Code 6Wool and Fur Products Labeling Act and Fiber Products Identification Act
Activity Code 7Bill of Lading
Activity Code 8Detention of Copyrighted Material
Activity Code 9 Neutrality
Activity Code 10Court Costs for Condemned Goods
Activity Code 11Airport Customs Security Area
Activity Code 12ITC Exclusion Order Bond
Activity Code 13In Bond Export Consolidation
Activity Code 14Intellectual Property Rights (IPR) Sample
Activity Code 15Importer Security Filing
Activity Code 16Marine Terminal Operator

Customs bonds can vary in price. Figuring out how much they cost is often frustrating. Luckily for you, we have an article that will show you what you need to know about calculating customs bonds

Import Bond 

Import Bond

The import bond is another well-known bond. It is used for basic commercial imports. Import bonds can be used as a single transaction or continuously. Both the continuous and the single transaction bonds would be considered activity code 1 bonds.

Drawback Bond 

Goods that are imported into the U.S. don’t have to be exported right away. Rather, they can be imported at a later time. In this instance, the importer can be refunded 99-percent of the duty taxes and fees that were originally paid when they imported the product. 

The drawback bond can be a continuous bond or a single transaction bond. 

Custodian of Bond 

A custodian bond is excellent when another entity is holding goods that haven’t been cleared into the country yet. These goods can be held by entities like warehouses, carriers, cartmen and other types of container areas.  

The maximum custodian bond amount is determined by the District Director of Customs. They determine the maximum amount by analyzing the commodities and products that are under the supervision of the bondholder. 

The minimum amount for a custodian bond is $50,000. The custodian bond can only be used as a continuous bond. 

International Carrier Bond 

The international carrier bond gives the guarantee that entry regulations for vessels, vehicles and aircraft that are trying to come into the U.S. will be followed. This bond also has to be used if a vessel has to make a repair entry. 

The international carrier bond also requires operators of vessels, vehicles and airlines to manifest the merchandise that is being transported. The international carrier bond can be used on a continuous or on a single-use basis.    

Instruments of International Traffic Bond 

This bond can function on a single transaction or continual basis. The instruments of international traffic bonds are similar to the international carrier bond

The main difference is that it guarantees that any rules and regulations regarding the clearance of shipping containers will be followed.  

Foreign Trade Zone Operator Bond 

The foreign trade zone operator bond accomplishes two different things. The first is that it creates a foreign trade zone. 

Legally, foreign trade zones are outside of the U.S. border. However, these zones are either near or inside a port of entry run by the CBP. 

Secondly, the foreign trade zone operator bond makes the additional guarantee that importers will follow the guidelines of the foreign trade zone as outlined by the CBP. 

Duties, taxes and fees that would normally have to be paid for foreign goods are deferred when they are in the foreign trade zone. It isn’t until these foreign goods come within the customs territory for consumption that duties will have to be paid. 

Commercial Gauger Bond 

A commercial gauger can be a commercial organization or a group of individuals who measure, gauge or sample merchandise coming into the country. Typically this merchandise arrives in bulk and is made up of some of the following items:

  • Vegetable Oils
  • Petroleum
  • Petroleum Products
  • Chemicals

Simply put, this type of bond guarantees that when these commercial gaugers inspect merchandise they do so while adhering to customs regulations. The commercial gauger bond can only be used continuously.  

Need to Secure a Continuous Customs Bond?

Get same-day approval and secure a bond that will cover all shipments for 12 months

Wool and Fur Products Labeling Act and Fiber Products Identification Act 

Wool and Fur Products Labeling Act and Fiber Products Identification Act

Despite not sounding very much like a bond, it’s designated as a type of customs bond under Activity Code 6. This particular customs bond requires the importer to adhere to three different federal acts. There are three particular acts that this bond requires importers to abide by. They are: 

  • Wool Products Labeling Act of 1939
  • Fur Products Labeling Act
  • Fiber Products Identification Act

Products that fall under these three acts must be properly labeled. This bond is available for a single transaction.

Bill of Lading 

This bond guarantees that the importer will produce a bill of lading. The bill of lading is given by a carrier to a shipper. The document simply details specific information about the goods being shipped and their destination.

The purpose of this bond is to protect the CBP from losses that could be incurred from merchandise being released from their custody without a bill of lading. This type of customs bond can only be used as a single transaction.

Detention of Copyrighted Material

One of the CBP’s functions is to make sure that imports coming into the country are not infringing on the copyright of other products. However, CBP doesn’t always make the right judgment and might detain a product that is not in violation of copyrights. 

Just as with the bill of lading bond, the detention of copyrighted material bond is used to protect the CBP. The bond will protect the CBP from having to compensate for damage to goods that were falsely detained for copyright infringement. 

This bond is used only as a single transaction.

Neutrality Bond 

The neutrality bond is to be used when an importer is using an armed vessel to transport goods. The importer must guarantee that the vessel will not commit any hostile actions against the U.S. or its allies. 

The neutrality bond can only be used as a single transaction bond. 

Court Costs for Condemned Goods 

Condemned goods are goods that are deemed unsafe for human or animal consumption. Under certain circumstances, court proceedings result in goods being ruled as condemned. 

If this happens, then the bond will guarantee that the CBP will pay the court fees. This bond is only used as a single transaction. 

Airport Security Bond 

When service companies need to enter the secured area of an airport, they need an airport security bond or ASB. Services can include cleaning personnel or maintenance crews that work on airplanes. 

Employees that work at the airport will also need this type of customs bond to get past the security checkpoint. Airport employees can include:

  • Restaurant Workers
  • Gift Shop Workers
  • Janitors
  • Vending Machine Operators

Essentially, the airport security bond is a guarantee that all personnel that is allowed entry with the bond will follow CBP guidelines. 

The airport security customs bond is used as a term bond. This means that the bond can only be used on a specific date in the future. 

ITC Exclusion Order Bond 

Exclusion orders are given by the International Trade Commission, or ITC. Exclusion orders are given to imports when they violate section 337. Section 337 is an investigation regarding intellectual property rights of imports. 

If an import infringes on a patent or a trademark, then an exclusion order will be placed on that import. Once the ITC comes to a determination about an import, it sends the exclusion order to the president for them to approve or disapprove the ITC’s ruling. 

The ITC exclusion order bond is needed during the president’s 60 day review period. The bond has to be filled out with information regarding the import and any requirements to make entry.  

This bond can only be used as a single transaction.

In Bond Export Consolidation 

In Bond Export Consolidation

This customs bond is used for In-Bond Export Consolidation facilities or IBEC. The IBEC is an area that is run by the and kept completely secure by CBP.

Goods located in IBEC facilities would normally have duty fees attached to them. However, the goods in these facilities are shipped, stored, manipulated and then transported completely free of any duties. 

This particular customs bond is used by a consolidator when they export a large number of goods from outside the exportation port. The bond guarantees that compliance with laws regarding the handling of in-bond merchandise will be followed.

The In Bond Export Consolidation is only available on a continual basis.  

Intellectual Property Rights (IPR) Sample 

The intellectual property rights, or IPR, sample is a bond that is tailored for rights owners. Rights owners are people that own trademarks, trade names and copyright owners. 

If the CBP suspects that an import violates any of those three criteria, they will send a sample to the rights owner. To receive the sample, the rights owner needs to send an IPR Sample bond. 

This bond guarantees that the rights owner will send the sample back to the CBP. This bond can be used as a single transaction or continually.

Importer Security Filing 

The Importer Security Filing (ISF) is a document that must be submitted to the CBP 24 hours in advance of their cargo being loaded on a U.S.-bound vessel. The ISF must contain multiple pieces of important data about the cargo.

Submitting this document guarantees that the importer is submitting proper information to the CBP about cargo before it is loaded onto the vessel that will transport it.

ISF is available in both single transaction and continual offerings. 

Marine Terminal Operator Bond 

The purpose of Marine Terminal Operators (MTO) is to provide ocean carriers a place to wharf, warehouse and dock at marine facilities. The MTO bond gives the guarantee that the MTO will follow CBP regulations regarding loading and unloading.

An MTO can be used continuously. 

Determining Which Bond is Right for You

With all these types of customs bonds to choose from, it might seem difficult to know which one you should get. The best way to find the customs bond that suits you is to consider the importing situation that you are in. 

All of these customs bonds are used for different purposes and scenarios. The one that works best for you will be the one that works best for the importing situations that you are in.

If you need more assistance in determining what type of customs bond you need, our team at USA Customs Clearance will be able to help you with that. On our import and customs consulting services page, you can schedule a 1-on-1 consulting session. 

This session will be with one of our Licensed Customs Brokers. They will hear you out and tell you what bond you need.  

If you need more direction in determining how to obtain a customs bond, then read our customs bond importing instructions article. This article will give you some extra guidance in finding the bond you need and showing you how to fill it out. 

Obtain a Customs Bond With USA Customs Clearance

There are many different types of customs bonds to choose from. If you’re looking for a continuous customs bond then look no further than USA Customs Clearance. Our specially trained team has over 150 years of combined experience and has helped importers across various industries.

On our customs bond page, you can not only learn more about customs bonds, but you can also purchase your own. If you have questions or any concerns, then please contact our team. They will guide you through any problems you might come across.

Need to Secure a Continuous Customs Bond?

Get same-day approval and secure a bond that will cover all shipments for 12 months

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