What is a customs broker, and why do importers need one? When you start importing products on a large scale, there are a variety of legal and logistical barriers to deal with. Getting these details right is a full-time job that companies can outsource to customs house brokerage services.
The U.S. Customs and Border Protection (CBP) agency issues and regulates the licensing of individuals and companies as certified customs brokers. The United Nations recognizes customs brokers as any third party working on behalf of others to assist with importing, exporting, or the movement of international goods.
USA Customs Clearance has decades of experience in import law and can offer customs brokerage services for a wide range of products.
It’s no secret that the United States has a massive import market. Even in 2021, which was a relatively slow year for imports due to the effects of the Covid-19 pandemic on international travel and trade, the U.S. imported $2.8 trillion worth of goods.
That comes out to about $7.6 billion in imports every day. Every shipment needed to be inspected, cleared, and transported to a final destination after arrival.
Customs brokers work with businesses and importers to arrange the fine details that make up every shipment.
Businesses rely on customs brokers to check on:
Companies that only import a few times a year might be able to get away with handling these details in-house. As the frequency and complexity of your imports increases, that becomes harder.
Customs brokers allow you to focus on growing your business without having to become an expert on import laws. The right brokerage services will ensure all your paperwork is correctly filed and on the right side of the law.
Although brokers are focused on mastering U.S. import regulations, they still need a comprehensive understanding of international trade.
Successful import brokerage services keep track of global events that are likely to impact local regulations.
Consider some of the cases that impacted U.S. import regulations in recent years.
Brokerage services have to adapt to the changes imposed by the CBP, FDA, and other agencies involved with imported products. Getting goods through customs is an ever-changing puzzle that customs brokers have to keep mastering.
In simple terms, a customs broker helps imported shipments pass customs entry procedures.
As international trade continues to expand, brokers have to keep up with a series of changing regulations. It isn’t just a matter of knowing import laws. Brokers have to be licensed by the CBP and adhere to a set of professional standards outlined in the Code of Federal Regulations part 111 title 19 (111 CFR 19).
The Customs Broker License Exam (CBLE) covers topics such as:
Brokers are able to assist with these and other tasks that relate to getting goods through customs. Many of the things brokers do are now on digital platforms. It helps with accurate record-keeping, but can also be a security issue.
Communications between clients and licensed customs brokers are a matter of law. When someone becomes a broker, they have a legal responsibility to provide accurate information and advice. Ones that don’t risk having their license revoked.
When you hire a customs broker, it’s in their best interest to only offer you fair and accurate advice. They want to make sure your imports are successful and hassle-free since even a simple import transaction has multiple steps.
From start to finish, brokers can handle the following steps:
Companies that arrange hundreds or thousands of import shipments every year are going through this process in a constant loop. Mistakes at any stage have a negative impact on the entire process.
There are customs brokers in every country, though they sometimes go by different names. In the U.S., a customs clearance agent is another way of referring to a licensed customs broker.
Most countries require importers and exporters to work with some kind of specialized customs agent, but the term ‘broker’ is not universal. Depending on the language, the term ‘customs clearance agent’ conveys a more exact definition of the job role.
A customs brokerage firm that works with foreign-based businesses may sometimes advertise themselves as customs clearance agents to make sure things aren’t lost in translation.
The term custom broker is applied to individuals, partnerships, and entire firms. However, some firms refer to themselves as a customs house broker. It just means there are multiple brokers working together under one company name.
Multiple brokers can choose to operate under a single company, but each one still needs to pass the CBLE on their own.
A customs house broker that claims to work internationally could imply a couple different things:
The only way to know for sure is to ask the company directly for the services they offer. Brokerage companies are going to be upfront about what they can and can’t offer clients because it’s required by law.
The CBP cannot legally require importers to use the services of a customs broker. The resources for finding HTS codes, filing for customs bonds, and other import service needs are available to the public.
However, these resources aren’t always user-friendly, and the surety companies that sell customs bonds and process fees can refuse to work with anyone who isn’t a licensed broker or freight forwarder.
Sureties are private companies, not government resources. They may be willing to take a risk on simple, small imports, but refuse to cover anything with a high rate of rejection.
Are there ways around that? Of course, but going it alone removes any kind of legal safety net. That means any and all mistakes are on you, financially and legally.
On the other hand, your business can benefit from brokerage services in a number of ways. Using a licensed brokerage service gives you access to experts who can confirm all legal requirements, submit documents electronically, and work with reputable sureties on your behalf.
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We’ve already outlined the various steps in the import process that a customs clearing agent takes care of. However, there are people out there who feel that continued use of a broker isn’t necessary.
After all, having gone through the process once, it’s just a matter of repeating the steps, right? Ask yourself this. Do you plan on repeating the exact same import order every single time for the life of your business?
Even if you answer yes, the simple fact is that laws and regulations do change. Long-term use of a customs broker is going to help your company ride out changes with ease and provide you with an accurate business record.
The advantages of using customs broker services for bulk freight shipments include:
Customs regulations are hard to master on your own and mistakes are costly. Choosing to use a customs clearance agent leaves you free to focus on your business while enjoying legal protections.
The cost of hiring a customs broker will depend on the exact services they provide you. Individuals and brokerage firms alike are free to set their own pricing.
Services can be charged individually or as part of a continuing contract.
|Consultation Sessions||$250 – $350|
|ISF Filing||$25 – $50|
|Customs Bonds||$40 – $400|
|Processing Fees||$25 – $600|
|Individual Agency Filing||$30 – $50|
There are a number of factors that cause fees to vary across the industry. Some, like customs bonds and processing fees, will depend on product values. The value of some services might be more immediately obvious than others. Take ISF filing as an example.
The average ISF filing fee is between $25 and $50, but the penalty fees for late or incorrect filing can be as much as $5,000. Considering the possible consequences, ISF filing fees are more than worth it.
Price differences from one firm to another also depend on things such as:
Quality services from experienced brokers may cost you a little more, but realize it comes with various industry connections meant to make it easier for you to succeed.
Once you realize it’s in your best interest to use a customs broker for your imports, it’s time to find the right one. As with many parts of your business, hiring a customs broker is an investment decision.
When hiring a customs brokerage firm to review your imports, look into the following details:
There are customs brokers that focus on trade with specific countries or commodities. This is important when you are looking to import something highly regulated, such as pharmaceuticals or organic food products.
Although every licensed broker in the United States needs to pass the same test, it doesn’t make them equally skilled. Speaking with other importers is actually a great way to get an idea of a broker’s work ethic. If you are already working with a freight forwarder, chances are they can provide you with a short list of trusted brokers.
When researching a brokerage firm, consider asking some of these questions:
If you are hiring a brokerage firm, that last question is very important. Companies that market themselves as customs house brokers are likely to have various support staff to help with filing and day-to-day details. These individuals do not need to be licensed, they only need to be working under someone who is.
However, the more licensed brokers there are, the easier it is to hold them accountable for their actions. Before you fully trust a broker with hundreds or thousands of shipments, a trial run is another good idea. If a firm is able to handle a limited number of small shipments, trusting them with more gets a little easier.
If you really want to expand your search options, you can look up customs brokers by their license registration with the CBP. There are roughly 11,000 brokers licensed by the CBP.
Although licensing is national, individuals are still registered by both state and port of entry. The CBP keeps the list updated, so any brokers that you find through their search system should be legitimate.
There are three ways for importers to find licensed brokers through the CBP:
The online database allows you to search by state and port of entry. Despite the term ‘port’, it actually refers to any hub of international travel, including airports.
Once you select both the state and the port of entry, you will see a list of brokers and their broker filer code. Brokers are listed by name or by company. Clicking on the person’s name will reveal their business address and contact phone number.
The busier a port, the more brokers are likely to be registered at that location. However, just because a business or individual is registered in one location does not mean that is the only port they can work with. It may just be where the main offices of a company are located.
The CBP also publishes revoked permits and licenses in the Federal Register, usually within a year of it happening.
A U.S. customs broker must conduct all business relating to customs and clearance procedures within the borders of United States territory.
This is a requirement of 19 CFR 111 which outlines the responsibilities and limitations of licensed brokers. By law, brokers have to conduct business in the country, even if it’s electronically based.
The same rule extends to any support staff. We mentioned earlier that customs house broker firms may have employees that assist with the details of the process. Most of what these employees do still falls under the definition of ‘customs business’ as defined by 19 U.S.C. 1641.
According to the official definition, ‘customs business’ includes:
What is a customs broker to do if they aren’t sure of something’s legality? They can request a specific ruling from the CBP. These are usually data specific inquiries about the interpretation of a law or admissibility of information. An official answer comes in the form of a written statement containing the clarified interpretation.
These rulings are then posted to the CBP’s Customs Bulletin for the benefit of other brokers who may have similar questions.
In short, if a customs broker says they can conduct your business from outside the country, they are not a broker you should be working with.
The import and export of goods is a complex process. Customs brokers are great for the official documentation of everything. The actual shipping arrangements, however, might be outside their expertise.
A freight forwarder is an individual or company that makes arrangements for transporting goods from the country of origin to the final destination.
Freight forwarders will often work with or have departments dedicated to in-house customs brokers. Imagine having all your shipping needs, import certificates, and even export documents handled by the same company.
This reduces the possibilities of delays, miscommunication errors, and more. When you consider the number of issues still plaguing the global supply chain, anything that eases the way is a worthwhile investment.
What is a customs broker worth to your business? As it turns out, quite a bit. You need shipments to meet any and all requirements when entering the country. USA Customs Clearance has both the experience and the personnel to handle all kinds of goods.
Our licensed customs brokers have advised hundreds of importers on thousands of different products. We have the connections to assist with filing, shipping, and even local distribution.
Available services include: