What is a Customs Broker?

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. Fortunately, customs brokers are there to help. Here at USA Customs Clearance, we have multiple brokers on our team. Here’s what you need to know about what they do and how they can help you. 

Key takeaways:

• Customs brokers are empowered by CBP to help businesses and individuals import their goods into the US. 
• Customs brokers can assist importers with import regulations, customs bonds, trade agreements, and foreign trade zones.
• You’re not required by CBP to hire a customs broker, but they can offer a variety of benefits like reducing overhead costs, submitting documents on your behalf, and improving risk management.
• The amount of money you spend on a customs broker will vary based on the services you require. 

USA Customs Clearance has decades of experience in import law and can offer customs brokerage services for a wide range of products.

What Customs Brokers Do

Customs brokers are licensed, regulated, and empowered by Customs and Border Protection (CBP). They work with businesses and importers to arrange the fine details that make up every shipment and assist them with following regulations on imports. Customs brokers are also referred to as customs clearance agents and customs house brokers.

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.

Brokers have to keep up with a series of changing regulations. It isn’t just a matter of knowing import laws. They must 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:

• Customs bonds
• Bookkeeping
• Trade Agreements
• Foreign Trade Zones
• Intellectual Property Rights
• Power of Attorney
• Penalties and Forfeitures
• Cybersecurity

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:

1. Confirming a product’s Harmonized Tariff Schedule (HTS) code: Customs officials use HTS codes to charge the right duty rate, but getting it wrong triggers additional expenses and delays the process. 
2. Complete an Import Security Filing (ISF): This document is filed with the port your products arrive in, so officials know what to expect. It has to be filed 24 hours before products even leave the port of origin or you risk a $5,000 fine. 
3. Purchasing ISF and Customs Bonds: The ISF bond to confirm the ISF filing arrives on time. Customs bonds have to be purchased to make sure all the right duties are paid to Customs without delay. 
4. Transmission of customs clearance documents: The needed documents vary slightly by product, but include things like commercial invoices, inspection certificates for various agencies, and confirmed HTS and ISF codes. 
5. Final arrangements of needed payments: Outside of standard clearance costs, there are fees for merchandise processing, harbor maintenance, and agency dealings. Everything needs to be squared away before the process is officially done.   

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. 

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. 

Brokerages 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. 

Do I Need a Customs Broker?

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.  

Benefits of Using A Customs Broker

Customs brokers are experts in CBP rules and regulations. Leveraging their expertise can be advantageous for your importing operations. 

Advantages you’ll be able to enjoy include:

• Reduced Overhead Costs: Having an in-house broker or trying to complete the process without professional assistance comes with all kinds of additional expenses, such as specific software and industry memberships. 
• Access to Electronic Data Interchange (EDI): This system makes it easy to avoid paper filing delays and works as a tracking system. Electronic submission is replacing paper filing which takes longer and is more prone to errors. 
• Improved Risk Management: By making sure that your HTS numbers are correct and that all inspection certificates or import licenses are in place, you can avoid a variety of expensive inspection fees or related legal penalties. 

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. 

Customs Brokerage Service Costs

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. We’ve provided a graphic with the services a broker can provide, along with a corresponding price range.  

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. 

Price differences from one firm to another also depend on things such as:

• Industry experience
• Required security forms
• Use of electronic filing systems
• Number of different agencies involved
• Variety of imported products
• Single vs continuous customs bond purchase
• The ability to combine service fees

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.

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Where Customs Brokers Are Allowed To Work

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. Most of what these employees do still falls under the definition of ‘customs business’ as defined by 19 U.S.C. 1641. Customs business refers to any activities involving transactions with CBP. 

The Difference Between Customs Brokers and Freight Forwarders

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.

Related: Customs Broker vs Freight Forwarders

Work With A Customs Freight Broker at USA Customs Clearance

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. 

Call us today at (866) 738-0851 to speak with a live agent or reach out to us on our contact page.