Customs Broker

Customs Broker: The Ultimate FAQ Guide

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What is a Customs Broker?

A customs broker is an individual or company that help facilitate international traders with their import and export of goods across the international borders.

The customs brokers work with small businesses, individuals or enterprise company that may need their expert services.

They will help you with the smooth clearance of goods across different countries.

Customs brokerage

Customs brokerage

What are the Responsibilities of a Customs Broker?

 

The responsibility of customs brokers is to handle the customs process for their clients’ shipments, whether by ocean, air or ground.

Some of the services they offer include:

  • Organizing the necessary documentation for shipments to be exported
  • Clearance of imported cargo
  • Collection of the required taxes and duties
  • Preparation of documents for customs accounting
  • Consulting and advising their clients on things like Free Trade Agreements (FTA)

Each country worldwide has their unique import and export regulations as well as procedures.

They all affect different commodities and the rules keep on changing.

The customs brokers are experts in understanding and being updated on the regulations.

What other Services does a Customs Broker provide?

 

The customs brokers will also handle all communications with the relevant agencies and government officials.

They will do this to ensure that the right process is followed during shipment.

This helps in ensuring the goods get cleared correctly devoid of any delays thus saving clients’ time in dealing with customs officials.

What are the Benefits of China Customs Brokers?

 

Having a customs broker in china will serve you greatly. Some of the benefits include:

  • Peace of mind-Having a customs broker in china is going to ensure that all your shipments are completed as per the existing laws.

By getting a customs broker in china, you do not need to study all the necessary laws.

You will not need to hire a specialist to join your workforce purposely to offer legal advice regarding customs.

 

  • Having a customs broker in china makes it easier to deal with a customs broker other than speaking to other different government agencies separately.

 

  • Having a customs broker helps you avoid chances of paying excess VAT or duty.

 

They also remove any risks of underpaying the duties and VAT which may lead to fines and extra charges if not paid.

 

  • You must be aware that your shipment will not be released by the customs until you pay the duties and have your documentation in order.

In China, having a customs broker will help you in reducing delays thus keeping your business moving.

 

  • Customs broker in china will lender you additional services. They include tracking the status of your delivery as it is transported from one point to another.

 

What are the Available Types of Customs Brokers?

 

There are three types of customs brokers. They include:

  • Nominee customs broker
  • Sole Trader customs broker
  • Corporate customs broker

A Nominee customs broker is the individual who is employed who works for one or different brokerages at any single moment. Most customs brokers will fall into this category.

Every customs broker must be licensed by the relevant department in Customs and Border Protection.

How does a Customs Broker Work?

 

The customs brokers handle everything to do with the entry of goods into the country.

They receive goods shipped by the seller or their agent and process their entry into the country.

Customs brokers prepare all the necessary documentation and pay the necessary fees based on your agreement.

They inform you of all proceedings and the requirements if any.

Once the goods have been cleared by the customs authority, the customs broker will ship the cargo to your location. Where necessary, they will store the cargo awaiting transportation.

The customs broker is an intermediary between you, the government and any other parties involved.

How much do Customs Brokers Charge?

 

Every customs broker has their way of doing things and even their charges will differ widely.

The fees charged are tailor-made depending on the situation at hand and the work involved.

Your customs broker may give a quote covering the following items:

  • Customs clearance charges will normally be charged as a flat fee.
  • The Airline handling charges- these are assessed based on the delivery weight and are at least $62. It includes any fees levied at the port authority.
  • The Airline bond transfer charges-the assessment is based on the delivery weight and is at least $21
  • The port storage or airline- it is required in the customs clearance
  • In case of a sea freight consolidated cargo, there will be handover, third party documents alongside other fees.
  • Inspection fees for government agencies
  • Bank transfer charges
  • Onward delivery fees if necessary

Some customs brokers may charge flat upfront charges. It is always good to ask all the relevant questions regarding what you expect and what you are being charged for.

When should I hire a Customs Broker when Importing from China?

Custom broker

Customs broker

 

Several reasons will make you require a customs broker whenever you are importing from China.

Some of the reasons include when you need:

  • A pre-release of a cargo
  • After-entry services
  • Any other reporting for the government agencies
  • Automatic broker interface
  • Binding ruling
  • Customs bond
  • Electronic transfer
  • Filing in a remote location
  • Peace of mind away from the hurdles involving the import process
  • Review of tariff classification
  • Services involving duty drawbacks
  • Support on compliance

 

What is the Difference Between a Customs Broker and a Freight Forwarder?

 Freight forwarder

Freight forwarder

 

  • A freight forwarder is very different from a customs broker in that they are very wide in operation.

Such services include warehousing, consolidation of shipments, packaging services and preparation of customs paperwork.

On the other hand, a customs broker is very specific and requires several licenses.

 

  • Most of the freight forwarders will also appear as customs brokers or offer brokerage services. However, a customs broker is not necessarily a freight forwarder.

 

  • A Customs broker focuses on the importation side of international trade.

 

For exporters, they will view customs brokers as a conversation in a foreign country.

U.S. Exporters however will not require a customs broker since they are moving goods out of the country.

They will however require the services of a freight forwarder.

 

  • A freight forwarder of an exporter can partner together to assist facilitate and fix any issues concerning an export transaction.

 

 

  • A customs broker will ship cargo using the bill of lading issued by the shipment owner.

A freight forwarder however will ship cargo using their bill of lading commonly known as house bills of lading.

 

  • A customs broker has low levels of legal liability on the shipper’s cargo since the goods are never in the broker’s possession.

Although the customs brokers still have liability insurance. A freight forwarder on the other hand will assume the greatest legal liability for the shipment including insuring it.

 

Do Freight Forwarders use Customs Brokers?

 

Yes, they do. It is very important that both the customs brokers and freight forwarder work in harmony.

They are very crucial in ensuring that the process runs smoothly and successfully.

Any issues arising in the trade can be sufficiently handled whenever there is a good relationship between the customs broker and the freight forwarder.

Where can I find a Customs Broker?

 

The best place to find a licensed customs broker is on the Customs Broker list on the Customs and Border Protection website.

Besides, the website lists all the licensed customs brokers and organizes them according to the points of entry.

The customs broker list indicates each custom broker’s port of operation and their respective contact information.

What is a Licensed Customs Broker?

 

A licensed customs broker can be an association, private individual, associations, partnerships or corporations that have been licensed by the Customs Service of the U.S.

They are licensed to:

  • Preparing the entries
  • Filing the entries
  • Arranging for payment of duties
  • Organizing for the release of shipment from the custody of the customs
  • Representing their clients’ matters to do with customs

The customs brokers are the only authorized entities that are supposed to assist importers in their trade.

Even though the importers have the rights to conduct their clearance of goods, most importers chose to work with customs brokers.

Customs brokers can make their work easier due to their vast knowledge in the industry.

How do I choose a Customs Broker?

 

The following is a guide that can help ensure you get a reliable customs broker:

Do you have a Special Type of Import or Product Line?

If so, you need to get a customs broker who specializes or has immense expertise in the clearance of your special type of goods.

For example, alcohol, apparel, textiles among others have many regulations and laws which apply importation of such cargo.

Not every broker has the required experience in handling such cargo.

How many Ports does your Cargo Pass Through?

If your goods are going to pass through various ports, then you will need to hire customs brokers with offices in those ports.

A one-office broker may not be helpful as they may be forced to subcontract the work.

This increases the chances of import errors arising.

Automation is Important

Every broker regardless of their size should have fully automated connections to different cargo tracking sites and web portals not only the U.S. systems.

Your customs broker should be in a position to communicate with you via e-mail, telephone and fax.

 

What is the General Reputation of your Broker?

You shouldn’t just trust everything that the broker’s marketing materials talks of their reputation and capabilities.

The best place to get reviews about your customs broker is from their customers.

You can also inquire for non-biased comments from local air and ocean carriers.

Are you in need of a Dedicated Account Manager?

If the volume of your shipment is going to be high enough, then you may require a dedicated contact person to act as your representative.

They will be responsible for the coordination of your shipments needs including communication.

Have a Working Agreement in Place

It is important that draft an agreement on the scope of work and responsibilities with your customs broker.

It should also have the fees structure for every service being offered, contacts and the operational procedures.

The agreement should be shared with all our involved parties.

Any changes in your business must reflect on the agreement and that is why you need to review the agreement whenever they occur.

Can I be my own Customs Broker?

Customs brokers are not a legal requirement although they may be necessary.

Not all imports may require the effort of a customs broker.

As an individual or company, you can also be able to do the clearing of your goods and ensure proper payment of all duties.

It may be time-consuming but it is worth going through to ensure your cargo gets released in time.

Having a customs broker can be helpful as it will help in avoiding avoidable mistakes that you may not be aware of.

 

How do I clear Customs without a Customs Broker?

Customs clearance

Customs clearance

It is possible to import without a customs broker. You however need to understand what goes into the clearance of goods.

You must understand the Policies of the CBP and their procedures together with the requirements for importing your specific goods.

Besides, you must file all the entry documents at the port of entry.

Imported goods are considered to have entered the country once they have been authorized by the CBP and all the duties paid for.

You will be responsible for preparing the examination and dispatch of the shipment.

Also, you’re required to contact all the concerned agencies apart from the CBP e.g. the Food and Drug Administration if you are importing food products.

You may also be required to get a license, permit or any other certifications corresponding to the type of goods you are importing.

This will also depend on your local authorities and their policies that may require business licenses affecting your line of trade.

A customs bond may also be necessary if you are importing cargo valued at over $2500 or goods subject to the requirements of the federal agency.

You can choose to have a single entry bond or a continuous customs bond.

For continuous customs bond, you must make an application through the customs office at the port of entry.

Follow all the paperwork procedures of the CBP otherwise, you may get fined.

You also risk your merchandise being held.

You must understand what every type of import requires to successfully import your cargo.

Once that all is done and done correctly, you should have your cargo released without any issues.

 

Do I need a Customs Broker for Alibaba Imports?

 Alibaba

Alibaba

Since there is no legal requirement stating that you must have a customs broker, imports from Alibaba are not an exception.

You can choose to have one or simply undertake the clearance process by yourself.

A customs broker is good as they come with a wealth of experience in the clearance of goods.

The process itself can be complicated and that is why it may be necessary to get one.

This especially so if you are importing from Alibaba for the first time.

Customs broker will help you avoid delays, overpayment of duties and miscommunications.

What Paperwork is required when dealing with a Customs Broker?

 

When importing into the U.S. through a customs broker, you must sign the power of attorney.

This allows the customs broker to act on your behalf. If you are importing using a continuous customs bond, you must sign the CBP application.

Other documents you need to have included the packaging list and a commercial invoice.

If you are dealing with other partner government agencies such as EPA, FDA, USDA etc., you will require the necessary paperwork done.

Such may include certificates and licenses and possibly registrations.

 

How do I pay Taxes and Duties when clearing Customs with a Broker?

 

Once the paperwork has been completed and you are required to pay the fees.

Based on your agreement with the customs broker they can pay or request you to make payments.

The customs broker may take care of the fees which you will be required to pay in total once you receive the shipment.

The customs broker will issue you with an invoice containing all the charges incurred.

The invoice will cover taxes, duties and other fees applicable. You will be required to pay for the invoices based on your terms e.g. 15 days.

Can I use different Customs Brokers Depending on the Mode of Transportation or the Location of the Entry?

 

It is very important that you use one customs brokers for a smooth operation.

Find out the number of ports of entry your cargo may need to pass through.

Choose a customs broker who has offices in all those ports of entry.

Having a customs broker with one only will mean that they need to hire other customs brokers in other ports.

This is a risky move as it exposes your cargo to loss and errors during shipment.

Choose a customs broker that is a full house.

This means they have all the services you need in one place including transportation of cargo.

When shipping via Courier, is it Recommendable to use the Courier Brokerage Services even though I use a different Broker for my Air and Sea shipments?

It is recommendable that you use the same customs broker for all your engagements with Customs and Border Protection.

If you are shipping using a courier, it is still necessary that you use your customs broker to conduct business for you.

Using one trusted customs broker helps you organize your business and solving issues that may arise becomes easy.

Are there Restrictions on what Kind of Goods Customs Brokers can Clear?

Restricted imports

Restricted imports

 

Customs brokers are supposed to help in the clearance of all type of goods.

It is expected that they have the knowledge of how the systems work and the charges.

However, it is not the case that they will understand every aspect of the goods being shipped.

Most of them are specialists in different fields.

It is important that you choose only the customs brokers that understand the field in which your cargo falls.

This is because changes keep on occurring across different sectors and only those associated with the sector may be informed.

If your customs broker is not an expert in the sector your shipment falls in, you may find challenges complying with the laws affecting your goods.

How long do Brokers take to clear Customs?

 

Typically, it can take customs brokers not more than 24 hours to clear a shipment.

However, it may take longer than expected going to days or weeks before goods are inspected.

Your customs broker should advise you on what is being done, when and how long it may take.

If the shipment is selected for customs exam, for example, it may take much longer.

How do I set up an Account with a Customs Broker?

 

The process of setting up a customs broker account is not very complicated. It involves the following steps:

  • Filling of an account application-This is your basic information
  • Completing the account questionnaire-This is to determine whether there is any relationship between you as the importer and the exporters
  • Creating an account profile-This will list your billing information, contact information and the payment terms.
  • The signing of the customs power of attorney-This is to give your customs broker the power to represent you.
  • Filling the Importer Security Form (ISF)
  • Compiling your Importing paperwork
  • Setting up the customs Broker account

 

Can a Customs Broker Research Previous Customs Entries so as to Determine Compliance and avoid Exposure to Extra Duties or Penalties?

 

Your customs broker has to keep you in a safe position with the customs.

This means that researching your past customs entries will help guard you against unnecessary fines.

Once the customs broker digs into the history of your customs records, they will advise you on the best step to take.

They will forecast the fees and taxes that you may be charged whenever you import in future.

It will also help them understand the kind of relationship between you and the customs officials.

The most important thing is to find out any mistakes that may have been committed in the past.

These are the mistakes that have the potential of haunting you later in future.

It is upon the customs broker to ensure you don’t fall into trouble with the customs.

In any case, they will end up losing business if they expose you to losses.

Which is Better Between a Customs Brokerage Company and an Independent Customs Broker Agent?

 

A customs brokerage company will always have a higher chance of being chosen to represent a company for a matter to deal with customs.

An individual customs broker may not have all the necessary assets required to handle all your needs.

An established customs Brokerage Company is easier to vet based on the volumes and satisfaction rate experienced by their clients.

They can also serve as an all-in-one shop for your needs including transport and warehousing.

The main reason why you should go for an established customs brokerage is when you have to deal with several ports of entry.

That will mean that you will need a customs broker in every port.

A customs brokerage company will have offices across various ports.

This means that all your shipping needs are handled from a single office that is closer to you.

What are the Steps to Customs Clearance with a Customs Broker?

Customs clearance

Customs clearance

 

There are four steps that are followed when you are shipping through a customs broker.

They are:

Verification of Paperwork

At this stage, a customs officer will verify your paperwork to ensure that everything is completely and correctly entered.

All international shipments are required to have commercial invoices.

After the verification exercise is complete, the document will indicate the shipper and the contact details of the receiver.

The airway bill number and the export date must be indicated on the shipment.

Checking by Customs Officer

A customs officer must verify the applicable fees on your shipment.

The fees will depend on the value of goods, their type and the laws of the country.

In case the value of the cargo is more than the tax bracket, the customs officer must check if the duties and taxes have been paid.

Taxes, Duties and Payments

The customs official will request that any outstanding duties and taxes be paid. There are two payment options.

You will have the Delivery Duty Unpaid (DDU) and Delivery Duty Paid (DDP). If the shipment is labelled DDP, it means that the duties and taxes have been paid for.

For DDU, the process can prove to be expensive since brokers will charge different charges.

You will also be charged storage, late payment fees, brokerage and other fees which will ultimately affect your shipment fee.

Shipment Release

After all the duties and taxes have been paid, the shipment is then released.

From here, if the taxes, duties and all the paperwork were done properly, the shipment will be released to their final destination.

Do Customs Brokerage Services cover both Importing and Exporting Goods?

 

Customs brokerage services cover both importation and exportation of goods.

They are licensed to assist traders in all matters to do with their international trade.

Whether you are moving goods inside the country (Import) or outside the country (export), you may need a customs broker.

Having one customs broker for both imports and exports can help ensure that you make your work easier.

Can a Customs Broker Assist with any Corrections or Duty Drawbacks to Customs Entries?

 

A customs broker is supposed to assist you with any matters to do with the customs.

They are supposed to guide you on all the paperwork and help you avoid any mistakes that may otherwise be costly.

The Customs broker should help you with all corrections and duty drawbacks that occur during the process.

What are the Risks of using Customs Brokers for Customs Clearance and How do I avoid them?

 

One of the risks of using a customs broker is the loss of touch with your shipment.

Once you choose to work with a customs broker, you entrust them with every process necessary.

That means you do not get to feel your goods along the supply chain other than the information you get.

To be safe, always ensure you work with a customs broker who is not only licensed but have the importer in mind.

They should communicate timely and in details.

Another risk is the loss of goods and financial losses arising from fines. Delays may also lead to financial losses thus affecting your business.

You should get the latest reviews regarding a customs broker to make sure you settle on the best.

Work with a knowledgeable customs broker and have experience handling goods similar to yours.

This makes sure you are safe from errors arising from the customs broker being uninformed.

At BanSar, we will help you with all your shipping needs from China to any global.

Contact us now for all freight forwarding services from China.

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