What Are Customs Brokers & Freight Forwarders? [Full Webinar]

Hello everyone and welcome to our latest

webinar

; "What are

customs

brokers

and

freight

forwarders

?" I'm Nick Esposito. I will be your host and presenter today. I wear many hats here at TRG, but one of my favorite roles is as an educator to both my coworkers and you, my audience of importers, exporters, and other international trade professionals. This

webinar

is brought to you by Trade Risk Guaranty Brokerage Services, LLC or as we are commonly known, TRG. We are located in the heart of downtown Bozeman, Montana, which lately can't decide if it wants to be winter, spring or summer.

Monday went from 66 degrees and sunny to 32 and snowing in a few hours. As we like to say around these parts; If you don't like the weather, wait a few minutes. If you're in town, be sure to stop by the second floor of the historic Rocking 'R' Bar building. Our direct-to-importer business model is unique to the

customs

bonding and cargo insurance markets. We have grown our business over the past 26 years to encompass more than 10,000 customers from all avenues of international trade. As an important disclaimer, the information presented in this webinar is for informational purposes only and is not intended to and does not constitute legal advice.

We will record this webinar and it will be available on YouTube for future reference. To be notified when it is released and to stay up to date with TRG educational videos, I recommend that you subscribe to our YouTube channel. You can also search for it by typing YouTube Business Risk Assurance Space into Google and clicking on the first result. If you have any additional questions outside of the webinar or would like to be part of a community of trade professionals, please join our Facebook group 'International Trade Professionals - TRG'. We periodically check the group for questions and encourage our members to start conversations with each other if they have a common problem.

Today's webinar topics will cover "

what

are customs

brokers

and three big questions to ask them", "

what

are

freight

forwarders

and three big questions to ask them", "where can you find customs brokers and freight forwarders" and 'the differences between Customs Agents and Freight Agents'. Our first topic today will be 'What are customs agents?' First, let's take a look at the definition and requirements to be a Customs Broker according to the Customs website. Customs brokers are private persons, partnerships, associations or corporations licensed, regulated and licensed by Customs and Border Protection. The US to help importers and exporters comply with federal requirements governing imports and exports Brokers submit the necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for the service.

Brokers must be experienced in entry procedures, admissibility requirements, classification, valuation and rates of duties and taxes and tariffs applicable to imported goods. Customs states that there are approximately eleven thousand authorized customs brokers active here. There is a curious fact: if we calculate that the active number of US importers who maintain continuous US customs bonds is between 250,000 and 300,000, we find that there are between 22 and 27 importers for each customs agent. Very cool! So what does it all mean? Licensed customs brokers must pass a rigorous government-mandated test and background search before engaging in customs activities on behalf of U.S. importers.

Basically, all customs brokers must possess expert knowledge of the Customs Code of Federal Regulations and display in-depth knowledge of the Harmonized Tariff System, as it ultimately provides the determination of the tariff rate for each unique product. The combination of their experience in these fields allows them to act as a liaison between the importer and Customs. What this translates to for many importers is that the customs broker prepares and delivers the necessary documentation, collaborates with the importer, determines proper classification, pays duties and fees, and handles other crucial interactions with Customs during the process of importing goods. . Let's take a moment to discuss an incredibly crucial issue: where the legal responsibility of goods lies in the eyes of Customs.

The Importer of Record or IOR, not the Customs Broker, is responsible for any errors made during the import process. Furthermore, Customs will not accept a lack of understanding at all. In other words, saying you didn't know doesn't matter to Customs. Again, I cannot emphasize this enough: regardless of who makes the mistakes, the IOR is ultimately legally responsible for your assets. So what does this mean for you, the importer of record? When it comes to the classification of your products, you will want to have multiple sources involved in the final determination of the classification you plan to use.

While we're on the topic, you'll also want to not rely on the foreign manufacturer to classify your products or, more importantly, the HTSUS codes of your suppliers. Importers using the tariff code suggested by suppliers may be falsely induced to perceive lower prices as a result of a lower tariff rate. The foreign manufacturer will not be responsible for the misclassification of your products, again, as the importer of record, the burden of properly classifying the products falls on your shoulders. What are some of the specific services and procedures that customs brokers provide to an importer? Customs brokers will transmit your Importer Security Filing (also known as ISF), declare your right to enter, properly complete and file your entry summary (7501), file your cargo release, pay duties and fees at your name, and may even have helped determine your ranking.

It is important to note that the accuracy of documentation is essential because, while Customs may inadvertently accept inaccurate documentation, they will eventually become aware of inaccuracies that could result in massive penalties in the future. It is not uncommon for Customs to overlook a classification error for several years and seek redress for a period of up to five years prior. Even on tickets that have already been settled. Some of you, up to this point, may be thinking, "That sounds great, Nick, but I'm not really sure what this all means." So let's take a step back and analyze where the Customs Broker fits during the foreign merchandise entry process.

And in this graph, we can group things into two categories; everything that needs to happen before the products arrive in the US, everything that happens once the products arrive in the US Let's discuss what needs to happen before the products arrive. The first step in the entry process occurs before the merchandise has even left the foreign port. This step is known as Importer Security Submission, in which you, or for this webinar, your customs broker submits to Customs several elements of data about your cargo bound for the U.S. This is essentially a report which details where your goods come from. from whom, who manufactured and sold them, who is in contact with them originally and to whom they will be sent.

Basically, a means for Customs to pre-check the goods you import and determine if there will be additional inspection upon arrival. This data submission must be completed no later than 24 hours before the goods are placed on the foreign ship bound for the US, i.e. well in advance. If your goods are about to arrive and their final destination is a seaport, the Customs Broker can pre-authorize their entry at the port of discharge up to five days in advance. If your cargo will be shipped or traveling to an inland port, the Customs Broker must wait for the cargo to arrive at its destination port before making entry.

The vast majority of customs brokers today transmit data through a method known as Remote Location Submission, 'RLF', which allows your agent to submit your data entry and pay duties and fees from your living room. in Fargo, while your cargo is in port. in Memphis. Very cool! Let me go into more detail that before your goods arrive in the US, the customs broker, on behalf of the importer, must also make arrangements at the port of entry, the place where tariffs and the documentation. What this does is tell Customs at which port you will be interacting with them, so that when the goods arrive at the port, Customs officials know what to do with the goods and what to expect.

Once your goods have arrived in the US, they cannot be cleared by Customs if your agent has arranged the trade documentation for Customs review or immediately. What are the required business documents, you asked? Your broker will need your commercial invoice, packing list, and bill of lading, and may also request your notice of arrival. Submitting these documents to your agent prior to your arrival will ensure timely release of your cargo and will help you avoid unnecessary storage fees. As long as the customs broker has all the appropriate documentation, he or she will typically request immediate release, which includes submitting the cargo release, submitting the 7501 entry summary, and paying estimated duties.

Here's a quick breakdown of each of these. Cargo Release Filing: Releases goods from Customs custody and declares that importers have the right to enter the U.S. File Entry Summary: Also known as Customs Form 7501. Customs Brokers file this document by compiling the data from your Commercial Registry. Invoice, packing list and bill of lading. They gather and compile data that informs the classification of their products, the origin of the products, the value and quantity of the products. Pay estimated fees; As you can imagine, this is a crucial step in which the Customs Broker pays the duties and fees calculated on the tariff and values ​​the commercial invoice on your behalf, based on the information contained in the 7501.

For more details on the process of entry, consult our previous webinar: The Process of Settlement and Entry of Goods to the United States. As you may have deduced, at this point the Customs Broker plays a huge and crucial role in the Import Process that directly affects your supply chain. Which means that finding the right one is also a crucial task. To that end, I've compiled three of my favorite questions to start the process of selecting a good customs broker. Question number one: Mr. Customs Broker, how will you help my company ensure proper compliance with customs regulations?

One of my favorites. Basically, you want to make sure they are aware of Customs. How are you monitoring the new compliance protocols that Customs publishes? Are they part of any key trade compliance organizations? For example; I-CPA, which are international compliance professionals, or NCBFA, a national association of US customs brokers and forwarders. Question number two: Mr. Customs Agent, do you have any pending lawsuit or violation and/or have you been sanctioned by Customs? As you can imagine, you probably don't want to work with a customs broker who has outstanding lawsuits or violations. Additionally, if they have been sanctioned by Customs, that means they have to make cash deposits at Customs.

Effectively eliminating payment by other means and severely limiting their capabilities. As you can imagine, being penalized by Customs is not a good thing. Question number three: Mr. Customs Agent, how much do your services cost? It's important to know how much your customs broker will charge you, and asking for a breakdown of fees is a great way to compare customs brokers. Here are some things you can ask to get started. You can ask about ISF filing, entry filing, warehouse entry, associated government agency (or PGA), entry filing, or even customs bonds. Many of you may already know, but customs bond can be obtained directly from an insurance agency like TRG.

Customs bonds aside, there are approximately 11,000 customs brokers, so don't feel stuck with one. Of course, do a cost comparison between your favorite options. Now that you understand customs brokers, let's delve into freight forwarders. As you can imagine, Freight Forwarders could easily be its own webinar, so I've tried to keep it pretty simple today with the idea that in the future we'll have an in-depth webinar that delves into the complexity of specific freight forwarder topics. . To begin with, freight forwarders can be defined as a company that specializes in arranging the storage and shipping of goods on behalf of its carriers; typically provides a

full

range of services thatThey include tracking ground transportation, preparing shipping and export documents, warehousing, and reserving cargo space. , freight negotiation, freight consolidation, cargo insurance and insurance claim submission.

Freight forwarders generally ship under their own bills of lading or air waybills, called house bill of lading, and their agents or associates at the destination (overseas freight brokers) provide document delivery, deconsolidation and shipping services. cargo collection. As attested in the definition above, the term Freight Forwarders can possibly cover a wide range of professionals and services and their role depends on the needs of your company. The advantage of working with a freight forwarder is that they can act as an extension of your business; Their level of involvement in your organization's supply chain may vary depending on how you involve them.

In essence, Forwarders are logistics professionals with a deep understanding of transporting cargo from one place to another and managing transportation to avoid or minimize cargo holdups, delays, and serving their customers. Foreigners working on behalf of importers will coordinate and provide the necessary documents to the customs broker, such as the bill of lading and notice of arrival. Unlike the Customs Agent, who has experience in customs regulation, classification, forms required by Customs and customs clearance; elFreight Forwarder advocates for the timely pickup and delivery of its customers' shipments by coordinating with a broad network of transportation and fulfillment professionals.

The most classic examples of freight forwarders are UPS, FedEx, DHL. It makes sense right? They pick up the cargo at one location, use their shipping network to determine the movement of the goods, and finally the cargo ends up at a different location at its destination. So we have a basic idea of ​​the breadth of services that freight forwarders cover. Let's look at some of the common terms associated with freight forwarders that we frequently receive questions about. First, let's discuss cargo consolidation and deconsolidation. Freight consolidation is the means by which several smaller shipments from different importers are grouped together to create one larger, more complete shipment.

It is generally used as a cost-saving technique, as well as time, due to the frequency of travel on specific commercial lines. Deconsolidation occurs after the merchandise has arrived at the shared destination. The goods must then be re-separated into smaller shipments for further distribution to warehouses or final destinations. Next we have FCL/LCL, which stands for

full

container load and less than container load. Full container loading means that all cargo in a single shipping container is all of your cargo. Less than container load shipments are those of lower volume and can be consolidated at one point of origin with many of the cosigner's goods sharing cargo space.

It's like buying a seat on kayak.com but in a shipping container. Followed by FTL/LTL. Similar to FCL/LCL, FTL means full truckload, while LTL means less than truckload. You will probably have noticed that instead of a container, the goods in this sense are transported via a truck instead of a container. Additionally, another difference is that in some cases, less than a truck load may simply mean that you need a smaller, specialized vehicle to move your goods. It does not necessarily mean that your products have consolidated with others compared to container shipping. Moving on, let's discuss a few more items you've probably heard.

First, Ocean Carrier, which generally refers to sea routes operated by cargo ships that physically move goods from one country to another. Some of the big boys in the game are Maersk, Hapaq-Lloyd and CMA CGM Group. Next we have NVOCC, which stands for non-vessel operating common carrier. Again, this is an element that could easily be its own topic in an upcoming webinar. But for now let's stick to a simple definition. NVOCCs are similar to carriers, although they do not own the cargo ships. Instead, they have purchased space on the shipping line's cargo vessels, which they in turn deliver and sell to freight forwarders, freight forwarders or others.

So what are three big questions for a freight forwarder? Question number one: do they offer the services you need? First determine what services you may need and then find out if that Freight Forwarder offers them. In many cases this can be solved by consulting their website, however, it never hurts to ask and make sure that what you are looking for is what they offer. Not only will you be able to discern what services they offer on the website, but you will probably also be able to get information from their customers' reviews or testimonials about how their service compares to that of their competitors.

Question number two: how will you manage your shipments? How will you interact with them? In general, you'll want to get an idea of ​​how they handle their customer service. Will more than one person be your point of contact? If a problem arises, are they readily available in case of an emergency? Remember, these are your products at risk, so you want to ensure that should a problem arise during contracted shipping, they will be available to assist you. Your question number three: how much experience do they have? Perhaps my favorite question, which really gets to the heart of the matter.

How much experience do you have? As a Freight Forwarder, Freight Forwarder, have you been doing this for years, months, days? Are they a reputable freight forwarder? Again, you can always start with a basic Google search and get a ton of information, including customer reviews. As you may have guessed, you can find freight forwarders and customs agents in almost identical locations. The easiest solution, which also offers the best chance of finding reviews, is to do a basic Google search for a customs broker or freight forwarder. Additionally, while you are browsing the web you can visit the Customs website; cbp.gov and find their interactive map where you can find customs brokers by port.

However, if you prefer the old-school physical option, you can find customs brokers and freight forwarders in every state and usually concentrated around ports, especially the larger ports. Finally, don't forget that our sister company, Strix, is a customs broker and freight forwarder specializing in self-presentation software as well as domestic and international freight services. You are welcome to contact us after the webinar and we can put you in touch with them if you would like to know if they are a good fit for your company. So if you've made it this far, hopefully you have a better understanding of customs brokers and freight forwarders, but in case you're still wondering what the difference is between customs brokers and freight forwarders.

Well, the expertise of customs brokers is in the language of Customs and ensuring that all documentation required by Customs is accurately submitted to Customs, while freight forwarders are the logistics professionals who are at your disposal. in charge of maneuvering your goods from ports and locations around the world to other ports and locations. in the world. As a final note, due to the complementary nature, as well as the need for cohesion between the two, we frequently see that many Customs Agents also assume the role of Freight Agent and vice versa. And that is! At this time we would like you to submit your questions, we will try to answer them in a moment, but first we want to tell you a little more about TRG.

While we gather questions from the audience, I'd like to talk to you about TRG. TRG is an international trade insurance agency. We work directly with importers and exporters. We have been doing this for 26 years, we have over 13,000 clients that we work with every day specifically discussing these complex issues and helping them navigate this world of Customs. We are an additional resource for them with their customs broker and freight forwarder. Therefore, our model helps save time and money, and our multi-year billing cycles rely considerably less on customs bond. Typically, people pay between four hundred and seventy-five and five hundred and twenty-five dollars for their customs bond and we go down to $225 a year with our multi-year bond price of fifty thousand dollars.

You can continue to work with any agent or carrier of your choice and if any issues arise, our in-house claims support from our licensed customs brokers is available to assist you. Alright, let's answer some of those questions. Gary's first question; 'Should an importer worry about his broker if that broker has few, if any, questions about what he is clearing for the importer?' I'd say that really depends on the type of goods you bring and how often. If he brings in a fairly simple product a couple of times a year, he'll probably get fewer questions than someone who brings in significantly more complex products more frequently.

So to answer your question, not necessarily. However, it never hurts to shop around if you feel your customs broker isn't the right fit, don't feel caged. Check out the competition. -Penny asked; 'What is the best way to compare costs between Customs Brokers?' First, I would start by gathering as much information as possible about the costs of each of your services, including any specific fees that might be related to your business. Some brokers will break down those prices on their website. After that, I would ask more thorough questions, especially if he has narrowed it down to three customs agents and asked them in person if he can, or over the phone, whichever works.

Sandy asked; 'Do customs agents check all your entries?' Sandy, I'd say customs agents worth their salt are probably checking your entries. If you feel that your Customs Broker is not up to par, it never hurts to get a second opinion from another Customs Broker. Thank you for attending the webinar. If you have any questions, please feel free to contact me directly via my email at [email protected] or you can contact us through our Facebook group 'International Trade Professionals - TRG'. The added advantage of reaching out to the Facebook group is that you will have access to not only our staff experts, but also experts from the international business community.

Also, check out our blog www.traderiskguaranty.com/TRGPeak which contains a treasure trove of great articles and information. Don't forget that you can find us on Facebook, Twitter, Linkedin, Instagram and, most importantly, on YouTube. If you'd like to be notified when we release the recording of this webinar and all of our amazing videos as soon as they come out, please subscribe to our YouTube channel. Thanks again for attending the webinar!