Choosing the Right Customs Broker

While it is not required, it is advisable to hire a customs broker when importing goods. They not only make the process of importing a lot easier and less time consuming, but their services also can potentially save a lot of money while helping to avoid unnecessary delays. However, not all customs brokers are created equal. With so many to choose from and the importing process potentially complicated, it is important to know what to look for.

All US customs brokers must be licensed (there is a custom broker license exam) by the U.S. Customs and Border Protection (CBP). Their activities are defined by agency as “activities concerning the entry and admissibility of merchandise.” They act on the behalf of other parties helping to fulfill all steps required to clear their goods through customs. While the CBP determines if everything is in order and what the duties are, a good customs broker will make sure all documentation is properly taken care of.

A customs broker will answer any relevant questions and advise importers on the procedures if it is their first time. They should also be able to tell how the CBP will classify the merchandise being according to the Harmonized Tariff Schedule of the United States and thus give a good idea of what the tariffs and other importing costs will be. They can sometimes point out ways to save the importer money.
Generally, a customs broker will charge in the range of $100 to $200 per entry. There is no reason to pay a lot for a customs broker but keep in mind the fees and other expenses can quickly add up to a substantial sum if something goes wrong on entry. While a customs broker will provide the necessary expertise to import the goods, the importer should still have a good basic understanding of the procedures both to select the right broker and to help the process run more smoothly.

Things to look for

  • How responsive is the broker? See what it takes to get a live person on the phone and how quickly they respond to email. Shipping companies, CBP and other different players are all must come together when goods clear customs. There is no telling when a quick response to an issue might be needed.
  • The area of expertise of the customs broker is also important. It is sometimes impossible for even a specialist to keep up with everything, and the rules pertaining to products like textiles and food are very different. If, for example, one is importing textiles, choosing a broker with experience in that field adds a degree of insurance that problems from missing something obscure will not occur.
  • Location also matters. While it may not make much difference if the customs broker has a location near the client, the broker should have some kind of presence at the port where the shipments will arrive. This can help lower fees and reduce response times.

Customs Broker

  • After the goods clear customs, they will still need to be sent to the final destination The customs broker needs to have relationships with freight forwarders so that can provide the fastest and most cost effective shipping. It is also important to be sure they can handle the locations and types of shipments involved.
  • It needs to be totally clear as to how payments will be handled. There will be various tariffs, port and transportation fees, etc. that must be paid after the goods arrive at the port or entry. Be sure of the payment methods as well as how and when the payment will be made before deciding on the services of a customs broker.

When deciding on a company, look online for any feedback from others who have used the company in the past. If the customs broker does not turn out as expected or a better one comes along, there is nothing to stop one from changing companies. However, it will save time and hassle to start and stay with a single company.

It is wise to have a good customs broker before the order is ever placed and certainly before the goods leave the factory. There may be markings and other regulations the importer needs to be aware of that must be taken care of at the manufacturer.

Choose carefully to ensure a smooth importing process.

How to Compute Customs Tariffs

Please follow the procedure below to obtain an estimate of the tariff on your product if you are importing into the US. This is only a guideline. You will need to contact U.S. Customs to obtain an exact rate. For countries other than the U.S., please check the links at the bottom of this page.

1. You will first need to obtain a tariff number. You may be able to obtain it by going directly to the HTS Schedule in step four below,
but it will probably be easier to first go to the Customs Ruling Online Search System (CROSS) at customs rulings.

2. Go to the keyword search and type in the name of the product for which you would like to obtain a tariff.

3. A ruling number and a tariff number will appear. Click on the tariff number to get a tariff rate (usually from the previous year). If you are not exactly sure which tariff number is correct, use your best judgment. Obtaining an approximate number will be adequate for the next step.

For example, if you are looking for the rate on silk ties, you will get the tariff number 6215.10.0025.

4. Go to HTS Schedule to see the Harmonized Tariff and Schedule (HTS) of the United States by Chapter. Use the tariff number you found in step three to find the current tariff rate (i.e. the first two numbers of the tariff number you obtained in step three correspond to the chapter number you need to click on). Since there is the possibility you did not get the exact number, make sure the description to the right of the number matches the product for which you would like to obtain a tariff.Compute Customs Tariffs

For example, if you are looking for the rate on silk ties, click on Chapter 62 (the chapter number is the same as the first two digits of the tariff number). Following the Heading/Subheading column to 6215.10.0025 will give you the tariff rate of 7.2% for countries with normal MFN status.

Links for customs offices in various countries.
USA: US Customs & Border Protection
Canada: Canada Border Services Agency
EU: The European Union’s TARIC database
United Kingdom: HM Revenue & Customs
Ireland: Tax and Duty Type
Australia: Australian Customs Service
New Zealand: New Zealand Customs Service
Worldwide: World Customs Organizations

Customs Clearance

When importing into a country, there are various terms, regulations and procedures an importer should be familiar with. The following is a guide of various issues to be aware of when importing.

For first time importers, it is highly advisable to use a customs broker to enter and clear goods through customs. Customs brokers are licensed by the countries in which they operate, and they act on behalf of the importer to file the necessary documents for goods to enter a country at the port-of-entry. Depending on their relationship with their client, they may also pay customs duties and other importing expenses on their client’s behalf. Finally, they advise importers about issues of which they may need to be aware such as country or origin markings.

When choosing a customs broker, the importer should first make sure they can enter goods at their desired arrival port. In the U.S., customs brokers are licensed by the U.S. Customs and Border Protection Service.
Prior to placing an order with a manufacturer, the respective nation’s customs agency and the importer’s customs broker should be consulted to avoid possible problems such as the following:

  • Any legal issues that might exist with the product in the country of import.
  • Finding out after the product arrives at port that the product is subject to import quotas (such as those put on textiles)
  • Possible health, safety or other regulations which apply to the product to be imported.

One easy to avoid, but all too common problem encountered when importing is the failure to mark the product in compliance with country of origin regulations. To avoid this, contact the respective customs agency of the nation where the merchandise will be imported to ensure the goods are in compliance. For example, custom laws in the U.S. require each imported good be marked with the English name of the country of origin (e.g. China) as legibly, indelibly, and permanently as the nature of the article permits. Furthermore, this marking must be visible to the ultimate purchaser of the product.

The tariff rate levied by customs must be paid before the importer can take possession of the goods. While tariff rates in countries like the U.S. average around 5%, they can be significantly higher for some goods, particularly those with higher labor content. Therefore, it is important to know the rate before product arrives at port. See the following link for more information tariff & customs information.

Before the goods are shipped, ensure the packing regulations for the destination country have been adhered to by the factory. For example, every box, bale or case may need to be numbered with the exact quantity in each.

Other regulations include the type of pallets that can be used.

The majority of customs clearance is about paperwork. Different goods can require different types of documentation, but the three major types of documentation the shipper must prepare include the following:

1. A bill of lading: This document, issued by the carrier or shipper, is basically a receipt of the goods acknowledging they have been received on the vessel for shipment. This document indicates the particular vessel on which the goods have been placed, their destination, and the terms for transporting the goods to their final destination. Customs Clearance

2. A commercial invoice: This is used as a customs declaration by the entity that is exporting an item across international borders. This document is required by customs to determine the value of the goods to assess duties and taxes, and goods must be invoiced in a systematic manner.

3. Packing list: This document is an itemized detail of the merchandise in a particular shipment. A copy is usually attached to the outside of the shipping container or inside the container itself so the merchandise may be counted by the person opening it.

It is crucial to make sure these documents, and any others that may be needed for a particular shipment, are carefully completed and reviewed before the goods arrive.

To avoid excess storage fees, arrange for a freight forwarder or some other type of transporter to ship the goods to their final destination as soon as they have cleared customs.

Being aware of these points, as well working closely with customs and a customs broker, will make the importing process run more smoothly and will reduce the possibility of unnecessary difficulty or expense.