In many ways, the rise of e-commerce has helped level the playing field between small and large businesses. Over the last decade or two, even start-ups have been empowered to connect with customers and source products from practically anywhere on the planet. Assuming smooth online order and payment processes, demand for international goods can quickly multiply in both volume and, as a result, complexity. After all, the internet may be borderless, but in the physical world shipments still need to clear customs. Fortunately, good customs brokers are well-equipped to handle the intricacies of cross-border trade. Customs brokerages also offer businesses several benefits that may enable them to pay for themselves.
Why Do Businesses Use Customs Brokers?
Customs clearance can be tricky and time-consuming for companies without in-house experts making sure that shipments meet various local regulations. The work often falls to employees lacking expertise in the field. This takes focus away from the primary business and can lead to costly missteps. The common misconception that moving goods across national borders simply entails filling out a form and paying a duty wastes an incalculable amount of time and money each day.
Mistakes made out of ignorance are avoided with the support of external customs brokers who are trained and licensed to handle the documentation, transport and clearance of goods on behalf of clients. Working with a customs brokerage is the smart approach to smooth cross-border operations.
How Do Customs Brokers Help With Cross-border Trade?
Clearance requirements vary based on several factors. These may include the type of goods, mode of transport and country of origin. Customs brokers assess each relevant factor and work with clients to prevent delays and ensure compliance with all applicable regulations. Examples include handling:
- Pre-clearance processes, such as Air Cargo Advance Screening program submissions, which must be provided before loading goods onto planes destined for the U.S.
- Permit and certification acquisition for goods requiring special handling, for instance, or are subject to extra regulatory scrutiny
- Tariff code identification to help avoid documentation errors
- Recordkeeping, so all audit requirements are met
5 Benefits of Using a Customs Brokerage
What benefits might a company expect from using a customs brokerage for ongoing operational support? The list is long, and its potential impact is significant.
1) Faster shipping time
Supply chains are complicated, and customers want immediate gratification. Something as simple as a missing form or incorrect tariff classification code can easily delay shipments. This may lead to unhappy customers, fines, storage fees, etc. Having expert assistance can help prevent some of the most common issues. It may also help with expediting the resolution of ones that can’t be avoided, enabling shipments to be on their way with minimal disruption.
2) Reduced costs
The calculation of duties and tariffs isn’t exactly straightforward. In the U.S., country of origin, product type and import method may affect costs, and then there are exemptions to keep in mind… A customs brokerage can help businesses make sense of the Harmonized Tariff System. This ensures that they don’t pay more or less than their fair share.
Then there are the fees associated with delayed shipments. Demurrage, detention, per diem and storage expenses add up quickly. They can be minimized or avoided altogether with expert support.
3) Time to focus on primary business
Generally businesses keep their operations as lean as possible. Aside from the giant multinationals of the world (read: Walmart), not many employ departments dedicated to navigating customs laws. As mentioned above, when employees are pulled away from their area of responsibility in support of the primary business, it comes at a cost.
When handling cross-border shipments is left up to someone who doesn’t have a relevant background or comfort level, problems can easily arise. Tariff misclassifications, permitting failures, paperwork errors and transportation delays are all examples of common issues that are avoidable. In the long run, many companies conclude that it’s better to remain focused on their own areas of expertise. They prefer to leave the intricacies of clearance operations up to customs brokerages.
4) Regulatory compliance
It’s important to ensure that operations are set up to pass muster with regulatory authorities from the beginning. Remaining in compliance with relevant rules requires knowing them well in the first place. It also entails having technological resources to build a recordkeeping solution that captures all the information needed to facilitate a successful audit.
All customs brokers should know the ins and outs of compliance. The ones that shine also offer robust record-keeping capabilities so customers don’t have to reinvent the wheel as part of the start-up process.
5) Up-to-date expertise
There’s a saying that “the only constant in life is change,” which may apply doubly to the world of customs operations. It’s certainly possible for a business to identify a good in-house resource to effectively handle all the work associated with cross-border transactions. However, how will the business know about, let alone respond to, regulatory revisions or procedural updates?
Customs brokerages understand the implications of new Incoterms as soon as they’re published. They follow the progress of important legislation so they can answer questions like how the USMCA differs from NAFTA, for instance. Each Wednesday customs brokers receive a weekly compilation of decisions, rulings, regulations, notices and abstracts that affect their clients’ businesses. Not doing so would present an existential threat to their livelihoods, so falling behind isn’t an option.
Customs Brokers Reduce Cross-border Trade Complexity
International trade can be highly rewarding in the steady hands of a seasoned expert. It can also spell disaster for businesses opting to roll the dice and go it alone. Customs brokerages often offer no-risk, customized quotes taking into account specific needs and budget, so there’s nothing to lose by initiating a discussion. Read What Makes a Good Customs Brokerage? for guidance on which questions to ask.
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An organization that offers the services of customs brokers who are trained and licensed to handle the documentation, transport and clearance of goods on behalf of clients.
No, although they do help businesses remain compliant with current regulations.
Fees are calculated based on clients’ specific needs. Many, if not most, offer customized, no-risk estimates.