Selecting the right customs broker is like finding the perfect key to unlock a door.
Noncompliance with Customs rules and regulations leads to blocked shipments. Here, customs brokers act as locksmiths, unlocking the rules and regulations to achieve a seamless Customs clearance process.
Customs brokers support importers with Customs procedures and supply important tips to avoid import mistakes. They take care of all required documentation, making sure it's accurate and filed on time.
Typically, they are experts in specific commodities and can provide updates on regulations specific to a company’s shipments. For example, a broker may have expertise on the requirements for importing agricultural goods, fish, or wildlife products.
Their efforts save importers time and money at the border. Besides having shipments clear Customs more quickly, customs brokers ensure importers pay the correct duties and fees to avoid penalties, fines and legal concerns down the road.
Once these relationships are established, it’s tempting to stick with customs brokers for the long haul. But what if it’s time to make a switch?
It is vital for importers to know the telltale signs that show it’s time to sever ties with their current customs broker and the steps to take to find a new one.
When Do You Need a New Customs Broker?
There are several reasons to consider switching customs brokers.
The most common reason is service failure. If a customs broker consistently makes mistakes that lead to clearance delays, the costs can be significant. Shippers may pay higher detention and demurrage fees, incur storage costs, and see delays in getting goods to customers.
Poor customer service or lack of consistency are also good reasons for a change. Inconsistent quality control measures can lead to overpayment of duties, trade data reporting errors, and billing mistakes.
Communication issues also point to a need for a new customs broker. Perhaps the current broker has reduced staffing or lost key contacts, and now lacks a local contact to field questions and problems. Maybe the broker has taken on more clients and now is making errors or misinterpreting requirements as they juggle more work.
Another reason for a switch is the importer’s own growth. To accommodate this growth, the company may require a customs broker with more extensive service offerings, including packaging, logistics, and warehousing.
Soaring service costs also may be a factor. Importers looking to lower supply chain costs might contemplate changing brokers to get better pricing. However, opting for a lower price without considering other factors could decrease service quality.
Though these signs point to the need for a new broker, switching brokers should not be a hasty decision. Importers should regularly audit and review their customs broker to ensure they receive the service they require at a fair price. When audits reveal an issue, it's time to make a change.
Capabilities to Look for in a Customs Broker
Selecting a new broker is a weighty decision. The importer of record is held legally responsible for imported goods as per 19 USC 1484.This means importers are legally responsible for their shipments and any issues that arise—even if they use a customs broker.
The best brokers value clear and constant communication. As import demands fluctuate, companies benefit from a customs broker who can easily expand or contract their services. An absence of communication can complicate this ability. An effective broker maintains open communication to adapt to changing service needs.
Once a customs broker is hired, work with them to create Standard Operating Procedures (SOP) and Key Performance Indicators (KPIs) to ensure they always meet Customs clearance and shipping needs. By analyzing KPIs alongside a customs broker's performance, companies can verify their service is in line with their goals.
For example, a KPI might analyze the number of CF28s (requests for information) and CF29s (notices of action) received from Customs. Were the broker's responses to these inquiries thorough, prompt, and concise? Additional KPIs could assess post summary corrections, broker or audit failures, and unforeseen fees for detention, demurrage, or warehousing.
Once SOPs and KPIs are in place, regular audits and review meetings can keep things on track. While KPIs can highlight potential problems, it's essential to probe further, as there may be a logical explanation. For example, a CF28 could mean the broker classified the shipment incorrectly. Or the import specialist might only be verifying the accuracy of the reported data.
Other considerations include:
- Account Management Efficiency. Hire a customs broker that manages accounts efficiently. A broker who provides a single point of contact to streamline and maintain consistent communication is dedicated to effective communication.
The hours a broker keeps is also important—business doesn’t just happen from 9 to 5. In the shipping industry, quick responses and availability are crucial. It is important to have a reliable Customs broker that operates 24/7. Having unrestricted access to a customs broker prevents delays, saves costs, and reduces risk.
- Billing and Financial Considerations. Most customs brokers charge a brokerage fee for the Customs clearance process, which may cover document preparation and submission, and communication with Customs authorities. But some customs brokers charge a flat rate based on the shipment value and tack on extra fees for extra work.
When it comes to paying duties, brokers have two methods to choose from. The first method is to cover the client's Customs payment, then ask for reimbursement. The other way is to let Customs take payments directly from the client's account.
Customs brokers also may combine their billing, allowing shippers to receive just one invoice for all their shipments. This is beneficial in terms of both time and cost.
- Training and Regulator Updates. Check on the priority the broker puts on training and education for all personnel. Customs brokers must stay prepared to handle ever-changing and complex international trade laws.
Customs has proposed a new rule that will require licensed customs brokers to have continuing education. Under this proposal, customs brokers must complete at least 36 continuing education credits every three years, which is equivalent to one hour per month.
This rule is forthcoming but isn’t final, yet. In the meantime, choose a customs broker that has already made this commitment. Check for their involvement in government and partner agency programs, committees, and associations, as well as their proactive pursuit of educational opportunities from government organizations and industry associations.
- Technology and Infrastructure. When selecting a customs broker, think about how they use technology to track shipments and handle paperwork. Verify the broker employs advanced technology and software tools for efficient customs processing, shipment tracking, report generation, and real-time updates.
- Compliance and Performance. Shipping requires a customs broker who can guarantee compliance, security, and protect the company's reputation. In-depth knowledge of laws, regulations, and professional standards is essential. Their security measures should protect sensitive information to prevent fraud, theft, or loss. By establishing performance benchmarks and creating scorecards, shippers can assess a broker's compliance and performance efforts.
Transitioning to a New Customs Broker
Switching customs brokers is a big decision for organizations with supply chain and international trade needs. It affects multiple departments and can have financial consequences if not done properly. To ensure a smooth transition, it's important to have a detailed plan that considers internal and external stakeholders.
A customs broker that takes a "big bang" onboarding approach ensures all necessary preparations are made before the switch. This strategy comprises evaluating those impacted by the transition, generating an extensive contact roster, and ensuring everyone possesses the essential resources prior to the change.
The first step is a kickoff meeting to align priorities and mitigate transition risks. This meeting sets KPIs, SOPs, addresses financial concerns, discusses operations, and establishes a timeline for a smooth transition.
Conclusion
Choosing the right customs broker is the key to unlocking complex Customs regulations for timely Customs clearance.
When evaluating a broker, consider their expertise, communication capabilities, technology, and dedication to education. These qualities help prevent delays and improve supply chain efficiency. Then set performance benchmarks and conduct regular audits.
If audits spotlight Customs clearance issues, poor communication, or a lack of service, consider switching brokers. Confidence in international trade is achieved through a partnership with each company’s unique goals.
