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White Paper: Is an Import Broker Necessary?

By Mike Richards Updated: 08/05/2017 Posted: 10/27/2015

Pros and Cons of Using a Broker

Investing in the export of goods can be difficult to manage if all segments of the shipping process are not monitored and addressed effectively. Shipping vehicles overseas can be a path with many traps that arise along the way. On both the departure and destination ends, there are several processes, paperwork and clearance tasks involved in getting a vehicle from its point of purchase to its destination market.

For those who are not fully acquainted with this process or do not have the time to devote to shepherding their goods through the exporting process, it may be wise to consider hiring a brokerage firm who specializes in the import and export of goods.

For vehicle exporters, the process can be particularly complex, involving a range of complex requirements before disembarking from the United States and an equally complex set of import duties and other regulations at the destination port for goods. This will require a person capable of navigating the intricacies of doing business in a foreign jurisdiction.

What does an import/export broker do?

Brokers manage everything from shipping to clearance, and delivery on both the point of origin and destination. A broker serves as the primary point of contact between government agencies involved in customs and intermediaries on both ends of the process.

Although there is no legal requirement to hire a customs broker, many exporters/importers opt to do so in order to reduce the risk of making a mistake on customs filings and ultimately to try to make the exporting and importing process as simple as possible. According to a report on the import and export industry published by Vanderbilt University, hiring a customs broker is a necessity for organizations who enter into complex exporting business.

Among these complex exporting transactions, vehicles are listed as some of the most complicated to manage. The report further notes the risk related to self-filing export documents can be serious. The report notes: “Few organizations have the human or financial resources to keep pace with the constant regulatory and technological changes throughout the world which are specific to each country involved in the international shipment of goods.” (1)

How do a freight forwarder’s duties differ from a customs broker?

A customs broker differs from a freight forwarder in that the broker arranges the logistical end of exporting whereas a freight forwarder transports the goods that are to be exported.

According to the United States Department of Transportation: “A broker is a person or an entity, which arranges for the transportation of property by a motor carrier for compensation. A broker does not transport the property and does not assume responsibility for the property”. A freight forwarder, on the other hand, “is a person or entity, which holds itself out to the public to provide transportation of property for compensation and in the ordinary course of its business:

  • Assembles and consolidates, or provides for assembling and consolidating, shipments and performs break-bulk and distribution operations of the shipments
  • Assumes responsibility for the transportation from the place of receipt to the place of destination” (2)

Pros and Cons of using a customs broker

The decision to hire a customs broker ultimately comes down to weighing the costs of brokerage against the risk of shipments being delayed due to improper paperwork. Although there is not accurate data to reflect the potential cost and benefits of using a customs, broker exporters can visualize what sort of risks can be avoided and compare this risk avoidance with the costs of a broker.

For example, non-compliant shipments may incur fines from customs authorities, delivery may be delayed resulting in contract penalties or worse. Business with potential buyers can be lost. Ultimately the list of harms can be substantial.

In the end, it is peace of mind knowing that the logistics of customs and shipping is being managed, therefore freeing up the seller to do other tasks such as handling marketing in the target market or sourcing more vehicles for export. For simple operations where one or two vehicles may be shipped, a customs broker may not be justified. However, for high volume exporters or those dealing with multiple jurisdictions the cost of a customs broker may be fully justified.

How to find a customs broker

There are a number of online resources to find out additional information on customs broker and how to find one to suit your particular export and import plans. Consult, for example, the National Customs Brokers & Forwarders Association of America, Inc. (NCBFAA), or the International Federation of Customs Brokers Associations.

In addition to using the peak organizations for customs brokers, an internet search for customs brokers can offer a range of options. For example, the following represents a list of brokers offering their services online. Their names and descriptions are listed below:

  • Traders Customs Brokerage

Although Traders Customs Brokerage has an Australian origin, it operates all over the world. They started their business in 1988 and have since then provided top-notch services to their clients.

  • Shapiro  

Founded in the 1990s, Shapiro is actually known as Samuel Shapiro & Company Inc. If you want to handle your cargo with precision and care, Shapiro is the company you should choose. From cargo management to freight forwarding, they do everything related to customs brokerage.

  • Parker & Company  

Originally, from Texas, Parker & Company do everything from freight forwarding and transportation to distribution of goods all over the USA.

  • JP Reynolds 

If you want excellent service in the field of international logistics, then JP Reynolds is your place. With 100 years of experience in this arena, they are one of the finest brokerage companies in the world. Their agents are located all over the world and will be able to provide you with instant service whenever you want. They do not only render freight forwarding, but they also handle important export documentation with utmost care and finesse.

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References

(1) https://finance.vanderbilt.edu/procurement/procurement/forms/Customs%20Brokerage%20-%20Why%20and%20When%20to%20Use.doc
(2) http://www.fmcsa.dot.gov/faq/what-are-definitions-motor-carrier-broker-and-freight-forwarder-authorities-0

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