What is a Freight Forwarder?
An international freight forwarder is an agent for the exporter and can move cargo from “dock to door,” providing several significant services such as:
- Advising on exporting costs including freight costs, port charges, consular fees, costs of special documentation, insurance costs and freight handling fees;
- Preparing and filing required export documentation such as the bill of lading and routing appropriate documents to the seller, the buyer or a paying bank;
- Advising on the most appropriate mode of cargo transport and making arrangements to pack and load the cargo;
- Reserving the necessary cargo space on a vessel, aircraft, train, or truck; and
- Making arrangements with overseas customs brokers to ensure that the goods and documents comply with customs regulations.
Export freight forwarders are licensed by the International Air Transport Association (IATA) to handle airfreight and the Federal Maritime Commission to handle ocean freight.
What is a Customs Broker?
Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service. Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.
What is a Customs Bond and am I required to have one?
U.S. customs regulations provide that a customs bond be posted for each importation of merchandise entering the United States.
When goods are imported into the United States, the importer is responsible for making the goods available to the U.S. Customs Service for inspection, ensuring that labeling and packaging requirements have been met, making transaction records available for audit and paying estimated or additional duties and fees, where applicable. The surety company issuing the bond guarantees that the importer will comply with U.S. customs regulations.
The bond is not designed or intended to protect the importer, nor does it relieve importers of any of their obligations.
The surety company issuing the bond can be called on for payment only when importers cannot or will not fulfill their obligations to the United States government; the surety company is entitled to full recovery of any loss from the importer.
The surety company assumes the importer’s duties and the responsibilities. If the importer fails to honor any condition of the bond, the surety company can be obligated to do so in the importer’s place.
The most common customs bond is a basic importation and entry bond. This type of bond covers the entry of goods for immediate delivery, consumption, temporary import, warehouse entry and withdrawals.
An importer may apply for a single transaction (single-entry or SEB) customs bond or a continuous customs bond. A single transaction bond covers only one import entry whereas a continuous customs bond remains in force for one year and must be renewed annually. The continuous customs bond also covers transactions at any U.S. Customs district or port.
In order for a broker to clear shipments on behalf of an importer, using the importer’s own U.S. customs bond, the importer must provide the broker with a valid U.S. Power of Attorney and a copy of the U.S. customs bond. Please contact Page International for competitive rates on continuous bonds and single-entry bonds.
Who is the U.S. Exporter?
For purposes of completing the SED, the exporter (U.S. principal party in interest) is the U.S. seller or U.S. principal party in interest in the export transaction. The U.S. principal party in interest is the person in the United States that receives the primary benefit, monetary or otherwise, of the transaction.
Who is the ultimate consignee?
The ultimate consignee is the party actually receiving the merchandise. The city and country are only needed for the address. If a validated export license is required, the ultimate consignee must be the same as designated on the license.
Who is the intermediate consignee?
The intermediate consignee is the party in a foreign country who receives and then delivers the merchandise to the ultimate consignee. The city and country are only needed for the address. If a validated export license is required the intermediate consignee must be the same as designated on the license.
What does export insurance typically cover?
Export shipments are usually insured against loss, damage, and delay in transit by cargo insurance. Carrier liability is frequently limited by international agreements. Additionally, the coverage is substantially different from domestic coverage.
Although sellers and buyers can agree to different components, insurance coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.
Exporters are advised to consult with international insurance carriers or freight forwarders for more information.
What is a Harmonized System (HS) classification number, the Schedule B number, and it there a difference between the two numbers?
The Harmonized System (HS) Classification is a 6-digit standardized numerical method of classifying traded products. HS numbers are used by customs authorities around the world to identify products for the application of duties and taxes. Additional digits are added to the HS number by some governments to further distinguish products in certain categories.
In the United States, numbers used to classify exported products are called “Schedule B” numbers. The U.S. Census Bureau administers the Schedule B system. Schedule B numbers, not HS numbers, must be provided on the Shippers’ Export Declaration (SED). The Census Bureau uses SEDs and Schedule B numbers to calculate U.S. export statistics.
There is a difference between the HS classification number and the Schedule B number. The HS number is an internationally accepted code. The basic HS code contains 6-digits, known as a subheading. The Schedule B is a 10-digit code built upon the first 6 digits of the HS code. Additionally, the Schedule B code is a U.S.-specific coding system used by the U.S. Government to monitor U.S. exports.
To find you HS or Schedule B number, visit Export.gov and click on “Harmonized System or Schedule B number.” From there, you can access the U.S. Census Bureau’s Schedule B Search Engine by clicking on “Search the database,” or, go directly to the U.S. Census Bureau to classify your own product through a keyword search.
If you require assistance in classifying your product, call the Census Bureau’s Foreign Trade Division at 1-800-549-0595.
What is a letter of credit?
The Letter of Credit is a document that is issued by a bank per instructions by the buyer of the goods. This document authorizes the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time. The foreign buyer applies for issuance of a letter of credit from the buyer’s bank to the exporter’s bank and is therefore called the applicant; the exporter is called the beneficiary.
Payment under a documentary letter of credit is based on documents, not on the terms of the sale or the physical condition of the goods. The letter of credit specifies the documents required by the exporter, such as an ocean bill of lading, consular invoice, draft and an insurance policy. Before the payment, the bank responsible for payment verifies that the proper documents conform to the letter of credit requirements.
U.S. exporters may want to confirm the letter of credit issued by the foreign bank if they are unfamiliar with the bank or are concerned about the political and economic risk associated with that country. A letter of credit may either be irrevocable, thus unable to be changed unless both parties agree, or revocable where either party may unilaterally make changes. This later form is inadvisable, as it carries many risks for the exporter.
A change made to the letter of credit after it has been issued is called an amendment. Banks charge fees for this service. It should be specified in the amendment who will pay these charges to the bank. It is important to get the letter of credit right the first time because of the cost in money and time.
How do you define a United States Principal Party in Interest (USPPI)?
A USPPI is the person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from the export transaction. Generally, that person or entity is the U.S. seller, manufacturer, or order party, or the foreign entity while in the United States when purchasing or obtaining the goods for export.
What is the AES?
The Automated Export System (AES) is a database system housing export shipment information that is required by multiple federal government agencies. AES provides electronic filing to the U.S. Census Bureau, using the efficiencies of electronic data transfers and the convenience of the Internet. AES is now the mandatory method of filing the “Electronic Export Information” (EEI), a new term that replaces the paper-based Shipper’s Export Declaration (SED).
AES was designed to enhance compliance with export laws, improve trade statistics, reduce duplicate reporting to multiple agencies, and improve customer service. With over 1.3 million shipments processed each year, AES has made the filing and review of shipments more efficient by handling larger volumes almost instantly, and more effective by detecting possible errors at the time of filing. AES is a nationwide system for all methods of transportation, which can be accessed worldwide, around the clock.