By Tim Moran
In the U.S., a customs broker is an individual or firm licensed by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting U.S. government requirements. As an intermediary between the business and the customs department, the broker requires expertise in numerous areas including entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.1
Experts suggest that SMEs need access to a customs broker as much as large businesses do.2 In fact, the role of a broker is said to be even more important to small businesses trying to succeed in an increasingly online and global market.
Today, with SMEs reaching beyond their borders in so many ways, the right customs broker can help them succeed by alleviating much of the stress involved with cross-border trade, which can be time-consuming and detail-heavy. And none of it is simple. If just one aspect isn’t handled properly, it could result in serious fines and, sometimes, business-crushing consequences.3 Proper use of customs brokers by SMEs can often save the day, say experts.
Be they working for a small or large enterprise, customs brokers are changing with the times. Today, for example, there is a digital customs broker network. Global trade and logistics software provider AEB has launched Customs Heroes, a network that brings together the global services of multiple customs brokers on a single platform.4 According to AEB, Customs Heroes digitizes the interactions between customs brokers and businesses in the manufacturing, commercial, and transport sectors. Until now, it says, these specialized processes have been largely fragmented.
Customs Heroes replaces the old manual process—which many observers believe is expensive and prone to errors—with a process that is digital from start to finish. Explains AEB:
“Users transmit the data needed for customs processing through a special interface to the Customs Heroes platform. The platform then automatically passes the data in the proper format to the system of the appropriate customs broker. After the customs declaration has been filed, the release documents and customs and tax assessments are sent back to the customer. Customers can also check the status of their declarations online at any time.”5
Further, most brokers are now used to the online customs declaration systems in use. This method, say observers, is usually quick, with the user being notified by the CBP’s Automated Broker Interface (ABI) system within 48 hours, whether the goods are released or require further inspection.6
Industry leaders are working to make the process better for the customer, as well. For example, this past spring, Danish shipping giant A.P. Moller-Maersk acquired Vandegrift, a U.S.-based customs broker.7 According to Maersk, the addition of a customs brokerage is key to its strategy to provide end-to-end solutions.
“Customers have been asking us to simplify the complexity of their global supply chains and reduce their risk,” said Klaus Rud Sejling, Head of Global Logistics and Services at Maersk.
“Transportation costs and trade compliance risk management are a strategic issue for our customers. We believe [this acquisition allows us] to better design a more holistic customs brokerage and trade compliance plan and overarching strategy for customers.” Vandegrift is particularly known for giving customers customs clearance visibility and electronic access to documents.
One question that often arises is this: What’s the difference between a freight forwarder and a customs broker? Many businesspeople assume they are different names for the same job, but that’s not exactly the case.
Things can get confusing, though, because freight forwarders often complete various kinds of documentation and compliance filings on behalf of their customers. According to export software provider InterMart, you can think of a freight forwarder as a “travel agent for cargo”—a third-party who sets a trip up and then, for a fee, will facilitate that entire trip, including paperwork and documentation.9 Of course, many freight forwarders are customs brokers as well (or have access to brokerage services), but not every customs broker is a freight forwarder.
It can be important for enterprises keen on doing global business—and especially for SMEs—to understand how customs brokers can assist them and the differences between customs brokers and freight forwarders. Meantime, customs brokers are changing and adapting to the age of digital transformation, with the creation of digital broker networks, among other things.
Tim Moran is a veteran business-technology journalist. He has most recently been involved in brand publishing startups, including creating CMO.com for Adobe.
1. “Becoming a Customs Broker,” U.S. Customs and Border Protection; https://www.cbp.gov/trade/programs-administration/customs-brokers/becoming-customs-broker
2. “Small Businesses and Customs Brokers: A Perfect Match,” ClearIt Canada; https://clearit.ca/canadian-customs-broker-blog/small-businesses-and-customs-brokers-a-perfect-match/
4. “AEB launches world’s first digital customs broker network,” Advance; https://www.adsadvance.co.uk/aeb-launches-world-s-first-digital-customs-broker-network.html
6. “Importing from China to USA: Customs & Duties,” China Purchasing Agent; https://chinapurchasingagent.com/importing-from-china-to-united-states-customs-duties/
7. “Maersk Acquires US Customs Broker Vandegrift,” World Maritime News; https://worldmaritimenews.com/archives/271253/maersk-acquires-us-customs-broker-vandegrift/
8. “Freight Forwarder vs Customs Broker: What's the Difference?” Shipping Solutions; https://www.shippingsolutions.com/blog/freight-forwarder-vs-customs-broker