AMA: Customs Brokerage/Freight Forwarding (International Logistics)

[Rsimmons016]

Hey Everyone,

I am new here. I found the forum through MJ's book. I have been checking the forum out for a couple of weeks and find that there is a lot of valuable information and resources here. I guess I would like to start out by trying to help the members who are interested in importing products into the USA.

A little bit about my background. I have been working in the freight forwarding industry for a little over 10 years. I am a Licensed U.S. Customs Broker and certified as a customs specialist.

I am also in the process of opening my own brokerage/forwarding company. Currently I am in the process of... Well waiting. It takes roughly a year to get all of the license's and permits from customs to open your own office. So while I am working with customs through the application process I am working on the back end structuring, and continuing to build my capital, etc.

So if there is anything that you would like to know about the logistics of having your products brought from overseas, customs clearance process, restrictions, regulations, and anything else that you can think of (related of course). just ask.

I will help the best that I can.

 

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[Rsimmons016]

I have always been interested in importing large quantities of minerals to the USA in bulk.

Let's take rock salt for example, since it is one product I have posted about here already, and it does relate to a number of my other products I am fiddling around with and trying to establish a relationship with buyers for...

If I have tons (literally) of product, in bulk to be shipped to California... I have no warehouse to store it, and am planning on just having it sent to the ship yard and then immediately sent over to the warehouse of the buyer... How would this entire process work? They can't really just place the tons of rock salt on the side of the dock or in their customs warehouse without me being charged a lot of money for it...especially with the load sizes.

Hello Lagron,

The process of importing your rock salt would go something like this:

1. Place order over seas
2. Coordinate shipping (either through supplier or with your own forwarder)
3. Contact a Customs Broker to process customs clearance
4. Cargo arrives to the U.S.
5. Broker processes Customs entry
6. Delivery is then coordinated from port to your/your clients warehouse

Now to break this process down.

1. When you place order over seas you will have to negotiate your buying price and terms, including credit and shipping terms.
(i.e. Prepaid(100%), 30% deposit so cargo can ship / Upon receiving remaining 70% supplier will surrender original BL (Which transfers ownership of cargo), Credit terms, etc.)
2. Based on the terms negotiated with your supplier you/supplier will arrange the shipping (Incoterms). See link for detailed explanation http://en.wikipedia.org/wiki/Incoterms
3. During this process I recommend you "shop" around for a reliable Customs Broker (If you have not found one yet). I do not recommend allowing the supplier to have control over this aspect because in Customs eyes you are fully liable for any penalties and payments if not processed properly.
4. Once the cargo arrives to port (California in this case) you are allotted "Free Time" at the port. This is the amount of time that your shipment is allowed to sit at the port before they begin to charge storage fees. Usually, between 2-5 business days (varies on terminal and steamship line).
5. Your Customs Broker will classify your shipment to determine the duty rate, process shipment for customs release, and coordinate exams with customs and terminal (If applicable). In the case of rock salt: It is duty free but still subject to standard customs fees. They are the Merchandise Processing Fee (MPF) and Harbor maintenance Fee (HMF). These fees are MPF 0.3464% & HMF 0.125% of the value of the shipment.
6. Once the shipment has been cleared by customs your cargo will then be either delivered to your clients or your warehouse. If you are not ready to deliver to your clients facility and don't have yours set up yet, you will have to locate a warehousing company that specializes in storing break bulk cargo.

 

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[Rsimmons016]

BTW the OP hasn't logged in for the past month

Hello Vigilante,

You are right I haven't been on much lately. The past few months have been quite busy as all of my licenses were issued and I have been in full force working on my Fastlane! I do keep an eye out for anyone in need, and will continue to help out as much as I can!

 

[Rsimmons016]

I find the import/export business extremely interesting with the little experience I have buying products oversees, but I am really curious to know more about the day-to-day activities of being a broker/forwarder.

Can you go over what a typical day is like? Also do you see this as a growing industry?

That's Great! This is a very good industry to get into! Yes it is growing and will continue to grow. Like anything else you have to get your foot in the door and learn!

Even though in the same industry there are three main avenues you can pursue; Imports, Customs Brokerage, and Exports. These are all completely different businesses and are not as closely related as it would seem. Once you get enough experience and make all the right contacts you can set up your own office and build your business.

Exports:
Main Customer is U.S. manufacturers/suppliers
Coordinate with Overseas Agents
Negotiate contracts with Airlines/Steamship Carriers
Obtain bookings with Airlines/Steamship Carriers
Consolidate multiple shipments to same final destination (Overseas City/Country)
Generate export packages for Customs/Carriers
Work with Hazmat companies to ensure all hazardous cargo is packed, documented, and declared properly
The export side is always a time crunch, you have meet the cut offs for the carriers or you will miss the departure.
To open office you have to apply and receive OTI license
No license required to work in field

Imports:
Main customer is U.S. Importers as well as Overseas agents
Work closely with Overseas Agents
Work closely with Customs Brokers
Consolidate multiple shipments destined to your U.S. location
Deconsolidate shipments
Coordinate delivery (If broker doesn't)
To open office you have to apply and receive OTI license
No license required to work in field

Customs Brokerage:
Main Customer is U.S. Importers
Work Closely with import forwarders
Work Closely with Customs
Work Closely with Other Government Agencies
Have extensive knowledge on customs import rules and regulation
Process customs clearance for import shipments
Coordinate exams with Customs and Other government agencies
Forward all releases to Freight Forwarders warehouse
Coordinate delivery of shipments
Educate importers of regulations for different items they are interested on importing
To open office you have to pass Brokers exam, apply and receive Customs Brokers license
No license required to work entry level positions

 

[RE Taipan]

Hello RE Taipan,

Sorry for the delayed response! Below is an Incoterms Chart. This chart illustrates at which point the seller/buyer assume responsibility for the cargo.

FOB – FREE ON BOARD
•Seller delivers goods across the ship’s rail at the named port of shipment
•The buyer bears all costs and risks of loss or damage to the goods from that point
•Term used for sea transport only

Rsimmons016,
No problem...I thought it would be helpful to others to include this information.

In my experience, FOB terms have been used modernly in more than just international seaborne shipment, although that is clearly where they originated and predominate. This could be b/c North American (and the US, primarily) make use of FOB points a bit differently than the rest of the world. I've seen FOB terms used in strictly domestic land transport on a BOL as there is still a point where "title" to the goods changes hands and who is responsible for paying for the different parts of a move (load, transport, unload). Depending on the situation and the particular move, the FOB point can have a significant impact if something goes amiss during the shipment. To go a little further down the FOB rabbit-hole....more recently, with the adoption of electronic bills of lading, etc., shipping point FOBs (FOB: Shipping Point) are more the norm with other "traditional" FOB points (dock, quay, alongside, etc.) are less and less common.

Hope that helps/adds.

 

[Rsimmons016]

Hey Guys!

I have been getting PM's and emails regarding what additional government agencies might be involved for which products. This is a very important question to ask. Below is a brief overview of the different government agencies and the general items they oversee.

Food and Drug Administration (FDA): Food, Drugs, Medical Devices, Radiation – Emitting Devices, Lasers, Vaccines, Blood and Biologicals, Animal & Veterinary, Cosmetics, Tobacco Products.
United Stated Department of Agriculture (USDA): Meat, Poultry, and Egg Products. Plants and Animals, Plant and Animal based products. Sugar, Dairy, Fruits and Vegetables
Federal Communications Commission (FCC): The FCC regulates marketing, sale and importation of radio frequency devices. I.e. Cell phones, computers, radios, Ipods, etc.
Department of Transportation (DOT): Any Vehicle that is intended to operate on public roads
Environmental Protection Agency (EPA): Motors/Engines
Consumer Product Safety Commission (CPSC): Children’s toys, Coffee makers, lawn mowers, Fireworks, and a wide variety of other products
Fish and Wildlife Services (FWS): Animals, seafood, and animal products. Exclusions are Domesticated animals (i.e. cows, pigs, chicken, etc.), shell fish for human consumption.

 

[Rsimmons016]

I will be more like an intermediary between the seller(manufacturer) and buyer. More like a broker. I hope that helps.

Find someone in that space and go work for them for a bit and learn everything you can. Take whatever they are willing to pay you. If they aren't willing to pay, then be an apprentice. You aren't looking to make a living of off them, you are there for a "free" or "paid" education.

 

[CommonCents]

It's incredible how I can get a mobile phone case shipped directly to my home for $3-$4 including the cost of the case, from china. Heck I can't mail that same package over a state or 2 for that same price.

 

[Rsimmons016]

Ddall,

To my understanding the process is similar. However, the fees and duties might be different.

 

[Rsimmons016]

Hey Guys,
There seems to have been a lot of questions over the past few days.

At what point do you have to start worrying about customs? Let's say I order a small sample from China, 2 items that weigh a total of a couple pounds and fit in a large shoebox and are shipped via Air. Do I need to fill out any forms or declarations for that or is it only once you start importing larger quantities?

I am also interested in this question.
I just received small samples from two different Chinese manufacturers. One shipped via Fedex and the other via DHL. As far as I know I had no involvement with customs at all. At what point does it become an issue? Is it dollar amount? Size? Or did the manufacturers already clear customs when sending the samples?

Since these two questions are essentially the same I will address them together. As far as customs is concerned there are value thresholds. For most products anything under $2500 is considered an "informal entry". With an informal entry the courier companies will typically clear them with customs and absorb any duty payment under $100. However, there are certain products that require a "formal entry" if there value is over $250.

What type of insurance do you recommend purchasing?
What type of escrow companies do you recommend using?
What are your recommendations for settling disagreements between the supplier and purchaser settled? What jurisdiction would an issue be settled?
How do you enforce settlements and collect on judgements in Asia?

Hello Pro,
Who ever you use for your logistics provider should be able to offer you cargo insurance. This will protect you in the event that your cargo is damaged or stolen while in transit.
For the other questions I am sorry but that is out of the scope of my expertise. There are lawyers who specialize in international trade. If any issue arises similar to your questions I would recommend you seek one out.

 

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[Rsimmons016]

Hello Nclabs,

When importing textile products your threshold for informal entry is less than $250, any textile shipment with a value over $250 will require a formal entry. If you are shipping via courier you can let them process the customs clearance for your shipments. However, you must be cautious because if they do anything wrong customs can/will hold you liable.

You mentioned you are importing from China, you may want to consider importing your products from Colombia or Peru. There are Free Trade Agreements in place that will save you a lot of money on duties (as well as shipping costs).

To the question about customs brokers charges. When you find a broker that you would like to work with, they will quote you their rates. Those rates should apply to most if not all types of entries.

Hope this helps to clear up some things for you!

 

[Rsimmons016]

Hi Rsimmons,

Thank you for the info. This is very helpful. You had mentioned that you were in the process of opening your customs brokerage/forwarding company. Do you provide these services to clients in TX. If yes, could you please provide me your contact info.

Thank you.

I am happy to help. We hold a National Permit that allows us to clear your merchandise in any U.S. Port. You can send me an email or check out my website for my contact information.

Email: Robert@a1-wwl.com
Website: www.a1worldwidelogistics.com

Good Luck!!

 

[Rsimmons016]

Hi...I am actually beginning to get into exporting into my home country of Papua New Guinea from a business registered in Taiwan but factories for the manufactured good in China, we still have a lot to mesh out with the Sales director and our own end from my country but I am still trying to determine what the 'best' arrangement is. As an independent contractor or an agent of the, with Taiwan company, as a buyer or a seller of the good with little to no capital at the moment to expand, with high costs for everything from customs clearance to import tarrifs. Anyway I would just like to ask the importance of and application or your own experience of using ICC's Incoterms and other international sales contracts. Did you find that using their templates that the transactions and agreements were easy to be on the same level with and more efficient? @Rsimmons016

Hello Leo,

I cannot comment on the import regulations, Tariffs, or import process for New Guinea as we my business and expertise is bringing products into the U.S.

The incoterms are used globally and are very important when purchasing products internationally. They dictate who takes "responsibility" for a shipment and at what point. I.E. If you were to Purchase Ex-Works (EXW) your suppliers responsibility would be to have the cargo ready at their door. All other aspects of the transportation (and costs) would be your "responsibility". On the flip side if you were to purchase Delivered Duty Paid (DDP) the supplier would have to arrange all the shipping to your door and pay any and all import fees/taxes.

See link for detailed explanation http://en.wikipedia.org/wiki/Incoterms

I hope this brings some clarity to your concerns.

 

[Rsimmons016]

Thanks for the AMA @Rsimmons016 and welcome to the forum.

Question: Not sure if you ever dealt with Europe: What's the best approach if I wanted to import apparel (i.e bike helmets) from England to Canada? Would you re-routed somewhere else to save costs? I'm trying to figure the most cost effective way to get this product to Canada.

Thanks in advance.

Hello Phenom,

Yes, I work with Europe regularly. The import process into Canada is quite similar to the process into the U.S. However, the Tariff rates are not. The most cost effective option would be to find a Canadian Customs Broker at the port in which you plan to import your goods. Contact more than one ask questions and get quotes from all of them. I would recommend using the one that you feel "guides" you the best and explains the process most complete, not necessarily the least expensive one.

If you receive any information that your unsure of or have questions don't hesitate to reach out to me.

 

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[Leo Hendrix]

Thanks @Rsimmons016 that has helped and even the advice you supplied to Phenom as great as I am talking to customs agents/brokers now...I will just read up on Incoterms and other relavant ICC documents now.

 

[Rsimmons016]

Thanks @Rsimmons016 that has helped and even the advice you supplied to Phenom as great as I am talking to customs agents/brokers now...I will just read up on Incoterms and other relavant ICC documents now.

Hello Leo,

No worries! If you have any additional questions or need any guidance don't hesitate to let me know.

Good Luck with your business venture!

 

[Leo Hendrix]

What about as an International Trade Broker?...ie acting as a go between or middleman after making offers to sell to suppliers and selling to buyers with your commission added...(simplified)

 

[Rsimmons016]

Sorry @Rsimmons016 what I mean is where do International Trade Brokers come in if here or this thread is not related...? ie you said there were 3 sections to this industry import,export and customs....so Trader brokers would be a whole different field?

Hello Leo,

International Trade Brokers are not in the logistics and customs clearance of the cargo. They would be a customer of the freight forwarder or customs broker.

 

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[Rsimmons016]

Thank you my main concern now is ensuring I get all the processes right...I just don't want to get into over analysis paralysis, although it does not seem very complex right now. So in saying that @Rsimmons016 do you have any experience with International Trade Brokering? or seen any threads, posts or users with experience in that field?

Hello Leo,

Sorry I do not have any experience in this field.

 

[Rsimmons016]

Hello,

First of all thank you for your time to answer our questions, appreciate it!

I'm not sure if you have an answer to this question but i'll give it a go anyway.

My business is located in the netherlands (europe) and i'm looking to sell my products in the US. Therefore i will need to sent the products from my supplier located in china straight to the fulfillment company in the US, transport will be by plane. So as a company located in the netherlands i'm importing products from china into the US.

What do i have to do to get this imported without any problems into the US, what things are involved? I really have no clue....

Hello Bimmer,

It is my pleasure to help as much as possible!

What products are you interested in importing into the U.S.?

 

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[Rsimmons016]

Thanks.

The products are 3 small plastic pieces, one piece runs on a battery.

Sorry for being a bit vague but don't want to expose my business with all the hungry people here, if you need more details i can sent you an PM

Hello Bimmer,

No worries. I think it would be best for you to PM me. Can't give you good advise without knowing what you have going on.

 

[Rsimmons016]

Yes i do have a freight forwarder and i will ask him about shipments from L.A. Being in the industry do you know of any cheap options to ship goods from L.A. to Canada instead of UPS?

Hi Dicky,

An LTL trucker might be less expensive.

 

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[Rsimmons016]

So just to clarify, if I place a $2,000 order for a category that is the $2500 informal entry threshold (batteries), and they're shipping DHL from China to US, is there anything that needs to be discussed with the supplier when it comes to shipping and terms outside of how much shipping will cost and the fact that it's DHL? I assume I don't have to worry about incoterms or ports or custom brokers or anything. They just ship it to my door and DHL handles customs?

Does DHL charge me extra for that privilege outside of the quoted shipping fee from the supplier? I assume the duty and merchandise processing fee are not included, but does DHL charge me extra fees?

Thanks for your help, this thread has been immensely helpful.

Hello Integra,

Based on the details provided you should not have any issues. In regards to whether or not DHL will charge you any additional charges? That is at DHL's discretion.

 

[Rsimmons016]

You mentioned one would need an OTI license. What does OTI mean?

Hi Topaz,

OTI stands for Ocean Transportation Intermediary

 

[Rsimmons016]

Ok. Thanks for replying back.

Yeah no worries! Happy to help! If you still have some questions unanswered don't hesitate to ask.

 

[HITO]

That's Great! This is a very good industry to get into! Yes it is growing and will continue to grow. Like anything else you have to get your foot in the door and learn!

Even though in the same industry there are three main avenues you can pursue; Imports, Customs Brokerage, and Exports. These are all completely different businesses and are not as closely related as it would seem. Once you get enough experience and make all the right contacts you can set up your own office and build your business.

Exports:
Main Customer is U.S. manufacturers/suppliers
Coordinate with Overseas Agents
Negotiate contracts with Airlines/Steamship Carriers
Obtain bookings with Airlines/Steamship Carriers
Consolidate multiple shipments to same final destination (Overseas City/Country)
Generate export packages for Customs/Carriers
Work with Hazmat companies to ensure all hazardous cargo is packed, documented, and declared properly
The export side is always a time crunch, you have meet the cut offs for the carriers or you will miss the departure.
To open office you have to apply and receive OTI license
No license required to work in field

Imports:
Main customer is U.S. Importers as well as Overseas agents
Work closely with Overseas Agents
Work closely with Customs Brokers
Consolidate multiple shipments destined to your U.S. location
Deconsolidate shipments
Coordinate delivery (If broker doesn't)
To open office you have to apply and receive OTI license
No license required to work in field

Customs Brokerage:
Main Customer is U.S. Importers
Work Closely with import forwarders
Work Closely with Customs
Work Closely with Other Government Agencies
Have extensive knowledge on customs import rules and regulation
Process customs clearance for import shipments
Coordinate exams with Customs and Other government agencies
Forward all releases to Freight Forwarders warehouse
Coordinate delivery of shipments
Educate importers of regulations for different items they are interested on importing
To open office you have to pass Brokers exam, apply and receive Customs Brokers license
No license required to work entry level positions

Hey Everyone,

I am new here. I found the forum through MJ's book. I have been checking the forum out for a couple of weeks and find that there is a lot of valuable information and resources here. I guess I would like to start out by trying to help the members who are interested in importing products into the USA.

A little bit about my background. I have been working in the freight forwarding industry for a little over 10 years. I am a Licensed U.S. Customs Broker and certified as a customs specialist.

I am also in the process of opening my own brokerage/forwarding company. Currently I am in the process of... Well waiting. It takes roughly a year to get all of the license's and permits from customs to open your own office. So while I am working with customs through the application process I am working on the back end structuring, and continuing to build my capital, etc.

So if there is anything that you would like to know about the logistics of having your products brought from overseas, customs clearance process, restrictions, regulations, and anything else that you can think of (related of course). just ask.

I will help the best that I can.

Hi Rsimmons,
I just passed April 2017 customs exam with no customs experience only 5 years logistics. I'm thinking of starting a customs service office as a sole proprietor. Can you give me some advice on starting own office? I probably should apply for license, permit and register company name or I should learn filing entry under a licensed broker for a year or two. I've heard a lot people say about how difficult FDA process is. Where should i start it

 

[Rsimmons016]

Hi Rsimmons,
I just passed April 2017 customs exam with no customs experience only 5 years logistics. I'm thinking of starting a customs service office as a sole proprietor. Can you give me some advice on starting own office? I probably should apply for license, permit and register company name or I should learn filing entry under a licensed broker for a year or two. I've heard a lot people say about how difficult FDA process is. Where should i start it

Hi Hito,
Go and get experience, after a couple of years you will know if you are ready to start you brokerage business.

 

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[OC Trading]

Hey VisionNN,

If the value of your cargo is under $2000 and not regulated by a Participating Government Agency then you won't need customs broker.

Hi Rsimmons,

I am in a similar situation where I am expecting a sea freight shipment of goods from China to the Port of Long Beach. I am assuming it would be an informal entry since the value of goods is approx. $1,200. Do I need to use a customs broker to help pay the duty fees and get my products released, and how would I go about getting them delivered by courier to my place of business? Obviously I'm trying to do this in the most cost effective way.

Thanks in advance!

P.S. I'm new to the forum and can't seem to send a PM.

 

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[merryrows]

hello there!

What is your opinion on exporting from Asia? I know most of the fastlaners are into importing, since I am in Asia I would want to be the supplier.. What are the most imported items you know that sells good?

 

[Rsimmons016]

Hello Merryrows,

The are to many products that are imported from Asia into the US to be able to tell you what is the best one.

What I would recommend is to get in touch with some of the members on the forum who are looking for specific products in Asia and try to help them with their sourcing. From there if you guys have questions on getting them into the US and through customs I can help.