As the world's largest importer, the US import process can be described as complicated. In addition to the regular paperwork required for any ocean shipment (such as a bill of lading or packing list), there are a number of other costs to consider, such as fees and taxes. In this post, we'll take a deep dive into one of them: customs bonds.
What is a customs bond?
A customs bond is like an insurance policy that guarantees payment of all duties and charges related to the goods. As an importer, you purchase a bond from a surety company that assures the U.S. government that all applicable shipping costs will be paid.
By sponsoring the importer, the sponsoring company is bound by the importer's liability. If the importer fails to fulfill the payment, the guarantee company may be obliged to perform and fulfill the guarantee conditions on its behalf before taking legal action against the importer.
It is important to note that customs bonds only cover U.S. duties and duties, not imported goods.
When do I need a customs bond?
As a U.S. importer, certain goods you bring into the country require you to submit a customs guarantee:
- Merchandise valued over $2,500 for commercial use
- Goods required by other government agencies, such as weapons or food
Without a customs guarantee, your imported goods will not be able to clear customs.
Difference Between Single Entry Bonds and Continuous Bonds
U.S. importers have two types of bonds to choose from: single bonds and continuous bonds. Which type of bond you choose depends on how often you import into the United States.
Single entry bond
A single-entry guarantee, also known as a single-transaction guarantee, is only valid for one transaction (import), as the name suggests, and can only be used at the port where the imported goods arrive. A one-time or occasional import is generally recommended. This is the better option if you import less than 3 times a year. However, much depends on the cost of bonding, and the breakpoint can vary between two and five shipments.
Please note that the Importer Security Declaration (ISF), which needs to be submitted before your shipment leaves the exporting country, is not included in the single entry bond and must be purchased separately.
Continuous bonding
Continuous Bonding, on the other hand, applies to an unlimited number of imports through all U.S. ports within a 12-month period. It covers all shipments during this period, so you don't have to get a single entry bond every time. This is the cheaper and better option for frequent importers who achieve three or more imports per year.
Serial bonds also include your ISF, so you don't have to make multiple purchases. Continuous bonds are automatically renewed each year until terminated by the guarantee company or the importer himself. Purchasing continuous bonds does not restrict importers to freight forwarders or customs brokers.
Note: If your customs broker assists U.S. Customs and Border Protection with customs clearance, you may be entitled to your broker bond.
Contact your freight forwarder to find out which option is better for your import needs.
