Customs brokers are different than freight forwarders. A freight forwarder is “ is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution “, Wikipedia’s definition. Freight forwarders make contracts with carriers such as shipping lines and airlines while a custom broker is a person or a company that confirms certain terms with a freight forwarder or trader to represent them in front of the customs department and facilitate their customs formalities and document processing.
In most of the world, freight forwarders may be able to perform customs brokerage with the proper license. However, in some countries like Turkey, these two activities are more separated. A customs broker in turkey can perform freight forwarding activities but not the other way around.
Since the customs formalities are part of any shipment movement out of the country by air, sea, or land, then it goes without saying that having a customs broker is going to make the process much easier.
Of course, all the services provided by a customs broker, especially in sea freight, are related to customs processing. If a shipment is coming into a country, the import customs clearance will need services like :
- Helping shippers meet the customs department requirements for import clearance. Some commodities will require special approvals and documentation like pharmaceutical products, or some audio and video equipment, … etc. For the shipment to be cleared smoothly with no challenges, or extra costs, it is important to have all documents prepared and ready to process
- Fill in the required forms: Customs department works through forms and applications that deliver all the needed details about the shipment being cleared. For example in sea freight, it’s good to know the shipping line, bill of lading number, container number(s), … etc. This is of course besides other basic information like the description of the goods being shipped, HS Code, the value of the cargo, plus other details. Providing the wrong input may lead to higher customs duties or even penalties. In some cases, it may be considered smuggling.
- Review all the commercial, shipping documents and make sure all the documents and filled applications describe the real shipment and that they comply with the government regulations.
- Process all payments for the government and sometimes to sea freight carriers such as customs duties, taxes, storage fees, penalties, .. etc.
- Some traders will seek the customs broker’s advice to expand into new markets and learn more about market conditions and challenges.
Getting the right details and making sure that all documents processing and applications are following the government’s regulations can be a little complicated. Therefore, you will need to get back to some parties or lists to make sure everything goes as per the book. Such as choosing the right HS Code; which is a short form for the Harmonized System Code (or The Harmonized Commodity Description and Coding System), filling the wrong HS Code in the customs application for import or export, will make the process harder and could result into delays and higher costs. also for some commodities, special requirements and approvals may need to be obtained before the arrival of your shipment. Like the measurement and statistics department, health department, or in some cases when the shipment is coming for military or other government departments, it may be required to get special approvals from these departments or shipment may be rejected or subject to higher customs duties or taxes.
In other cases having shipments coming or going based on a certain trade agreement background such as NAFTA may require a special process to be made.
Customs brokers are not only doing simple import and export processing. Some shipments require more work to be done. In projects such as exhibitions, or even when a shipment is coming for temporary reasons and leaving back again. A temporary entry(s) is needed to avoid paying customs duties.
On the other hand, when an air or sea freight shipment come in consolidation, the broker has required to breakdown this sea freight consolidation and prepare different shipments so every recipient can prepare the needed documents and applications for their shipments
Since the custom broker is helping to control the traffic of cargo going in and out of the country, then acquiring such a service license will not be an easy thing to do. In some countries, a physical inspection of the cargo doesn’t happen to all the sea freight or air freight shipments but depends on the applications uploaded by the customs broker. Therefore, having tight restrictions and high guarantees from the customs broker companies are required in most countries. Also, it is likely to see random inspections taking place with the customs brokers to make sure that they follow the government regulations and follow the clear instructions of the customs department.
It is important to know that acquiring a customs clearance broker license and making sure that all shipments processed are following the requirements and regulations are very demanding. A single entry or step done wrongly can cause irreversible damage.