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Important Customs Broker Terms
A customs broker specializes in getting goods through customs during international shipping. A broker will handle often handle important documentation, the payment of taxes, and communicating with government officials. The following are some important customs brokering terms to be aware of.
Customs – Customs agencies are government bodies that collect import and export taxes and control the flow of products in and out of a country. Customs agencies will check cargo and seize any illegal goods.
Tariff – A tariff is a tax on imports or exports meant to raise government revenues or discourage certain types of trade. For instance, a tariff on the importation of foreign steel would drive up prices for consumers and might encourage them to buy domestic steel instead.
Excises – Excise taxes are directed at the production or sale of certain types of goods. Examples of excise taxes are taxes levied on alcohol or tobacco products. Excise taxes are charged for many reasons. However, they are frequently used as an attempt to discourage certain behaviors.
Duty – A duty is a tax on imported items. For a duty to be applied, items must be brought into the country through customs. In certain situations, like at an airport or port, goods can be sold duty-free.
Freight Forwarding – A freight forwarding company coordinates cargo shipments on behalf of other businesses. They often consolidate cargo to make shipping more affordable and efficient. International freight forwarders are typically experts on the types of documentation needed in the countries they import from and export to.
Logistics – Logistics involves managing the transportation of goods from one place to another. A logistics professional might do things like oversee inventory, warehousing, transportation, and shipment tracking. Proper logistics management is imperative for the import and export of necessary goods.
Customs brokers assist companies that are sending freight overseas. They assist in the sometimes complicated process of gaining import and export licenses and paying duties and taxes. Brokers may handle all kinds of cargo. They may or may not also act as freight forwarders. In the United States, they have to pass an examination and be licensed by the U.S. Customs and Border Protection.
Companies that handle large quantities of international trade are likely to have a department that handles imports and exports. It is for the most part small firms that send relatively small amounts of cargo that use these services. Brokers may, like freight forwarders, also advise on logistics. However, when they act as brokers alone, they do not provide direct assistance. Rather, in these cases, the company handles its own logistics and trusts the broker to deal with clearance.
When they also act as forwarders, they may physically distribute and warehouse goods. Some brokers may work on a specific route or border. Others operate worldwide. As freight may be moved by either sea or air, they handle transportation in both those areas. A customs broker is likely to have an agent on the ground at all crossing points, including airports. A duty or tariff is most often charged on goods coming into a country, but export tariffs are sometimes charged. Quotes for customs brokerage generally include their estimation of taxes and tariffs on the merchandise.
Brokers are often highly specialized. There are many complicated regulations and the slightest mistake can result in delays or even seizure of cargo. The broker becomes responsible for ensuring the clearance of all goods shipped.