Evaluating your freight forwarders and customs brokers for compliance

In a previous blog, we discussed the concept of “reasonable care” as it applies to your trade compliance program.  The focus was how export and import programs dovetail with many other areas of compliance, such as policies and procedures, valuation, Free Trade Agreements, and more.  Today, I’d like to switch gears and talk about how you can effectively manage your company’s freight forwarders and customs brokers.  These entities are vital parts of your supply chain, and they are also a critical component to successful trade compliance.

In today’s global marketplace, it’s important to have a strategic partner whose help serves the success of your business. How you go about selecting that partner and maintaining oversight of their activity is crucial!  Here are several suggested areas to focus attention during the selection process; which in many cases would be a similar process used in your Supply Chain to evaluate potential new business partners.  Ask yourself:

• Does the perspective Freight Forwarder and/or Customs Broker have the right balance between expertise and resources to help you achieve your business goals? This means, do they have the knowledge and understand the requirements for the various countries you may export to (or import from)? Do they have the personnel in place that can handle shipments efficiently at any given time?
• Can they demonstrate that they understand other government agency requirements? Ask how they would handle a shipment containing goods that must be approved by the Food and Drug Administration (FDA), the Federal Communications Commission (FCC), or the Environmental Protection Agency (EPA)? It’s important that your forwarder or broker understands how to navigate these regulations.
• Does the Freight Forwarder utilize a Restricted Party Screening software tool that can serve as your “second set of eyes” for reviewing all the parties to your export transaction? If they found a compliance issue, how would you be notified? What would they do with your shipment while waiting for the issue to be resolved?  How will they attempt to communicate with you on this issue (i.e. email, telephone contact, etc.)?
• Do they maintain a process or procedure to ensure Harmonized Tariff Schedule numbers are consistently reviewed and applied correctly to your products as they exit and enter the United States?
• Does your forwarder or broker have the systems in place that will interface with Customs successfully to export/import and provide efficient releases?
• What type of training does the Freight Forwarder and/or Customs Broker maintain for their employees? Is it just in-house and user-led?  Or is it a combination of in-house/off-site training to fully understand the regulations? Don’t hesitate to ask for a sample of such training and what personnel attended.
• What kind of communication procedures are in place that will provide your business with important compliance updates/alerts? Is it email, in person communication, telephone or a combination of the variants? Many businesses today operate on a 24/7 mode.  Is your Freight Forwarder and/or Customs Broker capable of doing the same to help process exports and imports for you in a timely manner?
• Have they had any compliance issues that resulted in violations with any government agency? What were the penalties (if any)?  What corrective actions were required by the government agency, and have those been implemented?

Remember, this is a business partnership. Ultimately, as the Exporter or Importer of Record, your company is responsible and will be held liable for any mistakes that occur during the release of shipments from the United States (or being cleared by Customs for entry into the United States).  So, think twice before you fall into the trap of outsourcing your responsibility without any oversight.  Any significant failure in the overall process with Customs could cost your business the privilege of exporting or importing – and so much more.

Do you need help evaluating your Freight Forwarders / Customs Brokers and helping them improve?  We are experts.  Schedule a no-charge consultation today.