It’s a rare importer-exporter who tries to clear customs on its own. And not just anybody can help Canadian companies process the release and accounting paperwork that the Canada Border Services Agency requires. The Customs Act declares that only a licensed customs broker may assist businesses in accounting for goods and paying duties. With the details of taxes, tariffs and trade deals changing monthly, if not weekly, customs brokers play an integral role in eliminating the kinks in your international supply chain.
Anne Waldes, president and CEO of Trade Link International, a freight forwarders and logistics company based in Hamilton, Ont., has been working with customs brokers since she started out in international transportation in 1977. Helping move goods in and out of more than 80 countries, she’s seen some costly errors. “Any delay in customs clearance, you’re holding up somebody or some mode of transport. It’s always going to cost you something, whether it’s driver waiting time at the border or container storage and demurrage at a railhead, at $250 a day, or airline demurrage and detention,” says Waldes. (Demurrage is the penalty paid for exceeding the time allowed for taking delivery from a shipping or transport company.)
Waldes has a few tips for Canadian SMEs shopping for a customs broker that best fits their needs.
- Ask your industry peers, transport companies and freight forwarders to refer a customs broker with a good track record. “You want to shop around and do your due diligence,” says Waldes. Her company provides its own back office customs brokerage through a subcontractor, but will work with whatever broker the customer has chosen. “Talk to four or five brokers to find out what their strengths are,” she suggests. Prices can vary greatly depending on volume. A one-off shipment might cost $150 in customs brokerage fees, while large, frequent shipments might cost as little as $12 per entry.
- Choose a broker that’s fully automated. While filing is now electronic, some companies still use manual billing and get government updates by paper, which means their information may not always be up to date.
- Consider a broker that specializes in, or is at least familiar with the goods you’re shipping. Duties, taxes and regulations vary depending on a product’s HS (Harmonized System) code, which specifies its exact type. For example, it distinguishes between particle board and oriented-strand board or a silk bowtie from a bowtie woven from man-made fibres. While the shipper usually provides HS codes, they are not ultimately responsible and often make mistakes that can cost you money. An SME importing electronic components that are meant for export after assembly doesn’t want a broker that mostly handles household goods
- Look for a broker who will do some hand holding. Since the importer must provide all the necessary paperwork to the broker—and is ultimately responsible for the filing and paying taxes and duties—look for a broker willing to correct mistakes and prompt for what’s missing. “If they don’t recognize that you’re a new shipper and so expect you to know what you’re doing, and they’re waiting for you to give them what they need, that can be disastrous. You need someone who will be interactive with you,” says Waldes. Larger companies will often charge for such advice, while smaller companies will often provide it as part of the relationship.
- Small- or medium-sized brokers are often a better fit for small- and medium-sized businesses, as larger brokers often focus on high-volume customers. “If they’re dealing with larger corporations, they’re the ones getting the attention,” says Waldes.
- Consider a larger broker for more seamless service if your company is using multiple ports of entry. While smaller brokers rely on partner agents to handle shipments at various locations, larger brokers are more likely to have their own offices at multiple ports, reducing the risk of miscommunication.
- If your company is shipping a lot of goods, make sure your broker has the staff to keep up, or you could be paying for container storage waiting for the shipment to clear.
- Give the relationship a chance. Waldes says it may take six months to eliminate the inevitable hiccups. “Every company has its own idiosyncrasies and it usually takes a few shipments to sort those out,” she says.