It’s not often that a service provider will tell you how not to pay as much for their services, but when they do, we all sit up a little straighter and pay attention. Such is the topic of today’s blog on how to reduce your import costs with these 5 tips.
Tip #1: Choose A Partner, Not Just A Customs Broker
Let’s be honest… who knows what a customs broker actually does? If you speak to us at length on this topic, your eyes are likely to start glazing over. We are not too proud to say that our industry is a little nerdy (we LOVE to get to the bottom of a good classification conundrum!) and therefore we definitely fall into the category of “leave it to the experts.”
When we take a deep dive into the work that goes into ensuring an importer's trade activities are compliant with regulations, it's clear that a customs broker does so much more than transmit your declarations to Customs. A good broker will always be looking for ways to make your crossing smoother, quicker, more compliant, and cheaper (hence this little post we’re writing here 😉).
Customs brokers that act as your partner take extra due care and attention when:
- Analyzing each import while preparing and submitting to CBSA and applicable Participating Government Agencies (PGAs) documentation and information to ensure compliance
- Determining if the import qualifies for duty relief, deferral or trade incentives
- Ensuring goods are classified correctly in order to determine the applicable import duties and taxes
Therefore, tip #1 is to choose a customs broker that will partner with you rather than JUST transmit your entries to Customs.
Tip #2: Ensure Your Customs Broker Has All The Details Needed For Import For All Your Imported Commodities
Just like an efficient auto manufacture production line, PCB Customs Brokers has a streamlined release process, where each team member plays a specialized role in ensuring their part of the release is done efficiently and compliantly. An intricate series of client specific checks and balances is followed while combing through every detail of your release paperwork. If something is missing, incomplete or a little out of character for your company, we remove it from the processing stream and into ‘release intensive care.’ There, supervisors can drill down on the issues and rectify them by reaching out to importers or carriers, all the while keeping one eye on the clock as it ticks towards the carrier's arrival. Entries are checked up on repeatedly, and engagement with all parties involved is high.
Therefore, you can imagine that every time an entry is moved to this area of release, the number of staff and time needed to release that shipment is far higher than one with all data and documentation present. Additional charges are applied as a result.
To save on costs that your broker may charge, there are several steps you can take:
- Ensure they have a complete database for your importations: A parts database contains a verified and detailed description of the goods, country of origin, part numbers, values, weights and end use of the product. Importers can opt to have them maintained on a daily basis by a certified trade specialist, ensuring that any regulatory changes such as additional data requirements or tariff classification shifts, are reflected. Any imported commodity that your customs broker has not already reviewed and loaded into your database will increase release processing time, while commodity details are gathered and regulation and tariff can be determined.
- Ensure that all your trade chain partners provide your broker with the required data or documents and that both are 100% correct and complete: If you create your own shipment documentation, you have control over this aspect. This is infinitely more tricky if your vendor provides the shipment documentation. Either way, free tools are available to both vendors and carriers to ensure they know what is needed to report a load of goods to Customs and the PGAs that regulate them.
- Ensure adequate time is allotted for processing: The amount of time it takes to review documentation for completeness and accuracy (customs broker release team), assess for entry (Customs), assess commodity (PGA) and provide a release decision (Customs) is often underestimated. There is an increased risk of the entry not being processed by the time the carrier arrives at the port if an inadequate amount of time is available for processing. This often results in additional costs charged by receivers, carriers or a possible loss of load in extreme cases. Ensure that your trade chain partners understand that it takes a broker a quarter of the time it takes Customs and PGAs to process a release request. Allow a minimum of 6 - 8 hours for Customs and PGA’s processing time and 1 - 2 hours of custom broker release time.
Tip #3: Leverage Technology To Share Data
Look for a broker who is able to support Electronic Data Interchange (EDI) and has a process in place to send and receive electronic data.
By using EDI, your data is extracted from your own ERP system and sent to our system where it is processed automatically. In return, data can be sent back to update your own ERP system. EDI validation occurs in real time, so identification of missing information is addressed immediately.
This speeds up the clearance process by reducing time delays associated with manual processing and eliminates potential errors resulting from illegible handwriting, keying and re-keying errors and incorrect document handling.
Tip #4: Obtain Your Own Financial Security Bond
A customs broker paying duty and taxes on the importer’s behalf will charge a disbursement fee in most cases. You can save on disbursement fees by paying your own duties and taxes directly to the CBSA. There are programs available to Canadian and US importers that achieve this goal:
Canada: Remit your duty and taxes through the CBSA Assessment and Revenue Management (CARM) Client Portal. All Canadian importers under the Release Prior to Payment (RPP) will have to post their own account security with CARM Release 2 scheduled for Spring 2022. Importers will need to obtain a surety bond or post a cash bond based upon their highest monthly accounts payable to CBSA.
US: The Automated Clearing House (ACH) program allows US importers to pay US Customs and Border Protection (CBP) directly each month. Additionally, the program allows for the processing of refunds.
Tip #5: Use Free Trade Agreements (FTA)
According to Global Affairs Canada 2020 State of Trade “[...] the Comprehensive Economic and Trade Agreement [CETA], in its second year of provisional application, continues to support Canadian exports to the European Union. There are, however, indications that the agreement is not being fully utilized by Canadian exporters and importers, which suggests that further effort may be needed to promote the agreement.” Source
CETA is not the only FTA that is underutilized. Each day, we see imports enter into Canada and the US that could have utilized a FTA to reduce or eliminate duty, but did not. Additionally, we encourage our clients to look at opportunities to source raw and finished materials from nations in which FTAs are in place. A Trade Advisor can help you create a short list of countries that may prove to be cost effective suppliers of the raw materials you need.
These are starting points that can assist you with reducing your import fees. Meet with your customs broker to discuss compliance requirements of CBSA and CBP and how you can assist your broker with meeting those requirements and gain an understanding of your broker’s operational requirements. An open and transparent understanding of your role as the importer and your broker’s role will assist in getting the best service at a reasonable price.
We hope that these 5 tips prove effective in reducing your overall import costs and encourage you to reach out to us with any questions you may have.