Transport Bond Under Customs - What Types Of Bond Does a Carrier Need

Transport Bond Under Customs - What Types Of Bond Does a Carrier Need

This week, in a series we’re calling Shaken and Stirred - Bonds, Customs Bonds, we examine all the different types of bonds Customs brokers work within the US and Canada every day.

In Customs brokerage, we bandy about the term ‘bond’ for just about every situation, but not every bond is appropriate for every situation, and often, that single term can actually mean a multitude of different things. We know it can be a confusing mess for those who are uninitiated to its complexities, but at PCB, we are here to help untangle the term and bring you a better understanding. This series is intended to provide a helpful and quick reference for dividing this concept into useful and meaningful parts.  

When referencing bonds, they fall into a few different categories, but as a carrier, there are two that are most meaningful for you: “Carrier Bonds” and “Entry Type Bonds.” The prior is a requirement in order to carry bonded goods and is applied for and issued to a carrier. The latter is specific to a shipment, and there are various types of entry bonds that are important to be familiar with. Simply put, Carrier Bonds are issued to the Carrier, and Entry Bonds are issued to the goods.  

The path of the goods is going to tell you what type of entry bond you, as a bonded carrier, will need to get that cargo moving and your wheels turning. 

Before we dive into the different types of Entry Bonds, let's take a good look at the first step.  Before you can move a shipment that is under an entry bond, you must join the metaphorical Bonded Carrier Club and get yourself a carrier bond. 

What is a Bonded Carrier?  

To be a bonded carrier, you must hold a carrier bond. A carrier bond is a “C” or “Continuous” bond that is specific to the authority and/or allowance to move bonded goods. It is an insurance agreement made between the applying carrier and a surety company that insures the goods for the US government. 

The government, in this case, Customs, requires that you have this in order to move this type of freight. This agreement, at its most basic level, insures the duties, taxes, fees, and any other applicable monetary concerns Customs might have should that cargo under an entry bond not follow its designated path. It also provides a specific set of guidelines, including responsibilities, for that bonded carrier. 

When you are moving a bonded shipment, you are ultimately responsible to Customs for that cargo.  Essentially, you are the importer of that cargo, and that carrier bond helps insure your responsibility to the government. Bear in mind that this is a broad overview of what it means to be a ‘bonded carrier,’ and to add to this, there are many different types of bonds that Importers and Carriers can apply for that can expand the types of cargo they can clear, hold, and/or carry.  You might find it beneficial to see what other options are available under this class of bonds. 

If you have specific or in-depth questions about how to become a Bonded Carrier, what C Bond is right for you, or the responsibilities for joining this ‘Club of Bonded Carriers,’ we recommend you give us a call or visit our carrier services page for all the information you are going to need. 

A bonded carrier must do or have the following: 

  • US Operating Authority
  • A Completed Bond Application
  • Posted Financial Security

To summarize, at its most foundational level, a bonded carrier is a carrier that has been insured and authorized to transport goods under an entry bond.

The process only takes a few months and is not overly complex, which can make it worth it; after all, becoming a Bonded Carrier expands your service options significantly. Not many carriers out there have the ability to move US ‘in-bond’ freight, and bonded carriers can. It is well worth the investment for your freight business not only to expand the types of moves you can do but to elevate your profile as a carrier with Customs. For help with this process, we encourage you to reach out to our Carrier Assistance team for guidance. 

So, now that you’re bonded, what types of new moves can you do?

Types Of Transport Bonds

Entry Bonds, also referred to as transport bonds, can be broken down into three categories, and they are applicable based on how those goods are going to move through the US. Each Entry bond type is very specific to the path those goods are going to take while they are in your custody. An awareness of the different types of bonds can be vital for your success as a bonded carrier, and we recommend you read on to familiarize yourself and contact a broker for further explanations and details. Choosing the wrong type can be costly and will definitely create significant delays. 

What is an Immediate Transport Bond?

Of all the bond types, one of the ones we get asked the most questions about is the Transport Bond, or, as it is sometimes known, the Immediate Transportation (IT) bond or In-Transit Bond.  

The IT works by allowing goods to move from port of entry to another port of entry without payment of duties and taxes. For example, a shipment that arrives in Los Angeles may ultimately be destined for Texas. This bond allows the shipment to get to a bonded warehouse in Texas, and once at the destination, then the entry can be filed with the complete list of all duties, taxes, and fees. 

To release the bonded goods, you are advised to work with your broker to facilitate the entry and payment of the duties and taxes owed to Customs. 

There are a few advantages to this, from supply chain flexibility to logistical practicalities, but it is worth noting that the goods are not allowed to enter the commerce of the US without the relevant duties and tax being paid, and they remain in bonded facilities until the necessary requirements are met. One important note: if you are moving a shipment on an IT, not just any warehouse will do.  Just like you must be a bonded carrier to make this move, the warehouse must be a bonded facility to accept and hold the freight. 

What is an IE Bond? 

An Immediate Exportation bond is a bond that is specifically in place for goods that are required to be exported from the same port in which they are currently present. A typical use for this bond is on goods that are sampled by CBP or a PGA, like the FDA, and are turned away at the port of entry. The goods are to be shipped back, so no duty is needed, but the bond helps facilitate the process and for Customs provided them confidence in the chain of command in that merchandise. 

What is a T&E Bond? 

A Transportation and Export (T&E) bond is designed specifically for goods that are entering the US with the intention of passing through to be exported to the country of their intended destination.  The goods in question never enter the commerce of the US and never leave bonded carriers or warehouses custody on the way. This differs from the transport bond largely because the goods are intended to leave the country. In this way, it shares some similarities with the IE Bond as they are both essentially mechanisms to enable duty-free transportation into and then out of the country. The key difference is that this involves transportation to a different exit port. An example of this includes goods coming from Canada destined for Mexico. These goods can move, literally, freely through the US on a T&E bond without having to pay import duties or taxes. 

This is an, admittedly, very light touch on an incredibly complex system, but hopefully, it has provided some clarity on the different types of bonds that you may come across as a carrier. For more information on the specific details or for guidance on your specific situation or shipment, it is recommended that you get in touch with our carrier assist team before making any decisions. We have decades of experience, and we are standing by, ready to help.

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About Author
Breanna Leininger

Breanna has been in the industry since 2004 and has dealt with clearances and compliance concerns for a multitude of commodities for all ports of entry and all modes of transportation. She has a Bachelors in Communications, Bachelors in Political Science & Government, is a Licensed Customs Broker as well as Certified Customs Specialist. Breanna has been asked to be the speaker in a variety of events including the BC Agriculture Show, Doing Business in the US seminar and has been a contributor to Small Business BC publications. She was recently nominated for the NCBFAA Government Affairs Conference Emerging Leaders and Mentors by the NBCBA. She participates in the Northern Border Customs Brokers Association and the NCBFAA annual conferences in Washington, DC. Breanna has a deep passion for politics, global affairs, and how communication shapes policy and international business relationships. She feels very fortunate to work in an industry that allows her to take part in how policy impacts the global economy and domestic businesses of all shapes and sizes.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.
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