A Customs Bond guarantees that import duties and taxes on merchandise coming into the United States will be paid. It also assures the cargo meets all laws and regulations that apply to the entry of the merchandise into the United States.
The parties involved in a bond contract are known as the Principal, the Surety, and the Obligee. The principal is also known as the importer of record. The surety is the insurer, and the Obligee, in this case, is U.S. customs. These customs bonds come in two forms: Continuous bonds are annual bonds allowing for multiple shipments to be brought into the U.S. and a single transaction bond allows a one-time entry of merchandise into the U.S.
Some of the parties who may need customs bonds can include:
- importers of goods
- transporters of goods
- foreign trade zone operators
- bonded warehouse proprietors
- other parties that engage in business with the U.S. Customs & Border Protection
FMCSA Freight Broker Bond (Property Broker Bond)
A freight broker also known as a property broker, is required by the Federal Motor Carrier Safety Administration (FMCSA), a division of the U.S. Department of Transportation to have a freight broker bond or property broker bond known as a BMC-84 bond in place for $75,000. The freight broker’s or property broker’s license can only stay valid or effective as long as they have a surety bond or trust fund in place to insure the broker’s financial responsibility.
Due to the Map-21 legislation passed in 2012, effective October 1, 2013, the amount of the Map-21 required bond was increase to a $75,000 bond, which can make it more difficult for a freight broker or a property broker to secure a BMC-84 bond. GSIS can offer a competitive $75,000 freight bond option to our Freight Broker, Property Broker and Freight Forwarder clients.
An FMC licensed freight forwarder is required by the Federal Maritime Commission (FMC) to have an OTI (Ocean Transportation Intermediary) bond to guarantee their compliance with the Ocean Shipping Reform Act. There are two forms of OTI bonds: Freight Forwarder bonds and Non-Vessel Operator Common Carrier bonds.
The Freight Forwarder bond serves to guarantee that the freight forwarder will execute all contracts entered into while acting as an FMC licensed Ocean Freight Forwarder. This bond responds to claims made by ocean, air, or motor shippers and carriers. It is important for a freight forwarder to understand that a claim can be paid out even if a judgment has not been rendered.
The Non-Vessel Operator Common Carrier, NVOCC bond, offers coverage for payment of any judgment for damages against the carrier. These claims may arise from transportation-related activities while acting as the common carrier. This bond responds to the payment for claims for direct fines and penalties issued by the FMC. While the Freight Forwarder bond will pay without a judgment being filed, in this case there has to be a judgment in order for the bond to respond and for a claim to be paid.
International Carrier Bond
A Customs International Carrier Bond covers the clearance of vessels, including cars and airplanes that originate from any foreign location outside the U.S. This bond also certifies that the carrier’s manifest, which should list all of the goods and passengers carried by the international carrier, is accurate. This bond is also used to pay overtime wages to customs officials.
Custodian Of Bonded Merchandise Bond
The Activity Code 2 bond is an import bond that covers what are known as custodial activities. These can include bonded warehouse facilities for merchandise storage, container stations, and carrier vessels. If merchandise has not yet entered into commerce within the U.S. and duties must be paid, these custodians are liable for their activities with this merchandise. The commonly used term for this merchandise is “in-bond.”
Foreign Trade Zone Operator Bond
A Foreign Trade Zone Customs Bond is issued for carriers who bring goods out of a non-U.S. territory without paying duty.
Airport Security Bond
For companies that perform outsourced services within an airport, such as food preparation or janitorial services, an Airport Security Bond is required by U.S. Customs. The amount of this surety bond varies and is based on the requirements set by the individual airport.
Highway Use Bonds
A Highway Use Tax surety bond provides a guarantee to the federal government. Motor carriers, including trucking companies, are responsible for paying taxes and fees for the use of public highways. These carriers can also be charged penalties and interest related to the taxes and fees. The money collected is used to maintain and expand the highway system. This type of surety bond assures the government that they will be able to collect these monies.