Customs Brokers and Import Agents:
How to Choose
By Tekle Sebhatu
Selecting a talented import agent can be the key in helping a company implement its import operation. Companies most often have two options when importing products. First, hire an import agent (indirect channel). Or, second, import directly from the supplier or producer of the product (direct channel). For most companies, especially small ones option number one is the most preferred.
In an era where we have numerous suppliers and producers for a single product, the service offered by an import agent becomes invaluable. An import agent will not only provide your company access to several suppliers or producers, but it will also help your company during price negotiation, as well as arrange transportation and insurance, logistics support and help to handle the return of damaged and rejected goods.
Some import agents also attend trade shows on a company's behalf that can save a company time and other resources. Many import agents also have established foreign offices that are familiar with local cultures and business practices, including a program in place to ensure quality products are delivered to the importer
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To help your company select the best import agent, consider the following:
Track record and reputation of the import agent in the specific market your company proposes to import.
Size of the firm. Most import agents are small. Some small import agent companies are as good as their bigger counterparts, and they are very flexible. A larger company will give you the networking opportunities to expand more rapidly.
Competing products and the number of importers the company is representing.
Financial strength and needs of the agent, particularly commission. This will depend on the level of effort expected.
Degree of know how on your product and the entire industry.
Exclusivity. Let the agent perform first. Do not rush to give the agent exclusivity.
Request at least three references the company has done business with before.
One of the major concerns for import agents is that the buyer may try to bypass the agent on future transactions, and this is a legitimate concern. Your company must unconditionally assure that the import agent will be compensated for the value that the agent adds to the transaction. If trust and a strong relationship is established that fear will not be justified.
Assuming that you have identified a knowledgeable import agent to help you find the right product, and a supplier that will supply your company with a quality product at the right price, the next step is to identify a customs house broker (CHB) who will be responsible to help your company clear customs. CHB are individuals or private companies that are regulated by customs to assist importers and exporters to clear goods through customs. The CHB must be knowledgeable in clearing goods for the type of product and the country or region that you are prepared to import from.
Some CHB's specialize on specific industry or region. Others assist importers clear customs in variety of industries. To facilitate and reduce customs clearance time from days to hours, CHBs use Customs Automated Commercial System (ACS) or Automated Broker Interface (ABI). ACS or ABI are designed to receive and process entry documents and provides cargo disposition information. Services offered by CHB include filing and complying with the following major customs requirements.
Entry: The process of filing customs documents at the port of entry to get the good released from customs.
Admissibility: Process of complying with other Federal Government agencies (example: Department of Agriculture) and including whether the shipment contains products or articles that are prohibited and that the invoice presented is correct that no shortage or overage exists.
Classification: Using the Harmonized Tariff Schedule (HTS) which is a system adopted by most commercial countries of the world. HTS is classification of manufactured products that are sold in the world according to an agreed-upon numerical system.
Valuation: The appraisal of the value of imported goods by customs officials for purposes of determining the amount of duty payable in the importing country.
Rate of Duty: The determining factor that is used to assess duties rate. Duty rate could be calculated on ad-valorem , or specific or compound duty. Ad-valorem is a method when a percentage of transaction value is used. Specific duty is based on per unit or item. Compound duty is hybrid of ad-valorem and specific duty.
In addition to Customs clearance some CHB's also provide the following services: Carrier and routing informationgovernment licensing and import quota information, warehouse and distribution services, customs bonds, insurance assistance and hazardous materials compliance.
Whether you work with a competent agent and/or CHB, make sure that you are actively involved in every detail of the transaction to avoid surprises, after all, you will be ultimately responsible for any legal and financial issues that might arise.
