What is “customs business”? Licensed Customs Brokers deal with customs business on a daily basis but their activities are not always clear to new clients. For example, classifying goods for others is definitely customs business.

Importers, if you have been relying on your suppliers for HTS classifications of your products check this September 2022 CBP ruling. Briefly, it states that suppliers are not qualified to provide HTS classifications unless they employ LCBs (Licensed Customs Brokers), even with a disclaimer that the information is advisory.

Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. Pursuant to 19 U.S.C. § 1641(b)(1), “[n]o person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license . . . .”

https://rulings.cbp.gov/ruling/H290535

The ruling includes the following language which explains that classifying to the six digit level is not considered customs business:

We note, however, that CBP has consistently held that classifying goods to the six-digit level of the HTS is not customs business and does not require a customs broker’s license. This level of classification “does not constitute customs business because the six-digit HTS provision is insufficient for entry.”

Contact mitch@adhoclogistics.com for classification help.

If you are a Licensed Customs Broker (LCB), it is a good idea to have a strategy in place to fulfill your continuing education requirement. Here is a reminder from the CBP website:

To maintain an active license, individually licensed brokers must earn 20 CE credits from qualifying educational activities that occur beginning January 1, 2025 through January 31, 2027. January 31, 2027 is the end of the current triennial period.

I have started gaining credits by registering and participating in Trade Outreach Webinars hosted by CBP. These are free of charge and there are a number of webinars to choose from each month. I must admit that some of the topics do not apply to my clients’ commodities. However, I am learning something from each webinar, which is the goal of continuing education, and avoiding a scramble toward the end of the triennial period.

Why not get started now? Here is the link for Trade Outreach Webinars:

https://www.cbp.gov/trade/stakeholder-engagement/webinars

I have fielded quite a few questions about tariffs and Customs Brokers in the last few weeks. While importers are familiar with brokers, many others are not. Here is some info from the CBP website:

Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.

Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.

There are approximately 14,454 active licensed Customs brokers in the United States.

Corporations, partnerships and associations must have a broker license to transact Customs business. Each of these businesses must have at least one individually licensed officer, partner or associate to qualify the company’s license. Failure to have a qualifying officer or member (of a partnership) for more than 120 days will result in the revocation of the broker license.

If you are scheduled to sit for the CBLE (Customs Broker License Exam) on April 23rd your preparations have most likely included practice exams as well as a deep dive into the HTS tariff and customs regulations. Not to mention blood, sweat, and tears.

Let me suggest also reviewing the notifications on the CBP website so that you don’t have an unexpected complication on exam day. The notifications include details about Covid restrictions, reference materials allowed, and ID/Proof of Citizenship requirements. There are separate sections for remote and in-person test takers.

You will find the info under this link:

https://www.cbp.gov/trade/programs-administration/customs-brokers/license-examination-notice-examination/cble-registration-information

Look for the heading It’s Exam Day !

Best of luck on April 23rd!

Most roadblocks to implementing an ECP (Export Compliance Program) are self-imposed. The project stalls while management procrastinates. The process certainly must start with management commitment. As has been reported, CBP and BIS are ramping up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.

One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), is legally liable for any violations.

Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Shipment screening must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.

In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP, compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.

All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.

So once again; “Who’s responsible?”

Contact mitch@adhoclogistics.com for immediate assistance.

Customs delays in other countries are problematic for exporters, requiring a lot of time and effort to resolve. One of my recent posts considered 3 common causes of customs delays: vague or incomplete descriptions, questionable valuations, and lack of IOR contact info on commercial invoices. These items are easily fixed. The real complexity in international trade is due to the many different regulations applying to destination countries.

Best practices in exporting include due diligence and research when shipping to a country for the first time. The Country Commercial Guides published by the International Trade Administration are an excellent no cost starting point. Here is the link:

https://www.trade.gov/country-commercial-guides

Contact mitch@adhoclogistics.com for assistance.

https://www.linkedin.com/posts/mike-smiszek-5437231_the-us-customs-broker-license-exam-tips-activity-7302049943609823232-SrUg?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAGVD3UBu7RY4T4x68-aqSLyiBDvybv-4A0

https://www.linkedin.com/feed/update/urn:li:activity:7302049943609823232?commentUrn=urn%3Ali%3Acomment%3A%28activity%3A7302049943609823232%2C7302057652304375808%29&dashCommentUrn=urn%3Ali%3Afsd_comment%3A%287302057652304375808%2Curn%3Ali%3Aactivity%3A7302049943609823232%29

No, I’m not referring to golf, but using links as a logistics term. For exporters there is significant risk in becoming overly reliant on a single freight forwarder or LSP (Logistics Service Provider). Supply chain audits and best practices make it clear that diversifying LSPs can help mitigate disruptions, improve service, and possibly reduce costs.

Logistics is tactical in support of supply chain strategy, so must be able to adapt to the planned diversification. The textbook terms nodes and links are descriptive in logistics and supply chain discussions. Nodes are fixed locations such as factories and distribution centers. Links are Logistics Service Providers (LSPs) which connect the nodes from pick up (first mile), through line-haul operations (middle mile), to end user delivery (last mile). The links include ocean and air carriers, freight forwarders, truck lines, integrated parcel systems, customs brokers, and possibly 3PLs. It is easier to change links than nodes. However, if diversification is to reduce supply chain disruptions, both nodes and links must be strengthened.

New LSPs must be evaluated for their export compliance and ability to perform first mile, middle mile, and last mile operations. Details matter. Failure to review documentation, for example, can cause customs delays. New LSPs can make or break supply chain strategy. Consider their services as “value adds” rather than just cost. Consistent performance is more important than rates when new links are utilized in your supply chain.

Diversifying any supply chain requires time, a complete project plan, upper management commitment, and attention to detail.

We can help you work with the links. Contact mitch@adhoclogistics.com for assistance.

Registration for the April 23, 2025 Customs Broker License Exam (CBLE) opened on February 10th. The exam is notoriously difficult to pass so, if you plan to sit for it, don’t procrastinate. You have a little more than 60 days to prepare and you will need them all.

The CBLE pass rates were 24% in October 2024, 13% in May 2024, and 34% in October 2023. In previous years the rates were typically less than 15%.

For comparison purposes, the pass rate for the 2023 bar exam in the US was about 58%. Most law students take the exam shortly after completing three years of law school, however, while CBLE candidates may have been out of school for some time.

CPA- Certified Public Accountant and CFA- Chartered Financial Analyst exam pass rates vary by section but are usually around 50-60%.

Reach out to the Customs Broker Exam Assistance Group on LinkedIn for support and study tips.

https://www.linkedin.com/groups/12862151

Registration opens tomorrow Feb 10th.

The next CBLE will be administered April 23, 2025. Registration for this examination will open on February 10, 2025 and will close at 4:30 pm (Eastern time) on March 12, 2025. See the “How do I register?” tab for a link to the exam registration portal. 

https://www.cbp.gov/trade/programs-administration/customs-brokers/license-examination-notice-examination/cble-registration-information