Making sure your platform is upgraded, maintaining strong relationships with your team and providers, applying shipping analytics and running a warehouse management system are some of the best ways to improve your shipping process and ensure that your goods arrive safely at their destination.

However, your customs broker will tell you that in addition to this, it is necessary for you to comprehend the complexity of customs procedures for export and import trade like customs bonds —a key element in ensuring compliance and smooth transit through international borders. 

That is why, in today’s article, we would like to invite you to explore what a customs bond is and its impact on your business.  

What is a customs bond, and how does it work?

A customs bond is a legal contract between three parties: the importer, a surety company and the US Customs and Border Protection (CBP). The main focus of this bond is to establish the imposter’s commitment to go through every customs regulation and pay any additional import duties, taxes, and fees needed to release their cargo.  

A contract between an importer and the CBP makes sense; after all, it ensures that the government receives the necessary payments and that the importer adheres to regulations. But where does the surety company fit in?

A surety company acts as a guarantor, essentially vouching for the importer. If the importer fails to fulfill their obligations, the surety company steps in to cover the costs, ensuring that the CBP is paid. 

Later, the same surety company will seek reimbursement from the importer. If they fail to comply, this company will take a legal path based on a breach of contract, which could cost more than if the importer had paid from the beginning.

What kind of information is in a customs bond

To ensure that the contract is solely tied to the importer, your custom brokers in Nuevo Laredo will make sure that the bond includes the following information:

1. Identification: The company’s name and address are included in the bond.
2. Bond Number: A unique identifier tracks the bond.
3. Obligation details: The company’s responsibilities are clearly stated.
4. Surety information: The surety company issuing the bond is named.
5. Contract details: References to any specific contract or project link the bond to the company’s obligations.
6. Coverage specifics: The bond specifies coverage conditions related to the company’s commitments.

Types of customs bonds

Where can I apply for a custom bond? Simple: If you have already hired the services of a mexican custom broker linked with a surety company, then you only need to ask them to proceed with the application in your name. 

In approximately three days you will have a bond file electronically with the CBP, that allows you to clear your goods through customs without any problem. But before this happens, you must decide which type of bond best suits your needs. 

The duration and the payment you need to make to obtain this contact will depend on this. There are two types:

Single Transaction Bonds  (STB)

Single Transaction Bonds, also known as SEBs, cover a one-time importation. The price is calculated by considering the value of the shipment plus taxes, duties and fees.

If you need a customs bond for a specific business project, an STB will be the best cost-effective option. It is ideal for businesses that do not frequently import goods, ensuring compliance with customs regulations without the long-term commitment of an annual bond.

Continuous Bonds  (CB)

Continuous Bonds cover multiple transactions throughout the year. The cost is determined by considering only 10% of the payments made for taxes, duties and fees in the year before the application.  

To renew the CB, you must stay in contact with your custom brokers in Manzanillo to ensure timely payment and submission of the necessary documentation.  

Unlike STB, a CB contract is advisable for companies with a high volume of imports, as it eliminates the need to secure a separate bond for each individual shipment.

What happens if I don’t get a customs bond?

We understand that having to prove your honesty and business values through a contract may feel like an added layer of scrutiny, but it’s also an opportunity to demonstrate your commitment to compliance and ethical practices.

By adhering to the contract terms and fulfilling your obligations, you not only build trust with your partners and regulators but also strengthen your business’s reputation and credibility in the industry.

Not having a customs bond or refusing to process one will damage your reputation. Still, it could also prevent you from even being able to clear your cargo through customs for an indefinite period of time without including the additional fines.

We highly encourage you to listen to your customs brokers in Nuevo Laredo and follow the instructions and advice closely as they relate to the well-being of your business activities. If you have any other questions regarding today’s topic, please contact us.