U.S. Customs, or, How to Get Screwed and Pay for the Privilege

Thinking about having goods made overseas? You may want to consider the cost of shipping and customs before you set price points for your merchandise. I budgeted my costs based on a quote from my customs agent, and still came up about $500 short. Here’s a basic list of what you’ll need:

Freight: getting your cargo where it needs to go. If you have small or perishable items, you can use air freight. For bigger stuff, like a whole container’s worth of meat-shaped plush toys, you can use ocean or rail freight, depending on whether the country you’re importing from is connected to you by land or sea.

A customs broker: this guy gets your stuff off the dock and onto a truck. Unfortunately, many of these folks operate like bad movers — they claim zero responsibility for what happens to your stuff and sometimes hold it for ransom. The Dept. of Homeland Security requirement that a customs broker be “of good moral character” is clearly not enforced. Finding a trustworthy customs broker is like finding the holy grail. If you’re in the market for one of these guys, here are some charges to get in a quote:

  • “Door-to-door” freight: this is really dock-to-door freight, since most manufacturers will charge F.O.B. (freight on board) prices for your products, meaning that what you pay for manufacturing includes what it costs to box up your merchandise and get it onto a boat/plane/etc. I was quoted $1,717 for ocean freight from Hong Kong to Oakland, with door delivery in San Francisco. This was for a full 20 ft. container. Transporting less than a container load (LCL) was quoted at $125/cubic meter of cargo. This is because there is a lot more labor involved in separating, moving and accounting for your merchandise when it is mixed up with other people’s stuff. A full container load (FCL) doesn’t need to be opened at all between the overseas factory and your warehouse in the States. When my warehouse turned out to be in Fairfield rather than San Francisco (an extra 30 minutes away from the dock, but in another “zone”), my delivery cost went up $200. If gas prices rise between your quotation and shipment, expect to pay for that as well (an additional $50 in my case).
  • Customer Power of Attorney: allows your broker to conduct Customs business on your behalf (i.e. pay for your inspections to move your cargo through quicker, take your container off the dock, etc. I was quoted $0.35-$0.55 per $100 of merchandise value for this.
  • Insurance: this was included in my freight quote, but you NEED to make sure you have it. Containers fall off those barges on choppy seas all the time, and the last thing you want is to have your entire business end up at the bottom of the ocean.

Money for U.S. Customs fees: here’s the list:

  • Merchandise Processing Fee: 0.21% of Commercial Invoice., Min. USD25 and Max. USD485. $25 for me.
  • Harbor Maintenance Fee: 0.125% of Commercial Invoice. $8.85 for me.
  • Single Transaction Bond: a one-time $50 fee per import. If you import more than 10 times a year, you can use a $500/year bond instead.
  • Customs Clearance: $115.
  • C-TPAT security fee: protects the docks against terrorists. $7.50 per shipment.
  • Document turn-over fee: $55
  • Inspection: this is my personal favorite. Not all containers get inspected, but if you’re a new importer, yours will be. If they inspect by x-ray, you pay an additional $160. If they decide to do a FULL inspection, however, in which they open and rifle through every single box, they will charge you for the labor, which is more like $400-$500.

In the end, just getting my merchandise to the Fairfield warehouse cost almost a third of what it cost to manufacture it. That means I had to figure in a 33% mark-up in my prices, not including the cost of warehousing. If I could have had my plush toys made in the U.S., I would have, and it makes me seriously re-consider what my next product line will be.

**Tip: if you arrange for your freight early enough, you can sometimes “lock in” a rate for local delivery from the dock to your warehouse that won’t go up when your cargo arrives. Get this in writing.

US Customs FAQ on Duty Rates

your shipment of fail has arrived

Image courtesy of the Fail Blog at http://failblog.wordpress.com/2008/01/29/shipments-in

34 Comments

  1. Ms. Fleischer,

    In reading your above blog, I noticed how you combined the responsibilities of a customhouse broker with a freight forwarder. While many customhouse brokers offer both services, each is separate from the other.

    Your beginning sentence of, “A customs broker: this guy gets your stuff off the dock and onto a truck” is not only simplistic, but incorrect as well.

    If you had taken the time to simply read the link you appeared to have just “stuck” in there with your comments, you would have read this, from U.S. Customs, “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.” I don’t see any mention of “getting it to a truck” mentioned, do you?

    And you go on to state, “Unfortunately, many of these folks operate like bad movers–they claim zero responsibility for what happens to your stuff and sometimes hold it for ransom.” Again, you are erroneously stating that a customhouse broker actually has the power to take your product and “hold it for ransom”. This is patently untrue and not only slams these licensed individuals, but the Customs’ Service your taxes (and mine) pay to ensure proper security upon entry into the USA.

    You now continue to, what must now be called a “rant” and state (and I am quoting directly, so the spelling error is yours and you were “quoting” a direct source), “The Dept. of Homeland Security requirement that a customs broker be “of good more character” is clearly not enforced. Finding a trustworthy customs broker is like finding the holy grail.”

    I find it utterly amazing that an “importer” such as yourself has not only scant knowledge of how goods enter this country but uses this “misinformation”, compounds each error upon another in a single paragraph as your introduction, and use it as your opening to what can only be well-meaning, but mistaken advice. I would respectfully submit to you that you are doing not only your reader, but yourself, a disservice by not getting the “facts” before writing and then submitting this type of erroneous information.

    I implore you to get your facts straight before taking advantage of your first amendment rights and bashing a single section of what must have been a “first” importation, by putting the time into finding out what you are writing about, not simply adding “links” to make your story credible. As a teacher you should know better.

    I am sorry that your importation did not go as you wished. Please know that a good customhouse broker would have questions of his/her own to ask you before even accepting your business, and in so doing would have advised you of what “may” happen, including an inspector mistaking the name of your company for one that might also be noticed by the Department of Agriculture (i.e. “Sweet Meats”). Your unfortunate importation should not pose the grounds by which all customhouse brokers are judged, and no, we are not the Holy Grail, yet we do care for the people and companies who are doing the best they can in an honest and forthright manner.

    Before you write next time, please take the time to research and seriously consider your subject.

    Thank you.

    Sincerely,

  2. The US Customs is a scam. They charge you for their services. This would be like the fire dept. charging you for a second truck or a hook up fee to the fire hydrant. Their job is to check your stuff and they charge you in addition to their tax burden.

    They basically have killed my business. I will no longer import because I cannot control these costs. I never know what my true costs will be until after I have recived my product.

    Nice work guys not only did you destroy my business you destroyed my interest in doing more.

    Great for the economy, morons. I would rather NOT do business than deal with this kind of uncertainty. How is that for economic growth.

  3. This blog is full of bad information. I have been a licensed Customhouse Broker for 12 years - take it from me. Maurice is the only one with the correct information. For Bob - finding out your landed cost is easy, and I am not sure why you find it that difficult. You obviously don’t know what the hell you are doing. The author of the blog is flat out wrong. I could go point by point; however, I have better things to do. By the way, it wasn’t the “Power of Attorney” your broker charged you for - it was the “Customs Bond”. I love the Internet, any idiot can post incorrect information.

  4. Dan, you’re absolutely right that this post was needlessly snarky. One should never post in anger. Please see the following post for my corrections and my thanks to Maurice. If you have any corrections I didn’t catch, I would really appreciate if you submitted them.

    Like Bob, I didn’t know “what the hell I was doing,” and no customs agent other than Maurice (you included, sir) wanted to take the time to explain things. Like a few disreputable auto shops I’ve been to, most of the agents I spoke to seemed more eager to exploit my naivete than to correct it. That’s why this post had so much misinformation in it.

  5. Many freight forwarders can give you prices from origin to destination including costs of customs clearance at both ends.
    I am an importer myself and have imports from india,china,bangladesh, i know my prices of freight for lcl,fcl and air freight very well. U need to do some homework.
    write to me if u have any problems in indentifying fregiht forwarders, i can suggest. If u have lcl shipments, ensure you work directly with an ocean consolidator or else u end with your goods being handled by seveal freight forwarders. the only missing cost link is the exam cost and its about usd 10 per cbm for vacis exam and usd 25 per cbm approx for intensive on an approximate basis. Minimum usd 50.

  6. For some reason my freight are inspected every month. Some times arrival notice coming with exam attachment or after my broker file papers and they will place it on hold (as he aid). I just got tired, first few months i got my goods released in time but then something happened whole year i got 2 weeks sometimes 3 weeks holds. I am importing magazines and books so nothing suspicious.

    Everyone say they only check some containers, for last year they checked my goods 12 times. Please help!!!

  7. I have been importer for over 30 years now. I would call a rant the story of a custom broker who tried to present his job as if it was some sort of highly skilled trade. They get license after passing an open book test, it is not rocket engineering!

    I would agree with the notion that Bob should have done a better job of calculating all costs in advance. However, I’m totally with him on his anger towards US Customs. They keep ruining small businesses in the name of national security by destroying our products in examination process, delaying deliveries and on top of all by charging us fees for exam. It is very disspointing that this does not get publicity it deserves. Many of us small business owners make less money that US Customs examiners who were given power to do whatever they want including destrying that little we have.

  8. Cindy - the “open book test” is thousands of pages. Finding the answer is like looking for a needle in a haystack. You make it sound so simplistic, have you ever tried looking anything up in the regs yourself?

  9. A friend of mine just shipped a container with personal belongings / household from LA to Europe. The container was selected for inspection in LA and now my friend is charged an additional fee of 1800 Dollar. The CBP site says that the importer/exporter is charged a fee when his container gets inspected and rates will vary across the country, but I would like to hear from experts if 1800 Dollar is still considered to be a ‘normal’ fee? Could one of you refer me to a site where I can find the official rates? Many thanks in advance! Julie

  10. I’ve been importing since 1974 at the small business level and have seen lots of changes. One constant is people not doing their job and then blaming others. I wrote a book on the topic and am an adjunct lecturer at San Francisco State University on the topic. I can and do occasionally fill out all of the paperwork (7501, ID Permit, and even how Customs makes the Homeland Security supplier code) required by a customsbroker to get goods into USA. So I know what I am talking about when I say get a customsbroker. I use customsbrokers. Finding an excellent broker, the best one for you, takes about an hour, but it is your job. And that test is no joy ride, only 6% of those who take it pass.

    ( If the value is more than say $2000, get a broker, less than that just make sure you have the supplier mail it to your home. )

    Yes, I know my way around the HTS and CFR 19, and yes it is true it is difficult to get hard and fast answers, but they can be had, for a price. Or you can manage the uncertainty, which again, is your job. If the customsbroker says “well, it might be this HTS at 6%, or that HTS at 12%..” then figure the 12% in your costings, and when the entry liquidates in a year or so, you are either fine or Uncle Sam sends you a check for your overpayment. Same thing with freight, when they are not sure whether it is this or that, then pick the worse case scenario. And so on.

    When you know what your product is, who your customers are, and have identified the supplier and the weights and measures and cost of the minimum production run of the supplier, then sit with the best customsbroker and have them dummy up a set of proforma documents on a shipment. (Any less info that that and you are wasting everyone’s time). The customsbroker will dummy up a set of docs at no charge. Have them show you all of the costs, worst case scenario, and their bills and anything else. From there you can figure what your need to charge your customers to make money.

    I will remonstrate with customsbrokers: you do leave things out you know about. Since I am experienced, I can figure out what those are, but you need to include “outport services” or whatever else in your proforma.

    Newbies: At the meeting, bug the customsbroker, “what else?” What else?’ then when the broker is done, ask them if they will sign it as a promise that is all of the charges. (They will not, but let them know you are serious.)

    I will say if the person involved above found a $500 variation on costs on a full container load a deal breaker, then the margins are too tight. Also, at the small business level, FCL shipments are usually a bad idea. AS she found out, surprises are too big.

    And yes, government hates small business, but that is not unique to USCustoms. They are just the messenger. The world can be a wicked place, and that is good to know. Your job is to manage things so it works for you.

  11. Both this post and several comments seem to confuse a customs broker with US Customs. One is the government agency, the other is a professional who you pay to help you navigate through the red tape.

    As for costing out your shipments, it is quite easy to do. The first step is to buy John Spiers’ excellent book, How Small Business Trades Worldwide.

    Once properly educated, you will not encounter so many surprises as importing is, in fact, quite a routine and mundane matter.

  12. Not worth commenting, if you don’t know what your doing you have no business doing it! Since when does anyone go into business without a clear understanding of the business venture? Your better off buying a lottery ticket.

  13. you clearly do not have a clue of what you are talking about, I am sure if you had explained to your broker that you didn’t understand the process, they maybe would have taken more time to explain in better detail, I have been a licensed broker for 30 years and have also instructed importing classes at the local college, both require alot of hand holding, it is not right to blame the broker or the goverment for your own stupidity.

  14. I having problems in indentifying fregiht forwarders, can suggest a Reliable and Experienced one please.
    I’ll appriciate any recomendation

  15. I am trying to import fish from India to the USA. I would like someone to recommend a broker who has experience in clearing seafood products from India. Thank you.

  16. I just ordered inventory for our event decor business from Pakistan and India. I tend to agree with both sides of the argument to certain extent. It was a pain working with the brokers and US customs but to be true, I think it was because it was my first time. It was definitely a learning experience and I am sure next time I won’t make the mistakes I did this time. I think I ended up paying about $1000 extra this time around on my inventory which was worth about $10,000. One thing I learnt was that whenever you are about to import something, take a list and detailed description to your broker and then finish the classification process. This way you will have a very good idea as in what the costs will be. The most important thing is that we as importers need to do our homework well. It’s our money and our products. A good or a bad custom broker wont really matter if you do your homework well. In my case unfortunately I learnt the hard way but I am hopeful of not repeating the mistakes next time around. On a positive note I liked Lauren’s article. It points out what the first timers have to face when importing items into the US.

  17. Jall,

    Have you imported food products before? Be prepared to open up a whole other can of worms when you import goods subject to FDA controls.
    As far as a broker / freight forwarder I would recommend Western Overseas. 770-996-2224

  18. An importer who is totally 10000% clueless about importing typically pays more than they planned. Nobody knows as much about their product as the importer. A customs broker is only as good as the information they are aware of. Importers who lack experience often fail to give the broker the information necessary for a smooth transaction. The importer just doesn’t know, and that’s dangerous.

    If you are going to import on a regular basis, hire a consultant who can lead you through all of the details and requirements of your specific products. Understand exactly what Customs will require. Honestly that really isn’t the customs broker’s job. Their job is to facilitate the import transaction, not train a new importer.

    So, once you work with the consultant (I.e. KPMG, Tradewin, etc..) and have all of your ducks in a row, then go out and hire your freight forwarder and broker. Ideally that would be the Sam company but doesn’t have to be. Work with the bigger guys (I.e. FedEx Trade Networks, Expeditors International, UPS Supply Chain).

    Above all — - understand you need to do a TON of homework and legwork to give yourself the highest chance of success.

  19. Very nice I have gone through much worse, I was conveyed that US Customs forced to take my container premature and that cost $7000 which some how the shipping company reduce to $5000
    Then it went all the way of US territory and re-entered back to US and was asked to pay for VAICS then USDA and again new bill. In the event of premature discharge in NY I am not given a single document and told strictly that I will not be able to get my stuff until I don’t give my wallet in their hand. It was a prepaid shipping and cost me more than the cargo. Lesson learned buy garage sale they are always best even had equally bad experience with the moving company three years back who missed the parts
    Of bed broke the coffee table scratched the dinning table and even lost $100
    In litigation with arbitrator who asked the movng company to pay us $100 as damages

  20. I shipped a 20’ container of household goods from San Pedro. My container got pulled for a random “exit” inspection. Noting found..they just damaged some stuff.

    Cost to me $1350.

    Isn’t that an inspection without “probable cause”?

    Why should I have to pay that?

    Anyway is that expense deductible on personal taxes?

  21. It’s funny how the only people that complain about the article are customs brokers or those who admit that they’ve gone through the painstaking, bullshit, process of importing to “The Land of the Free,” and gotten fucked in the ass by Customs enough times, that they actually enjoy it enough to defend the process. How low we Americans have come since the Boston Tea Party.

  22. Just got priced 1000 for bringing back my personal effects after being abroad 10 yeArs and from a country that absolutely is not a torrist threat or drug grower/importer
    I still don’t
    Understand how a government agency can charge when their service is paid by our taxes seems like the corruption and bribe charges in a third world country but trying to disguise as legal unreal

  23. Got a sba loan and bought a container from China. Usa customs pulled it aside for inspection and left the container in a warehouse for 10 days at 100 per day then proceeded to charge 3500 for the inspection. Cost me a customer who now refuses to buy product from me. Now I can’t even afford to pay the SBA back. Nice how small businesses gets screwed. There should be a program to help small businesses grow now get f’d every time they take a step forward!

  24. I’m all for a good rant, and there are plenty of areas that a good rant is warranted in regards to US Customs, OGA’s (such as FDA and US AG), Ocean Carriers/NVOCC’s. However, in order to have a rant hold any water it would be great if the person raving about dissatisfaction showed even the most basic understanding of the processes involved or the responsible parties for each part of your logistics chain. When you rant about things you have no understanding of you look like a fool.

    So yes, please rant away…but how about you get educated and informed of the processes involved with international freight movement BEFORE you start a business model that requires it. Then, after you are educated, you can join us ranting about the real issues and speak intelligently about them.

  25. I was living in Europe for 10 years and just moved back.

    My stuff was packed into a 20ft container by professional movers with good reviews, they advised various things: no spices or vegetable matter, no liquids, etc, and we followed everything to a tee.
    Customs decided to do a VACIS and a full CET exam anyway. The cost? $4200!!! (plus 20 days delay)

    To anyone defending this system, please explain to me how this is just. If it costs extra to perform these searches, the cost should be spread to everyone. We’re just a family moving back to the States, we did everything by the book, and now we have to pay $4200 which we don’t even have - noone told us to budget for such a huge expense, our stuff is barely even worth that much. I really don’t even know what’s going to happen now, I literally don’t have that much money.

  26. John, a VACIS examination is a Customs-originated exam. The Customs broker and freight forwarder have no control over what goes in to the container, thus the importer is liable for the VACIS and associated fees.

  27. Hello, I am new to this so any help/guidance will be much appreciated. I’m importing a 7 cbm furniture from Pakistan to Houston for personal use. I paid about $3300 in Pakistan and my shipping company said all charges are prepaid but may have to pay custom fees if any which won’t be more than $300. My container arrived 2 weeks ago and I receive a bill of $840 from the broker in NY with several charges that don’t make sense to me. Could someone please tell me if this sounds about right?

  28. HI. Can anyone give me a bit of info. I imported my household goods through a moving company. It arrived a few weeks ago and got held up. Today I was told it was inspected and wi would need to pay the transporter/delivery company $2200 for delivery next week. The were working with a customs Broker. The transporter/delivery company gave me an invoice BUT I have not received any documentation showing that those charges came from US Customs. My business is paying the fees so they told me there should be an actual invoice from Customs itemizing the additional inspection/search costs. Does this sound right? Did you all get something from Customs with your additional fees?

  29. I am in the same boat, my household goods were shipped by an English shipping company and now I received a bill from the delivery company for Homeland Security and Customs inspection. This is a rip off. If inspections are done by a Federal Institution then it should be paid by the Government and, only if, I had good in the shipment for which customs have to paid should be put on a regular bill, not only an amount , which may or may not be a legal fee.

  30. I’ve been importing for seven years now and my most recent shipment came in I got to SPA loan so my order was much larger than normally I ordered a full container and then also about eight pallets both my container with short around $3500 in product as well as my LTL which was a freight drop off of eight pallets and I was missing another $3500-$4000 in product and when I told the driver he tells me it’s not in my truck so I signed the paper and confirm that with the missing items and told my customs broker at that point my customs broker tried to file a claim the warehouse is said that they received all of the merchandise and gave all the merchandise to me now they are trying to screw me over and make me pay The customs broker without giving me any of my money back from the missing items . I’m not really sure what to do except for not paying my customs broker I’m not sure of what the reaction will be from this choice but I told my customs broker I’m missing as much inventory as money IOU therefore I’m not paying you anything. If anybody has any comments or advice please email me

  31. name names people I want to know if there is such a thing as a good import broker… sort of like Hillary or Trump.. the best of the worst

  32. They have just done it to me. Customs SCAM - inspecting a box of clothes for a few hundred dollars - and then - “we had to store yourt box in a warehouse for 2 weeks until we can look at it” - i am now looking just under $1000.

    solicitor time!

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