Customs bond is a financial instrument. It is a three parties contract between Surety/Insurance company, U.S. Customs and Border Protection (CBP) and the Principal. Principal can be Importer of Record (IOR), international carrier or Foreign Trade Zone (FTZ).
Customs bond has dual purpose. First, it ensures that CBP can seek compensation from the Surety, up to the face value of the bond, if they are unable to collect any balances due from the Principal. Second, it allows Surety company to exercise all and any legal means to collect money from the Principal, when necessary.
While there are different types of the Customs bonds, such as Drawback, Custodian, Carrier, Free-Trade Zone (FTZ), most Customs bonds are Import bonds, where Principal in Importer of Record (IOR).
Import bond is a mandatory requirement, even if imported merchandise expected to be duty free. All importers must have it to file transactions with Customs & Border Protection. This type of bond guarantees the CBP that they will be able to collect all applicable duties, fees, fines or penalties from either the Importer of Record or the Surety company. IOR can obtain a Single Entry bond, designed for one time use for a specific single shipment, or a Continuous Bond, good for a long term, multiple shipments/entries and covering single transaction duties and fees amount up to face value of the bond.
Global Trade Link partners with highly rated insurance companies and offers full range of Customs bonds at some very competitive rates. Bond is the policy of the insurance company and owned by the Principal. You own it regardless of whether you use GTL for any other services or not.
In most cases, carrier insurance does not cover the merchandise. Moreover, carriers’ liability is very limited.
Ocean: Hague-Visby Rules of 1968 is generally recognized treaty governing international trade. United States follows 1936 Carriage of Goods by Sea Act (COGSA) which serves as U.S. version of Hague-Visby Rules. Under COGSA standard ocean carrier liability is $500 per package or “customary freight unit”, if not shipped in packages. Unless higher value declared upfront and carrier agrees with cargo owner definition of the package, ocean container is a customary freight unit.
Air: The Montreal Protocol to the Warsaw Convention sets the liability for lost or damaged international air cargo at 19 Special Drawing Rights (SDR), which is the basket of currencies consisting of the U.S. Dollar, the Euro, British Pound Sterling and Japanese Yen. Based on current exchange rates that sets the limitation of liability for international air cargo loss or damage to approximately $20 per kilogram. U.S. domestic air carriers enjoy even lower limits, set at approximately $0.50 per pound.
Global Trade Link offers a range of cargo insurance products, from specific risks, also called named perils, to broad most comprehensive “all risks” coverage to protect the merchandize in storage or in transit. Deductible can be customized based on customer specific risk tolerance. Loss, damage, theft or packaging failure can all be insured. Global Trade Link works with top rated insurance companies to reduce or eliminate your risk, protect your merchandise and ensure peace of mind.