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Insufficient Bonds

To import merchandise into the United States, you need to provide security to Customs to guarantee that you will comply with rules and regulations. This includes the guarantee of paying the total taxes, duties, and fees related to your entries. A Continuous Bond can conveniently be used for multiple entries across the country. Customs will perform periodic reviews on bonds to make sure that the bond amount is sufficient to protect the revenue of the United States. Once Customs deems a Continuous Bond to be insufficient, it can no longer be used for entries. This means your shipment cannot be cleared and will be held at port until a new sufficient bond is filed. Furthermore, a bond with egregious deficiencies will be rendered by Customs as insufficient immediately. Even though a bond is deemed insufficient the bond still needs to be terminated and the termination process takes at least 15 days. The dilemma lies in the fact that you cannot have two Continuous Bonds on file at the same time with the same importer number. Consequently, if a bond is needed in the meantime, a Single Transaction Bond (STB) must be filed. If you have multiple entries, you will need multiple STBs. This will cause more time and money, as well as increased exposure for the surety.

A bond can become insufficient for a variety of reasons, including massive outstanding debts or claims, a large or risky entry, or a bad address. Be proactive in keeping your bond in good standing. Below are a few tips to prevent bond insufficiency:

  • Know the correct bond amount. Refer to Customs’ formula on calculating bond amounts for more detailed information. This is a general guideline and there may be instances when a higher bond amount is needed, so check to see if the bond amount is adequate for your specific situation.
  • Increase your bond amounts as needed. Bond amounts can be changed throughout the year, not just at renewal. If you anticipate needing a higher bond amount you should proactively contact your surety.
  • Ensure claims are handled. Claims can increase the amount of “outstanding debt” that you have with Customs, so make sure claims are protested, petitioned or paid in a timely manner.
  • Make sure Customs has the correct address. If Customs receives returned mail marked as “undeliverable” due to bad address for an importer with a continuous bond, the bond will become insufficient immediately. This can be corrected by sending Customs a form 5106 with updated information, and notifying the Broker of Record and surety.
  • Monitor activity. Customs and sureties have valuable reports that can be used to determine if your current bond amount is still suitable. Reports can show detailed information for entries and claims.

What if CBP deems your bond insufficient?

If your bond becomes insufficient despite your best efforts, work with Customs and your surety to find an immediate resolution. Customs may allow for a bond termination sooner than 15 days so that you can file an appropriate bond. Sureties can serve as an additional resource to help alleviate the issue. They can increase the bond amount so that it will be sufficient or guide you through Customs’ form 5106 to update a bad address.

Source: Avalon Risk Management

Please be advised that Steer Offices may be closed Tuesday, March 14,2017 due to severe winter weather.

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Insufficient Bonds

To import merchandise into the United States, you need to provide security to Customs to guarantee that you will comply with rules and regulations. This includes the guarantee of paying the total taxes, duties, and fees related to your entries. A Continuous Bond can conveniently be used for multiple entries across the country. Customs will perform periodic reviews on bonds to make sure that the bond amount is sufficient to protect the revenue of the United States. Once Customs deems a Continuous Bond to be insufficient, it can no longer be used for entries. This means your shipment cannot be cleared and will be held at port until a new sufficient bond is filed. Furthermore, a bond with egregious deficiencies will be rendered by Customs as insufficient immediately. Even though a bond is deemed insufficient the bond still needs to be terminated and the termination process takes at least 15 days. The dilemma lies in the fact that you cannot have two Continuous Bonds on file at the same time with the same importer number. Consequently, if a bond is needed in the meantime, a Single Transaction Bond (STB) must be filed. If you have multiple entries, you will need multiple STBs. This will cause more time and money, as well as increased exposure for the surety.

A bond can become insufficient for a variety of reasons, including massive outstanding debts or claims, a large or risky entry, or a bad address. Be proactive in keeping your bond in good standing. Below are a few tips to prevent bond insufficiency:

  • Know the correct bond amount. Refer to Customs’ formula on calculating bond amounts for more detailed information. This is a general guideline and there may be instances when a higher bond amount is needed, so check to see if the bond amount is adequate for your specific situation.
  • Increase your bond amounts as needed. Bond amounts can be changed throughout the year, not just at renewal. If you anticipate needing a higher bond amount you should proactively contact your surety.
  • Ensure claims are handled. Claims can increase the amount of “outstanding debt” that you have with Customs, so make sure claims are protested, petitioned or paid in a timely manner.
  • Make sure Customs has the correct address. If Customs receives returned mail marked as “undeliverable” due to bad address for an importer with a continuous bond, the bond will become insufficient immediately. This can be corrected by sending Customs a form 5106 with updated information, and notifying the Broker of Record and surety.
  • Monitor activity. Customs and sureties have valuable reports that can be used to determine if your current bond amount is still suitable. Reports can show detailed information for entries and claims.

What if CBP deems your bond insufficient?

If your bond becomes insufficient despite your best efforts, work with Customs and your surety to find an immediate resolution. Customs may allow for a bond termination sooner than 15 days so that you can file an appropriate bond. Sureties can serve as an additional resource to help alleviate the issue. They can increase the bond amount so that it will be sufficient or guide you through Customs’ form 5106 to update a bad address.

Source: Avalon Risk Management

Please be advised that Steer Offices may be closed Tuesday, March 14,2017 due to severe winter weather.

Hanjin Bankruptcy Impacts Global Supply Chain

The bankruptcy of Hanjin Shipping Co. has created chaos in ports and terminals as well as among importers, exporters and retailers around the world–with giant container ships marooned and retailers unsure if goods will reach their shelves.

South Korea’s largest ocean carrier (the world’s 9th largest) filed for bankruptcy protection on September 2 in Newark, NJ, and stopped accepting new cargo. With its assets being frozen, many ships across the globe have been refused permission to offload or receive containers because of payment concerns. Major cargo disruptions are expected to continue, not only for Hanjin’s clients, but also for companies indirectly employing Hanjin services in numerous vessel sharing agreements with other major ocean carriers.

Other significant impacts to trade are expected as a result of the bankruptcy, including a dramatic increase in freight rates. Reports of rate increases of 50% have been noted in freight markets, particularly in the Transpacific trade.  The timing of the increases coincides with traditional “peak season” rate increases and volume constraints. Market analysts are predicting sustained rate hikes among all carriers. It is also expected that supply chain vendors, such as inland trucking carriers heavily reliant on Hanjin volumes could sink along with the bankrupt carrier.

 

Steer News Team

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