What are the Customs Clearance Processes for a DFB?
Shippers cringe at those two dreadful words: customs clearance. This logistics nightmare has recently gotten a whole lot easier and simpler, though, thanks to digital freight brokers. The best digital freight brokers will often take on the entire customs clearance process, so their clients can sit back and relax, while the brokerage handles the headaches of clearing exports and imports across borders.
What does the customs clearance process look like for a digital freight brokerage? How do they manage customs efficiently and cost-effectively for their clients?
Partnering with customs brokers
Customs brokers are logistics experts that focus solely on facilitating the customs clearance process. They focus on ensuring each shipment meets the standards, requirements, laws, and regulations of the exporting and importing countries. These brokerages handle everything from documentation to payments, and they’re often the point person for any issues that may arise. Customs brokers are useful, but they only handle customs. Most clients want to outsource more of the supply chain logistics, which is why they turn to digital freight brokers.
Some digital freight brokerages have a specific branch or department that handles customs clearance particularly, while other DFBs partner with experienced customs brokers in tandem with their own set of clearance processes. Most often, if you’re working with a top-tier digital freight broker, they’ll have access to custom brokerage partners or tools to handle the customs clearance process with the highest level of knowledge and expertise. Before you choose a digital freight broker to work with, ask if customs clearance is an available option, especially if you import and export shipments frequently.
Learn more about what digital freight brokers do here.
Creating a reliable supply chain
Quality digital freight brokerages like Redwood Logistics offer supply chain auditing and consultation to verify all of your manufacturing and logistics partners. When it comes to customs clearance, in particular, you want to make sure that your suppliers, buyers, and transporters are in good standing with the government so you don’t end up in hot water because of any of your partners.
For example, a country’s government will define restricted parties (aka “denied” parties). These are companies or individuals that you should not do business with for certain reasons. It could be something serious like they were involved in terrorist affiliations or drug trafficking, or it might be that they have a history of corrupt practices and trademark infringements. If you work with any of these businesses, you could face serious consequences as well—even if you did it unknowingly.
The digital freight brokerage will take care of the research for you. Screening your supply chain partners are often part of their services to ensure that you are in total compliance in the production and transportation of your goods. Talk to your brokerage to see if they can help with this vetting process.
The hardest part of customs clearance for most shippers is ensuring compliance at every step. It feels like there are a million things to remember—so hand it off to a DFB to take care of it for you! They’ll help ensure compliance in terms of:
- Making sure freight is a permitted export from the country of origin
- Making sure freight is a permitted import in the country of arrival
- Obtaining written permission and/or licenses if your goods are in a prohibited category
- Verifying you don’t have any product restrictions in terms of age (age of product), packaging, quantity, or licensing
- Paying duties, taxes, and trade tariffs
- Addressing specific payments, like pricing with regards to anti-dumping duties or fair trade in terms of countervailing duties
- Determining if your goods fall under negotiated Free Trade Agreements
- Protecting your intellectual property
- Not infringing on another’s trademarks or copyrights
- Packing, labeling, and documenting goods accordingly
… and so much more. If you’re overwhelmed by all of the rules and regulations of cross-border shipping, a DFB or customs broker can be a lifesaver for a clean and compliant customs clearance process.
This is one of the largest obstacles for shippers, but the paperwork is way easier when it’s all handled digitally. Your DFB will help prepare the required documents to present to the customs authorities, including the commercial invoice, packing list, certificate of origin, letter of credit (or other payment terms), bill of lading for ocean or airway bill for air, licenses, permits, and other necessary certificates. If something’s missing, the DFB and customs broker will track down the required papers or provide detailed guidance if the shipper is responsible for anything.
Clients always love that their digital freight brokerage not only handles everything for them but also digitizes the documentation process, so the shippers and all other partners always have instant online access to the available and required paperwork.
As we discussed in #2, the DFB is your partner in creating a successful and transparent supply chain. They may have overseas partners to help you with your pre-shipment inspections. These inspections are vital to ensure quality control and customs compliance. Most often, any delays at the port of origin or destination can be avoided by first conducting an inspection.
These inspections include health checks, especially for hazardous materials, packing and labeling requirements, quality consistency, and documentation. In the COVID-19 world, these sort of transparent and responsive health and safety inspections are becoming an increasingly important aspect of customs clearance.
One of the greatest benefits of working with a digital freight brokerage is that almost everything occurs in the digital realm. Shippers can see the status of their shipments in real-time and even make adjustments through their brokerage’s online platforms. This creates a high level of transparency and control for the shipper, without having to deal with the mounds and mounds of paperwork that are typically associated with customs clearance.
Create your custom customs plan
There can be a lot of confusion and overwhelm surrounding the customs clearance process. The purpose of a digital freight brokerage is to make all transportation processes, including customs, easy, optimized, and streamlined.
Redwood Logistics is unique in that we create a customized plan for your logistics needs. We can take a comprehensive look at your supply chain to pinpoint areas of weakness or upstream disruptions, and we’ll create a customized plan that addresses all of your logistics needs.
Whether you’re struggling with customs clearance, international multimodal shipments, or slow warehousing, we’ll create a technology-driven plan that tackles all of your essentials to a strong supply chain.