For trucking companies and owner-operators, expanding into international freight offers an opportunity for growth. Becoming a bonded carrier allows for the transportation of goods that have not yet cleared U.S. customs. This authorization can open new revenue streams by enabling carriers to move shipments from a port of entry to inland locations. This article provides a guide to the requirements and procedures to achieve this status.
What Is a Bonded Carrier?
A bonded carrier is a transportation company authorized by U.S. Customs and Border Protection (CBP) to transport in-bond merchandise. These are goods that have arrived in the United States but have not been processed for customs clearance, meaning duties and taxes have not been paid. This status allows a carrier to move these unreleased goods from a port of entry to a secure inland location.
This designation facilitates the movement of international freight under strict regulatory control. For example, a shipment arriving in Los Angeles destined for a warehouse in Denver can be moved by a bonded carrier before it is formally cleared by customs. The carrier assumes liability for the merchandise during transit, ensuring it remains secure until it reaches a designated bonded warehouse or is presented for final entry. This capability allows importers to manage supply chain logistics and defer duty payments.
Understanding the Customs Bond
A customs bond is a financial guarantee that ensures compliance with CBP regulations and protects U.S. revenue by guaranteeing payment of all duties, taxes, and penalties. This instrument is a three-party contract involving the carrier (the Principal), a surety company approved by the U.S. Department of the Treasury, and CBP.
If the carrier fails to adhere to customs laws, such as by not delivering goods to the authorized location, the surety company pays the government on the carrier’s behalf. The carrier must then reimburse the surety. International carriers secure a bond that covers activities like transporting in-transit goods through the U.S. or moving goods to an interior port for clearance.
The Application Process to Become a Bonded Carrier
Obtain a Standard Carrier Alpha Code (SCAC)
A carrier must first obtain a Standard Carrier Alpha Code (SCAC). This unique four-letter code identifies transportation companies and is required for conducting business with U.S. government agencies, including CBP. The SCAC is used in electronic systems for manifests and tracking and must be referenced in the application materials submitted to customs.
Secure a Bond from a Surety Company
The next step is to secure a customs bond from a surety company authorized by the U.S. Treasury Department to write federal bonds. The surety company will underwrite the bond after reviewing the carrier’s business, including its financial stability and operating history. The carrier must provide financial statements and other business documentation to demonstrate its reliability.
Prepare the Application Package
Once the surety company agrees to issue the bond, the carrier must assemble an application package. The main document is CBP Form 301, the Customs Bond form, which details the activity the bond will cover and includes information about the carrier and surety. The application also requires a formal letter to the CBP port director requesting to operate as a bonded carrier. Other supporting documents, such as proof of business ownership and the SCAC, may also be required.
Submit the Application to Customs and Border Protection (CBP)
The completed application package, including the original bond form with the surety’s seal, is submitted to the CBP port director for review. This is done at the port of entry where the carrier plans to conduct its primary operations. CBP will review the documents to ensure all requirements are met, the bond is properly executed, and the carrier is eligible. Upon successful review and verification, CBP will issue the carrier a unique bonded carrier number, authorizing them to transport in-bond shipments.
Costs and Timeline Involved
The main cost of becoming a bonded carrier is the annual premium for the customs bond. This premium is a percentage of the bond’s face value, determined by the surety company based on the carrier’s risk profile. CBP requires a minimum bond amount, which can be $50,000 or more for a common carrier, though this can vary. The annual premium for such a bond can range from a few hundred to several thousand dollars, depending on the carrier’s financial health.
Securing a bond from a surety company can take from a few days to a couple of weeks, depending on how quickly the carrier provides financial documentation. After submitting the application to CBP, the review and approval process can take from several weeks to a few months. The processing time depends on the workload of the specific CBP port and the application’s complexity. Carriers should plan for a total timeframe of one to three months.
Maintaining Your Bonded Carrier Status
Maintaining bonded carrier status requires ongoing compliance. The primary responsibility is the annual renewal of the customs bond premium. Failure to pay this premium to the surety company will result in the termination of the bond, and CBP will revoke the carrier’s bonded privileges. This ensures the financial guarantee remains in effect.
Carriers must also adhere to all CBP regulations for handling in-bond merchandise. This includes maintaining precise records of all bonded shipments and using the Automated Commercial Environment (ACE) system to file electronic manifests. Any deviation from the approved route or failure to deliver a shipment to its destination can lead to serious consequences. Non-compliance can result in financial penalties, cargo seizure, and the revocation of the carrier’s bonded status.