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Switching customs brokers: a guide

A solid relationship with your customs broker, and a good fit with them, is essential for an importer. But what if it’s time for a change? This week, we dive deep into why you might consider a switch and how to go about it without disrupting your operations.

Why would someone want to switch customs brokers? There could be a number of reasons:

  • Service failure (likely the most common reason).
  • A broker that causes repeated clearance delays, which could be resulting in storage charges and/or delays to supply chain.
  • Inconsistent quality control measures. This can lead to overpayment of duties, errors to trade data reporting, billing errors.
  • Poor customer service or lack of consistent customer service. (Having one point of contact for the client is ideal for maintaining consistent, reliable service.)
  • The importer has simply outgrown their current broker. They need a broker who provides a wider range of services: customs clearance, consulting, logistics services, warehousing services, etc.
  • Price. An importer may be looking to reduce their supply chain costs and can often look to their brokerage pricing as one avenue. This may not necessarily be the best reason to switch as service may be compromised for price.

Things to consider when switching customs brokersprosAndCons_77492532_s

Changing your customs brokerage should have a positive impact on your organization's supply chain. As an importer, you’ll need to ask yourself a series of questions when making a decision to switch brokers.

  1. What are my company’s expectations of a customs broker?
  2. Will switching to a new broker strengthen my company’s international supply chain?
  3. What services or solutions will a new broker offer to support our international trade needs? And are they a one-stop shop providing integrated solutions, including customs brokerage, customs and logistics consulting, international logistics, warehousing and fulfillment services, and project shipping?
  4. Does my organization have all the necessary information to make a smooth transition to a new customs broker? For example, a database of all our imported goods complete with foreign vendor information, part numbers and descriptions, tariff classification, country of origins, certificates of origin to support preferential duty rates (NAFTA, CETA, CPTPP), previous customs rulings or customs verification reports?
  5. How many business entities within our organization will be impacted by a decision to switch brokers?
  6. Who will need to be notified of a potential switch, internally and externally?

It may seem like a lot, but a decision like switching customs brokers needs to be put in the context of your entire operation and supply chain. It’s worth being thorough and thoughtful at this stage in order to avoid costly errors.

Don’t be hasty

Is there a wrong way to make the switch? In a word, yes. The main thing importers should avoid is making rash decisions to make a quick switch with a customs broker, especially if your business has daily or weekly imports.

Making a hasty switch more often results in disrupted communication with important trade chain partners such as carriers and vendors. These partners provide information and paperwork at the right time and the right place for efficient customs release.

If the paperwork is sent to the old broker, your shipment will be delayed. Delays impact your supply chain financially in multiple ways.

Finally, try to avoid making a decision on price alone. The lowest price is not necessarily in an organization’s best interests and doesn’t give you the full picture of all the factors impacting your supply chain and costs. The lowest price may also mean compromising on service.

The smoothest way to change brokersCustoms_61132155_s

If your organization’s supply chain and international trade needs require certainty, the decision to switch customs brokers is a significant one. It impacts several departments within an organization, not to mention the financial impact, if a proper transition plan isn’t put into place.

The best way to switch brokers and ensure a smooth transition is to have a detailed plan that considers the who, what, where, and when. Your plan needs to consider internal and external stakeholders to ensure a smooth and effective transition to a new customs broker.

Who

  • Internal: business units, purchasing, accounting, shipping/logistics.
  • External: vendors, carriers, new customs broker broker, 3rd party service providers (IT services, accounting services, 3PLs).
  • Who are the key contacts with our new customs broker?

What

  • What are the expectations/goals?
  • What are the key transition items?
  • Is our information complete: foreign vendor information, import/export database, certificates of origin, customs bonds, rulings, etc.?

Where

  • Where are the important distribution points and hubs for our supply chain?
  • Where are the key contacts located with our new customs broker?
  • Where should I remit payment?

When

  • What is the timeline for transition?
  • When is the official transition date?
  • How do I prioritize timelines for transition items?

Changing your customs brokerage service provider, and ensuring your supply chain and international trade stays on track, is no small feat. We’ve been in the customs brokerage business for more than half a century. We’re ready to help.

Information provided by: Customs Brokerage Dept. - Cole International

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