What are Customs Brokers, Freight Forwarders, and NVOCCs?

 What is a Customs broker?
      Customs brokers are private individuals, partnerships, associations, or corporations licensed, regulated, and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service. 
      Brokers must prove expertise via the passage of a difficult examination on the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise. There are approximately 12,000 active licensed Customs brokers in the United States. 
      When goods are imported into the customs territory of the United States (the fifty states, the District of Columbia, and Puerto Rico), they are subject to certain formalities involving U.S. Customs and Border Protection (CBP) (formerly known as U.S. Customs Service). In almost all cases, the goods are required to be “entered,” that is, declared to CBP, and are subject to detention and examination by CBP officers to ensure compliance with all laws and regulations enforced or administered by CBP.

         When a formal “entry” of merchandise is made under the provisions of 19 U.S.C. §1484, the required documentation or information must be filed or electronically transmitted by the “importer of record.” Under the statute, the “importer of record” is either the owner or purchaser of the merchandise or, when appropriately designated by the owner, purchaser, or consignee of the merchandise, a person holding a valid license as a customs broker. As part of the entry process, goods must be “classified” (determined where in the U.S. tariff system they fall) and their value must be determined. Pursuant to the Customs Modernization Act, it is now the responsibility of the importer of record to use “reasonable care” to enter, classify, and value the goods, as well as provide any other information necessary to enable CBP to properly assess duties, collect accurate statistics, and determine whether all other applicable legal requirements are met. These requirements can be complex. To assist importers in meeting their responsibilities, importers may employ experts within their organizations or seek advice or services from outside experts such as customs brokers, attorneys who specialize in customs matters or consultants. Of these outside experts, only customs brokers may prepare and file entry documentation, because the preparation and filing of entry documentation constitutes “customs business” which, by statute, may be performed on behalf of others only by a licensed customs broker.

Who is eligible to become qualified as a Customs broker?
       To be eligible, you must:

  • Be a United States citizen at least 21 years old.
  • Not be a current Federal Government employee.

Assuming I am eligible, how do I become a Customs broker?
First, you must pass the Customs Broker License Examination. 
Second, you must submit a broker license application with appropriate fees. 
Third, your application must be approved by CBP following investigation of your background.

Customs Regulations: 19 CFR   Broker regulations specifically:  19 CFR 111 

ABOUT OCEAN FREIGHT FORWARDERS AND NVOCCs

An Ocean Transportation Intermediary is either an

 a)  ocean freight forwarder or a

  b)non-vessel operating common carrier (NVOCC).  

An ocean freight forwarder is an individual or company that dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers. Ocean freight forwarders also prepare and process the documentation and perform related activities pertaining to those shipments. An NVOCC is a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bills of lading or equivalent document, but does not operate the vessels by which ocean transportation is provided, and is a shipper in relation to the involved ocean common carrier.
         Ocean freight forwarders are required to obtain a license to provide services in the United States. U.S.-based NVOCCs are also required to be licensed. NVOCCs that are not based in the U.S. are not required to be licensed but may choose to obtain one if desired, as licensing results in lower financial responsibility levels.
         To obtain a license, an OTI must submit Form FMC-18 and a fee in the amount of $250. Form FMC-18 is available on the Commission’s website. The applicant must appoint a qualifying individual with at least three years of demonstrable OTI experience and who is an officer of the applicant’s corporation, is the sole proprietor, or is a partner in a partnership. Proof of this position must be submitted. For U.S.-based OTIs the qualifying individual’s experience must have been gained in the United States. For non-U.S.-based NVOCC license applicants, the qualifying individual may have gained experience outside the U.S. Applications are filed for changes such as a change in qualifying individual, name, address, business structure change, additions or removals of trade names, or other changes of information reported on the original Form FMC-18. For changes in qualifying individuals or changes that result in the issuance of an amended license, the fee is $125. 
         Once an application is submitted, FMC staff will review the application, documents, contact references, and investigate the applicant. Should the application be approved, the applicant will be notified of the approval and will be required to submit proof of financial responsibility (most likely a surety bond), in the amount of $50,000 (for an ocean freight forwarder license) or $75,000 (for NVOCC license). Once a license has been issued to an NVOCC, it must file Form FMC-1 which notifies the Commission of the location of the NVOCC’s electronically available tariff. It must then ensure the tariff is published. 
         Non-U.S.-based NVOCCs that do not wish to be licensed must provide the Commission with proof of financial responsibility in the amount of $150,000, file Form FMC-1, and ensure a tariff is published at the site listed on the Form FMC-1. A non-U.S.-based NVOCC must list in its tariff an agent for service of process in the United States, and it must use a licensed OTI for any OTI services performed on its behalf in the United States.
         Non-U.S.-based NVOCCs that choose to be licensed must submit Form FMC-18, together with the required documentation and the fee. In addition, it must establish a presence in the United States such as an unincorporated branch office. The qualifying individual may obtain his experience outside the U.S. The amount of financial responsibility is $75,000 plus $10,000 for each unincorporated branch office in the United States other than the one used to establish a presence. A Form FMC-1 must be filed and a tariff published.
         An OTI NVOCC may be a shipper signatory to service contracts with vessel-operating common carriers. The shipper party will need to certify on the signature page its shipper status. The vessel-operating common carrier is required to obtain proof that the NVOCC is appropriately licensed for U.S.-based NVOCCs, bonded, and has published a tariff. 
         At the Commission, the Bureau of Certification and Licensing handles all OTI applications and OTI bonds and bond riders submitted as proof of financial responsibility. The Bureau of Trade Analysis handles all tariff and service contract-related matters. 
More information on OTIs may be obtained at the following links:  
         OTI Rules: 46 CFR Part 51546 CFR Part 52046 CFR Part 530 46 CFR Part 531 and 46 CFR Part 532

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