Whenever you are planning on moving goods internationally and in the process, there will be a portion that will be transported through a country that is not the country of origin or destination, these moves will need to be placed in bond. By placing the shipment in bond, you avoid having to clear customs in the country that is not the destination even though the shipment will be physically travelling through that country.
One common example is for over-the-road machinery transport between Canada and Mexico as the goods will need to travel through The United States in the process. Once the freight arrives at the border with The United States, it is placed in bond until the reaches the destination country where that bond will then be cancelled, and the freight will clear customs as normal into the final destination country.
Another example occurs when various machinery made outside of North America are first shipped by Ocean Vessel to a port in The United States but ultimately destined for Canada. In this case, once the machinery reaches the port in The United States, it is placed in bond to avoid clearing customs on arrival. Once the freight reaches the US-Canada border, that bond will be cancelled. The shipment will be submitted for customs clearance into Canada from the origin country.
The United States has two types of bonds used for International shipments. The first and most common is the Transportation and Exportation (T&E) Bond. A T&E Bond is used to move and export goods between two different entry ports in The United States and are common when goods are transiting through The United States to a different country. A T&E Bond would be used in the prior two examples listed. The second type of bond is called Immediate Transportation (IT) Bond. An IT Bond is used when goods are shipped internationally to The United States via air or seaport and then are transported within The United States for customs entry at the final port of destination. An example of when an IT Bond would be used would be when a shipment arrives at New York port, but the importer is in Texas (Dallas), an IT Bond would be entered, and the shipment is moved on a bonded truck to Dallas.
The Canada Border Services Agency (CBSA) is responsible for customs and bonded shipments for flatbed trucking companies. The most common case for putting a shipment in bond through Canada would be when Canada is used a corridor by starting from a point outside Canada and then transiting through Canada to another point outside Canada. In this case, the bonded trucking company would apply for an A8A Bond to avoid customs release by the CBSA.
Another scenario where a load could be put in bond in Canada arises when the truck arrives at the border, and there is paperwork that is missing to clear the shipment at the border. In this case, the bonded carrier can choose to take the load in bond to be cleared at an inland CBSA office (bonded warehouse) that is not at the border. This prevents the truck from being held up at the border and allows them to enter Canada and drop the goods off at the bonded warehouse for clearance once all the paperwork is finalized. This is usually a last resort as there are additional costs and delays involved, highlighting the importance of getting the cross-border requirements taken care of well ahead of time to avoid these unnecessary costs.
Understanding the regulations around bonded shipments is crucial for carriers to understand as the fines and liability for non-compliance can be as high as $50,000. Both Canada and The United States are strict regarding the enforcement of bonded shipments as these shipments do not follow the same customs clearance procedures and are not subject to duties and taxes like all other shipments.
For a flatbed trucking company to put a shipment in bond, it must apply to become a bonded carrier in the country it wants to move bonded shipments through. Therefore, a company that wants to apply for bonds in Canada and The United States must coordinate with both CBSA and U.S. Customs and Border Protection (CBP) to become a bonded carrier in both countries. Carriers must work with an approved surety company to initiate the bond application process with both regulatory bodies. Furthermore, the carrier must post financial security of $5,000 – $25,000 and must include company financials due to a review process. Once the review process is completed and approved, the carrier will receiver a carrier code used to place loads in bond.
Posting a bond against shipments should be done with extreme care and understanding of your liability. All internal parties within a carrier must understand the reporting requirements associated with ensuring a bond is properly closed once opened.
At Vectra Heavy Haulers, we are bonded in Canada and The United States and are aware of all the requirements around moving shipments under our bond. In doing so, we can confidently take care of all your international shipping needs while protecting ourselves and all the parties involved in the process. Please call 289-290-1033 or contact us, and we will be happy to answer any of your questions and provide a free quote for your multi-border transportation requirements for bonded shipments.