A Glimpse Into the Customs Process

On Time Performance Report
July 18, 2017
From the Marketing Room
August 16, 2017

A Glimpse Into the Customs Process

Many of the manufacturing plants in the United States don’t have to deal with the everyday nuances of the Customs process to import their items from foreign countries. Customs is the most important aspect of bringing in the spare parts and machines that these plants need to keep their doors open. The plants are often misguided in their thought that hiring a third party vendor to deal with the importing and exporting shifts all the responsibility of Customs to those vendors. What most plants do not realize is that the ultimate consignee of the products, the plants, carry most of the liability if the items are not cleared properly. Not having your products classified correctly can result in significant fines from Customs. Because of this, Key Industries has gone above and beyond the normal service of other distributors or re-sellers. We have become experts on the Customs side of the importing business. By doing this, we are giving our customers peace of mind that their products are being classified correctly.

The main importations we do here at Key Industries are for our twice weekly shipments from Japan. Each of these shipments typically contain anywhere from 40 to 150 different products. For each one of these products, Customs requires a HTS (Harmonized Tarif Schedule) code assigned to it and each of these HTS codes come with a specific duty rate that must be applied. Even if the item has a zero percent duty rate, each item has a required fee called the MPF (Merchandise Processing Fee) that must be applied to each item on top of the duty rate. The duty rates are used to help encourage or discourage certain items from being imported into the United States. An example of an item being discouraged are bearings. Their duty rates typically range from 4.4 to 9.9 percent. On the other hand, there are many items that are free of duty: most cylinders and specialized machines and machine parts that do not fit into any other classification.

When we receive shipment details from Japan in the morning, I go through each item line by line and apply the correct HTS code. In addition to this, I also fill out any paperwork that is required by Customs. Some items are considered special and require extra paperwork. Examples of such specialty items are: lasers, items that emit or alter radio frequencies that are regulated by the FDA, and substances such as greases and chemicals that are subject to TSCA (Toxic Substance Control Act) that are regulated by the EPA.

Once that step is complete, the paperwork to file Entry with Customs is finalized and submitted for clearance. There are many factors that can cause Customs to hold a shipment for further examination. When that happens, I work diligently with them to clear up any issues to get the shipment released as soon as possible.

For many years, FedEx Trade Networks processed our shipments; however, since we are always striving to be better, we decided to start processing our own shipments. We will still use FedEx for our many shipping needs, but by having a licensed Customs Broker on staff, we will no longer need to go through them for Customs. Due to this, we can file all the paperwork directly to Customs and have more control over finding out what is holding up our shipments. In addition, by moving these services in house, we are able to cut the costs associated with importing your items correctly in half.

Because the products we are bringing in for our customers are so unique, we wanted to avoid hiring a Customs Broker that would be unfamiliar with the items we bring in, so I took the test to become a licensed customs broker. I have been working at Key for nearly a decade, giving me the knowledge of the parts, as well as, experience with importing in general. After nearly 200 hours of self-study using an online course, I was able to take the test passing on my first attempt. It is a 4 and a half hour, 80 multiple-choice questions, open book exam. The test has about a 5 percent pass rate, with only 1 to 2 percent passing their first attempt. Going through this process has made it possible for me to clear the shipments myself. This paired with my knowledge of the company and industry allows me to help our customers better, creating less worry for them about this side of the business.

If you buy from Key Industries, you can trust that we will take care of you and handle the Customs end of importing your products.

-Jami-Leigh Gallagher: Logistics, Trade Compliance, and Customer Service Manager

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