Updated on November 01, 2022
If you've managed to get your freight all the way to its port of origin without any delays, you may consider yourself out of the woods. However, there is potentially still one more obstacle to overcome. Every year, 3-5% of shipments are chosen for a customs exam. These customs exams can be a serious source of frustration and confusion for importers moving goods in and out of the United States, often creating significant delays, hassles, and expenses.
The good news is that there are steps that you can take to reduce your chances of a customs hold. And, in the event that your shipment is chosen for examination, there are also steps that you can take to make the process as smooth and speedy as possible. To help you both prevent and prepare for a customs exam or hold, let's take a look at everything you need to know about customs exams, including what they are, the factors that heighten your odds of being chosen for a customs exam, how to avoid customs exam fees, and how FreightMango helps with customs clearance.
A customs exam entails having a shipment searched by authorities from U.S. Customs and Border Protection (CBP) to ensure that it does not contain any drugs, weapons, or other illegal contraband. Since its creation in 2003 in response to the 9/11 terrorist attacks, the agency's primary directive has been national security. However, in addition to preventing terrorist attacks, customs exams are also intended to prevent the smuggling of drugs and other illegal contraband into the country.
Of course, CBP agents can't inspect every single shipment that arrives at a U.S. port. Instead, the agency looks for certain red flags and risk factors to determine which shipments they will search. On average, 3-5% of shipments get chosen for a customs exam.
A customs hold comes into play when there is an issue with the shipment or its paperwork. The most common causes of customs holds are missing/incomplete paperwork and unpaid fees or taxes. However, the CBP may also place a hold pending the completion of a customs physical inspection of the shipment.
CBP agents look for many risk factors when determining which shipments to examine more closely. If any of the following factors apply to your shipment, it could be at heightened risk of a custom exam.
Someone who has never imported or exported goods is considered a much higher risk than an established importer. CBP agents often choose to examine first-time shipments to establish an importer's legitimacy.
If the shipper delivering your freight has a history of mismarking or mislabeling goods, then there's a good chance that the CBP will select your shipment for a customs exam. The freight shipper is not the only thing under the microscope. Agents also scrutinize the shipment's entire chain of custody. If anyone handling your cargo throughout its supply chain journey has a track record of past errors, then your freight is more likely to be flagged for examination.
Some types of goods are considered more suspicious than others. Likewise, some are more prone to inaccurate labeling, reporting, or valuing. In any case, a shipment containing these higher-risk goods is more likely to undergo a customs exam.
In the same way that certain types of goods are regarded more suspiciously than others by CBP, where your shipment is coming from plays a big role in how much attention it is going to get. A shipment originating from what CBP considers a high-risk location is more likely to be searched.
Consolidating multiple products into a single shipment can save you money, but it also increases your likelihood of having to complete a customs exam. If just one of the products in the shipment arouses suspicion, then the entire load will be put on hold.
Any missing or incomplete paperwork will likely trigger a customs hold and a request for additional documentation. Missing or incomplete paperwork also increases the likelihood that a shipment is flagged for physical examination since CBP may view it as an attempt to hide its contents.
The factors we've covered above are all common reasons for a customs exam. Even if you do everything right, though, there's still a chance that your shipment could end up being one of the 3-5% of shipments flagged for examination. There's no need to panic if CBP agents choose your shipment for a customs exam, and it doesn't inherently mean that you've done something wrong or broken any laws.
A customs hold essentially means that your shipment has been paused. CBP may hold a shipment pending a customs exam, but this isn't the only reason for customs holds. Here are the different types of customs holds commonly put on incoming shipments (and the reasons for them).
A manifest hold occurs when something is wrong with your shipment's documentation — missing paperwork, such as a missing bill of lading, or documentation that appears incorrect will raise this flag. CBP typically requires either corrected or additional documentation to clear up a manifest hold.
The Anti-Terrorism Contraband Enforcement Team, a special division of CBP, places this type of hold. A CET Hold applies to shipments suspected of containing illegal contraband such as drugs, weapons, and currency.
Many issues, including customs problems, can prompt a commercial enforcement hold on a shipment. However, this type of hold is commonly executed on behalf of other government agencies, such as the Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA), and Federal Communications Commission (FCC). This type of hold aims to ensure that goods entering the country comply with all federal regulations.
Similar to a commercial enforcement hold, any Participating Government Agencies (PGAs) can issue a hold if a shipment fails to comply with the agency's rules and regulations. This hold covers compliance issues, not customs.
Statistical validation holds come into play when discrepancies arise between the shipment and its manifest. For example, freight that weighs significantly more than expected based on the commodity shipped will likely trigger this customs hold. Often, the remedy is additional documentation; other cases might require a physical examination of the shipment.
How do you know if customs flags your shipment? How do you know when your shipment is released from customs? The answers become clear once you better understand the custom exam process. That said, a shipment can undergo three different customs exams, each with its unique timeline and fees.
The simplest and cheapest type of customs exam, Vehicle and Cargo Inspection System (VACIS)/Non-Intrusive Inspection (NII) exam, entails x-raying a shipment to check its contents. There are additional tests that a shipment might undergo in a VACIS/NII exam, such as testing for radiation. In either case, though, the container itself is never opened.
Because of its non-invasive nature, this type of customs exam is typically the quickest and most affordable of the three types; fees for VACIS/NII exams tend to cap at $300, and shipments that undergo these exams are usually only delayed about 2-3 days.
A tail gate exam is the next level of customs scrutiny. A CBP agent will break the seal on your shipping container to physically examine its contents. If everything looks in order, then your shipment will likely be released. However, any issues spotted will likely require an intensive customs exam.
Opening a container to check its contents may sound simpler than putting it through an x-ray machine. However, a tail gate exam is more costly and lengthy than a VACIS/NII exam. You can expect to pay about $350 in fees for a tail gate exam and transportation costs if your shipment has to be moved for inspection. Shipments flagged for a tail gate exam typically get cleared within 4-5 days.
As its name suggests, an intensive customs exam is the most intrusive of all customs exams. A shipment is delivered to a Customs Examination Station (CES), where CBP agents will break the container's seal and unload all of the contents inside, inspecting each item individually before loading them back up again.
For good reasons, this is the most dreaded type of customs exam; to start, undergoing an intensive customs exam means that your shipment will likely be delayed anywhere from a week to 30 days. Intensive customs exams also tend to cost thousands of dollars once you factor in expenses such as transportation to a CES, labor charges for loading and unloading the shipment, and detention fees for keeping your container longer than expected.
Along with the delays that they create, the fees associated with customs exams are the biggest reason why having a shipment chosen for customs examination is considered such a stroke of bad luck. The potential fees that you might be forced to pay if your shipment undergoes one of the three types of customs exams include:
A CES is a private facility that Customs and Border Protection uses to inspect shipments, and the facility's staff takes care of tasks such as loading and unloading freight. Of course, they charge for these services, and if your shipment is transported to a CES for inspection, you will be the one left holding the bill. The CES may also charge storage fees for storing the shipment at their facility.
As if paying a CES to process and store your shipment wasn't enough, you will also have to pay a transportation company to move your shipment to and from the CES. This fee will show up on your invoice as "drayage charges."
Shippers must return containers on time to avoid detention fees assessed by the carrier for every day past the deadline. Unfortunately, these fees apply even if the reason for the delay is a customs exam.
Once you are chosen for a customs exam, the fees associated become unavoidable. At best, you'll be on the hook for a few hundred dollars. At worst, several thousand or more. Therefore, the key to avoiding customs exam fees is avoiding customs exams. While there's no surefire way to completely eliminate the chances of your shipment being chosen for examination, there are things that you can do to reduce your odds.
The most important key to preventing customs exams is ensuring that you have all the required documentation for your shipment and that your documentation is correct and complete. Since paperwork requirements can vary drastically from shipment to shipment depending on numerous factors, this is often easier said than done. Thankfully, technology such as FreightMango's automated customs clearance solution can help.
The valuation you provide will be examined by CBP and compared to the valuations of similar shipments. It is likely to rouse suspicions if your numbers are way off, so ensure that you provide an accurate valuation of the goods your shipment contains.
Working with an established customs clearance services provider is the most effective way to prevent customs exams. At FreightMango, we help importers avoid customs exams with automated customs clearance solutions that standardize the preparation, validation, and submission of customs documents. Along with preventing customs exams by eliminating paperwork errors, FreightMango's automated customs clearance solutions also help organizations reduce their administrative costs by eliminating the hassle of manually preparing, validating, and submitting customs documents.
A Continuous Entry Bond (CEB) is a little like TSA Pre-Check for shippers. If you apply for and receive a CEB, you'll be able to expedite your shipments and lower your risk of customs exams by demonstrating to CBP that you are a trustworthy and reliable shipper.
FreightMango makes customs clearance a cinch by automatically preparing, validating, and submitting customs documents. This solution ensures that all the documents your shipment needs to pass through customs without ever raising an eyebrow are appropriately prepared and submitted on time. Best of all, automating the customs clearance process with FreightMango also means less burden for your team and reduced administrative costs.
To reduce the risk that your shipments face customs exams and eliminate the many hassles of customs clearance, sign up for FreightMango today!