US Customs and Border Protection (CBP) is increasing its scrutiny of customs brokers as the surge in e-commerce shipments poses new compliance challenges. With less comprehensive data required for smaller e-commerce packages compared to larger freight shipments, customs brokers are under growing pressure to navigate complex regulations while ensuring adherence to CBP’s mission.
Additionally, CBP is now expecting brokers to help importers monitor their upstream supplier networks to address concerns about forced labor, intellectual property infringements, and environmental violations.
“CBP seems to have an increased expectation that customs brokers know more about their importer clients, their products, and the admissibility of the merchandise,” explained Cindy Allen, CEO of Trade Force Multiplier. “This is a higher level of involvement that has not historically been required, presenting new challenges for both brokers and their clients.”
Impending Regulations and Identity Verification
The growing scrutiny may soon result in new regulations for customs brokers, particularly regarding the verification of importers’ identities. According to Ania Wierzbowska-Fuller, Director of Consulting and Regulatory Affairs at AN Deringer, CBP has hinted that a regulation mandating brokers to verify the identity of importers could be issued as soon as November.
“This is just the beginning,” said Wierzbowska-Fuller. “It will now be a legal requirement for brokers to verify the importer’s identity, and this responsibility extends beyond our customers. Brokers must also educate importers about their obligations to know the entities with which they do business.”
Brokers: Eyes and Ears for Customs
Despite these rising expectations, customs brokers have long served as a critical layer of intelligence for CBP. Margie Shapiro, CEO of customs broker Shapiro, emphasized that CBP values the role brokers play in ensuring compliance.
“The expectation is not necessarily that brokers know more about their customers, but that they help educate their clients to ensure they understand CBP’s mission and comply with what is required,” Shapiro explained.
While CBP has systems in place to detect issues such as forced labor and intellectual property violations, the sheer volume of shipments arriving via the de minimis provision has stretched the agency’s resources thin. This provision allows duty-free shipments under $800 per day per consignee, creating what Shapiro described as an “enormous loophole” that exposes the US to unnecessary risks.
Legislative Action and De Minimis Shipments
In response to these concerns, five bills have been introduced in Congress since March 2024, aiming to curb the widespread use of the de minimis provision. According to CBP data, there were as many de minimis shipments in the first half of 2024—1 billion—as in all of 2023, further intensifying concerns about compliance and security.
Amy Morgan, Vice President and Head of Trade Compliance at Altana, noted that the influx of these smaller shipments is shifting more oversight responsibility to the trade community. “We are seeing more advanced information-sharing programs that encourage joint management of trade compliance between regulators and the trade community,” she said.
This heightened scrutiny applies to all entry types but is particularly focused on “Type 86” shipments. These shipments, processed under the de minimis provision, require customs brokers to submit minimal data to CBP, which has led to increased monitoring for potential abuse.
“Type 86 entries are now being closely watched for security risks, necessitating an unprecedented understanding of product details, classification, valuation, and full disclosure of the transaction parties,” Morgan added.
Challenges of ‘Reasonable Care’ for Customs Brokers
Customs brokers now face a difficult balancing act with Type 86 shipments, especially when it comes to meeting the “reasonable care” standard, which traditionally applies to importers of record. The limited data available in Type 86 shipments complicates brokers’ ability to ensure compliance.
“A customs broker is extremely challenged in meeting the reasonable care standard for de minimis entries, as they rely on the information provided by their clients,” explained Allen. “There’s a lack of visibility into the details necessary for compliance.”
In a typical entry scenario, brokers can opt out of serving as the importer of record, leaving that responsibility to the owner, purchaser, or consignee. However, with Type 86 shipments, the flow of information is minimal, making it harder for brokers to ensure full compliance without additional communication.
“Brokers are not necessarily comfortable with the increased involvement required, and this has raised concerns within the importing community as well,” Allen added.
Wierzbowska-Fuller echoed this sentiment, saying, “With Entry Type 86, we’re receiving less data but more responsibility. This is disruptive to everyone in the supply chain, and even for CBP, which is struggling to keep up with the sheer volume of shipments.”
Conclusion: Navigating a New Compliance Landscape
As e-commerce continues to expand and the volume of smaller shipments grows, US customs brokers are facing unprecedented challenges in balancing their traditional roles with new compliance expectations. With CBP increasing scrutiny on brokers and the looming prospect of new regulations, the trade community will need to adapt to ensure they meet evolving standards while managing the influx of e-commerce shipments.
While the challenges are significant, brokers will play a crucial role in helping importers understand their obligations and ensuring compliance with CBP’s mission to protect the country from risks associated with trade and imports.
