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US CBP increasing scrutiny of customs brokers as e-commerce exposure rises

By Eric Johnson

Scrutiny on US customs brokers is ratcheting up , according to compliance experts , as US Customs and Border Protection ( CBP ) grapples with a deluge of e-commerce shipments that require less comprehensive data than those tied to larger freight shipments .

Also putting pressure on customs brokers is an expectation from CBP that brokers will help importers pay closer attention to their upstream supplier networks as the agency seeks to cut down on 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 beyond the normal requirements that brokers need to accurately file entries ,” said Cindy Allen , CEO of compliance consultancy Trade Force Multiplier and a veteran of FedEx and DHL . “ This is a higher level of involvement with the importers that has not historically been present and presents new challenges for the broker and their clients .”

Ania Wierzbowska-Fuller , director of consulting and regulatory affairs at customs broker AN Deringer , said a March advisory to brokers by CBP portends pending regulations that the agency will issue about brokers being required to verify an importer ’ s identity , with whispers that the rule might be released in November .

“ This is just a beginning ,” Wierzbowska-Fuller said . “ Brokers were always concerned about an importer ’ s identity for different reasons . Now , it will be a legal requirement to verify the importer ’ s identity , and it goes beyond our customers . As a broker , we have to inform our customers — the importers — about their obligation to know with whom they do business .”

Eyes and ears for customs

Margie Shapiro , CEO of customs broker Shapiro , said CBP understands the limitations of brokers .

“ CBP values the role of the customs broker and the relationship that the broker has with its customers ,” she said . “ The expectation is not that the broker knows more about their customers , it ’ s that the broker helps to educate and ensure its customers understand CBP ’ s mission and comply with what is required .”

Shapiro argued that CBP already has a system in place to collect data to detect forced labor , intellectual property rights infringements , duty non-compliance and circumvention , and compliance with partner government

agencies that works “ fairly well .” But CBP is not resourced to handle the deluge of shipments moving via the de minimis provision , which allows one duty-free shipment under $ 800 per day per consignee , she said .

“ Our country created this enormous loophole ,” she said . “ It would be hugely effective if Congress could close it .”

Customs brokers have long decried that the higher US de minimis level exposes the country to excess risk , given that brokers serve as a layer of intelligence about the importing community .

Multiple regulatory threats

To that end , five bills have been introduced in Congress since March alone to curtail the use of de minimis . According to a CBP dashboard tracking de minimis shipments , there were 1 billion such shipments in the first half of 2024 , as many as in all of 2023 .

The issue of higher broker expectations and the influx of smaller shipments is not unrelated in the eyes of the trade compliance community .

“ Customs authorities , overwhelmed by shipment volume and speed , are delegating more oversight and enforcement responsibilities to the trade community ,” said Amy Morgan , vice president and head of trade compliance at software vendor Altana and a veteran of compliance at multiple importers . “ We are seeing this in the promotion of more advanced information-sharing programs that facilitate the joint management of trade compliance between regulators and the trade community .”

46 Journal of Commerce | September 9 , 2024 www . joc . com