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Why Importers and Consolidators Need a Bond for CTPAT

Why Importers and Consolidators Need a Bond for CTPAT

Are you an importer, or consolidator? If so, the CBP requires that you maintain a customs bond to get CTPAT certified. These bonds come in different flavors depending on your application type.

CTPAT applicants must maintain the required bonds according to their application type.  In particular, CTPAT applicants of the Importer type and Consolidator type are required to carry special bonds to assure the U.S. Government that duty taxes will be paid. (Please note that Air Carriers, Sea Carriers, and 3PLs also need bonds, but already have them in place due to FAA, FMC, and USDOT licensing requirements.)

Check out the below to see exactly what type of bonds are required by the CBP to apply/maintain CTPAT certification.

Importers – Required Bond Type:

Type 1 Customs Bond for Importers  

  • Also called a Continuous Customs Bond
  • The minimum bond required amount is $50,000
  • The bond will cover any fees, taxes or duties to be paid by the importer to the United States government if the payer fails to pay as necessary
  • Usually, this bond also covers the ISF (Import Security Filing) requirements.
  • Usually costs <$1000.00

Note:  Importers must also have a valid Importer of Record (IOR) Number to apply for CTPAT.   When the IOR Number is granted by the CBP, it is typically the Company EIN followed by two zeroes like this: IOR# 11222233300.

To get the IOR, you or your Customs Broker must fill out a 5106 form and submit it to the CBP to get the IOR.   Typically, a Customs Broker will do it electronically for you for a small fee.  This can also be done manually.  Here is the physical form for reference: https://www.cbp.gov/sites/default/files/assets/documents/2019-Jun/cbp-form-5106.pdf

Consolidators – Required Bond Types:

Either a Type 2 Custodial Bond OR a Type 3 International Carrier Bond is needed to get CTPAT approved as a Consolidator.

Type 2 Custodial Bond – Custodian of Bonded Merchandise for Consolidators

  • Also called a Custodian Bond
  • Required for moving cargo, once imported, from one bonded warehouse to another bonded warehouse.  This bond covers the liability of cargo while in transport until released to the bonded warehouse.
  • Typically needed for cross-border transport into Canada or Mexico
  • Usually costs <$1000.00

 OR

Type 3 Continuous International Carrier Customs Bond for Consolidators

  • Also called International Carrier Bond
  • Required when cargo is entering the U.S. via International Waters
  • Usually costs <$1000.00

How do I obtain one of these Customs Bonds?

The easiest way is to reach out and contact a licensed customs broker.  They are experts in getting these bonds and will usually just charge a small fee to help you get them.  They can make sure all the paperwork is filled out correctly.  You can even tell them you are applying for CTPAT and that is the reason you need the bond. If you don’t have a customs broker in mind you can do a quick internet search for the bond type you are looking to purchase. There is no shortage of companies looking to sell you a bond!

 In general, all CBP Customs Bond questions can be directed to bondquestions@cbp.dhs.gov, but in most cases, it is easier to ask your customs broker since they do this every day.

How long does it take to secure one of these Bonds?

On average it can take 2-3 business days to secure a bond once the information is provided to your customs broker or bond company.

Do I need to keep the bond active?

Yes! As long as you want to stay in the CTPAT program, the bond must be in effect.

Well, that’s a wrap! We hope you enjoyed this brief primer on the bonds needed for CTPAT. If you have any questions, please contact us and we will try and help. Thanks!

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