My colleague, Dan Gardner, wrote a blog last week taking the position that the Customhouse Broker still has a central role to play in helping the import community interface with CBP and PGAs, provide compliance know-how, and support the move of shipments from the point of entry to the final delivery point. (See: Are Customhouse Brokers Obsolete? Part 1)
My view is diametrically opposed to Dan’s perspective. I believe that the traditional Customhouse Broker is fundamentally obsolete - they and the industry just don’t know it, yet. I want to make it clear that from a 3rdwave perspective whether the Customhouse Broker survives or doesn’t is not an issue. Either way, 3rdwave is about providing the importer with the toolset to entirely manage and control the customs and PGA entry process.
Ultimately what 3rdwave delivers to our clients is choice. The Choice to use a Customhouse Broker…or not.
Today, the Customhouse Broker provides several important functions: 1) preparing entries and clearing shipments on behalf of the importer, 2) advisory services on product classification, Account profiles, and as a specialized knowledge source on import and export practices and 3) coordinating and synchronizing the delivery of shipments with 3PLs, freight forwarders, and carriers.
For these services, the Customhouse Broker charges a fee or fees depending on the SOPs in place. Today, a good GTM solution can execute, support, and replace all the functions of a Customhouse Broker.
Most of the costs related to the service provided by the Customhouse Broker are covered in the entry fee. A good percentage of these Customhouse Broker costs are to cover the overhead required to prepare the entry.
With today’s GTM technology the preparation, filing, and tracking of the entry can be totally managed by the importer.
Oh, one last thing. As the importer, you do not need to be a licensed customs broker. You need to understand basic customs practices, know your products and accounts so that you can classify them appropriately, and practice Reasonable Care.
Most importers have the knowledge and understanding of their products and accounts. They can get a “right” GTM solution that will support and guide them through the compliance process. What they currently lack is the understanding and the confidence that they can do the import process without a Customhouse Broker.
That is changing and the speed of change is increasing. For medium and large importers this is already happening. For smaller importers it is still problematic but not out of the realm of possibility.
Whether the Customhouse Broker disappears or not is something that only time will tell. However, the technology exists today to enable the importer to be completely independent of the Customhouse Broker.
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