Compared to other global industries, maritime is perhaps the most international and, as a result, has the potential to be very dangerous. Hence, different federal agencies have made unrelenting efforts to improve sea safety. A significant way this is achieved is by developing international regulations on cargo going in and out of a country.
In the United States, imports are regulated through ISF filing. ISF is a U.S Customs and Border Protection (CBP) regulation that impacts importers and ocean shipments coming into the country. This is a crucial facet of importation that all importers must be aware of at all times.
What is ISF?
An Importer Security Filing or ISF is a filing mandated by the U.S Customs and Border Protection that evidences legal documents, importing information, and other relevant details, as cargo is shipped into the country. All information included in an ISF filing helps to improve the CBP’s ability to identify high-risk cargo that could be a threat upon its arrival.
ISF can be filed directly by importers or agents electronically before any ocean shipment is imported. The filing must also be made no later than 24 hours before the cargo is stacked on the vessel. Typically, the ISF filing fee is about $30 to $50. However, agents could charge a fee for their services. They could also include the costs for other documents, such as an ISF bond which could increase the cost to about $120.
How Does ISF Filing Work
The U.S Customs and Border Protection (CBP) mandates both the importer and shipping lines to provide information concerning shipments through an ISF form. While the deadline for ISF filing is 24 hours before cargo is loaded to the vessel, information must be provided through the ISF form 72 hours prior.
Failure to complete an ISF filing within the required timeframe can result in stringent penalties for importers. These penalties are enforced by the CBP and could range from $5,000 per infraction to $10,000 per transaction. Aside from fines, the CBP can also decide to hold the shipment at the port for further evaluation. The importer would also bear all evaluation costs.
The process for ISF filing is pretty straightforward. Before beginning the filing process, importers must have all relevant shipment information from various parties. Here are steps to complete ISF filing;
- Collect and ready all the information necessary for filing.
- Find a licensed ISF software partner for filing.
- After providing all information, constantly follow up on the ISF status.
Types of ISF Filing
The ISF filing only impacts imports through an ocean vessel. Imports entering through other modes of transportation are not affected. The filing process involves submitting electronic numbers of 10, two, and five elements, depending on the shipment type or who is carrying out the filing process. Thus, here are the two kinds of ISF filing.
10 + 2 ISF
This is probably the most common type and features 10 data elements required to conform with stipulated regulations for imports destined for the U.S. The importer or supplier fills in the first ten pieces of information. This information includes;
- The manufacturer or the supplier’s name and address
- The owner’s name and address
- Buyer’s name and address
- Ship-to party’s name and address
- Country of origin
- Importer of record number / FTZ applicant identification number
- Consignee’s number
- Consolidator’s name and address
- Container stuffing location
- Commodity Harmonized Tariff Schedule (HTSUS) number for each item on the shipment.
Aside from the information provided by the importer, the carrier or shipping line also bears some responsibilities. They have to provide two documents, referred to as ISF 2, which include the following information.
- The vessel stow plan
- The container status message
All ten pieces of information from the importer must be provided 24 hours before cargo is loaded on the vessel bound for the U.S. The documents provided by the shipping line should be completed 24 hours before the ship arrives at a U.S port.
ISF-5
The ISF-5 is similar to the typical 10 + 2, but it’s reserved for Freight Remaining Onboard (FROB), Immediate Export (IE), and Transportation and Exportation (TE) Bonds shipments. This type of ISF requires importers, authorized filers, or Foreign Trade Zone (FTZ) operators TO submit five data elements to CBP for these shipments. The information needed for the ISF-5 includes;
- Booking party
- Foreign port of unlading
- Location for delivery
- Ship-to party’s name and address
- Commodity Harmonized Tariff Schedule (HTSUS) number for each item on the shipment.
Custom Bonds
Customs bonds are another critical feature of shipping safety. These import bonds guarantee that Customs and Border Control can collect duties, taxes, and fines associated with importations into the United States. They serve as a form of insurance on occasions when importers cannot pay these amounts as when due.
Importers obtain custom bonds from insurance or surety companies, and if they default in payments, the CBP can collect these dues directly from the insurance company. Here are the types of customs bonds.
ISF Bond
The ISF bond is a bond of choice for importers with a relatively low import activity. It also serves one-time importers engaging in a single shipment filing. For such importers, obtaining a continuous bond is pretty costly; hence, ISF bonds serve as an efficient alternative. It guarantees a $10,000 ISF penalty limit in the case of non-compliance.
Single Transaction Bond
A single transaction bond, or single entry bond, is insurance obtained by an importer to cover a single shipment entry. This indemnity guarantees customs the payment of duties, taxes, fines, and penalties associated with the compliant cargo import. For ocean-bound shipments, an ISF-D bond is also required.
The value for this bond equals the shipment face value plus tax duties and other levies. Based on different factors considered by the CBP, a single transaction bond could also amount to three times the face value of cargo.
Continuous Bond
This is the most common type of customs bond utilized by importers with high import activities. This could range from two to three bulk importations annually. As the name implies, this financial guarantee renews continuously and automatically until it is canceled. Continuous bonds do not expire until the client makes the required payment for each renewal. It offers a more efficient customs clearance process and saves costs for frequent importers.
The value of continuous bonds typically amounts to 10% of the duty and other importation taxes paid in the previous year. For duties less than $1,000,000, continuous bonds are paid in multiples of $10,000, or multiples of $100,000 for duties over $1,000,000. Currently, the minimum bond amount required by the CBP is $50,000, and they make certain the bond is adequate to cover the duty, as opposed to the shipment value.
Engage Qualified Customs Brokers With the Help of Total Connection
Enlisting the services of a qualified and licensed customs broker is the best way to engage in ISF filing correctly and avoid non-compliance penalties. Total connection can connect you with capable custom brokers that can effectively file your ISF and other relevant information accurately and on time.
Our professionals will help guide you to file all information directly with U.S Customs officials, follow up on the ISF status and monitor your shipment throughout the customs clearance process. Fill out the brief quote below to get started.
