Questions? 1-877-213-4545
(Mon-Fri 8am - 8pm EST)
Transportation Bonds - Bond Surety

TRANSPORTATION BONDS

Goods imported into, exported from, or moving in transit through Canada must be reported to Canada Customs in order to ensure compliance with the Customs Act, and guarantee payment of duties and accountability of goods in transit.

There are many advantages for the usage of customs bonds for all parties concerned.

  • Pre-screening and registration with customs thus minimizing delays at crossing border(s). The pre-screening qualification is performed by the surety company
  • Control of financial obligation to customs

It is recommended by the industry that all suppliers be bonded and that companies in this industry deal with only bonded suppliers in the industry for the purpose of: security-, financial accountability and most important delay time at border(s) crossing.

The following are the most common bonds that companies in this industry require:


BONDED CARRIERS; LOGISTIC COMPANIES

As a general rule, suppliers prefer to do business with a "bonded" carrier. Suppliers understand that there is a prequalification and security screening process that the "bonded" carrier goes through with Canada Customs and the Bonding Company thus making them preferable business partners.

Once a carrier is registered with customs, they become "pre-approved" by customs to transport goods that are subject to being taxed. The "bonded" status also gives the carrier easy access at border crossings enabling carriers to meet delivery deadlines.

The carrier's responsibility is to account for the goods in transit. The mode of transportation of the goods is dependant on the type of bond required e.g Highway; Rail, Marine and Air. Bond limits are as follows: $5,000 minimum and $25,000.00 maximum for Bonded Highway Carriers – Rail, Marine & Air maximum $1 million.


BONDED FREIGHT FORWARDER

This is similar to the Bonded Carrier, however the Freight Forwarder may not actually be transporting goods. The Freight Forwarder is responsible for the duties and taxes while the goods are in transit.


BONDED WAREHOUSE

The bond enables the users to store goods and delay the payment of duties and as the duties/taxes are reported taxes. As the goods leave the warehouse, duties/taxes must be reported to Customs.

A warehouse operator must apply to customs to be recognized as a "bonded warehouse operator". The terminology "bonded warehouse" can be the total warehouse or an area within the warehouse; of where the goods are stored. Customs will perform on-site audits, depending on the volume of goods being stored in the warehouse or in instances where there is a discrepancy of inventory and goods reported.

You may apply to become a bonded warehouse operator to store goods for your clients. You may also recommend to your client to apply to become a bonded warehouse operator. This is recommended when dealing with large clients as bond limits will be reflective of the total amount duties/taxes on the goods being stored. As well, in a claim situation, the bonded warehouse operator becomes responsible for payment of the duty/taxes; therefore it makes good business sense to educate your clients and place the financial obligation with the owner of the goods. Minimum bond limit for this class of business is $20,000 minimum and $2 million maximum.

There are two types of warehouse bonds:
a) Bonded Warehouse; goods can stay in warehouse for a maximum of 2 years.
b) Sufferance Bonded Warehouse; goods are stored for a maximum of 40 days – usually for inspection purposes or goods are in transit.


U.S. BONDS

Much like Canada customs, goods exported into the U.S.A or traveling through the U.S.A. are required to register with U.S. Customs. U.S. Treasury Department will perform their due diligence in screening all applicants. Their screening process is much more stringent as are their laws.

Once U.S. Customs completes their screening process, they will request that a surety bond be filed to guarantee performance and financial obligations. Security must be in place in order to move goods into the U.S.A.

The following are the most common U.S. bonds companies in this industry will be required to post:

U.S. Importer Bond, Activity Code #1 — prequalification is not required for this bond but Canadian company must pre apply for an Importer Number.

Custodian of bonded merchandise; includes bonded carriers, freight forwarders, and warehouses;

Activity Code #2

Companies must first apply to US Customs — the application process can take several weeks and may include background checks and fingerprinting of the drivers and owners.

Company must also apply for an Importer Number.

Once the application is approved, US Customs will advise the Company what bond limit is required to obtain a license.

Required for goods brought into the U.S. and or traveling through the U.S.


PROPERTY BROKERS BOND

This bond does not fall under the U.S. customs act. However companies wishing to sub-broker loads going into or coming out of the U.S. must register with the Federal Department of Transportation in Washington, D.C.

Once registered, the Carrier/Logistics Company must file a bond with the Department of Transportation. The Department of Transportation maintains a web-site with all the names of the "Registered" carriers, which will include the name of the Surety Bond Carrier and all relevant information. Carriers will check the website to ensure that the Carrier they transact business with is in good standing and has a surety bond in effect. In the event that the Carrier that the load was sub-brokered to does not get paid, a claim would be made under the surety bond.

There are other bonds that you may also be required to post such as Fuel Tax Bonds; State Fuel Tax Bonds; Turnpike Bonds; and bonds for Over-Size loads.


Bond Surety - Questions? Email Us - Bond Surety
Instant Quotes - Bond Surety
Not sure what type of bond you require? Email us.

Type of Surety Bond:

Amount of Bond:

Province/State

Name:

Phone #:

Email:


Email Me Now - Bond Surety

Email: surety@bondsurety.ca   Phone: 1-877-213-4545 or 416-484-4545   Fax: 416-900-0322   24-Hour Claims Service: 1-888-235-2447

       Address: 38 Greensboro Drive., 2nd Floor, Toronto, ON, M9W 1E1 Bond Surety   Glossary of Terms   Legal    Privacy   Feedback