What is "in bond" mean for shipping and customs?

Customs Jul 02, 2020

The customs world is full of acronyms and confusing terms, and "in bond" is another one of those terms.

Generally...

A bond by definition is an agreement with legal force, which is very similar to a contract and for our purposes we can think of it like a contract. For example, a government issued savings bond in an agreement you enter into with the Treasury where you say, I'll give you $90 now and in 10 years you'll give me $100. This is a guaranteed agreement between two parties, where the bond holder is guaranteed to receive the agreements of the deal.

For cargo

In cargo terms a piece that is moving "in bond" means that it has not yet cleared customs. In this term the best way to think about this is that the cargo (or container) is not yet "free to go", it's still being held under customs control. This could be based off an inspection or a bond that is held for import fees, tariffs, and other duties.

This bond means that the importer will fulfill any financial responsibilities for Customs duties, penalties, and other obligations for the cargo.

For a facility

In the facilities and warehouse side of it, "bond" carries a different meaning. In this scope of the bond process, a bonded facility means they have agreed to participate in Customs and Border Protections instructions and that the facility can store the items duty and tariff free (up to 5 years).

Essentially...

A cargo or facility bond essentially allows a piece of cargo to move throughout the country without completely clearing customs or paying duties until received. For example, a container moving from China to Chicago through LA, is able to easily go from ship to dock to rail and finalize clearing customs and pay duties in Chicago rather than on the other side of the country where it actually arrives on US soil.

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Nick Seferos

Sea-going maritime professional on ships and tugs turned to shore-side terminal life. Nick manages shore-side personnel and security, customs, and hazardous shipments in a container terminal.

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