Why Do Freight Forwarders Need OTI Bonds in the US?

It’s never easy to move products, raw materials, and machines in other countries around the world without the help of experts. Businesses who conduct business internationally rely on freight forwarders and ocean carriers to move their items feasibly from one part of the land to another. The U.S. Customs and Border Protection observe and control the importing and exporting in the US. The federal agency requires all importing entities to obtain necessary customs bond.

On the other hand, freight forwarders and non-vessel operating common carriers are required to obtain OTI Bonds SC to meet the rules and regulations of the Federal Maritime Commission (FMC). Any kind of business that does require transacting merchandise internationally might be aware of the importance of having an efficient freight forwarding partner by their side.

What are Customs Bonds?

America is the largest importing country in the world. However, the process of importing is nothing short of intricacies, especially for newbies. Business that import frequently might be aware of the level of paperwork needed such as Bill of Landing, Commercial Invoice, and Arrival Notice. Customs bonds are quite different from other types of bonds.

A customs bond is like an insurance policy that guarantees payment of all duties and fees related to a shipment. As an importer, you can purchase a bond from a surety company or customs broker, who guarantees the US government that all corresponding shipment fees and taxes will be paid for. If the importer fails to comply with federal regulations, the bonding company will be responsible for compensation.

OTI Bonds

All international freight forwarders and non-vessel operating ocean carriers are required to obtain OTI bonds to operate as legitimate ocean transportation intermediaries. These bonds are also similar to customs bonds that warrant obeying all contracts with shippers and carriers.

So you belongs to freight forwarding fraternity, you may be already aware of the importance of being licensed. If you wish to become a licensed ocean transport intermediary, you will need post necessary bond.

OTI bonds act as proper proof of financial responsibility. If you don’t possess adequate bond, you may be subjected to some heavy fines by the FMC and your license can be revoked by the authorities if you found noncompliant at any stage of carrying.