Bonded Carrier Vs. Non-Bonded Carrier
What is a bonded carrier and what benefits do bonded carriers have? To bond, or not to bond: that is the question we will answer in this article.
What Is A Bonded Carrier?
Bonded carriers can bring a load of goods past the port of entry into Canada to an authorized location without customs release. They can do this because they were required to post financial security for $5000 to $25,000 with the Canada Border Services Agency (CBSA).
What Is Bonded Freight?
In-bond shipments are freight that is not released at the border. The freight is instead moved inland by a bonded carrier to obtain release by CBSA or to simply move through Canada to another country of import.
In-bond shipments can only be carried by carriers who have a bond. With this in mind, let us take a look at the process of transporting bonded freight. The in bond process begins when the bonded carrier elects to put the shipment in-bond rather than have it released at the border. This is done for a number of reasons or at the importer's request.
The In-Bond Process:
- The bonded carrier declares the shipment as an in-bond shipment to CBSA.
a. The carrier reports the shipment as in-bond on the ACI eManifest.
b. The driver reports the load as in-bond upon arrival at the border by presenting a paper cargo form (A8A) to the CBSA officer. - The CBSA officer will authorize the movement of the shipment.
- The carrier can then deliver the shipment to a specified sufferance warehouse or another CBSA office to await Customs release.
- Before removing the goods from the warehouse for delivery, the carrier must wait for a formal entry filing by a Customs Broker or the importer.
Benefits Of Bonded Carriers
Bonded carriers can:
- Move goods to an inland CBSA office (not located at the border) to have the shipment released;
- Move goods "in transit" through Canada. The bonded carrier uses Canada as a corridor by starting from a point outside Canada and then transiting through Canada to another point outside Canada. A release by CBSA is not required;
- Apply to the Customs Self Assessment Program and the Free and Secure Trade (FAST) Program.
Limitations Of Non-Bonded Carriers
A non-bonded carrier must have the shipment they are carrying released at the first point of arrival (i.e., the border).
Can A Non-Bonded Carrier Carry A Bonded Load?
Yes, but they must purchase a single trip bond. As mentioned previously, only a bonded carrier is entitled to use the in-bond process. Carriers with a carrier code beginning with a 1 or 7 are non-bonded and therefore cannot move goods in-bond without posting a single trip bond.
What Is A Single Trip Bond?
A carrier can obtain a single trip authorization bond by either posting security with CBSA using cash or a certified cheque. Customs Brokers also provide this service.
Carriers must file single trip authorization bond applications with security at the first point of arrival in Canada.
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Can A Non-Bonded Carrier Use A Bonded Carrier's Code?
Yes, if the non-bonded carrier/driver can provide evidence to CBSA at the time of arrival that they are under exclusive contract with the bonded carrier whose carrier code they are using. Therefore, a letter of authority will no longer suffice.
How To Become A Bonded Or Non-Bonded Carrier
Now that we understand what a bonded carrier can do, let's take a look at how to become one. The first step to becoming a bonded carrier is to obtain a carrier code from CBSA. This has been a requirement for commercial carriers since April 1, 2011.
A carrier code is a four-character unique identifier provided by CBSA to identify the carrier. There is a limit of one carrier code per legal company and per mode of transport.
Before CBSA issues a carrier code, they will first assess eligibility. For CBSA a carrier is a person involved in international commercial transportation who operates a conveyance used to transport specified goods to or from Canada. Additionally, to operate a conveyance means to have legal custody and control of the conveyance.
"Legal custody" means you are the owner, lessee, charterer, or mortgagor. "Specified goods" means commercial goods or any other goods transported into Canada for a fee.
How To Become A Non-Bonded Carrier
To obtain a non-bonded carrier code, apply with proof of ownership. The BSF329-7: Application form is to Transact Highway Operations with the CBSA.
It's important to note that an officer of the company with legal signing authority must sign the application. Submit the scanned copy to CBSA at carrier-cargo@cbsa.gc.ca. The processing time for this application is approximately one month and there is no fee associated with it when dealing directly with CBSA.
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How To Become A Bonded Carrier
The process to become a bonded carrier is more in-depth than the non-bonded application. This is because carriers must work with an approved surety company to initiate the bond application process. Again, the carrier must post financial security of $5,000 - $25,000. These applications must include company financials due to a review process.
Wee recommend that carriers review the CBSA Guidelines: Highway Carrier Code Application Process on the CBSA website as it is a clear guide. As a result of a carrier submitting a properly completed application with all applicable documentation, the carrier should receive their bonded carrier code within 3 business days. CBSA reviews applications on a first come first serve basis and "rush" requests are not permitted.
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Barcode Labels
Once the bonded or non-bonded carrier code application is approved, the carrier must obtain barcode labels. These labels display their bonded carrier code. Upon receiving a carrier code, carriers will have 30 days to obtain bar coded labels. Failing to have these upon arrival at the border can result in an administrative penalty of $1000
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Recent Changes To Bond Requirements
It is important to note that CBSA has recently made a change to the bond requirements and that change is: CBSA requires the signature of the Owner, President, Chief Executive Officer (CEO), Executive Director or a similar highest ranking official with signing authority. A different company official can sign on behalf of the organization however, a certified copy of the bylaws authorizing the signature is required. The signature of a witness is also necessary.
This article was last updated August 25, 2017.
