The growing importance of customs brokers in a rapidly changing global trade environment

When you cross a border, it’s only natural to present customs officials with a passport, or other required documentation. The same applies to goods arriving at a port of entry.

The big difference is that facilitating the smooth and legal entry of goods into a country and ensuring that any related duties, taxes, tariffs, or other charges due are properly levied requires careful documentation via CERS, the Canadian Export Reporting System an individual’s failure to produce mandatory travel documents can result in the embarrassment and inconvenience of being turned away at a border, but when shipping goods across borders, providing legally compliant documentation is crucial to avoid costly delays, financial penalties and supply chain disruptions.

Customs brokers play an essential role in getting the job done right. By leveraging their expertise, importers and exporters avoid the complexities of navigating cumbersome regulations and streamline cross-border transactions. In the process, they save money and benefit from a smoother deal, especially in light of a rapidly evolving global trade environment.

For these and other reasons, customs brokers are indispensable for businesses that trade internationally.

What’s a customs broker?

While an exporter can self-manage customs clearance processes by physically filing and presenting required paperwork at a port of entry office, going it alone can be time-consuming and fraught with risk.

This is often the case with businesses that lack the time, or expertise, to efficiently manage customs paperwork and processes. Engaging a customs broker helps ensure trade documentation accuracy and compliance, and avoid unexpected issues.

Regulated and licensed, customs brokerages work closely with authorities such as the Canada Border Services Agency (CBSA), the U.S. Customs and Border Protection (CBP) agency and similar bodies worldwide.

They ensure that all required import/export permits are secured and taxes, duties and other charges are paid. Customs brokers can also provide insights into tariff classifications and trade and documentation requirements to help their clients avoid shipment rejections, or fines.

By ensuring documentation is accurate, compliant and readily available, customs brokers also prepare their clients for potential audits. 

Better customs brokers also help their clients understand free trade agreements (FTAs) and other opportunities to tap into duty deferrals and exemptions that may apply to their industry.

Understanding the difference between customs brokers, freight forwarders and 3PLs

Customs brokers are often confused with freight forwarders. While both are crucial to international trade, they play very distinct roles.

With a sole purpose of moving goods from one location to another, a freight forwarder is like a travel agent for goods. They primarily deal with logistics by helping clients evaluate and facilitate different shipping methods (air, land, rail or sea), including informing clients about related costs, transit times and special permits or shipping requirements.

If you are looking to find a freight-forwarder, check out Export Development Canada’s (EDC). This handy online resource is designed to help you get connected.

A customs broker, on the other hand, specializes in ensuring goods comply with import regulations and clear customs seamlessly by liaising with customs authorities, preparing and submitting declarations and managing all aspects of compliance.

Some large freight-forwarding companies, including FedEx, UPS and DHL, combine freight forwarder and warehousing services with customs brokerage services to offer their customers a “one-stop shop.” Bundled services offered by 3PL (third-party logistics providers) can offer certain advantages and cost-savings, so choosing between a freight forwarder, 3PL, or customs broker depends on your business needs.

Customs brokers offer exporters numerous benefits, including:

• Working in real-time with customs authorities, ensuring efficient customs clearance
• Navigating tariff changes and keeping customers informed of risks and opportunities
• Providing insights into FTAs to facilitate strategic trade planning
• Helping businesses manage risk by staying ahead of compliance requirements 

Five factors to consider when choosing a customs broker

Alan Dewar, executive vice-president of Geo. H. Young and Co. Ltd., recommends looking for these qualities in a customs broker:

1. Customer service: Better customs brokers offer 24/7, 365-day support and dedicated personal representation. They’re professionals who take your interests to heart.
2. Industry experience and reputation: Ask industry peers and trade lawyers for referrals to brokers with a strong track record in your specific industry. They’ll be better equipped to handle challenges and spot opportunities for your business.
3. Compliance and risk management: A reputable broker should have deep knowledge of international trade regulations and quality control processes tailored to client needs.
4. Technology: Does the brokerage offer robust and easy-to-use technology that aligns with your business requirements and expectations, and offer easy access to information in the event of an audit?
5. Culture and accreditation: Ensure staff have the certified “customs specialist” or a licensed “customs broker” designation and that the broker provides staff with continuing education to ensure they’re informed of the latest trade developments.

Looking for more financial benefits?

Instead of requiring clients to pay duties on each shipment, many brokers consolidate invoices into monthly billing cycles. This service reduces financial strain and helps free up working capital.

Customs brokers also help clients avoid unnecessary costs due to misclassification of goods, tariff miscalculations, or incorrect Incoterm use. Properly structured contracts also spare businesses unexpected fees and delays.

Navigating changing trade dynamics

Thanks to Canada’s involvement in free trade agreements worldwide, most Canadian companies have come to expect the relative ease of shipping goods across borders. In North America, many Canadian companies maintain U.S. and Mexico affiliates and regularly ship products back and forth, assuming no customs costs, or tariffs, will apply. But shifting global trade policies mean that businesses must now be more vigilant about potential tariff changes.

As tariffs emerge and regulations change, businesses are well-advised to work with a customs brokerage that’s capable of handling dynamic trade environments.

“What was once a slow-moving regulatory landscape is now changing at an unprecedented pace. Companies that previously viewed customs regulations as an afterthought must now actively monitor them minute by minute,” says David Weiner, EDC senior vice-president, United States. “Customs brokers play a crucial role in helping businesses navigate these rapid shifts, ensuring compliance and mitigating risks.”

Existing trade regulations that distinguish between American and Canadian content, for example, are coming into play. While tariffs weren’t previously applied in either direction, new trade policies could impose unexpected costs on businesses. A knowledgeable customs broker can advise companies on how to structure their supply chains effectively to avoid unnecessary duties.

In some cases, businesses may also find value in a “wait-and-see” approach by keeping inventory on one side of a border while monitoring trade developments. Customs brokers provide critical insights that allow businesses to make strategic decisions.

Changes to CARM

The Canada Border Services Agency (CBSA) is rolling out the Customs Assessment and Revenue Management (CARM) program to modernize customs processes. This overhaul aims to improve compliance and record-keeping, and address long-standing system gaps.

Up until October 2024, CBSA relied on multiple disconnected data sources, making it difficult to effectively track trade activities. CARM introduces a centralized digital system to enhance transparency and facilitate more accurate auditing.

Customs brokers can help companies meet new reporting requirements, avoid compliance risks and maximize efficiencies in tariff payments.

Preparing for tariffs

For nearly 40 years, businesses trading between Canada and the United States have done so under open terms with few concerns. But new trade regulations are applying new tariffs on Canadian exports. Businesses must now be proactive in defining who pays tariffs in their contracts to prevent disputes.

Generally speaking, tariffs are paid by the importer of record. But if contractual terms don’t explicitly define tariff responsibilities, disputes may arise, leading to potential contract repudiations and financial losses.

Canadian exporters should work with customs brokers and a trade lawyer to clarify these details in their contracts, ensuring they understand potential tariff liabilities. 

EDC accounts receivables insurance can offer a solution in the event of contract repudiations and other unexpected financial risks arising from tariff disputes. 
Prepare your business with a tariff checklist for Canadian exporters to mitigate risks.

Bottomline advantages

A customs broker is an indispensable partner for businesses engaged in global trade.

As international trade continues to evolve, businesses that leverage the expertise of customs brokers will be better positioned to succeed. Whether managing multiple international shipments, dealing with tariffs, or ensuring regulatory compliance, working with a reputable customs brokerage can save time, money and prevent unnecessary trade disruptions.

Interested in talking to a qualified customs broker? The Canadian Society of Customs Brokers offers an online directory.

Still have questions?

Check out EDC’s Export Help Hub. It provides carefully reviewed answers to over 1,000 commonly asked exporter queries. It also lets you ask an EDC advisor directly.