What Is The Purpose of OTI Bonds And Customs Bonds?

by Samuel C. Customs Advisor

Both the terms OTI Bonds and Customs Bonds CA are either related to ocean freight forwarders or importers. We usually need the explanation of these words when we are a shipper or a carrier. The transportation of goods via sea route is highly regulated by almost all the countries. It becomes even difficult when one plans to merchandise in the United States.

You need to be licensed, you need to be legal, and you should be aware of all ongoing rules before sending your commodities to US ports. It is impossible to go pass the land without checking because the U.S. Customs and Border Protection (CBP) forces never evolve any overlooked conditions. So knowing the real purpose of OTI bonds CA and these surety bonds is important.

All about OTI Bonds

The enterprises which are acting as ocean freight forwarder or non-vessel operator common carriers (NVOCC) are asked to be licensed as ocean transportation intermediaries (OTIs) by the Federal Maritime Commission (FMC) of the United States. It is to ensure that all the OFFs and NVOCCs will follow all the rules and regulations set by the government authority. Another purpose of OTI Bonds CA is to guarantee secure transaction of goods between shipper and carriers.

It strengthens the relationship and contract between two companies. FMC made it mandatory for successful payment of duties and taxes. In any fraudulent/infringement condition, the FMC can collect fair compensation from concerning firm with the help of these legitimate resources. An insurance company/customs broker can prepare OTI Bonds CA for the aspiring party (principal).

Customs Bonds/Continuous Import Bond

Customs bonds CA have quite altered definition than OTI Bonds when it comes to importation of goods through ocean vessels into the US. These are another type of surety bonds comes under U.S. Customs Activity Code-1. It is also to secure the fines, taxes, and monies levied on the shipment.

The federal government body CBP had assigned the responsibility to protect the U.S. Treasury back in 2002. Since then, it has become necessary for traders to acquire continuous import bond if they wish to import their commodities into the country.

If the commercial value of cargo exceeds $2,500 then the importers are required to obtain either a Single Transaction Bond or a Continuous Customs Bond. After measuring the weight and type of goods a freight forwarder intended to import, it becomes clear which type of customs bonds needed. The first one is for one-time merchandise in a single year and the later one is for more than a one-time transaction in a single calendar.

A surety company can help you in determining the actual price of your continuous import bond or OTI bonds. You can purchase a bond from them and they will certainly help you with all the pertaining procedure.