CBP Says Bonded Carrier Must Take Physical Delivery to Obligate Bond for Non-Bonded Carrier

Bonded merchandise can only be carried by non-bonded parties if the bonded carrier first takes physical delivery of the merchandise and obligates its bond to a non-bonded carrier, CBP said in a May 5 ruling. Barnes Richardson lawyer Larry Friedman requested the ruling on behalf of Ford Motor Company. Friedman asked CBP for input on a logistics company proposal for consolidating immediate transportation and immediate exportation processes, it said.

Ford told CBP it uses a bonded carrier to move the Canadian-manufactured vehicles in-bond through the U.S.to a foreign-trade zone under an IT bond. The vehicles are then transported under an IE bond to a port for export abroad. The vehicles don't enter U.S. commence and aren't subject to further processing while in the U.S., Ford said. Under the logistics company proposal, that company “would act as Ford’s agent to file IT and IE transportation entries” in ACE and obligate another company's bond for transportation to a rail carrier. The rail carrier would then transport the vehicles under that same bond from Canada through the U.S. to an FTZ near each port of export, it said. The rail carrier's bond wouldn't be obligated under the proposal.

Ford asked CBP to say whether the vehicles would be “properly bonded when a bonded carrier accepts responsibility for the shipment without ever taking physical possession of the underlying vehicles.” CBP said it hadn't “directly considered whether a bonded carrier may obligate its bond to a non-bonded carrier for the purposes of IT or IE transportation entries without physically receiving and transferring the underlying merchandise.” Still, previous rulings seem to show that physical reception and transport of the goods is required, CBP said.

Ford cited CBP comments on a 2017 change to in-bond regulations as evidence that ACE was designed to allow bond holders to authorize third parties. “CBP’s response is not in itself a binding regulation, nor is it a ruling issued in response to a specific factual scenario,” the agency said. CBP's comments also don't contradict its analysis of previous rulings showing that physical delivery is required. “Indeed, this ruling recognizes that several scenarios exist in which a bonded carrier may obligate its bond to a third-party carrier (e.g., after physical transfer of merchandise to a non-bonded carrier for subsequent transportation),” it said.

The proposal to transport vehicles from Canada to U.S. ports of export through a non-bonded carrier under the bond of a separate “carrier that will otherwise play no role in the physical transportation of the vehicles” is not compliant with CBP regulations, the agency said. That's because “the subject merchandise would not be physically delivered to the bonded carrier and subsequently transferred to a non-bonded carrier for transportation,” it said.