When goods need to travel through the United States but aren't intended for domestic sale, a special process called "in-bond" movement comes into play. This allows cargo to transit the country without incurring import duties, but it requires strict adherence to customs regulations. For businesses utilizing BNSF Railway for these movements, a California BNSF Railway Company Carrier Bond is often essential. Let's explore what this bond entails and why it's crucial for smooth and compliant cross-border shipping.
What is a California BNSF Railway Company Carrier Bond?
In this context, a California BNSF Railway Company Carrier Bond is a type of surety bond that allows BNSF Railway to facilitate "in-bond" transportation of goods for its customers. Essentially, it's a financial guarantee that BNSF will comply with U.S. Customs and Border Protection (CBP) regulations when moving cargo through its network. This bond assures CBP that goods under in-bond transit will:
- Reach their intended destination (either another country or a designated port for export).
- Not be diverted into U.S. commerce without proper customs clearance.
- Have all applicable duties and penalties paid if regulations are violated.
It's a three-party agreement:
- The Principal: BNSF Railway, who holds the bond.
- The Obligee: U.S. Customs and Border Protection (CBP), who requires the bond.
- The Surety: The bonding company, which financially backs the bond.
For a general overview of surety bonds, this article provides a good starting point: What is a Surety Bond?
Why is it Needed? (Explaining the Legal Basis)
The legal requirement for this bond stems from federal law, specifically 19 CFR Part 18 (Transportation in Bond and Merchandise in Transit). This section of the Code of Federal Regulations governs the procedures for moving goods in-bond through the U.S.
The bond is needed to:
- Ensure Customs Compliance: Guarantee that BNSF follows all regulations for in-bond movements.
- Protect Government Revenue: Safeguard potential import duties and prevent revenue loss.
- Facilitate International Trade: Enable efficient movement of goods destined for other countries.
- Provide Financial Security: Offer a source of payment if duties are unpaid or penalties are incurred due to non-compliance.
How Do I Get a California BNSF Railway Company Carrier Bond?
While this bond is held by BNSF Railway, it indirectly impacts businesses that use their services for in-bond shipments. Here's how the process generally works:
- Shipper Inquiry: A business intending to use BNSF for in-bond transit would inquire about using BNSF's carrier bond.
- BNSF Approval: BNSF would assess the request based on factors like the type of goods, origin and destination, and the shipper's compliance history.
- Agreement: If approved, an agreement would be established outlining the terms of using BNSF's bond.
- Shipment Coordination: The shipper would work with BNSF and a customs broker to ensure all documentation and procedures are in place for the in-bond movement.
What Information Might Be Needed?
While the bond itself is held by BNSF, the shipper might need to provide information to BNSF for approval to use the bond, such as:
- Details about the goods being shipped
- Origin and destination of the shipment
- Estimated transit time
- Customs documentation
Example Scenario
A company in Canada needs to ship auto parts to Mexico through the U.S. They plan to use BNSF Railway for rail transport. To avoid paying U.S. import duties on the parts (since they're not for sale in the U.S.), they request to use BNSF's carrier bond for the in-bond movement. BNSF reviews the request, and if approved, the shipment moves through the U.S. under customs bond, ensuring compliance with CBP regulations.
How to Calculate the Premium
The bond premium is paid by BNSF Railway, not the individual shipper using the bond. The premium calculation is complex and depends on various factors, including:
- The bond amount (likely substantial for a major carrier like BNSF)
- BNSF's financial strength and credit rating
- The surety company's underwriting criteria
What Are the Penalties for Operating Without This Bond?
For BNSF, operating without this bond would mean:
- Inability to Facilitate In-Bond Movements: They couldn't offer this service to customers.
- Potential CBP Penalties: Fines and sanctions for non-compliance with customs regulations.
- Reputational Damage: Loss of business and trust from clients relying on in-bond services.
For shippers, not having access to BNSF's bond could mean:
- Higher Costs: Need to obtain their own individual customs bonds, which can be expensive.
- Operational Delays: Difficulty in arranging in-bond shipments, impacting supply chains.
For information regarding California bonds in general, please review this page: California Bonds
FAQ
Q: Who pays for the bond?
A: BNSF Railway pays the bond premium.
Q: Can any shipper use BNSF's bond?
A: No, BNSF has specific criteria and approval processes.
Q: What if goods are damaged or lost in transit?
A: That's typically covered by separate cargo insurance, not the carrier bond.
Q: What if the shipper violates customs rules?
A: BNSF and the shipper could face penalties, and the bond might be used to cover those costs.
Q: Where can I learn more about in-bond procedures?
A: Contact U.S. Customs and Border Protection or a licensed customs broker.
Sources:
- 19 CFR Part 18 (Transportation in Bond and Merchandise in Transit): Electronic Code of Federal Regulations (eCFR)
- BNSF Railway