Trade compliance management: the ‘link’ between service providers and shippers

Date published




Trade compliance management is integral to every operation engaged in global trade. It extends to all carriers, service providers, freight forwarders, customhouse brokers, 3PLs and related companies ‘part and parcel’ to the supply chain.

But too often, management teams engaged in moving freight as carriers and service providers have determined that the primary responsibility for trade compliance management rests with the principal shipper, importer or exporter.

This is a misnomer and often misunderstood principal of global trade. Government authorities understand well the connection between service providers and their principal shippers, and hold them equally responsible for the various aspects of trade compliance management.

While each entity is responsible to a certain extent, and in different ways, the only true compliant supply chain is one in which all parties are collaborative and equally compliant.

An importer which holds its internal controls to the highest standards, yet utilizes a customhouse broker who does not meet its required regulatory standards, does not have a trade compliant supply chain! A mistake by the customhouse broker could very well have ramifications for an importer.

Quality and experienced trade compliance officers working for shippers understand they need to have reach, influence and in some cases, an ‘override’ ability in the decision-making process when it comes to choosing and managing service providers.

Well-managed trade compliance managers recognize the four elements every successful trade program must have:

  • Due diligence
  • Reasonable care 
  • Supervision and control 
  • Proactive engagement 

Government authorities understand that shippers of cargo (importers and exporters) most often use third-party service providers to assist in the logistics of the supply chain. In doing so, the shippers are outsourcing or delegating their responsibility for trade compliance supervision and control.

However, the importer or exporter remains responsible to ensure the freight forwarder or customhouse broker is compliant in managing both the shippers’ and their responsibilities.

Many shippers I have come across look to the service provider as the experienced party in trade compliance. They defer to their expertise not only for guidance but also for ‘managing and handling’ their trade compliance responsibilities. But in my experience, the service providers with a detailed and comprehensive trade compliance capability are few and far between.

It is a better practice to handle trade compliance internally and align with industry professionals particularly versed in the industry, such as consultants and attorneys who have a demonstrated knowledge and experience with trade regulations.

In managing service providers and carriers with respect to trade compliance management, we make the following ten recommendations:

  1. Deeply investigate and scrutinize the service providers in their trade compliance responsibilities and determine if they have dedicated personnel who have a matured expertise in this regard.
  2. Do they work with and support their clients in mutual trade compliance areas of responsibility? Do they offer training programs?
  3. Do they have a robust technology that helps manage import and export regulatory concerns?
  4. Do they have a self-auditing capability to assure they and their clients are trade compliant?
  5. How are their relationships with the government agencies that oversee compliance with trade and shipping-related regulations, such as, but not limited to: Customs Border and Protection Bureau of Industry and Security, Food and Drug Administration, Federal Maritime Commission, etc. This would include both local and federal levels.
  6. Do they have a history or record of any violations?
  7. If they have a multiple office and agency structure, do they enforce and train those local personnel in trade compliance management?
  8. Are you aware how they manage their record keeping responsibilities? Do they have written SOPs and business protocols in place?
  9. Are they C-TPAT certified?
  10. Do they work with customers to be trade compliant? A trade compliant service provider should only have trade compliant customers.

Trade compliance is an important element of managing global supply chains. There is a strong connection between principal importers and exporters and those that service their logistics needs.

Managing this extension of your supply chain and developing a ‘partnership’ approach will work in everyone’s best interest in reducing risk and maximizing opportunity for successful global trade.

This article was written by Thomas Cook, Managing Director of Blue Tiger International.