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Monday, October 17, 2011

BONDS - Can't live without them nor would you want to

Surety Bonds, Carrier Bonds, Continuous Bonds, Importer Bonds, Broker Bonds, James Bonds..we have heard them all in the shipping industry. Does anyone know the purpose of a bond? What about the history and why these are such an important part of our industry.

Giving credit to Wikipedia for information contained within, Bonds can be traced back to 2700 BC. Yep. before the birth of Christ, the BOND existed (it came before the SCAC Code). You can thank our own bad behavior for the existance of a bond. As simply defined...The Bond ensures the obligator pays the obligatee and protects the contract of carriage for cargo. In the business of Artemus, our clients need bonds to transact with Customs, in several countries, not just the US.

Most of our clients start off with an Importer Bond...to mainly cover the obligations of paying duty and taxes for imported goods. Then, our clients obtain a carrier bond or continuous bond to allow their ability to transact with Customs and meet all requirements of those transactions. Although many of our clients can obtain a bond with corporate financials and proper corporate structure, a small number of clients are required to obtainer a letter of credit from their bank to back the bond amount or provide personal guarentees. Artemus referes clients to bond underwriting company's who work with us all the time and support our initial set up process and therefore giving our clients a step up in the process of securing the neccesary bonds.

The bond underwriting business is a $3.5 Billion dollar business each year. There are many other types of bonds not related to international trade but in order to transact with Customs, trade into and out of the US as well as provide contracts of carriage for cargo under your company's Bill of Lading, a bond is a neccesary and comforting part of the process. In short, they protect you and therefore make a lot of sense for the security and safety of cargo and your business

Don't sweat the Bonds, we can help you get them and our partners are very eager and anxious to assist. If they writing more bonds, that means more cargo is flowing, more providers are sprouting up and in short, our economy is growing...which are all good things.

Until next time, Artemus OUT!