Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Good morning, everyone. We'll give it just another minute or so for everyone to get on before we get started. There is a poll question up as you're joining. If you're able to answer that, that would be great. We'll share the results shortly. Good morning, everyone. Thank you so much for joining Expeditors Customs Bond, what an importer needs to know webinar today. My name is Nancy Bowie, and I am the District Sales Manager and located in the Boston office, and I will be your host today. Before we get started, we do have a poll question up on the screen as you're logging on. If you're able to answer that, that would be great. We'll be sharing those results shortly. Before we get started, we are going to run through just some quick ground rules. This webinar is being recorded. All attendees are anonymous and placed on mute. If you have any questions during the content, please submit questions in the Q&A window, and those will be answered at end of the webinar. You will also be receiving an e-mail in the next few days containing a link to the materials presented as well as a survey. We would love to have your feedback and it's valuable to us, so we ask that you complete our survey so we can improve future events. If you'd like information on future webinars, please feel free to scan the QR code in that fourth column on the screen now. Speaking today, I'd like to introduce Roma Sereke, who is our Customs Bond Program Manager; and Rui Salgado, Regional Risk and Insurance Manager. And with that, I will hand it off to our first speaker. Thanks, Roma.

Good morning. Thank you, everyone. Thank you for joining us today, and thank you for everyone who participated in our first poll question. So our first poll question was how familiar are you with customs bond? And it looks like a majority of you are somewhat familiar, very familiar, and then also what is a bond. So that we've got a good mix of a good crowd that are familiar with what a customs bond is and a handful that will like to learn a little more about what customs bond is. So I hope that this presentation -- for those of you that are familiar with customs bond, I hope that this presentation is -- you found it informative and a refresher. And then for those of you who are not familiar, I hope that this is going to be a good education opportunity and by the end of the presentation that you feel very familiar with what a custom bond is. The content of this presentation are made available for informal purposes only and should not be relied upon for any legal business or financial decisions. The content of this presentation was prepared to the best of our knowledge and research; however, the information contained in this presentation may not reflect the most current regulatory or industry development. So please take that into consideration. So what is a customs bond? A customs bond is a 3-party contract that is set to protect the revenue of the United States and guarantees compliance with import regulations. So the 3 parties involved in the 3-party contract are the surety, U.S. customs and the importer. A customs bond is required to import goods into the United States. And without a bond, an importer cannot import their product and their goods. So the bond is really an agreement that the surety will reimburse U.S. customs for any duties, taxes and fees that the importer fails to pay to U.S. customs. So if the importer fails to meet their obligation in paying the duties, taxes and fees, U.S. customs could seek payment from the surety up to the full bond amount in any situation where the importer fails to meet their obligation. It's not an insurance policy. So the surety does have legal rights to seek reimbursement if they are ever placed in a position where they have to provide payment to customs on behalf of the importer. So please keep that in mind. The goal is to have a bond on file so that you can clear your goods into the United States, but the surety should never be held liable on behalf of the importer for any duties, taxes and fees. All right. So there are many types of bond activity codes. There's about 17. But for the sake of time, I'll focus on the top 3 activity codes that we see requested. And the most commonly requested activity code is an importer bond activity code 1. And this is the most common type of bond, and this type of bond allows an importer of merchandise to bring their goods into the United States. This importer bond also satisfies the requirements of airport security and ISF filing. So this is really the bond that is utilized to bring goods into the United States and be able to clear it with U.S. customs. The second commonly used activity code bond is an FTZ bond, a foreign trade zone bond, Activity Code 4. A foreign trade zone bond is -- well, it's foreign trade zone is a secured area under U.S. customs supervision that is generally considered outside the United States territory for commerce purposes, and that is upon activation. So an FTZ zone can be utilized to import goods into the zone and keep the goods within the zone until the importer is available or wants to start selling those products and filing entry. So you would file an entry to take those goods out of the zone and sell as needed. A foreign trade zone, once it is activated and the zone is still active and approved with U.S. customs, once goods are imported into the zone, they can stay in the zone as long as the zone remains open so -- or remains active with customs. So if you can bring in a product and kind of hold on to it for a number of years if that's the decision that you decide to take as an importer. The second most commonly requested activity code bond is a drawback bond, activity Code 1A. Duty drawback is a process by which an entity, the importer known as the claimant may recover up to 99% of the duties they paid on goods that entered into the United States, but then for some reason, they were destroyed or reexported. So the claimant can request a refund of the duty paid to customs upon entry because the goods were destroyed or exported. And so there are 2 ways of filing drawback claims that allow you to -- allow an importer to get an accelerated -- acceleration of payment, which is 2 months compared to 1 year. And I'll talk a little bit about that in the next slide. So types of bond. I covered the activity codes related to bonds. But now there are 2 types of bonds within the different types of activity codes. The most -- so the commonly used type of bond is a continuous bond. A continuous bond for the sake of this presentation as well, I am going to focus mainly on importer bonds for the rest of the presentation because that is the most commonly requested bond type, and that's really the bond type that most importers utilize to bring goods into the United States. So continuous importer bond covers all activity over a 12-month period. And the way that the bond amount is calculated is by taking 10% of the total duties, fees and taxes in a 12-month period. So the importer would review their forecast for 12 months, determine how much in duties, taxes and fees they anticipate to pay U.S. customs within that 12-month period and the bond amount would need to cover 10% of that duties, taxes and fees. So for example, if an importer is anticipating to pay $550,000 in duties, taxes and fees, then the bond amount -- the minimum bond amount required to cover this level of duties, taxes and fees would be $60,000. For importer bonds, the minimum bond amount starts at $50,000 and then an increase in increments of $10,000 until you reach $100,000. And then once we reach to $100,000, it increases in increments of $100,000, so $100,000, $200,000, $300,000. The second type of bond is a single transaction bond. And a single transaction bond is used based on just a onetime entry and it could only be used for that specific entry it was approved for. So the way that we would calculate a single transaction bond is by adding up the value of the goods plus all duties, taxes and fees. So for example, if we have an importer that is planning to import a shipment with a merchandise value of $100,000 and is anticipating to pay $10,000 in duties, taxes and fees, the minimum bond amount required for that single entry bond would be $110,000, assuming that there is no other government agency or FDA that would apply to that entry. For single transaction bonds, again, it increases in increments of $10,000. So even if you do reach $100,000, you can still increase an increment of $10,000 compared to the continuous importer bond where it increases an increment of $100,000. For single-entry bonds, we typically do not recommend this to be a regular method of bond use. Single transaction bonds are really recommended for low-value 1 to 2 shipments per year. So if an importer has a more than 3 shipments plus and especially if the merchandise value is high, a continuous importer bond is the way to go. It helps -- well, one reason is because that bond is on file for a 12-month period. You don't have to request a new bond every time you have a shipment being imported. And then also the bond premium associated with the type of bond makes a huge difference based on if it's a continuous importer bond or a single transaction bond. So over time, through a single transaction bond, an importer would end up paying more in bond premium fee. All right. So now that we've covered how to calculate a continuous bond, I've got an example here, and we've got a second poll question. So let's take a look. An importer is anticipating spending up to $5 million in duties, taxes and fees for the next 12 months, and they have no claim history. I'll go into more details about claim history later on during the presentation. But based on the information that I've shared so far on how to calculate a customs bond, what is the minimum customs required bond amount the importer would need to secure. All right. Let's see. So the correct answer is C, $500,000. I hope most of you got that answer correct. $500,000 because 10% is what needs -- 10% of the total duty tax and fees is the minimum bond amount required. So $500,000 would cover just the $5 million in duties, taxes, and fees. If it was $5 million and $10, that bond would not be sufficient. So this is an example of what an e-bond confirmation looks like. This is a bond confirmation an importer will secure or be provided from their customs broker or bond broker or from the surety once the bond is issued, depending on -- so on the left side, the top form, you can see whether it is a single transaction bond or a continuous bond. And then midway in the form, it outlines the activity code. So importer drawback, FTZ bond, custodial bond. So it would really identify specifically which bond was approved and provide the bond number up at the top. So this is an e-bond confirmation you should expect from your bond broker and surety once the bond has been approved. All right. So now let's look at the surety approval process. The main and the first required document is a bond application. The bond application will ask basic information about the importer, address, what kind of commodity the importer is importing, the bond amount that's being requested, the type of bond, just all the basic information. And then there's also an indemnity agreement within that bond application that has to be signed by a corporate officer of the company requesting the bond. Now depending on the different types of commodity that are going to be imported in under the bond, an antidumping and countervailing questionnaire may be requested. I'll talk a little more about that later on in the presentation on what an ADD/CVD questionnaire is. Also review of financials depending on the bond amount. So our -- currently, the requirement for financial review with our main bond provider starts at a bond limit of $400,000. So for an importer is requesting a $400,000 bond, continuous importer bond, that would require a review of financials. If your bond is going to include ADD/CVD activity, financials would be required regardless of the bond amount. So even if it's a $50,000 bond, financials would be required. Within the financials, the surety likes to review income statement, balance sheet and statement of cash flow. And the surety will review the bond risk and exposure based on the commodity, the country of origin and any claim history. Claim history is really any increased duty bills, liquidated damage bills, debit voucher issued by U.S. customs to the importer. And then depending on the review of the financials, the commodity that's being imported under the bond, collateral may be required to approve the bond. And this is a very hot topic that we've seen over the years. It's commonly requested, especially when a bond has ADD/CVD activity that will be filed. So if the surety is requesting collateral to approve your bond, it's not uncommon. The most important thing is to kind of look at what is leading to that request. So a collateral can be provided via a letter of credit or a cash deposit, and it is generally held until all of the liability is extinguished from the particular bond period. So the liability being extinguished from a bond period is actually determined once U.S. Customs has liquidated an entry, every single entry filed on the bond. Some importers may be set up with periodic monthly statement payments and ACH payments, and that is a positive impact on the overall underwriting process, but it does not eliminate the surety risk and exposure associated to that bond until every single entry has been liquidated within that bond period. So part of the underwriting process on the surety completes is also looking at bond saturation and sufficiency. And this is really common if you have a bond on file already. So if it's a new bond request, the bond saturation and the sufficiency review doesn't really play a factor until you've secured a bond and then you are maintaining the bond saturation of that bond throughout the year. So what is bond saturation? When the current bond saturation is when the current bond is no longer able to cover 10% of the total duties, taxes and fees paid to CBP in a rolling 12-month period. For example, if an importer has a $500,000 bond limit allowing for $5 million in duties, taxes and fees in a rolling 12-month period, the bond saturation is considered fully saturated once 100% of that saturation has been reached. And it may be deemed -- well, once 100% saturation has been reached, it is deemed insufficient once importer has paid $5 million in duties, taxes and fees within that 12-month period. So you have a bond secured for a 12-month period. And at 10 months, you've paid $5 million in duties, taxes and fees already. That bond is fully saturated at 100% at 10 months compared to the 12 months that it was initially secured for. 100% saturation of a bond will lead to a bond insufficiency notice from customs, which demands termination of the current bond and requesting a higher bond within 30 days. So CBP will review every importer's bond saturation level the first week of every month. They've got a tool where they are pulling calculations to make sure that the existing bond and importer has on file is able to support 10% of the duties, taxes and fees paid in the last 12 months. If the bond saturation is deemed insufficient and has been reached over at 100% or over, CBP will issue that insufficiency notice. Excuse me. I'm just getting over a cold as well. So I'll just take a moment to cough there. So this is what an insufficiency notice from customs will look like on the right. So CBP will outline the specific bond number, the importer number, the surety and the bond amount. And they will state specifically, we reviewed the entry activity, so duties, taxes and fees paid for this particular time period. So you can see on this example, CBP reviewed January 1, 2024, through December 31, 2024. So that's a 12-month period, and this is a notice that was issued on the first week of January of this year. So they will outline the specific time frame that they reviewed and then advise that the bond on file is no longer sufficient and provide 30-day notice to increase the bond. Your bond broker should contact you with a copy of the insufficiency notice if you do get a notice from customs, the surety will also -- so the surety will get a copy from customs and the surety will contact the bond broker and the bond broker is responsible to relay that notice to the importer. CBP will also mail that notice to the importer directly. So you have 2 ways -- 2 forms of communication that you would get a copy of the notice through direct communication from CBP and then also your bond broker should be providing you a copy if you do receive an insufficiency notice. If you do get a notice, you got to act fast, forecast and look at your projections for the next 12 months and do not take time on it. It's a very urgent matter. And although there is 30 days that's being provided to increase the bond, the time amount that's needed to forecast, complete all of the documents required and for surety to complete their review is very short. 30 days is really -- it can go by pretty quickly. So act quickly and work with your broker on the next steps on obtaining all the required documents and securing a new bond. Okay. So if an importer receives a bond insufficiency notice from CBP, that will lead to a bond stacking liability issue with the surety. Bond stacking liability occurs when a surety has open exposure for multiple bond periods, continuous and single transaction bond or they have multiple bond periods with unliquidated entries. So bond periods from a few years back that still have entries pending liquidation, that those types of situations could create bond stacking liability. An entry liquidation is considered -- so entry is liquidated once customs reviews the entry and determines that the importer filed the entry correctly, the correct amount -- the correct HTS was utilized, the correct -- the right amount of duties, taxes and fees were paid. They'll review every single entry and determine if additional duties, taxes and fees will apply. If they determine that additional duties will apply, they will issue an increased duty bill or liquidated damage bill. And those are considered claims when the surety is reviewing the importers' bond history. So an entry liquidation is completed by U.S. customs only. And entry liquidations could take -- typically take up to a year for regular consumption entries, but entries that do have antidumping and countervailing, goods that are subject to antidumping and countervailing, those types of entries could take years to liquidate, which causes an open bond stacking liability for surety until those entries have fully liquidated. So let's look at an example of bond stacking liability. An importer gets a $50,000 importer bond effective January 1. And the importer is growing their business and therefore, the $50,000 bond initially secured no longer supports the 10% duties, taxes tax and fees they pay to customs. And so then they request a bond increase up to $60,000 in March. Again, their business is thriving, they're growing, and they have to increase the bond again in June up to $70,000. And then they end up increasing the bond to $100,000 on September 1. So within this short 9-month period, the importer has requested 4 different bonds at different bond amounts. So $50,000, $60,000, $70,000 and $100,000. This creates a bond stacking liability for the surety. Stacking exposure is now at $280,000 for the surety because as long as there is one entry filed under each bond period, the surety is considered liable up to the full bond amount. Regardless of how many entries are pending liquidation, the surety would be liable up to the full bond amount. So their exposure is now at $280,000. Had the importer forecasted more accurately and requested $100,000 bond amount to begin with, the total exposure for that 12-month period or 9-month period would be $100,000 as that bond amount would be sufficient for the activity of the entries that they anticipated to pay for a 12-month period. Again, the importer might not have had forecasted correctly because they are a new importer. They weren't able to -- they secured new business throughout the year. So sometimes it's hard to project and forecast those details, but it's also really important to add a little bit of wiggle room to your bond amount when you are determining and deciding on a bond amount. So if an importer is looking at their forecast and they decide that they're going to need a $100,000 bond for a 12-month period, I always recommend going up to the next level, which would be $200,000 just to protect their bond saturation level for any potential growth opportunities that may arise throughout the year. So another area that impacts bond saturation and bond stacking for the surety is ADD/CVD activity. So antidumping is additional duty placed on certain types of merchandise based on finding that a foreign manufacturer for a particular country or countries dumps or sells their goods into the United States at a price less than market value in order to enter the U.S. market and industry. countervailing is additional duties placed on certain type of merchandise based upon finding that a foreign government provides reimbursement or tax breaks to manufacturers that export goods to the United States. ADD/CVD are intended to really level out the playing field for the domestic manufacturers. And ADD/CVD cases are reviewed by the U.S. Department of Commerce, International Trade Administration, International U.S. Trade Commission and also CBP. So there are so many different parts of the review. And once an ADD/CVD case has been generated or a petition has been filed, then that case goes through the review -- intense review through those departments to ensure if the ADD/CVD case is legitimate, if the duty rate currently has been set for that case is accurate or if additional duties, taxes and fees need to be assessed before liquidation. When goods are subject to ADD/CVD, CBP is required to suspend liquidation of the entry until the Department of Commerce provides instructions to do so. So these investigations could take years. If you file an entry in 2020 and the investigation of that case is still ongoing to this day 2025, that bond period from 2020 with ADD/CVD entry remains open and is an open stacking exposure for the surety up to the full bond amount. So the surety reviews these types of entries as very high risk. The bond covers -- bonds that cover good subject to ADD/CVD will require underwriting approval. And part of that approval process is review of financials, antidumping questionnaire, which outlines what the ADD/CVD case is, the duty rate, the manufacturer information, just to give the surety more information on what the importer is importing, specifically to ADD/CVD goods that are subject to ADD/CVD. And in this case, during the review -- after the review, we find that collateral is required to secure the bond to obtain approval for the bond. So it's a very high-risk environment for the high-risk topic for the surety and will lead to bond stacking and obtaining collateral as they are approving the bond. So let's say, for example, that an importer bond was approved in 2020 with ADD/CVD activity. And just to keep it simple, it was a $50,000 bond and the surety required collateral, 100% collateral, $50,000 bond for $50,000 in collateral. So the collateral is provided to the surety. And then in 2021, the importer needs to renew the bond. At time of renewal, the surety will request additional collateral as long as the importer is still importing goods subject to antidumping. Each renewal is an opportunity or a risk for requests for additional collateral as long as the importer is still importing goods subject to antidumping. So if the importer secured the bond in 2020, and they're still importing goods subject to antidumping and they have entries pending liquidation under each bond period from 2020, 2021, 2023. So -- and then they're renewing the bond this year in 2025, that would be a bond stacking exposure of $250,000 for the surety which means that they will likely want to obtain that $250,000 in collateral on file until every single entry under each bond period has been fully liquidated. So it's a very difficult position to be in. So it's really important to understand that the impact of ADD/CVD cases is pretty significant when it comes to the underwriting approval process. All right. And now I will turn it over to Rui.

Thanks, Roma. And we'll start everybody with a poll question. Do you know which broker currently manages your continuous bond? One choice, yes and no. Give you guys about 30 seconds to answer. While you guys are answering that, I just want to introduce myself. Thank you, everybody, for coming and attending this webinar. My name is Rui Salgado. I know Nancy gave me -- a little intro in the beginning. I'm the Regional Risk and Insurance Manager for Expeditors based in the Northeast. I've been with Expeditors for about 26 years, and I've been on the operations import side, the customs import side, the account management side and for the last 7 years on the risk and insurance side of Expeditors. Here we go. Do you know which broker currently manages your continuous bond -- continuous import bond? Most, 76% said yes, 24% said no. Thank God, more than half said yes. So that's a great answer. Super excited to hear that. It almost -- you think about that question and you say, okay, do you know who you're continuous customs bond broker? Almost kind of reminds me of back in the mid-80s, you'd be on TV and at about 8:00, the TV would say, "Hey, it's 8:00. Do you know where your children are." So an answer that a lot of your folks answered and answering that poll question is exactly how my father answered TV is. Of course, I know my kids are you're big stupid. So I'm glad that most of you guys had that same answer in terms of knowing who your continuous bond broker is. My father was an immigrant and spoke Portuguese. So that last bit of comments that I made was in a different language. He understood it, and it was a bunch of curse words I wanted to tell you with those curse words. So Expeditors International, let me -- a little explanation on where we fit into this continuous bond and customs bond. So there are many bond brokers out there. The bond broker and/or Expeditors, which we are a continuous bond broker is the intermediary between the importer, the importer of record and the surety, the company that's going to underwrite and secure the bond. I don't recall even knowing any importer that has a direct relationship with the surety. Surety like to deal with the continuous bond broker because they're the ones that are going to get the client, get the importer, have all the questions answered, have all the documents completed like a bond application, antidumping questionnaire, gather any kind of collateral, as Roma mentioned before, some collateral if needed for particular bonds that have antidumping or that are high risk in terms of value and the ones that are going to be working with the importer to gather their financial statements for those imported bonds that are $400,000 or more. So just so you know where a company like Expeditors International fits as a continuous bond broker, not the customs broker, but a continuous bond broker. So we deal with the importer and then we relay that information to the surety to lock you up and get you that bond that you need. Next slide, Roma, thank you. And these are the surety partners that we work with. Avalon, we've had a relationship for 21 years now. They are, of course, a trusted partner in who we line up with our clients in terms of securing most of our bonds. When and if there is a bond that is possibly too high of a risk for Avalon, Avalon doesn't want to entertain the bond, and it could be a million different reasons, could be tied to severe antidumping, could be tied to amount of collateral that's needed. Financials aren't so great to present to Avalon. They're not liking the company's financial structure because that does play a big part in the bond. We do have secondary markets that will entertain and that will go to and shop a bond for a client. IB&M is one of them, and EPIC is another partner of ours. And again, we've also had a long-standing relationship with them. But our major partner, of course, is Avalon. We feel they're best fit for -- to take on the risk for our clients' bonds. They're great to work with. They have excellent customer service, very transparent in terms of notifying us, notifying the client and being on their game when it comes to the client's risk on the continuous bond side. Next. Well, I don't want to take this as a sales pitch. So I'll reword a lot of this information, if you don't mind, right? And it's basically into saying, okay, you answered that poll question. Do you know who your continuous bond broker is? And that's like part A of B is, do you know who your continuous bond broker is and are they best fit to manage your continuous bond? For an importer, it's the lifeline of their business, right? So are they best fit? Why did you choose them? If your continuous bond broker is Expeditors, you're in good hands. If you're continuous bond broker and your customs entry broker, right, the 2 different people are Expeditors, you're in fantastic hands. Having a continuous bond broker and the customs broker be the same company if they can provide both services is like a marriage. It should -- for the most part, it should work perfectly, but it does. It works in sync because there's visibility in all ends, visibility on your entries, on your duty exposure, reporting the bond broker and the customs broker work with one another because, of course, apparently, evidently, they're the same company, and they will work together. So for those who don't know and maybe it's kind of way on -- question on how it works, in a company, perfectly an importer, the people involved in a company that is securing your bond is typically the finance department. Your finance department because they're the ones that control the money, so your finance manager, your treasurer, your controller, maybe even a risk manager, those are the ones that ultimately are in control of the money and dictate where the money goes. And they're the ones that are typically dealing with what's a broker, a broker that is possibly getting their business insurance, their property insurance, the workers' comp insurance, maybe even your cargo insurance. And that broker has accessibility to companies to provide a continuous bond, right? Because they have that broker title, so they provide a continuous bond. Although it's -- although that's the way it usually works, I encourage you as an importer to have a relationship with the finance folks and also have a relationship with that person that's securing your continuous bond. If it's not any of the examples I mentioned before, where it's maybe your customs broker is also your continuous bond broker. You want them -- you want to know who's actually involved in securing your bond, what role they play? Are they there to just secure a bond and move on? Or do they add value to being a bond broker, right? Besides just calling a surety and saying, okay, let me get a $50,000 bond or a $100,000 bond for the importer, what role do they play? Do they -- are you going to communicate with them when you need a higher bond? Are they going to communicate with you? What kind of expertise do they have? Are they customs savvy or the customs knowledge? I can guarantee they're probably not. So I would encourage you to be involved in that, talk to them, talk to your finance manager or whoever is securing your bond and being participating and participating in that communication with the bond broker when securing your bond. Having a bond broker that provides value and that's knowledgeable in customs because that's probably part of their business like an Expeditors or like any other -- like maybe another customs broker, but someone that understands, someone that has clap with the customs border protection community, proper certifications, proper licenses. When your bond does become insufficient, will you be notified? Roma mentioned it before. Your -- the surety gets notification from CBP. That surety, their responsibility is to notify the bond broker. If the bond broker that they're notifying is just some broker that deals with finance on insurance and any other lines of insurance, how efficient is that information going to come to you as part of a compliance team for a company as part of the importer of record? Will that come to you timely so you can action it. CBP also -- as Roma mentioned, CBP also notifies the importer. That's via a written letter. That letter gets in the mail and gets to you. If your name as the importer or as the contact of the import department or compliance department of the company is not listed to customers and border protection, will you get that notification timely? So it's super, super important. I mentioned the relationship that Expeditors has with Avalon, and Roma kind of mentioned it earlier as well as Avalon as a trusted partner that Expeditors uses, they run sufficiency reports on a monthly basis. They run them before and more often than CBP does. CBP typically does at the end of the month, the report comes out at the beginning of the month, and then it rolls through to the surety and hopefully, the bond broker and hopefully to the importer. And then, of course, it will go via U.S. mail to the importer. There are months that CBP may not send the report. Your surety company should do that and provide that added value. And when they run that report, that sufficiency report, does it go to the right people? So it's a lot of added value. So I encourage you to find out who you're dealing with. If you don't have a trusted partner on the bond side and on the continuous bond side, get one. Expeditors does that job very, very well. We have great exposure. We have a great relationship with customs. We have a representation at every major U.S. port because, of course, this is a U.S. import customs bond. And I just -- again, this is just me as just encouragement to the participants on here to make sure that you align yourself with the proper partner in regards to securing your customs bond, dealing with the surety, making sure the I's are dotted, T's are crossed that. There is no flaw and no lapse in coverage over your continuous bond. And keep in mind, the continuous bond is continuous until canceled. So every year, it renews. It doesn't cancel unless you order it to be canceled or unless CBP orders it to be canceled. So it's continuous, and it happens once a year, not to be confused with some companies that offer multiyear continuous bonds. There is no such thing to CBP as a multiyear continuous bond. Continuous bond is every year. But there are companies or -- continuous bond brokers that offer 3-year bonds. All that means is you're tied into a contract with them for 3 years. You pay them ahead for 3 years. We don't do that. Expeditors International doesn't do that. We feel it's providing a disservice. We don't just want to take your money and go. Your bond is renewed every year. It's evaluated all the time as part of our service. And we abide by what exactly what customs rules are is renew every year. Therefore, we renew our continuous bonds for our clients every year as well. And that's it for my slide, next slide. Roma, thank you.

Thank you Rui. All right. So most of you may have participated in our previous webinars and may be familiar with this, but we do get our -- actually, let me go on to the next slide. We do get our webinars accredited with the National Customs Broker and Freight Forwarders Association of America Educational Institute. So if you have a CCS certification, you can use this webinar to collect 1.5 hours training credit. Also, a recent requirement set by customs as of January 1, 2025, is the continued U.S. customs broker license. So customs is requiring all licensed customs brokers to collect 20 hours of continued education training annually. So this webinar does qualify for that as well. So the code [ NEIO ] is what you'll want to save to record for your credits. All right. So now I will turn it back to Nancy.

Excellent. Thank you so much, Roma. I'm trying to get my camera back on. All right. Technical issues aside. Thank you all so much for joining. We are still open in the Q&A box. So please feel free to continue sending some questions, and we'll get -- we'll go through those answers as well. For upcoming webinars, there are some upcoming events that you can register through the QR codes that are on the screen right now. So we hope that the session was informative, and we do look forward to your feedback. As we mentioned previously, this session was recorded, and you will be receiving an e-mail later today, not only with the recording, but also with a survey. So if everyone could fill that out, we'd love your feedback so we can continue to provide these webinars and continue to provide value for you guys. So looking through the Q&A, as I mentioned, we're still -- when is the best time to increase an existing importer bond?

So the best time to increase a bond would be assuming that it is still sufficient and under that 100% saturation level, the best time is at time of bond renewal. And the reason for that is to ensure that the bond stacking exposure to the surety is minimized, and we are avoiding multiple bond periods within that 12-month period. So as when your customs broker or your bond broker is reaching out to start the process of renewing their bond or renewing your bond, one question that I should be asking you is if you are going to keep your bond at the current level, or if you plan on increasing or decreasing their bond based on your forecast. So that would be the time at time of renewal, and it's a great opportunity to review your forecast and determine if a bond increase is needed based on your projections for the next 12 months.

Thank you, Roma. Next question. If collateral is required to approve a bond request, when does the surety return the collateral back to the importer?

So the collateral is reviewed at time of bond renewal. The surety can also review collateral release quarterly if updated financials are provided. Ultimately, the collateral is deemed and can be released back to the importer if the surety reviews current financials and determines that the financials are supportive to release the collateral back to the importer because their risk exposure has been minimized due to the financial stability of the company or if the financials are deemed unsupportive and if the importer has antidumping activity still pending liquidation, like I mentioned earlier, the surety will still maintain any collateral on file until they deemed their risk and exposure no longer a high risk. So ultimately, what I would expect is that each bond period has to be closed, which means no -- there's no pending liquidation of any entries. Every single entry under a bond period has been fully liquidated. And at that time, the surety would be able to release the collateral for that particular bond period. If you have multiple bond periods that have a number of different collaterals that were requested over the years, the collateral may be rolled over to a bond renewal as well. So that's something to pay attention to when you're working on the renewal is that if your broker says, this bond renewal is approved subject to maintaining the collateral on file, that means that the surety is evaluating the new exposure that will be added on with the bond renewal and tying it to the collateral previously provided. So if you have an older bond period that is fully liquidated and you want to request that collateral back, if it was approved -- if a bond renewal was approved subject to maintaining the collateral, they will still maintain that collateral until their risk and exposure has been eliminated.

Thank you so much, Roma. Next question. I'm pretty new to all of this, but how does the ongoing tariff correlate or impact with this customs bond webinar?