For a decade, many Chinese and U.S. logistics companies sold more than freight. They sold certainty: one price per kilo, door to door, duties included, “we take care of customs.” Behind that promise sat a set of practices that made it work: an importer of record (IOR) found or created for the shipment, values set to fit the price, and a willingness to absorb the occasional held container. Executive Order 14411, CBP’s interim final rule effective January 5, 2027 and a far more aggressive Justice Department now put each of those practices under pressure. This is how we see the business changing, from the first quote to the worst-case scenario.
Why is DDP the center of this?
In a DDP sale the exporter promises to deliver with duties paid, so someone on the seller’s side must act as IOR. Exporters usually handed that job to the forwarder. The forwarder, in turn, used the exporter’s nonresident importer number, a U.S. shell company, or a third party that lent its name. CBP’s own numbers show why it cares: in the rulemaking, it reported that non-CTPAT foreign IORs owed about $1.01 billion in unpaid customs bills opened since October 2020, and had a seizure rate more than five times higher than other importers. The new rule is aimed squarely at that model.
What exactly changes for logistics companies?
- Shell importers stop working. A U.S. company counts as a “U.S. IOR” only if it is genuinely located here and either at least 51% owned and controlled by U.S. citizens or permanent residents, or owns significant unencumbered U.S. real property. Everything else is a “foreign IOR.”
- Foreign IORs need a CTPAT-validated broker. From January 5, 2027, a foreign IOR may file entries only through a licensed, CTPAT-validated customs broker. Only about one in five active brokers is validated.
- No owner, no importer. If the foreign party is neither owner nor purchaser of the goods, the CTPAT-validated broker must act as IOR. The practice of lending an importer number to shipments the lender does not own is finished.
- Every entry declares status. Entry forms will state whether the IOR is a U.S. or foreign IOR, and the broker must collect and keep five years of proof before declaring U.S. status. Brokers who get it wrong face penalties under §1592 and the broker statute.
- Identity must be real. CBP is enforcing the accuracy of Form 5106. The importer’s address must be its real operating location, not a forwarder’s or broker’s address, and the broker’s power of attorney must be signed directly with the importer, not through a forwarder.
- Everyone gets vetted. The executive order calls for enhanced and recurring vetting of foreign IORs, their affiliates, customs brokers, bonded-warehouse operators and freight forwarders.
How should intake change?
The old intake question was “how many kilos and where to?” The new one is “who is the importer, and can we prove it?” Before accepting a DDP job, a forwarder should know:
- who owns the goods at the time of import, and who will be the IOR;
- whether that IOR is a U.S. or foreign IOR, with documents to support it;
- which licensed broker will file, whether it is CTPAT-validated, and whether the power of attorney runs directly from the importer;
- whose bond covers the entry and whether it is large enough;
- what the goods are, how they are classified, their real transaction value and origin, and whether they are subject to Section 232, 301, antidumping or forced-labor scrutiny.
If the customer cannot or will not answer, the job is a risk, not a sale.
What about pricing “duties included”?
All-in pricing by weight or volume is the root of many problems, because it rewards whoever declares less. A forwarder that quotes a fixed duty-inclusive rate and then files the entry has a financial reason to undervalue, and prosecutors know it. A defensible model separates the pieces: freight and handling at a quoted rate; duties, taxes and fees passed through at cost based on the declared value the customer has confirmed in writing; and a clear fee for brokerage. If you keep a single all-in price, base it on real values and document how it was built.
How will competition change?
We expect a sharp split. Forwarders that own or partner with a CTPAT-validated broker, run real compliance, and can show a clean record will gain share, because exporters and U.S. buyers need someone who can still get goods in. CBP itself estimates validated brokers will pick up more clients. Forwarders whose advantage was the lowest “duties included” rate will lose it, because that rate depended on practices that no longer survive. Expect consolidation, more contracts that put compliance terms in writing, and buyers who audit their logistics providers. Price wars will move from “cheapest landed cost” to “most reliable clearance.”
Who bears the risk when goods are detained or seized?
Under the old model, the forwarder often promised to “handle” holds. Under the new rules, the real party in interest is the IOR, and if the IOR is a broker acting because the foreign party did not own the goods, the broker carries the entry risk too. That means:
- Contracts need to allocate it. Who pays storage and demurrage, who answers a CBP request, who bears the loss if goods are seized or refused, and who indemnifies whom for duties and penalties.
- Responses need standing. Only the importer or another party with an interest can petition for release or relief. A shell with no one behind it cannot.
- Bonds will be called. The order tells CBP to enforce liquidated damages against bonds more firmly and to set minimum floors. Sureties will price that risk and ask for collateral.
- Disposal will be faster. CBP is directed to make voluntary abandonment easier, raise bonds for high-risk shipments and dispose of seized goods more quickly. Delay is no longer a strategy.
Is there criminal risk for logistics companies?
Yes, and it is the part many in the industry underestimate. Civil penalties under 19 U.S.C. §1592 can be imposed on any person who introduces goods through a material false statement or omission, not just on the importer. The False Claims Act lets the government recover up to three times the lost duties plus per-claim penalties, and whistleblowers, including competitors and former employees, can bring those cases and share in the recovery. Criminal statutes include entry by false statement (18 U.S.C. §542), smuggling (§545), false statements (§1001), wire fraud and conspiracy (§371). Prosecutors do not need you to be the importer if you knowingly helped prepare false invoices, split shipments, relabel origin or route goods to avoid duties.
The Justice Department and DHS created a Trade Fraud Task Force in August 2025. By July 2026 it reported more than $1 billion in penalties, forfeitures and charged losses, created a permanent criminal section for trade fraud, and published a guide warning that investigations reach downstream companies whose conduct facilitates or benefits from trade fraud. Customs brokers, freight forwarders and other supply-chain participants are named targets.
What should a logistics company do now?
- Map your DDP book. List every customer and lane where you or an affiliate acts as, finds, or supplies the IOR.
- Stop lending importer names. Close any arrangement where an entity you control imports goods it does not own.
- Line up a CTPAT-validated broker, or the validation process if you own a brokerage, and confirm it can take foreign-IOR business after January 5, 2027.
- Rewrite intake and contracts. Require written confirmation of value, origin and classification from the customer; set out who bears holds, seizures, duties and penalties.
- Train sales staff. No more promises of “guaranteed clearance” or “we can make the value work.”
- Look back with counsel. If past entries filed under entities you control were undervalued or misdescribed, get privileged advice on prior disclosure and exposure before CBP or a whistleblower raises it.
- Clean up registrations. Form 5106 data, bonds, powers of attorney and, for ocean intermediaries, FMC licensing should all match how you actually operate.
How can we help?
We work with forwarders, NVOCCs, customs brokers and their exporter customers, in Mandarin and English: redesigning DDP models, drafting intake procedures and service contracts, responding to CBP holds, seizures and penalties, and advising on internal reviews and prior disclosures when past practices create exposure.
Sources: Executive Order 14411 (June 3, 2026); CBP interim final rule, Heightened Requirements for Foreign Importers of Record, CBP Dec. 26-19 (Nov. 6, 2026); CBP notice on Form 5106 accuracy (Aug. 2026); 19 U.S.C. §§1592, 1641; 18 U.S.C. §§371, 542, 545, 1001, 1343; 31 U.S.C. §3729; DOJ Trade Fraud Task Force announcements and Trade Fraud Resource Guide (July 2026). As of November 14, 2026. This article is general information, not legal advice.
