Lacey Act Changes Will Affect Reporting
05/20/2010 - Posted by Bill Ramia, VP Averitt Customs Brokerage
Growing numbers of importers who bring products made of wood or containing wood into the United States have been subject to reporting requirements set forth by USDA/APHIS for the last year under the Lacey Act. Based on a recent APHIS review, a number of changes are planned.
The biggest change affecting the reporting will be in the area of how quantities will be reported in the future. Previously, a piece count measurement or a statement of the number of planks/boards has been accepted by APHIS, but this was never their preference. Their preferred quantity measurement is in terms of cubic meters, square meters, or kilograms of wood product. The type of product will generally determine which measurement is more appropriate. This preference is soon to become mandatory. It would be good to start making your shippers aware of this change in policy.
Customs Proposes Eliminating Paper Liquidation Notices
Customs is investigating the possibility of doing away with the paper liquidation notices that are currently sent on each entry to the listed Importer of Record (IOR). For frequent importers, the receipt of these notices in hard copy is simply one more piece of paper that must be reviewed and filed away, or possibly acted upon if it refers to some action being taken by Customs in regards to the referenced entry.
Customs would like to move away from this paper-based mode of notification to a paperless, electronic means of notification to save both time and money. Customs has proposed to use the Automated Commercial Environment (ACE) system to meet their statutory need to "notify" the IOR of the liquidation of the entry. Unfortunately, the ACE system is not fully operational and it is more than a little time-consuming to even get authorized to use this system. Once on the system, it takes quite a bit of use to become proficient in using it.
For smaller importers, this change would become a major inconvenience and would likely result in a complete lack of visibility to their potential liability for any given import entry. Currently, most shipments liquidate 314 days after the entry date. At this point, Customs still has 90 days to rescind any liquidation and assess additional duties or request more information about the entry. The importer has 180 days from this liquidation date to protest the liquidation and request a review or refund of previously-paid duties. So, as you can see, it can be vitally important that the liquidation information be as visible as possible to the importer.
As your broker, Averitt Customs Brokers is positioned to advise you of the liquidation status of any entry we handle and we are pleased to do so. If you have any questions about this issue, please give us a call.
Ocean Freight Rates On The Way Up
As many of you know, the steamship lines traditionally review their rate structures collectively once a year and prepare new contracts with their clients that are effective from May 1 of the current year until April 30 of the next year. Revisions can occur throughout this contract period, but there is usually a new contract prepared each year that reflects the current fiscal realities of the freight market.
In 2009, the carriers collectively lost a tremendous amount of money—more than $15 billion, by some estimates. Even with the imposition of an Emergency Revenue Charge (ERC) back in January, the carriers seem united in their resolve to impose additional increases, known as a General Rate Increase (GRI), to all of their contract holders.
At the time of this writing, the final numbers are still somewhat in flux, but the general consensus is that these increases will likely total around $1000 per 40-foot container, which includes the roughly $400 per container that was assessed as an ERC in January.
Reduction in Ocean Carrier Customer Service
As a result of the fiscal struggles endured by the steamship lines in the past year, most ocean carriers have eliminated a large number of sales and operations personnel around the country. The result is longer and longer wait times as importers and broker-forwarders try to get updates about the status of a shipment, make efforts to divert a shipment or expedite a transfer or movement.
Our International Solutions group understands these realities, and we have a number of strategies at our disposal to mitigate the some of the effects of this downgrade in service from the carriers. In many cases, we are tied in electronically to the carriers and railroads for status and movement details. Also, as the contract holder for several carriers, we have people who can initiate a timely, effective solution for any issue that arises.
Direct Duty Payment
As you may be aware, Customs duties are the responsibility of the importer on any given shipment. For most importers, the duty amounts are small—and we include them on our invoice along with the freight charges and handling fees related to the shipment. When the amounts are significant, though, we would suggest an alternative method of payment of your duties called ACH.
Automated Clearinghouse (ACH) is a way for your duties to be paid by an ACH debit to your bank account directly to Customs. If you would prefer to pay your duties directly to Customs, please contact one of our associates and we will walk you through the few steps necessary to get this duty payment process in place.
Feasibility of 100 percent cargo scanning being questioned03/23/2010 - Posted by Bill Ramia, VP Averitt Customs Brokerage
In last months' news, we mentioned that the 10+2 Program (aka Importer Security Filing) was put in place at least partially in response to congressional demands that 100 percent of imported cargo be physically examined prior to being allowed into the country.
Initially, this would have required Customs and Border Protection (CBP) to perform all of the inspections. After learning that was a practical impossibility, congressional leaders decided to place the burden of this examination onto the exporting countries. As one can imagine, this was met with more than a little resistance. Still, the demand has been for CBP to move toward 100 percent physical examination by 2012.
In recent hearings, DHS Secretary Janet Napolitano (see Journal of Commerce 2/26/10) has stated the position of the Obama administration that 100 percent physical examination is not only an impossible deadline to reach by 2012, it may not ever be possible to reach. Napolitano also noted that current programs such the AMS 24 Hour Rule (requiring cargo manifest data to be transmitted to Customs 24 hours prior to loading on the export vessel) and the 10+2 Program are giving Customs unprecedented visibility into the import supply chain. The result is that CBP is increasingly able to use a risk-based formula to analyze the data and determine which shipments pose a potential danger to the homeland. Napolitano ended her recent remarks with a request to come back to the committee in order to discuss if it is now time to withdraw the stated goal of 100 percent examination.
Since 100 percent examination has primarily been a west coast and Democratic talking point, it is noteworthy that the top administration official over Homeland Security is now questioning whether it is needed. We will continue to monitor this issue and update you accordingly.
Ocean Carrier News
Growing container volume in several key trade lanes is prompting several steamship lines to add additional ships into their vessel rotations and even reactivate some trade routes they had abandoned as the economy slowed the past two years. It is expected that these vessels will be integrated into the carrier schedules by the end of April just as the new contract season begins.
As most of our customers have seen, freight rates have gone up significantly in the past several months. This news could slow future rate increases, so we will all be watching closely to see what impact these actions have on rates. Meanwhile, carriers continue using and are expanding their use of slow steaming to conserve fuel and drive down operating costs.
The Case for Continuous Bonds
As regular importers know, all import shipments (with few exceptions) must have a bond posted to guarantee payment of duties to CBP as well any post entry penalties that could possibly be imposed. The bonds can either be in the form of a single entry type that covers a single shipment, or they can be a continuous bond which covers all shipments for a year for a given importer.
Some infrequent importers have determined the cost for a continuous bond is higher than what they would pay for single entry bonds. But now, new bonding requirements CBP is demanding for ISF entries have dramatically impacted the cost-benefit calculation since a shipment not covered by a continuous bond must have two bonds posted: one for the ISF entry prior to shipment, and another for the customs entry after it arrives in the US.
Since the ISF bonds have a much higher premium associated with them, any importer currently without a continuous bond should contact us immediately to discuss the relative merits of each option. There are actually additional benefits to holders of continuous bonds that go beyond direct costs, including fewer examinations by CBP and more flexibility in clearing your shipments at most major ports. Please contact Bill Ramia or someone on our International Services team to answer any questions you may have.
ISF Enforcement Plans and Updated FAQ's02/17/2010 - Posted by Bill Ramia, VP Averitt Customs Brokerage
As we detailed last month, the Importer Security Filing (ISF) program is now mandatory—and as with most mandatory programs, there are penalties associated with non-compliance.
The good news is that Customs has adopted what they call a “graduated enforcement model,” and they say they are committed to exercising the least-punitive measures available to obtain full compliance. This means over the next several months, Customs will gradually tighten up the consequences for importers who either do not file an ISF at all, or whose shipments move with inaccurate data.
The enforcement may begin with phone calls and letters of "encouragement" asking the importer to fully adhere to ISF protocols. Then, Customs may proceed with more frequent and intensive examinations of cargo before finally issuing monetary penalties. These monetary penalties are severe, and there is very little room for mitigation. A single ISF violation can expose the importer to up to $10,000 in penalties.
Fortunately, Customs has committed to uniform application of penalty guidelines, and any monetary penalties—which are not expected to occur until the 4th quarter of the year—must be reviewed and approved at the Headquarters level. Local port officials will not be able to issue monetary penalties directly. However, as many importers know, an intensive exam can cost several hundred dollars and delay a shipment more than a week—so the local port still retains a good bit of control over the shipment.
Averitt International Solutions has an exceptionally good ISF program in place, and we are quite confident that with your and your shippers' cooperation, we can eliminate any concerns you may have regarding penalties.
In addition to the penalty guidelines detailed above, Customs has updated their website with additional FAQ's and answers to many of the questions raised by the trade community regarding ISF. There are approximately 60 pages of questions and answers, but very few of the answers are long and detailed. We would encourage you to take a look at these FAQ's and if you have any questions or concerns, just let us know and we will address them with you directly. You can access these updated FAQ's at this site.
Ocean Carrier News
As many of you know by now, steamship lines as a group have been losing money almost as quickly as the airlines once were. Emergency Revenue Charges (ERC) have recently been implemented to mitigate some of this problem, and there is widespread consensus that this years' contract negotiations will result in higher freight rates across the board.
In addition to these revenue-generating measures, several steamship lines have adopted a practice known as "slow steaming” to reduce costs. In order to save fuel, the carriers are running their vessels at less-than full speed. The result: these vessels arrive 1-3 days later than in the past.
Ocean carriers will likely continue to adopt stronger and stronger cost-cutting measures in their operations, but you can expect additional cuts to take the form of personnel reductions—which will impact customer service in many areas.
Importer Security Filing -
01/28/2010 - Posted by Bill Ramia, VP Averitt Customs Brokerage
Beginning January 27, 2010, US Customs and Border Protection (Customs) will begin actively enforcing the Importer Security Filing (ISF) program which has been designed to strengthen our national security.
For the past year, Customs has encouraged the voluntary integration of this program into the practices of importers in the United States. Now, the program will be mandatory, and Customs will issue penalties to importers who fail to accurately identify certain critical data elements associated with each of their import shipments prior to their being loaded onto a U.S.-bound ocean vessel. Since the penalties begin at $5000 per shipment, this has understandably been of great concern to every importer.
Another reason the ISF program has been met with concern is that it requires the identification of all manufacturers as well as sellers of goods to the US. In addition, the ISF program requires the identification of the destination(s) of these same shipments. Customs’ concern with this policy is to ensure no weapons of mass destruction get transported into the country.
Various sources within Customs have confided that the ISF program was the least "painful" option that Congress would consider in lieu of requiring mandatory inspections of every container imported to the country. As it turns out, even if scanning had been an acceptable solution, the great need to ensure our national security would have likely required the development of a program similar to ISF in the future.
Averitt Express and Averitt Customs Brokers currently manage the ISF process for many importers. We work closely with our partners overseas to ensure accurate, timely data is transmitted to Customs and a valid ISF record is in place for every shipment. In most cases, after the first few shipments, we have all the data necessary to complete these entries without the need for further involvement by the importer. It’s even possible for importers to utilize our system to file their own ISF entries—we can give them access to our system and the training to accomplish this without cost or delay.
Contact 1-866-208-0167 to find out how we can provide solutions to your transportation and documentation needs.