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June, 2011

Savvy importers handle their own customs compliance

Thursday, June 30th, 2011

In an opinion piece recently published in American Shipper“More to brokerage than pushing a button,” the president of the National Customs Brokers and Forwarders Association of America, Jeffrey Coppersmith, attempts to boost the perceived value of customs brokers.  He cites the complexities in clearing CBP and other government agencies that have jurisdiction over imports.

There is no doubt that navigating this regulatory maze can be very complex.  From the standpoint of a customs brokerage, it has customers that import everything from drugs to medical devices.  Food to firearms.   Alcohol to cars.  Household effects.  And everything in between.  That’s clearly many different regulatory programs of which to keep track.

Importers, however, have a more narrow focus.  They are very knowledgeable of their imported products and the requirements to import.  The Mod Act of 1993, which placed more responsibility on importers to know importing regulations and requirements, forced most importers to invest in their customs teams.  Compliance manager positions have abounded.

In a short amount of time since the Mod Act, importers were classifying their own import product, determining the correct country of origin for CBP purposes, ensuring their products met the requirements for Free Trade Agreements, and so on.  Most also audited some/all of their broker’s entries (and many required correcting.)   And they didn’t stop there.  Many continued to research and document new processes on how to effectively clear imports through agencies like the FDA, DOT, etc.

Nowadays, most importers have mastered the knowledge relating to the import regulatory schemes to which their products are subject.  They train their teams and know the “hot spots” in their import program.  It is not out of the question for them to take complete control over their import program by becoming direct filers of their entries and ISFs.

June 2011 ACE Trade Account Owner Update

Tuesday, June 28th, 2011

US Customs has just issued its June 2011 ACE Trade Account Owner Update.

Highlights include:

  • The Participating Government Agencies (PGA) Message Set has been approved, and CBP will now begin to implement the message set in ACE.
    • The message set is a harmonized set of information needed by federal agencies to approve imports of cargo.
    • As Customs enforces import laws for nearly 50 government agencies, the message set will allow the trade to supply all necessary data electronically one time and in one place — ACE – to expedite cargo release approval by all agencies with jurisdiction.
    • CBP targets late 2011 for completion of the technology to allow for pilot testing of message set functionality.
  • Post Summary Corrections (PSCs) - Customs deployed PSC functionality in ACE for ACE type 01 and 03 entry summaries.  Updated user guide and other revised reference materials, as well as web-based training, now available at CBP’s website.
    • Also, Customs has provided answers to several questions from the trade on PSC issues.

The ACE Trade Account Owner Update is available here.

Free webinar: will the 2012 HTS reform derail your supply chain?

Friday, June 24th, 2011

As reported in this blog on June 7, the World Customs Organization’s (WCO) reform of the Harmonized Tariff Schedule will be implemented on January 1, 2012.  The new version includes hundreds of amendments to the HS nomenclature and will trigger a massive chain reaction of critical trade data changes that, if not managed effectively, may threaten first quarter or even 2012 profit projections.

The CUSTOMS Info/Global Data Mining (CiGDM) team, who guest authored the referenced blog post, will be hosting a free informational webinar on this topic for importers and exporters on Thursday, June 30, 2011 at 11:00 AM – 11:30 AM EDT.  Click here to register.

Supply chain security – what are we afraid of?

Tuesday, June 21st, 2011

A recent report by PricewaterhouseCoopers (PwC) outlines a growing threat to supply chains from cyber, hacker, pirate and terrorist attacks.

The report, “Transportation & Logistics 2030, Vol. 4 – Securing the supply chain,” outlines the responses of 80 global executives to an extensive survey on what elements of supply chain security they believe will be most critical in the future.

Some highlights:

  • Total direct costs of piracy in 2010 are estimated to be between US$7 and $12 billion; indirect costs drive this figure higher
  • Terrorist attacks on key locations in the global supply chain — such as in Hong Kong, or chokepoints like the Panama and Suez Canals — can disable the immediate hub but can cause more widespread damage throughout the global supply chain (as recently seen with Japan post-earthquake and tsunami)
  • Cyber attacks designed to induce physical damage will be an increasing threat for the transportation and logistics industry

So what can the trade do?  According to PwC:

Companies have to find the right combination of preventive and reactive measures to achieve the optimal level of supply chain security…. [c]ompanies need to consider the possible, not just the probable.  Executive should keep an eye on so-called wild-card events too.  That means looking at the possible financial impact, the relative vulnerability of their business model and their company’s ability to react to low-probability, high-impact events…. Security audits along the entire supply chain will  become a requirement to maintain effective levels of security.

The complete report is available here.

Webinar: Customs’ Importer Self-Assessment “ISA” Program

Wednesday, June 15th, 2011

On Thursday, June 23, the Journal of Commerce is hosting a webinar on US Customs’ Importer Self-Assessment (ISA) program.

As JOC put it,

It’s the time of year when CBP is selecting its potential importer candidates for a “Focused Assessment”–or “FA”– also known as a customs audit. The ISA program offers an alternative to the FA path for those importers who are ready for “self-governance.” Learn from CBP’s ISA Program Chief and industry representatives why ISA has gained momentum – as well as what’s required to become an ISA program participant.

For more details and to register, click here.

HTS changes will be here on Jan. 1, 2012 — are you preparing?

Tuesday, June 7th, 2011

The following post has been contributed by the CUSTOMS Info/Global Data Mining (CiGDM) team:

As you may be aware, the World Customs Organization’s (WCO) reform of the Harmonized Tariff Schedule will be implemented on January 1, 2012.  The new version includes hundreds of amendments to the HS nomenclature and will trigger a massive chain reaction of critical trade data changes that, if not managed effectively, may threaten first quarter or even 2012 profit projections.

HS 2012 includes 220 sets of accepted amendments, divided as follows:

• 98 relate to the agricultural sector;

• 27 to the chemical sector;

• 9 to the paper sector;

• 14 to the textile sector;

• 5 to the base metal sector;

• 30 to the machinery sector; and

• an additional 37 that apply to a variety of other sectors.

Environmental and social issues of global concern are the major feature of these amendments, particularly the use of the HS as the standard for classifying and coding goods of specific importance to food security and the early warning data system of the Food and Agriculture Organization of the United Nations (FAO).

The 2012 HS Reform will affect each of the 177 member countries of the WCO and may result in thousands or even hundreds of thousands of updates, corrections and changes in current corporate databases housing HTS data, critical to the flow of the global supply chain. For large multi-national corporations, this will impact an enormous amount of data.

It is expected that many more shipments will be detained by customs agencies around the globe compared to the previous tariff reform five years ago. Significant changes in world trade volume, computer automation, and enhanced government oversight and enforcement have created conditions that can impact the supply chain. While automation means we become more efficient, it also means we can make mistakes faster.

Delays in the supply chain hit the bottom line. A Purdue University study has concluded the average cost per day of shipping time is approximately 0.5 percent ad-valorem. For a company importing $500 million of goods annually, an average delay of just one additional day could squander as much as $2.5 million per year from the bottom line, not including the operational costs associated with late shipments, inventory outages, and lost sales.

With the deadline for this enormous task just a few months away, brokers, forwarders, and other trade professionals can easily become overwhelmed with the scope of reclassifying and re-documenting thousands or hundreds of thousands of items for multiple countries, updating enterprise-wide computer systems, notifying all trading partners and service providers, and managing differing government regulations and effective dates. All these are necessary steps to assure a smooth transition and an uninterrupted chain of supply.

Get involved now to determine the scope of the 2012 HS Reform on your global business.  View the WCO correlation tables to understand the scope of the changes and how they might affect your business. Finding which HTS codes your company will need re-classification ahead of time will help companies update their systems when the new HTS codes are released. Stay tuned for more blog posts from CiGDM and webinars on upcoming services to ease the 2012 WCO transitions.

ISF filers: Watch for modified edits for bond and carnet data

Friday, June 3rd, 2011

Per US Customs’ CSMS# 11-000116:

On June 18, 2011, a number of Importer Security Filing (ISF) edits relating to bond data and carnet data will be converted from warnings to rejections. Please, be sure that any ISF transactions are fully compliant with these edits prior to that date. If you have any questions, comments, or issues related to these edits, please contact your assigned Client Representative.

  • Error Codes
    • SA7     Cont Bond Not on File
    • SA8     Cont Bond Not Active
    • SA9     Bond Holder Not Active
    • SAA     Cont Bond is Insufficient
    • SA1     Missing Carnet Country
    • SA2     Missing Carnet Number
    • SA3     Carnet Country Not on File

May 2011 ACE Trade Account Owner Update

Wednesday, June 1st, 2011

US Customs has just issued its May 2011 ACE Trade Account Owner Update.

Highlights include:

  • Post Summary Correction (PSC) functionality will be available this month for entry ACE type 01 and 03 summaries filed in ACE
    • PSC will replace Post Entry Amendment (PEA) hardcopy process
    • CBP will not review each PSC and assume that the filed data is the most current
    • PSC filer is a newly added field, and if the PSC is filed by someone other than the entry summary filer, ownership of the entry summary is moved to the PSC filer
      • PSC filer is only entity that can view specific entry summary that was corrected
      • Original filer gets notice of PSC, but can run an ACE query that provides some limited information on PSC correction
      • Original filer does not receive courtesy notice of liquidation via ABI
  • e-Manifest: Rail & Sea testing - Customs working with “early adopter” trade members to determine readiness to transmit actual data to ACE; trade testing is going “extremely well.”
  • Recent ACE updates
  • Answers to the trade’s questions on ACE
  • And more

The ACE Trade Account Owner Update is available here.