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General

Staffing an import compliance department

Wednesday, February 1st, 2012

A recent discussion thread on the Global Trade Compliance Professionals LinkedIn group page examined the issue of how many employees constituted a “properly staffed import compliance department.” While there is of course no definitive answer that applies to all importers, the thread highlighted key considerations when evaluating staffing decisions, summarized below.

As pointed out by the discussions, the most obvious factors to consider in staffing levels are:

Import volume – entries and ISFs
Degree of complexity of entries
Average line items per entry
Number of ports/shipping lanes used
Involvement of OGAs
Degree of system automation

Additionally, the staffing number will also depend on whether the importer uses the services of a customs broker or self-files entries/ISFs.

If using a broker, the compliance staff must determine the level of involvement needed to provide the broker with all of the relevant information, to be available for follow-up questions and other oversight, and, most important, to audit the broker’s performance.
If self-filing, the importer must have resources dedicated to filing, including self-auditing. In many cases, the number of employees necessary for direct filing may be the same or even less than that are required to oversee a broker, since the importer is more familiar with the particulars of their import stream, and it is more efficient to not use external parties.

In addition to entries/ ISFs, the staffing number will be affected by other responsibilities that the compliance staff will undertake, such as maintaining a compliance manual, employee training, product classification, filing PEAs, lodging protests, performing reconciliations, etc.

Beyond the specific number of import compliance personnel, another issue for an importer to consider is the type of positions that need to be created. For example, the compliance department could need a supervisor, entry specialists, pre-entry specialists, and/or post-entry audit staff.

Moreover, there is some debate as to whether an importer needs a licensed customs broker on staff. On the positive side, an LCB generally has more knowledge of the regulations than those who did not go through the licensing process. Also, US Customs may view having an LCB on staff as a sign of the importer’s commitment to exercising “reasonable care.” On the other hand, LCBs usually require a significantly higher salary, which may not be justified if there are other non-licensed experienced staffers who have a similar command of the regulations.

An import compliance department may augment its staff by “borrowing” from other departments. For example, one respondent described her company’s situation:

…[O]ur shipping department contributes to our “Trade Compliance” program without being in our [international trade compliance] department…. Shipping interfaces with the shipping company and our homeland warehousing, while my department does the work with our Customs Broker, US Customs and our factory and manufacturing vendors for our scheduling, pricing/costs, problems, classifications, regulatory reporting ad the C-TPAT program…. I also draw from the Accounting Department for 1 or 2 people when needed for tasks that impact financial aspects…. These “borrowed” staffers are trained by us and frankly enjoy the change of scenery from their usual jobs. All these instances of “sharing” personnel from different department help control our costs and department size.

And, of course, an import department may augment its staff by outsourcing certain functions to outside attorney, accountants, consultants and the like.

The Global Trade Compliance Professionals LinkedIn group page is available here (membership required).

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Brokers: triennial status reports due by Feb 27

Monday, January 23rd, 2012

As mandated by 19 CFR 111.30(d), all individuals, partnerships, corporations or associations that hold a Customs broker license(s) must submit a triennial status report and accompanying $100 fee by February 27, 2012. Submissions must be made to the director of the port that originally issued the license to the broker, not CBP headquarters. Failure to make a timely submission will result in a suspension of the broker’s license.

US Customs has published a list of helpful FAQs for the triennial reports, which also include a link to a sample report.

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CBP’s Bersin resigns

Friday, December 23rd, 2011

US Customs & Border Protection Commissioner Alan Bersin has resigned his post, effective December 31.

As reported in our blog post of September 28, Bersin was named to his position in a recess appointment by President Obama nearly 2 years ago, raising the ire of the Senate Finance Committee who sought to interrogate him about possible violation of immigration laws regarding hired household help.

Now that the Senate has adjourned without confirming his appointment, Bersin has resigned from the post in advance of its expiration at year end.

Overall, the trade was quite satisfied with the progress that Bersin made in helping to streamline the agency and facilitate trade with modernization efforts.

Deputy Commission David Aguilar will serve as Acting Commissioner.

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Country of origin – how the Chinese honey industry flouted the rules

Thursday, December 15th, 2011

As recently reported on National Public Radio, members of the US honey industry have taken major steps to prevent the importation into this country of Chinese honey purportedly from other countries.

In response to anti-dumping concerns, in 2008 the United States imposed significant duties on Chinese honey. Almost immediately, shipments of Chinese honey ceased, while imports of honey from China’s neighbors, such as Malaysia, Taiwan and Indonesia – with no commercial beekeeping history – increased markedly.

Scientific analysis of that honey revealed an absence of pollen present in those countries, but typical of pollen found in China, leading to charges of false labeling and fraud.

Now, with an sudden surge in honey imports from India, another Chinese neighbor, some members of the US honey industry have established True Source Honey, LLC, an organization that certifies foreign honey as authentically from the stated country of origin through audits, lab analysis and random inspection of honey producers.

Read or listen to NPR’s story, “Funny honey? Bringing Trust to a Sector Full of Suspicion.”

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Ready for the California Transparency in Supply Chains Act?

Thursday, December 1st, 2011

On January 1, 2012, the California Transparency in Supply Chains Act of 2010 takes effect. The new law mandates that retailers and manufacturers 1) with global sales exceeding $100 million, and 2) that do business in California (broadly defined) to disclose on their websites the steps taken to prevent slavery and human trafficking in their supply chain.

Because the law is broadly drafted and somewhat vague, those businesses that may be subject to the Act’s requirements should consult with legal counsel to determine applicability. In addition, suppliers to covered retailers and manufactures that are asked to certify their operation should also evaluate their obligations and responsibilities under the law.

For more information on the Act, check out the law firm of Mitchell Silberberg & Knupp’s International Trade Alert on this topic.

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How shippers can weather predicted trucking shortage

Wednesday, November 23rd, 2011

As recently reported in American Shipper, analysts and trucking executives are predicting an alarming commercial truck scarcity in the US in 2012. Currently, capacity is extremely tight, and if the economy improves, the situation will worsen.

The main factors that are leading to the looming crisis are a shortage in both equipment and drivers. As for equipment, the trucking industry has significantly reduced its fleets since the global economic downturn began in 2007 by selling used tractors and deferring purchase of new equipment. In addition, many small trucking companies went out of business.

With regard to drivers, more than 13 percent left the workforce left since 2007, and there are fewer younger drivers entering the market to replace older workers. Factors such as new federal hours-of-service rules inhibit hiring, leaving a current driver deficit of 125,000.

Astute shippers can take steps to mitigate problems caused by the shortage:

Strengthen relationship with key carriers (give consistent business, accept fair rates, reduce dock-wait times, pay invoices early) to increase priority during busy shipping times.
Create more consistent shipping patterns and share demand forecasts so carriers may deploy their trucks and drivers more efficiently.
Secure dedicated contract carriage (set asides of certain number of vehicles or drivers).
Use the spot market where rates and terms are better than contract rates.
Increase size of private fleet, and sell empty space in trailers on return trips.
Work with a truck broker for flexibility in last minute scheduling.
Adjust production schedules to produce loads when carriers have extra seasonal capacity.

The full article, “Where did all the trucks go?,” is available here.

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Customs compliance manuals – tips for importers

Monday, November 7th, 2011

Since a customs compliance manual is evidence of reasonable care under the Customs Modernization Act, an astute importer will maintain such a manual to demonstrate a proactive stance with regard to compliance. In fact, creation and maintenance of an accurate and up-to-date customs or trade compliance manual can help to mitigate certain types of customs errors and penalties (provided that the steps in the manual are followed). In addition, a customs compliance manual is typically required for both C-TPAT and ISA program acceptance.

Following are a few tips for maintaining and providing access to a compliance manual.

Internal use

Following best practices, an importer should maintain its compliance manual electronically. The document is uploaded to the corporate intranet site, a SharePoint site or the like. For version control purposes, the preferred approach is for the document to be stored in portable document format (PDF), read/view only or otherwise write-protected.

To the extent hard-copy versions of the manual are distributed internally, these manuals should contain a disclaimer, with a print date, that printed versions are for reference only, and that the electronic copy is the control copy (also helps to satisfy ISO9000 controlled document requirements).

Providing manuals to third parties

When US Customs requests a copy of the trade compliance manual, many importers provide a hard copy of the document, neatly arranged in a binder(s), with tabs for easy reference. Some provide the entire manual, while others provide the specific section of the manual that CBP requests. It is good practice to include the version control disclaimer mentioned above, so that Customs can see that the importer values the integrity of their compliance documentation.

Depending on the Customs representative’s request, some importers provide – instead of or in addition to the hard copy – a digital version of the manual on a flash drive or a compact drive. In this case, it is best to ensure that the document on the disc is write-protected. Most importers shy away from providing Customs with access to a company intranet to view a compliance manual, in order to maintain security of the corporate firewall.

Often, other third parties – usually a customs broker or a customer or supplier – may request a copy of the importer’s customs compliance manual. As for brokers, since generally they are intimately tied into the import process, it makes sense that each of the broker’s employee handling an account is provided with the importer’s customs compliance manual (following the safeguards discussed above). Alternatively, an importer may create a broker-specific manual, which the broker will use to create their internal SOP for the importer’s account.

Conversely, when a customer or supplier requests the manual, there may not be a need to provide the manual. An importer may instead provide a certification that that it is in possession of a manual and adheres to the procedures outlined in the document. Of course, whether to provide the manual to customers or suppliers may depend on any contractual obligations or the nature of the relationship between the parties.

Posted in C-TPAT, Customs & Border Protection, General, Importer Self-Assessment (ISA) | Add Comment »

September-October 2011 ACE Trade Account Owner Update

Wednesday, October 19th, 2011

US Customs has just issued its September-October 2011 ACE Trade Account Owner Update.

Many of the update’s highlights have been covered recently in this blog:

Simplified entry process
ACE customer satisfaction survey (now extended until October 26)
Courtesy notice of liquidation report (now available)
September 2011 TSN meeting highlights

Also of note in the update are:

Trade Outreach Webinars now available include “CBP Role of the Broker,” “CBP Account Management Restructuring,” and ”ACE Post Summary Corrections.”
Upcoming changes to data visibility for PSCs.

The ACE Trade Account Owner Update is available here.

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CBP’s Bersin may exit by year’s end

Wednesday, September 28th, 2011

American Shipper reports that US Customs & Border Protection Commissioner Alan Bersin may soon be out of a job.

President Obama installed Bersin as a recess appointment in March 2010, much to the chagrin of the Senate Finance Committee, who wanted to question Bersin about possible violation of immigration laws in hiring household help. Without Senate confirmation of his recess appointment expected by year end, the position will become vacant.

Despite the hard feelings on Capitol Hill, Bersin remains popular with the trade. He is viewed as a progressive, take-charge leader who exerted “significant effort to reorient CBP’s priorities towards trade facilitation and enforcement after a decade focusing on security measures that complicated the movement of cargo.”

Bersin’s staff has indicated that they will continue the forward progress started by Bersin.

The American Shipper article, “Popular Customs chief to lose post,” is available here. (site registration required for access to entire article).

Posted in Customs & Border Protection, General, News | 1 Comment »

Will there be a container shortage yet this year?

Monday, August 15th, 2011

As reported on this blog back in March, many in the trade predicted a shortage of containers and a resultant freight rate increase for 2011.

Now, however, Alphaliner, a market analyst for the liner shipping industry, foresees no container shortage during peak season. As reported in the Journal of Commerce, the primary reasons are that “[l]easing companies and ocean carriers have ordered sufficient numbers of new containers during the last 12 months, while demand growth has failed to match earlier projections.”

In addition, Alphaliner indicates that falling demand has caused “prices for new TEU dry containers drop from $2,900 at the beginning of the year to less than $2,500 per TEU.”

See the full article here.

Posted in General, News | 1 Comment »