Progress threatens broker industry

Progress threatens broker industry    In the letter, 'More to brokerage than pushing a button,' (online at www.AmericanShipper.com/links) the assertions of Jeffrey Coppersmith, president of the National Customs Brokers and Forwarders Association of America, appear to arise from an organization and industry that is coming to realize the world, spurred by advances in technology, may be passing them by. The NCBFAA's position is consistent with its past actions. My observations are that almost every time Customs has proposed changes that would improve efficiency or a new technology appears, the broker reacts by attempting to manipulate the rulemaking process, appeal to friends in Customs, and lobby Congress.
   For example:
   ' Brokers opposed the proposal to regionalize Customs from port 'collectors of customs' to regional commissioners (1961-1964) because it was perceived to be an attempt to eliminate the cozy relationships they had with politically appointed collectors. The proposal was good for importers but opposed by brokers.
   ' Duty Assessment by Account (DABA) was proposed in the late 1960s to allow importers to pay duty and tax on an account basis instead of by individual entry. Opposition to the DABA proposal was the catalyst for the broker industry to organize nationally and embark on the road to become the powerful political entity it is today. I remember well the enthusiasm Len Shayne, then the enormously effective president, was able to arouse by opposing DABA. It was good for importers but brokers saw it as a threat and worked effectively to kill it. Note that DABA, under another guise, is with us today.
   ' The Customs Modernization Act was intended to modernize customs operations, thereby enabling Customs to process the huge increase in imports for the benefit of importers and Customs. NCBFAA fought the Mod Act tooth and nail and was able to delay implementation for the better part of 10 years. The concept behind the Mod Act was to benefit importers but again the brokers perceived it to be detrimental to the their industry and road blocked implementation at every possible turn. During the years the NCBFAA kept the Mod Act under siege, it even proposed a provision in the act to prohibit importers from making entries without using a customs broker.
   ' Let's not forget the challenge in the 1980s by then-Customs Service Commissioner William von Raab, when he specifically told the NCBFAA to, 'Automate or perish.' What do you suppose prompted that challenge? Clearly, it was the fact that customs brokers and freight forwarders had steadfastly stood in the way of progress and were being dragged by the government kicking and screaming into the 20th century.
   As with any organization that aims to promote a specific industry, NCBFAA, when confronted with a new technology or regulation that is perceived to threaten its members' viability it will do everything in its power to avoid or block change even if the change is beneficial to importers. One would think that for a self-proclaimed 'progressive industry' with a vision, it would be the polar opposite.
   Today, largely because of the Mod Act, savvy importers have at their fingertips all the data necessary to complete a customs entry. It is the importer who knows and provides the tariff classification, country of origin, value, quantity; brokers add little or no value at all. In most cases the broker simply reformats the data and, yes, pushes a button to transmit it to Customs.
   Many advanced importers today are realizing that for most entries the customs broker is an unnecessary intermediary that only increases the opportunity and likelihood for error. Data degradation, poorly managed brokerage offices and untrained employees all contribute to an error rate that most importers deem unacceptable. Brokers can, and sometimes do add value, when the entry is more complex. But for most importers that is the exception, not the rule.
   Furthermore, it is the importer (not the customs broker) who:
   ' Bears all liability and responsibility for undertaking reasonable care when importing goods into the United States.
   ' Is incentivized under threat of penalty to ensure information given to Customs is accurate.
   ' Has intimate knowledge of the product(s) they import.
   No broker will exercise greater care in the preparation and processing of that entry than the importer. For these reasons alone, not to mention the substantial savings involved, a growing number of importers are electing the 'do-it-yourself' solution of direct-filing most of their entries with Customs. In a day and age where most mail is electronic, most businesses have become paperless, and we personally file our taxes or make major purchases using the Internet, it makes more sense than ever for importers to take greater control of their supply chains. That includes direct-filing entries with Customs, bypassing a customs broker when an importer deems a broker is not necessary.
   Change is inevitable. Though it often results in challenges, it also brings opportunities to profitably exploit. Those who drive, embrace and exploit change generally benefit from savings, increased productivity and greater efficiency. Those who hide from change generally fall behind and/or become extinct.
   Aided by advances in technology and good old-fashioned ingenuity, the importing industry has and will continue on its path of evolution in spite of NCBFAA obstructionism.

Bruce A. Wilson
chairman, Kernow Capital Corp.,
Barrington, Ill.