Companies pursue perfect ISF compliance

Companies pursue perfect ISF compliance    The fact that big importers with large information technology resources are still not able to properly file the Importer Security Filing every time illustrates the compliance challenge facing businesses, a couple of international trade professionals said last week.
   The U.S. government this week began enforcing the one-year-old cargo security rule that requires more detailed commercial data from importers before a shipment goes on a vessel. After 12 months in which shippers were encouraged to electronically submit the ISF form without consequences for late filing or other errors, Customs and Border Protection is now closely monitoring shipments, detaining those without the necessary documentation and building a case for damage claims later this year against companies that don't improve their performance.

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   The rule, also known as '10+2' for the number of data types that importers and carriers must submit, has arguably caused more far-reaching changes in industry business process than any other U.S. measure related to international cargo security. Importers have had to identify which overseas business partners possesses missing pieces of information, audit themselves to learn where other necessary data internally resides within their far-flung enterprises, and set up software applications to collect and transmit the data. The lift is often more difficult for small and medium-size importers that do not have extensive contacts overseas or the budgets for new technology.
   Many importers are able to meet the filing deadline — 24 hours prior to vessel loading — for a portion of their supply chains, but hitting the 100 percent mark is still difficult, Rosanne Esposito, executive vice president of global customs for Expeditors International, said at a trade seminar in Los Angeles.
   The 80-20 rule applies to '10+2,' she said, with 20 percent of problem shipments requiring the most resources to track down the necessary data about the shipper, consolidation center or cargo contents.
   CBP officials have expressed understanding of the implementation difficulties and said they will be more lenient towards companies that have made a good faith effort to file ISFs and correct problems.
   A big problem for industry is that a significant number of importers have not automated, or only partially automated, supply chain processes that would enable easier information sharing and completion of the ISF, said Matthew Varner, director of trade operations for Nike.
   Nike's goal was to automate the entire ISF process and it chose its overseas consolidators — the intermediaries that prepare the shipment for ocean transport — to file on its behalf because they have most of the critical data, he said. The athletic apparel company sends the remaining data elements needed to complete the document to the consolidator, he added.
   About 20 percent of Nike's ISFs are filed by customs brokers because they are in a better position to deal with smaller suppliers who still share information by paper, Varner said.
   Despite the growing pains, Nike has determined there is a business case for the rule because it has forced the trade unit to better integrate with other divisions in the company and has improved status updates and security of shipments throughout the supply chain. The company also anticipates having fewer delays at the destination port. The greater supply chain predictability translates into carrying less inventory and ultimately higher profits, Varner said. ' Eric Kulisch