æ10+2Æ pressures NVOs to automate
The new Importer Security Filing regulation could force ocean shipment consolidators and freight forwarders who have not automated communications with U.S. Customs and Border Protection to do so, or risk losing business, according to import industry specialists.
The rule, they say, is leveling the playing field in terms of technology investment.
The cargo security rule requires importers to electronically file of 10 types of transaction data 24 hours before their container is loaded on a vessel. Enforcement is scheduled to begin Jan. 26 after a one-year break-in period for industry.
A key piece of information that must be included on the so-called ’10+2′ form is the bill of lading (B/L) number issued by the ocean carrier and included on the advance manifest it files through a separate automated system to notify CBP of cargo riding onboard. CBP is using the B/L file date to measure whether the ISF was filed on time even though many carriers transmit the manifest several days before loading occurs.
• Stretch run
Many non-vessel-operating common carriers that buy wholesale space from carriers and market it to shippers opt to file their own manifests to Customs. Smaller NVOs that aren’t worried about carriers trying to poach their customers submit paper manifests and let the carriers electronically file their manifest on their behalf for a small fee. That type of arrangement has created problems because the B/L and associated ID number the NVO provides its customer is not the same as the carrier’s B/L. Carriers are assigning their own tracking numbers to these sub-bills to standardize and enter them into the Automated Manifest System. But many importers are incorrectly using the NVO-generated transaction number on their ISF and getting rejections because it doesn’t match the manifest on file at CBP. An NVO or forwarder with AMS capability benefits because its internal B/L is automatically attached to the carrier’s master B/L without any additional steps.
Shippers, who want to avoid any confusion and potential penalties of up to $5,000 for a late ISF filing, are likely to gravitate towards NVOs and forwarders that are automated, logistics experts say. As the pressure increases, they add, transportation intermediaries will quickly adapt to stay in business.
Retailer Crate & Barrel is requiring that its dozen freight forwarders have automated information systems for sharing information and separately filing the ocean manifest to CBP so that ISFs are completed on time and not rejected, Virginia Thompson, the company’s manager of import/export operations and compliance, told a large audience at CBP’s annual Trade Symposium in Washington early last month.
‘I’m not saying we would absolutely never use a forwarder that wasn’t (automated), but their rates and service would have to be so good for us’ to justify the added staff time and effort to manage the process, Thompson said.
Michael Laden, co-founder of supply chain consulting firm Trade Innovations and affiliated customs compliance service TRG Direct, urged shippers to only deal with automated NVOs.
‘If you’re having problems with a non-automated NVO I would suggest the problem is not in the rule but with your vendor and he should be encouraged to automate as soon as possible,’ added Chris Koch, president of the World Shipping Council, which represents the liner industry.
In the past, customers didn’t notice nor care how manifest compliance was managed, and small NVOs calculated they didn’t need the ability to transmit themselves if larger co-loaders were already filing the container manifest.
That mentality is changing.
‘I think we’ll see more NVOs automate to take advantage of this process and because it’s more visible now that they are not automated,’ said Cindy Allen, director of education for the National Customs Brokers And Forwarders Association of America, in an interview.
ISF is unlikely to force consolidators and freight brokers to shut their doors because there are plenty of easy-to-use, Web-based applications that cater to small businesses, said Bryn Heimbeck, president of Trade Tech.
Trade Tech, an international logistics technology service provider in Bellevue, Wash., offers importers or their agents a choice of a self-filing the ISF with its software for $2 per transaction or letting the company collect, enter and file the data for $15 per ISF. Other companies with low-cost ISF products include TradeMerit, TRG Direct, Descartes and GT Nexus.
When customers start getting fined and NVOs lose a couple of accounts ‘then they’ll jump and do it,’ Heimbeck said. ‘Nobody can afford to lose a piece of business for failure to reach the market standards and the market standards have just been increased.
‘It’s not a question of whether intermediaries can afford it. It’s a question of their desire to change their processes. As soon as the pressure mounts, they’ll find a compelling reason to find a solution. So, I don’t think anybody is going to go out of business over this. If anything, the small guys are more nimble,’ he said.
Trade Tech can train NVOs to file the ISF through AMS and eliminates the chance of mistyping the B/L number because its system processes both filings and shares any required data, Heimbeck added.
To read more ISF coverage see the feature story ‘Stretch run’ in the January issue of American Shipper as well as bonus Web-only coverage with tips for importers on implementing the rule. ‘ Eric Kulisch