AES ag-ony
Agriculture exporters upset by ocean carrier policies for complying with advance filing rules.
By Eric Kulisch
Inconsistent and excessive ocean carrier deadlines for documentation to comply with a new U.S. Census Bureau regulation are forcing many exporters to play a dangerous game of fudging shipment information to meet transport connections and then filing corrected amendments in hopes of avoiding government penalties, according to agriculture industry representatives.
Last summer, Census issued a rule making electronic filing of export declarations mandatory for U.S. exporters and freight forwarders, with enforcement beginning on Oct. 1. It eliminates the use of paper forms by requiring ocean shippers to file export data for most cargo through the existing Automated Export System (AES) 24 hours prior to vessel loading. Filing requirements for truck, rail and air cargo range from one to two hours prior to departure or arrival at the border.
The Census Bureau uses the export data to compile the nation’s trade statistics, while Customs and Border Protection and other agencies use it to stop illicit exports to unauthorized users or determine violations of export control laws.
Electronic filing allows for advance screening of data for potential violations prior to export as well as more timely and accurate trade statistics. The agency set deadlines for filing the export declaration that parallel U.S. requirements for advance manifest filing on the import side.
| Related News • Customs publishes AES penalty guidelines • China goes easy on 24-hour rule • Reminder: New China advanced manifest rules on Jan. 1 |
The new AES regulations put the onus on carriers to help enforce the filing requirement by penalizing them for accepting cargo from a shipper that has not filed the export data on time. Shippers must also provide carriers 24 hours prior to loading an Internal Transaction Number (ITN) generated by Census as proof that the electronic export information was properly filed.
To avoid fines, most container lines have instituted stringent policies for receiving confirmation receipts well ahead of the regulatory deadline so that non-compliant shipments can be pulled from the queue without disrupting vessel loading. Carriers claim the AES rules force them to build in extra time to make sure each container has required documentation and contact the customer if the confirmation receipt is missing.
'No Doc, No Load.' Agriculture shippers, many of whom are used to filling orders until the last minute for same-day port delivery, say they are extremely frustrated by carriers’ rules that in some cases also require containers to be delivered with full documentation — cargo descriptions and shipping instructions for the master bill of lading (B/L) — days earlier than previous port cutoff times. Carriers with such “no doc, no load” policies are trying to simplify their processes for collecting data needed for the manifest so it is captured all at once rather than trickle in over several days. The paper manifest must be submitted to Customs within four days of departure, or 10 days for some electronic filers.
About 1,800 exporters grandfathered under previous regulations are exempt from advance filing requirement because they have privileges to file export documents up to 10 days after a shipment has departed the country. Agricultural and other bulk shippers in particular like the post-departure option because the value, weight, quantity, exact final price, country of origin for components, inventory source of a shipment and other information needed for the declaration isn’t always available until after loading or vessel departure. The agriculture industry has lobbied without success to expand so-called Option 4 filing, which the Department of Homeland Security wants to eliminate because of concerns that it is a loophole for illegal exports.
Requiring commodity information as well as container and seal numbers far before the government’s deadline creates an even higher hurdle for shippers, especially when they often don’t gain possession of a container that far in advance, according to export industry officials.
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| 'Shippers are left between a rock and a hard place. They essentially have to violate the regulations to meet the documentation deadlines of carriers. ' | |
| Kathy Beaubien lobbyist, Agriculture Transportation Coalition |
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Exporters, in many cases, are responding by fabricating information for the declaration and then going back into the AES system to correct the filing when they have accurate information in hand.
“Shippers are left between a rock and a hard place. They essentially have to violate the regulations to meet the documentation deadlines of carriers,” Agriculture Transportation Coalition lobbyist Kathy Beaubien said at organization’s inaugural mid-year conference in Chicago last month.
Companies could be in serious jeopardy for knowingly entering inaccurate information because the updated AES regulations include significant increases in penalties for failure to file, late filing, and false or fraudulent reporting of export data, she warned. Criminal and civil penalties of up to $10,000 per violation may be imposed, including $1,100 for each day of delayed filing. The amendment process is also inefficient because shippers or their freight agents are doubling the amount of work they do.
Lack Of Consistency. The biggest problem is that there is no consistency between cutoff times for carriers calling U.S. ports, conference participants said.
APL and China Shipping, for example, accept documentation 24 hours prior to their container delivery cutoff at the ocean terminal. OOCL wants information 48 hours in advance of loading, and Hapag-Lloyd has a deadline of two days prior to vessel arrival. Korean carrier Hanjin Shipping accepts the proof of filing citation all the way to vessel cutoff.
Beaubien said Hapag-Lloyd’s policy is particularly onerous because carriers don’t share information about arrival times, leaving shippers to make their best guess on when to drop off a container.
In some cases, carriers move up the date of arrival at the last minute and shippers say they can’t react fast enough to get their documents in order.
On top of that, exporters are subject to a variety of penalty fees from carriers resulting from cargo held for insufficient documentation and rolled over to the next vessel. China Shipping, for example, says it will assess a $200 administrative charge for failure to provide proof of AES filing in time to load cargo on an assigned vessel.
Mallory Alexander International Logistics estimated that a typical cotton shipment of 10 40-foot containers that misses a carrier’s document deadline could cost the customer about $7,700 in rollover, demurrage (extra storage), container per diem, truck transfer and other fees for added handling costs associated with missed connections, said Donna Lemm, the company’s director of business development.
“We’ve seen a handful of carriers impose the rollover fee, sometimes within minutes” of missing the document window, she said.
Beaubien and liner industry officials said many carriers have taken a more lenient stance and are not enforcing the penalty clauses in their contracts.
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| 'We've seen a handful of carriers impose the rollover fee, sometimes within minutes' of missing the document window.' | |
| Donna Lemm director of business development, Mallory Alexander International Logistics |
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Maersk Line has softened its policy since September, according to Export Director Armando T. Martinez. The Danish carrier has gone from an absolute no-load stance without shipping instructions (B/L info) to only requiring the ITN 12 hours prior to the container delivery cutoff time. Maersk also created a dedicated team to take the initiative and call customers when the ITN has not been received to prevent shipments from being bumped to the next vessel arrival. And, he said, Maersk notates the document deadlines on the booking confirmation as a reminder. A couple of audience members at the AgTC mid-year conference confirmed the changes have been positive and expressed a desire for all carriers to be more flexible.
Penalty Guidelines. However, carriers may start strictly enforcing their document cutoff policies after Customs, which administers U.S. laws at the border, published on Jan. 2 much anticipated guidelines for enforcing the mandatory AES rules. Since Oct. 1, Customs has been reminding carriers to have their AES confirmation receipts for loaded containers, but postponed enforcement action because it did not have penalty guidelines in place for AES infractions. Carriers are also on the hook for failing to notify the exporter about changes in the export date or port of export and failure to include the ITN on the manifest. The release of the penalty scale makes it more likely that carriers will hold up cargo from shippers that don’t give the ITN in a timely manner.
Nearly 90 percent of customers for a major Asian carrier are complying with the AES timelines now compared to about 65 percent when mandatory AES went into effect in October, a company official said on condition of anonymity because of corporate policy prohibiting contact with the press. The official estimated that about 5 percent to 15 percent of vessels are sailing with cargo even though they don’t have the ITN, but expected close to full compliance by the time the penalties kick in on Feb. 1.
Liner industry officials say their document policies are not intended to punish customers to but give them time to resolve labor and functional issues at the marine terminal.
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| Christopher Koch president, World Shipping Council |
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| 'The carrier has to make sure its operation sustems have the data in the right amount of time. It's not intended to delay or inconvenience commerce.' | |
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“The carrier has to make sure its operating systems have the data in the right amount of time. It’s not intended to delay or inconvenience commerce,” said Christopher Koch, president of the World Shipping Council.
All vessel operators have deadlines by which cargo must be received at the container yard to make it on a particular ship. Once the cargo is in the terminal, load specialists can make stow plans for how to load the cargo and how much labor to schedule from the longshoreman’s union before the vessel arrives. The carriers have to precisely know how many containers will be moved because they will incur significant costs if there are changes to the stevedores’ work order.
When a box is held over, dockworkers have to put it on a chassis, pull it back into the yard, put it in a new stack, record the new location and prepare documentation for the next ship. The rollover fee covers the extra work on the dock and at the documentation center where clerks enter the new information into computers to reflect the new vessel voyage and then notify the customer of the new booking.
The liner industry specialist said that rollover fees may exist on paper, but doubted whether any company can afford to turn back reputable paying customers at a time when the industry is struggling with huge volume and profit declines that are reshaping the industry during a global recession. Carriers fear that customers that feel mistreated will simply take their business to a competitor.
Vessel operators will scrutinize the Customs penalty guidelines to determine how strictly the agency intends to enforce the timelines. But carriers are likely to proceed loading containers and work to obtain the ITN from the customer even if the AES 24-hour timeline has passed on the assumption that the government’s primary focus is whether the exporter has filed in a timely manner, the source said.
“The carrier perspective in this economy is the ship can’t be sailing light. We’ve got to load this thing,” he said.
Carriers will assess their vulnerability depending on the customer and the value of the cargo, the source predicted. A large, trusted manufacturer with strong compliance systems in place, such as Monsanto or John Deere, will get the benefit of the doubt that they can deliver their ITN in short order. Cargo will only get rolled for small, unknown exporters, or repeat offenders.
“I don’t think there are going to be any carriers watching the 24-hour timeline with a stopwatch,” the official said.
Seeking Consensus. AgTC is pushing for a standard industry deadline for export documents, but has not been able to gain any consensus in the ocean carrier community, Beaubien said.
Hayden Swofford, administrator for the Pacific Northwest Asia Shippers Association, suggested that the coalition create boilerplate language on document policy that could be inserted in contracts.
One carrier representative in attendance spoke out that he’d “love to see a common agreement in a service contract.”
AgTC would like Census to revisit the requirements and determine if there are certain AES fields that can be estimated and then revised when information is known for certain, Beaubien said. It also sees an unofficial role for the Federal Maritime Commission to convince carriers that their lag-time requirements are excessive because they force the shipping public to violate federal law.
“It’s certainly reasonable to punish the shipper for not meeting the Census requirements, but to simply penalize them for not meeting their policy when there might be extenuating circumstances like 'we can’t get a container' — that seems unfair,” she said, pointing to rollovers as a particularly punitive measure.
The AES rules include provisions for voluntary self-disclosure of suspected or actual violations that could mitigate penalty determinations, but Beaubien said turning oneself in isn’t an option if ongoing fabrication is taking place and that Customs may not be as understanding of the business pressures involved as Census.
Beaubien said there should also be a provision to protect shippers from late-filing penalties in infrequent cases where a carrier decides to move cargo sooner than expected on an available vessel.
And there needs to be a clear system for carriers to notify shippers when cargo is rolled to another vessel for operational reasons, such as overcapacity, she added.
While exporters and their agents complain about the impact of filing advance export data to Census, they may have to file anyway to meet advance manifest rules that took effect Jan. 1 in China. The new rules require the manifest for all cargo imported or transshipped into China to be submitted to China Customs electronically 24 hours prior to loading of cargo at foreign ports for container ships, although a several month enforcement grace period is apparently in effect. Once again, shippers are likely to be subject to divergent documentation policies among the carriers.
And compliance will continue to get more complicated as the European Union and Mexico also implement requirements for pre-departure filing of electronic cargo declarations. ' Eric Kulisch