CBP and COAC make strides to improve procedures for bonded cargo moves, but more work still needs to be done.
While recent regulatory changes to how U.S. Customs and Border Protection and the carrier industry manage the country’s in-bond processes are taking shape, further improvements will soon be under way.
An in-bond is imported merchandise that moves under bond within the U.S. without paying taxes and duties until it’s either cleared by CBP at an approved inland destination or re-exported to another country.
A concerted regulatory push by CBP, along with input from the Commercial Customs Operations Advisory Committee (COAC), in recent years has focused on eliminating documentation long associated with in-bonds. In 2018, CBP estimates that it processed more than 43 million in-bond transactions.
On Sept. 28, 2017, CBP published a final rule for changes to the in-bond process. These changes, which took effect Nov. 27, 2018, were developed to further enhance CBP’s ability to regulate and track in-bond merchandise and ensure that it is properly entered or exported.
The final rule required, with the exception of pipelined commodities and truck shipments transiting the U.S. from Canada, that the agency’s paper 7512 (Transportation Entry and Manifest of Goods Subject to CBP Inspection and Permit) be eliminated and carriers or their agents going forward will be required to electronically file the in-bond application.
In this final rule, CBP established a standard 30-day maximum transit time for all modes, except for pipeline and barge (which has 60 days), to transport in-bond merchandise between U.S. ports. If a carrier must divert an in-bond shipment to another destination port or export port, it’s required to electronically request and receive permission from CBP before doing so.
While the industry welcomes these changes, COAC says additional process improvements are required to fully modernize the in-bond process.
At its Wednesday meeting in Washington, D.C., COAC’s Secure Trade Lanes Subcommittee presented 10 in-bond recommendations for CBP to pursue.
The subcommittee first recommended that CBP enhance the Automated Commercial Environment (ACE) reports to allow bond owners to access data, as much as legally permissible, for every cargo move that has been obligated to their bonds. This should include all transport modes in which a bond was initiated, and the report also should display information that will identify the shipment, arriving carrier, bill of lading, pieces and weight, and the party that obligated the owner’s bond.
The subcommittee wants ACE to send “push notifications” to the party with the bond that has been obligated when a shipment is closing its 30-day maximum, which is similar to the ACE General Order clock function that generates 1R/1S-type notifications.
Mike Young, vice president of process and system services at OOCL (USA) and COAC’s Secure Trade Lanes Subcommittee chair, said these notifications will help CBP’s enforcement of the maximum 30-day in-bond transit time.
The subcommittee recommended that visibility to CBP cargo statuses be given to both the carrier and customs broker earlier than is currently done.
At the moment, visibility to the CBP status of cargo moving under bond is not provided to the carrier until messages are received by CBP that report the cargo’s arrival at the in-bond destination port, precluding the ability to effectively manage delivery within an in-bond facility’s free time, Young explained.
The subcommittee recommended that CBP clarify and standardize what constitutes the legal boundaries that are allowed for verifying content and piece counts of in-bond merchandise and wants CBP or PGA (participating government agency) in-bond cargo holds to include disposition codes that detail the reason for the hold, the inspection location and if the cargo must be re-exported or destroyed.
The subcommittee requested CBP develop a capability through the ACE portal or other electronic means to provide real-time notice to the industry when Facilities Information and Resources Management System (FIRMS) codes are activated or deactivated. The subcommittee said this will ensure visibility to the correct assignment of FIRMS codes for in-bond arrivals.
In addition, the subcommittee recommended that the requirement of FIRMS inclusion for all in-bond cargo moves be deferred until there is “mutual agreement to the capability and requirement for FIRMS application on all in-bond movements, including a suitable transition period to allow trade to implement this new requirement.”
Young explained that the subcommittee wants CBP to provide the ability to amend in-bond transactions rather than deleting and readding full details to the in-bond record, which is the current practice.
The Secure Trade Lanes Subcommittee asked CBP to publish “clear and specific guidelines that explain what acceptable and adequate documents and/or procedures will satisfy CBP’s proof of export requirements.”
Until this automation is finished, the subcommittee suggested the continuation of processes that allow CBP, upon request, to stamp the CF-7512 or similar documents containing the in-bond number or an official foreign government entry document or its electronic equivalent.
Lastly, the subcommittee recommended that CBP and the industry work together to develop a comprehensive information technology plan across ACE modules to facilitate in-bond automation, including:
• Providing carriers across all modes the necessary functionality to accomplish carrier-related in-bond requirements within their automated manifest systems and not be required to access customs broker systems for these functions.
• Allowing time to properly develop and implement new ACE functions related to in-bond.
• Avoiding piecemeal implementation of in-bond system functionality.
• Requesting CBP to leverage existing ACE automation projects, such as truck refactoring and automated export manifest, to the maximum extent to develop full in-bond automation capabilities for both import and export across all modes.
• Setting a timeline of no later than Dec. 31, 2019, for CBP to require all facilities that handle in-bond freight to automate their in-bond processes.
During Wednesday’s meeting, COAC approved the recommendations to move forward. “We want paperless and visibility in the in-bond process,” said Lisa Gelsomino, president and CEO of Avalon Risk Management, and COAC’s trade co-chair.
Young referred to the recommendations as “phase one” and said the COAC subcommittee will hold a meeting in April to further review and define the strategic direction for in-bonds.
James D. Swanson, CBP’s director of cargo security and controls, praised the subcommittee for its in-bond recommendations. “We want to represent not just in-bonds now but in-bonds for the next 25 years, so that we’re building for the long term,” he said.