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Importers readying for 10+2 enforcement
Thursday, 12 November 2009 00:00

The so-called 10+2 regulation has been in the trade horizon for some years, first in the discussion and rulemaking phases and then with its formal enactment in January 2009. Despite its entry on the books, however, U.S. Customs and Border Protection has held off on the formal enforcement of the regulation, with fines and other penalties such as denied entries, for a full year.

That grace period is about to expire, and importers are making the final tweaks to their systems and processes to make sure that they are in compliance. Although importers should have been working on this for some time, industry observers note that there will be a transition in the run-up to January.

"There are always early adopters" of technologies and systems, said Michael Odrzywolski, a product manager for U.S. Customs Brokerage at Livingston International, a logistics provider and customs broker with head offices in Buffalo and Toronto. "There was a lull during the summer, but now everyone else is kicking into gear as we get closer get to January."

The regulation in question requires that importers collect and submit to CBP, in an Importers Security Filing (ISF), twelve data elements in connection with import shipments. Ten data elements which provide descriptive information in shipments are due 24 hours prior to vessel loading. This information includes the identity and location of the manufacturer, seller, and buyer; the eventual destination; the container stuffing location and the stuffer’s identity; the identities of the importer of record and the consignee; the country of origin of the goods; and the Commodity Harmonized Tariff Schedule number.

Two message sets to be provided by the ocean carrier are due within 48 hours of vessel departure; including the vessel stow plan and any container status messages.

Once enforcement begins, importers will be much more careful to comply with the rule, according to Gary Price, Livingston's director of U.S. marketing. "I expect that once the regulation is being enforced, we will see an increase number of times importers will be modifying their filings," he said.

The rule's requirements present a number of challenges to importers. "One of the biggest problems is coordination between the importer and the carrier," said Jackson Wood, a corporate business manager at eCustoms, a Buffalo-based provider of trade compliance software. "The importer is responsible for the filing, yet it must rely on the shipping company to provide some of the data."

"Importers often struggle getting information, especially for unrelated suppliers," added Price. "They used to collect his information while the vessel was on route. Now the time frame has been moved to prior to vessel loading."

Some importers don't have a great deal of visibility about who they are doing business with. "Where some importers run into issues is with overseas companies that have agents here placing orders," said Paul Kaszubski, managing director for customs compliance at Livingston Consulting. And yet visibility is exactly what CBP is demanding, especially when it comes to receiving favorable treatment as part of programs like the Customs-Trade Partnership Against Terrorism (C-TPAT).

Some larger companies are relying on electronic data interchange (EDI) for the transmission of the ISF to Customs, according to Price. This presupposes that all of the required data is available in electronic format, which is not always the case, and could require the use of specialized EDI service providers.

Alternatives to EDI include the internet portal services provided by both Livingston and eCustoms. Users of the portal are able to log on to the site to enter information pertinent to the ISF.

Portals also allow for collaboration among diverse parties, all of whom must provide information for a common ISF filing. An importer can arrange for overseas supplies to gain access to the site for the purposes of adding ISF data and viewing information pertinent to that particular supplier. Around half of Livingston's portal customers are requiring their supply chain partners by contract to enter relevant ISF data in connection with their shipments, according to Price.

"This minimizes the burden on importers to gather all of this data in electronic format and transmit it on," he said. The Livingston tool, which is a standalone application and part of its electronic customs brokerage package, can also accommodate EDI messages.

The eCustoms ISF tool endeavors to make the data submission process as simple as possible by consolidating it onto a single web page, according to Wood. "We put a lot of research and development into the interface," he said. "Once the information is added to the page and the user believes it is correct the user clicks the submit button. The software then analyzes the submission to make sure all fields are populated with data and sends a notification to the user in case of error. When it is complete, the form is submitted to CBP. Once CBP sends an accepted message, it is returned back to the software and the customer has the green light to proceed with the shipment."

The eCustoms application can also be integrated with an information system infrastructure so that relevant data can be pulled into the application automatically. The eCustoms tool is also one module as part of a larger electronic system which automates importing and customs brokerage processes.

Compliance with 10+2 should make it easier to demonstrate "reasonable care," the key criterion which CBP requires of importers to receive favored treatment of their shipments under programs like C-TPAT. "Those are CBP's two magic words," said Livingston's Kaszubski. The 10+2 process will "expose where a company is not being compliant. Importers should know who their business partners are. It is all part of performing due diligence. They should be maintaining their databases properly to provide the proper tariff classification. They should have process to ensure uniformity and control over what they are presenting to Customs."

CBP views programs like C-TPAT as business partnerships "and they want to know your business," Kaszubski continued. "They ask for much of this information in a general way on the C-TPAT application. With 10+2 CBP is collecting this information for every shipment. They want to know as much as possible about what is coming in. This visibility supports their decisions on which shipments to target. Then they want to be able to locate a shipment that they decide to inspect."

Importers should have their "ducks lined up," advised Kaszubski in order to receive favorable treatment by Customs in the event of an incident which shuts a port down. "That way yours will be one of the first to move when they start releasing shipments." Now is the time, said Kaszubski, for importers to fine tune their processes and procedures to make sure that all parties are providing data on a timely basis. "Customs has given importers a window during which to test everything and iron out any glitches before the 2010 deadline," he said.

American Journal of Transportation, 11/12/2009