Many truckers remain unaware that U.S. Customs and Border Protection (CBP) will start requiring automated in-bond filings in late November.
The American trucking industry in recent years has experienced a rush of high-profile federal regulatory actions, including hours-of-service rules and in-cab electronic logging device (ELD) requirements. However, another far less publicized regulation is rapidly approaching. Starting Nov. 27, truckers will be required to file information to U.S. Customs and Border Protection (CBP) related to cargo transiting the country in-bond electronically.
In-bond shipments are imported merchandise that’s allowed under bond to move within the United States without paying taxes and duties. Often, this cargo is held in bonded warehouses or a foreign trade zone (FTZ) until it’s cleared through Customs or re-exported to another country.
CBP said in a Sept. 28 Federal Register notice that automating the in-bond process will not only eliminate the processing of paper form 7512, but help the agency better regulate and track in-bond merchandise and ensure that these shipments are properly entered or exported from the United States as well. The rule does not apply to cargo transported by pipeline or transiting the United States from Canada.
Three types of in-bonds will be affected by the rulemaking, including immediate transportation (IT), which allows merchandise upon its arrival at a U.S. port to be transported to another U.S. port, where a subsequent entry must be filed; transportation and exportation (T&E), which allows merchandise that entered a U.S. port to transit the country to another U.S. port, where it’s exported without the payment of duties; and immediate export (IE), which allows cargo that has arrived at a U.S. port to be immediately exported from that port without the payment of duties.
Long Time Coming. CBP has been working to automate the in-bond process since the mid-1990s, and conducted a pilot program in the early 2000s. CBP came under further pressure to automate in-bonds after the Government Accountability Office (GAO) pointed out weaknesses in the program to Congress back in 2007.
For 20 years, CBP’s Automated Broker Interface (ABI) module has offered filers the ability to create in-bond records in the agency’s database via electronic data interchange sets, QP and WP. QP is the application identifier that creates the records, while WP allows the ABI filer to electronically report the arrival and export of in-bond cargo. The application allowed not only customs brokers to initiate the in-bonds, but also the trucking companies transporting this merchandise. But many truckers failed to use the program, continuing to rely on the paper in-bond form.
In February 2012, CBP published a proposed rulemaking for changes to the in-bond process, including automating form 7512, during which it gathered comments from the industry for preparing its final rule.
In addition to abolishing paper form, the final rule includes provisions that:
• Require submission of the six-digit U.S. Harmonized Tariff Schedule (HTS) number, if available;
• Establish a 30-day maximum transit time to transport in-bond merchandise between U.S. ports for all modes, except pipeline;
• Require carriers to electronically request and receive permission from CBP before diverting in-bond merchandise from its intended destination port to another port;
• And require carriers to report the arrival and location of the in-bond cargo within 24 hours of arrival at the port of destination or port of export.
CBP rulemaking,
truckers were
tired of typing
up the 7512 forms, only to take
them to a customs agent to key
the information into ABI.”
Accelerating Compliance. Cody Armes, who left the shipping industry several years ago but recalled the 2012 proposed in-bond rulemaking, was surprised when he returned to the industry earlier this year as vice president of import-export compliance for Slidell, La.-based Mid-Gulf Shipping Co. to learn that the truck drivers were still carrying the paper form 7512s with their in-bond loads.
Mid-Gulf specializes in transporting imported shipments of ship parts and crew supplies for vessel operators in ports across the U.S. Gulf region. Most of these shipments move in-bond via Mid-Gulf’s trucks from airports to the seaports.
One of the first things Armes, who is also a licensed customs broker, did upon his arrival at Mid-Gulf was to find a solution to digitally process the details of the paper form 7512, including initiating automated arrivals with CBP when the in-bond shipments are loaded on the outbound vessels.
While there are a number of customs technology providers, Mid-Gulf picked Rancho Santa Margarita, Calif.-based CustomsNow as the system to process its in-bond filings. Among CBP’s list of ABI software vendors are about 40 that offer in-bond filing capability, such as Wise Tech Global, Integration Point, Descartes, and Questa Web.
Nic Adams, CustomsNow’s vice president of client services, said some truckers like Mid-Gulf, even before the CBP rulemaking, were tired of typing up the 7512 forms, only to take them to a customs agent to key the information into ABI, resulting in additional wait time and money spent.
If a trucking company decides to self-file in-bonds, it must first submit a request with CBP’s Office of Information Technology to obtain a filer code. CBP will also assign an ABI client representative to the company to help with any ABI transmission difficulties.
With the filer code in hand, CustomsNow will then set up the trucking company on ABI. “They can transmit and see the results in seconds,” Adams said.
He explained that the truckers can use the system to go into the CBP Automated Commercial Environment (ACE) portal to see all of their in-bond transactions, giving them visibility into who obligated their bonds and when the 60-day expiration period for the transaction is over. The trucking companies just pay CustomsNow a small per transaction fee for each in-bond filed. “Truckers who are using the online in-bond processing tools that we offer are glad they did it,” Adams said.
Even with the final rulemaking, Mid-Gulf runs into problems when retrieving in-bond shipments from airports and, for now, still requires its truck drivers to carry a paper copy of the 7512 with them.
“The airline handling stations still require some sort of paper-based proof,” Armes said. “These operators should be able to look into their systems to see that an in-bond was filed and we are there to pick it up.”
Both ocean and air transport modes recognize the house bill of lading-level details, but currently the ocean automated manifest system does not match the cargo release or in-bond authorization to the ocean carrier’s manifest system. In the future, CBP plans to further enhance the ACE manifest functionality to recognize release and in-bond status messages at a house bill of lading level.
Once the automated in-bond filing rule takes effect Nov. 27, CBP will provide the industry a “flexible enforcement” period that will last 90 days.
“CBP in implementing and enforcing the rule, will take into account challenges that carriers may face in complying with the rule, so long as carriers are making satisfactory progress toward compliance and are making a good faith effort to comply with the rule to the extent of their ability,” the agency said.
