Customs to change shipper definition, seek more info from importers
As part of an ongoing effort to collect better data on international shipments before arrival at a domestic port, U.S. Customs and Border Protection will for the first time seek some direct information from importers about their suppliers.
In a meeting with several trade industry groups this week, Customs officials indicated they will revert to the traditional definition of shipper as listed on the bill of lading, instead of forcing carriers to transmit data on the actual owner or exporter of the cargo, according to two industry sources involved with the discussions.
Instead, Customs will attempt to obtain more accurate sourcing information for targeted inspections of shipping containers by encouraging importers to submit merchandise entry information prior to arrival of a vessel, truck or plane at a port of entry rather than waiting up to five days after arrival to apply for custody of the goods.
“They are looking to get information earlier in the supply chain because they realize the manifest is not the best way to obtain” information on the party that originates a shipment, said Jonathan Gold, vice president for international trade policy at the Retail Industry Leaders Association (RILA).
Customs will seek to obtain the entry information at least 24 hours before a vessel arrives at a U.S. port, said Chris Koch, president of the World Shipping Council. Customs will create incentives for importers and their brokers to voluntarily submit the entry information in advance and avoid increased inspections for their shipments, he said.
“For shippers that do that they’ll get credit in (the Automated Targeting System) and for shippers that don’t do that they’ll get scored negatively,” he said.
The Automated Targeting System (ATS) is the high-powered computer system Customs uses to identify suspicious shipments for x-ray scans, as well as physical searches if necessary. The ATS follows a prescribed list of rules to assigning various amounts of points to a shipment based on the port of origination, whether transshipment has occurred, if the exporter or importer is regularly engaged in international trade and other factors. If a shipment scores a certain number of points the system flags it for closer scrutiny. That can mean delays of several days at many ports where backlogs for scanning containers are growing.
Customs “will also look at ACE (the new Automated Commercial Environment computer system for collecting trade information) and the cargo declarations to see if additional data can be collected out of those systems for targeting and work with the trade to see if there any new data elements that need to be created or not,” Gold said.
During development of the advance manifest rules last year, Customs’ industry-led Advisory Committee on Commercial Operations recommended that the agency consider options allowing importers to provide information directly to Customs. COAC said in its March 2003 report that Customs should consider the development of a system similar to the vessel Automated Export System through which detailed inbound cargo information could be collected. Vessel AES is divided into transportation and commodity modules so that carriers can transmit information related to the transportation of the cargo and exporters can transmit detailed commodity information, such as the identity of the factory or vendor.
Customs will soon put out a notice through the Automated Broker Interface about the incentives for filing earlier, Gold said.
Changing the definition of a “shipper” is a victory for the National Industrial Transportation League, the World Shipping Council, the National Customs Brokers and Freight Forwarders Association of America and RILA (formerly the International Mass Retail Association), which joined forces to protest Customs regulations that placed a new onus on international freight carriers to provide information on the actual shipper.
Under a mandate from Congress, Customs issued rules last year requiring advance electronic transmission of shipping manifests to help the government mine commercial data for unusual patterns and inspect shipments with a high-risk for terrorist connections before they reach U.S. shores. In February, Customs postponed its proposed change of the shipper definition that was to go into effect March 4 after the groups complained that the change would cause massive confusion, uncertainty and financial loss in the industry.
Carriers rarely deal directly with the manufacturer of the goods. When a carrier lists a shipper on its bill of lading, or invoice, it frequently is referring to a freight forwarder or other logistics intermediary that consolidates and manages shipments for shippers and contracts for their carriage with a transportation provider.
Customs had maintained the traditional definition of a shipper when it initiated in late 2002 the so-called 24-hour rule requiring ocean carriers to submit inbound manifests for ocean containers a full day prior to loading. When Congress subsequently expanded the pre-filing requirement to all modes of transportation in the 2002 Trade Act, Customs required carriers to list in the “shipper” data field of the Automated Manifest System the name of the foreign vendor, supplier, or manufacturer.
After further review, Customs officials agreed that enforcing the change would do more harm than good because it would require the carrier to obtain information on the intermediaries’ customers rather than its own customers, Gold said. In their petition, the groups argued that the final rule interferes with the terms of transportation contracts because if the bill of lading differs from the name of the seller in the contract banks will not pay for the merchandise under a letter of credit, thus nullifying the shipment. The petition said Customs should use import documents to obtain information on actual cargo owners and exporters because the importer is the party with direct knowledge of the supplier with which it placed an order.
Customs will publish a notice in the Federal Register in a couple of months revising the advance manifest regulations and allowing the continued use of the current interim definition of shipper in the shipper field of the electronic manifest form, Gold said.
Customs spokesman Bill Anthony said the agency would have no comment until the new rules are formalized in writing.