CBP will begin accessing liquidated damages against non-vessel-operating common carriers that fail to timely and completely file their Importer Security Filings.
Non-vessel-operating common carriers that fail to comply with Customs and Border Protection’s Importer Security Filing (ISF) requirements will now face penalties in the form of liquidated damages.
The maximum penalty for a late or non-filed ISF will be $5,000 per violation.
Either the NVO or ocean carrier is responsible for filing an ISF to CBP for freight remaining onboard the vessel, known more commonly within the container shipping industry by its acronym FROB.
“If you’re creating the bill (of lading), then you’re the one who should be filing the ISF,” said M. Craig Clark, CBP’s branch chief for advance data programs and cargo initiatives in the Office of Field Operations, during a webinar on Friday.
In the case of FROB cargoes, the ISF filing requires five data elements: booking party, foreign port of unlading, place of delivery, ship-to party and the Harmonized Schedule Commodity Code (at the 6-digit level) per item. This filing has become known as “ISF-5.”
In July 2016, CBP expanded for certain types of shipments the definition of the party required to electronically submit the ISF 24 hours prior to vessel loading at an overseas port.
The ISF rule was first implemented by CBP in 2009 to gather advance data about ocean cargo so that it could be screened for potential security threats prior to the vessel arriving in a U.S. port.
The ISF for most types of cargo consists of 10 data elements that provide details about the contents, origin, destination, shipper and receiver of the cargo. The so-called “ISF-10” is supposed to be filed by importers — the party causing the goods to be imported — or their customs brokers.
In 2016, CBP broadened its definition of importer for FROB shipments to include both ocean carriers and NVOs.
When shippers book their freight with an NVO, the vessel operator may not get access to the required ISF data elements because the NVO typically doesn’t want to share confidential business information with the ocean carrier, which is a potential competitor.
In CBP’s view, the ISF-filing change improves security because the NVO is the party with direct knowledge of the information and it’s booking the cargo for the shipper.
However, CBP delayed enforcement of the ISF-5 filings for FROB until March 15 to give the industry time to prepare its processes and systems to comply.
Some NVOs, however, remain concerned about how to handle ISF-5 filings when an ocean carrier diverts a ship to another port. For example, what happens when a vessel is scheduled to arrive in Vancouver, but because of weather or labor disruption diverts to Tacoma, Wash. with the FROB?
“CBP will take into consideration the totality of all the circumstances that led to the diversion,” Clark said. Still, ISF-5 filers need to comply with the regulations, he added.
An NVO can use a third-party provider, customs broker or ocean carrier to perform the ISF-5 filing on its behalf. However, the NVO must provide those intermediaries with the house bill of lading and bond information to complete the filing.
