Shipper takeaways for implementing ISF
By Eric Kulisch
The two biggest steps for successfully complying with the Importer Security Filing requirements:
‘ Fully understand one’s supply chain and the parties who have the various pieces of required data.
‘ Intense internal and external communication.
That’s according to Virginia Thompson, manager of import/export operations and compliance at Crate & Barrel. She and other industry representatives spoke on a panel at U.S. Customs and Border Protection’s annual Trade Symposium in Washington to describe some of the best practices and pitfalls companies are encountering as they ramp up for the Jan. 26 enforcement deadline.
Crate & Barrel has opted to self-file its ISF using Web-based software from Integration Point that automates the collection and validation of the advance shipping data. Crate & Barrel simply added a couple of new fields — bill of lading number and container stuffer/location — to its Advance Shipment Notice filed by the vendor. The notice flows to the company’s enterprise resource planning system, which adds the other eight data elements from the purchase orders and stock keeping units and pushes the information to the Integration Point software for filing.
Now that most foreign exporters are aware of the advance data required by CBP at origin, U.S. importers need to impress on their suppliers that how, and when, the information is collected and shared differs for each company and that they must follow each customer’s specific requirements, Thompson said.
Compliance staff should also spread the word and work collaboratively with their purchasing, information technology, and logistics departments to coordinate information gathering and product movement. Transportation providers and customs brokers should also be educated about the company’s expectations.
Although Crate & Barrel has been proactive in preparing for ISF in 2009, it is worried about the upcoming enforcement date because many vendors that are new or only ship to it once a year may not fully understand the significance of the requirement, Thompson said.
She urged importers not to underestimate the ISF as simply an earlier version of the customs entry because it has a relatively hard deadline by which it must be filed. Big importers with comprehensive purchase order management systems probably have visibility into when particular shipments are ready to leave the factory or warehouse, but the vast majority of shippers do not receive that real-time data and know when to file the ISF, Thompson said. She predicted international traders would develop an ISF arrival notice tool in the near future.
Crate & Barrel has gone beyond simple ISF compliance measures and is using the rule to drive business processes.
Thompson said the retailer has made ISF a regular part of its corporate audit process to check whether the forms match entries and are filed on time.
ISF has also become a part of ocean rate negotiations. Last spring, the Northbrook, Ill., company conditioned its contracts with shipping lines on making their booking number the same as the bill of lading number, which is required on the ISF form. Many ocean carriers have made the move to assist their customers because the traditional time for issuing the bill of lading after receipt of the goods is too late to meet the ISF filing deadline 24 hours prior to loading.
The home furnishings company also plans to demand its dozen freight forwarders have automated information systems for sharing information and separately filing the ocean manifest to CBP so that ISFs are completed on time and are not rejected.
‘I’m not saying we would absolutely never use a forwarder that wasn’t (automated), but their rates and service would have to be so good for us’ to justify the added staff time and effort to manage the process, Thompson said.
Michael Laden, a principle at supply chain consultancy Trade Innovations and affiliated importer direct-filing service TRG Direct, also recommended importers list their ISF expectations in purchase orders, contracts with carriers and consolidators, and vendor payment terms.
Despite the compliance burden, Thompson said ISF has provided some windfall benefits. The regulation forced Crate & Barrel to set up systems that have provided heightened visibility of shipment status at origin, primarily by eliminating the black hole of information between the factory and the local freight forwarder. The extra information allows a shipper to control the process better. Although the retailer has had to add transit days for some shipments to allow time for data procurement, it has also been able to reduce days in transit in other cases because of better understanding of the vendor and transport operations.
The importer has also been able to identify opportunities to consolidate shipments, especially in situations where it discovered two different trading houses it buys merchandise from both use the same manufacturer. Instead of paying a freight forwarder to consolidate the loads near the port the shipments can be co-loaded at the manufacturing site, Thompson said.
The supply chain data has also helped resolve situations involving damaged merchandise because it is used to determine where in transit the damage occurred, she added.
Michael Ford, vice president of regulatory compliance and quality at Philadelphia-based logistics provider BDP International, suggested that filers use the manufacturer’s Dun & Bradstreet (DUNS) identification number instead of the name and address to reduce the chance of data entry errors.
He also warned shippers of bulk containers that the rule requires them to file an ISF for any chemical or other residue that is listed by the carrier on the manifest.
Panelists urged small importers to pre-classify as many products as possible early in the process instead of waiting until filing time to figure out the required harmonized tariff number.
Importers who have authorized some of their service providers to start entering ISF data overseas have encountered communication problems in China, Laden said.
Some suspect that the transmission interruptions are occurring because they must go through many filters the Chinese government has imposed on Internet traffic before it leaves the country, he said. Several TRG Direct clients have worked around the problem with better results by transmitting through a Hong Kong broadband gateway.