Industry News

Apr 2017 Show ArticlesClose

Insufficient Bonds

To import merchandise into the United States, you need to provide security to Customs to guarantee that you will comply with rules and regulations. This includes the guarantee of paying the total taxes, duties, and fees related to your entries. A Continuous Bond can conveniently be used for multiple entries across the country. Customs will perform periodic reviews on bonds to make sure that the bond amount is sufficient to protect the revenue of the United States. Once Customs deems a Continuous Bond to be insufficient, it can no longer be used for entries. This means your shipment cannot be cleared and will be held at port until a new sufficient bond is filed. Furthermore, a bond with egregious deficiencies will be rendered by Customs as insufficient immediately. Even though a bond is deemed insufficient the bond still needs to be terminated and the termination process takes at least 15 days. The dilemma lies in the fact that you cannot have two Continuous Bonds on file at the same time with the same importer number. Consequently, if a bond is needed in the meantime, a Single Transaction Bond (STB) must be filed. If you have multiple entries, you will need multiple STBs. This will cause more time and money, as well as increased exposure for the surety.

A bond can become insufficient for a variety of reasons, including massive outstanding debts or claims, a large or risky entry, or a bad address. Be proactive in keeping your bond in good standing. Below are a few tips to prevent bond insufficiency:

  • Know the correct bond amount. Refer to Customs’ formula on calculating bond amounts for more detailed information. This is a general guideline and there may be instances when a higher bond amount is needed, so check to see if the bond amount is adequate for your specific situation.
  • Increase your bond amounts as needed. Bond amounts can be changed throughout the year, not just at renewal. If you anticipate needing a higher bond amount you should proactively contact your surety.
  • Ensure claims are handled. Claims can increase the amount of “outstanding debt” that you have with Customs, so make sure claims are protested, petitioned or paid in a timely manner.
  • Make sure Customs has the correct address. If Customs receives returned mail marked as “undeliverable” due to bad address for an importer with a continuous bond, the bond will become insufficient immediately. This can be corrected by sending Customs a form 5106 with updated information, and notifying the Broker of Record and surety.
  • Monitor activity. Customs and sureties have valuable reports that can be used to determine if your current bond amount is still suitable. Reports can show detailed information for entries and claims.

What if CBP deems your bond insufficient?

If your bond becomes insufficient despite your best efforts, work with Customs and your surety to find an immediate resolution. Customs may allow for a bond termination sooner than 15 days so that you can file an appropriate bond. Sureties can serve as an additional resource to help alleviate the issue. They can increase the bond amount so that it will be sufficient or guide you through Customs’ form 5106 to update a bad address.

Source: Avalon Risk Management

Mar 2017 Show ArticlesClose

Sep 2016 Show ArticlesClose

Hanjin Bankruptcy Impacts Global Supply Chain

The bankruptcy of Hanjin Shipping Co. has created chaos in ports and terminals as well as among importers, exporters and retailers around the world–with giant container ships marooned and retailers unsure if goods will reach their shelves.

South Korea’s largest ocean carrier (the world’s 9th largest) filed for bankruptcy protection on September 2 in Newark, NJ, and stopped accepting new cargo. With its assets being frozen, many ships across the globe have been refused permission to offload or receive containers because of payment concerns. Major cargo disruptions are expected to continue, not only for Hanjin’s clients, but also for companies indirectly employing Hanjin services in numerous vessel sharing agreements with other major ocean carriers.

Other significant impacts to trade are expected as a result of the bankruptcy, including a dramatic increase in freight rates. Reports of rate increases of 50% have been noted in freight markets, particularly in the Transpacific trade.  The timing of the increases coincides with traditional “peak season” rate increases and volume constraints. Market analysts are predicting sustained rate hikes among all carriers. It is also expected that supply chain vendors, such as inland trucking carriers heavily reliant on Hanjin volumes could sink along with the bankrupt carrier.


Steer News Team

Aug 2016 Show ArticlesClose

Status of ACE and Single Window Development And Impact to the Trade Community

The National Customs Brokers and Freight Forwarders Association of America, Inc. represents the interests of the brokerage and forwarding industries and has done so since 1897. With 1,000 member companies with hundreds of thousands of employees and clients, the NCBFAA represents all facets of these industries. In this capacity, the NCBFAA is the recognized primary user of CBP’s trade-facing information systems, notably the Automated Commercial System and its successor the Automated Commercial Environment and the primary user of the PGA’s single-window, the International Trade Data System.

Since the introduction of the Automated Broker Interface and continuously as that system matured and other automated systems were developed, the NCBFAA has supported CBP, recognizing the vital role automation plays in trade facilitation and in protecting the interests of our country. This support has not been without peril and expense. Brokerage companies have absorbed incalculable costs related directly and indirectly to software development, equipment, customization with importers, training, productivity loss, and travel. Some companies were not able to absorb the costs and their businesses have failed. While much has been accomplished, much remains to be done.

The NCBFAA sees stabilizing of current ACE functionality as essential.

System performance issues including slowdowns, delayed-response times and outages of all durations and frequency are occurring at alarming rates well above industry norms. Under ACS, the industry norm for availability of the automated system interfacing with CBP was more than 99%. According to recently published reports, the availability of the ACE system may now be 96%. This would translate to 60 hours of down time per month. Considering this is a 24/7/365 day environment, a 96% systemavailability rate would be unacceptable. An additional untracked aspect is the “slow time” or “delayed-response” time that CBP experiences several times each week. In June alone, there were 9 instances where the impact was severe enough for CBP to notify the trade that entries or PGA records were delayed. Two instances lasted more than one day.

Stabilizing system performance needs to be a top priority for CBP. Sustained, acceptable levels of optimal systems performance must be achieved and maintained before there is mandated use for additional functionality and before additional newprocess development. In addition, pre-arranged and communicated alternate processes must be decided and ready to be put to use in a uniform manner.

The NCBFAA sees current ACS transactional file size as essential.

2 As trade volumes and trade data continue to grow, limitations on file size hinder efficient entry and PGA filings. In June, a limitation was identified and communicated by CBP to the trade that entries above 8 MB’s cannot be accepted via ACE. In many cases, this limitation is more restrictive than the current ACS 999 line level limitation, as the PGA records represent a very large amount of required data per line. This is in direct contradiction to the 9,999 line level limitation communicated throughout the entire development process and it forces additional software and operational changes. 1 File size needs to be addressed and expanded to the original level of 9,999 lines in ACE. Loss of functionality from ACS to ACE is a step backwards, which the NCBFAA cannot support.

The NCBFAA sees regimented PGA adoption as essential.

Much functionality remains to be programmed into ACE, most notably the PGA interfaces via ITDS. The NCBFAA supports growing use of the single window, provided it is implemented in a disciplined manner. Before any additional PGA data is designated as mandatory in ACE, a stepped-in protocol needs to be adopted. This protocol would ensure adequate advance notice time, co-development and testing, issuance of policy and process instructions, and training before mandated use. The NCBFAA supports a process which includes published-for-comment FEDERAL REGISTER notices.

Before any PGA data can be designed as mandatory in ACE, each PGA should:

a. Publish an FRN to indicate the following: proposed data elements per agency program, explanation of the need for the data, rationale for the required timing of the data (at release or entry summary), the impact to the trade of collecting the additional data from the supply chains prior to entry of the cargo, the processes necessary to make that data available, the software costs to develop the programming for each PGA program, and the impact of transmitting the data to CBP, as well as the impact to CBP workload and staffing in adjudicating the additional messages. This data should be collected and reported individually and identified on a cumulative basis to determine the impact to the trade and CBP overall.

b. Each PGA should clearly indicate the intent and benefit of the data collection, which then needs to be weighed against the cost and burden to the trade, as well as the cost and burden on CBP to deliver and adjudicate the results of the review process.

c. Each PGA should be required to adopt a risk management process in screening data that is collected to ensure that the actions do not impact the flow of trade, which is vital to the economy.

d. The PGA must allow for a comment period for the FRN before an interim final rule, or final rule is published.

e. The PGA should respond to comments when publishing the final rule.

f. The PGA should issue policy guidance to ensure there is an understanding of how the changes should be rolled out. This policy guidance should include a clear indication of the PGA’s intent to adjudicate issues at the time of release or entry summary according to the required data submission timeline. 1 A major drawback broker estimates that what is currently filed as one drawback claim would exceed the 8 MB level and result being broken down into as many as 50 separate claims.

g. An adequate and reasonable testing period for the functionality should be given to CBP and the trade (minimum of 3 months for each PGA) giving additional time when overlapping requirements are identified. Only after each of these items has been successfully completed should a PGA filing be made mandatory in ACE.

The NCBFAA sees finishing of ‘core’ functionality necessary and in many cases overdue.

A basic requirement is that ACE offer no less functionality than available in ACS. Items that are in ABI via ACS and not yet in ACE should be developed immediately and tested. This includes ABI protest and Automated Invoice Interface. Processes that were identified as supporting the move to a paperless environment in ABI, and consistently communicated as essential in the ACE support from our industry, should be developed and delivered in ABI immediately regardless of any “Non-CORE” status as identified by CBP. These include: Automated Informal Entry Processes including Section 321 in ABI and submission of CBP Form 3311 in ABI, export manifest, true monthly payment via the statement, and house-bill release.

Items that are not working or ‘not fixed’ should be addressed promptly. NCBFAA has compiled a list which includes items not yet developed or not fixed. While some of these issues could appear minor or occasional, the ACE and ITDS systems need to work flawlessly and envision all manner of unique transactions.

Functionality must be preceded by written policy and process documents.

Instruction manuals, “How To” guides, directions and the like are written for all manner of tools and users. Basic operational instructions, tips, and remedies are common elements. It is essential that CBP and the PGAs release written guidance for each ACE/ITDS function contemporaneously with released functionality and before mandated use. This allows users to understand, adopt and train for new functionality and provides a tool for problem-solving and support decisions.

In summary, the NCBFAA is relying upon the full realization of ACE and the single window. A full realization includes all transaction types and variations, a reliable system with optimal productivity, disciplined adoption of PGAs and collaborative development of added functionality. As it stands, while ACE and the ITDS single window are essential for the survival of customs brokerage, the brokerage community has seen more than their fair share of the burden of adoption. We look forward to the realization of a fully operational state-of-the-art system which will facilitate legitimate trade into and out of the United States and be a model to other border administrations worldwide.


Mar 2016 Show ArticlesClose

Important Notice Regarding SOLAS and the New VGM Requirements

GKG_Law_LogoClient Alert, from Edward D. Greenberg, GKG Law, Washington DC

We have learned that Admiral Paul Thomas of the US Coast Guard has now formally clarified the position of the US Government about the vessel operators’ attempts to enforce the so-called Verified Gross Mass (VGM) rules on US exporters. In a meeting in a SOLAS forum held by the Journal of Commerce today, Admiral Thomas specifically set forth the Coast Guard’s views about the International Maritime Organization (IMO) and carrier guidelines that purported to require, as a legal matter, the exporter listed on carrier master bills of lading to provide a certification of the total weight of any container tendered to the vessel operators, including the tare weight of the container.

Essentially, the Coast Guard is taking the position that (1) as long as shippers (exporters and NVOCCs) have been tendering the accurate weight of the cargo being tendered, there is no need for them to change any processes, (2) the Coast Guard assumes that the carriers have been accurately reflecting the gross weight of the containers (including the cargo and the tare weight of the containers) being stowed in the past, (3) the carriers know what the tare weights of the containers are so that they have the ability to do their stow plans without requiring the shippers to also provide that data, (4) there is nothing unsafe about the existing processes as long as the shippers and carriers have properly done their jobs, (5) the Coast Guard will not do anything to enforce the new VGM rules on either shippers or carriers, and (6) the Coast Guard would need to implement any changes, through an appropriate regulatory rulemaking, before the IMO could properly compel carriers or shippers in the U.S. trade to make any change in their business practices.

This is obviously very good news to US exporters and OTIs. As we have contended in our discussions with the carriers, there is nothing deficient or inherently unsafe about the existing export processes. US exporters and NVOCCs have been required to provide accurate information about the weight of cargo being tendered for export for over 20 years and there is no reason to believe that the carriers have been unable to safely develop their stow plans due to some defect in those procedures. On the other hand, the new VGM rules would create significant problems for US exporters and OTIs, create delays in exporting, increase costs and require additional software programming in order to develop interfaces with the carriers who have still not established mechanisms to accept this data from their customers.

We assume that this is not the last word on this topic and that the carriers will continue to push to require exporters and OTIs to separately provide container tare weights as a precondition to tendering cargo. We believe, however, that it would be unreasonable for the carriers to try to compel shippers to provide anything else when the existing processes already give them accurate information about what is being tendered. Accordingly, we will be monitoring this situation to determine whether it will be necessary to bring any unreasonable demands by the carriers to the Federal Maritime Commission, since the Shipping Act requires that all carriers and marine terminal operators establish, maintain and enforce just and reasonable practices relating to the receipt and handling of cargo.

Parenthetically, it is possible that the carriers may seek FMC approval of a collective Agreement that might attempt to enforce these rules as a set of “best practices.” In that event, we will advise you further with a view towards challenging that attempt at the FMC.

Finally, while the position of the Coast Guard appears to resolve the issue with respect to exports from the U.S., importers in this country may need to be mindful of this situation when entering into commercial transactions with their overseas suppliers. If the commercial terms require the U.S. buyer to take on the obligation to load the cargo of the foreign port, it could take on a significant risk if their supplier does not supply the certified VGM to the carrier. Accordingly, you may wish to alert your customers to this possibility.

May 2012 Show ArticlesClose

CBP Allowing Protests of Erroneous Denial of Retroactive GSP Refunds

U.S. Customs and Border Protection issued a message on May 14 stating that importers may seek redress through protest if they were erroneously denied a refund of duties paid on goods otherwise eligible for duty-free treatment under the Generalized System of Preferences that were entered or withdrawn from warehouse for consumption during the period Jan. 1 through Nov. 4, 2011, when authorization for GSP lapsed. CBP stated earlier this year that requests for such refunds were due by April 18 and that protest was not available as a refund mechanism. However, CBP is now clarifying that protests are available for (1) those entries that were filed with the special program indicator “A” at entry summary but for which the automated scripting failed to liquidate the entry with refund and (b) those entries for which a refund was requested retroactively but were denied in error.

Slow Steaming—Impacts on Shippers

“Slow Steaming” occurs when ocean carriers reduce their overall sailing speeds in order to reduce costs, particularly fuel costs. But what had been a strategy that brought the shipping industry steaming back to black in 2010 from the red losses of 2009, has turned into a necessity of carrier survival whose effectiveness may have reached its limit in 2011–2012.

Many carriers—most notably Maersk—have cut average speeds down to levels akin to the most efficient clipper (sailing) ships of the late 19th century. Typical slow steaming can cut average speeds from around 25 knots to around 20 knots. Some carriers have taken to “super-slow steaming,” reducing average speeds even further into the low teens, though it appears that this strategy can actually increase costs in some circumstances. Carriers have employed slow steaming aggressively in recent months not only to reduce costs but to help accommodate the excess in supply and lack of demand in shipping markets.

While slow steaming can have positive economic benefits for carriers and a welcome reduction in greenhouse emissions, there are significant negative impacts that shippers can experience. Sudden delays and lack of delivery visibility can be unwelcome surprises. Transit delays—often in the 3-4 day range per deepwater lane—can also result in increased in-transit inventory, negative cash flow, and customer service problems. Shippers should consider a more aggressively managed carrier and transit-time mix, and perhaps a move to NVOCC services and away from direct carrier relationships to take advantage of all options in the marketplace.

GSP Refunds—Did You Get Yours?

US CBP SealBy now, importers of GSP merchandise should have received their automatic refund checks from Customs on product entered or withdrawn from warehouse for consumption during the period from January 1, 2011 through November 4, 2011.

U.S. Customs and Border Protection has been processing GSP refunds for all entries filed via the Automated Broker Interface—this would include any entries filed by Steer—with the Special Program Indicator (SPI) A, for duties deposited on GSP-eligible merchandise.

Claims for retroactive GSP benefits, on non-ABI entries or entries filed without the SPI A, must be filed by May 3, 2012 and should be filed in the Port of Entry. Please be advised that bill H.R. 2832 did not include a separate 180-day protest period. Refunds were also issued without interest—so they should be easy to match against duty deposits.

John Greenlee, VP of Import Operations at Steer Company, spearheaded a program for Steer clients to ensure they received all of their GSP refunds. Steer clients were issued a comprehensive list of GSP entries filed by Steer where refunds were due. “CBP’s refund process,” Greenlee said, “is an automated process, and importers are advised not to assume that eligible entries will liquidate with a refund. We’re helping importers with a double-check system to ensure they get their refunds.”

If you are an importer who has not reviewed your GSP import list against your refunds, please contact your Steer import representative, and we will be happy to assist you through this process.

From the IWPA »
The Lacey Act Declaration Requirement: An experiment that failed.

One of the most expensive and ineffective provisions of the 2008 Lacey amendment was the mandate that all products containing plant or plant material imported into the U.S. had to be accompanied by an import declaration form. This form had to include the scientific name of the plant, the value of the importation, the quantity of the plant, and the name of the country from which the plant was taken—a bureaucratic burden had never before been required since Lacey’s original enactment in 1900.

The declaration is such a heavy-handed regulatory overreach that even the Animal and Plant Health Inspection Services (APHIS)—the federal agency responsible for its implementation—described it as “burdensome,” “prohibitively expensive,” and “difficult if not impossible” to comply with.

Since its implementation in 2008, the declaration requirement has not been associated with a single conviction under the Lacey Act, nor have any of the current Lacey investigations originated from the declaration form.

Beyond lacking any real enforcement benefit, the process is burying the federal government—and honest business owners—under tons of paperwork, both figuratively and literally. According to APHIS’ own calculations, the agency is receiving approximately 9,200 declarations per week with annual burden to government and industry of up to $56 million.

Not only has this crush of paperwork forced APHIS to stop incorporating new HTS codes as required by statute, but there is no ability to examine these import declarations, which have been stockpiled in warehouses.

Quite simply, the declaration requirement is a four-year-old experiment that didn’t work. It has imposed unnecessary costs on businesses and the federal government without enhancing enforcement or the environmental goals of the law. APHIS is proposing regulations to mitigate the unnecessary burdens of this bureaucratic nightmare. But the simplest and most effective solution is to kill the declaration requirement entirely.

The absence of an import declaration in the statute prior to 2008 did not adversely impact the effectiveness of enforcement under the 108 year-old Lacey Act. We are confident that eliminating the failed declaration requirement will have no effect on Lacey over the next 108 years and beyond.

Read full article on International Wood Products Association Website