10 + 2 - $5,000
Mark Kopp, Yusen Logistics (Americas) Inc.
The news this week revolves around the announcement from Customs and Border Protection (CBP) that full enforcement of Importer Security Filings (ISF) will go into effect on July 9th.
In order to meet the Security and Accountability (SAFE) Port Act of 2006, CBP began requiring importers and carriers to submit information 24 hours before lading of a vessel in order to prevent smuggling and ensure cargo safety.
The ruling requires importers to file ten data elements and the carriers to file two data elements. The ruling was published on November 26, 2008. At that time CBP announced that untimely or inaccurate filings could be subject to a $5,000 fine. CBP began accepting filings on January 26, 2009. They allowed a one year grace period for the industry to put in the necessary procedures to implement the ruling. As things go in Washington, the grace period was extended.
By now all importers should be familiar with the rules and requirements of ISF and have their programs and procedures fully implemented. Therefore, there should be no need to go into the details of the data element required.
But that's the old news. On Friday June 7th, CBP issued CSMS #13-00298 stating, "On July 9, 2013 CBP will begin full enforcement of ISF, and will start issuing liquidated damages against ISF importers and carriers for ISF non-compliance."
What Can You Do?
Be proactive. Check with your customs broker or ISF filer if you do not file on your own. Make sure you understand where you are having existing issues with late or inaccurate filings and what you can do to correct them.
Additionally, monitor your ISF filings through your ACE portal. If you do not have one you can obtain an application from the CBP website at Home >> Trade >> Automated and Operational Systems/ACE: Modernization Information Systems or for questions, write to ACE.Support@cbp.dhs.gov; the service is free to all importers.
You should also monitor the status codes provided by CBP for your shipments. Remember that along with the "10+2" data elements, both the importer and carrier must supply a bill of lading number. This is the number CBP is using to match the importer ISF and carrier AMS filings and to determine timeliness of filings. CBP considers unmatched files as a non-filing. The status codes are as follows:
S1 - Status when AMS bill and ISF match
S2 - Status when AMS bill and ISF do not match at time of filing
S3 - Status when AMS bill and ISF do not match 5 days after ISF is accepted
S4 - Status when AMS bill and ISF do not match 20 days after ISF is accepted
S5 - Status when AMS bill and ISF do not match 30 days after ISF is accepted
Pay particular attention to any S3 status. Check with your carrier to determine if you have submitted the correct bill of lading number. It is possible the carrier may not have submitted the bill of lading number to AMS but it is in your best interest to find out. By the time a filing reaches S4 or S5 it may be too late to make any changes and CBP could consider this a non-filing.
CBP remains vague as to what constitutes an inaccurate filing. Filers are required to "submit information on the basis of what it reasonably believes to be true." The original ruling allowed for amendments to be made before vessel arrival if more accurate information became available; for example, a change in the bill of lading number or a conflict between house and master bills. At this point it is not known if an amended filing will be considered to have been inaccurate and therefore trigger a fine. Check with your broker or filer for clarification on this point as more information from CBP becomes available.
As far as can be determined, all fines and penalties will be reviewed by Washington before claims for liquidated damages are assessed. First violations could be reduced to between $1,000 and $2,000 depending on mitigating or aggravating factors. Subsequent violations could be reduced to $2,500 provided CBP determines that law enforcement goals were not compromised by the violation. No relief will be granted if CBP determines that law enforcement goals were compromised by the violation. We reasonably believe the fine will be capped at $10,000 per ISF.
More information can be obtained by reviewing the FAQ's on the CBP website at Home >> Trade >> Cargo Security.
How Serious Is CBP?
While we can be confident that CBP will enforce this ruling, full enforcement could potentially be a serious impediment to the importing community and carriers. Looking at some hypothetical numbers, in 2012, CBP processed approximately 30 million entries. Let's assume only 10% of these are subject to ISF filing. Let's further assume only 1% of these would be subject to liquidated damages for ISF violations. That's 30,000 entries at $5,000 dollars each, meaning CBP stands to collect $150 million dollars in the next year.
How Serious Are You?
How many ISF filings does your company make each year? Assume 1% of that number and multiply by $5,000. Can you afford to add that amount to your cost of doing business? Obviously not. Therefore you need to be as proactive as possible between to ensure you are doing all you can to make sure your ISF filings are timely and accurate.
Mark Kopp is currently the Senior Manager for Import Compliance for Yusen Logistics (Americas) Inc. Mark has over 30 years experience in all aspects of supply chain management and compliance – from product development and buying, cargo management and shipping, customs brokerage, to warehousing, distribution and retail sales. He has managed/directed imports for Kinney Shoe Corporation, Woolworth Corporation, Russ Berrie & Co. and DHL. He has also served on the Footwear Distributors & Retailers of America government customs council, been a member of the Board of Directors for the Toy Shippers Association, and been an instructor at The World Trade Institute in New York. Currently, he is a member of the NY/NJ Freight Forwarders & Brokers Association and serves on the American Apparel & Footwear Association Government Relations Committee. Mark graduated from Franklin & Marshall College in Lancaster, PA with a B.A. in Political Science.