Print Page | Contact Us | Sign In | Join RVCF
RVCF Link
Blog Home All Blogs
RVCF LINK focuses on the challenges and trends relevant to today's changing retail landscape. Our newsletter contains case studies, articles of note, and original content regarding collaborative initiatives, research, and training occurring in the world of RVCF.

 

Search all posts for:   

 

Top tags: Omni-Channel  e-commerce  Inventory Management  3PL  Collaboration  Kaizen  Vendor Compliance  Amazon  Brick-and-Mortar  RVCF Fall Conference 2015  RVCF Fall Conference 2016  supply chain  Chargeback  EDI  Onboarding  Shortages  Chargebacks  Compliance Management  Holiday 2014  RVCF Conferences  RVCF Membership  Tariff  Audit  CBP  Economic Sanctions  exports  Holiday 2015  Imports  NAFTA  Ports 

Yusen, We Have a Problem!: In The News Round-up

Posted By Administration, Thursday, January 19, 2017
Updated: Tuesday, January 17, 2017



by Mark Kopp, Yusen Logistics (Americas) Inc.


CBP takes a new look at audits
The November issue of American Shipper has a great article on new audit procedures by Customs and Border Protection (CBP).1 The article starts by reminding us of CBP's switch from enforced compliance to informed compliance. As we've all been working under this system for over 20 years, what's new?

CBP is moving away from focused assessments and moving to audit surveys. CBP has 350 auditors and there are over 300,000 importers in the United States. As full audits can take as long as a year to complete, CBP does not have the resources to thoroughly review every importer.

Audit surveys are short questionnaires sent to importers CBP believes to be a compliance risk in certain areas. The surveys are triggered by "shipment and trend analysis by CBP specialists, internal modeling showing problems in an area such as counterfeit goods…or other information that arouses suspicion." Audit surveys could also be triggered by anonymous tips or criminal investigators.

If an importer's actions come to the attention of CBP through the above information, the importer will receive an "informed compliance package." The letter will highlight CBP's potential cause for concern. It also encourages importers to monitor their transaction data though their Automated Commercial Environment (ACE) portal. In the "package" there will be "a DVD that points out penalty statutes and related regulations" as well.

We're the government, we're here to help
According to CBP the hope is importers will review their import procedures and make corrections and/or prior disclosures if necessary. However the letter ends with a warning that because the importer has been provided with this information, future violations may result in seizures, forfeitures or monetary penalties. In other words, it may be too late. The fear in the importing community is that there may be a formal investigation already underway.

What can you do?
All importers should be doing the following as a matter of good business practice for protection in the case of a formal investigation:

  • Create a compliance manual and make sure employees follow it.
  • Request advice on classification, valuation and trade preference programs.
  • Request rulings from CBP.
  • Consistently perform post entry reviews.

Post entry reviews may also allow an importer to identify duty and cost savings by reviewing classification, valuation and trade preference opportunities.

We received an "informed compliance package" now what?
Inform management about what it might mean for the company and the risks involved. You will also need to conduct a risk assessment of the issues raised by the compliance letter. Check that any prior disclosures and corrective actions taken in the past are still in place and working. Additionally, identify possible loss of revenue and penalties in areas highlighted by the compliance letter.

An importer can only do so much due diligence. Hope you do not receive an "informed compliance package," but the jury is still out. CBP may have reason to be investigating your company – or this could be your opportunity to get management on board for a strong compliance program.

[1] http://www.americanshipper.com/main/news/special-coverage-cbp-becomes-less-lenient-on-trade-65766.aspx#hide


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.

CLICK HERE to return to the JANUARY 2017 RVCF LINK

Tags:  audit surveys  CBP 

Share |
PermalinkComments (0)
 

Yusen, We Have a Problem!: In The News Round-up

Posted By Administration, Thursday, September 8, 2016
Updated: Wednesday, September 7, 2016



by Mark Kopp, Yusen Logistics (Americas) Inc.


Hanjin
Have you heard the one about the Korean steam ship company that filed for receivership? Of course you have. So what does it all mean? According to The Wall Street Journal there are about 25,000 containers crossing the Pacific each day on Hanjin vessels. Hanjin represents 3.1% of global shipping.1

Various ports across the globe are refusing to allow Hanjin vessels to dock for fears that Hanjin will not be able to pay port fees. Even if the fees can be paid, the vessels could be subject to complicated legal claims. Allowing the vessels to dock will only add to port congestion.

The first impact will be increased costs. In a September 1st article, The Los Angeles Times reported that spot shipping rates have increased by 15% as shippers look for alternatives, including air freight.2 The Guardian is reporting freight increases of as much as 50% with rates from China to the U.S. West Coast increasing from $1,100 to $1,700.3 The price increases are also a result of other carriers operating at high capacity due to peak season as retailers are looking to stock shelves for the upcoming Christmas season.

For retailers a price increase for containers still sitting in China may be the easy part. Those orders can still be rerouted with other carriers and arrive on time for the holiday season. A more complicated problem will be for retailers with cargo already on a Hanjin vessel. Ships are currently anchored off shore without being able to unload as stated above. What will happen to that cargo? Some ports, notably in China, have seized Hanjin vessels. Will shippers be able to obtain their cargo on these vessels? The situation remains unclear and will be subject to various legal claims not only from retailers, but possibly many international government entities.

Another question that remains open is what will be the impact on the supply chain downstream? What will be the impact on the railroads and trucking companies that have contracts with Hanjin? Will trucking companies with outstanding invoices to Hanjin be able to collect? Will truckers with exclusive contracts with Hanjin be able to stay in business? How much of the added costs will be passed on to shippers? How is this going to impact manufacturing companies that have been relying on Hanjin for just in time delivery of critical production materials? Will they be forced to lay off employees or shut down? What will be the impact to the consumer when anticipated holiday items are simply not available? It may take weeks if not months to learn the answers to these questions.

FMC Report on Cargo Diversion
In a report issued June 30, the Federal Maritime Commission released a report which states that for the second year in a row, more U.S. bound cargo is being diverted to Mexican and Canadian ports.4 The report cites port congestion as a result of new vessel alliances and labor unrest as the major factors in shippers looking for alternatives to West Coast ports. The report also cites continued chassis shortages, PierPASS fees, and the new VGM requirements as other factors leading to cargo diversion.

The report goes on to point out that strength of the Canadian rail system with on-dock service for seamless transfer of cargo is a major asset for Canadian ports while Lazaro Cadenas is Mexico will be opening a fully automated terminal this year.

The impact of improvements in the Panama Canal, remain to be seen. This could change the trend as West Coast cargo could be diverted to the East Coast instead of foreign ports.

Informed Compliance
According to The Sandler, Travis & Rosenberg Trade Report of August 9th, Customs and Border Protection has been issuing letters to some importers titled "Distribution of Informed Compliance Publications and Other Informative Documents."5

The letters include a list of informed compliance materials available to importers. The implication seems to be that CBP has identified recipients of these letters as possible candidates for audit. The purpose of the letters seem to be to encourage prior disclosures.

Should you receive one of these letters you may want to review your compliance procedures in the event that you may be on CBP's future audit list.

[1] http://www.wsj.com/articles/hanjin-shipping-upsets-global-trade-after-seeking-protection-from-creditors-1472683164
[2] http://www.latimes.com/business/la-fi-hanjin-bankruptcy-20160901-snap-story.html
[3] https://www.theguardian.com/business/2016/sep/02/hanjin-shipping-bankruptcy-causes-turmoil-in-global-sea-freight
[4] http://www.fmc.gov/assets/1/Page/4thAnnualUpdateStudyUSInlandContainerizedCargo.pdf
[5] http://www.strtrade.com/news-publications-informed-compliance-letters-audit-customs-080916.html


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.

CLICK HERE to return to the SEPTEMBER 2016 RVCF LINK

Tags:  Cargo Diversion  CBP  Hanjin  Ports 

Share |
PermalinkComments (0)
 

Yusen, We Have a Problem!: In The News Round-up

Posted By Administration, Thursday, August 11, 2016
Updated: Tuesday, August 9, 2016



by Mark Kopp, Yusen Logistics (Americas) Inc.


According to the Sandler, Travis and Rosenberg Trade Advisory of June 20, U.S. Customs and Border Protection (CBP) has begun increased enforcement of Importer Security Filings. In 2014 CBP adopted an enforcement strategy allowing the ports some flexibility to issue three warnings ("Three Strikes") to an importer before pursuing liquidated damages against that importer. Under this strategy, the ports were required to advise CBP headquarters before liquidated damages would be issued. CBP is now stating that shipments on the water on or after June 30 are subject to the new enforcement guidelines. The "Three Strikes" approach will end and ports will no longer need to notify CBP Headquarters before issuing liquidated damages.

In a related ISF issue, with the merger of COSCO and China Ocean Shipping, be sure you are using the new SCAC code, COSU, when filing your ISF's. You will also need to amend your existing filings to reflect this change.

As a reminder the new SOLAS regulations went into effect on July 1. As we have discussed previously, the new amendment requires shippers to physically weigh containers and their cargo and present carriers with a signed Verified Gross Mass (VGM) document before the container may be loaded on to a vessel. In an article published online by American Shipper on June 30, there remains some uncertainty if this will cause disruption in the shipping industry. The United States Coast Guard, which is responsible for enforcement of the rule, is willing to allow some flexibility as to who must do the actual weighing and issuing for the VGM. There is also some uncertainty as to how the rule will be enforced in different countries around the world.

Recently, a U.S. medical device manufacturer agreed to pay almost $15 million dollars to settle civil and criminal penalties for violation of the Foreign Corrupt Practices Act (FCPA). This begs the question: When was the last time your company reviewed its Corporate Social Responsibility (CSR) policies? Do you have formal written policies in place? When was the last time these policies were reviewed? Have the policies kept up with changes in the law regarding the FCPA, child and slave labor and environmental regulations to name a few? Does your company have a formal training program in place to be certain all employees understand their responsibilities in keeping the company compliant with all government regulations?

Finally, your logistics department should be aware that this is a busy time of year for all U.S. ports of entry. If you have regular truck traffic between the United States, Canada and Mexico, you may want to plan deliveries during off peak hours (9:00 am and 5:00 pm). This is the time when most travelers will be crossing the border so you may be able to avoid delays by scheduling "off peak" shipments.

Until next month…


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.

CLICK HERE to return to the AUGUST 2016 RVCF LINK

Tags:  CBP  ISF  SOLAS 

Share |
PermalinkComments (0)
 

U.S. Exporters Should Seek the Assistance of Customs and Border Protection in Resolving Disparate Tariff Classification and Customs Valuation Treatment in Foreign Markets

Posted By Administration, Thursday, July 9, 2015
Updated: Tuesday, July 7, 2015

by Melissa Proctor, Polsinelli, P.C.


On June 18, 2015, U.S. Customs and Border Protection ("CBP") published a General Notice in the Federal Register announcing a new process that will allow U.S. exporters to request CBP's assistance in resolving disputes with foreign government authorities involving tariff classification and customs valuation issues. See 80 Fed. Reg. 34924. This new avenue should prove to be an important tool for U.S. companies that may, from time to time, receive pushback from foreign markets on the classifications and values that are being used for their products. Exporters are encouraged to seek assistance from CBP when they encounter differing interpretations on classification and valuation in foreign markets, as they can lead to the disparate treatment of their goods resulting in additional costs and potential liability for foreign customers. In addition, U.S. exporters may experience a competitive disadvantage due to these varying interpretations and costly delays in the clearance of their goods in the countries of importation. The following describes the mechanics of CBP's new process as well as provides tips for preparing and submitting effective requests to CBP.

By way of background, when imported goods are entered into the United States, they require a ten-digit tariff classification code under the Harmonized Tariff Schedule of the United States ("HTSUS"). The HTSUS provides detailed commodity descriptions of more than 5,000 items in various chapters, sections and headings. The assigned classification codes are what drive the duty rates that are applied to the imported goods at the time of entry. The HTSUS reflects the classification rules established under the international Harmonized Commodity Description Coding System (or "Harmonized System") developed by the World Customs Organization ("WCO"). The Harmonized System was designed to ensure a uniform approach for the worldwide tariff classification of products. The United States, European Union and more than 100 other countries around the world are parties to the Harmonized System and utilize it as the basis of determining the tariff classification. The Harmonized System Committee ("HSC"), comprised of the various WCO members, meets twice annually to discuss tariff classification issues, settle disputes, and update the Harmonized System nomenclature and Explanatory Notes. Disputes between WCO members regarding proper interpretations of the Harmonized System rules are generally settled by negotiation between the parties. If these issues cannot be resolved, the parties may refer the dispute to the HSC for consideration and recommendations. CBP leads the U.S. delegation at meetings of the HSC.

Similarly, the U.S. rules for appraising imported merchandise reflects those of the international Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (i.e., the "WTO Valuation Agreement"). For example, the primary basis of appraisement for imported goods is transaction value, which is defined as the price actually paid or payable for merchandise when sold for exportation to the United States plus certain statutorily required additions. There are times when transaction value cannot be used as the proper basis of appraisement – in those cases, the value of the imported goods must be based on other approved valuation methods. Proper valuation of imported merchandise will ensure the accurate calculation of duties, fees and taxes in the country of importation. All members of the WTO are expected to have implemented this common set of valuation rules. The WTO's Technical Committee on Customs Valuation ("TCCV") meets twice annually and is responsible for reviewing valuation issues, resolving disputes amongst WTO member countries, and issuing advisory opinions. Disputes arising under the WTO Valuation Agreement may be referred to the TCCV for consideration and recommendations. The United States currently chairs the TCCV, and CBP represents the United States at meetings of the TCCV.

In theory, based upon an item's commodity description, the tariff classification of a good imported into countries that adhere to the Harmonized System is supposed to be identical up to the first six digits; however, as noted above, many products that would normally be expected to be uniformly classified can be assigned widely varying codes by foreign government authorities because of different interpretations of the rules themselves. The same holds true for the valuation of imported merchandise – where the rules may be arbitrarily applied from jurisdiction to jurisdiction. Foreign customers or their brokers may reject product tariff classifications or product values used by U.S. companies, which are reflected on the commercial invoices and other shipping documents. U.S. companies may even be requested to modify the classifications and values reflected on their documentation in order to comply with the mandates of foreign customs authorities – mandates that may conflict with the requirements under U.S. law.

When such situations occur, CBP invites U.S. exporters to submit formal requests for assistance. The requests should be in the form of a narrative letter that is prepared in essentially the same manner as binding ruling requests. For example, requests involving tariff classification issues should include:

  • A detailed description of the merchandise;
  • Clear explanation of the disparate treatment received in the foreign country;
  • Samples, photographs or diagrams of the goods;
  • Primary use and composition of the goods;
  • Purchase price and selling price of the goods; and,
  • Other technical and commercial specifications of the items.

Requests for valuation assistance should be supported by:

  • A detailed description of the goods;
  • Clear explanation of the disparate treatment received in the foreign country;
  • Any assists, commissions, royalties, license fees, discounts, and special packing requirements;
  • The sales terms applicable to the transaction;
  • The relationship between the exporter and foreign customer;
  • Whether the sale for export was made at arm's length;
  • Whether any agents are used in the sales transaction; and,
  • Samples, photographs or diagrams of the goods.

U.S. companies' requests should be addressed to the Commerce and Trade Facilitation Division of the Office of International Trade, Regulations and Rulings. If it agrees with the exporter, CBP will consider the appropriate course of action which may include discussions with the foreign customs administration or dispute settlement before the HSC or TCCV. CBP notes that it will strive to provide an initial response to the exporter within 60 days of the receipt of a formal request and will keep the exporter updated on its progress in resolving the conflict.

CBP notes that, in 2014, a company informally requested its assistance in a situation in which a foreign country was apparently misclassifying its products. The company asked CBP to try to resolve the issue with the foreign customs authorities and refer the matter to the HSC, if necessary. Within 30 days of receiving the company's request, CBP attorneys and import specialists reviewed the issue, agreed that the foreign administration's interpretation was in error, and raised the issue bilaterally with the country in question. In the end, the foreign customs authorities agreed with CBP's position and reclassified the goods accordingly. Thus, the new request process outlined by CBP should be very useful for U.S. companies that find themselves at a commercial and competitive disadvantage as a result of unequal classification and valuation treatment of their products in foreign markets.


Melissa Miller Proctor is a Shareholder with Polsinelli, P.C. With significant experience in the customs laws and regulations, export controls, economic sanctions, and international trade, Melissa is committed to understanding companies' operations and providing assistance geared toward helping them reach their specific business and operational goals. She may be reached at (602) 650-2002 or via e-mail at mproctor@polsinelli.com.

CLICK HERE to return to the JULY 2015 RVCF LINK

Tags:  CBP  Customs  HTSUS  Tariff 

Share |
PermalinkComments (0)
 

New ISF Guidelines from CBP

Posted By Administration, Thursday, June 19, 2014
Updated: Tuesday, June 17, 2014

by Mark Kopp, Yusen Logistics (Americas) Inc.


On May 14, 2014, Mr. Craig Clark, Importer Security Filing (ISF) Program Manager for Customs and Border Protection (CBP), met with members of the trade community in Newark, New Jersey. Mr. Clark's presentation was held under the auspices of Avalon Risk Management and the New York/New Jersey Foreign Freight Forwarders and Brokers Association, Inc.

CBP has processed over 10.5 million Importer Security Filings from approximately 2,500 filers and 264,000 importers. The compliance rate is about 90%. CBP issued guidelines for enforcement of ISF fines and penalties on July 9, 2013. Mr. Clark's comments were to inform the trade community of new guidelines that went into effect on May 13, 2014. The new phase of enforcement strategy is to be final as of May 13, 2015. CBP has also updated the FAQ section of their ISF policy on their website to highlight the new enforcement strategy. More detailed information can be found in the FAQ.1

Some fines and penalties have been issued by the ports since July 9 of last year; however, as of May 13th, CBP has "hit the reset button" on these penalties. Except in cases of fraud or criminal activity, CBP will not be approving liquidated damages claims for violations before May 13, 2014.

In the future, CBP will issue three warnings. This informed compliance outreach may be by e-mail, telephone or letter. The fourth will result in pine and penalties. Fines will be issued for egregious violations, significantly late filings and repeated violations. However, the exact definitions of egregious, significant and repeated will be left up to the individual ports. Local discretion will allow each port to make decisions based on infrastructure or staffing resources. For example, some ports may elect to hold freight rather than issue a penalty. In this regard, all importers are urged to continue to monitor the pipelines from their specific ports of entry.

All fines and penalties issued by the ports will continue to be reviewed by Headquarters. Headquarters will continue to take a measured and common sense approach. CBP plans to issue all fines and penalties within six months of the violation but reserves the right to issue liquidated damages up to the statutory limit six years.

CBP will allow for mitigating factors as provided for in the Federal Register notice of ISF implementation of November 25, 2008.2 In his comments, Mr. Clark specifically mentioned C-TPAT membership as a mitigating factor. CBP understands there may be certain factors outside of the Importer of Record's control such as changes to the bill of lading made by the carrier.

CBP will use an internal national database to monitor violations. The database will allow individual ports visibility to other ports nationwide. This will allow CBP to identify locations and specific importers where enhanced compliance outreach is required.

Importers should monitor the status of their ISF entries. No bill match equals no filing in the mechanical eyes of Custom's computer. While fines and penalties will not be issued until next year, containers arriving with no filing (no bill match) will be subject to examination. The implication is that CBP will not prioritize these examinations. Depending on the merchandise and the need for it, this could actually cost the importer more than a $5,000 penalty to be imposed in the ISF enforcement guidelines. Also, while CBP has repeatedly stated that ISF data will not be compared to the customs entry data at the time of entry, it may be compared during an examination. To date, the largest number of cargo holds has been on the West Coast and Norfolk. Currently only about 1% of containers are being held.

It is important to know that amendments, particularly bill of lading amendments, may be made up to the time of arrival and in some cases after arrival. Amendments do not reset the clock in terms of timeliness. Timeliness for amended entries will be based on the original filing. This new enforcement policy will apply only to ISF-10 filings. ISF-5 violations are not currently being enforced pending changes to the regulations.

[1] CBP
[2] http://www.gpo.gov/fdsys/pkg/FR-2008-11-25/pdf/E8-27048.pdf


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.

CLICK HERE to return to the JUNE 2014 RVCF LINK

Tags:  10+2  CBP  ISF 

Share |
PermalinkComments (0)
 
          Innovative Retail Technologies EDI Academy