The U.S. Department of Homeland Security published in today’s Federal Register the much-anticipated “10+2” notice of proposed rulemaking that will require 10 sets of data from importers or their agents 24 hours prior to vessel departure and two sets of data from ocean carriers.
U.S. Customs and Border Protection within DHS is seeking the information to enhance targeting of inbound containers for inspections as a means of protecting against terrorist smuggling of mass destruction weapons for a strike on the United States. The security filing was required by Congress in the SAFE Port Act of 2006. CBP has said it will phase in enforcement of the rule over 12 months following a final regulation.
The public has until March 3 to submit comments on the preliminary regulation.
Under the proposed rule, vessel operators must submit their stowage plans identifying the onboard location of each container within 48 hours of vessel departure from the foreign port and submit container status messages on an ongoing basis. CBP said it would allow carriers to dump in the Automated Manifest System all the status messages, regardless of whether the containers are bound for the United States or other global locations, in order to spare them the cost of sorting messages.
Data submitted by importers revolves around identifying the foreign manufacturer or supplier, seller, consolidator, container stuffing location and the consignee. The party that submits the filing is required to update the filing if any of the information changes prior to arrival at a U.S. port. CBP said in the rulemaking that it will take into the consideration whether the importer is in position to verify the information when determining whether there is any fault for an inaccurate filing.
Shippers with cargo remaining on board the vessel or intending to be shipped inland under bond for exportation through another port must submit five pieces of information related to the cargo and destination. The security filing for Freight Remaining on Board can be submitted anytime prior to lading in recognition of the fact that these type of shipments are frequently loaded by the carrier at the last minute.
Many companies that depend on import trade have voiced strong concerns that the new rulemaking will add significant cost and slow down their supply chains because of the extra time needed to collect all the required data from foreign suppliers. Some data elements are not normally collected from suppliers, can be hard to track down or is not known early in the process. A last minute order, for example, may lead to a container being filled from a different production line than normal or there may be no consignee to list because the goods are not sold sometimes until they are on the water. Importers also may not know the container stuffing location, consolidator, country of origin, or six-digit harmonized tariff number 24 hours prior to loading.
Consolidators, in particular, are likely to advance their cut-off times for receipt of shipments to allow importers sufficient time to transmit the security filing to prevent having to unpack a container in the event CBP rejects a security filing because it is incomplete. The extra lag means that importers are likely to increase their inventory levels.
The Office of Management and Budget’s analysis of the rule’s economic impact predicted that shippers will likely have to add another day to their normal transit schedules to account for the information gathering during the first year of implementation and experience an average delay of 12 hours in the second year onward.
Some sources say their companies have determined that the rule will add two or more extra days to their supply chain. One large manufacturer estimates that each extra day equates to about $300 million in inventory carrying costs.
They are frustrated that after years of optimizing the supply chain to move cargo at great speed and reduce cost, shipments must now wait for information to catch up with them.
Traders also are footing the cost to build or modify their systems, which currently don’t have fields for the new data requirements, and will pay fees to brokers or forwarders to transmit the security filing to CBP.
The full notice of proposed rulemaking can be found at http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/E7-25306.pdf. — Eric Kulisch