From the castle...

With a nod of thanks to our Washington, DC, legislative counsel, a summary of the 111th Congress

2010-12-30T12:35:00.000-08:00

Full props for this belong to Jon Kent of the firm Kent & O'Connor. They are the Washington, DC, representatives of the NCBFAA (of which we are members) and as the year draws to a close, put together a very eloquent summary of the legislative accomplishments and failings of the 111th Congress. When things resume in January, there will be a lot of politics played and we can only hope that while the noise is made on issues that are of greatest philosophical differences between the parties, that the real work of governing the country can still transpire.

Happy New Year to all, be safe and we look forward to great opportunities in 2011.

___________

What the 111th Congress Did and Didn’t Do

        The 111th Congress ended with a long list of unfinished business -- particularly trade-related matters. Following is an overview of the final outcome on key issues:

•    GSP Renewal: Congress did not renew the Generalized System of Preferences (GSP) program due to objections from Senator Jeff Sessions (R-AL) over sleeping bags from Bangladesh, which compete with a company in his state. Last-ditch negotiations to resolve the concerns were unsuccessful, resulting in a lapse in the program after its December 31 expiration date. Efforts to renew GSP will resume when the new Congress convenes in January.

•    Andean Trade Promotion Act: Congress did approve a temporary extension of the ATPA for Colombia and Ecuador -- but only until February 15, 2011. It is hoped that the short time frame will place added pressure on Congress to address both ATPA and GSP early in the new session.

•    Miscellaneous Tariff Bill: The House moved quickly in the lame duck session to approve a noncontroversial package containing hundreds of new duty suspensions for imported products. The duty suspensions fell by the wayside along with the GSP extension in the Senate. It is unclear how the duty suspensions will be handled in the new Congress, since the House Republicans' ban on "earmarks" may impact action on miscellaneous tariff bills.

•    China Currency: Sometimes Congressional inaction can be a good thing, as in the case of legislation to address the undervaluation of China's currency. There was strong interest in the Senate in voting on House-passed legislation to give the Commerce Department authority to impose sanctions on products from countries that manipulate their currencies. Several attempts were made to add China currency amendments to other legislative vehicles, as well as to bring a Schumer-Graham China currency bill to the Senate floor for a vote under the expedited unanimous consent procedures. Time ran out, however, before obstacles could be cleared away for a vote. China currency and other China issues are expected to resurface in 2011.

•    Food Safety: Just when nearly everyone had given up on Food Safety legislation, the Senate and House cleared away procedural hurdles to pass comprehensive legislation giving broad new authority to the Food and Drug Administration (FDA) to regulate food imports. The less onerous Senate measure was the version that was ultimately adopted, though it too will give the FDA a much strengthened role in the importation of food products. Missing from this expansion of authority is sufficient funding -- a cost which some in the Congress have objected to. Additional resources for the FDA will wait until an FY '11 appropriations bill is passed in the early part of the new Congress.

•    Customs Reauthorization: For the past two years, staff at the Senate Finance and House Ways and Means Committees has worked diligently to craft a Customs reauthorization bill, to strengthen CBP's enforcement of intellectual property and import safety. Amid the chaos of mid-term elections and the press of other legislative priorities, the Customs reauthorization bills ultimately stalled in committee.

•    Nominations: The Senate failed to act on the pending nominations of Rebecca Dye and Mario Cordero to be commissioners of the Federal Maritime Commission. The nominations were returned to the President, who will need to resubmit them in the new Congress.

•    Tax on Foreign Procurement By Federal Government: In passing the 9/11 Responders Health bill in the final days of the lame duck session, Congress included an excise tax on any foreign person (from a country who has not signed the WTO Government Procurement Agreement) that receives payment from the federal government under a federal procurement contract for foreign manufactured goods or foreign-provided services. The tax will equal 2% of the amount of the payment received by the foreign person. According to the language of the provision (in Title III of H.R. 847), the tax will be imposed on the payment to the foreign person, rather than on the products themselves. Therefore, it should not directly impact customs brokers.

More accolades from a customer

2010-11-10T15:19:00.000-08:00

We have a very nice customer who sells to lots of stores who are household names. Their product is private label, so while our client is the importer, it is the retailers' logos on the items.

They approached us early this fall because we handle a part of their business along with two steamship lines with whom they have direct contracts. They had some heavy traffic coming for their clients and needed some assurances that somebody could move it.

Courtesy of the partner carrier we are working with, we were able to provide them all the space they needed and also were in a position to price the product more competitively than their other carriers. These two elements combined to give us the opportunity to move a high volume of cargo on their behalf.

I am proud to say that their Camelot team of Gloria, Ellie and Marianna have done yeoman's work in making sure the goods are cleared and delivered. Our carrier partner has been of great assistance as well and we wouldn't have been able to do it without the Hong Kong partner who handles these shipments and vendor communications.

Today we received the following unsolicited e-mail of thanks, and we're especially grateful to have been a part of their success. We firmly believe that our clients fight hard to stay on their customers' shelves and in their catalogs and it is our goal to complement and enhance that effort.

Scott,

We don’t always hear the good stuff, so I wanted to let you know just how great this *** service is.

**** takes care of our largest customer, ordering and managing this account. She mentioned today that our Out of Stocks would have been very high if it wasn’t for these SPEEDY trains with ***. Honestly, I look at the website on Monday and the ship is not at port, but when I review it on Tuesday, our containers are in IDAHO!!!

Unbelievable

Also, please give a pat on the back to Ellie and Gloria with the way they handled the container situation yesterday.

We had 2 hot containers which had an unexpected delay and with their help, we were able to have these delivered today.

Again, we were able to fill our orders.

It is a pleasure working with your team!

Your chance to see me wave my arms for as low as $65.

2010-11-05T12:33:00.000-07:00

I have been fortunate to be able to annually do a seminar for the International Trade Club of Chicago about what I like to call "VH-1's Behind the Broker". That's not the official title, mind you, it's some fancy-schmancy thing about Import 101 or some nonesuch.

Heck, you can read about it on our website here.

The point is, that while I do this in the large-group setting on an annual basis for them (or for other organizations around the Midwest), it is something that can be tailored for delivery to companies if you're interested. The content runs about three hours or so in a lecture style, but the speed varies in a smaller group setting because we can be a bit more intimate and the Q&A doesn't need to be held for the ends of sections.

It's a great way to spend the morning and you can have the benefit of talking to other importers and compare best practices

Unsolicited compliments from customers are the best kind

2010-11-03T22:07:00.000-07:00

When somebody raves about your service, you want to share it with the world. However, it's usually best to make sure they don't mind the world knowing about it first. Not that we get a million hits on this blog, but nonetheless it's important to keep it proper.

We have a great client who makes a rather unique product, inflatable slides. They work hard with their factory to meet shipping deadlines for these things. Over the summer we arranged to get one from China to Europe to meet up with a yacht that was cruising the Med. It required a bit of work, but it was worth it.

So their factory gave us one to move last week, without telling us the deadline in advance. It left us scrambling a bit to change the destination, bump up the arrival time and do some work in a place we didn't plan.

But at the end of the day, THIS bad boy was put on display and will hopefully garner a host of orders for our client:

And after arriving in Hong Kong on Wednesday morning, we got it on a Friday evening flight to Miami where it was cleared, available for pickup by the client on Saturday morning and on display at a show on Saturday evening.

We couldn't have done it without the great partnership from Link Force Cargo Ltd. in Hong Kong who help us out greatly with shipments like this. Thanks to their team for getting it rebooked and out smoothly and for making the possibility to move more of these in the future a reality.

Which takes us to the comments from the customer. Here, in there unedited glory, are their words to us:

GREAT JOB ON THE MIAMI SHIPMENT!!!!!!! WE RECD. IT IN TIME FOR THE PARTY WITH 6,000 ATTENDEES. WE HAVE ALREADY RECD. SOME GREAT RESPONSE ON IT!!!! WE WOULD HAVE NEVER BEEN ABLE TO PULL IT OFF WITHOUT THE HELP OF LINK FORCE AND CAMELOT!!! I WILL BE FOREVER GRATEFUL!!!! YOU REALLY SAVED ME ON THIS ONE!!!! THANK YOU THANK YOU THANK YOU!!! (PLEASE PASS THIS ON TO EVERYONE WHO HELPED GET IT THERE IN TIME)

You're so welcome, Donna. Anytime.

The last two places you ever want your name to appear.

2010-10-21T23:20:00.000-07:00

Companies who import or export are governed by regulatory regimes which grow more complex by the day. Because many companies do not open their doors as an importer or an exporter specifically, they make the transition there. Perhaps they were purchasing domestically and pricing pressure caused them to look overseas. Perhaps they looked at the National Export Initiative as a means to find new business and expand their client base beyond the US shores.

But what happens when something goes wrong? With the passage of the CPSIA in 2008, the Consumer Product Safety Commission has grown more forceful in regulating imports as well as the mechanism of initiating a product recall. This is the first of our two "places you never want your name to appear." A product recall is something that requires a two-pronged strategy of damage control and positive spin. The most recent recall belongs to Graco, who have the expense and publicity of dealing with two million problematic strollers.

The lesson is that while there's no way to one hundred percent insulate from such a thing, the question becomes what can a company do concurrently with the recall to insure that their brand isn't irreparably damaged.

The second place to avoid appearing is on the list of companies who have pleaded guilty to an export violation and paid some sort of criminal or civil penalty for it. The Bureau of Industry and Security is rather proud of the people they get to pay up and loves to issue press releases about them all.

Staying off the radar screen of these agencies requires advanced planning, due diligence, written compliance instructions and the buy-in from top management. It is everyone's responsibility to understand that much like weighing the risks of when to disclosure on a Customs matter, hard questions must be asked about when is it appropriate to come forward in advance or be dragged reluctantly and belatedly in front of the public at the risk of reputation and brand.

Immigration & Customs Enforcement News

2010-10-18T11:47:00.000-07:00

There are people who look at Express Couriers (you know them by their colors, for liability reasons we probably shouldn't name them here) as a means to get all manner of goods into the country without having to undergo Customs scrutiny.

While these facilities and the arrangements they have made with CBP do in some ways seem to be less targeted than standard methods of cargo movement, individuals and companies who think they have carte blanche to move things without fear of reprisal or accountability should take a look at the press release from ICE.

They do look for counterfeit drugs, CD's, DVD's and other items because of their belief that it both infringes on the copyright holder and also could do the recipient harm (in the case of illegal or counterfeit drugs or medicines).

ICE is most associated with the "Immigration" part of their name responsible for deportations and other more public faces of CBP, but they still play a role in trade nonetheless.

Insurers revising coverage to sanctioned countries

2010-10-12T20:57:00.000-07:00

We received the following today from the World Cargo Alliance, the forwarders group to which we belong:

Sanctions Beginning to Affect Insurance Coverage

In response to growing pressure from various countries and political organizations around the world, insurers (including Lloyds of London), are amending their policies to exclude coverage where providing such may violate imposed economic sanctions. This exclusion is already in place in new commercial insurance policies and will be added to existing policies via endorsement by the end of 2010.

The new “Sanction Limitation and Exclusion Clause” reads as follows:

NO (RE)INSURER SHALL BE DEEMED TO PROVIDE COVER AND NO (RE)INSURER SHALL BE LIABLE
TO PAY ANY CLAIM OR PROVIDE ANY BENEFIT HEREUNDER TO THE EXTENT THAT THE PROVISION
OF SUCH COVER, PAYMENT OF SUCH CLAIM OR PROVISION OF SUCH BENEFIT WOULD EXPOSE
THAT (RE)INSURER TO ANY SANCTION, PROHIBITION OR RESTRICTION UNDER UNITED NATIONS
RESOLUTIONS OR THE TRADE OR ECONOMIC SANCTIONS, LAWS OR REGULATIONS OF THE EUROPEAN UNION, UNITED KINGDOM OR UNITED STATES OF AMERICA.

The severity of the punishment for violating sanctions coupled with the broad nature of this new insurance clause places extra emphasis on the insured to verify that none of their operations are in violation. The responsibility to ensure compliance lies solely with the insured and all precautions should be taken to do so.

Treasury Union: Staff CBP for Trade

2009-03-23T10:47:00.000-07:00

For anybody who has been watching, paying attention to or had a passing interest in the activities of Customs and Border Protection, you're aware of the phrase "One Face at the Border." It's been their calling card since September 11, 2001. Custom was, until the creation of the Department of Homeland Security, an agency of Treasury. With their additional border security duties, they were moved to DHS.

The employees of CBP are members of the National Treasury Employees Union (NTEU) even though they're under Homeland Security. At a subcommittee hearing on March 5, 2009, the union suggested that CBP should end their "One Face at the Border" initiative because it is increasingly difficult for one officer to be trained in all disciplines. There are different considerations for passengers, cargo, mail, baggage, agricultural issues and all of these different components have proven difficult to properly cross-train. NTEU says that officers really becoming generalists and the plan should be abandoned and that staffing for import specialists at the ports of entry should be increased to 1,100 individuals by FY 2010.

Written transcripts of the hearing can be found online at the committee's website.

Lacey Act Phase II Enforcement begins April 1st.

2009-03-23T09:52:00.000-07:00

For importers of plant or plant-based products, you have undoubtedly been following the saga of the Lacey Act. From its passage in Congress as part of the Farm Bill last year through the near-panic everyone has had over the wide reaching implications, it has been another challenge at a time when there are challenges a'plenty for importers already.

At a high level, the Lacey Act requires that the genus, species and country of harvest be provided to APHIS via CBP's entry process. A form has already been developed that can be completed, although ABI filers will likely have a function within their software which will allow the data to be transmitted electronically.

Under Phase II, APHIS is only going to require that the information be submitted for the following headings in Chapter 44:

4401 (fuel wood)
4403 (wood in the rough)
4404 (hoopwood; poles, piles, stakes)
4406 (railway or tram sleepers)
4407 (wood sawn or chipped lengthwise)
4408 (sheets for veneering)
4409 (wood continuously shaped)
4417 (tools, tool handles, broom handles) and
4418 (builder's joinery and carpentry of wood)

Information about the Lacey Act can be found on APHIS's website and you can check out CBP's plan for data sets and handling on their website.

Yo, ho, yo, ho a pirate's life for me

2009-03-16T12:44:00.000-07:00

The Boston Globe today apparently had a photo essay on Somali pirates. For those who have read about it but haven't seen some of the players, it's worth a visit.

Find it here.

CPSCIA 2008 Update

2009-02-27T08:39:00.000-08:00

You won't be alone if you don't know what that acronym stands for. There are enough of them in the government nowadays, that's for sure. It stands for the Consumer Products Safety Act of 2008 which was passed into law last year. Among other things, the law mandates new permissible levels for lead paint and phthalates in children's toys and apparel, mandatory third party testing and certification requirements and a significant stiffening of penalties, both civil and criminal, for violations of the Act.

The full text of the act can be found on the CPSC's website here. Over time, the amount of lead in children's items must be reduced first to 600 ppm (parts per million), then 300 ppm and finally to under 100 ppm. Additionally, there will be limits for phthalates as well in both toys and apparel. Phthalates are used in plastic and/or vinyl and can be found in apparel items such as children's footed pajamas. Components of garments will be required to meet the new levels as well, and "components" includes zippers, buttons and other fasteners.

While the certification requirements are in place and importers and distributors should make this information available to CBP, CPSC and the public (if so requested), the testing requirements have been stayed for a year. It seems impossible to state that products meet the new levels without testing, so it's a Catch 22 for companies.

What is most important is that importers (and distributors of imported products) will all be held liable for products which enter the commerce that are in violation of the laws of the act. This means that companies who are distributing products imported by another person or firm will be liable as well.

The penalties are not insubstantial and are ratcheted up significantly. Cvil penalties in August, 2009, will increase to $100,000 per violation and a maximum of $15 million for related violations. Criminal penalties will be up to five years in prison and fines of up to $250,000 for individuals and $500,000 for corporations for each offense.

The moral of the story? Make sure you're complying. If your company is an importer, it has been suggested to take some basic steps to protect yourself including:

Reviewing contracts and purchase orders to be sure that vendors will be responsible for compliance and will indemnify you from loss.
Speak to your insurance company (whoever carries your product liability insurance) to be sure that recalls and related issues are covered.
Insure there is a documented process in place should a recall become necessary to facilitate and expedite the process and demonstrate good faith compliance to the appropriate government agencies involved.

They (the CPSC and CBP) are extremely serious about this. Last year's high profile cases of melamine in pet food, lead paint in toys and even the melamine-tainted in milk in China and subsequent legislative response by the Congress are a clear sign that not complying will not be tolerated.

CBP seminar on Importer Security Filing

2009-02-27T08:27:00.000-08:00

This week CBP's road show talking about the 10 +2 Importer Security Filing program made a stop in Chicago. They held a morning and afternoon session and in both instances, a 400 seat auditorium was packed to the gills.

There were no major surprises to come out of it. The presentation is available on CBP's website for viewing, but it was some content which was added by the presenter that I found most interesting.

Everyone knows that CBP plans to issue report cards for performance on ISF filing. What is less know and is still be worked out are the means by which CBP will enforce during this one year grace period. We were told:

There are CBP officers right now reviewing this data and if importers are not submitting ISF's then CBP is well within their right to issue a do not load (DNL) message to the carrier until such time as an ISF is filed.
The mitigation guidelines for penalties are being written now and an importer's history of filing (or non-filing) of the ISF will contribute to whether or not penalties in the future are mitigated.
While DNL's will not be issued for ISF's which are filed incomplete and penalties for such infractions will not be imposed until 2010, anything which is in the interest of the national security of the United States will be acted upon and the one-year grace period should not be construed as allowing "anything" to get on board.
CBP also indicated that there are no plans in the immediate future to expand this program to other modalities (air, truck, rail).

CBP has been more than clear about their goal to use this as a vehicle to get more information to better target inbound cargo for security. It is not to be used for admissibility purposes and that was again restated. We will wait and see if that truly is the case.

Take the long way home...

2009-02-23T12:33:00.000-08:00

Apparently steamship lines are finding it cost-prohibitive to transit the Suez Canal. Never mind the pirates and such, but apparently the toll fees when they're busy trying to pinch pennies are so high that they're willing to take seven extra days to sail around the Cape of Good Hope rather than the Suez shortcut and even the week's extra transit time is still CHEAPER.

What does this tell us? First, that we really need to dig canals through major landlocked areas and charge through the roof during global shipping boom cycles. Second? That apparently despite being able to use words like "million" or "billion" conversationally, I really have no concept of what things cost in the real world. (Answer: For a 'very large container ship', $700,000.)

Container volume down in Southern California...who could've seen that coming?

2009-02-20T09:16:00.000-08:00

The Journal of Commerce reports that volume slowed 23.4 percent in January from the same period a year earlier. Exports were even sharply lower, down 27.3%.

The state of the shipping industry is one of great fluidity at this point. At last count, more than 1.1 million TEUs of container ships were idled globally. Carriers are even storing containers on those idled vessels. (Journal of Commerce subscription required for container storage story)

And now, carriers like CMA-CGM are going to try to seek rate increases on many if not all of their trade lanes. Here's a news flash: Maybe if you weren't so busy slashing and burning rates to try to incent business that doesn't exist to change, you wouldn't have to be trying to pump those numbers back up again.

We're also being approached by several of our carrier partners wanting us to sign our contracts NOW for 2009-2010, well in advance of their expirations many months down the line. Peculiar and it makes me wonder what their end-game is.

A couple of weeks ago I received the following picture from a buddy who used to work for a big blue steamship line. They're Danish, and not the kind you eat, either. Reminds me of Monroe Harbor during the summer time in Chicago, except they're a little bigger and not nearly as plush. This picture was (allegedly) taken in Singapore.

So you want to learn more about 10 + 2?

2009-02-20T09:15:00.000-08:00

Customs and Border Protection will be traveling around the country with their "10 + 2 Roadshow", not to be confused with the Antiques Roadshow which is far more entertaining but probably contains an equal number of surprises. They're in Chicago next week and we will be sending our entire entry department and key staff who are involved in the process.

The presentation that they will be giving has been posted to their website.

Click here to read it.

First Carrier Casualty: Senator Lines

2009-02-12T14:29:00.000-08:00

Senator Lines this week announced that they would begin to wind down their liner operations as soon as possible. You wouldn't know it from their website, everything still appears hunky-dory, but every trade publication we read had a story on it. Senator, which worked in close alliance with Hanjin, was the “alternative” carrier to some people who didn’t want to pay for a name brand (such as Hanjin or people who use Safmarine instead of Maersk). Other carriers will pick up the slack.

But what about those remaining carriers? Tonnage is being laid up globally because of the massive slowing down all over the world. It is estimated that more than a half a million TEU’s of space is sitting at anchor. As for rates, the once-lucrative Asia Europe trade (where carriers charged far more than on the Eastbound Trans-Pacific) has had some rates fall as low as $100. Granted, there are surcharges for such things as fuel and terminal handling which contribute to a larger all-in number than that, but the question still does remain. What do carriers who invested heavily only a few years ago in larger vessels due to remain afloat?

The carriers of the Trans-Pacific Stabilization Agreement recently put a proposal before the FMC that would allow them to speak about space, pricing and vessel issues to “respond to the rapidly changing global economic climate.” The backlash from every corner of the shipping community was tremendous and the FMC ordered an extension before it came into effect to review it further. This week, the carriers withdrew their proposal.

How low can rates fall? Fuel has fallen significantly, from a high of nearly $150/barrel last year to under $40/barrel now. But there is a floor below which these operators insist on going; that floor is their true cost to move a container. Remember that rates bear very little correlation to cost. It’s mostly supply and demand because, like a grocery store, the Eastbound Trans-Pacific was viewed as a “loss-leader” which was offset by money made on other lanes by global operators. Now, with global traffic and rates in a downward trend, these lanes must make money on their own. Why do the rates continue to dive then? They think that perhaps a rogue action to lower the rates by one or two carriers will incent business to move from one place to another, but the elephant in the room is that there is just less business to go around, period.

Many of these carriers are heavily debt leveraged and rely on access to capital through credit markets to remain in business. As credit continues to remain scant and notes are renegotiated with higher interest payments to become more attractive to investors, there has to come a tipping point. The only question is where and when it will happen again.

We're back...we're sure.

2009-02-12T08:37:00.000-08:00

Okay. I realize it's been, oh, only about five months since the last post. You're right, that's bad.

But things they are a'changing. Effective this year I have been moved into our sales department full time. As that was getting off the ground, I also needed to simultaneously manage our 10 + 2 rollout which has gone far smoother than I anticipated.

Along the way, we've picked up a new President and the heads of all the agencies will be changing as happens to political appointments when administrations change. We're waiting for the new heads of TSA and Customs (the Customs Commissioner, Ralph Basham, is retiring effective 1.March). The Federal Maritime Commission is also pending a chairman and a Commissioner who need to be appointed.

Mix in a little stimulus, a global economic meltdown, the snowiest and what felt like coldest winter so far around these here parts in a while...and like I said, it's been busy.

But we're working on some new technology things on the website and with our marketing. It is my goal in the next month or two to roll out our News Alert by e-mail, especially in light of the recent announcement from the Post Office. We're also going to be reaching out electronically through some managed lists a bit more; so if you hear from us and find a message in your inbox, rest assured that we put it there for a reason. Things are constantly in flux in our line of work and we are going to do our best to deliver the most important changes and updates to you as quickly as possible.

Stay tuned. Stick around. Enjoy, and thanks for reading.

Houston preparing for Hurricane Ike

2008-09-11T07:08:00.001-07:00

Below is a message we received from one our trade partners concerning the status of the Port of Houston with Ike bearing down on the region:

The Houston Ship Channel has closed to all inbound traffic as of 1200/10th and will close to all outbound traffic as of 1800/11th.

The Port of Houston's Barbours Cut and Bayport Terminals will close the gates today at 1200 and will be closed all day Friday Sept. 12th. It is recommended that all inbound freight which can be picked up by consignees be dispatched today. Gates will remain open until all outbound activity has been cleared. Import containers will be grated 2 additional free days this week.

Mandatory evacuations are in effect for low lying areas in Galveston and southern Harris Counties. This includes the area of Barbours Cut in LaPorte, TX.

Our empty container facilities IMS and RCS will also close today at 1200 in preparation for the storm and will remain closed on Friday Sept.
12th.

There are currently no ships working at Barbours Cut.

10 + 2: It's still coming

2008-08-12T10:12:00.001-07:00

We didn’t mention it in this month’s News Alert, but that doesn’t mean it still isn’t something that every importer should be thinking about and developing a checklist to manage.

The formal name is the Importer Security Filing, or ISF for short. It will require that importers (or their designated agents), file ten data elements with Customs 24 hours prior to loading cargo at a foreign port. These data elements are:

Manufacturer name and address (if unknown, CBP will accept the supplier’s name and address)
Seller name and address (for “no sale” transactions, CBP will accept the owner’s name and address)
Container stuffing location (an address is required)
Consolidator name and address (name of the company responsible for coordinating or packing the container)
Buyer name and address (for "no sale" transactions, CBP will accept the owner's name and address)
Ship to name and address
Importer of record number
Consignee number
Commodity’s 6-digit HTS number (per the CBP Web site, CBP will accept the 10-digit HTS code)
Country of origin

What does this mean for importers? It means that if you are a company who does not get your documents until you pay for them, or the supplier is slow in issuing them, or you’re working through a trading company who shrouds the actual identity of the factory, you are going to have to engage suppliers now in a discussion of providing you this information.

Customs has released the data sets to the trade to begin programming, but they are in draft form only since the final rule has yet to be published. At a recent meeting of COAC (the Commercial Operations Advisory Committee), CBP indicated that they are still targeting a late summer, early fall release of the final rule. It must first clear the Department of Homeland Security’s general counsel and then it moves to the Office of Management and Budget for final approval and publishing in the federal register.

A host of suggestions have been made by the trade over the past several months, from delaying the program, to testing it first with a pilot program, to a recent suggest that there be an online profile that importers can create and CBP can use for screening when data doesn’t change greatly from shipment to shipment. Because the rule is being reviewed, CBP is prohibited from making any comments about it, either public or private.

What is for certain, though, is that companies should start laying the groundwork to obtain this information. CBP envisions a period of informed compliance while people work through the processes and then enforced compliance. Penalties for non-submission can reach as high as the domestic value of the merchandise. Have a plan, start now.

California State Senate Approves $30/TEU fee

2008-08-12T09:47:00.000-07:00

An infrastructure and environmental mitigation bill has passed the California Senate and awaits the signature of Governor Schwarzenegger. The $30/TEU fee would apply on containers moving through Los Angeles, Long Beach and Oakland. A similar bill, authored by Sen. Alan Lowenthal, was presented in 2006 and the governor rejected it and suggested several amendments. Over 150 amendments were made to this new iteration and it is expected to be signed into law.

The fees would be charged to the beneficial cargo owners and are eted to generate about $400 million/year in revenue which would be split evenly among intermodal rail projects and environmental mitigation for trade projects. Unsurprisingly, trade associations are opposed for a variety of reasons. Some claim that the issue should be addressed by the federal government and the state doesn’t have the necessary authority. Others claim that it will lead to cargo diversions to other ports because LA/LGB is becoming “too expensive.”

With regards to “too expensive” allegation, the fact of the matter is that there is no other port complex in the United States which has the capacity to handle the volumes that LA/LGB processes. The nation’s largest traders have set up shop in the area and their distribution warehouses are geared to handle cargo which arrives at this port complex. Further, until the Panama Canal widening is completed (which is years down the line) which will accommodate post-Panamax container ships, these ports have a stranglehold on traffic.

This would be just another in a laundry list of fees which shippers would have to pay to do business in Southern California. Already in place is the traffic mitigation fee (Pier Pass) and the Clean Trucks Program will start this fall (pending a court challenge by the American Trucking Association). The Alameda Corridor Charge (ACC) is assessed on containers which move out of the LA basin by rail.

Shippers on the Asia – USWC trade lane, though, have become accustomed to the concept of “all-in” rates. On other lanes, such as Europe to North America, the charges by both the carriers as well as the warehouses which handle the deconsolidation of the cargo, read like a grocery list as long as your arm. There’s a fee for everything, even to recover the additional fuel costs for the propane that forklifts in the warehouse consume.

Typhoon closes Hong Kong

2008-08-05T19:42:00.001-07:00

I was advised this evening by Robert Lee of our partners in Hong Kong, Link Force Cargo Ltd., that their offices and much of Hong Kong are closed today due to a typhoon.

It would appear that they're catching the brunt of a Tropical Cyclone and are closed for business today (Wednesday) locally. So please accept our apologies, but it appears that we will have a one day delay in getting information from them.

Hapag Lloyd bids submitted: Hamburg tops NOL

2008-07-31T07:13:00.001-07:00

Anyone who has been watching the steamship industry (and it's funny that we still call them 'steamships' even though they haven't been powered that way for more than a century) has seen first-hand the effects of industry consolidation. Brands that have been absorbed, merged and gone away over the past decade or so include Sealand, P&O, US Lines, Lloyd Triestino and most recently CP Ships, just to name a few.

CP Ships was most recently bought and integrated into the Hapag Lloyd, the line owned by the giant German travel operator TUI. TUI is under pressure to spin off Hapag by shareholders. Our firm worked with both CP Ships and Hapag Lloyd and I can say with first-hand experience that the merger was abysmal for their customers and employees. When companies start to try to integrate technologies, ships, port calls, vessel rotations, back office and sales, it is rarely seamless. For some reason where carriers merge it becomes just absolutely atrocious.

Enter Hapag Lloyd's sale. There is a consortium of German investors which includes the city of Hamburg and Kuehne & Nagel chairman Klaus-Michael Kuhne who have allegedly submitted the highest bid to keep the company in German hands. All bids are believed to be between $5.46 and $6.2 billion. Other bidders are a private equity firm and NOL, the parent company of American President Lines. Bid amounts have not been announced and there were estimations that the company could fetch as much as $8 billion.

More pollution controls for Beijing pre-Olympics

2008-07-31T06:57:00.000-07:00

As if the security cordon that is falling around Beijing and the other cities where Olympic events are taking place isn't tough enough to work with, the air quality in Beijing is not improving at the rate that the Chinese authorities promised.

The Associated Press has posted a video report of what isn't happening here. So today, the Chinese have announced even more controls. The government has already restricted about 3.3 million vehicles by allowing them to be driven on certain days based on whether the plates end with odd or even numbers. Factories are being closed dozens of miles away. The Financial Times has more.

The odd-and-even system would also be extended to the nearby city of Tianjin and four urban areas in Hebei province, which surrounds Beijing, the statement said.

A total of 105 electronic, chemical, furniture and construction material factories in Beijing would suspend production or the part of the production process that emits pollutants, it said.

In Tianjin, 56 coal-fired power plants and other factories would be affected by the plan. In Hebei the number would be 61 and small steel plants would have to cut production significantly.

Importers who are anticipating orders from factories near Beijing or nearby Tianjin should expect complications in deliveries and delays during the tenure of the games. This is on top of restrictions already in place on the shipping of some types of hazardous materials from key Chinese sea and airports.

ILWU and PMA agree on new contract

2008-07-29T20:33:00.000-07:00

And peace returns to the Waterfront...release below.

A joint statement from the International Longshore and Warehouse Union and the Pacific Maritime Association

San Francisco (July 28, 2008) – After a marathon weekend bargaining session, leaders from the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) announced a preliminary agreement on terms for a new six year contract covering more than 25,000 dockworkers at 29 West Coast ports. The leaders shook hands in San Francisco over the proposed agreement on Monday.

The agreement is subject to ratification by the ILWU and PMA membership. The ILWU and PMA have agreed to extend the previous agreement and resume normal port operations.

ILWU President Bob McEllrath and PMA President Jim McKenna said the proposed agreement meets the needs of both workers and the industry. It allows West Coast ports to be competitive and provides the good jobs that workers and communities need.

The parties have agreed not to discuss details of the agreement until the ILWU and PMA leadership teams have communicated with their respective membership.

CBP announces mid-year FY 2008 IPR seizures

2008-07-28T13:52:00.000-07:00

While the most public face of CBP is focused on border security and interdiction of drugs and prevention of the introduction of WME's to the United States, the trade side has a sizable agenda, too. Protection of Intellectual Property Rights, or IPR, is a key part of CBP's strategy for two reasons. First, it is to protect the legitimate copyright holders and developers of patented products. Secondly, they believe that when illicitly copied products are imported that the money is funneled to illicit activities such as drugs and terrorism.

In a report released on CBP's website, they show what products they have seized and their relative values and percentages of the overall seizure number.

Some highlights from the report are:

The value of the seized goods are $113.2 million, only slightly ahead of the $110.2 million from the same point at FY 2007.
China is the top trading partner for IPR seizures, accounting for a full 85% of the total value. Hong Kong is in second place.
The top product seized by value was footwear at $40.3 million and 36% of the total value. A whopping 96% of the infringing footwear came from China.
Wearing apparel was a distant second with $15.7 million and 14%. The list is rounded out, in order, with handbags, consumer electronics, pharmaceuticals, cigarettes, computers, watches, media, sunglasses and then "other".

Seizures related to safety and security featured $9.2 million in value for pharmaceuticals, the largest by value and percentage (37%). Continuing their string of great press, China accounted for almost 90% of IPR seizures that pose safety and security risks.

CBP aggressively pursues action against companies who are circumventing IPR rules. If importers are engaged in legitimate trade of copywrited material, it is of paramount importance that any documentation provided by the trademark or copyright holder be provided to CBP at time of entry to prevent unnecessary delays, holds or detentions of such merchandise.

It only takes a day (or less) to be wrong

2008-07-25T12:11:00.000-07:00

While the negotiations may be underway, the work stoppages / slowdowns of the ILWU have become more organized and coordinated. The union which under the terms of their contract would take staggered breaks at the terminals are now taking them at the same time in the morning and afternoon and leading to closures of fifteen minutes or more twice daily.

The PMA is claiming that productivity is down 10 - 15% because of this and other "work to rule" activities. Neither side is commenting on how close the negotiations are to concluding a new contract.

ILWU and PMA close to agreement

2008-07-24T11:07:00.000-07:00

The Journal of Commerce is reporting that both sides may finally be close to an agreement which would finalize and put a new contract in place at a time when the shipping public is getting nervous about alleged disruptions by the ILWU on the docks.

__________________

Negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association for a new multi-year waterfront contract are “getting close to the end,” according to a labor spokesman.

“Pensions and other issues are now being discussed, which means we’re getting close to the end," said ILWU spokesman Craig Merrilees.

Merrilees would not specify other issues that been either finalized or remained on the table, except to say that salary levels are still to be decided. He said there had been ongoing comments and ideas about productivity measures sought by the employers' group.

________________

The last thing anyone wants is a repeat of 2002 when the employers locked the union out for ten days and brought out a backlog that took months to clean out and cost the economy billions of dollars. We will have something here when the agreement is formally concluded. It will still require ratification by the rank and file members of the union, but it may be only a formality to the whole negotiation process.

CBP Delays First Sale Rule until at least 2011

2008-07-22T06:54:00.000-07:00

Several months ago, CBP proposed to change their so-called "first sale rule" which would have significantly changed the valuation standard for imported cargo which had been sold through several parties on the way to the ultimate importer of record. CBP wanted to change their regulations so that the value on which the duty was based was the final sale price to the importer rather than the first sale price from an overseas company to a US buyer (who may have subsequently sold the goods to another entity).

The outcry from trade associations and the private sector was huge and Customs received a tremendous number of comments counseling them to not make this change. CBP insisted they had to do it to align their regulations with existing interpretations under the framework of the WTO.

In the recently passed Farm Bill, Congress enacted legislation which would put off until at least 2011 any action on the first sale rule. But for a period of one year, importers will be required to declare to CBP whether the transaction value of the merchandise has been based of a first or earlier sale.

US and Canada align cross-border security standards

2008-07-22T06:50:00.000-07:00

In a signing ceremony in Brussels, Belgium, Commissioner of U.S. Customs and Border Protection W. Ralph Basham and his counterpart from the Canada Border Services Agency Alain Jolicoeur agreed to a framework whereby the standards of C-TPAT and Canada's Partners in Protection program are recognized by each country.

The arrangement acknowledges that both agencies will apply the same security standards and validation protocols when approving companies for membership in their respective programs.

More fees on tap for California

2008-07-22T06:41:00.001-07:00

The California State Assembly voted 45-23 in favor of a $30/TEU charge for containers moving through the ports of Los Angeles, Long Beach and Oakland to pay for infrastructure and air quality improvements.

State Senator Alan Lowenthal has long sought a vehicle through which to raise revenues to pay for needed expansion and repair on local roads and bridges as well as grade separations at rail-highway crossings in different locations.

There has been much push-back against these fees. Shippers are growing fatigued by the myriad of charges they must now pay. The short list includes Pier Pass, the Alameda Corridor Charge, a soon-to-be-imposed Clean Trucks charge and now this. Claims that cargo will find another place to discharge and load really don't hold water because there are no other ports with the infrastructure necessary to support the vessels that call LA/LGB. The post-Panamax ships cannot traverse the Panama Canal and those services are already at capacity and would carry more if the Canal allowed for larger vessels.

We counsel shippers when they start to balk at these types of increases that they should really take these costs and divide them over the value of a typical container of their merchandise and in most cases, this only adds pennies (or less) on the dollar to the landed cost of their merchandise.

July News Alert published

2008-07-18T12:58:00.001-07:00

The July edition of our News Alert is now available on our website and has been mailed to our subscribers. Click here to see the articles or download your own copy.

EC to remove carrier antitrust immunity in October, US FMC to follow?

2008-07-18T12:56:00.001-07:00

In short, no. The Federal Maritime Commission has jurisdiction over steamship lines, but it would require Congress passing legislation to revoke the immunity that carriers now have. Immunity dates back to when there was a substantial US Merchant Marine and served to allow US carriers to sit together and collectively set strategy and policy against foreign competition.

Fast forward to today and there is no American merchant marine to speak of, nor are any of the remaining carriers engaged in regular liner shipping. So the people for whom immunity was granted to strategize against now enjoy that same protection for themselves. And the World Shipping Council, the lobbying and organizing arm for these carriers, vociferously protects that immunity.

But in Europe, Competition Commissioner Neelie Kroes has made it clear that the block antitrust exemption is gone. Beginning October 17, 2008, carriers based in Europe or elsewhere who take part in conferences moving cargo to and from the European Union will not be allowed to participate in conference activities, most notably price fixing and capacity regulation. Carriers have been cautioned that the EU will be watching their activities very, very closely.

CBP creates online method to submit trade violations

2008-07-18T12:37:00.001-07:00

On June 17th, CBP's new system 'e-Allegations' went live as a means to submit suspected illegal import or export activity. Information can be submitted anonymously on a variety of issues ranging from misclassification of merchandise, country of origin markings or IPR violations. Basic data must be submitted and if the submitter provides an e-mail address, they will receive a reply confirmation with a number and an address to mail documentary evidence if they wish. The submission form is available on CBP's website here.

US government resources for exporters

2008-07-18T12:34:00.001-07:00

While Customs, Census and BIS are involved in the compliance side of export transactions, there is another part of the government committed to helping US companies market themselves globally. Check out www.export.gov which is the home of the U.S. Commercial Service, the export arm of the Commerce Department. They offer a suite of services to exporters including researching market opportunities, matching buyers and sellers and securing financing. Fees are quite reasonable and are scaled based on the size of the company. Small business of less than five hundred emloyees can find services to promote themselves or do market resarch for only a few hundred dollars.

Camelot enters digital age with current content

2008-07-18T08:24:00.001-07:00

Ladies and gentlemen:

With the redesign of our website, we realize that it is important to deliver content that is timely and of use to our clients, vendors and global partners. As we work to integrate a formal blog into our website, we are employing Blogspot as a means to get into the space. We welcome comments and look forward to further employing this medium in the future.