U.S. Customs and Border Protection has recently began to enforce a new program designed to enhance import security. By requiring cargo-related information to be sent to customs before leaving a foreign port, data can be analyzed for potential security risks. By changing processes and obtaining information earlier, the trade community has made adjustments to follow the mandates of this program as customs begins enforcement.
Port Security Concerns
Since September 11, 2001, the Department of Homeland Security and U.S. Customs and Border Protection have become increasingly aware of the threat posed to the United States from terrorism. The Trade Act of 2002 and the Security and Accountability for Every (SAFE) Port Act of 2006 laid out requirements to provide more visibility to ocean cargo entering the U.S. To meet these requirements, the Importer Security Filing and Additional Carrier Requirements rule was made effective on January 26, 2009. Customs provided a “flexible enforcement period” for the first 12 months.
This new program requires ocean carriers and importers to provide shipment-related information through an Importer Security Filing (ISF) to customs before the freight departs a port overseas. The idea is to bring more transparency to ocean cargo shipments and allow customs to target freight that is a potential security threat.
Using Information to Create Safe Ports
In order to screen incoming cargo more effectively, importers (or their agent, such as a licensed customs broker or a freight forwarder) are required to submit 10 data elements plus two from the ocean carrier with an ISF-10 filing. Therefore, the program is commonly referred to as “10 + 2.” For shipments that are transiting the U.S. (for example, shipments arriving at a U.S. port but destined for Mexico) five elements need to be reported along with the ocean carrier’s two, called an ISF-5.
The ocean carrier is already responsible for filing advance cargo information via the Vessel Automated Manifest System (AMS). With the 10 + 2 program, all vessels that transport freight containers are also required to provide the vessel stow plan with standard vessel information and container details, and all of the container status messages that record container-related events.
The 10 pieces of information for U.S. bound cargo are:
- Importer of Record Number
- Consignee Number
- Seller (Owner) name/address
- Buyer (Owner) name/address
- Ship to Party
- Manufacturer (Supplier) name/address
- Country of Origin
- Commodity HTS-6
- Container Stuffing Location
- Consolidator (Stuffer) name/address
The five pieces of information for goods transiting the U.S. are:
- Booking Party name/address
- Ship to Party
- Commodity HTS-6
- Foreign Port of Unlading
- Place of Delivery
The filings are submitted electronically via AMS or the Automated Broker Interface (ABI). An ISF must be submitted at the lowest bill of lading level entered in AMS (in most cases, this is the house bill level). The ISF-10 data elements of manufacturer, country of origin, and commodity HTS-6 code are required to be linked at the line level. Therefore, ISF’s containing different commodities or manufacturers will have multiple lines and be more complex.
Enforcing the 10 + 2 Program
Not all importers jumped on the 10 + 2 bandwagon when it first became effective. In fact, some waited until just before the enforcement date of January 26, 2010 to become involved. Customs had stated that once the enforcement period began, failure to comply would result in penalties starting at $5,000 per ISF transaction and shipments being held at origin.
Just before the enforcement date, Customs announced to various media sources and the National Customs Brokers & Forwarders Association of America (NCBFAA) that they would take a gradual approach to enforcement. The Frequently Asked Questions for 10 + 2 on the Customs and Border Protection (CBP) website was updated to explain, “CBP will apply a measured, common sense approach to enforcement.” It goes on to warn importers that this approach should not be viewed as an extension of the flexible enforcement period. Instead, customs will start enforcement with warnings and possible examinations of non-compliant shipments. Then they will gradually escalate to issuing penalties and placing cargo holds.
Balancing Import Security with International Trade Practices
Maintaining safe ports without disrupting international trade is a difficult balancing act. While the 10 + 2 program does provide more information early in the shipping process, it adds another layer of reporting and cost to international business transactions.
Customs has responded to some of the global trade community’s concerns, yet they remain firm that this program is here to stay and importers must adjust to it. Only time will tell if the goal of keeping ports safe with tighter import security is achieved.