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December 2002 - Issue #9

In This Issue:

West Coast Strike - Tentative Agreement Reached
Transportation News
Baltimore Port Update
Recap of Customs Efforts to Secure the Homeland
24-Hour Cargo Manifest Rule - Importers
24-Hour Cargo Manifest Rule - Exporters
Importers Should File C-TPAT Applications ASAP
New Port Director for Baltimore
C-TPAT Seminar Hosted by Samuel Shapiro & Company, Inc.
Protecting Your Privacy Under the 24-Hour Cargo Manifest Rule

Trade Industry News
West Coast Strike - Tentative Agreement Reached

A tentative agreement was reached over the weekend between dock workers and shipping companies on the West Coast, hopefully ending the nagging labor dispute that has lingered for months. The dispute resulted in a 10-day shut-down of twenty-nine West Coast ports, thus prompting intervention by the President in an effort to avoid an economic crisis. The International Longshoreman and Warehouse Union (ILWA), representing dock workers, and the Pacific Maritime Association (PMA), representing shipping companies, signed a six year contract early Sunday.

Before the contested issues can be considered officially settled, the agreement must first be ratified by a majority of the 10,500 members of the ILWA union. Beginning on December 9, 2002, the union will call for a caucus to discuss the contract. It is expected that, at some point in January, union members will exercise their secret ballot voting rights and to ratify the deal. In the interim, union workers will continue working under the terms of the old contract. ILWA President James Spinosa says he feels confident that union membership will ratify the deal. If ratified, the agreement will partially ease some of the recent economic uncertainty; it will also gradually end major transportation disruptions that have loomed during the negotiations which has affected far-reaching global markets.

Some major points include:

  • Contract term extended for six years (previous contracts had three year limits)
  • Computerized cargo-tracking systems for shipping companies intended to modernize and increase efficiency and productivity of West Coast dock workers
  • Substantial increases in compensation and pension benefits for union members in return for some loss of jobs
  • Clearly defined arbitration and dispute resolution improvements intended to avoid past mistakes

Sources: MOL America, Inc. e-mail alert entitled "US West Coast - ILWA (Longshoremen Union) Contract Negotiation Update", dated 11/25/2002. Article of unknown sources originating in Washington entitled "West Coast Dock Workers, Operators Agree Tentatively on Six-Year Contract", dated 11/24/2002. The Journal of Commerce Online "West Coast Port Deal will Bring Pay Hikes, New Technology" dated 11/25/2002.

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Transportation News

Most inland carriers have opened up bookings to the Midwest and East Coast via West Coast ports.   Not all inland destinations are being serviced currently; the individual carrier is making the determination.  Rates have taken a spike during this time; like an auction, carriers are loading cargo based on the revenue of the particular shipment. This is a common practice during these situations.

Carriers providing all-water service to the East Coast are at full capacity. The all-water service situation is expected to worsen, however, if the carriers implement the Port Congestion Surcharge of $500.00 per 20-foot container and $1000.00 per 40-foot container.  The carriers have delayed the implementation date until December 6, 2002.

The ripple effect of the 10-day lockout is still being felt as the container shortage continues in Asia.   The ports of Dalian and Qingdao are terribly tight on equipment.   Carriers are still unable to make port calls in Northern China. There is a major backlog in the Korean ports that are used for transshipment from Northern China.  The situation will improve, as carriers are able to get their vessels back to a normal schedule.    

Airfreight space from Asia is precious, especially in Shanghai.  Rates are above $5.00 per kilo from Shanghai to JFK Airport. The market has softened from Hong Kong, although the rates are running in excess of $4.50 per kilo to the East Coast.

Samuel Shapiro & Company can meet all of the transportation needs of our import and export clients.    We have space on vessels and airlines from Asia to the East Coast. Please contact our Transportation Department at Marketing@shapiro.com if you require assistance.

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    Baltimore Port Update

    Yang Ming, China Ocean Shipping Company (COSCO) and K-Line have announced that they will no longer call on the Port of Baltimore for import shipments from Europe and for export to Asia.   This is a major loss for the port.  As it stands, there are only three steamship lines calling on Baltimore from Northern Europe.

    Mediterranean Shipping has announced that they will begin a direct service from Italy and Spain to Baltimore instead of transshipping containers through Le Havre via feeder service from Italy and Spain.  This more reliable service will benefit customers importing from that region.

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    Recap of Customs Efforts to Secure the Homeland

    The U.S. Customs Service continues to stress the importance of various recently enacted security initiatives. The Container Security Initiative (CSI) continues to be at the top of Customs' agenda. Customs believes that this program, which focuses on the overseas screening of containers before they are transported to the United States, is critical for safe borders and secure trade. All major trading partner countries have been targeted, with shipments from Western Europe identified as a direct threat. To date, Customs has indicated that fifteen of the twenty largest ports of the world, which accounts for more than 50% of cargo containers that move to the United States, are currently in agreements and/or participating with the United States in this program.

    The Customs Trade Partnership Against Terrorism (C-TPAT) program remains another hot topic. Customs continues to emphasize the importance of membership. The current focus on importers, carriers and brokers has substantially increased membership application statistics. In the future, Customs hopes to integrate foreign manufacturers, warehouse operators, and local Port Authorities into the program. Once a company's C-TPAT application has been approved by Customs, the company is essentially labeled a lower security risk. Consequently, the company will be able to take advantage of C-TPAT program benefits. The prime benefit that Customs has outlined is access to the "fast lane", that is, a reduced number of Customs examinations. In 2003, Customs intends to begin conducting "highly- focused security 'validations'" to assure that C-TPAT participants are adhering to the agreement that they made with Customs.

    Related to C-TPAT and the CSI Initiative is the new 24-Hour Cargo Manifest Rule, that will go into effect on December 2, 2002. Customs believes that providing an accurate manifest in advance allows Customs to make thoughtful risk management decisions.  One of the requirements of the implementation of the 24-Hour Cargo Manifest Rule is that ocean / air bills of lading specifically describe the contents of a shipment. Gone are the days where an acceptable cargo description could be stated as "100 cartons said to contain various goods". Customs will no longer allow these types of vague descriptions. Preferred methods for describing merchandise are the use of the 6-digit Harmonized Tariff Schedule (HTS) numbers, or, recognizing that different governments have different rules of classification interpretation, a detailed narrative description. Customs is working to develop a system to provide as much universal uniformity in description as possible.

    The Container Targeting Initiative (CTI), a nationwide program, concentrates on minimizing security risk from a domestic standpoint. Risk determination is based on security enforcement targeting, as well as by a combination of manifest details and entry review.  (The entry review plays a key role when the manifest is deficient.)  CTI training for Customs personnel is identical in all ports; hence, there is no reason to "port shop." The automated targeting system is set nationally, revised monthly and tweaked often. Manifest description, importer of record and consignee information is critical.  Again, in terms of assessing security risk, approved C-TPAT participants factor in at a lower risk threshold.

    There are now a total of one hundred x-ray machines installed in various ports nationwide intended to be used for non-intrusive inspections (NII) of cargo coming into the United States. The overall strategy of all of the security initiatives is to identify low-risk cargo, thus reducing the pool of containers that need to be targeted, screened and examined. Once the pool of containers has been reduced, excluding those that are determined to be lower risk, Customs will then be able to cluster their resources and focus on higher-risk targets.

    In addition to the x-ray machines, in the near future, the Customs' arsenal will also include the use of Radiation Detection Pagers. The intention is that containers, after they are unloaded from the ocean or air carrier, will move through an arch-type drive-through staging area where full container radiation screening will take place. The goal is to perform the screening prior to domestic trucker pick-up, as opposed to when the driver is exiting the pier complex. It is important to note that even though a container is x-rayed or scanned using radiation detectors, it will not preclude the container from a full examination. The results of the initial scans and x-rays will allow Customs to assess the risk and determine the need for further examination of the container.

    With the continued increase in cargo inspections, the need for additional resources has become quite apparent. Accordingly, Customs has hired and trained new personnel to supplement the current security / inspection workforce. The security initiatives that Customs has outlined and implemented overlap and complement each other; the goal is to create a safety net in an effort to increase the security of the environment in which we live.

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    24-Hour Cargo Manifest Rule - Importers

    Please be sure to advise your suppliers, manufacturers and shippers that the U.S. Customs' new 24-Hour Cargo Manifest Rule goes into effect on December 2, 2002.  (Enforcement of this new rule begins January 31, 2003.) It is important to check with each steamship line or consolidator at each overseas shipping location to confirm the cut-off date for cargo.  All manifests must be submitted to U.S. Customs 24 hours in advance, creating an even longer lead time to have cargo in place so that the steamship line can prepare the manifest and submit it to Customs 24 hours in advance of loading the vessel. Holidays and weekends will have to be taken into account when the steamship line advises a cut-off date for a particular vessel.  Some cut-off times to have cargo at the dock may be 72 hours in advance; some my be 96 hours.  Your shipper must confirm.

    Customs will be using this new 24-hour period to review the manifest and based on its contents, will determine if they feel there is any container that may threaten National Security. As a result, it is imperative that a precise cargo description of your merchandise is presented timely. If there is any anomaly or concern, and, if your container is domiciled in a participating CSI port, it will undergo inspection by the CSI team. A CSI seal will be affixed to the container upon completion of the exam. Without presentation of a timely manifest, the container, will very likely not be laden on the vessel.  Customs officials in overseas ports or Customs security contacts in that region will determine the course of action for examination or detention of the container in question at that time.

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    24-Hour Cargo Manifest Rule - Exporters

    At the U.S. Census Foreign Trade Conference in Baltimore on November 20, 2002, Charles Bartoldus, the new Director of the Office of Border Security, advised that Customs is looking at implementing a similar 24-hour manifest rule for all out-going export vessels by January 2004.  The design will likely be very similar to the 24-Hour Cargo Manifest Rule that goes into effect for import vessel manifest cargo on December 2, 2002.  It seems reasonable to expect that all manifests will have to be submitted to Customs 24 hours in advance of the vessel loading for export. This will definitely change the cut-off times for shipments to load on to out-going vessels from the U.S.  If possible, it is a good idea to start looking at your shipping practices now to accommodate an earlier delivery of your goods to the dock for export.

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    Importers Should File C-TPAT Applications ASAP

    Andrew Maner, Customs Commissioner Bonner's Chief of Staff, stated that membership would be limited in the Customs Trade Partnership Against Terrorism (C-TPAT) program.  At a recent conference of the Organization of Women in International Trade in Dallas, Customs advised that they have not put an upward limit on the number of firms that can enroll in C-TPAT, nor has it set a deadline for membership.  But at the same time, they indicated that it will not be open-ended.  "We want to take the companies that are in and make that meaningful, rather than taking the next five years and to let everybody in," Maner stated. These statements place C-TPAT at the top of the “to-do” list for importers.  Shapiro Consulting can help you with this process.  Contact consulting@shapiro.com for assistance with your C-TPAT process review and application.

    Source: Journal of Commerce, dated 11/4/2002.

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    New Port Director for Baltimore

    January 2003 will bring a new Director to the Port of Baltimore. Jim Engleman is a twenty-year career veteran with U.S. Customs. His tenure includes nine years in Miami as well as nine years at Headquarters, which is an impressive enforcement background.

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    Shapiro Products & Services
    C-TPAT Seminar Hosted by Samuel Shapiro & Company, Inc.

    Samuel Shapiro & Company, Inc. will be holding a seminar in January or February 2003 that will focus on the Customs Trade Partnership Against Terrorism (C-TPAT) program. Look for more details in our next issue of "Shap" Talk.

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    DID YOU KNOW ?

    Protecting Your Privacy Under the 24 - Hour Cargo Manifest Rule

    Many importers have expressed concern about the loss of confidentiality of vendor information, once this 24-Hour Cargo Manifest Rule goes into effect.

    Did you know that the following partial list of your import and export manifest information will be made available to the public as well as to accredited members of the press for publication purposes?

    • Shipper Name, Address
    • Consignee Name, Address
    • Notify Party Name, Address
    • Description of Merchandise
    • Piece Count
    • Container Number
    • Vessel Name
    • Voyage Number
    • ETA
    • Ports of Lading, Unlading
    • Bill of Lading Number

    You are in luck, however. You may write a letter to Disclosure Law Officer at U.S. Customs Headquarters and request that this information be considered confidential. For more information and assistance please e-mail our Compliance Department at compliance@shapiro.com or call 1.800.695.9465.

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