January 2003 - Issue #10
In This Issue:
President Signs Homeland Security Act of 2002
President Signs Maritime Security Act of 2002
West Coast Strike Update
24-Hour Advanced Cargo Manifest Rule
Future Redevelopment for NY and NJ Ports
Customs to Impose Collection of Hass Avocado Fee Beginning January 1, 2003
Transportation News
Trade Industry News
President Signs Homeland Security Act of 2002
President Bush signed into law the "Homeland Security Act of 2002" with an effective date of January 24, 2003. The nominations of Thomas Ridge as the Secretary of the Department of Homeland Security and Asa Hutchinson as the Under Secretary for Border and Transportation Security of the Department of Homeland Security were also announced.
The Homeland Security Act of 2002 will:
- establish a Department of Homeland Security (DHS);
- establish a Directorate of Border and Transportation Security, which will include the U.S. Customs Service, the Bureau of Border Security, the Office of Domestic Preparedness, the Transportation Security Administration, the Federal Law Enforcement Training Center and the Federal Protection Service;
- transfer some agricultural inspection functions from the current Agriculture Department;
- transfer the Bureau of Alcohol, Tobacco and Firearms from the Treasury Department to the Justice Department. It will be re-establish as the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATFE), which will oversee firearms, explosives and arson programs;
- establish a new entity within the Treasury Department to regulate and tax segments of the alcohol and tobacco industries, to be known as the Tax and Trade Bureau (TTB);
- maintain the Transportation Security Administration;
- require the President to provide for a reorganization plan for the Department of Homeland Security.
The White House has provided the reorganization plan for the DHS. This plan, subject to modifications based on future discussions with congressional committees, establishes a timeline for the transfer, consolidation and reorganization of various agencies to the DHS, which also includes the transfer of the U.S. Customs Service on March 1, 2003.
Expected Timeline for Organizing the Department of Homeland Security
- January 24, 2003: Establish the Office of the Secretary of Homeland Security, appoint officers (including the Commissioner of Customs) and establish new offices or bureaus.
- March 1, 2003: Transfer certain agencies and functions to the DHS, including the U.S. Customs Service.
- June 1, 2003: Transfer additional agency functions.
- September 30, 2003: Complete remaining incidental transfers of personnel, assets and liabilities.
Sources: "President Signs 'Homeland Security Act of 2002' into Law", from International Trade Today-All News Edition, dated 11/27/2002, "White House Plans March 2003 Transfer of U.S. Customs to Homeland Security, Etc." from International Trade Today-All News Edition, dated 12/05/2002 and "Changes in ATF Resulting From the Signing of the Homeland Security Bill" from ATF News Online, dated 11/27/2002 .
Back to top
President Signs Maritime Transportation Security Act of 2002
On November 25, 2002 President Bush signed into law the Maritime Transportation Security Act of 2002. It allows for the following provisions:
require the U.S. Coast Guard to establish a cargo identification, tracking and screening system for containers shipped to and from the United States. The system will be maintained by the Secretary of Homeland Security. After the reorganization, the Secretary will be responsible for the oversight of the U.S. Coast Guard (which currently falls under the umbrella of the Department of Transportation);
- establish standards to enhance the security of shipping containers, including standards for container seals and locks;
- require the U.S. Coast Guard to evaluate the effectiveness of security systems in previously identified foreign ports, and to deny entry of vessels originating from ports where deficient security measures remain problematic;
- require the U.S. Coast Guard to conduct vulnerability assessments of U.S. ports;
- require individuals who enter secure areas of vessels or other facilities to undergo background investigations as well as carry transportation security badges issued by the Federal government.
Source: "President Signs 'Maritime Transportation Security Act of 2002' into Law", from International Trade Today-All News Edition, dated 11/27/2002, and "Details of the Maritime Transportation Security Act of 2002" from International Trade Today-All News Edition, dated 12/12/2002.
Back to top
West Coast Strike Update
The International Longshoreman and Warehouse Union (ILWA) members are expected to ratify the contract that was agreed to by the Pacific Maritime Association (PMA) and ILWA negotiators two weeks ago. The agreement, which involves a six-year contract, should create relative labor peace on the West Coast. Delays at the terminals are still prevalent, however. Cargo destined for the Midwest and East Coast is moving without major delays via rail.
Back to top
24-Hour Advanced Cargo Manifest Rule
There have been many questions about Customs' 24-hour Advanced Cargo Manifest Rule, which became effective on December 2, 2002. In an effort to clarify some of these concerns, Customs has posted to its website a list of thirty-nine (39) frequently asked questions about the new 24-hour manifest rule. The rule was enacted to give Customs a more effective way to secure U.S. borders against terrorism. Please remember to check with the Shapiro Transportation Department or your logistics provider for specific time frames for vessel loading overseas. To view these questions and answers, please refer to U.S. Customs web site at: http://www.customs.ustreas.gov/impoexpo/24hour_rule.pdf . It is anticipated that Customs will extend this program to export cargo in 2004. If you have any additional questions, please contact consulting@shapiro.com.
Back to top
Future Redevelopment for the Ports of New York and New Jersey
The Port Authority of New York and New Jersey held a Port Industry briefing on December 4, 2002 in Philadelphia, PA. As the largest port complex on North America’s East Coast, the Port of NY/NJ anticipates that container volumes will double within the next ten years. To prepare for such rapid growth, plans for new construction and development are underway to create a 21st century port. The five major goals of the redevelopment program are to:
- improve port productivity
- increase terminal capacity
- accommodate larger vessels
- improve inland transportation
- preserve the harbor
The Port Newark/Elizabeth Marine Terminal has already entered the initial stages of increasing terminal capacity. Although there are tremendous costs associated with revamping this particular 2,100 acre property, the potential outcome of an increase in the overall port capacity will mitigate the painful outlay. Deeper depths at various berths will accommodate larger ships and new stevedoring equipment will expedite the loading and unloading of vessels. New jobs will be created and, hopefully, new business generated. For more information regarding the Port Authority of New York and New Jersey, please visit their website at www.panynj.gov
Back to top
Customs to Impose Collection of Hass Avocado Fee Beginning January 1, 2003
U.S. Customs announced in Administrative Message 02-1633 that they intend to impose the collection of a new fee on fresh Hass avocados scheduled to take affect on January 1, 2003.
The Agriculture Marketing Services (AMS) has requested that the rate of 2.5 cents per pound be collected on fresh imported Hass avocados classified under the Harmonized Tariff Schedule number of 0804.40.0010. The 2.5 cents per pound fee assessment converts to .055115 cents per kilogram under the metric system. The class code of 107 will identify the Hass avocado fee assessment.
As reported in an article in a recent issue of International Trade Today - All News Edition dated December 5, 2002 entitled "Customs' Instructions on the New Hass Avocado Fee Which Begins January 1, 2003", "AMS has stated that although the Hass Avocado Promotion, Research and Information Act of 2000 authorizes the fee for domestic Hass avocados and on imports of fresh, frozen and processed Hass avocados, initially, only fresh domestic and imported Hass avocados will be assessed".
Source: U.S. Customs Administrative Message 02-1633, dated 11/26/2002 and "Customs' Instructions on the New Hass Avocado Fee Which Begins January 1, 2003" from International Trade Today-All News Edition, dated 12/05/2002.
Back to top
Transportation News
Congestion at the Port of New York
There are major delays at the Port of New York due to the high volume of diverted cargo from West Coast ports. Shipments that may have normally moved via mini-landbridge service were diverted to all-water service and have created a major backlog in New York. Some truckers are assessing surcharges of $150.00 due to the delays at the terminals. Maher Terminal seems to be the most congested.
Air Rates from Asia Coming Down
Airfreight rates from Hong Kong and China have dropped over the last week and are anticipated to continue to decline through the end of January. Rates that were over $5.00 per kilo from Hong Kong to JFK at the height of the West Coast strike are now at levels below $3.00 per kilo. These rate quotes do not include fuel or insurance surcharges.
Yang Ming / COSCO / K-Line Leaving the Port of Baltimore
As reported last month, Yang Ming, China Ocean Shipping Company (COSCO) and K-Line have announced, that within the first few months of 2003, they will end direct service to the Port of Baltimore for import shipments from Europe, and for export to Asia. Baltimore will be serviced via barge from Norfolk. This will leave Baltimore with fewer carriers offering direct service, which could result in higher rates. We are monitoring the situation closely with our overseas agents.
Back to top
