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July 2005 - Issue #39

In This Issue:

Compliance Still Matters
Baltimore Screens Containerized Cargo in 30 Seconds
Solid Wood Packing Material – USDA Update
Legislation to Combat Counterfeit Goods
Air Cargo Security Bill
Customs Issues Informed Compliance Publication for Non-Ferrous Metals
News from the Port of Savannah
VPA Security Charge Effective Date
Several Exporters Fined for Unauthorized Exports
Samuel Shapiro & Company, Inc. Receives “Value Chain” Award from Unique Industries
Transportation Update
Export Essentials Seminar – Register Early and SAVE!

Since the attacks of 9/11, Customs & Border Protection’s primary mission has been preventing terrorists and terrorist weapons from entering the United States. However, this does not mean that trade compliance has disappeared in the wake of cargo security. In fact, the quality of data Customs receives from importers is more critical than ever. Customs must pay attention to compliance or else “it won’t spot a bad guy who is exploiting those trade rules to hide what he’s up to,” states Stephen Flynn, a national security fellow at the Council on Foreign Relations.

A low risk targeting score depends not only on an importer’s C-TPAT status, but also on the company’s past compliance history. A compliant shipment is a lower risk shipment. However, non-compliance, such as inadequate invoicing or past marking violations, will raise red flags and increase the likelihood a shipment will be examined.

If you are a C-TPAT member, you may want to consider enrollment in the Importer Self-Assessment (ISA) program. ISA puts your compliance program in your hands, not in the hands of a Customs auditor. By joining ISA, an importer is removed from the Focused Assessment pool. ISA participating importers make a commitment to self-audit and maintaining adequate internal controls.  ISA best practices include a management commitment, developing formal policies, establishing training programs, and conducting internal control reviews. ISA benefits include special consideration in mitigation of penalties and liquidated damages. However, the best benefit will be a higher level of compliance in your importing program. Remember, regulatory compliance is not an option!

For information on joining C-TPAT, ISA, or having one of our consultants assist you in a review of your compliance program, please contact consulting@shapiro.com.

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Department of Homeland Security, U.S. Customs and Border Protection Commissioner Robert Bonner joined Maryland's governor Robert Ehrlich at the busy Port of Baltimore for a demonstration of a new $6 million X-ray system that can quickly scan cargo for contraband.

The new X-Ray machine can display an X-ray image of the contents of cargo containers within 30 seconds. Baltimore's machine is one of three operating at American ports; the other two are in El Paso, Texas and Savannah, Georgia.

Bonner, commissioner of the federal agency charged with keeping terrorist weapons out of the country, trumpeted the security improvements at America's seaports, which he said were "the Achilles heel" of homeland security in the wake of the Sept. 11, 2001, terrorist attacks.

Two Homeland Security officers operated the machine, which weighs 180,000 pounds and is 42 feet long, 32 feet wide and 21 feet high. One drove it over the container, while the other sat in a control room above and matched the X-ray image with the listed inventory of the cargo.

Shipping into the port of Baltimore just became safer.

The complete story is posted on the Customs website (June 2, 2005) at:
http://www.cbp.gov/xp/cgov/newsroom/press_releases/06022005.xml

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The U.S. Department of Agriculture's (USDA) Animal and Plant Health Inspection Service (APHIS) is set to implement its regulation for the importation of un-manufactured wood articles.

The regulations incorporate international standards. The international standards call for wood packaging material to be either heat treated or fumigated with methyl bromide and marked with an approved international mark certifying treatment. The treatment certification mark harmonizes the regulations and replaces country-by-country certifications.

Be certain to inform your suppliers to use only treated wood and to provide fumigation certificates. Best practices include stating this on your purchase orders; it will protect you.

If merchandise arrives in USA territory and is found packed with non-treated wood packing material, it can be ordered to be returned intact back to origin at your expense. In some cases USDA will permit packing material to be removed and the container fumigated; the removed packing material will have to be packed and re-exported to origin at the importer’s expense.

The expense of a delay in clearing merchandise and the possible return of the goods is a serious matter, so please be sure that your shipper is following the new regulations to insure that you are not penalized.

USDA updates, announcements and media advisories are available at: http://www.aphis.usda.gov. 
 

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On May 20, 2005, Senate bill 1095, “Protecting American Goods and Services Act of 2005,” was introduced by Sen. John Cornyn (R-TX) and Sen. Patrick Leahy (D-VT). The legislation expands the definition of “traffic” to include any distribution of counterfeit merchandise with or without the expectation of gaining something of value, and it criminalizes the importation and exportation of counterfeit goods, including bootleg copies of copyrighted works into and out of the United States, by imposing significant penalties on those possessing counterfeit goods with the intent to sell or traffic in them.

On May 23, 2005, the House approved H.R. 32, the “Stop Counterfeiting in Manufactured Goods Act.” This bill prohibits trafficking in counterfeit labels, stickers, tags and documentation (these items are often trafficked separately from the counterfeit goods themselves and are married to the goods downstream in the supply chain). The legislation also includes mandatory forfeiture and destruction of counterfeit goods, as well as forfeiture of property and assets derived from counterfeiting.

Counterfeit goods are estimated to comprise up to 7 percent of global trade, and cost our economy hundreds of billions of dollars. World Health Organization estimates put the counterfeit drug market at $32 billion a year. Counterfeit goods are typically inferior to the original products and can cause harm to the consumer as well as damage the reputation of the legitimate rights holders.

The Senate Committee on Homeland Security & Government Affairs states counterfeit goods provide easy cash for organized crime and terrorists. Customs & Border Protection reports that the sale of counterfeit and pirated music, movies, software, fake drugs, and wearing apparel “accounts for much of the money the international terrorist network depends on to feed its operations.” As the U.S. has infiltrated and shut down terrorist financing schemes wired through banks and various charities, terror groups have looked for other avenues and have discovered and are exploiting counterfeit sales.

Customs devotes substantial resources to target, intercept, detain, seize and forfeit shipments of intellectual property rights (IPR) violative goods. The vast majority of seized goods are wearing apparel and cigarettes. In each of the past two years, Customs has reported nearly $100 million in IPR seizures.

In a speech on June 1st in Beijing, Secretary of Commerce Carlos Gutierrez professed his concern with the level of IPR enforcement in China, calling the abuse a crime. “Intellectual property rights are not up for negotiation. The abuse of intellectual property rights is not acceptable. We need to come up with a solution and we need to do that pretty quickly.” Gutierrez warned that trade tensions with China would increase without enforcement of IPR in that country.

If you have any questions about protecting your company’s intellectual property rights, please contact compliance@shapiro.com.

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On May 3, 2005, Representatives Ed Markey (D-MA) and Chris Shays (R-CT) introduced House Bill H.R. 2044 in an effort to improve air cargo security. The bill was referred to the House Subcommittee on Economic Security, Infrastructure Protection, and Cyber-security on May 19, 2005 for further review.

The bill’s proponents state the public is at risk when the government fails to screen 100 percent of the cargo carried on passenger planes and all-cargo aircrafts. When commercial cargo is loaded onto passenger planes or placed on aircraft that transports cargo, only a small percentage is inspected.

Representatives Markey and Shays have introduced the bill referred to as the “Air Cargo Security Act” in an effort to encourage the Secretary of Homeland Security to establish and begin implementing a system to inspect all cargo transported on passenger planes and all-cargo carriers so that cargo is subject to the same level of scrutiny as passenger luggage.

This legislation also includes additional measures to close the cargo loophole such as:

• a mandate to establish systems to inspect cargo using equipment, technology and personnel that meet, at a minimum, the same standards established to inspect passenger baggage;
   
• a requirement to monitor and evaluate the research and development of effective cargo screening technologies;
   
• establishment of a system of regular inspection of shipping facilities for shipments of cargo to ensure that appropriate security controls and systems are observed, both at facilities inside the U.S. and abroad;
   
• a directive that the Secretary of Homeland Security report to Congress on the number of cargo shipping facilities that have been inspected, the number of facilities that have failed to comply with security controls, and the number of agreements concluded with foreign aviation authorities to ensure that regular inspections are conducted for cargo transported to the United States;
   
• Creation of a training and evaluation program for cargo handlers to improve security to ensure that cargo is safeguarded from security breaches.

The bill, in its entirety, can be accessed at: http://thomas.loc.gov. Enter bill number H.R. 2044 in the search field.

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U.S. Customs and Border Protection (CBP) has issued a new informed compliance publication (ICP) entitled, “What Every Member of the Trade Community Should Know About: Basic Forms of Non-Ferrous Metals.”

Table of Contents includes:

Introduction…................................7
Non-Ferrous Metals......................…..7
Unwrought…..................................7
Alloys…........................................8
Bars & Rods...............................…..9
Wire.......................................…..10
Types of wire include the following…......10
Strand….......................................10
Rope and Cable...........................…..10
Ribbon….......................................10
Insulated electric wire...................…..10
Welding Wire…...............................10
Plates, Sheets, Strip, & Foil…..............10
Foil…...........................................11
Backed Foil…..................................11
Coated Foil…..................................11
Profiles…......................................12
Hollow profile…...............................12
Tubes & Pipes…...............................12
Pipe Fittings…................................ 12
Waste & Scrap…...............................13
Questions to Ask…............................ 13
Additional Information....................……14

In May 2005, Customs also posted to its website the following recently revised or reviewed informed compliance publications.

Revised ICP’s:

• Raw Cotton: Tariff Classification and Import Quotas
• NAFTA For Textiles & Textile Articles
• Gloves, Mittens & Mitts, Not Knitted or Crocheted Under the HTSUS
• Classification of Hats and Other Headgear Under HTSUS Heading 6505
• Classification of Children’s Apparel
• Fiber Trade Names & Generic Terms
• Apparel Terminology under the HTSUS

ICP’s Reviewed with No Change:

• Waste & Scrap as it Relates to Base Metals of Chapter 81
• Turbojets, Turbo Propellers and Other Gas Turbines, (HTSUS 8411) and Parts Thereof
• Coated Non-alloy Flat-Rolled Steel
• Button, Snap Fasteners, Slide Fasteners and Similar Articles

The publications are intended to provide guidance and information to the trade community and reflect the position on or interpretation of the applicable laws or regulations by CBP as of the date of publication.

The material in the publications is provided for general information purposes only. Importers may wish to obtain a ruling from CBP or obtain advice from an expert who specialized in customs matters.

Comments and suggestions on ICP’s are welcomed and should be addressed to the Assistant Commissioner at the Office of Regulations and Rulings, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue, (Mint Annex), NW, Washington, DC  20229.

Other Informed Compliance Publications are available on the Customs website at: http://www.cbp.gov/xp/cgov/toolbox/legal/informed_compliance_pubs/informed_compliance_pubs.xml.

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In the ever challenging effort to remain competitive, we are happy to report the Port of Savannah is exceeding its goals.

For the year ending 2004, Georgia Ports Authority reported a record 1.65 million TEU’s moving through Savannah.  The annual throughput capacity today stands at 2.5 million TEU’s. Although record increases in TEU’s are expected to continue, record breaking turn times are not slowing container movement in and out of the port. For the first quarter of 2005, gate moves increased by 22% over the same period in 2004.

Major retail distribution centers are recognizing Georgia and specifically the Port of Savannah as the place to be. Target, Hugo Boss, Home Depot, Wal-Mart and Dollar Tree have all recognized the potential opened up by moving freight through Savannah and have located distribution centers in or near Savannah.

New steamship line services also increase the potential for growth in Savannah.  Turkon Line will begin its service the week of June 8, 2005.  Hapag-Lloyd and NYK Line have announced a new joint East Coast/South American service. The All Water East Coast (AWE4) Service also offers weekly calls direct from Asia with K-Line, COSCO, Hanjin and Yang Ming.

As the port continues to grow, so does the Samuel Shapiro & Company, Inc. office in Savannah. We have recently moved to a new office suite in our building which gives us double the square footage we previously had. This gives us the ability to expand as our business grows. You can reach us at savannah@shapiro.com.

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Due to a request from the steamship line community, the Virginia Port Authority (VPA) will delay implementation of the security fee until August 1, 2005.   This request was granted due to Federal Maritime Commission requirements for the carriers to file tariff charges 30 days in advance and the short time frame provided to do so following passage of the resolution by the VPA board on May 24th.

Effective August 1, 2005 Security Charges will be assessed as follows:

• $2.00 per container - loads or empty
• $0.10 per ton - break bulk
• $5,000.00 flat – automobiles (charged to single automotive processor)

Note 1: Containers not declared water to water will be billed one surcharge for every load/empty container on/off a water carrier.

Note 2: Containers declared water to water will be billed one surcharge against the inbound carrier.

Note 3: Loaded DUAL containers (in/out gate/rail) will be billed one surcharge upon departure of container.

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The Bureau of Industry and Security has reported several cases of unauthorized exports with hefty penalties to U.S. exporters.

In a recent case, a $700,000 civil penalty to settle administrative charges that it violated the Export Administration Regulations (EAR) in connection with unauthorized exports was levied on a California exporter.

It is imperative that U.S. exporters know exactly what they are shipping and to where it is shipped. Exporters must know that it does not fall under any Government agency list or violate any of the export regulations currently in effect.

If you are unsure and need help assessing your situation, please contact compliance@shapiro.com. A list of recent penalty assessment cases is available at the Bureau of Industry and Security website (Department of Commerce) at: http://www.bis.doc.gov/news/index.htm.

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On May 26, 2005, our valued and long-time customer, Unique Industries Inc., presented Samuel Shapiro & Company, Inc. with their “Value Chain” award.  Unique Industries, Inc. is the leader in manufacturing and distributing party merchandise, including Batman™, Bob the Builder™, and Looney Tunes™ themed goods. Unique sells directly to wholesalers, distributors, and retailers and is an industry innovator in creating new types of party supplies and merchandising display programs.

“Samuel Shapiro & Company, Inc. is recognized as being Unique Industries’ most valued and trusted supply chain partner and friend,” said Daniel McAuliffe, International Logistics Manager for Unique Industries.  “As our Customs Broker for the USA, they have proven themselves time and time again. They are to be congratulated in keeping a watch over the entire supply chain and helping to manage it effectively."

Our Norfolk, Philadelphia, and Baltimore offices are responsible for streamlining Unique’s supply chain and ensuring their logistical needs are met effectively and efficiently.   Becky Tucker, our Import Coordinator in Norfolk, represented the Samuel Shapiro & Company, Inc.  team in the award ceremony.

“It is no surprise to me that our employees provide excellent service, a high level of enthusiasm and have pride in their work.  But it is particularly rewarding when on of our largest customers recognizes and proclaims this as well,” said Marjorie Shapiro, President and CEO of Samuel Shapiro & Company, Inc.  “To quote my grandfather, ‘I expected nothing less.’” To learn more about Unique Industries, Inc., visit their website at http://www.favors.com.

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Far East

Carriers from the Far East to the USA have reported that their vessels are running nearly 100% full on all water service to the USA east coast.  The rate increases on May 1, 2005 did little to slow down imports from Asia, especially from China.  Actually, there was a surge in textile exports from China due to quotas that were imposed in June.

Carriers servicing the USA west coast are reporting that their vessels are filling up but they are not at capacity. The two primary west coast railroads, BNSF and Union Pacific are reporting that they are operating smoothly in Long Beach/Los Angeles.  Things could change as the summer heats up.   Everyone is holding his breath that we don’t see a repeat of the delays on the west coast that we experienced last summer.

Carriers have generally raised the rate level on all water shipments to around 10-15% less than on MLB shipments. Peak Season Surcharges began on June 15, 2005, and nearly all carriers took the full Peak Season Surcharge on all water service and mitigated Peak Season Surcharges to 50% on shipments to the west coast and via west coast ports to inland points in the USA.

Peak Season Surcharges (PSS) are as follows:

• LCL $              6.00 w/m
• 20’ container$ 300.00
• 40’ container$ 400.00
• 40’ HC cont.$  450.00
• 45’ container$ 510.00

Samuel Shapiro & Company Inc. contracts have a reduced PSS for shipments arriving to and via west coast ports. Our level is 50% of the full PSS.

The Panama Canal Surcharge has increased from $115.00 per container to $165.00 per container.

Bunker Surcharges from Far East ports to the USA will increase as of July 1, 2005

                               Current level  - July 1, 2005 level

• 20’ container          $ 205.00         -     $ 310.00
• 40’ container          $ 275.00         -     $ 410.00
• 40 HC cont.            $ 310.00         -     $ 460.00
• 45’ container          $ 350.00       -      $ 520.00

Carriers evaluate the bunker surcharge on a quarterly basis.   The next possible change will be on October 1, 2005.

It is critical that importers give a volume forecast in order to protect space. Space on all water vessels will be tight; however space to the east coast via the west coast should not be a problem due to capacity increases to the west coast.

EUROPE

Northern Europe

Bunker fuel surcharges that were increased on May 16, 2005 to and from Northern Europe to United States will remain in place through August 16, 2005.

The bunker surcharges are as follows:

• 20’ container $304.00 to the East Coast and $456.00 to the West Coast
• 40’, 40’ HC and 45’ container $608.00 to the East Coast and $ 912.00 to the West Coast.

There is still a significant shortage of open top containers throughout Europe at this time. Carriers are raising their special equipment surcharges due to this shortage. Some are as high as $1200.00 per open top.

Many carriers announced base rate increases as of July 1, 2005, however at the time of this publication it is not known how much, if any, they will obtain. Space is very tight on the North Atlantic trade.  The recent strengthening of the U.S. Dollar should add to the space crunch.

The Mediterranean

Space is still very tight from Italy, Spain, Portugal and Turkey.  A combination of capacity reduction and surging volumes has created a difficult situation from these countries.

There are still considerable problems from Turkey to the USA.

Air News

Fuel surcharges are still high with no reductions planned in the future. The high rates have added considerable expense.

Air rates from Asia should creep up beginning in June throughout the summer. If there are significant problems shipping containers from Asia, there will be a need for increased air capacity from that region.  There has been an increase in flights from China to the USA due to recent aviation agreements signed between the two countries.

Cathay Pacific Airlines will begin a 3 times a week service from Hong Kong to Atlanta. These added flights will be a boon to Atlanta and the southeast.

Export Ocean News

Space is still tight to both Northern Europe and Asia. Carriers are being more selective on the type of cargo they carry.

Bunker surcharges to Asia will increase on July 1, 2005.

                             Current level     -   July 1, 2005 level

• 20’ container    $ 220.00    -      $ 328.00
• 40’ container    $ 275.00    -      $ 410.00
• 40 HC cont.      $ 275.00    -      $ 410.00
• 45’ container    $ 275.00    -      $ 410.00

Carriers have raised the BAF to Europe to the same level as imports. Samuel Shapiro & Company Inc. export service contracts have the BAF rolled into the base rate and are not subject to the increased BAF. Our export contracts are very competitive to Europe.

Domestic USA

There are still reports that at the moment there are not significant delays in the southern California ports. Carriers have diverted vessels to Seattle, Tacoma and Oakland to help alleviate the congestion.  These ports are seeing record volumes at this time. They should expect to see continued growth during the summer and fall.

It was announced last month that UPS was buying Overnite Transportation. The transaction is expected to close later in the year.

Domestic fuel surcharges are still high. Some carriers are charging as high as 17%.

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Samuel Shapiro & Company, Inc. will be hosting a half-day seminar on Thursday, August 11th, 2005, from 8:30 a.m. to 12:00 p.m., at the World Trade Center in Baltimore.  Seminar topics will include exporter responsibilities, export regulations, export enforcement, and exporter advocacy services. Featured speakers will be from the Bureau of Customs and Border Protection, Bureau of Industry & Security, and U.S. Census Bureau.

Representatives of the U.S. Export Assistance Center will be present and available at the seminar to address any questions or issues of the exporting community.  The U.S. Export Assistance Center is part of a vast network of domestic and international offices, staffed by the U.S. Department of Commerce.  They assist firms in exporting by providing expert counseling and advice, information on markets abroad, international contacts and advocacy services. They combine these resources of the Commercial Service with the finance expertise of the Small Business Administration, and can provide information on all Federal programs designed to support international trade.

This event is a must attend for experienced and novice exporters alike looking to improve their export compliance program or for importers interested in learning about export opportunities. Following the seminar, come join us for the annual Propeller Club Crab Feast. According to a spokesperson at the Conrad Ruth Villa (venue for the event), over 4000 people attended the crab feast last year, including more than 50 customers and staff from all eight of Samuel Shapiro & Company, Inc.’s East Coast operations. We will provide courtesy round-trip transportation from the World Trade Center immediately following the seminar.

Seminar Location:

The World Trade Center
401 East Pratt Street
Maryland Room (21st Floor)
Baltimore, MD 21202

Cost, if purchased by July 15th, 2005:

$75 per person
$60 for each additional attendee from the same company
$50 crab feast ticket per person (in addition to your seminar cost)

Cost, if purchased after July 15th, 2005:

$100 per person
$75 for each additional attendee from the same company

Please let us know as soon as possible if you need crab feast tickets as supplies are limited!

Register Now!  Click on the link below:

http://www.shapiro.com/html/export_seminar.html

For more information contact the compliance department by phone at 800-695-9465 ext. 290 or by email at compliance@shapiro.com.

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This newsletter is for informational purposes only.  Although every effort is made to ensure accuracy, Samuel Shapiro & Company, Inc. assumes no legal liability for any erroneous information. Links to other websites are provided for reference and convenience and do not constitute endorsement of the content of those sites.