Foreign Trade Regulations Revisions Effective April 5, 2014
Please be prepared for additional questions from Shapiro global specialists to process your export shipment leaving the U.S. April 5th or later.
Below are the highlights to the revised Foreign Trade Regulations, which govern all of the information that is required to be filed in the Automated Export System (AES). These reporting requirements are called the Electronic Export Information (EEI). This export statistical information is reported to the U.S. Census Bureau, and is also used by various U.S. Government agencies, such as the Department of Commerce and the State Department, to enforce U.S. export laws.
There are two new data elements added that must be filed with the EEI.
Ultimate consignee type will be required for all foreign consignees. (15 CFR 30.6(a)(28). Provide the business function of the ultimate consignee that most often applies. If more than one type applies to the ultimate consignee, report the type that applies most often. There are four types shown below to choose from.
- Direct Consumer—a non-government institution, enterprise, or company that will consume or use the exported good as a consumable, for its own internal processes, as an input to the production of another good or as machinery or equipment that is part of a manufacturing process or a provision of services and will not resell or distribute the good.
- Government Entity—a government-owned or government-controlled agency, institution, enterprise, or company.
- Reseller—a non-government reseller, retailer, wholesaler, distributor, distribution center or trading company.
- Other/Unknown—an entity that is not a Direct Consumer, Government Entity or Reseller, as defined above, or whose ultimate consignee type is not known at the time of export.
License Value (FTR 15 CFR 30.6(b)(15) ): If the shipment requires a license, you will report the value designated on the export license that corresponds to the commodity actually being exported for each line item/quantity.
Changes to the EEI data:
Used Self-Propelled Vehicles (FTR 30.2(a)(1)(iv)(H) & 30.4(b)(5)) Used Self-Propelled Vehicles must be filed in the AES regardless of value or country of destination. The required vehicle information must be filed with Customs and Border Protection 72 hours prior to export. Vehicle shipments to Canada must now be filed in AES. There are no exemptions for low value under $2500. Additional information can be found in Appendix U of the Automated Export System Trade Interface Requirements (AESTIR).
Port of Export: (FTR 30.6(a)(9)) The port of export for shipments by overland transportation is where the goods cross the U.S. border into Canada or Mexico. This includes transshipments through Canada or Mexico to other countries.
Split Shipments: (FTR 30.28) Applies to all modes of transportation, not just air. New Definition: A shipment booked for export that is divided by the carrier into two or more shipments (more than one conveyance and sent on two or more conveyances) by the same mode of transportation from the same port within 24 hours.*
*Revisions made after Final Rule Publication: see FTR letter No.6.
- For vessel cargo-24 hours
- For air cargo (including air express)-7 days
- For truck cargo (including cargo departing by express consignment courier)-7 days
- For rail cargo-7 days
Postdeparture: (FTR 30.5) Filing time has been reduced from 10 days to 5 calendar days after departure. There is still a moratorium on applications for postdeparture.
Household Goods: (FTR 30.1) New Definition: Usual and reasonable kinds and quantities of personal property necessary and appropriate for use by the USPPI in the USPPI’s dwelling in a foreign country that are shipped under a bill of lading or an air waybill and are not intended for sale. Reporting: Limited exemption can only be used for shipments where the USPPI is the ultimate consignee. Filing will be required for household goods that are over $2500.00 and are destined for all countries with the exception of Canada. Household goods to Canada do not have to be filed in AES.
New Exclusion-Ultimate destination U.S.: (FTR 30.2(d)) AES filing is not required for licensed goods where the country of ultimate destination is the United States, or for goods destined to international waters where the person(s) or entity assuming control of the item(s) is a U.S. citizen or permanent resident alien of the United States.(30.2(d)(5)) Reporting: The Exclusion legend is required to be reported on the air waybill, export shipping instructions, or commercial loading or transport documents.
New Exemptions Added:
- 30.37 (u): Exports of technical data and defense service exemptions as defined in 22 CFR 123.22 (b)(3)(iii) are exempt from the Electronic Export Information (EEI) filing requirements.
- 30.37 (v): Vessels, aircraft, cargo vans, and other carriers and containers when shipping as tools of international trade.
- 30.37 (w): Shipments to Army Post Office, Diplomatic Post Office, Fleet Post Office.
- 30.37 (x): Shipments exported under License Exception BAG.
- 30.37 (y): Specific types of shipments destined for a country listed in Country Group E:1.
- In-bond (in-transit) shipment exemption found in 30.37 (e) is now covered by exclusion 30.2(d)(1)
- Temporary exports under 30.37 (q) Carnet Exemption removed.*
- Goods under a Temporary Import Bond (TIB)being exported in the same condition as when imported under 30.37(r) *
Reporting: Temporary shipments valued over $2500.00 per schedule B or that fall under 30.2 (a)(1)(iv) must be filed in AES.
*Census does understand the removal of these exemptions is problematic for USPPI’s (exporters), and there is dialogue among our Government agencies to find a possible solution. Currently, these exemptions are removed and require full reporting as of April 5, 2014.
There are many definition changes, such as the definition for international waters and other changes, such as the format for the Foreign Trade Zone identifier. All of the changes and updates can be found on the Census website under the Regulations tab.
If you need further assistance, please contact firstname.lastname@example.org.
CBP Changes Scope of CEE Sees Challenges & Benefits
U.S. Customs and Border Protection’s (CBP) test of its Centers of Excellence (CEE) has been modified to expand the types of entries accepted and the scope of commodity coverage for some CEE with the long term goal of transitioning port of entry operational functions to the CEE. As a result, if achieved, CBP intends to reduce costs, facilitate trade, increase compliance, and increase uniformity at the port level.
- Adding HTSUS heading 8511 to the Automotive & Aerospace Center.
- Adding headings 2501-2530, 7013, 7309-7311, and 9406 to the Industrial & Manufacturing Materials Center.
- Adding headings 8210, 8539, and 9619 to the Consumer Products & Mass Merchandising Center.
- Adding 7415, 8307-8311 to the Base Metals Center.
- Adding heading 3826 to the Petroleum, Natural Gas & Minerals Center.
- Various headings have also moved from their originally assigned center to a different center, and obsolete HTS numbers not included in the 2014 HTSUS have been removed.
As of March 10th, the Centers will process the following entry types filed currently or before member participation:
- Type 01, consumption entries- free & dutiable
- 11, informal entries- free & dutiable
- 04, consumption entries- appraisement
- 06, consumption entries- foreign trade zone
- 08, consumption entries- duty deferral
- 23, temporary importation under bond (TIB)
- 24, trade fair
In the near future CBP intends to expand the CEE operations to include the following entry types:
- 02, consumption entries- quota/visa
- 05, consumption entries- vessel repair
- 07, consumption entries- quota/visa & ADD/CVD
- 09, consumption entries- reconciliation
- 12, informal entries- quota
- 21, warehouse entries
- 22, re-warehouse entries
- 31, warehouse withdrawals
- 32, warehouse withdrawals- quota/visa
- 34, warehouse withdrawals- ADD/CVD
- 25, permanent exhibition
- 51, government entries- Defense Contract Management Area (DCMAO)
- 52, government entries- other than DCMAO
Processing will exclude type 26 foreign trade zone admissions and types 61, 62, and 63 transportation entries.
CBP Officials advised at the 2014 Trade Symposium that there will be challenges and benefits to expanding the CEE after the testing.
Many centers that were handling fewer than 100 importers will now be obligated to process entries from thousands to tens of thousands of importers. There will be issues with communication with Customs brokers, how the CEE will treat non-trusted trader importers who are not Customs–Trade Partnership Against Terrorism (C-TPAT) members or Importer Self-Assessment (ISA) certified vs. those who participate in those programs.
On the other hand, CBP believes that the CEE can streamline the current port processing methodologies for post entry corrections and the drawback program, and communication/cooperation between CBP and other government agencies.
Possible Return of Pre-classification Program for Apparel Products
U.S. Customs and Border Protection (CBP) is currently reviewing a proposal that would allow the renewal of a Pre-classification program for the apparel industry.
The program did exist previously at the CBP Import Specialist level, but had been discontinued a number of years ago.
The new program would allow importers who participate in the Centers of Excellence and Expertise (CEE) program, which is currently operating under a pilot test, to submit information to the CEE to receive HTS classification advice on apparel, textile, and footwear products prior to importation. The proposed program would utilize the National Import Specialists assigned to the apparel CEE. The CEE are already involved in classification issues; although no official program currently exists.
Such a program would reinforce the virtual nature of the CEE as stated on March 7th at the 2014 Trade Symposium by Elena Ryan, director of CBP’s CEE transition team. She further stated that although more functions will become virtual in nature, the requirement for CBP staffing at ports will still be valid as cargo isn’t being imported virtually. Staffing will be still required on the ground including CBP Officers, and CEE employees involved in classification and valuation.
Although popularity for a Pre-classification program has ebbed and waned over time by both CBP and trade, the program is on CBP’s radar again in light of CEE operations. At the symposium Brenda Smith, CBP’s director of the Automated Commercial Environment (ACE) business office, stated to reporters that the pre-classification idea is one of the items being considered to get issues resolved early before goods actually hit the border port.
CBP stated that although they can’t give any details about the specific nature of the program, the proposal has been sent to CBP Headquarters and is currently being considered.
U.S. Customs Launches New Website
U.S. Customs and Border Protection has revamped its website www.cbp.gov. The graphics are bolder, there are more photos, and the links on the sides of the pages are meant to be more user-friendly. Most of the content for importers will be found under “Trade” and then “For the Trade Community.” Information on C-TPAT and ISF will be found under “Border Security” and then “At Ports of Entry.”
The address for CROSS (Customs Rulings Online Search System) remains the same – www.rulings.cbp.gov.
USTR to Negotiate to Eliminate Tariffs on Environmental Goods
The U.S. Trade Representative has notified Congress of its intent to enter negotiations with the World Trade Organization for a new trade agreement aimed at eliminating tariffs on environmental goods such as wind turbines, solar panels, and wastewater treatment filters.
The U.S. and thirteen other WTO members, including Australia, China, Canada, the European Union, Hong Kong, Japan, and Korea, account for 86 percent of global trade in environmental goods.
While the duty rates in the United States are relatively low for these type items, duty rates can reach 35 percent in some countries. The U.S. exported $106 billion in environmental goods in 2013. Global trade in environmental goods is estimated at nearly one trillion dollars. The goal of the trade agreement is to not only boost U.S. exports and help the U.S. compete globally, but also to make environmental technologies more affordable around the world.
Ocean Carrier Industry Appears Worrisome in 2014
The outlook for the container shipping industry looks depressed as the publicly-listed global shipping companies face a greater risk of financial distress, including possible bankruptcy, than at any time since 2010 according to business-advisory firm AlixPartners. The shipping industry’s problems are the result of sluggish demand at a time when the carriers have been building bigger and better mega-ships making expenses go up and causing a disparity of supply vs. demand. Many years have gone by where the industry has been more of a buyer’s market than a seller’s market so the carriers cannot sustain growth at a time where there has been no chance at a sustained recovery in freight pricing. Carriers are fighting for survival and face many uncertainties as we get closer to the new contract season.
Shippers have expressed their concern for an unhealthy carrier industry yet they have benefitted from the woes of the carriers’ never-ending push for market share to fill the increasingly larger vessels in the market. AlixPartners advises shippers to take the following steps to ensure that the industry remains as stable as possible:
- Closely monitor the financial health of the carriers they work with
- Keep a NVOCC in the mix to provide a better view to the market outside key carriers and as a safety valve for excess capacity requirements should the market suddenly tighten
- Try to spread out business by not putting all business with one or two carriers
- Benchmark rates and service levels using third-party resources
- Consider long-term contracting options when available if operating with high volumes on lanes where the market is more stable
- Pay carriers fairly for bunker fuel
The new extra capacity being brought into the ocean carrier industry is very likely creating a contentious environment amongst carriers between the “haves and have-nots” where the smaller carriers in particular face difficult challenges going forward leading to more carrier alliances and streamlining in the industry. Small carriers such as Zim have seen their losses soar to $530 million in 2013 up from $428 million in 2012 as their container traffic grew 5 percent during the same period as they cut prices to obtain market share. Hapag Lloyd is an example of a larger carrier who posted an operating profit of $92.7 million in 2013 as opposed to an operating profit of $56.6 million operating profit in 2012. With increased expenses in bunker fuel and equipment in 2013, Hapag Lloyd had a net loss of 97.4 million Euros.
The forecast for years to come is that container volumes are expected to gradually increase but the increased capacity brought on by ships cascading from the Asia-Europe trade to the U.S. trade will present more challenges in the coming years ahead until 2016 when the extra capacity is forecasted to be absorbed. Carriers are forecasting that in 2016 they will be more in a position of a seller’s market, and they see capacity levels tightening up during that year.
New York and New Jersey Ports Report Improved Productivity
The ports of New York and New Jersey have reported marked improvements recently in moving cargo on and off terminal since the beginning of the year when snow and extreme cold caused the terminals there to close which resulted in historic cargo backups at the port. An example of the improvements is evidenced by gate moves averaging more than 60,000 per week in the last two weeks of March as compared to 36,400 per week in February. The average time that cargo remained in port to be picked up peaked in January at 8.1 days and by the end of March the average dropped to 6 days.
The NY-NJ Port Authority said about 2,000 chassis were brought into the port from other regions to bolster the local fleet in an attempt to relieve the backlog of out-of-service chassis which has been reduced by 30 percent in the last two weeks. The port has recently hired 125 new longshoremen and 5 new checkers and a total of 271 people were pre-qualified to be added to the workforce in the port. The Waterfront Commission has also agreed to certify 20 additional mechanics immediately.
The NY-NJ Port Authority is still urging trucking companies to have drivers check on both chassis and container availability before dispatching drivers to the port. The truckers are also asked to make sure that all charges have been paid and the necessary releases are in place, and they are being asked to double confirm export receiving and cutoff times by checking the terminal websites which carry the most up to date information.
Port of Vancouver Truckers Go Back to Work
The trucker strike at the port of Vancouver, B.C., Canada ended on March 26 when drivers reached an agreement with the port and the federal government of Canada to put an end to a 28-day strike that has devastated Canada’s busiest port. The port of Vancouver has warned it will take quite some time to clear out the backlog of containers that have built up at the port during the work stoppage. The agreement resulted in better compensation and other benefits for the drivers at the port.
There is a sense of urgency at Vancouver Port as they have lost business during the strike to the nearby U.S. ports of Seattle and Tacoma. The port authority believes that the hard times have passed as the agreement was a collaboration of various stakeholders that work in the harbor.
Joint Maersk-MSC-CMA P3 Service Wins FMC Approval
The alliance tween the three largest container lines in the world; Maersk Lines, Mediterranean Shipping Company (MSC) and CMA CGM was approved by four votes to one at a meeting of Federal Maritime Commission (FMC) Commissioners on March 20, 2014. The general consensus was that the new P3 alliance is not likely to cause an unreasonable increase in transportation costs or an unreasonable reduction in transportation services. The FMC promises to institute a monitoring program of the P3 to assure that there will be no unreasonable raises in rates and services in the Trans-Pacific and Trans-Atlantic by the P3 alliance that will impact U.S. shippers.
Separate approvals by the European Union and China’s Ministry of Commerce still need to occur before the P3 alliance can fully operate. Both the EU and China decisions are expected to be made by the middle of this year to allow whether or not the alliance can proceed. It should be noted that the China’s Ship Owners Association, which is comprised of COSCO and China Shipping Company are opposed to the alliance and they have expressed shock and dismay at the recent FMC decision which leads many to believe the Chinese government will try to block the P3. Opponents of the alliance say that the agreement in reality is not an alliance or true vessel sharing agreement. The opponents believe that it is a merger of the top three global liner companies to threaten the existence of the smaller carriers in the industry.
More Rate Increases Announced for Transpacific Eastbound
Shipping lines participating in the eastbound trans-Pacific lane have decided to advance the General Rate Increase (GRI) that was originally announced for May 1 to start on April 15 instead as requested by the Trans-Pacific Stabilization Agreement Carriers. (TSA). The GRI applies to all commodities and all origins and destination pairs on containerized imports from Asia.
Carriers are looking to stop the rate erosion that took place in late February and March. Carriers have recognized that the beneficial cargo owners (BCOs) are attempting to profit by locking in a today’s lower rates into new service contracts for the coming year. The TSA said that they believe that this strategy is short sighted because it does not recognize the long-term requirements to generate capital investments in vessels, services, and infrastructure.
Less than container load (LCL) carriers have announced a $6 per 1000 kilos or cubic meter whichever is greater GRI for April 15 as well.
General Rate Increases (GRI) To Hit Again on April 1 from Indian Sub-Continent to USA
Please be advised that following carriers have advised that GRI is applicable for all shipments bound to USA out of India effective April 1, 2014.
APL - $160/200/200 per 20'/40'/hc
NYK Line - $160/200/225 per 20'/40'/hc
Hapag Lloyd - $160/200/250 per 20'/40'/hc
MSC - $150/215/215 per 20'/40'/hc
HMM Line - $160/200/225 per 20'/40'/hc
General Rate Increase (GRI) from Europe to USA
The carriers in the North Europe trade have announced an April 1 GRI in the range of $200 per 20’ and $400 per 40’ and 40’hc.
Asia’s Air Hubs Enjoy Growth in 2014
In 2013, Asia’s air hubs saw a growth rate in tonnage of only 0.9 percent over the year before. Already in January 2014 South Korea’s Incheon International Airport has seen an increase in cargo of 8.2 percent over last year, Singapore rose 3.8 percent over last year’s tonnage, and Hong Kong has seen an increase of 5.4 percent in January over last year. For Bangkok, exports are up 11 percent over last year thus far.
Shipper’s Shift from Moving Cargo by Ocean Instead of Air Erodes Air Market
A recent study of cargo movement in 2012 revealed that the air freight forwarding market shrank 4.2 percent that year as a result of overcapacity, rising fuel prices and other rising operational costs, and the market did not recover at all in 2013. Shippers polled to find out why they are shifting their cargo to move more by ocean than air said that the increasing reliability of ocean freight is the main driving factor in shifting modes. The shippers also said that air cargo agents could minimize the reverse effect of modal shift by offering cheaper rates, better air freight products, and closer relationships with the customers. This comes at a time when the airfreight business is putting less focus on a sales force to call on shippers and air forwarders.
IATA recent suggested that airlines need to strive to cut their end-to-end transit times by up to 48 hours by the end of this decade to improve the competitiveness of air cargo versus other modes of shipping. IATA remains committed to faster delivery times, coupled with competitive quality benchmarking and more efficient processes to win new business and new customers.
Air carriers have introduced new types of containers that are helping to increase the range of goods they can handle. There is a sense of urgency with the carriers now as they have seen cargo yields drop for the third year in a row. In the last three years, global air cargo industry revenue dropped by an estimated $67 billion.
Air carriers are being realistic by understanding the price of fuel has drastically decreased their chances of capturing the larger shipments which now ship by ocean. They do have hope that the current trend where manufacturers are making components for other manufacturers which will yield smaller shipments that can possibly move by air as components and parts are generally needed both as fast and cheaply as possible.
Important Notice and Reminder: New Shapiro 360° Tracking Will Launch on April 16, 2014
As mentioned in last month’s Shap Talk, Shapiro will be upgrading Shapiro 360° tracking. The launch date has been set for April 16, 2014.
If you are a Shapiro customer that uses the tracking system, we urge you to contact us to obtain your new login credentials as soon as possible. We will be hosting one last live webinar on April 11th at 2:00 pm to get you familiar with the new system before launch. Please contact your Shapiro representative to obtain your new credentials and sign up for training.
If you are not a current Shapiro customer and would like a tour of our cargo tracking system, please contact us at email@example.com.
Suggestion/Idea Box Now Available on the Shapiro Website: Let us Hear from You!
We are always looking for feedback at Shapiro and we love hearing from our customers, employees, and industry friends. Shapiro recently introduced a Suggestion/Idea box on our website to give you a place to quickly and easily share any ideas, feedback, and even ask for Shapiro U training.
If you have a suggestion for a Shap Blog or Shap Talk article, have a great idea to share, or simply just want to reach out and say hello, please take a moment and check out our new Suggestion/Idea box. You are even free to leave an anonymous comment if you would like. We do not track visitor activity in this page.
Click here to check out our Suggestion/Idea Box now and leave us a comment. We would love to hear from you!
Employee of the Month
As previously featured in Shap Talk, Shapiro has been sharing with you the names of employees who have been recognized for their exceptional efforts and contributions to our Company. At Shapiro, we continually work to develop, challenge, and inspire all of our employees to grow individually and with the Company. This month, we would like to recognize Linda Matschat, Senior Import Analyst in New York, for her outstanding performance and contributions.
We encourage you to provide us with employee feedback! Please email us at firstname.lastname@example.org.