Employee of the Month

As previously featured in “Shap” Talk, Samuel Shapiro & Company, Inc. 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 Samantha Sibley, Senior Import Account Coordinator in Philadelphia, for her outstanding performance and contributions.

We encourage you to provide us with employee feedback! Please email us at hr@shapiro.com.

Shapiro Promotes George Galestro to New York Branch Manager

Samuel Shapiro & Company, Inc., a 97-year-old logistics leader, recently announced the promotion of George Galestro from Import Manager to Branch Manager of its Rosedale, New York office.

Galestro, a licensed Customs broker with 33 years of industry experience, previously served as vice president of Priority Airfreight Ltd., and has held managerial positions  with Daher Golden Eagle and F.W. Myers & Company. He brings a thorough knowledge of Customs regulations as well as expertise in accounting and budgetary reports, developing relationships with current and prospective clients, and staff management. During his 14-year tenure as Import Manager for Shapiro’s New York office, Galestro was responsible for staff supervision, all Customs brokerage activities, coordinating routed cargo, and securing quotes for new business.

In this new position, Galestro’s main objective will be to aggressively grow the branch’s business and presence while maintaining outstanding levels of customer service. “The  New York ports have always lived up to their fast-paced and high volume reputation,” says Galestro. “I’m looking forward to leading the New York office of Samuel Shapiro & Company to a new chapter of growth. I attribute our success to the wonderful group of logistics professionals who encourage me daily with their hard work and dedication to our customers.”

“George has been with Shapiro for 14 years and served very proudly as our import manager,” says Marina Tasiopoulos, regional manager for Samuel Shapiro & Company. “Overseeing the branch over the past 4 years, George has been the ‘rock’ that held it all together, with team work, dedication, and the thirst to make this branch grow. We are excited for George to start this new chapter in his career.”

European Union “Known Consignor Rule” To Affect Air Cargo

A new EU “Known Consignor Rule” goes into effect on April 29, 2013. Once in effect, only companies listed as “Known Consignors” within the European Union can designate their airfreight as secure. Companies that do not submit to the new security guidelines will be subject to increased screening, inspections, delays, and will face additional costs. The European Commission has delayed the rule before but as of April 29 this rule is now to be in effect.

Hapag Lloyd Announces GRI from Mediterranean To USA

Hapag Lloyd has announced that they will have a GRI of $250 per 20’ and $350 per 40’ effective June 1 from all Mediterranean ports to all USA ports.

Carriers Grapple with Supply And Demand As They Struggle To Become Profitable

Ocean carriers as a group coming off a period of almost zero cargo growth in 2012 are now feeling more positive about 2013. The April 1 GRI was only partially successful but they have seen some improvement in vessel utilization. Even though carriers did cancel 53 weekly scheduled departures earlier this year in the post-Chinese New Year period, recent news that ocean carriers are planning to add 12 percent more vessel capacity in the Asia to USEC trade by May despite lack of growth does seem to be counterproductive for the carriers. At the same time the carriers have announced a GRI for May 1, which was recently delayed until May 20 to 22. It remains to be seen if carriers can actually pull off the GRI, and if the upcoming Peak Season will play a factor on vessel utilization so that rate increases can be justified. Many retailers that sign contracts directly with carriers are reporting that most, but not all, carriers are coming to them with contract offers at least as favorable as what they had in the previous contract season.

Asia Inbound Carriers Delay General Rate Increase (GRI)

The majority of the ocean carriers that ship in the transpacific import market have delayed the May 1 GRI to now be effective between May 20 and 22 (depending on the carrier). Most have announced a GRI of $320/20’, $400/40’, $450/40’HC, $506/45’ to USWC ports, and $480/20’, $600/40’, $675/40’HC, $760/45’ to Inland Rail points via USWC and USEC ports. The GRI from India is slightly higher. The GRI for LCL is delayed until May 20 and it is announced at $8 w/m to USWC and $12 w/m to USEC and MLB points.

U.S. Infrastructure “Not Ready” For Panama Canal Upgrade

Even without the Panama Canal upgrade, railroads are grappling with increasing intermodal traffic throughout the U.S. as importers and truckers are seeking more capacity on the rails according to President and CEO of the Association of American Railroads, Ed Hamberger. Transport carriers and shippers both report that the current U.S. rail infrastructure is totally inadequate.

Maersk Lines has listened to analysts and they have been moving cargo from Southeast Asia via the Suez Canal through the Mediterranean and across the Atlantic to the U.S. East Coast. Only the Virginia ports and Baltimore are ready to accept the largest vessels now, and significant improvements still must be made at the other major ports on the East Coast to accommodate the large ships that are being built for the Panama Canal upgrade to be completed in 2015. If many of the largest East Coast ports are not ready, there will be extra pressure for the cargo to be moved to the U.S. West Coast, and the rail system will certainly be overwhelmed if the infrastructure is not improved markedly.

The port of Savannah was recently disappointed to learn that the federal budget for 2014 only allowed $1.28 million for dredging the Savannah River, which is not a significant amount considering the project is estimated to cost $652 million. The Senate is now considering a bill to approve the project at the total price.

In addition to the infrastructure issues, the carriers and their customers will also be faced with increased tolls and fees that will be imposed by the Panama Canal Authority once the upgrade is complete.

Obama’s 2014 Budget Provides $76.6 Billion to DOT

The new federal budget for 2014 proposes a total of $76.6 billion in discretionary and mandatory funding for the U.S. Department of Transportation. This new budget is an increase of 5.5 percent (or $4 billion) as compared with the 2012 level.

Included in the budget is $40 billion for upgrading the freight rail system, as well as passenger rail services such as high-speed rail corridors. This is very much needed to secure and improve the movement of both domestic and international cargo across the country. There are also plans to spend nearly $1 billion on aviation modernization that will help the movement of domestic and international air cargo.

In addition to the increased budget for the DOT, there is an additional $50 billion intended to stimulate economic growth and job creation, including $40 billion for “Fixit-First” projects to improve the existing infrastructure and $10 billion to help with the states and local innovation in infrastructure development.

The U.S. Replaces China as Japan’s Biggest Export Market in 2012

For the first time in four years the United States has surpassed China as Japan’s largest export market in fiscal 2012. Japan is now the world’s third largest economy after the U.S. and China, and it relies on its exports for growth.

In 2012 Japan’s exports to the U.S. increased by a shocking 10.4 percent compared to the year earlier. During the same time period China’s imports from Japan tumbled by 9.1 percent. Japan’s imports from the U.S. increased 1.5 percent in 2012 which results in a trade surplus of roughly $53.66 billion with the U.S. The growth in exports to the U.S. was led by autos, auto parts, and motors. The increase of imports from the U.S. was led by aircraft, petroleum products and medical products.

All Eyes on NY-NJ Port Terminals As Master Contract Is Implemented

The month of April saw ratification by both ILA membership and USMX employers for all ports on the East and Gulf coasts by overwhelming margins. Doing so without any disruption, stoppage, lockout, or strike was seen as a major accomplishment on both sides of the bargaining table. Federal mediators should also be credited with helping an agreement to be reached after about a year of negotiations.

In the port of NY-NJ a separate contract agreement between the ILA and the Metropolitan Marine Maintenance Contractors Association followed the ratification of  the coast-wide master contract as well as the local pact between the ILA and the New York Shipping Association. Employers did win hard-fought changes that will allow them to improve productivity at the high-cost port of NY-NJ. The next focus is just how these efficiencies can be implemented.

To start implementation the employers will be phasing in the changes that they are  now free to do. The first step is to start a two-month window for older workers to decide on whether or not they will accept early retirement. The New York Shipping Association aims to hire and train new workers to fill the existing needs while replacing the retirees. It is estimated that up to 500 new workers may be needed to complete this.

Later phased in changes would include more reasonable work shifts that would resemble those in most other ports, reduction in the size of gangs, random drug and alcohol testing, and an end to low-show jobs. In turn dock workers will get adjustments to their pay to help offset the new shift’s impact on their wages. These are all welcome changes because the NY-NJ terminals have the lowest productivity of all of the major USA ports so port customers are keenly interested in seeing things improve.

All parties realize that there is much work to be done and change is very difficult. Many at the port remain skeptical but NYSA and ILA officials seem to be optimistic about the next six years. ILA President Harold Daggett pledges that the result of the changes will attract more cargo to NY-NJ terminals and he vowed to work with management to make sure that this happens.

Hong Kong Port Workers Continue To Strike As Market Share Erodes

Dock workers in Hong Kong have now been on strike for over four weeks as they are seeking better pay and better working conditions. Chinese billionaire Li Ka-shing is heavily invested in the Port of Hong Kong and he has made moves to hire new workers to handle ships. He is demanding the departure of protesters that are now camped outside of his building in Central Hong Kong. Even so, the protesters remain. 300 dock workers also blocked the road in front of the container port for several hours, causing a massive backup of trucks reaching many kilometers.

The workers newly hired by Li as well as strikers that decided to go back to work have now cut the wait time for working ships to an average of 20 to 25 hours instead of the 60 hour delay when the strike began. The port is now operating at almost 90 percent capacity although at least 100 vessels have already skipped calling Hong Kong in favor of other nearby ports in China such as Yantian.

The Hong Kong International Terminal (HIT) union was able to get HIT management to approve overtime compensation of 1.4 times the hourly rate on April 22, which is seen as a victory for the HIT union. Nonetheless, HIT management’s request for an interim injunction to stop demonstrators from picketing outside the Hutchison Port Holdings  Headquarters was rejected on April 25. The dockworkers have not had a pay raise for 10 years because management is worried that increased expenses will make Hong Kong lose its ability to compete in the regional and global market.

Hong Kong’s share of volumes in the Pearl River Delta region has declined dramatically over the past 10 years because of the success of Shenzhen’s terminals such as Yantian and Chiwan and Guangzhou’s terminal at Huangpu. Hong Kong suffers from lack of space and higher costs than its neighbors to the north.

Go Global Webinar Series from Census Designed for New Exporters

The United States Census Bureau announced its Go Global Webinar series, starting on May 7th. There will be eight (8) free webinars designed to assist new exporters entering into the export marketplace. This series touts that “exporting is a great way to increase your sales and competiveness, especially since 95% of your potential consumers live outside the United States.”

The Go Global Webinar Series consists of the following topics and is scheduled from 1pm-2pm ET. Each has its own registration deadline date.

May 07: Where to Get Started—International Trade Administration (ITA), Trade Promotion Coordination Committee (TPCC)

May 21: Preparing your Business to Export—Small Business Administration (SBA)

June 06: Picking your Market/Trade Research

June 18 & July 16: Finding Buyers and Making Contacts—U.S. Commercial Service

July 30 & August 13: Trade Financing—Small Business Administration (SBA) and Export-Import Bank

August 27: Documentation and Shipping

September 10 & 24: Understanding export regulations - Export Administration Regulations

October 8: Avoiding and Solving Problems—International Trade Administration

For a complete list of webinars and registration please go to the Census website.

CBP Launching Pilot Program on Container Cargo Residue

U.S. Customs and Border Protection (CBP) has announced that it would like to begin a  pilot program as soon as October to address the entry of inbound containers with cargo residue.

In 2009 CBP modified rulings so that the residue had to be separately entered instead of containers being manifested as empty. CBP changed the policy to address security concerns and the health and safety of its inspectors. Although implementation of the change has been delayed due to concerns from the trade community about costs of  compliance and border congestion, CBP is moving forward on containers with residue not exceeding 7% for rail, 5% for air, and 3% for ocean and truck shipments of their total capacity by weight or volume. Such containers would have to be manifested as containing residue rather than as empty. These limits are the same below which carriers do not charge for carrying freight.

Under the pilot program CBP has stated that it will:

  • Allow containers with cargo residue of no commercial value to be re-filled for  export or to cleaned, thereby destroying the residue.
  • Not weigh or measure containers to verify the amounts of residue present, but  rather will accept declarations completed by carriers or the importers of record  stating that the residue has no commercial value, a description of the residue,  and that the country of origin is the country from which the container arrived.  In this case CBP will require a “residue entry” even though the residue has no  commercial value. No Merchandise Processing Fee (MPF) would be collected.
  • Allow the carrier to make informal entry of the residue from its manifest  without any other documentation required as long as the commercial value is  below the referenced limits.
  • Allow significant residue in containers above the described limits to be  manifested and entered for CBP clearance.

CBP has stated that there will be no application process to participate in the voluntary pilot and interested parties can join at any time during the pilot period with no additional CBP bonding requirements. CBP anticipates the Federal Register notice to be published in May.

Customs Adds New Centers of Excellence and Expertise

U.S. Customs and Border Protection has issued a notice to add six more Centers of Excellence and Expertise (CEE) to bring the total to ten.

The four existing CEE’s are

  • Electronics
  • Pharmaceuticals, Health & Chemicals
  •  Automotive & Aerospace
  • Petroleum, Natural Gas & Minerals.

The new CEE’s are

  • Agriculture & Prepared Products (food and beverages)
  • Apparel, Footwear & Textiles
  • Base Metals
  • Consumer Products & Mass Merchandising
  • Industrial & Manufacturing    

Applications for Base Metals, Industrial & Manufacturing, and Machinery must be submitted no later than May 6, 2013. Applications for Agriculture & Prepared Products; Apparel, Footwear & Textiles; and Consumer Products & Mass  Merchandising may be submitted starting June 3, 2013 and no later than July 3, 2013. Priority consideration for participation in the CEE’s will be given to C-TPAT members and members of the Importer Self-Assessment (ISA) program, but importers  need not participate in C-TPAT or ISA to apply to any of the CEE’s.

Customs’ goal is to incrementally transition operational trade functions from the ports of entry to the CEE’s. By focusing on industry specific issues and providing tailored support for the participating importers, Customs is seeking to facilitate trade, reduce  transaction costs, increase compliance with applicable import laws, and achieve uniformity of treatment at the ports of entry for the identified industries.

Guidelines for the CEE’s were also recently posted to the Customs website. Entries will continue to be submitted at the ports of entry. However, entry summaries will be  processed by the CEE. If documents are required for the entry summary, they must be  submitted to the CEE. Post entry filings such as post entry amendments, post summary corrections, protests, and petitions will be filed with the CEE and not with  the port of entry. Prior disclosures may be filed either with the CEE or the port.  Requests for Information and Notices of Action will be issued by the CEE’s. Responses therefore will be sent to the CEE.

The Federal Register notice, which includes the tariff number ranges for the six new CEE’s, may be found here

The guidelines, FAQ’s, and more information on the CEE’s may be found on the Customs website.

First Final Rules for Export Control Reform Published by Commerce and State

The initial implementation of the Export Control Reform (ECR) rules from the Department of Commerce Bureau of Industry and Security (BIS) and the Department of State Directorate of Defense Trade Controls (DDTC) were issued in the Federal Register on April 16, 2013. Both rules become effective October 15, 2013.

Commerce Rule

State Rule

These rules are the first set in a series of final rules that redefine how the U.S. government protects sensitive technologies and regulates exports of munitions and commercial items with military applications. Experts from agencies across the government have worked tirelessly to review and define how and where items will be regulated for export. These reforms will move less sensitive items, such as parts and components, from the State Department’s U.S. Munitions List to the Commerce Control List. This has all been a part of the President’s Export Control Reform to meet current and emerging national security challenges and foreign policy objectives.

These specific rules concern U.S. Munitions List’s Category VIII – Aircraft and Associated Equipment, and a newly established Category XIX – Gas Turbine Engines. These are the first of 19 of U.S. Munitions List categories that will be revised under Export Control Reform. Work on the remaining categories is ongoing and once the final rules are issued, they will become effective 180 days after the publication date.

This time frame was allotted to provide sufficient time for exporters to review their items and determine where the item falls and what controls are in place.

The BIS final rule creates ten new “600 series” Export Control Classification Numbers (ECCN) to accommodate the items being transferred from the USML. The “600 series” derives its name from the third character of the ECCN. For example; 9A610 is the ECCN for Military aircraft and related commodities. Policies for handling licensing and other issues both before and after the 180-day transition period for all “600 series” ECCN’s are provided in these rules.

The day after the rules were issued, Assistant Secretary of Commerce for Export Administration Kevin Wolf conducted a very useful webinar, in place of the weekly Wednesday ECR teleconference, explaining background and specific information on these rules and advising what requirements are in place. He also went through the “specially designed” definition in detail. You can view this webinar on the BIS website.

The weekly teleconference on Export Control Reform (ECR) conducted by Assistant Secretary Wolf is held on Wednesdays at 2:30 Eastern Time. BIS does encourage questions and there will be many now that this final rule is published. Please send questions in advance on any ECR topic to: OESDSeminar@bis.doc.gov. On the April 24th teleconference, BIS advised that there will be a new Supplement 4 to part 774 of the Export Administration Regulations (EAR) added to assist the public in reviewing the CCL. BIS also mentioned that a new software decision tool will soon be posted to the BIS website to assist exporters. Outreach sessions are being announced and the annual BIS Update in July will be about Export Control Reform.

For general questions about the "600 series" control structure or transition related questions, contact Hillary Hess, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, at 202-482-2440 or rpd2@bis.doc.gov. For technical questions about the ECCNs included in this rule contact Gene Christiansen, Office of National Security and Technology Transfer Controls, at 202-482-2984 or gene.christiansen@bis.doc.gov. For questions about the definition of “specially designed,” contact Timothy Mooney, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, at 202-482-2440 or timothy.mooney@bis.doc.gov.

Shapiro to Host Webinar Series on the Logistics of Importing and Exporting

Samuel Shapiro & Company, Inc. will be presenting a series of webinars outlining the basics of the logistics industry. The webinars are designed to assist all levels of importers and exporters in better understanding the logistics of their supply chains. Those attending will gain a deeper knowledge of key players and the entire process of moving cargo from origin to destination. These classes are ideal for new employees or anyone who would like a refresher in international transportation and Customs clearance. Topics will include documentation requirements, selecting appropriate mode of transportation, Incoterms, common industry terminology, and specific timeframes.

Hosting the Logistics of Importing webinar will be Kathy McKoy, Manager, Mid-Atlantic Region, and Jane Taeger, Director of Compliance. McKoy has been with Shapiro for 15  years and manages both the Baltimore and Dulles branches. Taeger brings over 28  years of experience in logistics and regulatory compliance, eight with Shapiro, and  serves on the Education Committee of the National Customs Brokers and Forwarders Association of America.

The Logistics of Exporting webinar will be hosted by Matthew Kobussen, Shapiro’s  Transportation Manager, and Paul Yankelunas, Pricing Manager. Kobussen has been  with Shapiro for 10 years, and manages the company’s global forwarding staff.  Yankelunas, who has been with Shapiro for 19 years, heads the entire pricing staff  and maintains agent relations.

“We are so pleased to continue our education series,” says Taeger. “Through the  various types of training Shapiro offers, our customers are able to improve their  compliance and logistics knowledge and become more effective in their jobs.”

The series is structured into two 60-minute webinars:

The Logistics of Importing will be presented on May 22, 2013 at 1:00 p.m. EDT.  The Logistics of Exporting will be presented on June 18, 2013 at 1:00 p.m. EDT.

Interested parties may register by emailing Shapiro at seminars@shapiro.com.

FDA Issues Guidance Document for Food Facility Registration

The Food and Drug Administration has released a draft compliance policy guide concerning food facility registration. The document addresses the requirement to register with FDA, to renew the registration biennially, and FDA’s authority to suspend a registration.

Food that arrives in the United States from a foreign facility that has not registered will be held at the port of entry, and may not be delivered to the importer, owner, or consignee until that facility is registered.

FDA has noted that quite a large number of registrations were not renewed by the close of the renewal period January 31, 2013. Less than 29 percent of foreign facilities had renewed and only a third of domestic facility registrations were renewed. For those facilities that did not renew by the deadline, they must start the registration process over.

The guidance document also outlines the circumstances under which a facility’s registration may be suspended. Specifically, if FDA determines that food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, FDA may suspend the registration. No person may import food from that facility into the United States while a suspension order is in effect. Food imported from a facility with a suspended registration will be held at the port of entry.

The guidance document is available here.

Comments on the document are due by May 6, 2013. Please see the April 4, 2013 Federal Register notice for information on how to submit a comment.



CBP Report Finds Decline in Security and Compliance Measurements

US Customs and Border Protection (CBP) has published its annual performance and accountability report for fiscal year 2012. CBP found that supply chain security and compliance measurements have declined for the period.

The report includes declines in the following areas:

  • Import Compliance with trade laws fell to 96.46% below the goal of 98%, which represents a failure to reach the goal for the second straight year. CBP determined the decline to be mostly due to importer classification errors.
  • Although CBP has determined screening measurements a challenge based on data accessibility and exchange issues, CBP failed to meet its targeted percentage for screening of high risk cargo as determined by the Automated Targeting System. CBP did not provide a specific figure for accomplished screenings.
  • CBP did collect 98.88% of revenue due, although that figure is down from 99.12% from the previous year. Collectable revenue is determined as the total collection plus the net under collection due to noncompliance with laws and/or regulations.
  • The compliance rate for members of the Customs-Trade Partnership Against Terrorism (C-TPAT) declined to 94.5% versus 95.1% for 2011, which represents a five year low in part according to CBP due to companies being suspended or removed from the program because of strengthened C-TPAT criteria. Tier 2 and 3 members were also recently made exempt from stratified compliance exams and will in the near future be exempted from non-intrusive inspection exams.
  • Cargo by value imported by CBP trade partnership security programs including C-TPAT and Importer Self-Assessment (ISA) declined to 54.66 % versus 55.07% in 2011. Even so CBP still met its goal of 45%.

One named increase in CBP activities included completed exams of high risk cargo under the Container Security Initiative (CSI). The percentage of exams completed that were requested rose for the third straight year to 98% from 96% in 2011. In total the percentage represents approximately 49,000 exams and a review of 10.8 million bills of lading.

The report can be viewed in its entirety by visiting the CBP website.