CBP 2013 Fiscal Year Review
On January 24th U.S. Customs and Border Protection (CBP) published its fiscal year-end review.
CBP’s focus was mainly on reducing threats and building available resources in an effort to secure U.S. borders for travel and trade facilitation.
As a result of CBP’s strategies accomplishments included:
- 102 million international travelers were processed at airports, which represents an increase of approximately 4% from fiscal year 2012.
- Overall 360 million travelers were processed at all ports including air, land, and sea.
- More than 1 million new travelers were enrolled in CBP’s Trusted Traveler Programs resulting in membership of over 2.2 million. The programs are designed to expedite screening for travelers considered low risk through periodic background checks.
- The automation of Form I-94 Arrival/Departure Record increased efficiency in processing travelers and saved and will continue to save approximately $19 million a year.
- The introduction of paperless traveler driven processing such as Automated Passport Control kiosks reduced wait times and passenger inspections.
- CBP processed more than $2.3 trillion in trade and 25 million containers, which represents a 1% increase in cargo containers over last year.
- CBP completed 24,000 seizures involving intellectual property rights (IPR) violations totaling $1.7 billion in value, which represents a 38% increase over last year.
- The Beyond the Border Protection Plan between the U.S. and Canada successfully completed Phase 1 of the Cargo Pre-Inspection pilot, and developed an Integrated Security Strategy (ICSS) to be tested in 3 pilot ports of entry.
- The exchange of approximately 2 million exit records to date between the US and Canada as part of an entry-exit policy between the 2 countries in an effort to identify information on third country nationals who cross shared borders.
- The opening of 6 new Centers of Excellence and Expertise (CEE) for a total of 10, which now cover a complete range of imported commodities.
- U.S. Border Patrol apprehensions totaled 420,789, which represents an increase of 16% over last year. 132,000 inadmissible aliens were stopped from entering through ports of entry, and 5,378 high risk persons were prevented from boarding flights destined for the US.
- CBP seized more than 4.3 million pounds of narcotics and $106 million in unreported currency countrywide through targeted operations.
- CBP arrested approximately 8,000 persons wanted for serious crimes at U.S. ports of entry.
- CBP stopped approximately 160,000 potentially dangerous pests from entering the U.S. through 1.6 million inspections of prohibited plant and animal products.
The review in its entirety can be viewed here.
Annual BIS Report 2013
The Bureau of Industry and Security (BIS), Department of Commerce issued the BIS Annual Report for fiscal year 2013. (10/1/2012-9/10/2013) The report has 8 appendices covering regulatory changes, the BIS organizational structure, summaries of closed export enforcement and criminal cases, individuals and firms requesting restrictive trade practices, approved applications for country group D:1 and Cuba, domestic impact of U.S. exports to controlled countries, agricultural supply tables, and export control reform fact sheets, speeches and testimony. Below are just a few highlights from the report.
Regulatory: BIS published 27 notices, rules or other items in the Federal Register in the past fiscal year. The greatest impact of these rules centered on Export Control Reform (ECR) for items that the President has determined no longer warrant export control under the State Department on the United States Munitions List (USML). Commerce has taken on these items transferred with varying degrees of control dependent on the item. We saw the first final rule become effective on October 15, 2013 in this transition. As other ECR rules rolled out, BIS and State came to agreement on the definition of Specially Designed, which companies are still working through with assistance from the decision tree tools created in 2013 for on-line use on the BIS website.
Export Licensing: BIS processed 24,782 export license applications for transactions, which was up significantly from 2012. The average processing time was 26 days. The highest commodity transaction by value was crude oil, and the most license approvals were for chemical manufacturing facilities and equipment under ECCN 2B350. Export value for all BIS licenses was $5 billion.
Enforcement/Penalties: This is a category that everyone finds interesting. Many of the cases involved exports to Iran, so as a reminder, please ensure you are not exporting to Iran directly or indirectly. It is an expected practice to check all of the countries and entities you are exporting to so you can be sure you are in compliance with the Export Administration Regulations (EAR).
Another area of enforcement and penalties comes from the antiboycott cases that were prosecuted. The boycott regulations are extremely hard to follow and confusing. As one official just said in January, it took him years to learn the regulations. The best advice we can provide is when you have transactions with Middle East countries, especially the countries found on page 53 of this publication, be extremely cautious of any requests or specific language that asks you to “comply with,” “abide by,” “obey,” “observe,” “meet the requirements of, ”conform to,” or “adhere to”. Watch requests for steamship certificates, too; there have been many penalties issued by BIS over the past few years. We know it is difficult to identify boycott language, but when in doubt, check it out with BIS.
Some statistical information from enforcement/penalties: 52 individuals were convicted criminally by BIS. Penalties amounted to $2,694,500 in criminal fines, more than $18 million in forfeitures, and more than 881 months of imprisonment.
Civil penalties totaled $6,524,955 in 2013 with 71 administrative export and antiboycott actions against businesses and individuals. Note the word “individuals.” BIS found some bad actors at companies where employees were prosecuted for rogue export violations. Our advice on this one is to have your transactions audited by someone other than the person responsible for the license or transaction to try to guard against any illegal activity.
Outreach: BIS has been available and informative to the trade community as far as outreach is concerned. There have been many questions and situations to work through with Export Control Reform and the BIS employees have really come through to make themselves available for comments, concerns, and questions. BIS has spoken at industry seminars, held webinars, conference calls, and were in full force at the BIS Update. This has been helpful to the trade community with the ECR transition. This publication details their outreach efforts to the trade.
Take a look at page 70 in the report. There is a fascinating table for controlled destinations and how many millions in U.S. exports went to these countries.
Import Coalition Urges Congress to Renew GSP
A group of 463 companies and organizations from 43 states, the District of Columbia, and Puerto Rico has sent a letter to Congress urging the “immediate renewal” of the Generalized System of Preferences (GSP) program that expired on July 31, 2013. The letter was sent to every member of the Senate and the House of Representatives, and states that the GSP lapse has cost importers nearly $2 million a day in additional duties.
Advanced Export Information (AEI) Pilot Program
The U.S. Census Bureau, in cooperation with U.S. Customs and Border Protection (CBP), published information in the Federal Register dated January 31, 2014 introducing a pilot program to evaluate a new filing option in the Automated Export System (AES).
The Advance Export Information (AEI) pilot is a voluntary program in which selected exporters agree to submit a limited set of Electronic Export Information (EEI) in accordance with existing filing deadlines followed by the full set of data elements submitted within five calendar days of the date of export.
Currently there are two AES filing options: AES Pre-departure Filing where all commodity information is filed electronically prior to departure as outlined in 15 CFR 30.4(b). AES Post-departure Filing is available for previously approved (prior to August 2003) United States Principal Parties in Interest (USPPI) and provides for the electronic filing of the data elements for eligible shipments required by 15 CFR 30.6 no later than five calendar days from the date of exportation. Post-departure filing has been a problem for CBP and they have worked with Census to try to alleviate their concerns. If the AEI pilot is successful, Census may discontinue the AES Post-Departure filing option and offer an AEI filing option.
Eligibility Requirements for this pilot program are as follows:
- The participant must be a USPPI as defined in 15 CFR 30.1. Authorized agents will not be approved for the AEI pilot.
- The participant must have 12 months of export reporting history.
- The participant must report a minimum of ten shipments per month. However, seasonal exporters will be considered on a case-by-case basis.
- The participant must show an acceptable level of compliance for export reporting for the latest 12-month period.
- The participant must be compliant with all other federal regulations related to trade import and export transactions.
Not all commodities are eligible for the AEI pilot. Please see the full Federal Register notice for details.
Comments Requested by BIS on Five-Year Records Retention Requirement for Export Transactions and Boycott Actions
BIS invites comments by March 17, 2014 from all interested parties on the five year record retention period and:
- Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
- The accuracy of the agency’s estimate of the burden (including hours and cost) of the proposed collection of information;
- Ways to enhance the quality, utility, and clarity of the information to be collected; and
- Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
All parties involved in export transactions and the U.S. party involved in a boycott action are required to maintain records of these activities for a period of five years. These records can include memoranda, correspondence, contracts, invitations to bid, books of account, financial records, restrictive trade practice or boycott documents and reports.
The five-year record retention period corresponds with the five-year statute of limitations for criminal actions brought under the Export Administration Act of 1979 and predecessor acts, and the five-year statute for administrative compliance proceedings. Without this authority, potential violators could discard records demonstrating violations of the Export Administration Regulations prior to the expiration of the five-year statute of limitations.
Be sure to check out Shapiro’s blog post on the Ins and Outs of Export Recordkeeping.
The Federal Register Notice dated January 16, 2014 has the contact information for this notice and additional details.
U.S.-NAFTA Trade Exceeds $100 Billion
The Bureau of Transportation Statistics (BTS), part of the U.S. Department of Transportation, has announced that monthly U.S.-NAFTA trade has exceeded $100 billion for the first time.
BTS published the following information on January 7, 2014:
- Canada/Mexico trade in October 2013 totaled $103.1 billion, which represents an increase of 4.5% from the previous October. It’s the first month on record which totaled more than $100 million.
- Of the $103.1 billion, trucks transported 59.5%, rail 15.4%, vessels 8.8%, pipeline 7.8%, and air transportation 3.8%.
- Total transportation trade also reached a high in October. Truck transportation was at $61.4 billion, rail at $15.9 billion, and pipeline at $8.1 billion. Pipeline showed the most year to date growth at 23.7% due to primarily an increase in oil and petroleum products pricing.
- For fiscal year 2013 Canadian vessel trade had the largest increase of any mode of transportation at 40.2%. Pipeline followed at an increase of 26.7%. Truck transportation grew the least at 0.7%.
- For Mexico, trade rail had the largest increase of any mode at 10.9%. Vessel trade decreased by 18.8% due to a drop in mineral fuels moving by vessel between Mexico and the US.
- For Mexico, truck transportation covered 66.9% of freight, followed by rail at 14.1%, vessel at 12.2%, air at 3%, and pipeline at 0.7%.
- In October 2013 the top commodity transported between Canada and the U.S. was mineral fuels at a value of $7.8 billion by pipeline. Between Mexico and the U.S. the number one commodity was electrical machinery with a value of $8.2 billion moved by truck.
The summary can be viewed in its entirety on the BTS website.
C-TPAT Now on Twitter
U.S. Customs and Border Protection’s (CBP) Customs-Trade Partnership Against Terrorism (C-TPAT) office has announced it will now be posting on CBP’s Twitter account @CustomsBorder. The C-TPAT Twitter feed will be used to highlight issues and/or events related to supply chain security including alerts and notices. Customs hopes the tweets will motivate C-TPAT partners to visit the C-TPAT webpage for more details.
The C-TPAT Twitter account will also be used for announcements of C-TPAT training seminars, including the annual conference, and Mutual Recognition arrangements.
Customs urges Twitter uses to connect with CBP so as not to miss the latest information from C-TPAT.
Shapiro will also re-tweet CBP messages of interest via our Twitter account, @shapiroco. If you are not following us on Twitter yet, you can find us at https://twitter.com/shapiroco. We will keep you updated on what’s happening in our industry and entertain you along the way.
New Assessment on Imports of Paper and Paper-Based Packaging
The Agricultural Marketing Services of the U.S. Department of Agriculture has issued a final rule that establishes a new user fee on imports of paper and paper-based packaging. The assessment rate will be $0.35 per short ton (1 short ton = 2000 pounds). The money collected from the fee will be used to establish an industry-funded research, promotion and information program to maintain and expand markets for paper and paper-based packaging.
The program will cover four types of paper and paper-based packaging:
- printing, writing and related paper (used to make products for printing, writing and other communication purposes)
- kraft packaging paper (used for products like grocery bags and sacks)
- containerboard (used to make corrugated boxes, shipping containers and related products)
- paperboard (used for food and beverage packaging, tubes and other miscellaneous products)
Entities that import fewer than 100,000 short tons per marketing year will be exempt from the payment of the assessment.
Detailed descriptions and definitions of each type of paper and paper-based packaging along with the affected HTS numbers may be found in the Federal Register notice.
“Perfect Storm” Causes Serious Cargo Backlogs in the Midwest
The Midwest has been hit with what we would call a “Perfect Storm.” The severe weather conditions for the past several weeks have hindered the rail operations in many cities like Chicago and Detroit. The heavy snow has impacted general operations in addition to the movement of containers in the yard. In addition to 4 days counting as “holiday,” this has occurred right when most importers ramp up their imports in anticipation of Chinese New Year.
In Detroit and Chicago, trucking companies are 5-7 days behind, and while some of the rail yards are extending free time, others are not. Many truckers have advised of huge backlogs and long lines to get containers out of the rail while many are also having problems with their trucks not operating properly in the extreme cold. The lifting machines are also unable to work properly slowing operations down even further.
To make matters worse, there is a huge chassis shortage in Chicago since many of the containers and chassis are not able to get unloaded and returned quickly enough. In fact, some truckers are holding on to the chassis so they can go back in and get another load without waiting at the chassis pools.
This is affecting more than just the customers in those regions as cargo moving from the West Coast destined for the East Coast has also been impacted and delayed for several days. Cargo that would normally take 8-10 days to get from Los Angeles to Baltimore is now taking almost double that time as it has to change rails in Chicago.
Many distribution centers and warehouses in the Midwest are also backed up and unable to accept more cargo. As a result of the Polar Vortex, holidays, and heavy import activity, we do not see this situation resolving itself for several weeks to come. Patience and understanding will be needed until this region can get through the backlog.
USWC Labor Issues Concern Shippers
Shippers have already begun to plan for using alternative routes for shipping into the United States from Asia due to an expected disruption of services at U.S. west coast ports as the current contract for the ILA there expires on June 30, 2014. Shippers are considering shipping via Canadian west coast ports as an alternative or via the Panama Canal to the U.S. east coast for points in the eastern U.S. Part of the shippers’ concerns about the upcoming 2014 negotiations is the volatility of the issues at hand on the west coast, such as ILWU members currently enjoying premium health care plans where they pay no premiums and pay only $1 co-pay for prescriptions. Their plan will be subject to a tax of $150 million under President Obama’s Affordable Health Care Act.
Importers Feel Brunt of Chinese New Year Rush
As Chinese factories start powering down a week before Chinese New Year, the ocean carriers report fully booked vessels and scarce equipment availability for shipments leaving China for the U.S. In addition to this, virtually all carriers have announced blank (no) sailings the week of Chinese New year (from January 31 through February 6). Carriers report that this is the heaviest pre-Chinese New Year shipping season in five years and importers that pay the higher rates are the ones that are getting on the vessels during the two weeks prior to the announced blank sailings. This year’s rush has highlighted the common misconception of westerners that the Chinese New Year holiday only spans one week when in fact most workers do not return to their factories until the 14th day after Chinese New Year. In anticipation of the rush, the carriers were largely successful in implementing a January 15 General Rate Increase of $240/20’, $300/40’, and $350/40’HC. In anticipation of another rush as the factories reopen, carriers are asking importers to place their bookings 2 to 3 weeks in advance.
Structural Changes in Shipping Industry to Spark Roller Coaster Rates In Transpacific in 2014
Importers should not expect the roller coaster ride of rate peaks and valleys in the Transpacific market to end anytime soon. 2014 is shaping up to look very similar to 2013. 2014 should prove to be yet another year of excess capacity once the Chinese New Year backlog becomes history. Carriers will continue to feel the need to announce General Rate Increases (GRIs) in order to remain profitable while at the same time the forces of supply and demand continues to work against them. Carriers are positioning themselves for the long term, which means they are ordering vessels with capacities of 8,000 to 18,000 20-foot-equivalent container units. These larger ships lower the cost per unit to operate by $300 to $400 per 40-foot-contianer and these newer ships are much more fuel-efficient. Prior to 2013, carriers typically announced GRIs two to three times in a year, but in 2013 the carriers announced a GRI almost every month while they watched rates deteriorate in the weeks following each GRI. By the end of last year some GRIs only lasted a day or two before rates began to fall again.
Cargo growth is expected to increase by 3 to 4 percent in the transpacific trade while global capacity for vessel space is expected to grow by approximately 7 percent. Carrier alliances such as the P3 Network with Maersk Lines, Mediterranean Shipping Company, and CMA will begin operations in the spring (pending approval) and this will hopefully allow these carriers to lower costs by deploying larger vessels. Even the smaller carriers are ordering bigger ships to join in on the better economies of scale that they hope to enjoy. All of these structural changes will spark rates to rise and fall throughout 2014.
NJ Governor Signs Bill to Stop Cargo Facility Fee at NY/NJ Ports
On January 21, New Jersey Governor Chris Christie signed a bill in the state legislature to allow for the elimination of the cargo facility fee at the ports of New York and New Jersey. This bill was signed to ensure that the ports of New York and New Jersey can remain competitive with the rest of the ports by stopping the Port Authority from imposing a cargo facility charge of $4.95/TEU on all carriers calling the port. The bill will remain inactive until a similar bill is enacted in the State of New York.
Hapag Lloyd and CSAV to Merge to Form Fourth Largest Shipping Company
Hapag Lloyd has signed an agreement with Cia. Sud Americana de Vapores (CSAV) to form the world’s fourth largest container shipping company. With this deal, CSAV will own almost 30 percent of the newly formed company while German billionaire Klaus-Michael Kühne and the city of Hamburg will control a total of 75.5 percent. Kühne, who controls Switzerland-based Kühne and Nagel owns a 28.8 percent stake in Hapag Lloyd. The merged companies will collectively ship 1 million TEUs and will have sales of approximately $12 billion per year. Hapag Lloyd will now boost its presence in the Europe-Latin America and Latin-American-Asia trade through the deal. It is not yet clear how the two companies will change their structure.
FMC Wants Additional Information from G6 Parties
Federal Maritime Commissioner William P. Doyle has submitted additional questions to the G6 parties (American President Lines, Hapag Lloyd, Hyundai, Mitsui OSK, NYK, and OOCL) to assess the impact the group would have on consumers, the U.S. flag international fleet, small business and third party interests such as terminals, vendors and bunker suppliers. This information request has stopped the 45 day regulatory waiting period. A new waiting period will begin once the G6 parties have submitted their responses to the questions.
The proposed G6 amendment anticipates 180-220 vessels with a maximum capacity of 14,000 TEUs. By contrast, the P3 (Maersk, Mediterranean Shipping, and CMA-CGM) is proposing an initial deployment across all U.S. trades with an annual capacity of 130 vessels ranging between 4000 TEUs and 12,250 TEUs, with an eventual expansion to a maximum of 180 vessel of up to 19,200 TEUs.
SeaLand Brand Name to be Reborn Next Year
On January 1, 2015, Maersk Lines is planning to revive the SeaLand name it acquired in 1999 to rebrand its regional intra-Americas services in a new division of the world’s largest steamship line. Maersk has realized that a much smaller and nimbler organization is needed in the intra-Americas trade to adapt more readily to the small shippers that populate that market. Craig Mygatt will be CEO of SeaLand and he is committed to reach out to the smaller customers in this region. Mygatt mentioned recently that he was surprised at how many customers in the region still think of the services covering the region as “SeaLand’s services” instead of Maersk’s services.
The new SeaLand will operate as an independent company servicing the needs of all of the trades between North and South America and all the ports in between. SeaLand will still report into Maersk HQ in Copenhagen as it will operate 8 ships in the region. The change will occur in phases beginning about July 1 and it will staff the new company with about 250 employees.
General Rate Increases (GRI) To Hit Again on February 15 from Indian Sub-Continent to USA
Many shipping lines that ship from Indian Subcontinent ports to the USA have announced a GRI effective February 15.
The announced GRI is:
- US$ 240 per 20’ container
- US$ 300 per 40’ container
- US$ 350 per 40’ HC container
- US$ 380 per 45’ container
TSA Carriers Plan Increased Rates In March and May 2014
The Transpacific Stabilization Agreement carriers are already planning to increase rates by $300 per FEU by March 15 and they are also looking for a similar increase with the new contract season on May 1. The problem is that no major trans-Pacific carrier operated profitably in that trade lane in both 2012 and 2013. The TSA said that in the new contract season it will need to see increases of $300 per FEU to the USWC and $400 per FEU for all other destinations at the onset of the new contract season in May in order to try to regain profitability. TSA is a forum for 15 carriers servicing the trade from Asia to USA ports including: APL, China Shipping, CMA CGM, COSCO, Evergreen, Hanjin, Hapag-Llloyd, Hyundai, K-Line, Maersk, MSC, NYK, OOCL, Yang Ming, and Zim.
Latin America’s Infrastructure Strains under Rapid Growth
As mutual interests in trade between North and Central and South America continue to grow, the infrastructure in Central and South American nations will call for deeper harbors to accommodate larger ships, larger marine terminals to accommodate equipment, and larger new cranes to handle the volumes of cargo flowing through the ports. Even more urgent than the changes required at the port terminals is the need for large investments in inland road and rail infrastructure in South America. Many countries have a unique geography making it difficult to transport minerals and agricultural products to its sea ports. Unfortunately for Brazil, the high costs of inland transportation there has kept it from expanding its market share in the agricultural sector in the north/south trade. Brazil is by far the fastest growing economy in Latin America and it is struggling to keep up with the demands on its infrastructure.
New Shapiro 360º Tracking to Launch in March 2014
Shapiro is pleased to announce that we will be launching a new version of Shapiro 360º tracking this March. Shapiro 360º is our home for purchase order management, cargo tracking, customer reports and dashboards, and all other Shapiro technology applications. The cargo tracking system, which will continue to be a complimentary service to all Shapiro customers, has undergone a major upgrade and this new technology will be made available in March.
The new Shapiro 360º tracking platform not only has a more modern look and feel, but it also provides multiple new features:
- Improved navigation and speed
- Improved user interface
- Enhanced cargo tracking
- More robust and easier to use customization features
- New transportation and Customs entry dashboards
- Expanded reporting capabilities with Business Intelligence tool integration
Below you will find a preview of our new dashboard screen, which will allow you to view metrics based on your shipment data and activity.
In the next few weeks, Shapiro will contact current 360º tracking users to obtain information and set up credentials in the new system. To ensure the security of your data and to provide more flexibility, the new platform will require each user to have his or her own login. The master authorized user will have the power to determine security levels for other users and to limit access to some of the functionality and reporting. This will allow for a more customized experience for all users. We would appreciate everyone’s cooperation in returning the information to us promptly.
In addition, we will be hosting live webinar training events before the launch in order to help you familiarize yourself with the platform. We will send event information to each Shapiro customer with a list of available dates. If you are unable to find a training event that suits your schedule, you will be able to find video tutorials within 360’s Help menu. Of course, you can always contact your Shapiro representative and schedule a personalized tour of the system.
We are very excited about this major milestone for Shapiro and, more importantly, what it means to you, our customers.
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 Russell Pinckney, Programmer Analyst in Baltimore, for his outstanding performance and contributions.
We encourage you to provide us with employee feedback! Please email us at firstname.lastname@example.org.
We Want to Hear from You!
Do you have suggestions for an article? Is there a topic you’d like us to cover in a future issue? Please let us know! Send your feedback to email@example.com.