Importer Security Filing - An Update To Requirements For U.S. Importers. Are You Prepared?

Jan. 15, 2009 - PRLog -- The newest issue on the United States Customs and Border Protection compliance front is that the Importer Security Filing, ISF, or 10+2, is now a requirement.  Immediate action is required of all US importers with shipments arriving via ocean freight.  Completely fulfilling your obligations as an importer may well require many fundamental changes in the way you currently conduct business.

Based on the SAFE Port Act of 2006, U.S. Customs and Border Protection (CBP) published its ruling on the Importer Security Filing, also known as ISF or 10+2, on November 25, 2008.  Similar to the Container Security Initiative, 24-hour rule, C-TPAT, and other security measures, ISF is designed to improve national security.

Effective January 26, 2009, all importers (definition also amended by CBP for this ruling) must begin electronically submitting 10 data elements, plus bill of lading numbers, 24 hours prior to the loading of containers and break bulk cargo onto ocean vessels at the foreign port.

This information must be filed for all ocean shipments entering, or even just transiting the USA, including shipments going into Free Trade Zones (FTZ).  Here is the list of the ten data elements -

1.   Manufacturer (or supplier) name and address
2.   Seller name and address
3.   Container stuffing location
4.   Consolidator name and address
5.   Buyer name and address
6.   Ship to name and address
7.   Importer of record number
8.   Consignee number
9.   Country of origin of the goods - Required for each invoice line
10. Commodity HTS number - Required to 6-digit for each line item

Download detailed descriptions of the 10 data elements and the full Importer Security ruling at  http://raymcguire.com/importersecurityfiling.aspx

The problem facing U.S. importers is that much of this now required information is usually not available until later in the time-line of events.  Typically, it is compiled and documented only after the shipment is loaded and placed in transit.  Importers will have to quickly agree on new working procedures with their offshore suppliers to obtain this information prior to the loading of the container on the ocean vessel.

Importers may choose to file this information themselves, or contract with an agent to do this for them.  Legal culpability for filing in an accurate and timely manner, however, remains entirely with the importer.

Cargo interests should also be aware that while CBP holds the importer completely liable for the accurate and timely submission of all required info, only those entities certified for transmitting electronically to Customs via AMS (24-hour rule or Advance Manifest filers normally forwarders and NVOCCs) or ABI (customs brokers) interfaces may submit the actual filing!

As an importer you must buy, test, and become a certified ABI filer, or you have to have an agent file this (pay a fee) on your behalf.  These filing fees are likely to range from $20 to $85 per submission, depending on the number of SKUs, tariff codes, line items, etc, much as fees for a regular customs entry would vary.

There will be a "flexible enforcement" period extending until January 26, 2010.  CBP has grasped that in the current world of international business, many documents and some required information is not currently available prior to loading the containers, especially under EXW (Ex Works) and FOB (Free On Board) terms.  Therefore, a 12-month delayed compliance period has been granted.

Because of this "flexible enforcement period" there has been some confusion regarding the actual enforcement of this new rule.  Here is a clarification -

#1  The effective date to begin submitting the ISF for ocean shipments will still be January 26, 2009.

#2  The "flexible enforcement" period will extend until January 26, 2010.

#3  During the flexible enforcement period there will be no fines assessed for not meeting all requirements of the ruling, and no "Do Not Load" messages sent to the carriers.

#4  This period is NOT being granted to allow importers to ignore the rule, or to grant full "amnesty".  ISFs must still be submitted, but CBP will allow late and incomplete filings to a degree.

#5  During the first year, CBP will monitor all ISF submissions for timeliness, accuracy and completeness and will work with any non-complying ISF filer in order to help them adhere to the new requirements.

#6  In order to provide the trade sufficient time to adjust to the new requirements and in consideration of the business process changes that may be necessary to achieve full compliance, CBP will show restraint in enforcing the rule, taking into account difficulties that importers may face in complying with the rule, so long as importers are
 (a)  MAKING SATISFACTORY PROGRESS toward compliance, and
 (b)  Importers are MAKING A GOOD FAITH EFFORT TO COMPLY with the rule to the extent of their current ability.

#7  The clear attitude and tone at CBP is still that importers must file all the required information they can obtain, as quickly as they can obtain it, and update incorrect and/or missing information at least 24 hours prior to shipment arrival at the first U.S. port.

#8  Again ... no blanket amnesty or license to ignore the Importer Security Filing mandates.

Without proper management and communication with the supplier there is nothing to stop a container from being loaded on board a vessel, even if the ISF has not been transmitted.  If CBP perceives blatant disregard or willful neglect of fulfilling this new obligation, importers risk exposure to penalties of $5,000 per incident.

Therefore, time is of the essence!

Due to the fast approaching deadline (January 26, 2009) to begin sending the ISF, it is highly recommended that importers advise their suppliers of these new requirements.  It would also be appropriate to revise and amend foreign purchasing agreements to require supplier or seller support for this data collection.

If you do not fully understand the filing requirements, need assistance in selecting a partner or implementation, please contact us immediately!

Ray McGuire is a seasoned logistics and supply chain executive, with 15 years experience in Europe and 16 years in the United States, possessing extensive knowledge of international and domestic logistics, and a proven track record of accomplishments. He has expert knowledge and experience in C-TPAT certification (Customs-Trade Partnership Against Terrorism), Importer Security Filing (ISF or 10+2), and other supply chain security programs.

Ray McGuire Consulting Group
Providing advice, direction, and project management to high fashion, high-tech, and other importers, customs brokers, and international forwarders. Identifying, developing and successfully implementing international logistics, US Customs, C-TPAT, Importer Security Filing - (ISF or 10 + 2), and other supply chain security programs, as well as other trade and governmental compliance.  This includes FCC (Federal Communications Commission), FTC (Federal Trade Commission), FDA (Food and Drug Administration), F&W (Fish and Wildlife Service), social and vendor compliance.
Increasing speed-to-market while reducing costs through cross-dock, pick & pack fulfillment, inventory management, EDI, and other distribution solutions.

Specialties:
* International and domestic transportation * Import and export supply chain design and optimization * Direct-ship and multi-point distribution, for B-2-B or end consumer * International trade, warehouse operations, and inventory management * Governmental compliance success criteria * Buying agent and vendor management * Factory safety and social compliance (SA8000)
Expert knowledge and experience in C-TPAT certification (Customs-Trade Partnership Against Terrorism) and other supply chain security programs.

On the web at http://raymcguire.com

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Ray McGuire Consulting Group provides direction, tools and training to successfully execute international and domestic logistics, inventory management, agent/supplier relationships, safety, social and governmental compliance or security programs.

On the web at http://raymcguire.com