Importer Security Filing Summary & Conclusion
Introduction
Welcome, to the fifth and final issue of TradeMerit e-Newsletter. Over the past few weeks TradeMerit has devoted an educational series of e-Newsletters on Importer Security Filing (ISF). During this time we've covered; Requirements, Mitigation Guidelines, ISF Costs and Best Practices. Please follow this link if you have missed any of the previous e-Newsletters.
We've received numerous questions, comments and concerns from the trading community. Not only have we tried to include the information in the e-Newsletters but we've addressed many of them on TradeMerit's website. If you have any questions, please feel free to send them to us and we will respond and include the question in our question/answer in our FAQ.
Although, this is the final e-Newsletter on the ISF subject, there will be an ISF Free Webinar offered in November. Please go to the TradeMerit homepage to sign up.
We hope you enjoy the article(s).
ISF Series Highlights
Series 1: ISF Requirements and rules that govern
The filing requirements were drafted and agreed to in close partnership with CBP. The precursor to ISF was The Advance Trade Data Initiative (ATDI) began in 2004 and was a voluntary program. Some companies shared their import data with CBP. ISF became effective on January 26, 2009. Refer to the interim and final rules as published in the Federal Register (Vol.73, No.228), November 2008. Delayed compliance period referred to as "flexible enforcement" until January 26, 2010. Only applies to cargo arriving into the U.S. by vessel carrier. Importer and Carrier must transmit specific 10+2 data via CBP approved electronic data interchange system Automated Manifest System (AMS) or Automated Broker Interface (ABI). Importer or their agents are responsible for electronic transmission to CBP of 8 data elements and the bill of lading number 24 hours before loading cargo onto a U.S.-bound vessel. Ocean Carriers required to transmit electronically vessel stow plans and container status messages. Importer or their agents are required to provide 2 more data elements 24 hours before the vessels arrival at a U.S. Port. Timing of required data elements and data availability. It was identified that 8 of the 10 data elements are known at the time the order is placed. There are 2 data elements that can be attained after the cargo is loaded. The most problematic is the 11th data element the Bill of Lading number.
Series 2: Mitigation Guidelines
As published on July 17, 2009 in the CBP Bulletin (CBO Dec 09 278, pages 29-41).
ISF Violations: Failure to file, Inaccurate Filing, Failing to Withdraw, and Late Filing. Importer penalty amounts for liquidated damages of $5K for each ISF violation. ISF Importer identified as the party causing the goods to enter the limits of a port in the U.S. Importer is not responsible for foreign cargo remaining on board (FROB). For in-bonds it's the responsible party that is filing the immediate exportation (IE), transportation and exportation (T&E) or foreign trade zone (FTZ) documentation. During this time of flexible enforcement January 26th, 2009 to January 26th, 2010) importers should begin filing their ISF's. Importers not filing today and choose to wait until after enforced compliance begins on January 26, 2010 to file, are making a grave mistake. During this informed compliance phase CBP is allowing the importers time to transition their business processes to accommodate ISF. Importer infractions may be subject to a $5K penalty amount with no mitigation. The importer must connect all the dots throughout their supply chain. Identify those parties which you must work with internally/externally in order to establish the ISF process for your company. CBP will treat all ISF Importers the same, no matter what the size of the company is. Importer ISF bonds will not be required until January 26, 2010.
Series 3: ISF Costs
CBP will only show restraint in enforcing the rule, when importers are making a good faith effort to comply with the rule. CBP is watching and keeping performance reports on Importers that are making an attempt to comply with the regulation. The importer must decide who is going to transmit the ISF electronically to CBP. Importer as Self-Filer or Agent?
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Comparison shopping in selecting an accepted method for filing. Using vendor's software for "self-filers", Customs Brokers are they using the 1 step process of "unified" filing, and finally is it most cost effective to develop ISF internally? For developing your own in house program, it's been estimated to cost $25K to complete some level of internal programming and modify their information systems. The government's cost benefit and feasibility study outlined; between 200,000 to 750,000 importers in the U.S. that will be impacted by ISF. The costs can range from 0.13% to 1.03% of the median shipment value ($38K per shipment). The estimated costs per shipment are $58 to $390. Importer and Carrier supply chain delays may be experienced due to ISF failure, errors, etc. Estimated that for every day added to the supply chain may equate to a 1% tariff on the goods subject to delay.
Series 4: Best Practices
There are 8 of the 11 data elements available at the time an order is created between Buyer and Seller. When these are identified at time of order the importer should immediately transmit their ISF. Senior management should appoint an ISF planning committee. ISF planning committee should be responsible for identifying current supply chain practices, identify gaps, and make recommendations to adhere to ISF requirements. Establish ISF supply chain partner requirements. Show reasonable care and due diligence. Identify the best and most cost effective approach to be used for ISF filing. Have in place an ISF Self-Assessment Program. Use D&B numbers whenever possible.
CBP ISF Statistics
This year CBP have conducted numerous outreach sessions around the country. During this period of delayed enforcement CBP understand the difficulties that importers may face in complying with the rule. It's of the utmost importance for every importer to give up the time necessary today towards establishing a successful ISF process, – don't wait!
Below are YTD statistics CBP shared with trade at the Chicago outreach session:
2.4 million ISF's have been filed. 5% rejection rate. 1,758 filers. 84,540 importers of record captured in those filings. 50+ carriers/filers are participating in the CMS, Stow Plan and ISF-5 Fillings. Less than 1% delete rate. Average ISF 350,000 per month being filed. 85% stand alone filings. 3% ISF Unified filings. 70% of ISF CBP system responses are under 15 seconds.
The top five errors:
Duplicate filings – being most frequent. Invalid transaction number. Invalid HTS number. Invalid country code. Missing surety information.
Conclusion
We want to thank each and every one of you that have sent information to us. Hopefully, we've done a good job of outlining all the important facts in the series of TradeMerit's ISF e-newsletters. We're now in countdown mode for when the ISF enforcement is to begin on January 26, 2010.
There is a lot of information out there on the ISF subject. Reach out to your colleagues, associations, vendors, and CBP for more detailed information about Importer Security Filing.
Sign Up for Free ISF Webinar
TradeMerit will host an ISF Webinar in November.
Richard DiNucci, Director of Secure Freight Initiative for CBP will be keynote speaker. Joining him will be Industry experts; Karen Lobdell, Director, Trade Security & Supply Chain Services for Drinker Biddle & Reath LLP, COAC member and Sandra Scott, Vice President of Trade Compliance for TradeMerit Corporation.
Please sign up to be part of the webinar. Within the next few day's you'll be notified the time/date of the event followed by an agenda.
We encourage you to submit questions prior to the Webinar. Send them to sscott@trademerit.com.
Thank You!
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