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government-trade

11th Hour for Customs 24-Hour Rule

WASHINGTON — U.S. Customs Commissioner Robert C. Bonner has laid to rest any doubts about his agency’s intent to enforce the "24-hour rule" on Feb. 2, as importers’ concerns continue to mount over whether carriers are...

WASHINGTON — U.S. Customs Commissioner Robert C. Bonner has laid to rest any doubts about his agency’s intent to enforce the “24-hour rule” on Feb. 2, as importers’ concerns continue to mount over whether carriers are prepared.

“As I have said before, this is an issue of national security and Customs intends to take compliance seriously,” said Bonner in a speech at the Foreign Press Center last week. “We applaud the efforts of those shippers and carriers that have taken the rule and implementation period seriously — and many, many have — but we caution those that have not.”

The regulation, which requires ocean carriers to have containers sealed and accompanied by a detailed list of cargo 24 hours before being loaded onto a U.S.-bound vessel, is part of Customs’ effort to keep weapons or biohazardous material from being smuggled in the 6 million cargo containers passing through U.S. ports each year.

Customs issued the final regulation on Oct. 31 after a 45-day comment period on the rule, which caused a strain between importers and agency officials in August when it was announced. The agency then delayed implementation for 90 days, which included a 60-day, penalty-free period to allow ocean carriers time to change business practices. That grace period expires on Feb. 2 and Customs is making no bones about enforcement.

“Data that is incomplete or late will not be tolerated from carriers or shippers,” said Bonner.

He said incomplete data includes vague descriptions of cargo, late descriptions or blank descriptions. Bonner said the agency is ready to “ratchet up” denials of unloading permits to carriers that don’t comply, as well as the imposition of penalties.

All of this has importers concerned about their supply chains.

“From the retailers’ perspective, they are handing control of a portion of their supply chain to carriers,” said Erik Autor, vice president and international counsel for the National Retail Federation. “If carriers can’t provide information to Customs, goods will not be loaded on ships and there will be big delays.”

Autor said the biggest worry is that the transition period was too short.

“The feeling was that this represents a significant change in the way business is done,” he said. “This isn’t like a little sports car turning on a dime, it’s more like a super tanker and it requires miles to turn in a new direction, which is a tall task.”

Hubert Wiesenmaier, executive director of the American Import Shippers Association, which arranges cargo needs for many major U.S. apparel and textile importers, said: “It’s a question of relocating or allocating resources. Manifests have always been reported, but in the past, carriers had the time to do this while the vessel was in transit. Now they have to do it before the vessel is loaded.”

He said most major carriers are sophisticated and already have the electronic capacity to do transmissions.

“Seeing it within the framework of eliminating the risk of carrying in weapons of mass destruction, it would be prudent to leave a container behind that is suspicious rather than loading it,” said Wiesenmaier, adding that confidentiality is a bigger concern than supply-chain disruptions, among his importing clients. “Many shippers don’t want the whole world to know what is in the containers and when it is coming in because there are theft problems if this information is easily available to the public.”

However, a spokesman for Neptune Orient Lines Ltd., a global transportation and logistics company of which APL is a subsidiary, turned the tables and claimed shippers and importers are facing a greater challenge to comply than carriers.

“Our customers and their vendors have to make some pretty substantial changes in their operations to meet the new requirements,” said the spokesman. “We’re the collectors of information who then pass it on to U.S. Customs. If the shipper doesn’t provide what Customs requires, there will be delays in shipping their cargo.”

APL has spent the past month fine-tuning systems and processes to support the regulations. The company has also worked closely with its customers to help them meet the new requirements and is seeing an increasing level of compliance, according to the spokesman.

He noted that some shippers are still not providing complete manifest information by cutoff times, which will cause cargo delays from Feb. 2 onward.

“The real test will be from Feb. 2, when full enforcement begins,” he said. However, it is too early to say what the level of compliance will be by then and “whether we can expect any cargo ‘holds’ from U.S. Customs,” he added.