CBP Proposal for Importer Security Filing and Additional Carrier Requirements

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• CBP Proposal for Importer Security Filing and
  Additional Carrier Requirements
• "102 Initiative"

• October 2008
• (Reflects the Pre-NPRM Version)

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Todays Presentation on 102

• Background and Development Process
• Targeting and Security Benefits
• Update on Current Status
• Questions

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Background

• CBP has implemented a comprehensive,
  multi-layered cargo screening strategy designed
  to enhance national security while protecting the
  economic vitality of the United States.
• 24-Hour Manifest Rule
• Container Security Initiative (CSI)
• Customs-Trade Partnership Against Terrorism
  (C-TPAT)
• Non Intrusive Inspection (NII) Techniques
• Automated Targeting System (ATS)
• Advance Targeting Units (ATUs)
• National Targeting Centers (Cargo and Passenger)
• Secure Freight Initiative
• The information that CBP currently analyzes to
  generate its risk assessment prior to vessel
  loading is, for the most part, the ocean
  carriers or non-vessel operators (NVOCC) cargo
  declaration (i.e. manifest data).
• Internal and external reviews have shown that
  alone, manifest data is not sufficient to perform
  reliable targeting.

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One Dangerous Container is One Too Many
The Hyundai Fortune exploded in March 2006, 60
miles from the coast of Yemen.
Stowaways Found at the LA-LB Seaport
The Security Filing (SF) is a Customs and Border
Protection (CBP) proposal that will require
importers and vessel operating carriers to
provide additional advance trade data to CBP
pursuant to Section 203 of the SAFE Port Act of
2006 and Trade Act of 2002. 24 Hour Rule for
Importers. 1. Importer Security Filing (ISF)
One Importer Security Filing required per
importer, per shipment, per vessel. Required
24 hours prior to lading. 10 elements to be
transmitted by the importer (or designated
agent). 2. Additional Carrier
Requirements 2 data sets to be transmitted by
the carrier
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Current Data Requirements

• All cargo shipments arriving at US ports must be
  properly declared.
• Carriers and NVOCCs are required to provide CBP
  with cargo manifest data 24-hours prior to vessel
  lading. 19 CFR 4.7(a)
• Importers, or their designated customs brokers,
  are generally required to provide CBP with entry
  data within 15 days of vessel arrival. In the
  sea mode, CBP will accept and process entry data
  up to 5 days prior to vessel arrival. 19 CFR 141
  (In-bond Movements)
• Entry type data has a profound effect on the ATS
  risk assessment process.

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Current Status Versus New Requirements
Required Manifest Data
Security Filing Data
Entry Data Elements
Generally, 24 Hrs Prior to Lading
Generally, up to 15 Days After Arrival
ISF-10 Regular Cargo

• Entry Number Type
• Entry Dist Entry Port
• Filer Code
• Importer of Record
• Ultimate Consignee
• Surety Number
• Filing Date Time
• Importing Carrier
• Vessel Name
• Country of Origin
• Exporting Country
• Exporting Date
• Foreign Port of Arrival
• Estimated Arrival Date
• Entry Value
• HSUSA (10)
• Manufacturer ID

• Bill of Lading Number
• Foreign Port before vessel departs for U.S.
• Carrier SCAC
• Carrier Assigned Voyage Number
• Date of Arrival at First U.S. Port
• U.S. Port of Unlading
• Quantity
• Unit of measure of Quantity
• First Foreign Place of Receipt
• Commodity Description (or HTS-6)
• Commodity Weight
• Shipper Name
• Shipper Address
• Consignee Name
• Consignee Address
• Vessel Name
• Vessel Country
• Vessel Number
• Foreign Port of Lading

(3461, IT, FTZ)

• Manufacturer (Supplier) name/address
• Seller (Owner) name/address
• Container Stuffing location
• Consolidator name/address
• Buyer (Owner) name/address
• Ship to name/address
• Importer of record number
• Consignee number
• Country of origin
• Commodity HTS-6

ISF-5 Transit Cargo
(FROB, IE, TE)

• Booking Party Name/Address
• Ship to name/address
• Commodity HTS-6
• Foreign Port of Unlading
• Place of Delivery

• Identification of
• Supply Chain Entities
• Cargo Descriptions
• Cargo Origins
• Container Routing
• Conveyance Routing

Stow Plan Data
Container Status Message (CSM) Data
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102 Security Filing Milestones

• Advance Trade Data Initiative (June 2004)
• CBP Targeting Taskforce (March-May 2006)
• SAFE Port Act (October 2006)
• Consultative Process (November 2006 - present)
• Straw Man Paper and Formal COAC Consultations
  (Nov 2007 Mar 2008)
• ATDI 102 Testing (March 2007 present)
• Notice of Proposed Rule Making (January 2008-
  present)
• www.regulations.gov USCBP-2007-0077

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Advance Trade Data Initiative (ATDI)
(Established 2004)

• Voluntary Program Between CBP and the Trade
  Community
• Electronic Data Sandbox

• What we knew
• The trade community relies on various
  documents and data to facilitate commerce
  and conduct day-to-day business.
• What we learned about the data
• Additional trade data would significantly
  enhance both CBPs automated and officer-based
  targeting efforts
• Increase the transparency of key
  participants, cargo and events
• Increase confidence in CBPs trade
  facilitation function

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ATDI Overview
ATDI June 2004 February 2007
ATDI is a Partnership With Trade To Identify
Information In Todays Supply Chains Capable of
Strengthening DHS Risk Management Efforts
Conveyance and Container Location Intermodal
Interchange Status
Proof of Delivery
Truck Status
Vessel Stow Plans
Booking Confirmation Routing
Purchase Order Advance Shipping Notice
Terminal Receipt Drayage Detail
Feeder
Feeder
U.S. Bound
A significant amount of data is known about the
average shipment more than 24 hours prior to
vessel lading
CBP 24 Hour Manifest
CBP Entry and Entry Summary
CBP Importer Security Filing
Container Status Messages
15 Days After Arrival
24 HRs Prior to Lading
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CBP Cargo Targeting Taskforce (CTT)
(March-May 2006)

• Who
• Cargo Targeting Experts from the Nations
  seaports
• High-Level CBP Managers
• Industry experts
• Objectives Met
• Identified sources of information
• Conducted a qualitative review of existing data
  elements
• Conclusions
• Smuggling is smuggling.
• The right data at the right time is critical.
• Identified which additional elements should be
  mandated to improve security targeting.

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CTT Assessed Data Availability
(March-May 2006)
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SAFE Port Act of 2006
(October 2006)

• Established New Data Requirements

• Section 203 (a) (1) Secretary shall identify
  and seek the submission of data related to the
  movement of a shipment of cargo through the
  international supply chain
• Section 203 (b) Secretary shall
  requireadditional data elements for improved
  high-risk targeting, including appropriate
  security elements of entry datato be provided as
  advanced information prior to lading at the
  foreign port.

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SAFE Port Act of 2006
(October 2006)

• Consultative Process Required
• Requires consultation with stakeholders
  (including COAC) and that the Secretary identify
  to them the need for such information and the
  appropriate timing of its submission.
• Requires consideration of costs, benefits, and
  feasibility of requiring additional non-manifest
  data, reducing the time period for revising cargo
  manifests and for submission of certain elements
  of entry data.

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Consultative Process
(October 2006 - present)

• Required by the SAFE Port Act of 2006
• Good Business Practice
• Strawman Proposal
• COAC Meetings (Nov 2006 Feb 2007)
• Critical to the Success of 102
• US Government Entities
• Foreign Government Entities
• World Customs Organization
• Advisory Committees (COAC, TSN, CESAC)
• Importing Community
• Customs Broker Community
• Carrier Community
• Freight Forwarding-Logistics Community
• Software Developers-Data Providers

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ATDI Security Filing 102 Testing

• Proxy Testing of 102 Since March 2007
• 102 Data Formats Developed and Tested
• Importer 10 Security Filing Stand Alone and
  Entry-Type filings were created
• Stow Plans accepted industry standards
• CSMs accepted industry standards
• Transmission Protocols
• Existing CBP connections used (ABI, AMS)
• Secure File Transfer Protocol (sFTP) used
• E-mail used
• Proof of Concept Data Intake into CBP Systems
  Works Well
• Over 57,400 Proxy Importer Security Filings
  Received
• Over 1,000 Stow Plans Received
• Over 95 Million CSMs Received
• ATDI able to match ISFs and CSMs to manifest data
  (bills of lading)

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102 Proposal (Importers)

• NPRM posted January 2, 2008 for Public Comment
  (75 Days)
• Consistent with the direction of the SAFE Port
  Act of 2006 and the Trade Act of 2002, CBP will
  soon require the importer to provide an enhanced
  cargo declaration 24 hours prior to vessel lading
  to complement the manifest information.
• One Importer Security Filing (ISF-10) filing
  required per importer, per shipment, per vessel.
• If one shipment to one importer has multiple
  bills of lading, one ISF may satisfy the multiple
  bills of lading.
• Modified ISF (ISF-5) filing for transit and FROB
  cargo (5 elements)
• Vessel Mode of Transportation Only
• Bulk Shipments will be Exempt

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102 Proposal (Carriers)

• Per the SAFE Port Act of 2006 and the Trade Act
  of 2002, CBP will now require the vessel
  operators and vessel operating carriers to
  provide two data sets
• Vessel Stow Plans
• Generally required within 48 hours of foreign
  departure
• -or-
• Prior to arrival for trips lasting less than
  48 hours
• Container Status Messages
• Required within 24 hours of creation/receipt
  in carrier equipment tracking system
• Carrier is not required to use new types of
  CSMs (as is, where is)

CBP will generally accept the common industry
data standards for the carrier portion of the new
proposed regulations.
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Targeting and Security Benefits of 102

• Enhanced Risk Analysis Capabilities
• Essential component of CBPs multi-layered
  security strategy
• Increase the transparency of key supply chain
  participants
• Improve identification of cargo
• Identify cargo and conveyance origins, routing
  and event timelines
• Complement and validate manifest data that is
  collected 24 hours prior to lading
• Improve Facilitation of Lawful International
  Trade
• Increase confidence in CBPs trade facilitation
  function by mitigating risk
• Enforcement and facilitation decision making can
  be done much farther upstream

Results Allow CBP to Focus Resources on
High-Risk Cargo
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What Are Casings?
Greater Commodity Identification (ISF Data)
HTS 9306.30
HTS 1601.00
HTS 7304.200
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Improved Targeting Capabilities (ISF Data)
Container INBU4944310
Source Description HTS C/O Role
Party BILL OF LADING SHEET
N/A N/A Shipper XYZ LOGISTICS
Consignee ABC TRUCKING
NEW SECURITY FILING
DATA BED LINEN 630210
CN MFR/Supl. XINJIANG TOP BEDDING PRODUCTS
Seller XINJIANG TOP BEDDING
PRODUCTS Stuffing Location XINJIANG, CN
Buyer B D IMPORT INC (PHX.,
AZ) Consolidator XYZ LOGISTICS
Importer B D
IMPORT INC (PHX., AZ) Ship To Name/Add. PRICE
TRANSFER WHSE (L.B., CA) Consignee B D
IMPORT INC (PHX., AZ)
NII Image Only
NII Image and Manifest Data
Whats in the box?
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C-TPAT Benefits of 102

• Earlier Decision Making
• C-TPAT entities will be reliably identified prior
  to lading
• Importer of Record Number
• Consignee Number
• Better Decision Making
• Tangible C-TPAT benefits will be applied far
  upstream
• No longer tied solely to entry data (24 hours or
  more prior to arrival)
• Stabilization of Automated Hold Process
• Immediate Transportation (IT) in-bonds scores
  will be stable
• Validation of Supply Chain Security Reviews
• New Entities and Locations Identified
• Container Stuffing Location
• Consolidator (Stuffer) name/address

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Stow Plan Data (ATS Stow Plan Module)
Identifies/Validates

• Unmanifested Cargo
• High-Risk Cargo
• Hazmat
• Empty Containers
• Freight Remaining on Board (FROB)
• Specific Locations
• Container Counts
• By SCAC
• Load Ports
• Discharge Ports
• Vessel Itineraries

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Stow Plan Testing Overview

• Electronic Container Verification Operations
• Port of Newark (August-September 2008)
• 31 Vessels with Discrepancies
• 905 Containers with Discrepancies
• 869 Unmanifested Containers
• (773 Empties)
• 96 Unmanifested With Cargo
• 8 Unmanifested With High Risk Cargo
• Includes Check Digit Errors on Stow Plan
  Deleted Bills of Lading with no Updates

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Container Status Messages
Equipment Tracking Mechanism Used Today By
Industry
Identifies/Validates
Common Event Types

• Match CSM to Manifest
• Establish Container Origin
• Container Routing
• Volumetrics

• Gate-In Gate-Out
• Loaded Unloaded from Conveyance
• Vessel Arrival Vessel Departure

Common Status Types

• Empty or Full

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Public Reaction General Comments NPRM

• Public Comment period closed Tuesday, March 18,
  2008
• Less than 200 submissions (Approx. 115 issues
  identified)
• Technical Requirements (System Development)
• Want to know about file formats and transfer
  protocols (to better assess needed changes)
• Want a unique SF identification number generated
  by CBP Messaging Components
• Implementation Process
• Want to know effective date
• Want to know method of phased-in implementation
  (incremental vs. big bang)
• A few commenters want a Pilot to be conducted
  first
• Enforcement Actions, Penalties and Liquidated
  Damages and Bond Provisions
• Concerned about extreme liquidated damages
  receptive to do not load actions instead
• Cost, Benefit and Feasibility Study and Impact on
  Trade
• Harmonization with International Standards (WCO)
• Privacy and Disclosure Concerns

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Going Forward

• Need to know your supply chain partners
• Manufacturers and Suppliers
• Freight Forwarders
• Require that the new data be collected now
• Shippers, Manufacturers, Suppliers, Vendors, etc.
  have access to the Scheduled Container Stuffing
  Location and Consolidator Name/Address
  elements.
• Know what you are importing before you import it
• Begin the classification process earlier
• Decide who will transmit the ISF on your behalf
• There are many options available

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102 Update on Current Status

• The Final Rule is under review by the Office of
  Management and Budget (OMB).
• ATDI 102 on-boarding and testing continues.
• Most of the CBP system programming has already
  been tested and completed (ACS and ATS). ATDI
  data is available in ATS for operational use by
  the field.
• CBP released draft copies of the proposed 102
  data formats for the Importer Security Filing
  portion of the proposed regulation. Copies were
  posted to CBP.gov on May 30, 2008 and further
  updated July 17 and September 17, 2008.
• http//www.cbp.gov/xp/cgov/trade/automated/automat
  ed_systems/sf_transaction_sets/
• Security_Filing_Technical_at_cbp.dhs.gov
• Committed to a 60 Day Delayed Effective Date
• Committed to a 1 year Delayed Enforcement Period
  (Informed Compliance)
• Committed to a Comprehensive Outreach Program
  (Mirror 24 Hr. Manifest Rule)
• WCO SAFE Framework amendment process continues.

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What they said about the 24-Hour Rule
By Letter Dated September 6, 2002 in response to
NPRM (67 FR 51519)

• The proposed rules increases security risks
  containers will wait longer on the dock before
  they are loaded and may be stored in unsecured
  locations.
• The requirements of the NPRM will cause economic
  harm to the importer and carrier without a
  commensurate increase in security.
• The regulatory requirements will cause an
  unreasonable paperwork burden on the public.
• This will economically disadvantage NVOCCs,
  importers and various other entities involved in
  international trade.
• The NPRM provides no support for requiring this
  information 24 hours prior to lading.
• This will add at least 2 to 4 days to the supply
  chain.
• Signed by
• National Customs Brokers Forwarders Association
  of America, Inc. (NCBFAA)
• Business Alliance for Customs Modernization
  (BACM)
• American Association of Exporters and Importers
  (AAEI)
• Joint Industry Group (JIG)
• Pacific Coast Council of Freight Forwarders and
  Customs Brokers (PCC)
• The International Association of NVOCCS, Inc.
• Los Angeles Customs Brokers and Freight
  Forwarders Association

Note These predictions did not come to pass.
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Questions?
John Jurgutis Chief Program Manager Secure
Freight Initiative (Security Filing) Customs and
Border Protection [phone] john.jurgutis_at_dhs
.gov
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