Holding Your Breath Won’t Help

When U.S. Customs and Border Protection unveiled its Importer Security Filing program last year, the trade community cried foul, condemning the huge extra costs the rule would impose on importers, especially as the global economy staggered. The National Association of Manufacturers calculated the rule popularly known as 10+2 would cost U.S. companies $20 billion a year and impose permanent operational costs of $3.5 billion every year.

Those projections may turn out to be exaggerated, but this much is already clear: Vendors of global trade management software are enjoying a steadily rising stream of business as more importers and customs brokers prepare for next Jan. 26, when ISF filing becomes mandatory.

“People are taking this seriously,” said Ty Bordner, vice president of solutions consulting at Management Dynamics, a provider of compliance software. “With penalties of $5,000 per ISF violation, it can add up quick.”

The pitfalls include not just a failure to file, but late filing, inaccurate filing and incomplete filing. All of those are actions compliance software companies have sought to address, and seize on as new opportunities.

In recent months, the major logistics software providers have launched a range of products aimed at making it quicker and easier for importers to file ISF information directly with Customs and make it easier for brokers and forwarders to file on behalf of importers.

At logistics technology provider IES, 70 percent of all ISF filings to date are occurring on behalf of customs brokers such as Louisville-based CJ International, which buys the technology from IES, and markets it to importers under CJ’s own brand.

Kevin Gavin, vice president of supply chain management at IES, said an additional 20 percent of IES’s revenue from ISF filings come directly from importers, and the final 10 percent from filings done by ocean forwarders and logistics providers.

The more ISF filings IES customers make, the more IES earns from fees. Although business has been increasing steadily, Gavin expects three to four times as much volume in ISF activity by next January.

“September will be the month when many importers wake up” to the idea that ISF is here to stay, he said. “There are still a lot of importers who have buried their heads in the sand and hope it never happens.”

Greg Johnsen, executive vice president of marketing at GT Nexus, the trade and logistics platform, said a quarter of his customers still aren’t filing. “They are in denial about ISF, and they are holding their breath. They are not taking this as seriously as we are,” he said.